[For Translation Purposes Only]
March 21, 2017

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

Notice Concerning Property Acquisition and Disposition
Nomura Real Estate Master Fund, Inc. (“Nomura Master Fund” or the “Fund”) announced the decision madetoday by Nomura Real Estate Asset management Co., Ltd., a licensed investment trust management company
retained by the Fund to provide asset management services, that it will acquire and dispose assets (the “Acquisition”
and the “Disposition,” respectively; the Acquisition and the Disposition collectively referred to as the“Transaction”), as described below.
1.

Summary of Assets to be Acquired/Disposed

1)

Summary of Assets to be Acquired
Date ofagreement(Scheduled)
Date ofacquisition

SellerAcquisition price(¥million) (Note1)

No.

Property nameUse

1

NRE Kichijoji Building(additional
stake acquisition)(Note2)

Retail2

Landport Kashiwa ShonanⅠ

Logistics

3

Proud Flat Omori Ⅲ

Residential

4

Proud Flat Kinshicho

Residential

785

Total

16,895

5,100
March 21,2017

March 31,2017

Nomura Real
EstateDevelopment
Co., Ltd.

9,900
1,110

(Note 1) The amount excluding acquisition related costs, property tax, city planning tax, consumption tax and local
consumption tax is stated.
(Note 2) This acquisition is of an additional 49.0% quasi co-ownership stake in a beneficial interest in a real estate trust
for the property. Together with the 51.0% quasi co-ownership stake in a beneficial interest in the real estate trust
acquired by the Fund on October 30, 2015, this acquisition makes the Fund the sole owner of the beneficial
interest in the real estate trust.
(Note 3) Of the assets to be acquired, NRE Kichijoji Building (additional stake acquisition) is a beneficiary interest in atrust for which real estate is the principal trust asset; all others are actual real estate.
(Note 4) The properties to be acquired will be acquired using cash on hand and borrowings after settling a portion of the－ １ －acquisition price with proceeds from the NOF Nihonbashi Honcho building(51.0%) the Fund is selling.
The above four properties are collectively referred to hereinafter as the “Four Properties to Be Acquired.”2) Summary of Assets scheduled to be Disposed
No.
1
2
3

Property nameNOF Nihonbashi
Honchobuilding(51.0%)(Note3)
Mitsubishi Motors
Shibuya
Mitsubishi Motors
Suginami

Use

Date ofagreement(Scheduled)
Date ofdisposition

OfficeMarch 21,2017

March 31,2017

Retail(Land)
Retail(Land)March 31,2017

Transferee

Nomura Real
EstateDevelopment
Co., Ltd.
June 1, 2017

Total

-

TransferPrice(¥million)

Book Value(¥million)(Note 1)

Difference(¥million)(Note 2)

11,73010,889

840

1,720

1,586

133

896

748

147

14,346

13,224

1,121(Note 1) Indicates anticipated book value at the date of disposition.
(Note 2) This is only a reference value based on the difference between the scheduled transfer price and anticipated bookvalue; it is not equal to gain or loss on sale.
(Note 3) This sale is of the Fund’s 51.0% quasi co-ownership stake in a beneficial interest in a real estate trust for theproperty. As a result of this sale, the Fund will have sold its entire stake.
(Note 4) The above assets to be disposed of are all beneficiary interests in trusts for which real estate is the principal trust
asset.
The above three properties are collectively referred to hereinafter as the “Three Properties to Be Sold.” Individual
properties among the Four Properties to Be Acquired or the Three Properties to Be Sold are also referred tohereinafter as “the Property.”2.

Reasons for the Transaction
In accordance with the Medium- to Long-term Management Strategy announced in November 2015, Nomura
Master Fund designated the next three years as its Quality Phase and has been implementing various related
measures.
One key measure is Strategic Property Replacement (SPR), which is aimed at improving the quality of ourportfolio. As part of this measure, the Fund has decided to execute an asset swap with the Sponsor, Nomura
Real Estate Development Co., Ltd., comprising the acquisition of the Four Properties to Be Acquired and thesale of the Three Properties to Be Sold.
Under the sale contact for the Three Properties to Be Sold, should Nomura Real Estate Development Co.,
Ltd., redevelop and sell any of the said three properties, the Fund shall be granted preferential negotiationrights regarding said sale.
The Fund will continue to actively use its leasing value chain, consisting of its property acquisition pipeline andmanagement pipeline, thereby working to accelerate mutual growth with the Nomura Real Estate Group.

The main strengths of the properties to be acquired and reasons for the disposition of the properties to be soldare as follows.
(1)Strengths of the Properties to be Acquired

－ ２ －

a.

Nomura Real Estate Kichijoji Building Located three minutes on foot from Kichijoji Station on the JR Chuo-Sobu Line and Keio Inokashira Line,the Property faces Kichijoji Dori, an avenue along which stand a number of large-scale shopping complexes,on the corner at the entrance to Nakamichi Dori, a road with numerous street-level stores. Thanks to thislocation, the Property enjoys high visibility with a great deal of foot traffic in front of the building. Kichijoji
is a very popular neighborhood, consistently ranked as among the most desirable places to live in Japan (Note).
With convenient shopping around the station and pleasant natural scenery, including Inokashira Park, thearea offers a large nearby population.
(Note)

This ranking is based on a nationwide survey of approximately 720,000 individuals interested inbuying a condominium conducted by MAJOR7, a portal website for information on new
condominiums (operated by Sumitomo Realty & Development Co., Ltd., Daikyo Incorporated,
Tokyu Land Corporation, Tokyo Tatemono Co., Ltd., Nomura Real Estate Development Co., Ltd.,
Mitsui Fudosan Residential Co., Ltd., and Mitsubishi Jisho Residence, Co., Ltd.).

 With a façade of white panels and glass that makes the interior of the building visible as well as an
entranceway with an extra-high ceiling, the Property is a landmark of the Kichijoji area.
 The Property enjoys excellent brand power thanks to its tenant, Uniqlo Co., Ltd., Japan’s largest apparelcompany, which operates the Property as Uniqlo Kichijoji, one of its key global locations.
b.

Landport Kashiwa Shonan I
 The Property has an excellent location within 30 km of central Tokyo, 12 km from the Kashiwa Interchangeof the Joban Expressway and just off National Highway 16. This location offers superb access to the Tokyo
Bay coastal area, including the Port of Chiba, which boasts the second highest cargo handling volume inJapan,(note) and to the major consumption zone of the Tokyo Metropolitan Area. Located in an industrial park,
the facility can operate 24 hours a day, 365 days a year.
(Note) Based on 2015 statistics on the Port of Chiba from the Chiba Prefectural Government.
 Located near some of Chiba’s greatest commuter towns, with a dedicated shuttle bus to Abiko Station on the
JR Joban Line, the facility is able to secure personnel from a wide geographic range.
 The facility enables high work efficiency, with berths on two sides of the first floor as well as four freight
elevators and eight vertical conveyors within the warehouse. The facility is designed for optimized, efficientlogistics, with an 11 by 11 meter grid and effective ceiling height of 5.5 to 6.5 meters for more efficient rackloading, as well as extra floor space to accommodate seasonal variations or volume increases after move-in.
 The Property offers stable revenue, thanks to long-term leases with DHL Supply Chain Co., Ltd., part of theworld’s largest logistics Group, and Plus Logistics Corporation, a subsidiary of Japan’s largest provider of
mail-order office supplies services.

c.

PROUD FLAT Omori III
 Located five minutes on foot from Omori Station on the JR Keihin-Tohoku Line, the Property offers directaccess to key business areas, including those near Shinagawa and Tokyo stations, and is also close to Haneda
Airport. The area around Omori Station offers a concentration of retail facilities, including the stationbuilding itself, making the neighborhood lively and convenient. These advantages are accordingly high for－ ３ －stable demand from single workers who commute to the city center.
 Nomura Real Estate Partners Co., Ltd., to which the Fund entrusts property management, offers 24-hour
response, disaster prevention support services and other unique services that help maintain high customer
satisfaction. Accordingly, the Fund is confident that the Property will enjoy high-quality property
management.

d.

PROUD FLAT Kinshicho Located five minutes on foot from the Kinshicho Station on the JR Chuo-Sobu and Sobu (Rapid) lines andTokyo Metro Hanzomon Line, the Property offers excellent transportation convenience, with direct access tomajor business and retail areas, such as Tokyo, Otemachi, Akihabara and Shinjuku. The Property is locatednear Tokyo Skytree, a major tourist attraction, and the area near Kinshicho Station includes Olinas, a multipurpose facility boasting a shopping mall and cinema complex, as well as the spacious Kinshi Park, making it
a very convenient area to live in. These advantages are accordingly high for stable demand from single
workers who commute to the city center.
 Nomura Real Estate Partners Co., Ltd., to which the Fund entrusts property management, offers 24-hour
response, disaster prevention support services and other unique services that help maintain high customer
satisfaction. Accordingly, the Fund is confident that the Property will enjoy high-quality property
management.

－ ４ －(2)Reasons for Property Dispositions
a. NOF Nihonbashi Honcho Building(51.0%)
As announced in the May 9, 2016 press release “Notice Concerning Property Acquisition and Disposition,” theFund previously sold a 49% quasi co-ownership stake in the beneficial interest in a real estate trust for thisproperty to the sponsor, Nomura Real Estate Development Co., Ltd., as part of its SPR. Nomura Real Estate
Development Co., Ltd. has recently expressed willingness to purchase the remaining 51% quasi co-ownership. In
light of this as well as comprehensive considerations of the portfolio’s composition, the average age of its
properties and other factors, the Fund has decided to sell its remaining stake. Under the sale contract, should
Nomura Real Estate Development Co., Ltd., redevelop and sell the Property, the Fund will be granted preferential
negotiation rights regarding said sale.
b. Mitsubishi Motors Shibuya and Mitsubishi Motors Suginami
Both of these assets are land with leasehold rights for which the Fund has business-use fixed-term land lease
contracts. However, on September 19, 2016, the Fund received notice of contract cancellation from the properties’
lessee. The properties are scheduled to be returned as empty lots after the termination of their lease contracts.
Based on market surveys and studies of the surrounding areas, the Fund has considered how to use theseproperties after they are vacated by the lessee, looking at a wide range of possibilities, centered on the following
options.
i.

Maintain the properties as land with leasehold rights and lease to a new tenantii.

Maintain ownership of the properties and begin redevelopmentiii. Sell the properties to a third party
iv. Sell the properties to the sponsor (Nomura Real Estate Development Co., Ltd.) to be redeveloped for adifferent use
As a result and in light of such considerations as optimizing usage given the characteristics of the properties’
locations, the Fund judged that it would best serve its interests to sell the properties to the sponsor, which plans toredevelop them for a new use that is expected to raise their asset value. If the properties are sold after
redevelopment, the Fund will be granted preferential negotiation rights, providing a valuable opportunity toacquire excellent properties in a competitive real estate market. Accordingly, the Fund decided to sell the properties.
The sponsor is planning to develop residential facilities (under the PROUD FLAT brand) at the site of Mitsubishi
Motors Shibuya and residential-area retail facilities (a store) at the site of Mitsubishi Motors Suginami.

－ ５ －

4.

Summary of Assets to be Acquired and Sold
(1) Summary of Assets to be Acquireda. NRE Kichijoji Building (additional stake acquisition)
Property Name
Type of Asset
Trustee
Trust Term
Registry
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
Property Management
Company
Master leasing company
Type of master leasing
Seismic Risk (PML) (Note 5)

Notes

NRE Kichijoji Building
Trust beneficiary interest in real estate (49% quasi co-ownership stake)
Mitsubishi UFJ Trust and Banking Corporation
March 10, 2005 to March 10, 2025
2-2017-216 Kichijoji Honcho, Musashino City, Tokyo and 10 other lots
2-2-17 Kichijoji Honcho, Musashino City, Tokyo
3-minute walk from Kichijoji Station on the JR Chuo and Sobu lines and Keio
Inokashira Line
July 10, 2014
Retail, parking
SRC B2/7F
Obayashi Corporation, first-class registered architectural firm
Obayashi Corporation (Head Office)UHEC
923.73 m2 (Note 2)
5,550.35 m2 (Note 2)
Ownership (49.0%) (Note 3)
Ownership (49.0%) (Note 3)
100.0% (Note 4)600.0%
None
Geo-Akamatsu Co., Ltd.
—
—
3.06%
(Based on a May 2015 Earthquake PML Appraisal Report by Sompo Japan
Nipponkoa Risk Management Inc. (now SOMPO RISK MANAGEMENT &HEALTH CARE Inc.)
The property management company, GEO-AKAMATSU Co., Ltd. isconsidered a related party under the Law Concerning Investment Trust andInvestment Corporations (“Investment Trust Law”).

Acquisition Price¥5,100 million
Appraisal Value and¥5,440 million (Based on the capitalization approach as of December 1, 2016)
Method(Appraiser: Daiwa Real Estate Appraisal Co., Ltd.)
Appraisal NOI (Note 6)¥222 million
Leasing Status (As of March 21, 2017) (Note 7)
Total Number of Tenants 1
Tenant Name
Uniqlo Co., Ltd.
Undisclosed
Total Rental Income
Security Deposits
Occupancy Rate
Total Leased Floor Space
Total Leasable Floor SpaceHistorical Occupancy Rates(Note 8)

Undisclosed
100.0%
1,962.00 m2
1,962.00 m2
February2013—

February
2014
—

－ ６ －

February2015
100.0%

February 2016

February 2017100.0%

100.0%

(Note 1) Location and Other Items
Location (registry), Completion Date, Use, Structure and Area are based on the information in the realestate registry.
(Note 2) Area
The Property’s total land area and the building’s total floor area are given.
(Note 3) Type of Ownership
The percentage of ownership shown, 49.0%, is the quasi co-ownership stake in a beneficial interest in a realestate trust for this property that the Fund plans to acquire. Together with the 51.0% quasi co-ownershipstake in a beneficial interest in the real estate trust acquired by the Fund on October 30, 2015, thisacquisition will make the Fund the sole owner of the beneficial interest in the real estate trust.
(Note 4) Building Coverage Ratio
The Property is located in a commercial zone where the building coverage ratio is 80% in principle.
Because the Property is in a fire prevention zone and certified fireproof, however, the applied coverage
ratio is 100%.
(Note 5) PML (Probable Maximum Loss)PML shows the probable losses caused by a major earthquake, expressed as the expected recovery costpresented as a percentage of replacement cost. PML is calculated based on a statistical assumption that
there is a 0.211% annual chance (10% probability of once every 50 years, i.e., the average life time ofbuildings) of a major earthquake occurring.
(Note 6) Appraisal NOI“Appraisal NOI” indicates the annual NOI (operating income-operating expenses) described in the realestate appraisal report, with December 1, 2016 as the appraisal date, multiplied by 49.0%, the quasi coownership stake in the beneficial interest in a real estate trust that the Fund is planning to acquire.
(Note 7) Leasing Status“Total Rental Income” and “Security Deposits” are not disclosed as the Fund has not received permission
from the end tenant.
“Total Leased Floor Space” and “Total Leasable Floor Space” indicate the building’s total leased floor space(the floor space being leased to the end tenant as of today) and total leasable floor space each multiplied by
49.0%, the quasi co-ownership stake in the beneficial interest in a real estate trust that the Fund is planningto acquire.
(Note 8) Historical Occupancy Rates
There are no applicable occupancy rates for February 2014 and before because the building was not yet
completed.
b.

Landport Kashiwa Shonan I
Property Name

Type of AssetRegistry
Location(Note 1)StreetAccessCompletion Date (Note 1)
Use (Note 1)
Structure (Note 1)
Architect
Builder
Building Inspection Agency
Land
Floor Area
Land
Type ofOwnership
Building
Building Coverage Ratio
Floor Area Ratio
Collateral
Property Management
Company (Note 3)
Master leasing company
Type of master leasing
Area (Note 1)

Seismic Risk (PML) (Note 4)

Landport Kashiwa Shonan I
Real estate
1027-15 Aza-miyagohara, Washinoya, Kashiwa City, Chiba and 1 other lot
1027-15 Washinoya, Kashiwa City, Chiba
11.6 km from the Kashiwa Interchange on the Joban Expressway
January 29, 2016
Warehouse
S 3F
Nishimatsu Construction Co., Ltd., first-class registered architectural firm
Nishimatsu Construction Co., Ltd., Kanto Architectural Regional Headquarters
CENTER OF INTERNATIONAL ARCITECTUAL STANDARD
28,029.31 m2
49,394.87 m2
Ownership
Ownership
70.0% (Note 2)
200.0%
None
Nomura Real Estate Development Co., Ltd., Nomura Real Estate Partners Co.,
Ltd.
—
—
5.56%
(Based on a November 2016 Earthquake PML Appraisal Report by SOMPORISK MANAGEMENT & HEALTH CARE Inc.)－ ７ －The property management companies, Nomura Real Estate Development Co.,
Notes

Ltd., and Nomura Real Estate Partners Co., Ltd., are each considered a related
party under the Law Concerning Investment Trust and Investment
Corporations (“Investment Trust Law”).

Acquisition Price¥9,900 million
Appraisal Value and¥9,920 million (Based on the capitalization approach as of December 1, 2016)
Method(Appraiser: Japan Valuers Co., Ltd.)
Appraisal NOI (Note 5)¥486 million
Leasing Status (As of March 21, 2017) (Note 6)
Total Number of Tenants 2
Tenant NameDHL Supply Chain Co., Ltd., Plus Logistics Corporation
Undisclosed
Total Rental Income
Security Deposits
Occupancy Rate
Total Leased Floor Space
Total Leasable Floor Space

Undisclosed

100.0%
48,401.96 m2
48,401.96 m2
February
February
February
February 2016 February 2017
Historical Occupancy Rates
2013
2014
2015
(Note 7)—0%——
100.0%(Note 1) Location and Other Items
Location (registry), Completion Date, Use, Structure and Area are based on the information in the realestate registry.
Because the street address for this property has not yet been established, the building’s location as listed in
the real estate registry is given for Location (street).
(Note 2) Building Coverage Ratio
The Property is located in an industrial zone where the building coverage ratio is 60% in principle. Because
the Property is on a corner, however, the applied coverage ratio is 70%.
(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, expressed as the expected recovery costpresented as a percentage of replacement cost. PML is calculated based on a statistical assumption that
there is a 0.211% annual chance (10% probability of once every 50 years, i.e., the average life time ofbuildings) of a major earthquake occurring.
(Note 5) Appraisal NOI“Appraisal NOI” indicates the annual NOI (operating income-operating expenses) described in the realestate appraisal report, with December 1, 2016 as the appraisal date.
(Note 6) Leasing Status“Total Rental Income” and “Security Deposits” are not disclosed as the Fund has not received permission
from the end tenants.
“Total Leased Floor Space” indicates the total floor space leased to end tenants.
(Note 7) Historical Occupancy Rates“Historical Occupancy Rates” are based on information from the seller. There are no applicable occupancy
rates for February 2015 and before because the building was not yet completed.
c.

PROUD FLAT Omori III
Property Name
Type of AssetRegistry
Location(Note 1)StreetAccessCompletion Date (Note 1)
Use (Note 1)
Structure (Note 1)
Leasable Units
Architect

PROUD FLAT Omori III
Real estate
6-107-3 Minamioi, Shinagawa Ward, Tokyo
6-5-14 Minamioi, Shinagawa Ward, Tokyo
5-minute walk from Omori Station on the JR Keihin-Tohoku Line
October 15, 2014
Apartments
RC, 8F
49
Form Architect Planning Co., Ltd－ ８ －BuilderBuilding Inspection Agency

Raito Kogyo Co., Ltd.
Housing Loan Progress Association

Land
526.83 m2
Floor Area 1,742.08 m2
Land
Ownership
Type ofOwnership
Building Ownership
Building Coverage Ratio
60.0%
Floor Area Ratio
300.0%
Collateral
None
Property Management
Nomura Real Estate Partners Co., Ltd.
Company (Note 2)
Master leasing company (Note 3) Nomura Real Estate Partners Co., Ltd.
Type of master leasing (Note 3) Pass through
5.84%
Seismic Risk (PML) (Note 4)(Based on a January 2017 Earthquake PML Appraisal Report by SOMPO RISKMANAGEMENT & HEALTH CARE Inc.)
The property management and master leasing company, Nomura Real Estate
Area (Note 1)

Notes

Partners Co., Ltd., is considered a related party under the Law Concerning
Investment Trust and Investment Corporations (“Investment Trust Law”).

Acquisition Price¥1,110 million
Appraisal Value and¥1,140 million (Based on the capitalization approach as of December 1, 2016)
Method(Appraiser: Morii Appraisal & Investment Consulting, Inc.)
Appraisal NOI (Note 5)¥51 million
Leasing Status (As of March 21, 2017) (Note 6)
Total Number of Tenants 1¥66 million
Total Rental Income
Security Deposits
Occupancy Rate
Total Leased Floor Space
Total Leasable Floor Space¥8 million

97.0%
1,372.06 m2
1,414.74 m2
February
February
February
February 2016 February 2017
Historical Occupancy Rates
2013
2014
2015
(Note 7)
97.0%
96.8%
—
—
100.0%(Note 1) Location and Other Items
Location (registry), Completion Date, Use, Structure and Area are based on the information in the realestate registry.
(Note 2) Property Management Company
Refers to the Property Management Company that is scheduled to be appointed after acquisition.
(Note 3) Master Lease
Upon the acquisition of the Property, the Fund plans to enter into a master lease agreement with Nomura
Real Estate Partners Co., Ltd. Under this agreement, the building of the Property will be collectively leased
to Nomura Real Estate Partners Co., Ltd. for the purpose of subleasing. The master lease agreement is apass-through scheme, in which Nomura Real Estate Partners Co., Ltd., the master lease company, pays to
the Fund the same amount as the total sum of the rent based on the lease agreements that the master lease
company concludes with end tenants.
(Note 4) PML (Probable Maximum Loss)PML shows the probable losses caused by a major earthquake, expressed as the expected recovery costpresented as a percentage of replacement cost. PML is calculated based on a statistical assumption that
there is a 0.211% annual chance (10% probability of once every 50 years, i.e., the average life time ofbuildings) of a major earthquake occurring.
(Note 5) Appraisal NOI“Appraisal NOI” indicates the annual NOI (operating income-operating expenses) described in the realestate appraisal report, with December 1, 2016 as the appraisal date.
(Note 6) Leasing Status“Total Number of Tenants” is listed as one because the Fund plans to enter a master lease agreement,
under which all the Property’s leasable units will be collectively leased to the master lease company for the
purpose of subleasing to end tenants.

－ ９ －“Total Rental Income” is the amount obtained by multiplying the monthly rent stated in the leaseagreements with end tenants actually leasing the building of the Property by 12 (truncated at the nearest
million yen).
“Security Deposits” indicates the amount of security and other deposits specified in the aforementioned
lease agreements (truncated at the nearest million yen).
“Total Leased Floor Space” indicates the total floor space leased to end tenants.
(Note 7) Historical Occupancy Rates“Historical Occupancy Rates” are based on information from the seller. There are no applicable occupancy
rates for February 2014 and before because the building was not yet completed.
d.

PROUD FLAT Kinshicho
Property Name
Type of AssetRegistry
Location(Note 1)StreetAccessCompletion Date (Note 1)
Use (Note 1)
Structure (Note 1)
Leasable Units
Architect
Builder
Building Inspection Agency

PROUD FLAT Kinshicho
Real estate
1-8-7 and -8 Kotobashi, Sumida Ward, Tokyo
1-12-9 Kotobashi, Sumida Ward, Tokyo
5-minute walk from Kinshicho Station on the JR Chuo-Sobu and Sobu (Rapid)lines and Tokyo Metro Hanzomon Line
December 19, 2014
Apartments
RC, 13F
36
Form Architect Planning Co., Ltd
Mabuchi Construction Co., Ltd.
Housing Loan Progress AssociationLand
175.86 m2
Floor Area 1,259.73 m2
Land
Ownership
Type ofOwnership
Building Ownership
Building Coverage Ratio
100.0% (Note 2)
Floor Area Ratio
700.0%
Collateral
None
Property Management
Nomura Real Estate Partners Co., Ltd.
Company (Note 3)
Master leasing company (Note 4) Nomura Real Estate Partners Co., Ltd.
Type of master leasing (Note 4) Pass through6.47%
Seismic Risk (PML) (Note 5)(Based on a January 2017 Earthquake PML Appraisal Report by SOMPO RISKMANAGEMENT & HEALTH CARE Inc.)
The property management and master leasing company, Nomura Real Estate
Area (Note 1)

Notes

Partners Co., Ltd., is considered a related party under the Law Concerning
Investment Trust and Investment Corporations (“Investment Trust Law”).

Acquisition Price¥785 million
Appraisal Value and¥839 million (Based on the capitalization approach as of December 1, 2016)
Method(Appraiser: Morii Appraisal & Investment Consulting, Inc.)
Appraisal NOI (Note 6)¥38 million
Leasing Status (As of March 21, 2017) (Note 7)
Total Number of Tenants 1¥53 million
Total Rental Income
Security Deposits
Occupancy Rate
Total Leased Floor Space
Total Leasable Floor Space¥6 million
100.0%
1,087.80 m2
1,087.80 m2－ １０ －

February
February
February
February 2016 February 2017
2013
2014
2015
(Note 8)13.9%
100.0%——
100.0%
Location and Other Items
Location (registry), Completion Date, Use, Structure and Area are based on the information in the realestate registry.
Building Coverage Ratio
The Property is located in a commercial zone where the building coverage ratio is 80% in principle.
Because the Property is in a fire prevention zone and certified fireproof, however, the applied coverage
ratio is 100%.
Property Management Company
Refers to the Property Management Company that is scheduled to be appointed after acquisition.
Master Lease
Upon the acquisition of the Property, the Fund plans to enter into a master lease agreement with Nomura
Real Estate Partners Co., Ltd. Under this agreement, the building of the Property will be collectively leased
to Nomura Real Estate Partners Co., Ltd. for the purpose of subleasing. The master lease agreement is apass-through scheme, in which Nomura Real Estate Partners Co., Ltd., the master lease company, pays to
the Fund the same amount as the total sum of the rent based on the lease agreements that the master lease
company concludes with end tenants.
PML (Probable Maximum Loss)PML shows the probable losses caused by a major earthquake, expressed as the expected recovery costpresented as a percentage of replacement cost. PML is calculated based on a statistical assumption that
there is a 0.211% annual chance (10% probability of once every 50 years, i.e., the average life time ofbuildings) of a major earthquake occurring.
Appraisal NOI“Appraisal NOI” indicates the annual NOI (operating income-operating expenses) described in the realestate appraisal report, with December 1, 2016 as the appraisal date.
Leasing Status“Total Number of Tenants” is listed as one because the Fund plans to enter a master lease agreement,
under which all the Property’s leasable units will be collectively leased to the master lease company for the
purpose of subleasing to end tenants.
“Total Rental Income” is the amount obtained by multiplying the monthly rent stated in the leaseagreements with end tenants actually leasing the building of the Property by 12 (truncated at the nearest
million yen).
“Security Deposits” indicates the amount of security and other deposits specified in the aforementioned
lease agreements (truncated at the nearest million yen).
“Total Leased Floor Space” indicates the total floor space leased to end tenants.
Historical Occupancy Rates“Historical Occupancy Rates” are based on information from the seller. There are no applicable occupancy
rates for February 2014 and before because the building was not yet completed.

Historical Occupancy Rates(Note 1)
(Note 2)

(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(2) Summary of Assets to be Solda. NOF Nihonbashi Honcho Building (51.0%)
Property Name
Type of Asset
Trustee
Trust Term
Registry
Location(Note 1)StreetAccessCompletion Date (Note 1)
Use (Note 1)
Structure (Note 1)
Land
Area (Note 1)
Floor Area
Land
Type ofOwnership
Building
Building Coverage Ratio

NOF Nihonbashi Honcho Building
Trust beneficiary interest in real estate (51% quasi co-ownership stake)
Mitsubishi UFJ Trust and Banking Corporation
March 5, 2002 to February 28, 2022
2-4-1 Nihonbashi Honcho, Chuo Ward, Tokyo and 8 other lots
2-7-1 Nihonbashi Honcho, Chuo Ward, Tokyo
Mitsukoshimae Station on the Tokyo Metro Ginza and Hanzomon lines; Kanda
Station and Shin-Nihombashi Station on JR lines
April 19, 1961; expansion completed April 16, 1968
OfficeSRC B3/8F
3,196.31 m2 (Note 2)
29,430.67 m2 (Note 2)
Ownership (51.0%) (Note 2)
Ownership (51.0%) (Note 2)
100.0% (Note 3)－ １１ －

Floor Area Ratio
CollateralAcquisition Price

800.0%
None¥10,914 million (Note 4)

Transfer Price¥11,730 million

Book Value¥10,889 million (Note 5)

Difference¥840 million
Appraisal Value and¥11,200 million (Based on the capitalization approach as of August 31, 2016)
Method(Appraiser: The Tanizawa Sōgō Appraisal Co., Ltd.)
Leasing Status (As of March 21, 2017) (Note 6)
Total Number of Tenants 16¥1,389million
Total Rental Income
Security Deposits
Occupancy Rate
Total Leased Floor Space
Total Leasable Floor Space¥961 million

100.0%
19,157.05 m2
19,157.05 m2
February
February
February
February 2016 February 2017
2013
2014
2015
Historical Occupancy Rates
95.9%
100.0%
96.4%
98.9%
100.0%(Note 1) Location and Other Items
Location (registry), Completion Date, Use, Structure and Area are based on the information in the realestate registry. The areas given for the Property’s land and floor area are those for the entire
property/building.
(Note 2) Type of Ownership
The percentage of ownership given, 51.0%, is the Fund’s quasi co-ownership stake in the beneficial interestin the real estate trust for the Property.
(Note 3) Building Coverage Ratio
The Property is located in a commercial zone where the building coverage ratio is 80% in principle.
Because the Property is in a fire prevention zone and certified fireproof, however, the applied coverage
ratio is 100%.
(Note 4) Acquisition Price“Acquisition Price” is given as the acquisition price of the entire beneficial interest in the real estate trust
multiplied by 0.51.
(Note 5) Book Value“Book Value” is the anticipated book value at the date of disposition.
(Note 6) Leasing Status“Total Number of Tenants” is the total number of end tenants actually leasing the building of the Property.
“Total Rental Income” is the amount obtained by multiplying the monthly rent stated in the leaseagreements with end tenants actually leasing the building of the Property by 12 (truncated at the nearest
million yen). Note that rent-free periods under the leasing contracts for certain tenants are not taken into
account.
“Security Deposits” indicates the amount of security and other deposits specified in the aforementioned
lease agreements (truncated at the nearest million yen).
“Total Leased Floor Space” indicates the total floor space leased to end tenants.
“Total Leasable Floor Space” indicates the total leasable floor space as of today, including the area ofcommon-use space, etc., if leased. Leasable area is calculated based not on the area presented in the realestate registry, but the area stated in the lease contracts and the area calculated based on building
completion drawings, etc. Accordingly, the leasable area may not be the same as the floor area presented in
the registry and may exceed the total floor area.
Note that, while the Fund currently owns a 51% quasi co-ownership stake in the beneficial interest in thereal estate trust for the Property, the information listed under “Leasing Status” is that for the entirety ofthe trust’s assets.

－ １２ －

b. Mitsubishi Motors Shibuya
Property Name
Type of Asset
Trustee
Trust Term
Registry
Location(Note 1)StreetAccessCompletion Date
Use
Structure

Mitsubishi Motors Shibuya
Trust beneficiary interest in real estate
Mitsubishi UFJ Trust and Banking Corporation
March 31, 2004 to June 30, 2023
2-1446-15 Tomigaya, Shibuya Ward, Tokyo and three other lots
2-20-9 Tomigaya, Shibuya Ward, Tokyo
15-minute walk from Komaba-Todaimae Station on the Keio Inokashira Line
—
—
—

Land
Floor Area
Land
Type ofOwnership
Building
Building Coverage Ratio
Floor Area Ratio
CollateralAcquisition PriceArea (Note 1)

1,421.31 m2—
Ownership (land with business-use fixed-term leasehold rights)
—
80%
300%
None
¥1,570 million

Transfer Price¥1,720 million

Book Value¥1,586 million

Difference¥133 million
Appraisal Value and¥1,720 million (Based on the development approach as of March 10, 2017)
Method(Appraiser: Daiwa Real Estate Appraisal Co., Ltd.)
Leasing Status (As of March 21, 2017) (Note 2)
Total Number of Tenants 1
Tenant Name
Undisclosed
Undisclosed
Total Rental Income
Security Deposits
Occupancy Rate
Total Leased Floor Space
Total Leasable Floor Space

Undisclosed

100.0%
1,421.31 m2
1,421.31 m2
February
February
February
February 2016 February 2017
2013
2014
2015
Historical Occupancy Rates
100.0%
100.0%
100.0%
100.0%
100.0%(Note 1) Location and Other Items
Location (registry) and Area are based on the information in the real estate registry.
(Note 2) Leasing Status“Tenant Name,” “Total Rental Income” and “Security Deposits” are not disclosed as the Fund has notreceived permission from the end tenant.
“Total Leased Floor Space” indicates the total floor space leased to the tenant.
c. Mitsubishi Motors Suginami
Property Name
Type of Asset
Trustee
Trust Term
Registry
Location(Note 1)StreetAccessMitsubishi Motors Suginami
Trust beneficiary interest in real estate
Mitsubishi UFJ Trust and Banking Corporation
March 31, 2004 to June 30, 2023
2-185-1 Honamanuma, Suginami Ward, Tokyo
2-42-8 Honamanuma, Suginami Ward, Tokyo
12-minute walk from Shimoigusa Station on the Seibu Shinjuku Line

－ １３ －

Completion Date)
Use
Structure
Area (Note 1)
Type ofOwnershipLand
Floor Area
Land
Building

Building Coverage Ratio———
1,831.00 m2—
Ownership (land with business-use fixed-term leasehold rights)—
80%/50% (Note 2)

Floor Area Ratio
CollateralAcquisition Price

200%/100% (Note 2)

Transfer Price¥896 million

Book Value¥748 million

None¥740 million

Difference¥147 million¥896 million (Based on the development approach, sales comparison approachAppraisal Value andand land residual approach as of March 10, 2017)
Method(Appraiser: The Tanizawa Sōgō Appraisal Co., Ltd.)
Leasing Status (As of March 21, 2017) (Note 3)
Total Number of Tenants 1
Tenant Name
Undisclosed
Undisclosed
Total Rental Income
Security Deposits
Occupancy Rate
Total Leased Floor Space
Total Leasable Floor Space

Undisclosed

100.0%
1,831.00 m2
1,831.00 m2
February
February
February
February 2016 February 2017
2013
2014
2015
Historical Occupancy Rates
100.0%
100.0%
100.0%
100.0%
100.0%(Note 1) Location and Other Items
Location (registry) and Area are based on the information in the real estate registry.
(Note 3) Building Coverage Ratio and Floor Area Ratio
The portion of the Property that is within 20 meters of the road on the northeast side of the Property is
within a neighborhood commercial zone with an 80% building coverage ratio. The portion more than 20
meters from said road is within a category I low building residential zone with a 50% building coverage
ratio. The building coverage ratio applied to the Property is the average of these two weighted by area.
The floor area ratio for the portion in the neighborhood commercial zone is 200%; that for the portion in
the category I low building residential zone is 100%. The floor area ratio applied to the Property is theaverage of these two weighted by area.
(Note 3) Leasing Status“Tenant Name,” “Total Rental Income” and “Security Deposits” are not disclosed as the Fund has notreceived permission from the end tenant.
“Total Leased Floor Space” indicates the total floor space leased to the tenant.
4.

Profile of Seller of the Properties to Be Acquired and Buyer of the Properties to be Sold
Company Name
Head Office
Representative
Principal Business
CapitalEstablished
Net Assets
Total Assets

Nomura Real Estate Development, Co., Ltd.
1-26-2 Nishi-Shinjuku, Shinjuku Ward, Tokyo
Seiichi Miyajima, President & CEO
Real Estate¥2,000 million (as of March 31, 2016)
April 15, 1957
¥121.5 billion (as of March 31, 2016)¥1,005.7 billion (as of March 31, 2016)－ １４ －

Major Shareholder
Nomura Real Estate Holdings, Inc. (100.0%) (as of March 31, 2016)(Stockholding Ratio)
Relationships with the Fund and/or the Asset Management Company
Nomura Real Estate Development, Co., Ltd. holds 5.66% of the Fund’s investment
units (as of August 31, 2016). As a wholly owned subsidiary of Nomura Real Estate
CapitalHoldings, Inc., which also holds 100% ownership of the Asset Management
Company, Nomura Real Estate Development, Co., Ltd. is a related party of the AssetManagement Company as defined in the Investment Trust Law.
The Asset Management Company’s employees and officers are dispatched from
Personal
Nomura Real Estate Development, Co., Ltd.
Nomura Real Estate Development, Co., Ltd. is the property management companyof the Fund and a lessee of real estate owned by the Fund. Moreover, the Asset
Transactions
Management Company has concluded an agreement on provision of information anda basic agreement on the leasing value chain with the said company.
Nomura Real Estate Development, Co., Ltd. does not fall under the definition of a
Related Party
related party of the Fund. However, as stated above, the said company is a related
Statusparty of the Asset Management Company as they are fellow subsidiaries of acommon parent company.
5.

Status of Owner of Properties to be Acquired
Status of owner(Note 1)
Company name
Relationship with parties
with special interest
Background/reasons foracquisition, etc.
Acquisition price (including
other related expenses)
Acquisition date
(Note 1)

Current owner and/or trustee
Nomura Real Estate Development,
Co., Ltd.
Please refer to “4. Profile of Seller of
the Properties to Be Acquired andBuyer of the Properties to be Sold,”
above

Previous owner and/or trustee

For development for later sale

—

—

—

—

—

“Status of owner” is the same owner in the Transaction－ １５ －——

6.

Transactions with Related Parties(1) Transactions related to the acquisition of assets to be acquired and the sale of assets to be sold
The transactions related to the acquisition of assets to be acquired and the sale of assets to be sold are consideredtransactions with a related party under the Investment Trust Law, as stated above. Accordingly, the acquisition andsale of each property, the acquisition and sale prices, and other relevant terms have been duly examined andauthorized by the Asset Management Company’s compliance committee and investment committee pursuant to its
investment committee rules, rules of compliance, compliance manual, rules concerning transactions with relatedparties, and other relevant rules and guidelines.
(2) The property management company of the NRE Kichijoji Building
The property management company of the NRE Kichijoji Building, Geo-Akamatsu Co., Ltd., is considered a related
party under the Investment Trust Law, as stated above. When the Fund acquired a 51.0% stake in the asset on
October 30, 2015, the fees and other terms of the consignment of property management related to the Property were
duly examined and authorized by the Asset Management Company’s compliance committee and investmentcommittee pursuant to its investment committee rules, rules of compliance, compliance manual, rules concerningtransactions with related parties, and other relevant rules and guidelines.
(3) The property management company of Landport Kashiwa Shonan I
The property management company of Landport Kashiwa Shonan I, Nomura Real Estate Co., Ltd. and Nomura Real
Estate Partners Co., Ltd., are considered related parties under the Investment Trust Law, as stated above. Accordingly,
the fees and other terms of the consignment of property management related to the Property have been duly
examined and authorized by the Asset Management Company’s compliance committee and investment committee
pursuant to its investment committee rules, rules of compliance, compliance manual, rules concerning transactions
with related parties, and other relevant rules and guidelines.
(4) The property management company and master leasing company of PROUD FLAT Omori III and PROUD FLAT
Kinshicho
The property management company and master leasing company of PROUD FLAT Omori III and PROUD FLAT
Kinshicho, Nomura Real Estate Partners Co., Ltd., is considered a related party under the Investment Trust Law, as
stated above. Accordingly, the fees and other terms of the consignment of property management as well as the lease
period, rental rate, and other leasing terms related to the properties have been duly examined and authorized by the
Asset Management Company’s compliance committee and investment committee pursuant to its investmentcommittee rules, rules of compliance, compliance manual, rules concerning transactions with related parties, andother relevant rules and guidelines.
7.

BrokerThere is no brokerage involved for the assets to be acquired or sold.

8.

Form of Payment, etc.

(1) Acquisition of Four Properties to Be Acquired, and sale of NOF Nihonbashi Honcho Building
Because the acquisitions and sale are between the same parties, said parties intend to settle the account for the－ １６ －

difference between the acquisition and sales prices. On the scheduled acquisition and sale date, the Fund intends touse borrowings and cash on hand to pay the seller the total acquisition price of the four properties minus the total
sales price of NOF Nihonbashi Honcho Building.
(2) Sale of Mitsubishi Motors Shibuya and Mitsubishi Motors Suginami
On the scheduled sale date, the buyer intends to pay the seller the total sales price of the Mitsubishi Motors Shibuya
Branch and Mitsubishi Motors Suginami Branch.
9.

Schedule for the Transaction
March 21, 2017

• Conclusion of a purchase and sale agreement for the acquisitions of each of the Four
Properties to Be Acquired• Conclusion of the purchase and sale agreement for the sale of the NOF Nihonbashi
Honcho Building(51.0%)

March 31, 2017

• Acquisition of Four Properties to Be Acquired (delivery of the real estate and trust
beneficiary interests)• Sale of NOF Nihonbashi Honcho Building(delivery of trust beneficiary interests)• Conclusion of the purchase and sale agreement for the sales of Mitsubishi Motors
Shibuya and Mitsubishi Motors Suginami

June 1, 2017

Sale of Mitsubishi Motors Shibuya and Mitsubishi Motors Suginami (delivery of the trust
beneficiary interests)

10. Forecast of Financial Results
Although the Fund expects to generate gains on the sale of the Three Properties to Be Sold, it intends to hold thegains as internal reserves to ensure stable investment and dividends in the near term. (For details, please refer to theadditional material entitled “Supplement Documentation for Press Release ‘Acquisition and Disposition of the Assets’dated today.”) Furthermore, the effects of the Transaction on the entire portfolio will be accounted for in the forecastof financial results for the period ending August 31, 2017 (March 1, 2017 to August 31, 2017). This announcement isplanned for April 14, 2017, in tandem with the disclosure of results for the period ending February 28, 2017.

－ １７ －

11．Appraisal Summary(1)Four Properties to Be Acquired.
Property Name

NRE Kichijoji Building(additional stake acquisition)

Appraisal Vale

¥5,440,000,000

Appraiser

Daiwa Real Estate Appraisal Co., Ltd.

Appraisal Date

December 1, 2016
(Yen)

Item
Capitalization approach pricePrice 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 managementof temporary deposits, etc.

Amount orpercentage
5,440,000,000

Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
222,364,640

Undisclosed(6) Net Cash Flow (NCF =(3)+(4)-(5))

221,462,286
4.0％(Note)
Assumed in consideration of building age, as well as
average maintenance and lease renewal fees based on theengineering report.
Assumed based on conditions of the location, thebuilding, and the contract of the Property.

5,390,000,000
3.8％

Terminal capitalization rate
4.2％
Cost Approach Price
Ratio of land
Ratio of building(Note)

Undisclosed

2,148,775

Price calculated by the Discounted
Cash Flow Approach
Discount rate

In calculating, income-based values calculated using both thedirect capitalization approach and the discounted cash flow
approach were taken into account.

5,540,000,000(5) Capital Expenditure Reserve(7) Capitalization rate

Grounds

4,410,000,000
81.6％
18.4％

－ １８ －

Assumed based on the yield on investment of similarbuildings and the characteristics of the Property.
Assumed based on the yield on investment of similarbuildings, the future movement of the yield on
investment, risks of the Property as a preferredinvestment, general forecasts of economic growth rate,
and price trends of real estate and rents.

Matters noted in reconciliation ofindicated value and determinationof appraisal value

The Property has an excellent location just three minutes on foot from Kichijoji
Station. Situated on the corner of Kichijoji Dori, home to a mix of street-levelshops and department stores, and Nakamichi Dori, along which are clustered cafesand various small shops, the location also enjoys excellent visibility from the station
and a very high volume of foot traffic, in the middle of a bustling area. The
building’s exterior design makes great use of glass, making the building easily
recognizable the movement of people inside visible from the outside. As a result,the building has a strong presence as a local landmark. The property is one of themore competitive in the area and is expected to steadily generate income as a retailfacility well into the future.
In view of the above factors, the appraisal value was determined with an emphasison the capitalization approach price, in which the investment value wasappropriately reflected.

(Note) The Property is occupied only by a tenant who is a third party with no special relationship of interest with the Fund or the AssetManagement Company. The disclosure of the items noted could be used to infer the conditions of the lease, which could negativ ely
impact the Fund’s competitiveness and thus harm the interests of unitholders. Furthermore, the Fund has not received permissi on
from the tenant to disclose these items. Accordingly, these items are not disclosed.

Property Name

Landport Kashiwa ShonanⅠ

Appraisal Value¥9,920,000,000

Appraiser

Japan Valuers Co., Ltd.

Appraisal Date

December 1, 2016
(Yen)

Item
Capitalization approach pricePrice 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 managementof temporary deposits, etc.

Amount orpercentage
9,920,000,000

In calculating, income-based values calculated using both thedirect capitalization approach and the discounted cash flow
approach were taken into account.

10,000,000,000

Calculated by capitalization rate based on a net revenueof the stable mid-to-long term.

Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
Undisclosed
486,674,497

Undisclosed
5,350,000(6) Net Cash Flow (NCF =(3)+(4)-(5))

481,675,279

Price calculated by the Discounted
Cash Flow Approach
Discount rate

(Note)

Undisclosed(5) Capital Expenditure Reserve(7) Capitalization rate

Grounds

4.8%(Note)
Assumed in consideration of building age, as well as
average maintenance and lease renewal fees based on theengineering report.
Assumed based on conditions of the location, thebuilding, and the contract of the Property.

9,830,000,000
4.6%

Terminal capitalization rate
5.0%

－ １９ －

Assumed based on the yield on investment of similarbuildings and the characteristics of the Property.
Assumed based on the yield on investment of similarbuildings, the future movement of the yield on
investment, risks of the Property as a preferredinvestment, general forecasts of economic growth rate,
and price trends of real estate and rents.

Cost Approach Price
Ratio of land
Ratio of building

Matters noted in reconciliation ofindicated value and determinationof appraisal value

11,100,000,000
62.3%
37.7%
Approximately 12 km from the Kashiwa Interchange on the Joban Expressway and 400 m
from National Highway 16, a beltway around the suburbs of Tokyo, the Property is wellsituated to serve a broad expanse of the Tokyo Metropolitan Area. As part of an industrial
park, logistics operations at the facility can be carried out 24 hours a day. Furthermore, adedicated shuttle bus facilitates hiring for the facility from across a wide geographic range.
The building offers cutting-edge, high-performance logistics facilities, making it highly
competitive against other similar properties.
In view of the above factors, the appraisal value was determined with an emphasis on thecapitalization approach price, in which the investment value was appropriately reflected.

(Note) The Property is occupied only by a tenant who is a third party with no special relationship of interest with the Fund or the AssetManagement Company. The disclosure of the items noted could be used to infer the conditions of the lease, which could negatively
impact the Fund’s competitiveness and thus harm the interests of unitholders. Furthermore, the Fund has not received permissi on
from the tenant to disclose these items. Accordingly, these items are not disclosed.

Property Name

Proud Flat Omori Ⅲ

Appraisal Value¥1,140,000,000

Appraiser

Morii Appraisal & Investment Consulting, Inc.

Appraisal Date

December 1, 2016
(Yen)

Item
Capitalization approach pricePrice 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

Amount orpercentage
1,140,000,000

In calculating, income-based values calculated using both thedirect capitalization approach and the discounted cash flow
approach were taken into account.

1,150,000,000
65,192,000
69,258,000
4,066,000

Stable medium- to long-term rent was calculated based on rent
under the current contract to determine rental income.
The expected vacancy rate was calculated based on typical rates
in the area and the particular characteristics of the Property.
This rate was used to calculate losses due to vacancies, etc.,from the loss of rental, parking and other incomes.

13,592,000
2,412,000
770,000

Repair costs

1,089,000

Property management fees

Grounds

1,890,000

Advertisement for leasing,etc.
3,809,000－ ２０ －

Calculated based on estimates provided with past results for theProperty, with reference to additional materials gathered by theappraiser (regarding the levels of similar properties).
Calculated based on past results for the Property, with reference
to additional materials gathered by the appraiser (regarding thelevels of similar properties).
Costs to maintain the Property to its original condition were
calculated based on past results for the Property provided by
Nomura Master Fund and move-out rates, with reference toadditional materials gathered by the appraiser (regarding thelevels of similar properties). In addition, the estimates of theEngineering Report were judged to be reasonable based in parton the levels of similar properties, and 30% of the standard
value for such properties was also recorded.
Estimates provided by Nomura Master Fund were judged to bereasonable based in part on materials gathered by the appraiser(regarding the levels of similar properties).
Leasing advertisement costs were calculated based on suchfactors as local practices and the Property’s past results. In
addition, estimates of renewal fees provided by Nomura MasterFund were judged to be reasonable based in part on materials
gathered by the appraiser (regarding the levels of similar
properties) and included in the determination.

Taxes3,458,000
Insurance premium
Other expenses

68,00096,000(3) Net operating income fromleasing business (NOI=(1)-(2))

51,600,000(4) Profit through managementof temporary deposits, etc.

72,000(5) Capital Expenditure Reserve

965,000(6) Net Cash Flow (NCF =(3)+(4)-(5))

50,707,000(7) Capitalization rate

4.4％

Price calculated by the Discounted
Cash Flow Approach
Discount rate

Cost Approach Price
Ratio of land
Ratio of building

Calculated by multiplying the amount of deposits by an
expected investment yield determined based on acomprehensive consideration of such factors as sovereign bondinterest rates.
The estimates of the Engineering Report were judged to bereasonable based in part on the levels of similar properties, and
70% of the standard value for such properties was recorded.

Calculated based in part on the past capitalization rate of theProperty and of J-REITs judged to be adequately representative,
with reference to revenues based on the discount rate and therisk of capital fluctuations.

1,120,000,000

4.2％

Terminal capitalization rate

Calculated based on fiscal 2016 tax amounts, with reference tomovement in land prices for the land and age depreciation forthe building and depreciable assets. Depreciable asset tax was
based in part on materials gathered by the appraiser (regarding
the levels of similar properties).
Estimates provided by Nomura Master Fund were judged to bereasonable.
Comprises cable television usage expenses estimated based on
past results.

4.6％

Calculated based on a comprehensive consideration of suchfactors as investor surveys, REIT performance and real estatemarket conditions, with yields on single-person rental housing
in key areas of central Tokyo as the base yield, taking into
account interest rates on long-term sovereign bonds.
Consideration was given to risks related to the area and specificproperty in light of such factors as the conditions of theProperty’s location, building, contract and rights-related issues.
Calculated based on the capitalization rate, with consideration
given to uncertainty regarding initial predictions of changes in
net cash flow, future building deterioration and sale-related risk.

1,040,000,000
67.9％
32.1％

Matters noted in reconciliation ofindicated value and determinationof appraisal value

The Property is a five-minute walk from Omori Station on the JR Keihin-Tohoku Line. The area around
Omori Station is comfortably livable, with numerous restaurants and other convenient facilities withinwalking distance. Located behind the Shinkansen railway, the area offers an excellent living environment,with very little noise or traffic exhaust. The quality and maintenance level of the building itself are on
par with its many competitor properties. The Property also offers an ample security system to ensure
privacy and security, with video intercoms, a 24-hour emergency alert system, dimple keys and security
cameras. The rental units’ layout, furnishings, and overall look of quality are as good as those of any
competing property. The supply of relatively new apartments and condominiums in the area around theProperty is limited, and the Property is expected to enjoy firm demand from consumers who value
proximity to the city center, such as those in single-person households, urban commuters and dual
income couples with no children.
In view of the above factors, the Property is not recognized as presenting particular risk of income
fluctuation and has been judged to possess a standard level of competitiveness within its supply-demandzone.

Property Name

Proud Flat KinshichoAppraisal Value¥839,000,000

Appraiser

Morii Appraisal & Investment Consulting, Inc.

Appraisal Date

December 1, 2016
(Yen)

Item
Capitalization approach priceAmount orpercentage
839,000,000－ ２１ －

Groundsn calculating, income-based values calculated using both thedirect capitalization approach and the discounted cash flow
approach were taken into account.

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
Maintenance

850,000,000
49,981,000
52,694,000

2,713,000
11,708,000
2,915,000

Utilities costs
790,000

Repair costs

1,045,000

Property management fees
1,469,000

Advertisement for leasing,etc.
2,991,000

Taxes
2,444,000

Insurance premium

54,000

Other expenses

0(3) Net operating income fromleasing business (NOI=(1)-(2))

38,273,000(4) Profit through managementof temporary deposits, etc.

57,000(5) Capital Expenditure Reserve

924,000(6) Net Cash Flow (NCF =(3)+(4)-(5))

37,406,000(7) Capitalization rate
Price calculated by the Discounted
Cash Flow Approach
Discount rate

Stable medium- to long-term rent was calculated based on rent
under the current contract to determine rental income.
The expected vacancy rate was calculated based on typical rates
in the area and the particular characteristics of the Property.
This rate was used to calculate losses due to vacancies, etc.,from the loss of rental, motorcycle parking and other incomes.

4.4％

Calculated based on estimates provided by Nomura MasterFund and past results for the Property, with reference toadditional materials gathered by the appraiser (regarding thelevels of similar properties).
Calculated based past results for the Property, with reference toadditional materials gathered by the appraiser (regarding thelevels of similar properties).
Costs to maintain the Property in its current condition were
calculated based on past results for the Property provided by
Nomura Master Fund and move-out rates, with reference toadditional materials gathered by the appraiser (regarding thelevels of similar properties). In addition, the estimates of theEngineering Report were judged to be reasonable based in parton the levels of similar properties, and 30% of the standard
value for such properties was also recorded.
Estimates provided by Nomura Master Fund were judged to bereasonable based in part on materials gathered by the appraiser(regarding the levels of similar properties).
Leasing advertisement costs were calculated based on suchfactors as local practices and the Property’s past results. In
addition, estimates of renewal fees provided by Nomura MasterFund were judged to be reasonable based in part on materials
gathered by the appraiser (regarding the levels of similar
properties) and included in the determination.
Calculated based on fiscal 2016 tax amounts, with reference tomovement in land prices for the land and age depreciation forthe building and depreciable assets. Depreciable asset tax was
based in part on materials gathered by the appraiser (regarding
the levels of similar properties).
Estimates provided by Nomura Master Fund were judged to bereasonable.
None.

Calculated by multiplying the amount of deposits by an
expected investment yield determined based on acomprehensive consideration of such factors as sovereign bondinterest rates.
The estimates of the Engineering Report were judged to bereasonable based in part on the levels of similar properties, and
70% of the standard value for such properties was recorded.

Calculated based in part on the past capitalization rate of theProperty and of J-REITs judged to be adequately representative,
with reference to revenues based on the discount rate and therisk of capital fluctuations.

827,000,000

4.2％－ ２２ －

Calculated based on a comprehensive consideration of suchfactors as investor surveys, REIT performance and real estatemarket conditions, with yields on single-person rental housing
in key areas of central Tokyo as the base yield, taking into
account interest rates on long-term sovereign bonds.
Consideration was given to risks related to the area and specificproperty in light of such factors as the conditions of theProperty’s location, building, contract and rights-related issues.

Terminal capitalization rate
4.6％

Cost Approach Price
Ratio of land
Ratio of building

Matters noted in reconciliation ofindicated value and determinationof appraisal value

Calculated based on the capitalization rate, with consideration
given to uncertainty regarding initial predictions of changes in
net cash flow, future building deterioration and sale-related risk.

637,000,000
58.3％
41.7％
The Property is located a five-minute walk from Kinshicho Station on the JR Sobu Main Line and othertrain lines. Because users can take multiple lines from Kinshicho Station, the Property offers excellent
access to key areas of the city center, particularly those near Tokyo and Otemachi stations. The area
near Kinshicho Station includes a variety of large-scale retail and other facilities, making it a convenientarea to live in. Furthermore, although the Property faces a high-traffic national highway, all rental units
have southern exposure with excellent sunlight. The building itself offers such features as auto-lockdoors, video intercoms, and a parcel delivery box, as well as excellent maintenance and management.
In view of the above factors, the Property is not recognized as presenting particular risk of income
fluctuation and has been judged to possess a solid level of competitiveness within its supply-demandzone.

－ ２３ －

(2) Three Properties to Be Sold
Property NameNOF Nihonbashi Honcho building

Appraisal Value¥11,200,000,000

Appraiser

The Tanizawa Sogo Appraisal Co., Ltd.

Appraisal Date

August 31, 2016
(Yen)
Amount orpercentage

Item
Capitalization approach price

11,200,000,000

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

10,900,000,000
1,300,522,999
1,379,816,200
79,293,201
98,850,378

28,060,000

Property management fees
Advertisement for leasing,
etc.
Taxes

23,409,414
12,633,009
80,604,600

Insurance premium
Other expenses

1,251,150
1,300,523(3) Net operating income fromleasing business (NOI=(1)-(2))(4) Profit through managementof temporary deposits, etc.

In calculating, both the discounted cash flow approachand the direct capitalization approach are taken into
account.
Calculated by capitalization rate based on a net revenueof the stable mid-to-long term.
※There is no consideration about ownershipas below.
Assumed based on the expected mid- to long-term
stable rent.
Assumed based on the expected mid- to long-term
stable occupancy rate.

338,062,914

91,953,840

Repair costs

Grounds

Assumed based on the estimated amount and of asimilar building.
Assumed based on past actual expences takinginto
account the occupancy rate.
Allocation of appraised restoration expenses and repair
expenses based on the Engineering Report.
Assumed based on agreement conditions, generalstandard, etc.
Assumed based on the agreement conditions, taking into
account the standard tenant recruit expenses of similarbuildings, and applying the estimated turnover ratio of
unit.
Assumed based on mid to long term perspective of thetax base of year 2016.
Allocation, taking into account the actual amount,insurance premium rates of similar buildings, etc.
Assumed based on past actual other expences.

962,460,085
17,415,724

Assumed interest rates of 2.0%.

(5) Capital Expenditure Reserve

64,660,000

Assumed in consideration of building age, as well as
average maintenance and lease renewal fees based on theengineering report.

(6) Net Cash Flow (NCF =(3)+(4)-(5))

915,215,809(7) Capitalization rate

4.3％

Price calculated by the Discounted
Cash Flow Approach
Discount rate

1,130,000,000
4.2％

Terminal capitalization rate
4.5％
Cost Approach Price
Ratio of land
Ratio of building
Matters noted in reconciliation ofindicated value and determinationof appraisal value

8,620,000,000
91.3％
8.7％

―

－ ２４ －

Assumed based on conditions of the location, thebuilding, and the contract of the Property.
※There is no consideration about ownershipas below.
Assumed based on the yield on investment of similarbuildings and the characteristics of the Property
Assumed based on the yield on investment of similarbuildings, the future movement of the yield on
investment, risks of the Property as a preferredinvestment, general forecasts of economic growth rate,
and price trends of real estate and rents

Mitsubishi Motors Shibuya

Property Name
Appraisal Value¥1,720,000,000

Appraiser

Daiwa Real Estate Appraisal Co., Ltd.

Appraisal Date

March 10, 2017
(Yen)

Item

Amount orpercentage

Grounds

Development approach price

1,720,000,000(¥1,190,000/㎡)
Comparison approach price

1,910,000,000(¥1,330,000/㎡)
Capitalization approach (land residual 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 managementof temporary deposits, etc.
(5) Capital Expenditure Reserve(6) Net Cash Flow (NCF =(3)+(4)-(5))

―
(¥/㎡)
―
―

Estimated by deducting standard construction costs andstandard related expenses to be borne by the contractee fromthe present value of the gross revenues from the sales of abuilding based on the assumption that an optimal-use building(condominiums) would be built on the land.
Calculated with a price comparison, utilizing region-specific andindividual-property-specific factors, of appropriate examples
selected from a large pool of transactions, with relevant
controls for specific circumstances and timeframes.
Not applied, as not relevant to estimates based on optimal use.

―
―
―
―
―
―
―
―
―
―
―
―
―
―

(7) Net cash flow attributable to―buildings, etc.
(8) Rate of adjustment for pre―income period(9) Net cash flow attributable to land
adjusted for pre-income period―(=((6)-(7))×(8))(10) Annual reserve for building―
demolition expenses(11) Allotment for taxes during the―
pre-income period(12) Net cash flow attributable to―land (=(9)-(10)-(11))(13) Land capitalization rate―
The typical potential buyers for the Property are thought to be mainly real estate companies anddevelopers planning to construct and sell condominiums or similar facilities. Accordingly, the value
Matters noted in reconciliation ofdetermined by the development approach, which is based on a developer’s perspective, fits theindicated value and determination
characteristics of the market. The development approach was thus judged to be the most authoritativeof appraisal value
and used to determine the appraisal value of the Property, with reference also to the value estimatedusing the comparison approach.

Property Name

Mitsubishi Motors Suginami

Appraisal Value¥896,000,000

Appraiser

The Tanizawa Sogo Appraisal Co., Ltd.

－ ２５ －

Appraisal Date

March 10, 2017
(Yen)
Amount orpercentage

Item
Development approach price912,000,000(¥495,000/㎡)
Comparison approach price

900,000,000(¥488,000/㎡)
Capitalization approach (land residual approach)

852,000,000(¥462,000/㎡)(1) Operating income (a)-(b)(a) Gross rental income(b)
Lossesduevacancies, etc.
(2) Operating expenses
MaintenanceUtilities costs
Repair costs

89,190,742
93,656,587
toProperty management fees
Advertisement for leasing,
etc.
Taxes
Insurance premium
Other expenses(3) Net operating income fromleasing business (NOI=(1)-(2))(4) Profit through managementof temporary deposits, etc.
(5) Capital Expenditure Reserve(6) Net Cash Flow (NCF =(3)+(4)-(5))

4,465,845
20,982,262
4,101,900
1,525,500

2,896,151

Estimated on the assumption of 20.0% annual tenant turnover.

6,823,600
311,500
445,954

Assumed.
Estimated using standard fee rates for similar properties.
Estimated based on the results of similar properties.

68,208,480
139,708
1,246,000

Estimated based on an investment yield of 1%.
Estimated based on the results of similar properties.

67,102,188(8) Rate of adjustment for preincome period

0.952717

Matters noted in reconciliation ofindicated value and determinationof appraisal value

Estimated based in part on market rent levels.
Estimated based on the standard medium- to long-tem vacancy
rate.

2,545,532

2,332,125

31,073,371(13) Land capitalization rate

Estimated by deducting standard construction costs andstandard related expenses to be borne by the contractee fromthe present value of the gross revenues from the sales of abuilding based on the assumption that an optimal-use building(condominiums) would be built on the land.
Calculated with a price comparison, utilizing region-specific andindividual-property-specific factors, of appropriate examples
selected from a large pool of transactions, with relevant
controls for specific circumstances and timeframes.
Estimated based on the assumption that rental apartments
would be built on the land by first estimating the net income
attributable to the land and property together by deducting
estimated operating costs from the gross operating income ofsaid apartments, and then deducting from said net income thenet income attributable to the building to obtain the net income
attributable to the land and reducing this figure by thecapitalization rate.

Estimated based on the results of similar properties.
Estimated based on the results of similar properties.
Estimated based on costs to maintain the Property to its
original condition and the results of similar properties.
Estimated using standard fee rates for similar properties.

(7) Net cash flow attributable tobuildings, etc.

(9) Net cash flow attributable to land
adjusted for pre-income period(=((6)-(7))×(8))(10) Annual reserve for building
demolition expenses(11) Allotment for taxes during the
pre-income period(12) Net cash flow attributable toland (=(9)-(10)-(11))

Grounds

Estimated by multiplying the initial investment in the building,etc., by the increasing return rate for the principal and interest.
Calculated with reference to basic interest rates, rates ofvariation in net income, the duration of the pre-income period
and other factors.

34,325,266
1,009,791
94,108Calculated with reference to building structure, economic usefullife and other factors.
Calculated with reference to property and other taxes, theduration of the pre-income period and other factors.

33,221,367
3.9％Calculated with reference to the characteristics of the areasurrounding the Property, the Property’s particularcharacteristics and other factors.

Calculated with reference to the characteristics of the area surrounding the Property, the Property’s
particular characteristics and other factors.

－ ２６ －

【Exhibits】
Exhibit 1

Portfolio Over View after Acquisition and Disposition

Exhibit 2

Photos of four Properties

Exhibit 3

Maps of four Properties*<Nomura Real Estate Master Fund, Inc> URL: http://www.nre-mf.co.jp/en/－ ２７ －

Exhibit 1

Portfolio Overview after Acquisition of the Assets
Asset Type

OfficeRetailLogistics

Residential

OthersArea (Note 1)(Scheduled)

Acquisition Price (mln)Percentage tototal (%) (Note 2)

Tokyo Area

361,030

37.9

Other Area

71,9307.6

Total

432,960

45.5

Tokyo Area

107,667

11.3

Other Area

65,996

6.9

Total

173,663

18.2

Tokyo Area

146,930

15.4

Other Area

10,0401.1

Total

156,970

16.5

Tokyo Area

151,518

15.9

Other Area

32,527

3.4

Total

184,045

19.3

Tokyo Area

4,900

0.5

Total

4,900

0.5

-

952,538

100.0

Grand Total(Note1)“Greater Tokyo” 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.
(Note2)“Tokyo Area”Areater Tokyo” refers to Tokyo Prefecture, Kanagawa Prefecture, Chiba Prefecture andSaitama Prefecture. “Other Areas” refers to cabinet-order designated cities, prefecturs the figures wererounded to the first decimal place, the total may not necessarily be 100%.
(Note3)Figures in the above table assume the successful dispositions of NOF Technoport Kamata Center Building and ItoYokado Higashi-Narashino Store (announced in the December 20, 2016 press release entitled “Notice Concerning
Property Disposition”), the successful acquisition of PRIME URBAN Gakugei Daigaku Parkfront (announced in
the January 27, 2017 press release entitled "Notice Concerning Property Acquisition"), and the successful acquisitionof the Nakaza Cui-daore Building (announced in the February 21, 2017 press release entitled "Notice Concerning
Property Acquisition."

Exhibit 2

NRE Kichijoji Building(additional stake acquisition)

Landport Kashiwa ShonanⅠ

Proud Flat Omori Ⅲ

Proud Flat KinshichoExhibit 3

NRE Kichijoji Building(additional acquisition)

Landport Kashiwa ShonanⅠ

Proud Flat Omori Ⅲ

Proud Flat Kinshicho