13 th Fiscal Period Report on Financial Results andOperational Status (Asset Management Report)

September 1, 2021 to February 28, 2022
Securities Code: 3462

Nomura Real Estate Master Fund, Inc.
8-5-1 Nishi-Shinjuku, Shinjuku Ward, Tokyo
https://www.nre-mf.co.jp/en/Driving the Market as One ofJapan’s Largest REITs
Contents

Message from the Managementp. 03

To Our Unitholders / Performance Highlights
Management Strategy

p. 05

Track Record of Growth since Incorporation / External Growth / Internal Growth
ESG Measures

p. 11

ESG Measures
Financing Statusp. 15

Financing Status / Financial Statement Highlights
Portfolio

p. 17

Portfolio Analysis / Portfolio Gallery
Investor Information

p. 23

Distribution Policy / Structure and Organization / Investor Information
Financial Section
Balance Sheet
Statement of Income and Retained Earnings
Statement of Changes in Net Assets
Statement of Cash Flows
Notes to Financial Statements
Independent Auditor’s Reportp. 27

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

Message from the Management
PERFORMANCE HIGHLIGHTS

NMF will strive to increase unitholder value by securing stable income over the
medium to long term and ensuring the steady growth of assets under management.

13th FPCash Distribution
per Unit¥3,296¥3,289Operating Revenues¥37,520¥38,762¥38,243

Operating Expenses¥22,927¥23,294¥23,174

Net Income¥12,377¥13,220¥12,888

Total Assets¥1,187,420¥1,187,144¥1,183,232

of earnings)

Shuhei Yoshida Executive Director
Koichi Owada (Note 1) Supervisory Director
Mineo Uchiyama Supervisory Director
Mika Okada (Note 2) Supervisory Director
Nomura Real Estate Master Fund, Inc.

(Note 1) As of April 30, 2022, Koichi Owada retired as Supervisory Director .
(Note 2) Mika Okada is her maiden name and the name she uses professionally. The name recorded on her family register is Mika Furusawa.

millionmillionmillionmillionTo Our Unitholders
First, we would like to express our deepest condolences to those whohave lost their lives due to COVID-19 and their families, as well as our
sympathies to those fighting the disease.
In reaching the end of our 13th fiscal period ended February 2022,
we would also like to extend our sincere gratitude to all unitholders
for your continued support for Nomura Real Estate Master Fund, Inc.
During the 13th fiscal period, we decided to implement asset
replacement as part of our policy of external growth, with theacquisition of four properties (Landport Ome III, PMO Hamamatsucho
II, PROUD FLAT Togoshi-Ginza, and PRIME URBAN Higashi Nakano
Court for a total price of ¥32 billion) and the sale of four properties(NMF Utsunomiya Building, Sundai Azaminokou, Ichibancho stear,and NRE Higashi-nihonbashi Building for a total price of ¥13.8 billion).
As a result of continuous asset replacement, we have enhanced thequality of our property portfolio by improving the ratio of properties in
the Greater Tokyo area and improving building age. At the same time,
we increased the ratios of properties in the logistics and residential
sectors, which are expected to generate stable earnings even amid
the COVID-19 pandemic.
In the fiscal period under review, while retail facilities, etc. arerepeatedly requested to shorten operating hours with the declarationof a state of emergency and implementation of semi-emergency
COVID-19 measures due to the prolonged COVID-19 pandemic, we
continued to offer rent reduction/ exemption and other forms of relief
to support some of our retail tenants. Nevertheless, the impact of thison overall portfolio revenue was limited.
Furthermore, the office sector and the residential sector continued tosee a rise in vacancy rates and a decline in advertised rents in themarket. Through appropriate and flexible leasing activities based onthese market trends, we achieved the greatest number of new leases
in the office sector since we listed on the stock exchange, and we are

3

NOMURA REAL ESTATE MASTER FUND, INC.

seeing steady improvement in occupancy rates in the residential
sector as well. Against the background of a continuing strong market,
we achieved rent increases when re-contracting in the logistics sector
despite the pandemic. Although we saw varying impacts of COVID-19
like this in each sector, we were able to leverage the strengths of NMF
during this fiscal period as well to continue ensuring stable earnings
through flexible operations that took market changes into account.
As a result, at the end of the 13th fiscal period, our portfolio consistedof 298 properties with a total acquisition price of ¥1,081.3 billion.
Operating revenues totaled ¥37,520 million, operating profit reached¥14,593 million, and net income came to ¥12,377 million for the fiscal
period. Although booking a loss on the sale of Sundai Azaminokou,
which was not expected in the earnings forecast, a portion of internal
reserves equivalent to the amount of the loss (¥300 million) will bedrawn down to achieve distributions per unit of ¥3,244 for this fiscal
period, which is greater than the forecast at the beginning of the fiscal
period.
In addition, in the area of ESG (environmental, social and governance)
activities, which we have been promoting for some time, we
continued to promote ESG initiatives, such as initiatives in theenvironmental field aiming for energy saving and initiatives in thesocial field aiming for improved tenant satisfaction and contributions
to local communities. Our aim was to achieve materiality (material
issues) and KPI targets formulated to realize sustainable growth of
NMF. We will continue to proactively promote ESG initiatives as thefront runner in the J-REIT industry.
With a careful eye on the impact of COVID-19 and the associatedmarket changes, we remain strongly committed to enhancing fundperformance and managing the fund’s assets in an aim to live up to
the expectations and trust of our unitholders.
We ask for your continued support and encouragement.

15th Fiscal Period (forecast)*¥3,244(including distribution in excess(From left)

14th Fiscal Period (forecast)*

millionmillionmillionmillionmillionmillionmillionmillion* The above forecast distribution is calculated based on certain assumptions as disclosed in “SUMMARY OF FINANCIAL RESULTS (REIT) for the 13th Fiscal Period Ended
February 28, 2022,” published April 19, 2022. As such, the actual distribution may differ from this forecast due to future property acquisitions or sales, changes in thereal estate market, tenant changes or other changes in the circumstances surrounding NMF. The distribution forecast is not a guarantee of distributions.

Operating Revenues and Net Income(Millions of yen)

Operating Revenues

Cash Distribution per Unit

Net Income(Yen)

40,000

3,500

3,279

30,0003,209

3,317 3,330

3,296 3,289

3,288
3,244

3,128
20,0003,000

10,0000

0

7th FP 8th FP 9th FP 10th FP 11th FP 12th FP 13th FP 14th

15th

Fiscal Period Fiscal Period(Forecast)(Forecast)

7th FP 8th FP 9th FP 10th FP 11th FP 12th FP 13th FP 14th

15th

Fiscal Period Fiscal Period(Forecast)(Forecast)

NOMURA REAL ESTATE MASTER FUND, INC.

4

Management Strategy

Message from the Management

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

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

298

299

257

Ratio of top 10 properties

26.8%

22.1%

22.0%

Ratio of Greater Tokyo area

79.8%

83.2%

83.8%

Average building age

19.3 years

20.0 years

20.8 years

DPU (Note 1)¥2,656

932.8

792.6

After asset replacement (Note 2)

Number of properties

Acquisition of high-quality properties

Disposition of less competitive

927.3

mainly developed by the Sponsor

properties due to building age, etc.

922.5

955.9

1,031.0

1,051.6

1,066.2

1,068.4

371.3

385.9

388.0

1,081.3

1,088.1

405.0

420.1

960.3

784.6

330.9
220.9

237.4

270.8

350.6

Total Acquisition Price

279.9

81 properties¥420.1 bln

181.9

9

33.6

-34.1

Feb-16

Total Disposition Price-34.1■ Asset Size (¥bln)■ Total Acquisition Price (¥bln)■ Total Disposition Price (¥bln)

Incorporation(Oct-15)(26.3 years without SPR) (Note 3)¥3,244(+22.1%)

1,011.2

783.6

Feb. 2022 FP-81.5

Aug-16

Feb-17Aug-17-105.0-105.0-110.3-110.3-110.3-110.3-110.4-110.4-114.3-124.2

Feb-18Aug-18

Feb-19Aug-19Feb-20Aug-20Feb-21

Aug-21

Feb-22After asset
replacement

41 properties¥124.2 bln(Note 1) Distributions for February 2016 FP are calculated on a six-month basis for 152 operating days.
(Note 2) As of March 15, 2023.
(Note 3) I t is an average building age without taking into account the effect of property acquisition and disposition from the original portfolio at incorporation until
March 15, 2023.

5

NOMURA REAL ESTATE MASTER FUND, INC.

NOMURA REAL ESTATE MASTER FUND, INC.

6

Management Strategy

Message from the Management

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

External Growth
While acquiring relatively recently built sponsor-developed properties in the Greater Tokyo area, properties were sold where there wereconcerns about reduced competitiveness in the future.
Logistics

OfficeIn addition to expanding the portfolio and improving its quality through asset replacement, unrealized gains were realized across multiple periods.
(1) External growth through utilization of funds from sales and cash reserves

Residential• Scale of assets expanded (total portfolio value +¥19,780 million)• NOI increased (appraisal NOI +¥757 million ¥year)
Acquisition: 4
 properties Total acquisition
price ¥32,070 mln

HotelsAcquisitions

Sale: 4 properties Total sale price ¥13,822 mln
Property

Landport Ome III

PMO Hamamatsucho II

PROUD FLAT Togoshi-Ginza

Acquisition price¥17,000 mln¥5,500 mln¥2,550 mln

Appraisal value¥18,300 mln¥5,950 mln¥2,640 mln

Acquisition date

January 6, 2022

April 1, 2022

March 1, 2022

NOI yield

4.5%

3.6%

4.2%

Asset age

1.1 years

1.6 years

2.0 years

Location andtransportation• Located approximately 2.9 km from theOme Interchange on the Ken O
Expressway• 10-minute walk from Ozaku Station on
the JR Ome Line
OfficeSales

Property• 2-minute walk from Daimon Station on
the Toei Asakusa Line(access to three stations on five lines)• Good access to Haneda Airport
RetailNMF Utsunomiya Building

11.4%

Residential

18.9%• Solid increase in ratios for logistics and residential
sectors despite COVID-19

Other

5.4%

Other

0.5%

Retail(Near stations)

10.6%

OfficeResidential

44.3%

19.4%

Logistics

Office43.5%

Logistics

18.8%• Improved asset age(Average age of acquired assets: 3.8 years / Averageage of sold assets: 21.5 years)

0.6%

Retail (Residential area)

0.5%

Retail(Near stations)• Improved Greater Tokyo area ratio (82.8% ➾ 83.8%)• 4-minute walk from Togoshi-ginza
Station on the Tokyu Ikegami Line(access to two stations on two lines)

20.1%

After acquisition and sale

End of Aug. 2021 FP(3) Realization of unrealized gains across multiple periods

RetailSundai Azaminokou

5.5%(2) Improvement of portfolio quality

Hotels0.6%

Retail (Residential area)

Ichibancho stear
Gain on sales

Sale price¥2,720 mln¥6,582 mln

Appraisal value¥2,390 mln¥1,170 mln¥5,270 mln

Sale date

October 29, 2021

January 31, 2022

March 18, 2022

Asset age

21.8 years

13.2 years

16.0 years

Gain on sale¥162 mln¥457 mln

Feb. 2022 FP

Aug. 2022 FP (forecast)

Feb. 2023 FP (forecast)Aug. 2023 FP (forecast)¥162 mln (note)¥757 mln¥370 mln¥386 mln(Note) Separate to the gain on sales, losses on sales during the fiscal period ended February 28, 2022, amounted to 300 million yen, but an amount was appropriatedfrom internal reserves to avoid impacting distributions.

Continued selective investment with a focus on sponsor-developed properties and aimed for distribution growth and improved portfolio
quality through utilization of asset replacement and other methods.

(Note 1) Asset age is calculated from the date of acquisition or date of sale.

Leveraging the strengths of NMF, an extremely rare, large residential facility was acquired through an exchange with the external owner.
Acquisition: PRIME URBAN Higashi Nakano Court
Location characteristics• 8-minute walk from Higashi-Nakano Station on the JR Chuo and Sobu Lines, withexcellent transportation access to three stations on several lines• Asset is highly convenient for daily living with a variety of retail facilities located in
front of the nearest station

Asset characteristics•Common areas and comprehensive security features taking advantage of theeconomies of scale of all 173 units•
Substantial number of family-oriented units (two-bedroom and three-bedroom
units), demand for which is rising further due to the COVID-19 pandemic

Strengths of NMF in terms of the exchange• Relations with a wide range of operating companies cultivated by the Nomura
Real Estate Group• Breadth of exchange possibilities that are unique to large and diversified type
REITs

Acquisitions• Selective investments based on profitability and competitiveness even in a rising market, with a focus on sponsor developed properties• Aiming to acquire high quality external properties by leveraging the strengths of NMF (comprehensive and diversified asset holdings)<Quality of sponsor developed properties (Note)>

Sponsor developed properties(1) Ratio of Greater
Tokyo area
Greater
Tokyo
97.9%

83.2%

(2) Averagebuilding age

Entire portfolio

20.0

7.9
PMO Akihabara-kita

PROUD FRAT Shibuya-tomigaya

Disposition

Disposition took future competitive advantage into consideration (profitability, asset age, marketability, area growth potential, medium to long term
operation, etc.)

Sale: NRE Higashi-nihonbashi Building

Acquisition date March 15, 2022
Acquisition price¥7,020 mln
Appraisal value¥8,020 mln
NOI yield
4.4%
Asset age
12.9 years(Note 1) NOI yield is calculated based on the acquisition price or the anticipated sale price.
(Note 2) Asset age is calculated from the date of acquisition or scheduled date of sale.

7

NOMURA REAL ESTATE MASTER FUND, INC.

Selling schedule(1) September 15, 2022
(2) March 15, 2023

Scheduled transfer price¥4,520 mln

Appraisal value¥4,350 mln

Asset age

32.4 years

Gain on sale(1) ¥370 mln(2) ¥386 mln

Distribution growth(Consider returning gain on sale, if any, through distributions)Improvement of portfolio quality(Note) PMO, GEMS, Landport, and PROUD FLAT series of properties.

NOMURA REAL ESTATE MASTER FUND, INC.

8

Management Strategy

Message from the Management

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

Internal Growth -Management StatusOffice

Residential

Through active leasing, achieved the greatest number of move-ins since listing on the stock exchange, and dramatically lifted occupancy rates.

Occupancy exceeded the same period of the previous year due to an enhanced leasing strategy focused on occupancy rates, with rent revenues
also exceeding those of the previous year.

Changes in move-in/out floor areas and period-end occupancy rates■ move-out (tsubo) ■ move-in (tsubo)

99.8

99.8

99.4

Net

Occupancy Rate (%)

98.9

97.9

96.4

Average rate of rent increase within
rent revision with rent increase

98.4■ Monthly rent decrease ■ Monthly rent increase

(mln)

5,825

2,740

3,194
2,255
1,351

Amount of change in monthly rent and rate of change
in monthly rent upon rent revision (Note 2)

2,052

30

Approximately
4,000 tsubo
assumption
The greatest
numbersince listing-2,272

2.4%

1.6%

15

17

17

8

7

-1,809Approximately-3,670 3,000 tsubo
assumption

Aug-20Feb-21

Aug-21

Average rate of rent increase within
tenant replacement with rent increase■ Monthly rent decrease ■ Monthly rent increase(mln)

COVID-19 pandemic-6,944Aug-20Aug-21

Feb-21

5

Feb-22Aug-22(Forecast)(Note 1) C ontracted sections and sections with applications received as of March 31,
2022.

0

+11.4%

15.9%
7

7
4

-1

Aug-20Feb-21-6

Aug-21100.0%

100.0%

Atsugi Minami Logistics Center B

Breakdown of tenants with expired leases (rent basis)

98.6%

99.5%

Average occupancy
rates since incorporation (Based on results)
Feb-209Aug-20Feb-21

Aug-21NOMURA REAL ESTATE MASTER FUND, INC.

In process of leasing
・Landport Atsugi (Approx. 1,700 tsubo)
・Landport Hachioji II (Approx. 10,000 tsubo)

100.0%

Feb-22Contracts
signedAug-22(Forecast)

7.4%

5.8%

5.4%

3,234

5,010

1,000

Feb-23Aug-23

0.4%

0.4%

0.4%
0.2%

2.0%
2,426

0.1%

832

855

681

488

500

-556
-0.4%

256

217

-3,220

0

-2.6%
-500

Aug-19Feb-20Aug-20Feb-21

Aug-21

Feb-22

Aug-19Feb-20Aug-20Feb-21

Aug-21

Feb-22(Note) Forecast figures as of April 19, 2022.

RetailSteadily capture the needs for store openings, which are on a recovery trend although the influence of COVID-19 still remains

Sales status (change from same month of 2019–2020)

Rents linked to sales were very limited

Properties

Kinds

Nov.

Dec.

Jan.

Feb.

Retail Facilities
Residential(Residential Areas)(Note 1)
Areas

97%

98%

93%

90%

96%

Recipe SHIMOKITA

NearStations

Food
101% supermarket,
Retail

71%

93%

91%

88%

87%

80% Retail, Services

nORBESA

Near
Stations

41%

76%

76%

78%

59%

37%

Restaurant,
Retail, Services

Universal Citywalk
Osaka

Near
Stations

32%

47%

78%

93%

67%

49%

Restaurant,
RetailGEMS

NearStations

25%

52%

60%

67%

45%

33% Restaurant

Changes in period-end occupancy rate

February 2021 FP

August 2021 FP

February 2022 FP

3 cases

8 cases

15 cases (+7 cases)

Services:
Retail:Restaurants:

42
2

Major Tenant

Oct.

Steadily capture the needs for opening stores with a view to the future1
1
1

Year 2021–2022 (change from the results of
2019–2020)
Sep.

New leasing results (facilities located near stations)

Offices:
Retail:Restaurants:

Nil

Aug-222,000

Rate of change in monthly rent

0.4%

4,617

overall retail sector is 97.0%(Note 2)

Under discussion with the assumption of re-contracting

100.0%

2.6%■ Amount of change in monthly rent

(Thousands of yen)
1,500

Percentage of fixed rents across the• Landport Atsugi: Approx. 5,300 tsubo

99.2%

4,000

Rate of change in monthly rent at renewals

4.3%• Sales of facilities located in residential areas continued
to be strong• Although sales of facilities located near stations wereon a recovery trend after the lifting of the state of
emergency in October, sales stagnated again due tothe spread of the Omicron variant since January 2022.

(Rent increase rate +2.9%)

Changes in period-average occupancy rates

Rate of change in monthly rent

Sales status for each facility type

Tenant with expired lease during August 2022 FP(Rent increase rate +2.2%)

Mar.

Feb-22• Atsugi Minami Logistics Center B: Approx. 7,500
tsubo(Rent increase rate +3.9%)

Feb.

4.5%

6,000

-4,000Re-contracted at a higher rent with tenants that have an expired fixed-term lease• Landport Itabashi : Approx. 16,000 tsubo (2 tenants)■ Amount of change in monthly rent

-2,000High performance has continued despite the pandemic, with rent increases continuing when re-contracting.

Tenant with expired lease during February 2022 FP

Jan.

(Thousands of yen)

6

(Note 2) The rates of change in monthly rents are calculated as weighted
averages of all relevant sections This is the same for othersectors explained later.

Logistics

Dec.

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

-0.3%

-10

Feb-20

Nov.

0

6
7.0%

-5

Oct.

Feb-22Rate of change in monthly rent

11.4%

Aug-19

96.5%
95

20.7%

17.6%

5

97.3%

Sep.

Feb-20Rent revenues also exceeded thoseof the previous year
Feb. 2022 FP: ¥6,360 mln
Feb. 2021 FP: ¥6,351 mln

97.8%(Note)

97.0%

97

17

-2

-10

10

Feb-20

3.0%

Amount of change in monthly rent and rate of change
in monthly rent upon tenant replacement (Note 2)-3,130Aug-193.4%

02,254 (Note 1)

2020–2021

(%)
99

4.6%
3.3%

Aug-19-2,204Rate of change in monthly rent

20
10

+4.9%

Changes in occupancy rates
2021–2022

Restaurants:
Retail:Services:
Others:6
5
3
1

Feb-24The entire retail facilities

99.1%

97.4%

99.2%
97.6%

Retail facilities (near stations)

99.5%

98.8%

97.9%

97.8%

98.4%

98.4%
95.0%

96.3%

93.3%
93.7%
Expected reversal

Aug-19Feb-20Aug-20Feb-21

Aug-21

Feb-22Aug-22(Forecast)(Note 1) Tenants whose sales since September 2019 can be ascertained are included.
(Note 2) Calculated based on rents in February 2020 FP before the COVID-19 pandemic.

NOMURA REAL ESTATE MASTER FUND, INC.

10

Message from the Management

ESG Measures

Management Strategy

Financing Status

Portfolio

Investor Information

Financial Section

ESG Measures
Have been actively implementing a wide range of initiatives since 2015, including industry-first initiatives for a J-REIT.
2017

2018

Asset management company initiatives andachievements

NMF initiatives and achievements

September 2016GRESB real estate
assessment:“Green Star”
September 2017GRESB real estate
assessment:“5-Star”

September 2018GRESB real estate assessment:“Global Sector Leader”

December 2015
EstablishedSustainability Policy

October 2018
Participated in Japan
Climate Initiative (JCI)

December 2017
Signatory to Principles for Responsible
Investment (PRI) and United Nations
Environment Programme FinanceInitiative (UNEP FI)

2019
February 2019Set ESG materiality issues(Materiality)
Set J-REIT-first long-termtargets

2020
May 29, 2019
Included in MSCI JapanESG Select Leaders
Index

[E]
• Raised proportion of “green”
properties in investment
portfolio• Implemented climate change
response• Implemented water resource
response[S]• Ensured safety and securityof tenants and improved user
comfort• Created a workplaceenvironment in which
everyone is treated fairly andempowered to find his/her
job rewarding• Human resource
development and talentmanagement[G]• Enhanced governance• Ensured compliance and risk
management• Stakeholder engagement andtimely and appropriate
information disclosure

September 20, 2019
Issued first NMF green
bonds

2021

2022

February 26, 2021
Based onRecommendations of the
Task Force on Climaterelated Financial
Disclosures (TCFD),
disclosed scenario analysis
and financial impact(qualitative assessment) asa first for J-REITs

January 30, 2020
First J-REIT certified andregistered for EcoAction 21
program, an Environmental
Management System (EMS)

ESG Measures (E: Environment)

Environmental Indicators

Specific Measures to Reduce Environmental Impact[Target] Raise the ratio to 70% by FY2030 (total floor area basis)
Green Certification (With three stars or more or equivalent)
80.0%Green Certification

2016

Target
70.0%

70.0%

60.0%

56.1%
50.0%

40.0%

FY2017 FY2018 FY2019 FY2020 FY2021

Implemented a variety of capital investments in owned
properties to reduce their environmental impact (The examples
below are from the 13th FP)(1) Saving Energy with LED Lighting•N MF Takebashi Building•P MO Hatchobori•N MF Nagoya Fushimi Building•S agamihara Onodai Logistics Center•L andport Kasukabe•Y okosuka More’s City•E
 QUINIA Aobadai•P RIME URBAN Shinkawa		

FY2030March 5, 2020

Received Minister of theEnvironment Award (theMost Excellent Efforts) from
Principles for Financial Action
for the 21st Century

October 2019
Established a
dedicated ESG
department

December 13, 2021
Received the 2021
Climate Change Action
Environment Minister’sCommendation

July 14, 2020
Signatory to
Recommendations of the
Task Force on Climate-related
Financial Disclosures (TCFD)

GHG (Intensity)-1,382 Mwh/year(approx.-55.9%)•N RE Tennozu Building•O mron Kyoto Center Building•S apporo North Plaza-20.0%-35.8%FY2016 FY2017 FY2018 FY2019 FY2020

Target-40.0%
FY2030

Water Use (Intensity)(3) S aving Water by Upgrading
Toilets•N MF Kichijoji Honcho Building•R ecipe SHIMOKITA

Energy reduction by work in
the 13th FP-385 Mwh/year(approx.-7.9%)

Water use reduction by workin the 13th FP-949 Kl/year(approx.-63.1%)

Energy Saving via installing double sash

0.0%

Target-10.0%-10.0%

Water Use

The Climate Change Action Environment Minister’s Commendation is a commendation
presented by the Ministry of the Environment to individuals and organizations that havemade outstanding achievements in addressing climate change.
The Ministry launched the Environment Minister’s Award for Global Warming Prevention
Activities in 1998 as part of its global warming countermeasures, but in consideration offactors such as recent trends in climate change measures in society, the commendation
was updated in 2020 to the Climate Change Action Environment Minister’s Commendation.

(2) S aving Energy by Upgrading
Air-Conditioners-10.0%[Target] Reduce 10% by FY2030 (compared with FY2016)

Received the 2021 Climate Change Action Environment Minister’s Commendation (Dissemination/Promotion category)

Outline of the Climate Change Action Environment Minister’s Commendation

NMF Nagoya Yanagibashi Building-30.0%

Received an Environment Minister’s commendation in recognition of ongoing efforts on climate change, impact on the industry, etc.

In recognition of ongoing efforts for mitigation and adaptation in the area of climate change by Nomura Real Estate Master Fund, Inc. (NMF), Nomura Real
Estate Asset Management Co., Ltd., to which NMF entrusts management of its assets, received the 2021 Climate Change Action Environment Minister’sCommendation (Dissemination/Promotion category) sponsored by the Ministry of the Environment.

Energy Consumption (Intensity)

0.0%-40.0%

othersEnergy reduction by work in
the 13th FP[Target] Reduce 40% by FY2030 (compared with FY2016)

Greenhouse Gas

2015

E

-20.0%-30.0%-40.0%We are installing double sash
to improve heat insulation andreduce the air conditioning
energy required to keep theroom temperature constant to
reduce energy consumption.

-30.3%FY2016 FY2017 FY2018 FY2019 FY2020

FY2030

Sapporo North Plaza(Note) “Green Certification” refers to either DBJ Green Building Certification, BELS Certification or CASBEE for Real Estate. “Green Certification (with three stars or moreor equivalent)” refers to three stars or more for DBJ Green Building Certification, three stars or more for BELS Certification, or B+ or higher for CASBEE for Real
Estate.
(Award ceremony)
Left: Yutaka Shoda, Vice-Minister for Global Environment, Ministry of the Environment
Right: Koki Miura, President & CEO, Nomura Real Estate Asset Management Co., Ltd.

11

NOMURA REAL ESTATE MASTER FUND, INC.

NOMURA REAL ESTATE MASTER FUND, INC.

12

Message from the Management

ESG Measures

Management Strategy

Financing Status

Portfolio

Investor Information

Financial Section

ESG Measures

S

G

ESG Measures (S: Society)

Initiatives to contribute to local communities

Workable sustainability promotion system
The Asset Management Company has established the following systems to promote measures based on the Sustainability Policy in a continuous and systematic manner.

Held “Dining Room for Everyone” and ”Nagasaki Fair” at GEMS
(1) Held “Dining Room for Everyone”•T o support families with small children in Minato-ku and prompt smiles
from children, GEMS stores made original Ehomaki (Fortune sushi roll) andeach store served them out to 100 families free of charge (two rolls perfamily).
•B y serving their creative Ehomaki, each store also helped to promote itself.

ESG Measures (G: Governance)(2) Held “Nagasaki Fair”•F or the aim of revitalizing local regions, reducing food loss and supporting
tenants’ sales, we purchase specialty products of Nagasaki Prefecture andprovide them to tenants at their request.

(Participating properties: GEMS Shinbashi, GEMS Daimon, GEMS Tamachi)(Participating properties: GEMS in the Kanto region)

Sponsored the Coming of Age Ceremony held by Osaka City and Universal Studios Japan•A fter postponement of the Coming of Age Ceremony in Osaka City in FY2020, scheduled to beheld in January 2021, due to the spread of COVID-19, it was held in January 2022 at Universal
Studios Japan.
•N omura Real Estate Master Fund, Inc. sponsored the event as owner of Universal Citywalk
Osaka.

TM & © Universal Studios. All rights reserved.

Measures to improve tenant satisfaction

Board ofDirectors:

Meets once a year, inprinciple
Approval of policies andrules, etc., monitoring andsupervision of the status ofsustainability promotion

Investment
Committee:

Meets twice a year
(decisions on goals andmeasures), in principle
Decision-making body forsustainability (goals,
measures, etc.)

Sustainability
Promotion
Committee:

Meets once a quarter, inprinciple
Formulates sustainability
goals and measures andmonitors achievement status

Chief
Sustainability
Officer:

Involved in decision-making
at the Investment
Committee and reports to
the Board of Directors atleast once a year.

Sustainability
Operating
Officer:Convenes the Sustainability
Promotion Committee,
submits matters fordiscussion and reports to
the Investment Committee.

Board of Directors
Sustainability
Policies
Regulation of
Sustainability
Promotion

Environmental
policies= Operating
Procedure

Reporting

Chief Sustainability Officer
Chief Strategy Officer (Director)

Investment Committee
Chair: President and Executive Officer
Members: C hief Strategy Officer, other
Executive Officers, Compliance
Officer, and any other person
appointed by the chair
Decision· Decision of sustainability targets andmeasures

Assigned Fund (NMF)
Committee Chair (Head of NMF Investment
Management Group)= Sustainability Operating Officer

Sustainability Promotion Committee
Committee members
Committee Chair (Sustainability Operating Officer)· Fund Management Dept.
· Asset Management Dept.
· Investment Management Planning Department
ESG & Engineering Service· Corporate Planning Dept.
· Finance & Accounting Dept.
Discussion agenda· Formulation of annual and long-term targets
and measures· Monitoring state of achievements
Assigned Fund (excluding NMF)
Committee Chair ( Fund Manager)= Sustain ability Operating & Officer

Respective department(s) Initiates proposal

Offered a variety of services for residents at owned residential properties•C ook Pad Mart--- Pick up fresh foodstuff from the dedicated refrigerator installed in thecommon area of the condominium

Compliance Officer• I tems sharing services--- Provision of monthly subscription services for high-quality homeelectrical appliances
Proposal for a sustainable living such as “re-leasing, not discarding”
Nomura Real Estate
Partners Co., Ltd.

Properties undermanagement

Joint development of Alice.style for
Urban life dedicated to residents of
Nomura Real Estate
Residents

Peace Tec Lab, Inc.

Compliance Committee

Compliance Committee·A pproves major business transactions carried out with stakeholders·D eliberates on status of business transactions carried out with stakeholders
Committee members: C ompliance Officer (Chairperson),Experts from outside the company (Attorneys at law
from outside the company and university professors)
Resolutions: U pon affirmation by no less than two-thirds of voting members

Sharing platform

Provision of Alice.style for
Urban life to residents

Compliance Officer· Verifies status of compliance with laws and regulations· Verifies whether other compliance concerns apply

Investment Committee

Investment Committee·M akes decisions as the asset management company

Implemented a variety of measures to increase tenants’ sales at owned
properties (GEMS)•B icycle sharing--- Improves transportation convenience and addresses lack of exercise
from working from home.
•M obile stores--- Provide quality ingredients, meals, etc. close to home to help residents
enhance their time at home.

•F ood truck--- Sale of GEMS restaurants foods at condominiums, etc.

•H
 ASHIGO DELIVERY--- Foods of multiple restaurants in the same GEMS are delivered at theone time·R eal estate acquisition and transfer·R eal estate leasing
Prior consent of investment
corporations
Board of Directors (investment corporation)

Chairperson: President and CEO
Committee members: Chief Strategy Officer,
other executive officers*1,
Compliance Officer
Resolutions: Upon affirmation by all voting members
Board of Directors· Furnishes consent for business transactions with asset
management company stakeholder or other such party

Execute business pertaining to the transaction

Committee members: E
 xecutive Officer (Chairperson),Supervisory Officers
Resolutions: U pon affirmation by a majority of voting members

1 This does not include the Fund Managers or Executive Officers concurrently serving as general managers of respective departments established within the
NMF Investment Management Group.
2 Voting rights are possessed neither by Compliance Officers nor by Executive Officers in charge of administrative divisions.

13

NOMURA REAL ESTATE MASTER FUND, INC.

NOMURA REAL ESTATE MASTER FUND, INC.

14

Message from the Management

Management Strategy

ESG Measures

Financing Status

Financing Status

Portfolio(¥mln)

Interest-bearing debt at the end of Feb 2022 FP
Aug. 2019(8th FP)

Feb. 2020(9th FP)

Aug. 2020(10th FP)

Feb. 2021(11th FP)

Aug. 2021(12th FP)

Feb. 2022(13th FP)

Total interest-bearing debt

¥510,770 million¥510,727 million¥517,884 million¥517,841 million¥517,798 million¥517,756 million

Average remaining duration

4.64 years

4.82 years

4.97 years

4.97 years

4.92 years

4.88 years

Average interest rate

0.83%

0.82%

0.76%

0.74%

0.71%

0.68%

Ratio of long-term debt

86.0%

87.1%

88.2%

88.7%

89.4%

88.7%

Ratio of fixed-rate debt

94.1%

95.6%

95.7%

95.7%

95.7%

95.7%

LTV

43.9%

42.8%

43.2%

43.3%

43.4%

43.6%

Diversified maturity of repayment at the end of Feb 2022 FP(¥mln)

60,000

1.06%

0.99%

0.92%
0.70%

0.65%

40,0000.63% 0.66% 0.59% 0.57% 0.64% 0.64%
0.54% 0.59%

1.03%
0.57% 0.50% 0.61% 0.54%

0.76% 0.68% 0.73%

0.90%

Investment Corporation Bond
Average Interest Rate

20,00010,000Differences(B) - (A)37,51934,6792,839
ー
22,777
16,097
1,531
3,263
5,586
5,715
ー
3,394
2,622
663
14,741
4
2,310
2,297
12
12,435
12,434(12,434)

37,52034,6542,703
162
22,927
15,972
1,273
3,246
5,609
5,842
300
3,385
2,622
646
14,593
3
2,216
2,205
10
12,38012,377(12,515)

1
-24
-136
162
149
-124
-258
-17
23
127
300
-8
ー
-17
-148
-1
-94
-92
-2
-55
-56
(80)

Distribution of earnings (a)Distribution in excess of net earnings (b)Total distributions (a)+(b)12,433
3,069
15,503

12,377
2,918
15,296

-56
-150
-207

Internal reserves(Total Internal reserves)-447(2,691)-300(2,391)146(-300)DPU
Distributions of earnings per unit

3,288
2,637

3,244
2,625

-44
-12

Distributions in excess of retained earnings per unit
[allowance for adjustment of temporary differences]

387

444

57

Distributions in excess of retained earnings per unit
[other distributions in excess of net earnings]

264

175

-89

1,192,507
517,79843.4%
800,169
27,00820,651

1,187,420
517,75643.6%
715,767
26,99520,755(Millions of yen)

0
23/2

23/8

24/2

24/8

25/2

25/8

26/2

26/8

27/2

27/8

28/2

28/8

29/2

29/8

30/2

Refinancing during Feb 2022 FP

Total amount of
repayment

30/8

31/2

31/8

32/2

38/8

40/2

Scheduled repayment during Aug
2022 FP

Repayment Overview (Note 1)

Refinancing Overview (Note 2)

Scheduled Repayment (Note 3)

30,025 mln

Total amount ofrefinancing

30,025 mln

Total amount of
repayment

24,980 mln

Average interest rate

1.02%

Average interest rate

0.59%

Average interest rate

0.92%

Average remaining
duration

6.6 years

Average remaining
duration

7.9 years

Average remaining
duration

6.7 years¥(Note 1) A verage remaining duration is weighted
average duration at the time of borrowing
and average interest rate is weighted
average interest rate at the time of
repayment. Excluding ¥42.8 million incontractual repayment.

(Note 2) A verage interest rate and averageremaining duration are those at the time ofrefinancing.

(Note 3) Average remaining duration is weighted
average duration at the time of borrowing
and average interest rate is weighted
average interest rate as of the end of
February 2022. Excluding ¥42.8 million incontractual repayment.

Total assets
Interest-bearing debt
LTV
Market capitalization
NOI
FFO

Rating Description

Japan Credit Rating Agency, Ltd. (JCR)

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

Issuer rating:

NOMURA REAL ESTATE MASTER FUND, INC.

AA-

AA

Operating Revenue

1-24

Rental revenues
Rent and common area charges(of which, absence of rent reduction/exemption in 12th FP+280, rent reduction/exemption in 13th FP -65)

-80

Impact of acquisition and disposition

56

-136

Other rental revenues
Increase in utility expenses received

139

Reduction of cancellation penalty fee, etc.

-276

Gain on sales of real estate

162

Operating Expense

149

Rental Business Expenses-124

Decrease in repair expenses-258

Increase in utility expenses paid

152

Decrease in other expenses-18

Loss on sales of real estate

300

Asset management fees/Other operating
expenses-27

Non-operating expenses-94Interest expenses and other financial costs-92

Net income-56

Absence of 12th FP’s reversal of internal reserves-447

13th FP’s reversal of internal reserves

300(equivalent amount of loss on sales of real estate)

Main factors in change of DPU (¥/unit)

3,288

Decrease in rent revenues and common area charges
Office-48
Logistics+1
Residential-4
Retail-18
Decrease in temporary rent reduction/exemption(Absence in 12th FP+59)(13th FP
-14)
Increase in utility expenses received
Absence of cancellation penalty fee, etc.

-62

DPU
Increase factors
+45

+30
-58

Decrease factors
Decrease in interest expenses, etc. +19
Other
+5

95

-44

Credit Rating Agency-5,086-42
0.2%-84,402-13
103

Main factors accounting for differences between the
12th results and the 13th results (¥mln)

Despite decreased DPU due to absence of reversal of internal reserves, final DPU was up 17 yen from the earnings forecast due to external
growth and returning gain on sales.

(Reversal of internal reserves)

Credit Ratings

15

Operating Revenue
Rental revenues
Other rental revenues
Gain on sales of real estate
Operating Expense
Rental business expenses
Repair expenses
Taxes and public charges
Depreciation
Other rental business expenses
Loss on sales of real estate
Asset management fees
Amortization of goodwill
Other operating expenses
Operating profit
Non-operating revenues
Non-operating expenses
Interest expenses and other financial costs
Other non-operating expenses
Ordinary income
Net income(Net income excluding realized gain)

Ended
Ended
Aug. 31, 2021 Feb. 28, 2022
(12th FP)
(13th FP)
Result (A)Result (B)

(Yen)

Debt

30,000

22/8

Financial Section

Financial Statement Highlights

Continued to maintain financial stability by realizing lower interest rates and longer borrowing terms in refinancing

50,000Investor Information

3,193

Aug. 2021 FP
DPU result

Decrease in repair expenses
Increase in utility expenses paid
Other

+54
-33
-1

Rent revenues
Rental business expenses(portfolio properties)(portfolio properties)

34

17

24

20

3,244

Sundai Azamino -63(Gain on sales)-63

External growth

Loss on sales ofreal estate

34(Gain on sales)

63

Acquisition of Landport Ome III+26
Sale of NMF Utsunomiya Building -7
Sale of Sundai Azamino
-2

Other

3,227

Reversal of internal reserves(equivalent to loss on sales)

3,210

3,193

Feb. 2022 FP
DPU result

Feb. 2022 FP
DPU forecasts

NOMURA REAL ESTATE MASTER FUND, INC.

16

Message from the Management

Management Strategy

ESG Measures

Portfolio

Financing Status

Investor Information

Financial Section

Portfolio Analysis (As of Feb. 28, 2022)

NUMBER OF PROPERTIES

298

propertiesASSET SIZEOCCUPANCY RATE

¥1,081,389

million98.7%

Hotels

16.8%

Tokyo Area

Diversification by
location

83.2%(based on acquisition price)

Logistics Facilities

20.2%

Diversification byproperty type22.1%

RetailHotels

Logistics

SapporoSapporo

OthersOther

Tokyo Area

Other Areas

54 Properties■ Retail
39 Properties■ Logistics
22 Properties■ Residential 125 Properties■ Other 
1 Properties

13 Properties■ Retail
11 Properties■ Logistics
1 Properties■ Residential 30 Properties■ Hotels
2 Properties

Retail Facilities(near stations)

11.1%

Top Ten Tenants asa Percentage ofPortfolio

Diversification bytenant29.6%

3 Properties
3 Properties

7,400

7,400

■ Office

241 Properties

Total

57 Properties

Total

5 Properties
5 Properties

3,942

1 Property1 Property

2,030

3,942

2,030

51 Properties
51 Properties
6 Properties
6 Properties
385,745 385,745(based on leased area)(based on acquisition price)

Residential■ Office

Other

70.4%

10,390 10,390
10,267 10,267(based on acquisition price)

5.4%

77.9%

3,600

2 Properties
2 Properties
12 Properties
12 Properties

43.6%

Diversification by
use

Retail Facilities

Top 10 properties

3,600
8,500

OfficeOffice Buildings(Residential areas)

Other 289
Properties

8,500

0.5%

Residential Facilities

18.7%

1 Property1 Property
1 Property1 Property

Other

0.6%
Other Area

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

78,450 78,450

Sendai Sendai

108 Properties
108 Properties
7 Properties
7 Properties
25 Properties
25 Properties
149,036 149,036
48,310 48,310

67,018 67,018

Tochigi Tochigi

Kyoto Kyoto
1 Property1 Property

4 Properties
4 Properties
1 Property1 Property
5,830 5,830

18,300 18,300

1 Property1 Property

2,280

2,280

5 Properties
5 Properties

5 Properties
5 Properties
46,375 46,375
2 Properties
2 Properties
7,645 7,645
4,520
4,520
1
Property
1
Property
4 Properties
4 Properties
3,460 3,460
25,650 25,650

2 Properties
2 Properties

6,580

6,580

3 Properties
3 Properties

Hyogo Hyogo
1 Property1 Property

2,650

2,650

Naha

Naha

1,580

8,997

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

2,477

2,477

8,997

Nagoya Nagoya

1,580

4 Properties
4 Properties

49,972 49,972

SaitamaSaitama

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

7 Properties
7 Properties

33,960 33,960

3 Properties
3 Properties 9 Properties
9 Properties

4,632

4,632

1 Property1 Property1 Property1 Property

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

3,0804,900
OthersOthersChiba Chiba

Osaka Osaka

FukuokaFukuoka

4,900

Kanagawa
Kanagawa

For a detailed list of properties in our portfolio, visit the website below.
(Note) In the diversification by tenant, the leased areas of properties under pass-through master lease agreements are calculated based on the leased areas of end tenants.

17

NOMURA REAL ESTATE MASTER FUND, INC.

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

NOMURA REAL ESTATE MASTER FUND, INC.

18

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

Portfolio Gallery
OfficeRetailTOP 3 Properties (Acquisition price)1

NEC Head Office Building
Location: Minato Ward, Tokyo
Acquisition price: ¥44,100 million
Total floor area: 144,476.05 m2

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

3

Kojimachi Millennium Garden
Location: Chiyoda Ward, Tokyo
Acquisition price: ¥26,700 million
Total floor area: 16,050.53 m2

1

Universal Citywalk Osaka
Location: Osaka City, Osaka
Acquisition price: ¥15,500 million
Total floor area: 17,769.42 m2

2

Yokosuka More’s City

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

3

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

PMO Tamachi II

PMO Nihonbashi Honcho

PMO Ochanomizu

NRE Kichijoji Building

nORBESA

Kawasaki More’s

NMF Aoyama 1-chome Building

NMF Kawasaki Higashiguchi Building

SORA Shin-Osaka 21

EQUINIA Shinjuku

NMF Kobe Myodani Building

GEMS Daimon

Location: Minato Ward, Tokyo
Total floor area: 7,088.17 m2

Location: Minato Ward, Tokyo
Total floor area: 10,063.05 m2

192

Shinjuku Nomura Building

TOP 3 Properties (Acquisition price)

NOMURA REAL ESTATE MASTER FUND, INC.

Location: Chuo Ward, Tokyo
Total floor area: 3,507.37 m2

Location: Kawasaki City, Kanagawa
Total floor area: 10,932.69 m2

Location: Chuo Ward, Tokyo
Total floor area: 2,670.12 m2

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

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

Location: Shinjuku Ward, Tokyo
Total floor area: 5,221.88 m2

Location: Sapporo City, Hokkaido
Total floor area: 21,564.42 m2

Location: Kobe City, Hyogo
Total floor area: 14,619.46 m2

Location: Kawasaki City, Kanagawa
Total floor area: 18,727.37 m2

Location: Minato Ward, Tokyo
Total floor area: 1,387.89 m2

NOMURA REAL ESTATE MASTER FUND, INC.

20

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

Portfolio Gallery
Logistics

Residential

TOP 3 Properties (Acquisition price)1

Landport Urayasu

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

NEW

Location: Ome City, Tokyo
Acquisition price: ¥17,000 million
Total floor area: 73,087.15 m2

3

Landport Itabashi

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

1

Fukasawa House Towers H&I
Location: Setagaya Ward, Tokyo
Acquisition price: ¥7,140 million
Total floor area: 12,135.36 m2

2

Serenite Shinsaibashi Grande
Location: Osaka City, Osaka
Acquisition price: ¥5,567 million
Total floor area: 7,794.23 m2

Landport Ome I

Landport Ome II

Landport Kashiwa Shonan II

PROUD FLAT Sangenjaya II
Location: Setagaya Ward, Tokyo
Total floor area: 3,522.92 m2

Location: Shinagawa Ward, Tokyo
Total floor area: 3,354.13 m2

Landport Hachioji

Sagamihara Onodai Logistics Center

Atsugi Minami Logistics Center B Tower

PRIME URBAN Nihonbashi Yokoyamacho

PRIME URBAN Kagurazaka

Location: Ome City, Tokyo
Total floor area: 57,721.34 m2

Location: Hachioji City, Tokyo
Total floor area: 35,948.63 m2

212

Landport Ome III

TOP 3 Properties (Acquisition price)

NOMURA REAL ESTATE MASTER FUND, INC.

Location: Ome City, Tokyo
Total floor area: 63,879.98 m2

Location: Sagamihara City, Kanagawa
Total floor area: 49,927.89 m2

Location: Kashiwa City, Chiba
Total floor area: 51,485.62 m2

Location: Atsugi City, Kanagawa
Total floor area: 24,929.27 m2

Location: Chuo Ward, Tokyo
Total floor area: 6,898.33 m2

PROUD FLAT Togoshi-Koen

Location: Shinjuku Ward, Tokyo
Total floor area: 4,079.83 m2

3

PRIME URBAN Toyosu

Location: Koto Ward, Tokyo
Acquisition price: ¥5,290 million
Total floor area: 9,630.96 m2

PROUD FLAT Soto kanda
Location: Chiyoda Ward, Tokyo
Total floor area: 2,882.48 m2

PRIME URBAN Sakaisuji Honmachi

Location: Osaka City, Osaka
Total floor area: 4,231.41 m2

NOMURA REAL ESTATE MASTER FUND, INC.

22

Message from the Management

Management Strategy

ESG Measures

Financing Status

Distribution policy
Basic Distribution Policy

Distribution Policy for Periods with Gain on Sales

Structure of NMF

Internal reserves
equivalent to gain on
sale

10

Net income

Total
distribution(Statement of Income andRetained Earnings)

Gain on sales

Amortization of goodwill

80

20

10

Net income excl. gain on sales

Distributionof earnings

10

Net income excl. gain on sales

Gain on sales
Net income excl. gain on sales

Amortization of goodwill
Net income

Net income

Distributions
in excessof earnings

Distribution inexcess of earnings

80

Distribution
policyAsset Custody Agreement

Specified Related Party

Investment Corporation

Custodian

Parent Company of the Asset Management
Company
Nomura Real Estate Holdings, Inc.

Nomura Real Estate Master Fund,Inc.

Sumitomo Mitsui Trust Bank, Ltd.

Nomura Real Estate Development Co., Ltd.

10

Unitholders' Meeting

Asset Management
Agreement

10

Gain on sales is distributed,
and a corresponding
amount is deducted from
distributions in excess ofearnings

Basic Agreement with respect to Leasing Value Chain

Gain on sales

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

Reserve

Net income

Financial Section

Structure and Organization

Net income + amortization of goodwill(Statement of Income
and Retained
Earnings)

Investor Information

Portfolio

Asset Management Company

Board of Directors
Executive Director: Shuhei Yoshida

Nomura Real Estate Asset Management
Co., Ltd.

Supervisory Directors: Mineo Uchiyama
Supervisory Directors: Koichi Owada (Note)

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

General Administrator (Institutional
Administration / Accounting)Transfer Agentand Special Account Administrator
Mitsubishi UFJ Trust and Banking Corporation

Supervisory Directors: Mika Okada

Financial Agent Agreement

Financial Agent Agreement

Information Provider
Auditor

General Administrator (Financial Agent)

Ernst & Young Shin Nihon LLC

MUFG Bank, Ltd.
Sumitomo Mitsui Banking Corporation

Nomura Real Estate Development Co., Ltd.

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

80

Nomura Real Estate Partners Co., Ltd.
Nomura Real Estate Retail Properties
Co., Ltd.

Breakdown ofdistributions(Note) As of April 30, 2022, Koichi Owada retired as Supervisory Director.

* Figures shown above are for illustrative purposes only

Distributions in Excess of Earnings in the Fiscal Period Ended February 2022
Organization of NREAM[About distribution in excess of earnings]<Reversal of internal reserves>(Equivalent to loss on sales of real estate)

2,093(fractional
adjustment)(¥175/unit)

Total distribution¥15,296 million

Net
income12,377

Net income(Statement of Income
and Retained
Earnings)(¥3,244/unit)

12,377

Distribution
policy12,377

Total distribution(Before adjustment of
fractions less than one
unit)

12,377

Total distribution(After adjustment of
fractions less than one
unit)

Distributions ofearnings¥12,377 million(¥2,625/unit)

12,377

Distributions ofearnings, etc.
(Income tax
withheld)¥14,470 million(¥3,069/unit)

Allowance forDistributions in
temporary difference excess of earnings
adjustments(Breakdown)(Note 1) W hen there is a gain on sales, NMF’s policy is, in principle, to set aside an amount equivalent to the gain that is not more than the amount of amortization of
goodwill as retained earnings within the scope that will not be subject to income tax.
(Note 2) T he amount is obtained by deducting under depreciation, etc. (provision deduction items) attributable to the difference between depreciation in tax andaccounting treatments from amortization of goodwill, etc. (provision addition items).

23

NOMURA REAL ESTATE MASTER FUND, INC.

Legal & Compliance

Statutory Auditors

Internal Audit
Finance & Accounting
Board of Directors

Client Relations & Marketing

President & CEO

Acquisitions
Investment Management Planning
Private Fund Management
NMF Investment
Management Group(*2)

Chief Strategy Officer

2,097

Project Screening Committee

2,918

NPR Valuation Committee(¥619/unit)

Risk Management Committee

2,918International Business Planning

Other
distributions inexcess of earnings(Income tax notwithheld)¥825 million

Compliance Committee

2,622

825

Investment Committee

2,622

Distributions inexcess of
earnings¥2,918 million

General Meeting of Shareholders

300
Amortization of
goodwill

Corporate Planning

Distribution of allowance for temporary
difference adjustments
Other distributions in excess of earnings

Fund Management
Asset Management I
Asset Management II
NPR Investment Management

NOMURA REAL ESTATE MASTER FUND, INC.

24

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

Unitholder Information
Composition of Unitholders
Foreign Corporations

640 2.1%

Other Domestic
Corporations

IR ACTIVITIESFinancial Institutions(including financial
instrument businesses)

307,697 6.5%

238 0.8%515 1.7%

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

Individuals and Others
Financial Institutions(including financial
instrument businesses)

Other Domestic
Corporations

Official Website

2,858,115 60.6%

333,074 7.1%

Number of Unitholders
Total

Number of investment units
Total

31,1194,715,200

ESG Annual Report
Individuals andOthersForeign Corporations

1,216,314 25.8%

29,726 95.5%

IR Calendar
End of February Fiscal period Mid-April
January

February

March

April

Announcement offinancial results
May

June

End of August Fiscal period
July

AugustSeptember

Mid-October
October

Announcement offinancial results
November

December

Mid-May

Mid-November

Commencement of
payment of distributions
Release of AssetManagement Report

Commencement of
payment of distributions
Release of AssetManagement Report

Unitholder Information
The Process for Changing Your Address and Other Information
To change your address, name, seal, or other information, please contact the securities firm where your account was established.
Distributions
Stockholders can collect distributions at a Japan Post Bank or post office. If the receipt date has passed, please refer to instructions
on the back of the distribution receipt and either send it to the Corporate Agency Division of Mitsubishi UFJ Trust and Banking
Corporation or present it at the counter of one of the bank’s branches. In addition, regarding distributions going forward, if you wish
distributions to be paid in the form of bank deposits or other, please contact your securities firm.

IR Activities■ IR tour of the financial results for the Aug. 2021 period for domestic institutional investors (Conducted by telephone conference)■ One-on-one IR meetings with overseas investors in North America, Europe and in Asia (Conducted by telephone conference)

Important Reminders for Unitholders
Closing dates

The last days of February and August of every year

General meeting of unitholders

At least once every two years in principle

Unitholder record date for voting
eligibility

The last day of February 2017, and then the last day of February every second year or adate announced in advanceDistribution payment record dates The last days of February and August of every year

25

Stock exchange listings

Tokyo Securities Exchange (securities code: 3462)

Newspaper for announcements

Nihon Keizai Shimbun

Transfer agent

Mitsubishi UFJ Trust and Banking Corporation

Contact information for thetransfer agent

Corporate Agency Division, Mitsubishi UFJ Trust and Banking Corporation
1-1, Nikko-cho, Fuchu, Tokyo, Japan
TEL. 0120-232-711 (toll free) in Japan only
Mailing address: P.O. Box #29 Shin-Tokyo Post Office, Tokyo, Japan 137-8081
Corporate Agency Division, Mitsubishi UFJ Trust and Banking Corporation

NOMURA REAL ESTATE MASTER FUND, INC.

NOMURA REAL ESTATE MASTER FUND, INC.

26

Message from the Management

Management Strategy

ESG Measures

As of August 31, 2021

As of February 28, 2022

Financing Status

Portfolio

Financial Section

Investor Information

BALANCE SHEET
Thousands of Yen

Thousands of Yen

As of August 31, 2021

ASSETSLIABILITIESCurrent Assets:

Current Liabilities:

Cash and bank deposits
Rental receivables
Other current assets
Total current assets

63,111,539

50,237,480

722,315577,103

Trade accounts payable

2,588,017

1,627,787

Current portion of long-term debt

55,090,600

58,615,600

1,282,492

1,377,273

Lease obligations

65,116,347

52,191,857

Other accounts payable
Accrued expenses

Property and Equipment:

As of February 28, 2022

Accrued income taxes

871

871

2,763,065

2,475,394

357,458

317,250

1,125

2,683

Land

736,068,822

745,177,983

Accrued consumption taxes

957,285

182,342

Buildings and structures

362,880,018

368,928,614

Rent received in advance

5,655,117

5,588,079

Machinery and equipment

2,017,603

2,081,726

Unearned revenue

60,233

26,694Tools, furniture and fixtures

1,658,047

1,770,723

Provision for loss on disaster

30,45020,370

4,752

4,752

Derivatives liabilities

61,671

27,412

124,467

70,431Other current liabilities

11,18817,75567,577,084

68,902,241

Investment corporation bonds

32,000,000

32,000,000

Leased assets
Construction in progress

1,102,753,711

1,118,034,231

Less accumulated depreciation

Subtotal(63,009,077)(67,941,527)

Net property and equipment

1,039,744,634

1,050,092,704

Investments and Other Assets:

Total current liabilities
Long-term Liabilities:
Long-term debt

430,708,200

427,140,400

Goodwill

75,098,009

72,475,766

Lease obligations

2,468

2,032

Leasehold rights

8,957,374

8,956,988

Long-term advances received

14,854

7,706

Intangible assets

51,71450,162

Security deposits from tenants

42,161,565

42,413,496

Long-term prepaid expenses

1,979,162

2,176,053

Derivatives liabilities

141,998

76,619Long-term deposits

478,665445,088

Total long-term liabilities

505,029,087

501,640,254

Security deposits

925,784885,773

Derivative assets

6,336

4,632

Total Liabilities

572,606,171

570,542,496

149,540

141,555

244,739,887

244,893,909

Deferred investment corporation bond issuance costs
Total investments and other assets
Total Assets
The accompanying notes to financial statements are an integral part of these statements.

87,646,588

85,136,020

1,192,507,570

1,187,420,582

NET ASSETS
Unitholders’ Equity:
Unitholders’ capital
SurplusCapital surplus

394,012,959

394,012,959

Allowance for temporary difference adjustment(16,624,976)(18,295,737)

Other deductions from capital surplus(14,815,391)(16,214,225)

Total deductions from capital surplus(31,440,368)(34,509,963)

Net capital surplus

362,572,590

359,502,995

Retained earnings

12,786,253

12,575,751

Total surplus

375,358,843

372,078,747

Total unitholders’ equity

620,098,731

616,972,656

Deferred gains or losses on hedges(197,332)(94,570)

Total valuation and translation adjustments(197,332)(94,570)

619,901,398

616,878,085

1,192,507,570

1,187,420,582

Valuation and Translation Adjustments:

Total Net Assets
Total Liabilities and Net Assets
The accompanying notes to financial statements are an integral part of these statements.

27

NOMURA REAL ESTATE MASTER FUND, INC.

NOMURA REAL ESTATE MASTER FUND, INC.

28

Message from the Management

Management Strategy

ESG Measures

Financing Status

STATEMENT OF INCOME AND RETAINED EARNINGSFor the period from
September 1, 2021
to February 28, 2022

For the period from March 1, 2021 to August 31, 2021

SurplusCapital surplus
Deductions from capital surplus

Operating Revenues:
Gain on sales of real estate

37,519,267

37,358,086—

162,853

37,519,267

37,520,940

Operating Expenses:
Real estate rental expenses

16,097,387

15,972,567

Loss on sale of real estate—

300,369

Asset management fees

3,394,277

3,385,703

Asset custody fees

57,15457,099Administrative service fees

178,250

172,567

Amortization of goodwill

2,622,242

2,622,242

Other operating expenses

428,539

417,172

22,777,851

22,927,722

14,741,415

14,593,218

Operating Income
NON-OPERATING REVENUES AND EXPENSES
Non-Operating Revenues:
Interest income
Reversal of dividends payable
Interest on refund
Other non-operating revenues

328

292

3,024

2,845

—

7

1,142

6

4,494

3,152

1,677,807

1,585,499

173,528

170,560

7,984

7,984

446,432

449,353

4,824

2,740

2,310,577

2,216,139

12,435,333

12,380,230

12,435,333

12,380,230

Balance as of March 1, 2021
Distributions of retained earnings
Reversal of allowance for temporary difference
adjustments
Distributions in excess of net earnings from allowancefor temporary difference adjustments
Other distributions in excess of net earnings
Net income
Net changes of items other than unitholders’ equity
Total changes of items during the period
Balance as of August 31,2021

Units
4,715,200—

Capitalsurplus394,012,959——

132,888—

132,888

—

—

—

—
—
—
—
4,715,200———
132,888244,739,887————
394,012,959

Unitholders’ Equity
Surplus
Balance as of March 1, 2021
Distributions of retained earnings
Reversal of allowance for temporary difference
adjustments
Distributions in excess of net earnings from allowancefor temporary difference adjustments
Other distributions in excess of net earnings
Net income
Net changes of items other than unitholders’ equity
Total changes of items during the period
Balance as of August 31,2021

Allowance fortemporary
Other deductions Total deductions
difference
from capitalfrom capitaladjustment
surplussurplus(14,994,380)(13,763,038)(28,757,419)———

Unitholders’capital244,606,999—

Interest expenses on investment corporation bonds
Amortization of investment corporation bonds issuance costs
Loan arrangement fees
Other non-operating expenses

Ordinary Income
Income before Income Taxes——(1,763,484)—(1,763,484)(1,763,484)———(1,630,596)(16,624,976)(919,464)——(1,052,352)(14,815,391)(919,464)——(2,682,948)(31,440,368)(919,464)——(2,682,948)
362,572,590

Valuation and Translation Adjustments
Total valuation
Deferred gains or
and translation
losses on hedges
adjustments(351,354)(351,354)——

Retained earnings
13,503,646(13,018,667)

Total surplus
378,759,186(13,018,667)

Total
unitholders’equity623,366,185(13,018,667)(132,888)(132,888)

—

—

—

—

—

(1,763,484)(1,763,484)——(1,763,484)—
12,434,161—(717,393)
12,786,253(919,464)
12,434,161—(3,400,342)
375,358,843(919,464)
12,434,161—(3,267,454)
620,098,731——
154,021
154,021(197,332)——
154,021
154,021(197,332)(919,464)
12,434,161
154,021(3,113,432)
619,901,398

For the period from September 1, 2021 to February 28, 2022

2,727

1,171

2,727

12,434,161

12,377,502

Retained earnings brought forward

352,091

198,249

Retained Earnings at End of Period

12,786,253

12,575,751

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

Total net assets
623,014,831(13,018,667)

Thousands of Yen

Unitholders’ Equity

SurplusCapital surplus
Deductions from capital surplus

Balance as of September 1, 2021
Distributions of retained earnings
Reversal of allowance for temporary difference
adjustments
Distributions in excess of net earnings from allowancefor temporary difference adjustments
Other distributions in excess of net earnings
Net income
Net changes of items other than unitholders’ equity
Total changes of items during the period
Balance as of February 28, 2022

Unitholders’capitalCapital surplus
244,739,887
394,012,959
—
—

Units
4,715,200—

Allowance fortemporary
Other
Total deductions
difference
deductions from from capitaladjustment
capital surplus
surplus(16,624,976)(14,815,391)(31,440,368)
—
—
—

—

154,021—

154,021

—

—

—

—
—
—
—
4,715,200———
154,021244,893,909————
394,012,959

Balance as of September 1, 2021
Distributions of retained earnings
Reversal of allowance for temporary difference
adjustments
Distributions in excess of net earnings from allowancefor temporary difference adjustments
Other distributions in excess of net earnings
Net income
Net changes of items other than unitholders’ equity
Total changes of items during the period
Balance as of February 28, 2022

Retained earnings
12,786,253(12,433,982)

Net capitalsurplus362,572,590—(154,021)——(1,824,782)—(1,824,782)(1,824,782)———(1,670,760)(18,295,737)(1,244,812)——(1,398,834)(16,214,225)(1,244,812)——(3,069,595)(34,509,963)(1,244,812)——(3,069,595)
359,502,995

Unitholders’ Equity
Surplus

1,171

Net Income

Thousands of Yen

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

Income Taxes:
Current

Net capitalsurplus365,255,539—(132,888)

Non-Operating Expenses:
Interest expense

Thousands of Yen

Unitholders’ Equity

OPERATING REVENUES AND EXPENSES

Real estate rental revenues

Financial Section

Investor Information

STATEMENT OF CHANGES IN NET ASSETS
Thousands of Yen

For the period fromMarch 1, 2021
to August 31, 2021

Portfolio

Valuation and Translation Adjustments
Total valuation
Total unitholders’ Deferred gains or
and translation
Total surplus
equitylosses on hedges
adjustments
375,358,843
620,098,731(197,332)(197,332)(12,433,982)(12,433,982)——

Thousands of Yen
Total
net assets
619,901,398(12,433,982)(154,021)(154,021)

—

—

—

—

—

(1,824,782)(1,824,782)——(1,824,782)—
12,377,502—(210,501)
12,575,751(1,244,812)
12,377,502—(3,280,096)
372,078,747(1,244,812)
12,377,502—(3,126,075)
616,972,656——
102,762
102,762(94,570)——
102,762
102,762(94,570)(1,244,812)
12,377,502
102,762(3,023,312)
616,878,085

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

29

NOMURA REAL ESTATE MASTER FUND, INC.

NOMURA REAL ESTATE MASTER FUND, INC.

30

Message from the Management

Management Strategy

ESG Measures

STATEMENT OF CASH FLOWS
Thousands of Yen

For the period from
September 1, 2021
to February 28, 2022

CASH FLOWSCash Flows from Operating Activities
Income before income taxes

12,435,333

12,380,230

Depreciation

5,587,125

5,610,152

Amortization of goodwill

2,622,242

2,622,242

Amortization of investment corporation bonds issuance costs

7,984

7,984

Increase (Decrease) in provision for loss on disaster(550)(10,080)

Interest income

(328)

(292)

Interest expense

1,851,336

1,756,060

Loss on disposal of property and equipment

15,436

5,191

Decrease (Increase) in rental receivables

97,507

134,952

Decrease (Increase) in long-term prepaid expenses(3,130)(196,890)

Decrease (Increase) in long-term deposits

63,56933,577

Increase (Decrease) in trade accounts payable

105,630(960,230)

Increase (Decrease) in other accounts payable(108,257)(15,348)

Increase (Decrease) in accrued consumption taxes

404,292(774,942)

Increase (Decrease) in rent received in advance

13,987(67,037)—

3,896,189

Other
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities

32,912(73,306)

23,125,092

24,348,452

328

292

(1,862,616)(1,836,956)(1,074)(1,170)21,261,729

22,510,618

Cash Flows from Investing Activities
Payments for purchases of property and equipment(5,922,923)(20,168,775)(17,636)(4,339)Reimbursement of security deposits to tenants(1,594,948)(1,666,403)

Proceeds from security deposits from tenants

1,284,481

1,962,236—

40,011(6,251,026)(19,837,271)

Payments for purchases of leasehold rights and intangible assets

Proceeds from security deposits
Net cash provided by (used in) investing activities

Proceeds from long-term debt

28,650,000

30,025,000

Repayments of long-term debt

(28,692,800)(30,067,800)

Distributions to unitholders(13,014,277)(12,434,078)

Distributions in excess of net earnings from allowance for temporary
difference adjustments(1,763,205)(1,825,166)(919,559)(1,245,360)

Net cash provided by (used in) financing activities(15,739,842)(15,547,404)

Net Increase (Decrease) in Cash and Cash Equivalents(729,140)(12,874,058)

Cash and Cash Equivalents at Beginning of Period

63,840,679

63,111,539

Cash and Cash Equivalents at End of Period

63,111,539

50,237,480

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

31

NOMURA REAL ESTATE MASTER FUND, INC.

Investor Information

Financial Section

1. ORGANIZATION
Nomura Real Estate Master Fund, Inc. (NMF) is a real estate investment corporation formed to own and invest primarily in officebuildings, retail facilities, logistics and residential facilities. NMF is externally managed by a licensed asset management company,
Nomura Real Estate Asset Management Co., Ltd. (“NREAM”). NREAM is a wholly-owned subsidiary of Nomura Real Estate Holdings,
Inc. NMF was established on October 1, 2015 through the consolidation type merger involving the former Nomura Real Estate
Master Fund, Inc. (hereinafter the “former NMF”), Nomura Real Estate Office Fund, Inc. (hereinafter “NOF”) and Nomura Real Estate
Residential Fund, Inc. (hereinafter “NRF”), and listed its investment securities (TSE code: 3462) on the Real Estate Investment Trust
Section of the Tokyo Stock Exchange on October 2 of the same year.
NMF adopts the basic policy of investing primarily in real estate and other assets to secure stable income and steady growth ofassets under management over the medium to long term. In order to realize this basic policy, NMF adopts an investment strategy
that centers on the Greater Tokyo area (Tokyo, Kanagawa, Chiba and Saitama prefectures), which has strong tenant demand, while
also considering regional diversification through the three major metropolitan areas and cabinet-order designated cities, etc. By
combining the “diversified type strategy” in which investments are made in facilities of a variety of sectors such as office buildings,
retail facilities, logistics and residential facilities with the “large-scale REIT strategy,” which pursues the effects of diversifying
properties and tenants, to make the portfolio more stable as well as with the utilization of the “leasing value chain” with the Nomura
Real Estate Group, the sponsor, NMF will aim to increase unitholder value by securing stable income and steady growth of assets
under management over the medium to long term.

2. BASIS OF PRESENTATION
NMF maintains its accounting records and prepares its financial statements in accordance with accounting principles generally
accepted in Japan (“Japanese GAAP”), including provisions set forth in the Investment Trust Act of Japan, the Companies Act of Japan,
the Financial Instruments and Exchange Act of Japan and related regulations, which are different in certain respects as to theapplication and disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of NMF, which were prepared inaccordance with Japanese GAAP and were presented in NMF’s Securities Report filed with the Kanto Local Finance Bureau. In
preparing the accompanying financial statements, certain reclassifications and modifications have been made to the financial
statements issued domestically in order to present them in a format that is more familiar to readers outside Japan. In addition,
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.
NMF’s fiscal period is a six-month period which ends at the end of February or August. NMF does not prepare consolidated financial
statements because it has no subsidiaries.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESCash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments that are highly liquid,readily convertible to cash, with an insignificant risk of market value fluctuation, and with a maturity of three months or less whenpurchased.
Property and equipment

Cash Flows from Financing Activities

Other distributions in excess of net earnings

Portfolio

NOTES TO FINANCIAL STATEMENTS
For the period fromMarch 1, 2021
to August 31, 2021

Decrease in property and equipment in trust due to sales

Financing Status

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

5–45 years

Machinery and equipment

6–17 years

Tools, furniture and fixtures

3–20 years

Intangible assets
Intangible assets are amortized by the straight-line method.
Goodwill is amortized using the straight-line method over 20 years.

NOMURA REAL ESTATE MASTER FUND, INC.

32

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

NOTES TO FINANCIAL STATEMENTS
Long-term prepaid expenses

Derivative financial instruments

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

NMF utilizes interest-rate swap contracts as derivative financial instruments only for the purpose of hedging its exposure tochanges in interest rates. NMF defers recognition of gains or losses resulting from changes in the fair value of interest-rate swap
contracts which meet the criteria for deferral hedge accounting.

Impairment of fixed assets
NMF reviews fixed assets for impairment whenever events or changes in circumstances indicate that the carrying value of its fixed
assets may not be recoverable. An impairment loss is recognized if the carrying value of an asset exceeds the aggregate estimatedfuture cash flows. If a fixed asset is determined to be impaired, it is written down to its recoverable amount and the write-down isrecorded as an impairment loss during the period in which it occurs.
Deferred investment corporation bond issuance costs
Deferred investment corporation bond issuance costs are amortized by the straight-line method over the respective terms of
the bonds.
Investment units issuance expenses
The entire amount is expensed as incurred.
Allowances and provisions(1) Allowance for doubtful accounts
For allowance for doubtful accounts against possible losses arising from default on receivables, the uncollectable amount isestimated and recorded by investigating collectability based on historical loan loss ratios for general receivables and on acase-by-case examination for doubtful and other specific receivables.
(2) Provision for loss on disaster
The amount that is reasonably estimated at the end of the 11th fiscal period under review is recorded to cover expenditures forrestoration etc. following the 2021 Fukushima Earthquake.
Accounting treatment of beneficial interests in real estate
All assets and liabilities held in trust, for which the real estate in possession of NMF was entrusted, and all related earnings andexpenses incurred are reflected in the accompanying balance sheet and statement of income and retained earnings, respectively.

Although deferral hedge accounting is generally applied, NMF applies the special treatment to those interest-rate swap contracts
that meet the criteria for such special treatment. Under the special treatment, interest-rate swaps are not remeasured at fairvalue; instead, the net amount paid or received under the interest-rate swap contract is recognized and included in interest
expense or income.
Concerning Changes in Accounting Policies(1) Adoption of accounting standard concerning revenue recognition
NMF decided that it would adopt the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29 issued on March
31, 2020) from the beginning of the accounting period under review, and that it would recognize revenues in the amounts
expected to be received in exchange for promised goods or services at the point in time when control over the goods orservices is transferred to customers. There is no impact on the financial statements in the accounting period under review
due to this change.
In accordance with the transitional treatment stipulated in item 89-3 of the Accounting Standard for Revenue Recognition, thenote “Revenue Recognition” pertaining to the previous accounting period is not presented.
(2) Adoption of the accounting standard concerning fair value measurement
NMF decided that it would adopt the “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30 issued on July 4,2019) from the beginning of the accounting period under review, and that it would adopt the new accounting policies stipulated
in the Accounting Standard for Fair Value Measurement in the future according to the transitional treatment stipulated in item
19 of the Accounting Standard for Fair Value Measurement and item 44-2 of the “Accounting Standard for Financial Instruments”(ASBJ Statement No. 10 issued on July 4, 2019). There is no impact on the financial statements in the accounting period underreview by this change.

Property related taxes
Property in Japan is subject to property taxes, urban planning taxes and depreciable property taxes on a calendar year basis. The
taxes related to property are generally imposed based on the value of the relevant property and incurred for the fiscal period. The
seller of a property is liable for property related taxes for the period from the purchase date through the end of that calendar year
because taxes are imposed on the owner registered in the record as of January 1 for the entire year based on the assessment madeby the local government. The amount applicable to the buyer of a property is usually settled between each party and capitalized aspart of the acquisition cost of the property. The capitalized property related taxes amounted to not applicable for the fiscal period
ended August 31, 2021 and ¥114,569 thousand for the fiscal period ended February 28, 2022.
Revenue recognition
Main performance obligations concerning revenues from contracts with NMF’s customers and normal points in time when the
obligations are satisfied (normal points in time when revenues are recognized) are as follows:(1) Disposition of real estate
Gains on sale of real estate are recorded at the points in time when customers or the buyers acquire control over the real estate
by NMF satisfying delivery obligations stipulated in the contracts on real estate disposition.
(2) Utility expense revenues
Utility expense revenues are recorded according to the supply of electricity, water, etc. to customers or the tenants based on thelease contracts and attached agreements.
Among utility expense revenues, when NMF is acting as an agent in a transaction, it is NMF’s policy to recognize net amounts asrevenues after deducting the amounts paid to the suppliers of electricity, gas, etc. from the amounts NMF received as utility charges.
Income taxes
Deferred tax assets and liabilities are computed based on the differences between the financial statements and income tax bases ofassets and liabilities using the applicable statutory tax rates.
Method of accounting for non-deductible consumption tax, etc.
Non-deductible consumption tax, etc., on such items, as noncurrent assets is included in the acquisition costs of individual items.

33

NOMURA REAL ESTATE MASTER FUND, INC.

NOMURA REAL ESTATE MASTER FUND, INC.

34

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

NOTES TO FINANCIAL STATEMENTS
4. CASH AND CASH EQUIVALENTS

7. LONG-TERM DEBT

Cash and cash equivalents as of August 31, 2021 and February 28, 2022 consist of the following:

Long-term debts as of August 31, 2021 and February 28, 2022 consist of the following:
As of August 31, 2021

Thousands of Yen

As of August 31, 2021
63,111,539

50,237,480

Cash and cash equivalents

63,111,539

50,237,480

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

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

As of August 31, 2021
Buildings in trust
Land in trust
Structures in trust
Tools, furniture and fixtures in trust
Total

As of February 28, 2022

3,239,960
6,096,368
4,794
3,710

3,212,180
6,096,368
4,696
3,324

9,344,833

9,316,569

The secured liabilities are as follows:
Thousands of Yen

As of August 31, 2021
Tenant leasehold and security deposits in trust
Total

As of February 28, 2022

726,648

726,648

726,648

726,648

6. SCHEDULE OF PROPERTY AND EQUIPMENT
Property and equipment as of August 31, 2021 and February 28, 2022 consist of the following:Thousands of Yen

As of August 31, 2021
Acquisition costs
Land

313,197,582

Buildings and structures
Accumulated depreciation

160,252,956(23,504,974)

Machinery and equipment
Accumulated depreciation

1,049,441(594,655)

Tools, furniture and fixtures
Accumulated depreciation

Acquisition costs

Book value

313,197,582

313,203,327

136,747,981

160,622,817(25,863,563)

454,786

1,113,640(627,866)

569,914(254,552)

315,361

620,439(300,902)

319,536

Land in trust

422,871,240

422,871,240

431,974,656

431,974,656

Buildings and structures in trust
Accumulated depreciation

202,627,061(37,847,583)

164,779,478

208,305,796(40,234,095)

Machinery and equipment in trust
Accumulated depreciation

968,161(263,601)

704,560

968,086(297,250)

Tools, furniture and fixtures in trust
Accumulated depreciation

1,088,132(541,993)

546,139

1,150,284(615,736)

313,203,327

2,640

134,759,253
485,773

168,071,701
670,835
534,547

Lease assets in trust
Accumulated depreciation

4,752(1,716)

3,036

4,752
(2,112)

Construction in progress

124,467

124,467

70,43170,431

1,039,744,634

1,039,744,634

1,050,092,704

1,050,092,704

Total

35

As of February 28, 2022

Book value

NOMURA REAL ESTATE MASTER FUND, INC.

Weighted-averageinterest rate (Note 1)

Unsecured loans from a bank due on November 26, 2021

2,000,000

1.30289%——

Unsecured loans from banks due on November 26, 2021

2,000,000

1.11662%——

Unsecured loans from banks due on November 26, 2021

4,900,000

0.97410%——

Unsecured loans from banks due on December 27, 2021

6,375,000

0.25545%——

Unsecured loans from a bank due on January 26, 2022

3,500,000

1.48300%——

Unsecured loans from banks due on February 28, 2022

4,500,000

1.31850%——

Unsecured loans from a bank due on February 28, 2022

2,750,000

1.29600%——

Unsecured loans from banks due on February 28, 2022

4,000,000

1.16000%——

Unsecured loans from banks due on May 26, 2022 (Note 2)

5,500,000

1.25900%

5,500,000

1.25900%

Unsecured loans from banks due on May 31, 2022 (Note 2)

4,500,000

0.82500%

4,500,000

0.82500%

Unsecured loans from banks due on June 27, 2022 (Note 2)

4,000,000

0.22545%

4,000,000

0.21545%

Unsecured loans from banks due on August 26, 2022 (Note 2)

2,980,000

1.19700%

2,980,000

1.19700%

Unsecured loans from a bank due on August 26, 2022 (Note 2)

3,000,000

1.09133%

3,000,000

1.09133%

Unsecured loans from banks due on August 26, 2022 (Note 2)

4,000,000

1.08034%

4,000,000

1.08034%

Unsecured loans from a bank due on August 26, 2022 (Note 2)

1,000,000

0.32886%

1,000,000

0.32886%

Unsecured loans from banks due on September 30, 2022 (Note 2)

4,000,000

0.76250%

4,000,000

0.76250%

Unsecured loans from banks due on October 26, 2022 (Note 2)

3,000,000

0.25545%

3,000,000

0.24545%

Unsecured loans from banks due on November 28, 2022 (Note 2)

2,100,000

0.92280%

2,100,000

0.92280%

Unsecured loans from banks due on November 28, 2022 (Note 2)

4,550,000

1.11000%

4,550,000

1.11000%

Unsecured loans from a bank due on November 28, 2022 (Note 2)

1,800,000

1.05000%

1,800,000

1.05000%

Unsecured loans from banks due on November 28, 2022 (Note 2)

1,500,000

0.98624%

1,500,000

0.98624%

Unsecured loans from a bank due on November 28, 2022 (Note 2)

1,000,000

0.71221%1,000,000

0.71221%

Unsecured loans from banks due on November 28, 2022 (Note 2)

1,500,000

0.69250%

1,500,000

0.69250%

Unsecured loans from a bank due on February 27, 2023 (Note 2)

1,300,000

1.13250%

1,300,000

1.13250%

Unsecured loans from banks due on February 27, 2023 (Note 2)

2,800,000

0.40740%2,800,000

0.40740%

Unsecured loans from banks due on February 28, 2023 (Note 2)

10,000,000

0.48700%

10,000,000

0.48700%

Unsecured loans from a bank due on May 26, 2023

2,000,000

1.86500%

2,000,000

1.86500%

Unsecured loans from a bank due on May 26, 2023

2,000,000

1.89500%

2,000,000

1.89500%

Unsecured loans from a bank due on May 26, 2023

1,000,000

1.83875%

1,000,000

1.83875%

Unsecured loans from a bank due on May 26, 2023

1,000,000

0.41250%

1,000,000

0.41250%

Unsecured loans from a bank due on May 26, 2023

2,500,000

0.43408%2,500,000

0.43408%

Unsecured loans from a bank due on August 28, 2023

1,000,000

1.14850%

1,000,000

1.14850%

Unsecured loans from a bank due on August 28, 2023

1,000,000

1.15850%

1,000,000

1.15850%

Unsecured loans from a bank due on August 28, 2023

1,000,000

1.18032%

1,000,000

1.18032%

Unsecured loans from a bank due on August 28, 2023

4,000,000

1.20772%

4,000,000

1.20772%

Unsecured loans from banks due on August 28, 2023

6,100,000

1.08510%

6,100,000

1.08510%

Unsecured loans from a bank due on August 28, 2023

1,000,000

0.43466%

1,000,000

0.43466%

Unsecured loans from a bank due on August 28, 2023

1,000,000

0.41000%

1,000,000

0.41000%

Unsecured loans from a bank due on August 28, 2023

500,000

0.41435%

500,000

0.41435%

Unsecured loans from banks due on August 31, 2023

6,700,000

0.55700%

6,700,000

0.55700%

Unsecured loans from banks due on September 26, 2023

3,000,000

0.25545%

3,000,000

0.24545%

Unsecured loans from banks due on November 27, 2023

2,000,000

1.75900%

2,000,000

1.75900%

Unsecured loans from banks due on November 27, 2023

2,600,000

0.82800%

2,600,000

0.82800%

Unsecured loans from banks due on November 27, 2023

4,000,000

0.49380%

4,000,000

0.49380%

Unsecured loans from banks due on November 27, 2023

1,500,000

0.47483%

1,500,000

0.47483%

Unsecured loans from banks due on November 27, 2023

1,230,000

0.25545%

1,230,000

0.24545%

Unsecured loans from a bank due on February 26, 2024

2,750,000

1.59400%

2,750,000

1.59400%

Unsecured loans from banks due on February 26, 2024

1,300,000

0.53630%

1,300,000

0.53630%

Unsecured loans from a bank due on February 26, 2024

500,0000.24000%

500,0000.24000%

Unsecured loans from a bank due on February 26, 2024

1,000,000

0.18500%

1,000,000

0.18500%

Unsecured loans from banks due on February 26, 2024

4,670,000

0.25545%

4,670,000

0.24545%

Unsecured loans from banks due on May 27, 2024

1,100,000

0.51000%

1,100,000

0.51000%

As of February 28, 2022

Cash and bank deposits

As of February 28, 2022

Amount(Thousands of Yen)

Amount(Thousands of Yen)

Weighted-averageinterest rate (Note 1)

NOMURA REAL ESTATE MASTER FUND, INC.

36

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

NOTES TO FINANCIAL STATEMENTS
As of August 31, 2021

37

As of February 28, 2022

Amount(Thousands of Yen)

Weighted-averageinterest rate (Note 1)

Unsecured loans from a bank due on May 27, 2024

2,700,000

0.46376%

2,700,000

0.46376%

Unsecured loans from a bank due on May 27, 2024

2,000,000

0.53676%

2,000,000

0.53676%

Unsecured loans from a bank due on June 26, 2024

2,700,000

0.85925%2,700,000

Unsecured loans from a bank due on June 26, 2024

2,700,000

0.49533%

Unsecured loans from a bank due on August 26, 2024

3,000,000

Unsecured loans from a bank due on August 26, 2024

As of August 31, 2021

Weighted-averageinterest rate (Note 1)

As of February 28, 2022

Amount(Thousands of Yen)

Weighted-averageinterest rate (Note 1)

Unsecured loans from a bank due on August 26, 2026

2,700,000

0.67591%2,700,000

0.67591%

Unsecured loans from a bank due on August 26, 2026

2,700,000

0.67591%2,700,000

0.67591%0.85925%

Unsecured loans from banks due on August 26, 2026

3,000,000

0.77669%

3,000,000

0.77669%

2,700,000

0.49533%

Unsecured loans from a bank due on August 26, 2026

1,000,000

0.70414%1,000,000

0.70414%0.58175%

3,000,000

0.58175%

Unsecured loans from banks due on August 26, 2026

3,000,000

0.67483%

3,000,000

0.67483%2,430,000

0.49971%2,430,000

0.49971%

Unsecured loans from a bank due on August 26, 2026

1,000,000

0.64500%

1,000,000

0.64500%

Unsecured loans from banks due on August 26, 2024

5,670,000

0.49485%

5,670,000

0.49485%

Unsecured loans from a bank due on August 26, 2026

1,000,000

0.42118%

1,000,000

0.42118%

Unsecured loans from a bank due on August 26, 2024

1,000,000

0.28624%

1,000,000

0.28624%

Unsecured loans from a bank due on August 26, 2026

500,000

0.43627%

500,000

0.43627%

Unsecured loans from a bank due on November 26, 2024

2,250,000

0.50825%

2,250,000

0.50825%

Unsecured loans from banks due on August 26, 2026

1,500,000

0.20880%

1,500,000

0.20880%

Unsecured loans from banks due on November 26, 2024

3,000,000

0.58000%

3,000,000

0.58000%

Unsecured loans from a bank due on August 26, 2026

1,000,000

0.30116%

1,000,000

0.30116%

Unsecured loans from a bank due on November 26, 2024

1,800,000

0.55979%

1,800,000

0.55979%

Unsecured loans from a bank due on November 26, 2026

2,000,000

0.76000%

2,000,000

0.76000%

Unsecured loans from a bank due on November 26, 2024

500,000

0.52384%

500,000

0.52384%

Unsecured loans from a bank due on November 26, 2026

2,000,000

0.74229%2,000,000

0.74229%

Unsecured loans from banks due on November 26, 2024

2,000,000

0.42630%

2,000,000

0.42630%

Unsecured loans from banks due on November 26, 2026

4,165,000

0.73506%

4,165,000

0.73506%

Unsecured loans from a bank due on November 26, 2024

800,000

0.21380%

800,000

0.21380%

Unsecured loans from banks due on November 26, 2026

4,000,000

0.69956%

4,000,000

0.69956%

Unsecured loans from banks due on November 26, 2024——

6,375,000

0.24545%

Unsecured loans from banks due on November 26, 2026

1,500,000

0.64999%

1,500,000

0.64999%

Unsecured loans from banks due on February 26, 2025

4,200,000

0.62675%

4,200,000

0.62675%

Unsecured loans from banks due on November 26, 2026

2,000,000

0.60750%

2,000,000

0.60750%

Unsecured loans from a bank due on February 26, 2025

1,000,000

0.52140%

1,000,000

0.52140%

Unsecured loans from banks due on November 26, 2026

1,000,000

0.28000%

1,000,000

0.28000%

Unsecured loans from banks due on February 26, 2025

3,000,000

0.53936%3,000,000

0.53936%

Unsecured loans from banks due on November 26, 2026

1,200,000

0.30000%

1,200,000

0.30000%

Unsecured loans from banks due on February 26, 2025

1,500,000

0.53880%

1,500,000

0.53880%

Unsecured loans from banks due on February 26, 2027

2,320,000

0.71500%

2,320,000

0.71500%

Unsecured loans from banks due on February 26, 2025

1,000,000

0.50604%

1,000,000

0.50604%

Unsecured loans from banks due on February 26, 2027

1,500,000

0.46630%

1,500,000

0.46630%

Unsecured loans from a bank due on May 26, 2025

2,000,000

0.60286%2,000,000

0.60286%

Unsecured loans from a bank due on February 26, 2027

500,000

0.44859%

500,000

0.44859%

Unsecured loans from a bank due on May 26, 2025

2,000,000

0.60286%2,000,000

0.60286%

Unsecured loans from banks due on February 26, 2027

1,000,000

0.48144%

1,000,000

0.48144%

Unsecured loans from banks due on May 26, 2025

2,800,000

0.60286%

2,800,000

0.60286%

Unsecured loans from a bank due on February 26, 2027

1,500,000

0.28500%

1,500,000

0.28500%

Unsecured loans from a bank due on May 26, 2025

1,000,000

0.61434%

1,000,000

0.61434%

Unsecured loans from a bank due on February 26, 2027

1,000,000

0.28500%

1,000,000

0.28500%

Unsecured loans from a bank due on May 26, 2025

1,000,000

0.50506%

1,000,000

0.50506%

Unsecured loans from a bank due on February 26, 2027

300,000

0.16205%

300,000

0.16205%

Unsecured loans from banks due on May 26, 2025

2,000,000

0.46301%2,000,000

0.46301%

Unsecured loans from a bank due on February 26, 2027

500,000

0.10094%

500,000

0.10094%

Unsecured loans from a bank due on May 26, 2025

1,000,000

0.19750%

1,000,000

0.19750%

Unsecured loans from a bank due on February 26, 2027

500,000

0.35139%

500,000

0.35139%

Unsecured loans from banks due on August 26, 2025

3,000,000

0.56380%

3,000,000

0.56380%

Unsecured loans from a bank due on February 26, 2027

500,000

0.24818%

500,000

0.24818%

Unsecured loans from banks due on August 26, 2025

4,050,000

0.58727%

4,050,000

0.58727%

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

1,000,000

0.29065%

Unsecured loans from banks due on August 26, 2025

1,850,000

0.67915%1,850,000

0.67915%

Unsecured loans from banks due on March 26, 2027

1,500,000

0.69068%

1,500,000

0.69068%

Unsecured loans from banks due on August 26, 2025

2,600,000

0.60489%

2,600,000

0.60489%

Unsecured loans from banks due on May 26, 2027

3,060,000

0.78177%

3,060,000

0.78177%

Unsecured loans from banks due on August 26, 2025

3,000,000

0.58380%

3,000,000

0.58380%

Unsecured loans from banks due on May 26, 2027

2,300,000

0.74736%2,300,000

0.74736%

Unsecured loans from a bank due on November 26, 2025

1,100,000

1.09830%

1,100,000

1.09830%

Unsecured loans from a bank due on May 26, 2027

1,800,000

0.70250%

1,800,000

0.70250%

Unsecured loans from a bank due on November 26, 2025

1,100,000

1.06250%

1,100,000

1.06250%

Unsecured loans from a bank due on May 26, 2027

1,400,000

0.32000%

1,400,000

0.32000%

Unsecured loans from a bank due on November 26, 2025

2,000,000

1.03955%

2,000,000

1.03955%

Unsecured loans from banks due on August 26, 2027

4,000,000

0.76843%

4,000,000

0.76843%

Unsecured loans from a bank due on November 26, 2025

2,000,000

0.59639%2,000,000

0.59639%

Unsecured loans from banks due on August 26, 2027

2,600,000

0.76290%

2,600,000

0.76290%

Unsecured loans from a bank due on November 26, 2025

2,000,000

0.60448%2,000,000

0.60448%

Unsecured loans from a bank due on August 26, 2027

1,000,000

0.74500%

1,000,000

0.74500%

Unsecured loans from banks due on November 26, 2025

4,200,000

0.64616%

4,200,000

0.64616%

Unsecured loans from a bank due on August 26, 2027

1,000,000

0.51356%

1,000,000

0.51356%

Unsecured loans from a bank due on November 26, 2025

900,000

0.65123%900,000

0.65123%

Unsecured loans from banks due on August 26, 2027

1,500,000

0.29000%

1,500,000

0.29000%

Unsecured loans from a bank due on November 26, 2025

1,300,000

0.64278%

1,300,000

0.64278%

Unsecured loans from a bank due on August 26, 2027

600,000

0.32630%

600,000

0.32630%

Unsecured loans from a bank due on November 26, 2025

1,000,000

0.59499%

1,000,000

0.59499%

Unsecured loans from a bank due on August 26, 2027

1,700,000

0.27130%

1,700,000

0.27130%

Unsecured loans from a bank due on November 26, 2025

500,000

0.56311%500,000

0.56311%

Unsecured loans from a bank due on November 26, 2027

2,000,000

0.89209%2,000,000

0.89209%

Unsecured loans from banks due on February 26, 2026

4,000,000

0.74080%

4,000,000

0.74080%

Unsecured loans from banks due on November 26, 2027

5,000,000

0.79571%

5,000,000

0.79571%

Unsecured loans from banks due on February 26, 2026

2,500,000

0.59592%

2,500,000

0.59592%

Unsecured loans from a bank due on November 26, 2027

1,800,000

0.75050%

1,800,000

0.75050%

Unsecured loans from banks due on February 26, 2026

800,000

0.37630%

800,000

0.37630%

Unsecured loans from banks due on November 26, 2027

1,700,000

0.70750%

1,700,000

0.70750%

Unsecured loans from a bank due on February 26, 2026

500,000

0.39196%

500,000

0.39196%

Unsecured loans from banks due on November 26, 2027

2,500,000

0.52234%

2,500,000

0.52234%

Unsecured loans from banks due on February 26, 2026

1,500,000

0.17136%

1,500,000

0.17136%

Unsecured loans from banks due on November 26, 2027

1,000,000

0.31630%

1,000,000

0.31630%

Unsecured loans from a bank due on February 26, 2026

500,000

0.21500%

500,000

0.21500%

Unsecured loans from a bank due on November 26, 2027

750,000

0.29630%750,000

0.29630%

Unsecured loans from a bank due on May 26, 2026

2,500,000

0.63995%

2,500,000

0.63995%

Unsecured loans from a bank due on February 28, 2028

1,000,000

0.82130%

1,000,000

0.82130%

Unsecured loans from a bank due on May 26, 2026

1,100,000

0.65267%

1,100,000

0.65267%

Unsecured loans from a bank due on February 28, 2028

2,355,000

0.76241%

2,355,000

0.76241%

Unsecured loans from banks due on May 26, 2026

3,600,000

0.60880%

3,600,000

0.60880%

Unsecured loans from banks due on February 28, 2028

1,500,000

0.78296%

1,500,000

0.78296%

Unsecured loans from a bank due on May 26, 2026

1,000,000

0.59614%1,000,000

0.59614%

Unsecured loans from a bank due on February 28, 2028

1,800,000

0.79642%1,800,000

0.79642%

Unsecured loans from a bank due on May 26, 2026

1,100,000

0.37000%

1,100,000

0.37000%

Unsecured loans from a bank due on February 28, 2028

2,650,000

0.54205%2,650,000

0.54205%

Unsecured loans from a bank due on May 26, 2026

1,500,000

0.25873%

1,500,000

0.25873%

Unsecured loans from banks due on February 28, 2028

1,500,000

0.57365%

1,500,000

0.57365%

NOMURA REAL ESTATE MASTER FUND, INC.

Amount(Thousands of Yen)

Amount(Thousands of Yen)

Weighted-averageinterest rate (Note 1)

NOMURA REAL ESTATE MASTER FUND, INC.

38

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

NOTES TO FINANCIAL STATEMENTS
As of August 31, 2021

39

As of February 28, 2022

Amount(Thousands of Yen)

Weighted-averageinterest rate (Note 1)

Unsecured loans from banks due on February 28, 2028

1,000,000

0.17813%1,000,000

0.17813%

Unsecured loans from a bank due on February 28, 2028

1,000,000

0.41000%

1,000,000

0.41000%

Unsecured loans from a bank due on February 28, 2028

1,000,000

0.41000%

1,000,000

Unsecured loans from a bank due on February 28, 2028

500,000

0.39000%

Unsecured loans from a bank due on February 28, 2028

920,000

Unsecured loans from banks due on May 26, 2028

As of August 31, 2021

Weighted-averageinterest rate (Note 1)

As of February 28, 2022

Amount(Thousands of Yen)

Weighted-averageinterest rate (Note 1)

Unsecured loans from banks due on February 26, 2030

4,250,000

0.52000%

4,250,000

0.52000%

Unsecured loans from a bank due on February 26, 2030

1,500,000

0.48000%

1,500,000

0.48000%

0.41000%

Unsecured loans from a bank due on February 26, 2030

600,000

0.40915%600,000

0.40915%500,000

0.39000%

Unsecured loans from a bank due on February 26, 2030

500,000

0.34054%500,000

0.34054%0.30000%

920,000

0.30000%

Unsecured loans from banks due on February 26, 2030

1,300,000

0.59482%

1,300,000

0.59482%

5,000,000

0.79880%

5,000,000

0.79880%

Unsecured loans from a bank due on February 26, 2030

1,500,000

0.52446%

1,500,000

0.52446%

Unsecured loans from a bank due on May 26, 2028

2,000,000

0.75922%2,000,000

0.75922%

Unsecured loans from a bank due on February 26, 2030

1,400,000

0.58630%

1,400,000

0.58630%

Unsecured loans from a bank due on May 26, 2028

1,550,000

0.55038%

1,550,000

0.55038%

Unsecured loans from a bank due on February 26, 2030

1,000,000

0.58630%

1,000,000

0.58630%

Unsecured loans from a bank due on May 26, 2028

500,000

0.54010%500,000

0.54010%

Unsecured loans from banks due on May 27, 2030

7,000,000

0.54630%

7,000,000

0.54630%

Unsecured loans from banks due on May 26, 2028

2,000,000

0.54750%

2,000,000

0.54750%

Unsecured loans from a bank due on May 27, 2030

800,000

0.52630%

800,000

0.52630%

Unsecured loans from a bank due on May 26, 2028

1,400,000

0.40500%

1,400,000

0.40500%

Unsecured loans from a bank due on May 27, 2030

1,000,000

0.53250%

1,000,000

0.53250%

Unsecured loans from banks due on August 28, 2028

3,600,000

0.84750%

3,600,000

0.84750%

Unsecured loans from a bank due on May 27, 2030

1,000,000

0.55988%

1,000,000

0.55988%

Unsecured loans from a bank due on August 28, 2028

500,000

0.61005%

500,000

0.61005%

Unsecured loans from a bank due on May 27, 2030

500,000

0.50485%

500,000

0.50485%

Unsecured loans from banks due on August 28, 2028

1,000,000

0.62163%

1,000,000

0.62163%

Unsecured loans from a bank due on May 27, 2030

720,000

0.59399%

720,000

0.59399%

Unsecured loans from a bank due on August 28, 2028

500,000

0.62025%500,000

0.62025%

Unsecured loans from a bank due on May 27, 2030

1,430,000

0.45862%

1,430,000

0.45862%

Unsecured loans from a bank due on August 28, 2028

500,000

0.37500%

500,000

0.37500%

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

1,000,000

0.52437%

Unsecured loans from a bank due on August 28, 2028

1,000,000

0.40380%

1,000,000

0.40380%

Unsecured loans from banks due on August 26, 2030

2,000,000

0.56500%

2,000,000

0.56500%

Unsecured loans from a bank due on August 28, 2028

1,260,000

0.45375%

1,260,000

0.45375%

Unsecured loans from a bank due on August 26, 2030

1,100,000

0.54500%

1,100,000

0.54500%

Unsecured loans from banks due on November 27, 2028

2,000,000

0.81130%

2,000,000

0.81130%

Unsecured loans from a bank due on August 26, 2030

300,000

0.54500%

300,000

0.54500%

Unsecured loans from banks due on November 27, 2028

3,000,000

0.59375%

3,000,000

0.59375%

Unsecured loans from banks due on August 26, 2030

500,000

0.52063%

500,000

0.52063%

Unsecured loans from a bank due on November 27, 2028

1,800,000

0.50880%

1,800,000

0.50880%

Unsecured loans from a bank due on August 26, 2030

1,000,000

0.46000%

1,000,000

0.46000%

Unsecured loans from a bank due on November 27, 2028

500,000

0.39380%

500,000

0.39380%

Unsecured loans from a bank due on August 26, 2030

1,000,000

0.56068%

1,000,000

0.56068%

Unsecured loans from a bank due on November 27, 2028——

1,000,000

0.40630%

Unsecured loans from a bank due on October 28, 2030

1,100,000

1.92250%

1,100,000

1.92250%

Unsecured loans from banks due on February 26, 2029

2,500,000

0.65880%

2,500,000

0.65880%

Unsecured loans from a bank due on October 28, 2030

1,100,000

1.91700%

1,100,000

1.91700%

Unsecured loans from banks due on February 26, 2029

1,400,000

0.67098%

1,400,000

0.67098%

Unsecured loans from a bank due on November 26, 2030

350,000

0.42630%

350,000

0.42630%

Unsecured loans from a bank due on February 26, 2029

2,300,000

0.63692%

2,300,000

0.63692%

Unsecured loans from a bank due on November 26, 2030

500,000

0.53630%

500,000

0.53630%

Unsecured loans from a bank due on February 26, 2029

500,000

0.63692%

500,000

0.63692%

Unsecured loans from a bank due on November 26, 2030

2,000,000

0.59763%2,000,000

0.59763%

Unsecured loans from a bank due on February 26, 2029

3,500,000

0.41815%3,500,000

0.41815%

Unsecured loans from a bank due on November 26, 2030

1,000,000

0.59819%

1,000,000

0.59819%

Unsecured loans from a bank due on February 26, 2029

500,000

0.37000%

500,000

0.37000%

Unsecured loans from a bank due on February 26, 2031

700,000

0.67750%700,000

0.67750%

Unsecured loans from a bank due on February 26, 2029

500,000

0.49750%

500,000

0.49750%

Unsecured loans from a bank due on February 26, 2031

2,000,000

0.67750%

2,000,000

0.67750%

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

1,500,000

0.55565%

Unsecured loans from banks due on February 26, 2031

4,000,000

0.67750%

4,000,000

0.67750%

Unsecured loans from banks due on May 28, 2029

5,000,000

0.64000%

5,000,000

0.64000%

Unsecured loans from a bank due on February 26, 2031

400,000

0.50000%

400,000

0.50000%

Unsecured loans from a bank due on May 28, 2029

800,000

0.55190%

800,000

0.55190%

Unsecured loans from a bank due on February 26, 2031

420,000

0.65750%

420,000

0.65750%

Unsecured loans from a bank due on May 28, 2029

500,000

0.26451%

500,000

0.26451%

Unsecured loans from a bank due on February 26, 2031

2,750,000

0.50226%

2,750,000

0.50226%

Unsecured loans from a bank due on May 28, 2029

1,000,000

0.45875%

1,000,000

0.45875%

Unsecured loans from a bank due on February 26, 2031

1,800,000

0.52198%

1,800,000

0.52198%

Unsecured loans from a bank due on May 28, 2029

1,000,000

0.44880%

1,000,000

0.44880%

Unsecured loans from banks due on May 26, 2031

6,000,000

0.64130%

6,000,000

0.64130%

Unsecured loans from banks due on May 28, 2029

1,000,000

0.38500%

1,000,000

0.38500%

Unsecured loans from a bank due on May 26, 2031

3,500,000

0.64242%3,500,000

0.64242%

Unsecured loans from banks due on August 27, 2029

3,900,000

0.46130%

3,900,000

0.46130%

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

1,000,000

0.60556%

Unsecured loans from banks due on August 27, 2029

2,000,000

0.46130%

2,000,000

0.46130%

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

3,500,000

0.78816%

Unsecured loans from banks due on August 27, 2029

2,800,000

0.55845%2,800,000

0.55845%

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

3,000,000

0.64630%

Unsecured loans from banks due on August 27, 2029

1,600,000

0.48380%

1,600,000

0.48380%

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

1,900,000

0.47755%

Unsecured loans from a bank due on August 27, 2029

1,500,000

0.48380%

1,500,000

0.48380%

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

3,500,000

0.73988%

Unsecured loans from a bank due on August 27, 2029

500,000

0.46380%

500,000

0.46380%

Unsecured loans from banks due on February 26, 2032——

6,250,000

0.83563%

Unsecured loans from banks due on August 27, 2029

1,000,000

0.43880%

1,000,000

0.43880%

Unsecured loans from a bank due on May 26, 2025 (Note 3)

646,900

2.17000%

625,500

2.17000%

Unsecured loans from a bank due on August 27, 2029

1,800,000

0.40500%

1,800,000

0.40500%

Unsecured loans from a bank due on May 26, 2025 (Note 3)

646,900

2.21812%625,500

2.21812%

Unsecured loans from a bank due on November 26, 2029

2,000,000

1.12506%

2,000,000

1.12506%

Unsecured loans from a bank due on November 26, 2029

2,000,000

1.12506%

2,000,000

1.12506%

Unsecured loans from a bank due on November 26, 2029

1,200,000

0.59500%

1,200,000

0.59500%

Unsecured loans from a bank due on November 26, 2029

1,000,000

0.59500%

1,000,000

0.59500%

Unsecured loans from a bank due on November 26, 2029

750,000

0.48000%

750,000

0.48000%

Unsecured loans from a bank due on November 26, 2029

500,000

0.59500%

500,000

0.59500%

Unsecured loans from a bank due on November 26, 2029

2,000,000

0.50630%

2,000,000

0.50630%

Unsecured loans from a bank due on November 26, 2029

750,000

0.47380%750,000

0.47380%

Unsecured loans from banks due on November 26, 2029

4,000,000

0.54904%

4,000,000

0.54904%

NOMURA REAL ESTATE MASTER FUND, INC.

Amount(Thousands of Yen)

Total

485,798,800

Amount(Thousands of Yen)

Weighted-averageinterest rate (Note 1)

485,756,000

Note 1: T he weighted-average interest rate is weighted by the balance of each borrowing at the end of the period and rounded to the nearest fifth decimal place. As for the borrowings,
hedged by interest-rate swaps for the purpose of avoiding interest rate fluctuation risk, the swapped interest rates are used to calculate the weighted-average interest rate.
Note 2: A
 t the end of the period, these loans are accounted for under current liabilities on the balance sheets as the current portion of long-term borrowings.
Note 3: I nstallments of ¥10.7 million will be made on the 26th day of every third month starting on August 26, 2013, with the remaining payment of ¥497.1 million to be repaid on May
26, 2025.

NOMURA REAL ESTATE MASTER FUND, INC.

40

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Financial Section

Investor Information

NOTES TO FINANCIAL STATEMENTS
The scheduled repayment amounts of long-term debt for each of the five years after the balance sheet date are as follows:

Thousands of Yen

Thousands of Yen
1-2 years

2-3 years

3-4 years

As of August 31, 2021

Within a year
55,090,600

64,435,600

47,935,600

48,387,000

54,100,000

As of February 28, 2022

58,615,000

55,435,600

50,810,600

53,194,200

56,685,000

Related assets, etc.

Balance at the Allowance set
Initial amount end of previous aside during
periodperiodReason4-5 years

Note 1: The Company entered into ¥10,000 million of credit facilities in the form of commitment lines with two financial institutions for the fiscal period ended August 31, 2021. The total
unused amount of such credit facilities was ¥10,000 million as of August 31, 2021.
Note 2: The Company entered into ¥40,000 million of credit facilities in the form of commitment lines with four financial institutions for the fiscal period ended August 31, 2021. The total
unused amount of such credit facilities was ¥40,000 million as of August 31, 2021.
Note 3: The Company entered into ¥10,000 million of credit facilities in the form of commitment lines with two financial institutions for the fiscal period ended February 28, 2022. The
total unused amount of such credit facilities was ¥10,000 million as of February 28, 2022.
Note 4: The Company entered into ¥40,000 million of credit facilities in the form of commitment lines with four financial institutions for the fiscal period ended February 28, 2022. The
total unused amount of such credit facilities was ¥40,000 million as of February 28, 2022.

8. INVESTMENT CORPORATION BONDS

Amortization of
goodwill

Goodwill

Land, buildings, etc. Merger expenses
Loss on interest-rate
swaps recognized at
the end of the fiscal
periodDeferred gains orlosses on hedges

As of February 28, 2022

Reason forreversal

13,192,958

1,769,017—

14,961,976—

4,029,135

1,317,179(5,533)—

1,311,646—

Changes in fairvalue of351,354
derivativetransactions

2,867,594

484,242—(132,888)—

14,994,380

1,763,484(132,888)

16,624,976——

14,994,380

1,763,484(132,888)

16,624,976

—

Total

As of August 31, 2021

Balance at theend of current
period

22,600,340

Increase – subtotal

Details of investment corporation bonds outstanding are summarized as follows:

Reversalduringperiod

2. Method of reversal

Amount(Thousands of Yen)

Interest rate (Note 1)

Amount(Thousands of Yen)

Interest rate (Note 1)

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

3,000,000

0.87%

3,000,000

0.87%

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

6,000,000

1.02%

6,000,000

1.02%

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

2,000,000

0.59%

2,000,000

0.59%

Buildings, etc.

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

Land

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

Buildings in trust, etc.

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

Land in trust
Leasehold rights
Leasehold rights in trust

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

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

4,500,000

2.90%

4,500,000

2.90%

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

3,000,000

0.53%

3,000,000

0.53%

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

7,000,000

0.54%

7,000,000

0.54%

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

1,500,000

1.03%

1,500,000

1.03%

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

5,000,000

0.90%

5,000,000

0.90%

Total

32,000,000

32,000,000(1) Amortization of goodwill
In principle, amortization of goodwill is not reversed.
(2) Merger expenses
Item

Method of reversal(3) Deferred gains or losses on hedges
Based on changes in the fair value of derivatives used as hedging instruments, the corresponding amount is scheduled tobe reversed.
For the period from September 1, 2021 to February 28, 2022
1. Reason, related assets and amounts

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

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

1-2 years

2-3 years

3-4 years

4-5 years

As of August 31, 2021

—

—

—

9,000,000—

As of February 28, 2022——

9,000,000——

9. UNITHOLDERS’ EQUITY
NMF issues only non-par value investment units in accordance with the Investment Trust Act. The entire amount of the issue price of
new units is designated as stated capital. NMF is required to maintain net assets of at least ¥50,000 thousand as set forth in theInvestment Trust Act.

10. ALLOWANCE FOR TEMPORARY DIFFERENCE ADJUSTMENTS

Thousands of Yen

Related assets, etc.
Goodwill

ReasonAmortization of
goodwill

Land, buildings, etc. Merger expenses
Deferred gains orlosses on hedges
Increase - subtotal
Total

Loss on interest-rate
swaps recognized at
the end of the fiscal
periodBalance at the Allowance set
Initial amount end of previous aside during
periodperiodReversalduringperiodBalance at theend of current
periodReason forreversal

25,222,583

14,961,976

1,830,223—

16,792,199—

4,029,135

1,311,646(5,440)—1,306,205—

Changes in fairvalue of197,332
derivativetransactions

2,867,594

351,354—(154,021)—

16,624,976

1,824,782(154,021)

18,295,737——

16,624,976

1,824,782(154,021)

18,295,737—

The movement in the allowance for temporary difference adjustments on the Balance Sheet was as follows:
For the period from March 1, 2021 to August 31, 2021
1. Reason, related assets and amounts

41

NOMURA REAL ESTATE MASTER FUND, INC.

NOMURA REAL ESTATE MASTER FUND, INC.

42

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Financial Section

Investor Information

NOTES TO FINANCIAL STATEMENTS
2. Method of reversal

Since the Company distributed in excess of 90% of its distributable income in the form of cash distributions totaling ¥15,296,108
thousand for the fiscal period ended February 28, 2022 such distributions were treated as deductible distributions for purposes ofcorporate income taxes.

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

The following summarizes breakdown of deferred tax assets and liabilities:(2) Merger expenses
Item

Method of reversal

Thousands of Yen

Buildings, etc.

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

Land

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

Buildings in trust, etc.

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

Land in trust
Leasehold rights
Leasehold rights in trust

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

For the period fromMarch 1, 2021
to August 31, 2021
Deferred tax asset:
Valuation difference on other assets acquired by merger(3) Deferred gains or losses on hedges
Based on changes in the fair value of derivatives used as hedging instruments, the corresponding amount is scheduled tobe reversed.

11. PER UNIT INFORMATIONThe net asset values per unit and the net income per unit as of August 31, 2021 and February 28, 2022 were as follows:
For the period fromMarch 1, 2021
to August 31, 2021

For the period from
September 1, 2021
to February 28, 2022

19,486,187

19,327,733

Deferred gains or losses on hedges

62,08129,752

Unearned revenue

23,623

10,822

Write-offs for long-term prepaid expenses

991

402

Depreciation costs of trust leasehold rights

1,824

1,945

Non-deductible accrued enterprise tax

27

142

Provision for loss on disaster

—

6,408

Subtotal

19,574,735

19,377,207

Valuation allowance(19,574,735)(19,377,207)

—

—

—

—

—

—

Total non-current deferred tax assets
Total deferred tax assets

Net assets per unit

131,468

130,827

Net income per unit

2,637

2,625

Net deferred tax assets

The following summarizes the significant differences between the statutory tax rate and the effective tax rate.

Note 1: The net income per unit is calculated by dividing net income by the weighted-average number of units outstanding.
Note 2: The basis for calculating net income per unit is as follows.

For the period fromMarch 1, 2021
to August 31, 2021
Net income (Thousands of Yen)

For the period fromMarch 1, 2021
to August 31, 2021

For the period from
September 1, 2021
to February 28, 2022

12,434,161

12,377,502

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

Net income available to ordinary unitholders (Thousands of Yen)

12,434,161

12,377,502

Average number of units during the period (Units)

4,715,200

4,715,200

12. RELATED PARTY TRANSACTIONS

31.46%

31.46%

Deductible cash distributions(36.07%)(36.77%)

Valuation of allowance(2.02%)(1.33%)

Amortization of goodwill

6.63%

6.66%

Other

0.00%

0.00%

Effective tax rate

0.01%

0.02%

14. FINANCIAL INSTRUMENTS

Parent Company and major corporate unitholders

Overview

Subsidiaries and affiliates
Not applicable
Fellow subsidiary companies
Not applicable
Directors and major individual unitholders
Not applicable

13. INCOME TAXESThe Company, as an investment corporation, is subject to corporate income taxes at a statutory tax rate of approximately 31.46% for
the fiscal period ended February 28, 2022. However, the Company may deduct dividend distributions paid to its unitholders from its
taxable income amounts, provided such distributions meet the requirements under the Act on Special Measures Concerning
Taxation of Japan. Under this act, an investment corporation must meet a number of tax requirements, including a requirement to
distribute in excess of 90% of its distributable income for the fiscal period, in order to deduct such amounts. If the investment
corporation does not satisfy all of the requirements, the entire taxable income of the investment corporation will be subject toregular corporate income taxes.

NOMURA REAL ESTATE MASTER FUND, INC.

For the period from
September 1, 2021
to February 28, 2022

Statutory tax rate

For the periods from March 1, 2021 to August 31, 2021 and from September 1, 2021 to February 28, 2022
Not applicable43

For the period from
September 1, 2021
to February 28, 2022

(1) Policy for Financial Instruments
Upon acquisition of property-related assets, the Company may raise funds through certain financing methods including
borrowings, issuance of investment corporation bonds and issuance of investment units. In financing through interest-bearing
debt, to secure stable financing capability and reduce future risks of rising interest rates, the Company’s investment policy is tosecure longer-term, fixed-rate borrowings with well-diversified maturities.
The Company enters into derivative transactions only for the purpose of reducing risk of future interest rate fluctuations anddoes not engage in speculative transactions.
(2) Type and Risk of Financial Instruments and Related Risk Management
Borrowings and investment corporation bonds are primarily used to fund the acquisition of property-related assets as well as therepayment of debts and redemption of investment corporation bonds. The Company is exposed to liquidity risk of being unable
to meet its obligations on scheduled due dates. The Company controls and limits such risk by diversifying not only the financial
institutions, but also the type of financing to include the effective use of surplus funds and direct financing from the capital
markets such as issuance of investment units. In addition, the Company is exposed to the market risk arising from fluctuations ininterest rates on its floating-rate debt. However, the effect of such risk on the operation of the Company is limited by maintaining
the LTV ratio at low levels and the ratio of long-term fixed-rate debt to total debt at high levels. Furthermore, the Company may
utilize derivative transactions (interest-rate swap transactions) as a hedging instrument to reduce the market risk under floatingrate debt by swapping such floating-rate interest payments for fixed-rate interest payments.

NOMURA REAL ESTATE MASTER FUND, INC.

44

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Financial Section

Investor Information

NOTES TO FINANCIAL STATEMENTS
Bank deposits are held as a means of investing surplus funds, and the Company is exposed to the credit risk that financial
institutions may default. However, the effect of such risk is limited by diversifying the financial institutions with which surplus
funds are deposited.

Note 3: Redemption schedule for debt as of August 31, 2021

Thousands of Yen(3) Supplementary Explanation on Estimated Fair Value of Financial Instruments
The fair value of financial instruments is based on the quoted market price, if applicable. When there is no quoted market
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 of derivative transactions stated in “22. Derivatives and Hedge Accounting” below do not represent the market
risk involved in these derivative transactions.

Due within
one yearInvestment corporation bonds
Long-term debt
Total

After one year,
within two years

After two years,
within three years

After three years,
within four years

After four years,
within five years

—

—

—

9,000,000—

23,000,000

55,090,600

64,435,600

47,935,600

48,387,000

54,100,000

215,850,000

55,090,600

64,435,600

47,935,600

57,387,000

54,100,000

238,850,000

After one year,
within two years

After two years,
within three years

After three years,
within four years

After four years,
within five years

Note 4: Redemption schedule for debt as of February 28, 2022

Fair Value of Financial Instruments

Thousands of Yen

For the period from March 1, 2021 to August 31, 2021

Due within
one yearCarrying amount, fair value and the difference between the two as of August 31, 2021 are as follows.
“Cash and bank deposits,” “Cash and bank deposits in trust,” and “Short-term debt” approximate their carrying amounts due to cash
and short-term settlements, therefore, notes are omitted.
Thousands of Yen

Carrying value (Note 1)

Fair value (Note 1)

Difference(i) Current portion of long-term debt

(55,090,600)(55,268,046)

177,446(ii) Investment corporation bonds(32,000,000)(32,632,833)

632,833(iii) Long-term debt

(430,708,200)(437,372,030)

6,663,830(199,516)(199,516)—(iv) Derivative transactions

Investment corporation bonds
Long-term debt
Total

—

—

9,000,000——

23,000,000

55,435,600

50,810,600

53,194,200

56,685,000

211,015,000

58,615,600

55,435,600

59,810,600

53,194,200

56,685,000

234,015,000

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

For the period fromMarch 1, 2021
to August 31, 2021

Carrying amount, fair value and the difference between the two as of February 28, 2022 are as follows.
“Cash and bank deposits,” “Cash and bank deposits in trust,” and “Short-term debt” approximate their carrying amounts due to cash
and short-term settlements, therefore, notes are omitted.

Carrying value (Note 1)(58,615,600)

Fair value (Note 1)(58,751,400)

Difference
135,800(ii) Investment corporation bonds(32,000,000)(32,261,876)

261,876(iii) Long-term debt

(427,140,400)(430,380,637)

3,240,237(94,619)(94,619)—(iv) Derivative transactions

Note 1: The numbers in parenthesis indicate liabilities.
Note 2: Method for determining the fair value of financial instruments and derivative transactions(i) Current portion of long-term debt and (iii) Long-term debt
For floating-rate long-term debt, the carrying value is reported as it is considered to be approximately equal to the fair value because such debt reflects the market interest rates
within a short-term period. (However, the fair value of certain floating-rate long-term debt that qualifies for the special treatment of interest-rate swaps (see “22. Derivatives 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 estimatedto be applicable to similar fixed-rate debt.) The fair value of fixed-rate long-term debt is determined by discounting the sum of its principal and interest payments at a rate
reasonably estimated to be applicable to similar fixed-rate debt.
(ii) Investment corporation bonds
The fair value of investment corporation bonds issued by the Company is determined based on their market prices.
(iv) Derivative transactions
See “22. Derivatives and Hedge Accounting.”

For the period from
September 1, 2021
to February 28, 2022

Carrying value
Balance at beginning of the period

1,048,917,843

Amount of increase (decrease) during the period
Thousands of Yen

After five years

58,615,600

For the period from September 1, 2021 to February 28, 2022

(i) Current portion of long-term debt

After five years

1,048,702,009(215,834)

10,347,682

Balance at end of the period

1,048,702,009

1,059,049,692

Fair value at end of the period

1,218,347,000

1,252,960,000

Note 1: T he carrying value represents the acquisition cost less accumulated depreciation.
Note 2: O f the change in investment and rental properties, the increase during the previous period is mainly attributable to the acquisition of Universal Citywalk Osaka (Land) (¥2,178,530
thousand). The decrease during the previous period is mainly attributable to depreciation expenses (¥5,578,207 thousand). The increase during the current period is mainly
attributable to the acquisition of Landport Ome III (¥17,238,207 thousand). The decrease during the current period is mainly attributable to the sale of NMF Utsunomiya Building(¥2,445,354 thousand) and Sundai Azamino (¥1,450,835 thousand) as well as depreciation (¥5,602,175 thousand).
Note 3: F air value at the end of the period is the appraisal value or investigation value determined by investigation, found by an outside real estate appraiser. However, in the current
fiscai period, transfer price is used as the fair value for Ichibancho stear, and the scheduled transfer price is used as the fair value for NRE Higashi-nihonbashi Building.

The real estate rental revenues and expenses for the fiscal period ended February 28, 2022 are presented in “18. Breakdown of Real
Estate Rental Revenues and Expenses.”

16. REVENUE RECOGNITION
1. Information on classifying revenues from contracts with customers
Current period (from September 1, 2021 to February 28, 2022)
Thousands of Yen

Revenues from contracts with customers (Note 1)

Sales to external customers

Proceeds from sales of real estate

3,920,000

Utility expense revenues

1,331,843

1,331,843—

36,026,243

5,251,843

37,520,940

Other
Total

(Note 2)

162,853

Note 1: Leasing business revenues, which are subject to ASBJ Statement No. 13, “Accounting Standard for Lease Transactions,” and real estate transfers, which are subject to the“Practical Guidelines Concerning Accounting for the Transferors in Securitization of Real Estate Using SPCs” of the JICPA Accounting System Committee Report No. 15, are notapplicable to the Accounting Standard for Revenue Recognition , and are thus not included in the above amount. Note that the main revenues from contracts with customers
are gains on sale of real estate and utilities expense revenues
Note 2: Gains on sale of real estate are recorded as profits/losses on sale of real estate (the amount after deducting real estate disposition costs and other disposition costs fromgains on sale of real estate) in the statement of income and retained earnings. Since NMF records gains on sale of real estate as operating revenues and losses on sale of realestate as operating expenses, only the amounts of gains on sale of real estate are described in the above table.

45

NOMURA REAL ESTATE MASTER FUND, INC.

NOMURA REAL ESTATE MASTER FUND, INC.

46

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Financial Section

Investor Information

NOTES TO FINANCIAL STATEMENTS
17. SEGMENT INFORMATION

2. Basic information for understanding revenues from contracts with customers
Current period (from September 1, 2021 to February 28, 2022)

For the periods from March 1, 2021 to August 31, 2021 and from September 1, 2021 to February 28, 2022

Refer to the description in the notes concerning matters pertaining to significant accounting policies.

Segment Information

3. I nformation on the satisfaction of performance obligations based on contracts with customers, relationships with cash flows
arising from the contracts, and the amounts of revenues which arise from outstanding contracts with customers as of the end of
the accounting period under review and will be recognized in the next accounting period onwards, as well as the timing torecognize the revenues.

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(1) Balances of contract assets and liabilities
Thousands of Yen

Current period from Sep. 1, 2021 to Feb. 28, 2022

Since revenues from external customers for products and services within a single segment are more than 90 percent of total
operating revenues, information about products and services has been omitted.
2. Information about geographical areas

Receivables from contracts with customers(balance as of the beginning of the fiscal period)

363,492

Receivables from contracts with customers(balance as of the end of the fiscal period)

372,248

Contract assets (balance as of the beginning of
the fiscal period)—

Contract assets (balance as of the end of the
fiscal period)—

Contract liabilities (balance as of the beginningof the fiscal period)—

Contract liabilities (balance as of the end of the
fiscal period)—(2) Transaction prices allocated to remaining performance obligations
Not applicable.
Concerning utility expense revenues, NMF recognizes them based on the amounts for which it has the right to claim according toitem 19 of the Implementation Guidance on the Accounting Standard for Revenue Recognition. This is because NMF has the right toreceive the amounts of consideration, which directly correspond to the value for customers or tenants, from customers for the
portions where the obligations are satisfied before the end of a fiscal period. Accordingly, adopting the stipulation of item 80 22 (2)of the Accounting Standard for Revenue Recognition, utility expense revenues are not included in the note on transaction prices
allocated to remaining performance obligations.

(1) Revenues
Since more than 90 percent of the total operating revenues were generated from external customers in Japan, a geographicalbreakdown of revenues has been omitted.
(2) Property and equipment
Since more than 90 percent of the total property and equipment on the balance sheet are located in Japan, a geographicalbreakdown of property and equipment has been omitted.
3. Information about major clients
For the period from March 1, 2021 to August 31, 2021
Customer name

Revenues (Thousands of Yen)

Related segment name

Nomura Real Estate Partners Co., Ltd.

5,373,430

Rental real estate business

For the period from September 1, 2021 to February 28, 2022
Customer name

Revenues (Thousands of Yen)

Related segment name

Nomura Real Estate Partners Co., Ltd.

5,305,535

Rental real estate business

18. BREAKDOWN OF REAL ESTATE RENTAL REVENUES AND EXPENSES
Real estate rental revenues and expenses for the fiscal periods ended August 31, 2021 and February 28, 2022 consist of the following:Thousands of Yen
For the period fromMarch 1, 2021
to August 31, 2021
Real estate rental revenues

37,519,267

37,358,086

34,679,385

34,654,862

Rental revenues

32,344,406

32,379,033

Common area charges

Rental revenues

2,334,9782,275,828

Other rental revenues

2,839,881

2,703,224

Parking revenues

622,960

629,997

Incidental income

1,806,838

1,925,291

410,082

147,934

Other miscellaneous revenues
Real estate rental expenses

16,097,387

15,972,567

Property management costs

1,832,875

1,829,209

Property management fees

975,826

951,283

Property and other taxes

3,263,841

3,246,576

Utility expenses

1,431,766

1,584,054

Casualty insurance

54,11059,873

1,531,578

1,273,461

Land rents

201,748

177,522

Depreciation

5,586,593

5,609,620

Other rental expenses

1,219,046

1,240,965

21,421,880

21,385,518

Repairs and maintenanceReal estate rental profits

47

NOMURA REAL ESTATE MASTER FUND, INC.

For the period from
September 1, 2021
to February 28, 2022

NOMURA REAL ESTATE MASTER FUND, INC.

48

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Financial Section

Investor Information

NOTES TO FINANCIAL STATEMENTS
19. BREAKDOWN OF GAIN AND LOSS ON SALES OF REAL ESTATE

Derivative transactions as of February 28, 2022

For the period from March 1, 2021 to August 31, 2021

(1) There were no derivative financial instruments not subject to hedge accounting.

Not applicable.

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

For the period from September 1, 2021 to February 28, 2022
Thousands of Yen

NMF Utsunomiya Building
Proceeds from sales of real estate
Cost of sales of real estate
Other related sales expenses
Gain on sales of real estate

162,853
Thousands of Yen

Type of derivative
instruments

Main hedged item

15,800,000

Interest-rate swaps:
Special treatment ofReceived/floating and Long-term debt
interest-rate swaps
paid/fixed

34,825,500

24,382,700

76,655,500

40,182,700

Total

1,200,000
1,450,835
49,534300,369

Not applicable.
For the period from September 1, 2021 to February 28, 2022
Not applicable.

21. LEASESThe future minimum rental revenues from tenants under non-cancelable operating leases of properties as of August 31, 2021 andFebruary 28, 2022 are summarized as follows:
Thousands of Yen

Due within one year
Due after one year
Total

As of February 28, 2022

34,049,489

38,246,189

74,520,472

100,363,195

108,569,961

138,609,384(434,342)

Thousands of Yen

Notional amount (Note 1)
Due after one year

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

58,730,000

34,350,000

Special treatment ofinterest-rate swaps

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

34,846,900

29,304,100

93,576,900

63,654,100

Note 1: Contract amount is based on notional amount.
Note 2: Fair value is measured by swap counterparty, based on the actual market interest rate, etc.
Note 3: Out of the fair value, (¥2,184 thousand) is booked as “accrued expenses” on the Balance Sheet.
Note 4: Out of the fair value, (¥531,285 thousand) is not marked to market on the Balance Sheet, since adopting special treatment for interest-rate swaps.

Fair value (Note 2)(199,516)(Note 3)(531,285)(Note 4)(730,802)

For the period from
September 1, 2021
to February 28, 2022

2. Distributions in excess of retained earnings

3,069,595,200

2,918,708,800

Of which, allowance for temporary difference adjustment

1,824,782,400

2,093,548,800

Of which, other distributions in excess of net income

1,244,812,800

825,160,000

154,021,761

102,762,213

154,021,761

102,762,213

15,503,577,600

15,296,108,800

3. Incorporation into unitholders’ capital
Of which, reversal of allowance for temporary difference adjustments
4. Distributions[Distributions (per unit)]
Of which, distributions of earnings[Of which, distributions of earnings (per unit)]
Of which, allowance for temporary difference adjustments

5. Retained earnings carried forward(2) Derivative financial instruments subject to hedge accounting were as follows:

NOMURA REAL ESTATE MASTER FUND, INC.

(Note 4)

12,575,751,402[Of which, other distributions in excess of net income (per unit)](1) There were no derivative financial instruments not subject to hedge accounting.

49(339,722)

12,786,253,162

Of which, other distributions in excess of net income

Derivative transactions as of August 31, 2021

Total

(Note 3)

1. Retained earnings at end of period[Of which, allowance for temporary difference adjustments (per unit)]

22. DERIVATIVES AND HEDGE ACCOUNTING

Main hedged item

(94,619)

23. CASH DISTRIBUTIONS
For the period fromMarch 1, 2021
to August 31, 2021

As of August 31, 2021

Fair value (Note 2)

Note 1: Contract amount is based on notional amount.
Note 2: Fair value is measured by swap counterparty, based on the actual market interest rate, etc.
Note 3: Out of the fair value, (¥48 thousand) is booked as “accrued expenses” on the Balance Sheet.
Note 4: Out of the fair value, (¥339,722 thousand) is not marked to market on the Balance Sheet, since adopting special treatment for interest-rate swaps.

For the period from March 1, 2021 to August 31, 2021

Type of derivative
instruments

Due after one year
41,830,000

20. BREAKDOWN OF EXTRAORDINARY LOSS

Hedge accounting
methodNotional amount (Note 1)

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

Principal treatment
method2,720,000
2,445,354
111,792

Sundai Azamino
Proceeds from sales of real estate
Cost of sales of real estate
Other related sales expenses
Loss on sales of real estate

Hedge accounting
method(3,288)(3,244)

12,433,982,400

12,377,400,000(2,637)(2,625)

1,824,782,400

2,093,548,800

(387)

(444)

1,244,812,800

825,160,000

(264)

(175)

198,249,001

95,589,189

Calculation method of distribution amount
NMF calculates distributions in accordance with the cash distribution policies as specified in Article 36, Paragraphs 1 and 2 of NMF’s
Articles of Incorporation.
For the fiscal period under review, NMF decided to implement a total of ¥15,296,108,800 in distributions (¥3,244 per investmentunit). This figure was arrived at by excluding the portion for which per-unit distribution comprising the types of dividends laid out
below would be less than ¥1 from ¥15,300,114,556, the amount calculated by adding to ¥12,377,502,401 in net income after taxes¥2,622,242,820 in amortization of goodwill, and adding ¥300,369,335 in loss on sales of real estate.
Total distributions comprise distribution of earnings and distribution in excess of net income. Distribution of earnings as stipulated
in Article 136, paragraph 1 of the Investment Trusts Act came to ¥12,377,400,000 (¥2,625 per investment unit). Distribution in excess
of net income comprises a distribution of ¥2,093,548,800 (¥444 per investment unit) as allowance for temporary difference
adjustment and ¥825,160,000 (¥175 per investment unit) in other distribution in excess of net income.

NOMURA REAL ESTATE MASTER FUND, INC.

50

Message from the Management

Management Strategy

ESG Measures

Financing Status

Portfolio

Financial Section

Investor Information

24. INFORMATION ON ALLOWANCE FOR TEMPORARY DIFFERENCE ADJUSTMENTS

For the period from September 1, 2021 to February 28, 2022

For the period from March 1, 2021 to August 31, 2021

1. Reason for provision, related assets and amounts

1. Reason for provision, related assets and amounts

Thousands of Yen

Related assets, etc.

Thousands of Yen

Related assets, etc.

Provision of allowance for temporary
difference adjustments

Reason for provision

Goodwill

Amortization of goodwill

Long-term deposits

Shortfall of reserve for repairs

2,622,242
7,161

Increase-subtotal

2,629,404

Buildings, facilities, etc.

Depreciation deficiency equivalent(741,188)

Unearned revenue

Write-down of loss on interest-rate swap due to merger(54,234)

Others—(9,199)Decrease-subtotal(804,622)

Total

1,824,782

2. Reason for reversal, related assets and amounts

Provision of allowance for temporary
difference adjustments

Reason for provision

Goodwill

Amortization of goodwill

Long-term deposits

Shortfall of reserve for repairs

Others—2,622,242
51,45813,678

Increase-subtotal

2,687,379

Buildings, facilities, etc.

Depreciation deficiency equivalent(306,277)

Unearned revenue

Write-down of loss on interest-rate swap due to merger(40,687)

Land

Cost of sales of land

(246,865)

Decrease-subtotal(593,831)

Total

2,093,548

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

Related assets, etc.

Provision of allowance for temporary
difference adjustments

Reason for reversal

Land, Buildings, etc.

Sale and depreciation of properties for which merger
expenses were recorded

Deferred gains or losses on hedges

Changes in fair value of derivatives(154,021)

Note 1: The amount of reversal during the current fiscal period (¥5,440 thousand) is included in “Depreciation deficiency equivalent” on “1. Reasons for provision, related assets
and amounts.”

3. Method of reversal

Method of reversal

Buildings, etc.

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

Land

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

Buildings in trust, etc.

Deferred gains or losses on hedges Changes in fair value of derivatives(102,762)

Total(102,762)

Note 1: The amount of reversal during the current fiscal period (¥12,575 thousand) is included in “Depreciation deficiency equivalent” on “1. Reasons for provision, related assets
and amounts.”(2) Merger expenses
Item

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

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

Land

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

Buildings in trust, etc.

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

Upon sale, the corresponding amount is scheduled to be reversed

Land in trust, etc.

Leasehold in trust(3) Long-term deposits
In principle, long-term deposits are not reserved.
(4) Deferred gains or losses on hedges
The amount corresponding to changes in the fair value of derivatives used as hedging instruments is scheduled to be reversed.

NOMURA REAL ESTATE MASTER FUND, INC.

—

(Note 1)

Buildings, etc.

Land in trust, etc.

51

Sale and depreciation of properties for which merger
expenses were recorded

Land, Buildings, etc.

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

(2) Merger expenses

Leasehold

Reason for reversal

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

Related assets, etc.

—

(Note 1)

(154,021)

Total

Thousands of Yen

Provision of allowance for temporary
difference adjustments

LeaseholdUpon sale, the corresponding amount is scheduled to be reversed

Leasehold in trust(3) Long-term deposits
In principle, long-term deposits are not reserved.
(4) Deferred gains or losses on hedges
The amount corresponding to changes in the fair value of derivatives used as hedging instruments is scheduled to be reversed.

NOMURA REAL ESTATE MASTER FUND, INC.

52

Message from the Management

Management Strategy

ESG Measures

25. SIGNIFICANT SUBSEQUENT EVENTSAsset Sales

Financing Status

Portfolio

Investor Information

Financial Section

INDEPENDENT AUDITOR’S REPORT(1) NMF sold the following asset after the conclusion of the 13th fiscal period (February 28, 2022).
Ichibancho stear
Type of asset: Trust beneficiary interest in mainly real estate
Use: Commercial facility
Contract date: January 27, 2022
Transfer date: March 18, 2022
Transfer price: ¥5,382 million
Buyer: A domestic LLC.
Impact on 14th fiscal period earnings (Scheduled): ¥757 million(2) NMF decided to transfer the following asset subsequent to the 13th fiscal period (February 28, 2022).
NRE Higashi-nihonbashi Building
Type of asset: Real estate
Use: Office
Scheduled contract date: May 8, 2022
Scheduled transfer date: S eptember 15, 2022 (Quasi co-ownership of 50%)
March 15, 2023 (Quasi co-ownership of 50%)
Scheduled transfer price: ¥ 2,260 million (Quasi co-ownership of 50%)
¥2,260 million (Quasi co-ownership of 50%)
Buyer: A domestic corporation
Impact on 15th fiscal period earnings (Scheduled): ¥370 million
Impact on 16th fiscal period earnings (Scheduled): ¥386 million
The impact of (1), (2), above, on earnings for the 14th fiscal period (March 1, 2022 to August 31, 2022), the 15th fiscal period(September 1, 2022 to February 28, 2023) and the 16th fiscal period (March 1, 2023 to August 31, 2023) will be recorded as gain on
sales of real estate under operating revenues.

53

NOMURA REAL ESTATE MASTER FUND, INC.

NOMURA REAL ESTATE MASTER FUND, INC.

54

Message from the Management

55

NOMURA REAL ESTATE MASTER FUND, INC.

Management Strategy

ESG Measures

Financing Status

Portfolio

Investor Information

Financial Section

NOMURA REAL ESTATE MASTER FUND, INC.

56