Supplement Documentation for Press Release“Acquisition and Disposition of the Assets” dated today
March 29, 2016

Construction of Sustainable Portfolio
Portfolio NMF Aims
Aiming for construction of sustainable portfolio utilizing a strength to have a general developer in asponsor and making quality and performance to be highly stable by asset replacement cycle
Relatively
New

Outside of the groupMid-to long term earning strength▶ Secure stable cashflow
NewlyBuilt

Sponsor developed
properties

Highly competivenessand location▶ Specification
promising strong tenant demand

Redevelopment
AcquisitionSPR（※）

Building Age▶ Increase of repair costs

Disposition
Possible forredevelopment

AssetManagement

Disposition tooutside of the group
Inadequate forredevelopment※ Based on Mid-to Long-term Management Strategy disclosed by “Brief session regarding the Investment Principles presentation” held on November 9, 2015

Timing▶ Earning strength, real estate market
Possibility of redevelopment▶ Potential, size of the land2

Overview of SPR (Strategic Property Replacement)
About SPR
Denotes Strategic Property Replacement enhancing portfolio quality, main axis of NMF’s mid-to longterm management strategy(※)

Target✔ Improvement of portfolio quality✔ Management of DPU (profit & loss from disposition and periodic profit)■Replacement Goal
3-5years

10years afterQuality phase

Growth phase

Master phase

Around ¥50 bln
in total

Around ¥10 bln
per year

Maintain highquality of portfolio

Point✔ Crossover deals✔ Optimization of sector timing✔ Utilization of the sponsor pipeline※ Based on “Brief session regarding the Investment Principles presentation” held on November 9, 20153

First Shot of SPR
Started SPR utilizing the merit of diversified REIT and enhanced stability from larger scale strategy
Points of First Shot of SPR
1.

Corresponded to increase of repair costs andlowering competitivenessImprovement of portfolio quality
aging properties and▶ Disposed
acquired recently constructed properties

2.

New acquisition considering size andearning strength of disposed assets

Management of DPU level▶ Exercised preferential negotiating rights coupledwith disposition (Hirakata Kuzuha LC)

3.

Crossover Deals

Cross asset type transaction utilizing themerit of diversified type REIT

office & residential properties,▶ Disposed
acquired logistics & residential properties

Overview of Replacement
Changes in Portfolio
Number ofProperties

Disposition

Acquisition

83

Asset typeOffice,
Residential

Logistics,
Residential

Price

Building age

NOI yield

5,350 mln

25.3year(※1)

3.7%(※2)

5,680 mln(※1) Building age are as of March 29, 2016(※2) NOI of most recent 2FYof each REIT before the merger divided by NMF’s acquisition price.
(※3) NOI yield obtained using NOI of direct capitalization approach on the appraisal report for the acquisition price.

10.9year(※1)

Reducing of averagebuilding age- 0.1year (※1)
(Average 19.2 year)

5.2%(※3)

Difference between
disposition price andanticipated book value＋286 mln (※4)

Reducing ofrepair expense
Estimated long term repair plans- 293 mln (※5)(※4) Indicates scheduled disposition price minus anticipated book value as of October 1, 2015,
and differs from accounting transfer profit.
(※5) Compared forecast of long-term repair costs (12years) written in the Engineering Report of the Property

4

List of Disposed Properties
Disposed small 8 properties which building age are old and hard to anticipate future internal growththrough “bidding process & bulk transaction”
Central Shintomicho Bldg.

Toho Edogawabashi Bldg.

Toshin Meguro Bldg.

Address

Chuo-ku, TokyoAddress

Bunkyo-ku, Tokyo

Address

Meguro-ku, Tokyo

Access

Shintomicho Station (Tokyo Metro Yurakucho Line)

Access

Edogaw abashi Station (Tokyo Metro Yurakucho Line)

AccessMeguro Station (JR Yamanote Line)

Building Age

26.0years
2,465.86㎡

Building Age

23.0years
2,058.95㎡

Building Age

Gross Floor area

Gross Floor area

26.5years
1,341.17㎡

Gross Floor area

Prime Urban Nakano

Prime Urban Ekoda

Prime Urban Urayasu 2

Prime Urban Ochiai

Shinjuku-ku, Tokyo
Nakai Station (Seibu Shinjuku Line)
Building Age
30.0years
Gross Floor area / Unit
517.53㎡ 32units
Address
AccessPrime Urban Yamahana

AddressNakano-ku, Tokyo

Address

Nerima-ku, Tokyo

Address

Urayasu-shi, Chiba

Address

Sapporo-shi, Hokkaido

AccessAraiyakushimae Station (Seibu Shinjuku Line)

AccessEkoda Station (Seibu Ikebukuro Line)

AccessUrayasu Station (Tokyo Metro Tozai Line)

AccessNishisen Jy uroku Jo Station (Sapporo City Street Car Line)

Building Age

31.1years
801.30㎡ 51units

Building Age

26.7years
872.49㎡ 35unitsBuilding Age

Gross Floor area / Unit

Gross Floor area / Unit

22.9years
437.94㎡ 27units

Gross Floor area / Unit

Gross Floor area / Unit

※ Access denotes major station only.

Building Age

11.0years
1,518.58㎡ 33units

5

Overview of New Properties

Utilized Bridge Fund

Hirakata Kuzuha Logistics Center

Acquisition Date

April 27, 2016

Address

Completion date

Apr 2003

Gross Floor area

7 Shodai-Tachika, Hirakata City, Osaka
19,807.18㎡

Acquisition Price(A)¥3,460mln.

Number of Tenants/Main Tenant

1 tenant / Itochu Logistics

Appraisal Value(B)¥3,690mln.

(A)/(B)

93.8%

Investment Highlights✔ Located on scarce place that covers two largest consuming markets of Kansai-area (Osaka,Kyoto), enables 24hours operation, and easy to find labor force.
✔ Stable cashflow from long-term lease contract and room for continuous internal growth fromstage rent.
✔ Room for internal growth utilizing 7.5m effective height under lower beam (mezzanine floor,etc.)
Possibility of redevelopment using undigested floor area ratio (142%/200%)✔ Preceded investment on March, 2015 utilizing bridge fund.
Investment without competition, exercising preferential negotiation right on the same timingwith this property replacement.

6Overview of New Properties
1 on 1
negotiation

PRIME URBAN Meguro Mita

1 on 1
negotiation

PRIME URBAN Chikusa

Acquisition Date

April 25, 2016

Address

2-7-9 Mita, Meguro-ku, Tokyo

Acquisition Date

April 5, 2016

Address

2-7-9 Mita, Meguro-ku, Tokyo

Completion dateJul 2008

Gross Floor area

1,106.31㎡

Completion dateAug 2008

Gross Floor area

2,287.07㎡

Acquisition Price(A)¥1,058mln.

Number of Unit

28units

Acquisition Price(A)¥1,110mln.

Number of Unit28 units

Appraisal Value(B)¥1,080mln.

(A)/(B)

98.0%

Appraisal Value(B)¥1,130mln.

(A)/(B)

98.2%

Investment Highlights

Investment Highlights✔ Located on “Ebisu” area ranked as No.1 for “Where to live ranking”.(※)
Scarce location enabling to use both Ebisu Station and Meguro Station with flat approach
despite locating in quiet residential area next to Ebisu Garden Place.

✔ Located on the most prestigious residential area “Chikusa” within Naogoya City.
Located on adjacent to central Nagoya and the most traffic convenient location enabling touse 2 stations and 3 lines.
Brand location where local lord’s townhouse used to exist.

✔ Wide range type of rooms from studio to duplex type 1LDK.
Accomplished façade titillates tenant needs.

✔ Mainly with wider 1K type. Room layout composition matched to singles and employeestransferred without family✔ Obtained property information through own route of the asset management company.
Realization of negotiation basis transaction without bidding process.

✔ Obtained property information through own route of the asset management company.
Realization of negotiation basis transaction without bidding process.

(※) The questionnaire carried out for approximately 720,000 who are intended to purchase condominium in Japan carried out by po rtal site “MAJOR 7” （MAJOR 7= Sumitomo Realty & Development, Daikyo, Tokyu Land, Tokyo Tatemono,
Nomura Real Estate Development, Mitsui Fudosan Residential, and Mitsubishi Jisho Residence）

7

Action Plans of SPR

Action Plan

Disclosed
concepts ofSPRFirst shotofSPR

Considering asset swap
with sponsor

Realization of replacement of ¥50 bln in total

Strong sponsor commitment

Completedselecting properties
for disposition

Acquire sponsor developedproperties▶ Construction of sustainable portfolio
Implement continuous SPR
Consider acceleration of SPR bymonitoring sales market

Redevelopment by sponsor

Merger

2nd FP

1st FP

Quality phase : 3～5years after merger
AroundImage of Replacement

19.4 years¥50 bln

19.2 years
Average building age¥5.35 bln

Target:15 years

Selective investment inproperties outside of the group

Consideracceleration

Utilizing sponsor pipelines

8This document has been prepared for the purpose of provision of information only, and should not beconstrued as an offer, solicitation or commercial conduct of any nature associated with any specificproducts. Investors wishing to purchase the investment units of Nomura Real Estate Master Fund, Inc.
should contact their own securities brokers or dealers. A fee may be charged by your financial
instruments business operator in relation to the sale or purchase of investment units.
For management fees that the Fund pays to Nomura Real Estate Asset Management Co., Ltd., pleaserefer to the terms and conditions of the Fund, 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 the Fund, applicable laws and regulations,the market environment, business practice, etc., as of the preparation date of this document and do notreflect 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 theFund.
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 theunderlying 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 precision and safety of the same. Please note that the contents of this document issubject to change or cancellation without prior notice.
It is prohibited to make duplication, reproduction, distribution or use of any part or whole of theinformation contained in this document without express prior written consent.