4th
thFiscal
FiscalPeriod
PeriodSemi-AnnualSemi-AnnualReport
ReportSeptember
September1,1,2014
2014totoFebruary
February28,
28,2015
2015
NOMURANOMURAREALREALESTATEESTATEMASTERMASTERFUND,
FUND,INC.
INC.
8-5-1,
8-5-1,Nishi-Shinjuku,
Nishi-Shinjuku,Shinjuku
ShinjukuWard,
Ward,TokyoTokyo

Executing Our Strategy

Stable Returns for Investors

Nomura Master Fund’s dedication to building a robust portfolio of logistics
and retail real estate assets continues to be proven through execution.

Logistics

RetailAcquisitions below appraisal values and increased rents per square meterfor the portfolio represent execution of our strategies.

Superior Pipeline Enabledby the Nomura Real Estate GroupIs provided through a balanced portfolio of
Is delivered through alogistics (47.7% of portfolio) andTokyo-centric portfolio (79.6%)
retail properties (52.3%)
Is achieved by incorporating
Is delivered through long-term
established Nomura brands
contracts often 10 years or
Landport (logistics) andmore in length (70.2%)
GEMS (retail)Stability
Masato Yamauchi

Motomi Uki

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

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

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

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

Is evidenced through a stablefinancial base with an averageborrowing period of more than
4.6 years and an LTV of
only 35.9%

Is evidenced througha high long-term issuer ratingof AA- (stable)

Is delivered through 99.8%
occupancy primarily tied up in
long-term contracts

Note: The above figures are based on data as of February 28, 2015.

Contents
Top Message: Execution Proving Our Strategy is Sound

2

One Period Later: A Visit with Motomi Uki
Execution Requires Dedicated Professionalism

3

The Nomura Master Fund Growth Strategy

4Portfolio Management: External Growth

5-9

Portfolio Management: Internal Growth

10-11

Finance Strategy

12-13

Portfolio Gallery

14-17
18

Corporate Governance
Financial Section

19-33

Independent Auditor’s Report

34

Investor Information

35

Nomura Real Estate Master Fund

1

Top Message

Execution Proving
Our Strategy is Sound

One Period Later: A Visit with Motomi Uki

Execution Requires
Dedicated Professionalism

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

Satoshi Yanagita
Executive Director
Nomura Real Estate Master Fund, Inc.

On behalf of Nomura Real Estate Master Fund, Inc.
(Nomura Master Fund) and as its Executive Director,
I would like to extend our gratitude to you, ourunitholders, for your steady and robust support.
I would like to use this space to report on the results of
the Fourth Fiscal Period. I am pleased to report operating
profits of 4,750 million yen, net income of 4,145 million
yen and dividend per unit of 2,490 yen. This dividend
exceeds our initial forecast by 70 yen per unit.
Nomura Master Fund delivered these results throughproactive portfolio management in a competitive market.
The acquisition of additional interest in Kawasaki More’s
had a positive impact on NOI along with the increasein performance-based rents from Universal CityWalk
Osaka™ and costs were also decreased by reducing
interest paid and financing-related costs.

Nomura Master Fund additionally sold off one asset andacquired two properties – Kawaguchi Ryoke Logistics
Center and silent partnership equity interest in Hirakata
Logistics Center – in the Fifth Fiscal Period, bringing ourportfolio to 56 assets with an acquisition price of 255.6
billion yen.
Nomura Master Fund is executing its strategy of building
a robust portfolio of retail and logistics assets and our
performance is proving the excellence of this strategy.
First-look support of the robust pipeline and thediversified management support of the Nomura Real
Estate Group signify that the Nomura Value Chain isfunctioning superbly for our investors.
We will continue to adhere to our strategies of investingin retail and logistics, keeping around 80% of ourportfolio in the Tokyo Area, focusing on assets withlonger lease periods and maintaining a conservative
financing level of 30-40% LTV. This enables Nomura
Master Fund to consistently deliver steady dividends toour unitholders.
Thank you again for your support.

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

Diversified Management Support from the Nomura Real Estate GroupAs a member of the Nomura Real Estate Group, a diversified real estate group, Nomura Master Fund possesses the inherent
advantage of being able to utilize the Group’s extensive capabilities in leasing, administration and property management. By
applying this expertise, Nomura Master Fund ensures it will be able to continuously improve tenant satisfaction by maintaining
and increasing the value of the assets it manages, and in turn deliver this stability
and quality to its investors.
Nomura Real Estate Development has assumed responsibility for executing theplanning, development and leasing of logistics and retail facilities in Nomura
Master Fund’s portfolio.
2

Nomura Real Estate Master Fund

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

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

Q1. What are your reflections of the firstfiscal period that has passed since you assumed
the post of Executive Officer and Head of the
NMF Investment Management Division of
NREAM?

Last fiscal period I was quoted as having said, “I will work tobalance assets under management and tenants even further
to achieve greater stability in our return on income and an
even steadier portfolio as we march to our medium-termtarget of 400 billion yen in AUM.” My stance remains thesame but my belief in the importance of professionalism
and the Nomura Value Chain has grown.

Q2. Specifically, what are you driving at?
As a J-REIT, we are basically forced to perform every six
months with an asset that traditionally grows in value overa significant period of time. Consequently, we have a teamthat must focus on consistently acquiring strong, reliable
assets. This is not easy. In a hot market like today, investors
will constantly read of assets being acquired for over 3%
returns and assets only being acquired through bids where
pricing gets out of control. We must remain disciplined
within these conditions and apply the strengths of the
Nomura Value Chain to responsibly acquire assets at stablecap rates. The Fourth Fiscal Period acquisitions of Universal
CityWalk Osaka™ and additional acquisition of equity

Logistics Centers

interest in Kawasaki More’s are proof of this, along with theacquisitions that we have made in the Fifth Fiscal Period.

Q3. Is acquisition at a good cap rate all that isrequired?

No, the reality is that we need to acquire assets that have astrong future for either steady performance or an upside.
This of course is evident in the average remaining leaseterm – 5.6 years as of the end of the Fourth Fiscal Period –but also in other figures like the high continual occupancyof 99.8% and increasing rents per tsubo for the entire
portfolio from 5,296 yen to 5,518 yen per tsubo.
Ultimately, what this should lead to is latent profit andincreased value. J-REITs appraise their portfolios every
six months. We have found that our latent profit – inother words, the appraised value versus the book value –has climbed to almost 25.1 billion yen. This is roughly ten
percent of our acquisition value. All of our asset classes
have seen a gain in appraised value over the past fiscal
period. Yes, a strong market is part of this, but a keen eye
discerning good investment opportunities from among
those presented to us and the ability to increase value
through management are vital.

Q4. What are your goals going forward?
Of course, 400 billion yen remains our medium-term goalfor portfolio value. However, we have set a dividend perunit target of 2,480 yen per unit for the Fifth Fiscal Period.
This will require continued discipline, keen management
and effective use of our strong group asset pipeline. Our
team at NREAM will continue to expertly perform thetasks demanded of us as we demonstrate the true value of
the Nomura Value Chain both in its people and its asset
pipeline.

Retail Centers

Retail Centers(excluding land-only assets)(million yen)
136,000(million yen)
131,000+1,826+1,700134,000

132,000

130,000+165

129,000

134,666
132,840(land-only assets)(million yen)
18,00016,000129,260

127,000

14,00015,893

16,058

127,560
125,000

12,000Nomura Real Estate Master Fund

3

The Nomura Master Fund

Portfolio Management

Growth Path

Nomura Master Fund continues to prove the value of
the Nomura Value Chain. The employees of the Nomura
Group continue to apply the networks they haveconstructed over time to source properties that adhere to
our investment strategy of investing in logistics, stationfront retail and residential-oriented retail to achieve
growth without sacrificing stability.

Growth Strategy

External Growth

Increasesta Seble ciM

rea ax
le i
st

n

at

e
ur comeize uem e valtment unit priceinves

Realize
Stable GrowthThis fiscal period, Nomura Master Fund acquired
additional compartmentalized ownership in Kawasaki
More’s and the iconic Universal CityWalk Osaka™.
We have followed these retail investments up withinvestments after the Fourth Fiscal Period in the
Kawaguchi Ryoke Logistics Center and acquisition of

Aim to realize stable distribution based on clear concepts

Investment strategy

Operating strategy

Financial strategy• Set medium-term asset size target• Build a stable portfolio• Expand external acquisition pipeline

Against backdrop of long-term lease agreements• Build a stable ﬁnancial base
• Finance in response to the market• Maintain a high occupancy rate
• Maintain and enhance rent levels

Finally, we continue to march in a conservative,
responsible manner towards our medium-term portfolio
goal of 400 billion yen. Our portfolio as of the end of
the Fourth Fiscal Period was 255.6 billion yen, and with
the Fifth Fiscal Period acquisitions and the sizeable
pipeline mentioned on page 7 it is clear that we are well
positioned to reach our medium-term goal.

External Growth Strategy

The Nomura Master Fund Growth Strategy

Nomura Master Fund primarily invests in relatively new logistics and retail properties less than 10 years old that are located in
the Tokyo Area.

Asset to be Acquired

Medium-term
asset size target

400

billionyen

Investment Perspective

Portfolio Distribution●● Investment is focused on the Tokyo Area (80% or more of

The following is current as of the acquisitions described on
the following page.

portfolio in principle), where there will be continued strong
demandGrowth Pipeline●● Focus on acquisitions of relatively new properties built

Kawaguchi Ryoke Logistics Center
Universal CityWalk Osaka™

preferential negotiation rights for the Hirakata Logistics
Center with a 100 million yen investment in the silent
partnership that invested in the G.K. Osaka Hirakata
Project. Acquisitions continue to be below appraisal value
despite the heated, competitive environment.

less than 10 years ago for a competitive advantage in themarketplace

Kawasaki More’s(Additional Acquisition)

40km

17

Increase investment unit priceHirakata Logistics Center

238.0
238.0
227.6
billion yen billion yen
billion yen

255.6
billion yen

External Growth
Nomura Real EstateGroup Pipeline

Around 5 years
Stability

External Growth● Creation of stable cash flow based on long-term lease agreements

Ratio of contracts of 10 years or more

70.2%
40%

32.3%
2nd fiscal
period end

31.3%
3rd fiscal
period end

16

20km

Main Target
Area

Tokyo Area
X
Property Age of
10 years or less Within
20km

20 – 40km

5 years

10 years

Over 10 years

Operational LTV level
30%–40%

4th fiscal
period end

Over
40km

16

Tokyo
Station20

14

Three major
metropolitan areas● Increasing tenant satisfaction through appropriate renewals● Further increasing of incidental revenues and increase of

6

Secure stable income● Strong leasing abilities of Nomura Real Estate Group30%
1st fiscal
period end

Maximize real estate value

profitability through cost reductions

35.9%
LTV: 31.1%

4(excluding Tokyo Area)

Haneda Airport(Tokyo International Airport)

16

Tokyo Area
Surrounding areas ofcabinet-orderdesignated cities

16

246

Property Age
Investment Universe

134

16

Logistics
RetailExpressway

Aim to diversify real estate under management and tenants by expanding asset size, and realize the building of an increasingly stable portfolio

4

Nomura Real Estate Master Fund

Nomura Real Estate Master Fund

5

External Growth

External Growth

Acquisition of the Kawaguchi Ryoke Logistics Center

The Robust Nomura Real Estate Pipeline

Nomura Master Fund is scheduled to acquire this large logistics center on July 1, 2015. The Center was completed in
October 2003 and enjoys excellent access to the Shuto Expressway. It is a large 24-hour facility with leasable area of
42,840.91m2. Located in a well-populated area with access to a sufficient population to fill employment needs as wellas the markets of Central Tokyo and the Tohoku region, the property enjoys full occupancy as of February 28, 2015.
This investment in a high-function logistics center raises Nomura Master Fund’s portfolio investment in the Tokyo
Area to 80.4% and lowers the average age of the portfolio to 14.6 years.

Nomura Real Estate is a diversified property developer that develops logistics, retail, residential, office and other properties. This
proven track record, combined with the Nomura Real Estate Group’s extensive sourcing network, mean that Nomura Master Fundhas a robust pipeline for sourcing properties. This distinct advantage is evidenced in the acquisition of Universal CityWalk Osaka™
and demonstrates Nomura Master Fund’s steady commitment to realizing a portfolio of 400 billion yen within around five yearsof the end of its First Fiscal Period.

Logistics

Retaily LineKawaguchi Ryoke Logistics Center

Sait
ama
Rai
lwa

Kawaguchi
Stn.

Adachiiriya I.C.

Ka
wa
guc
hi

JR Keihin-ToRoutehoku Line

Kawaguchi-Motogo
Stn.
Kawaguchi Logistics
Center A Tower

Kaga I.C.

122

Kawaguchi Logistics
Center B Tower
Akabane-Iwabuchi
Toky
Stn.
oM

ay

sw
pres

ai k yropo
Met litan E
xamboku L i ne
oN
etr

JR S

AkabaneStn.

●● 
Investment focused on large, high-performance logistics

facilities

by providing daily necessities, food/beverages, etc.

●● Ability to apply Nomura expertiseo Line●● A bility to take advantage of large, high-performance

Shikahamabashi I.C.

●● Investment in retail facilities with stable demand achieved

facilities emerging as industry structure changes●● Station-front retail: Investment in facilities in close

proximity to stations with dense traffic●● Residential-oriented retail: Investment in facilities inresidential areas with high populations

Acquisition of Silent Partnership Interest
Nomura Master Fund has taken a silent partnership interest in the G.K.
Osaka Hirakata Project. This investment secures preferential negotiationrights for the Hirakata Logistics Center. Beneficial trust interests issued
for ownership of this property total just under 3.7 billion yen.
The Hirakata Logistics Center was completed in April 2003. It is locatedjust over four kilometers from the No. 2 Keihan Expressway and has
a total leasable area of 19,807.18m2. The property is operating at fulloccupancy as of February 28, 2015. Hirakata is part of the Kansai Area,
Japan’s second largest consumption area, and the location enables usersof the Center to access all of the Kansai Area. The Center boasts 24-hour
operations and high-function logistics center specifications. The location
also provides the Center with access to a sufficient population to fill
employment needs.

The G.K. Osaka Hirakata ProjectNon-recourse loan:
2,747 million yen

Beneficial trustinterests
in real estate:
3,692 million yen

Silent partnershipinterest:
945 million yen
Landport Iwatsuki (Tentative Name)(to be completed in September 2016)* Nomura Master Fund acquired 100 million
yen of the silent partnership (about 10.6%)
GEMS Shibadaimon (Tentative Name)(to be completed in February 2016)* Nomura Master Fund secures preferential
negotiation rights for the beneficial trustinterests with this acquisitiondoaDaini K
eih
an
R
1

R ail

mach
i Lin
e
JR Kata

Hirakatashi
Stn.

Nagao
Stn.

Kein awa Expres
swa
y

w ay

Kyotanabe-Matsui I.C.

Kei
h

JR T
oka

Takatsuki
Stn.

Kuzuha
Stn.

an

171

Line
Shi
nk a
nse
n

o
kaid

Yawatashi
Stn.

id o

o
JR T

Landport Hachioji II (Tentative Name)(to be completed in September 2016)

Oyamazaki JCT

y

Meis
hin
Ex

pre
ssw
a

Hirakata Logistics Center

Hirakata-Higashi I.C.

Hirakata-Gakken I.C.

Landport Kashiwa Shonan II (Tentative Name)(to be completed in March 2016)

GEMS Ichigaya(completed October 2014)

Nomura Fudosan
Kichijoji Building(completed July 2014)

Note: Nomura Master Fund has no plans to acquire the above properties as of the printing of this publication.

6

Nomura Real Estate Master Fund

Nomura Real Estate Master Fund

7

External Growth

External Growth

Portfolio Distribution

Portfolio Table (as of the end of the 4th Fiscal Period)

The geographical diversification, portfolio composition and portfolio age distribution are clear evidence that
Nomura Master Fund is executing its strategy by utilizing the expertise of NREAM.

A Balanced Portfolio Delivering Stability and Potential for Growth
Use Area No.

Name

Location

Acquisition
Price

Investment
Ratio(millions of yen)

Geographical Diversification

5.1%
15.4%
Logistics

Portfolio Composition by
Property TypeTokyo Area
investment ratio

79.6%

Residential
facility type
Other

Kinki Area

Tokyo

Other Areas

18.6%

Retail

52.3%

Logistics

47.7%

33.6%

Distribution of Portfolio AgeLess than 5 years

10 years or more

Tokyo

5.4%

Averageproperty age

14.4 years

Lease Term

45.6%

(by leased area)

Retail Properties

49.0%

Station-front typeLess than 2 years 0.5%
Kinki

5 to 10 years

2 to 5 years 9.5%
5 to 10 years

Remaining Lease Term(by leased area)

70.2%

Less than 2 years

10 years or more

25.2%

10 years or more
18.9%

Averageremaininglease term 20.3%

5.6 yearsTokyo

12.5 years

Other

19.8%

Retail (land only)

Averagelease term

35.6%
5 to 10 years
Other

2 to 5 years

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

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

6.8
6.1
5.4
4.5
4.1
3.4
3.2
2.9
1.8
1.8
1.5
1.5
1.1
1.1
1.3
0.8
0.3
0.1
6.5
5.3
4.1
2.4
1.7
1.6
1.3
1.2
1.1
1.0
1.0
0.7
0.6
0.4
6.1
3.5

19,80017,40014,90012,50011,400
9,700
8,720
8,200
5,190
4,990
4,230
4,220
3,200
3,090
3,690
2,380
702
354
17,30014,90010,600
7,160
4,480
4,260
4,100
3,490
3,160
2,950
2,550
1,850
1,750
1,320
16,60010,30017 Merad Owada

Osaka City, Osaka

6,640

2.6

7,150

18 Izumiya Yao
19 Izumiya Obayashi
20 Ichibancho stear
21 EQUINIA Aobadori
1 Mitsubishi Motors Meguro
2 Mitsubishi Motors Chofu
3 Mitsubishi Motors Shibuya
4 Mitsubishi Motors Nerima
5 Mitsubishi Motors Kawasaki
6 Mitsubishi Motors Takaido
7 Mitsubishi Motors Katsushika
8 Mitsubishi Motors Higashikurume
9 Mitsubishi Motors Setagaya
10 Mitsubishi Motors Suginami
11 Mitsubishi Motors Sekimachi
12 Mitsubishi Motors Higashiyamato
13 Mitsubishi Motors Motosumiyoshi
14 Mitsubishi Motors Kawagoe
15 Mitsubishi Motors Edogawa
16 Mitsubishi Motors Sayama
Mitsubishi Motors
17
Ibaraki Maintenance Center

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

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

1.7
1.2
1.8
0.6
1.1
0.7
0.6
0.5
0.4
0.3
0.3
0.3
0.3
0.3
0.2
0.2
0.1
0.1
0.1
0.1

4,910
3,560
5,050
1,820
2,840
1,840
1,740
1,280
1,030
898
825
825
792
818
620
492
376
366
211
168

Ibaraki City, Osaka
Total

Tokyo

Investment Securities
Ryoke Capital Godo Kaisha
1
Silent Partnership Equity Interest

Kawaguchi City,
Saitama
Total

Nomura Real Estate Master Fund(millions of yen)

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

Note: The above figures are based on data as of February 28, 2015.

8(%)

Appraisal
Value

Leasable
Floor Space

PML
(%)

(m2)

(Retail)(Logistics)

70,045.85
52,794.55
71,569.89
47,995.23
50,450.00
57,448.03
34,896.32
29,630.48
30,641.98
24,909.96
24,850.80
13,648.70
12,003.57
9,825.52
42,328.00
23,584.72
9,397.38
4,592.00
39,736.87
29,383.65
6,295.22
18,810.31
3,611.59
2,693.93
2,891.32
14,367.98
12,385.18
7,480.63
1,791.34
2,286.47
2,457.36
6,217.85
9,733.28
24,399.12
14,941.54
5,856.50
34,198.01
11,714.36
4,582.81
4,030.37
3,381.19
4,183.63
1,421.31
1,725.61
3,057.02
1,923.64
1,930.05
4,105.00
1,305.78
1,831.00
989.772,783.79
1,646.97
2,462.40
892.56
1,793.00

4.16
6.42
3.73
6.15
4.32
7.30
5.79
5.90
3.40
6.15
2.72
2.92
2.92
5.36
1.40
1.35
1.03
3.76
4.70
6.89
4.38
7.39
5.81
8.36
10.85
3.90
2.76
5.40
4.18
4.89
9.33
9.06
4.42
5.43
3.33
3.97
3.89
2.42
1.57
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

820

0.3

937

5,704.24–

255,603

100.0

279,984

911,615.63

2.60

500

–

–

–

–

500

–

–

–

–

Nomura Real Estate Master Fund

9

Portfolio Management

Internal GrowthInternal Growth

One of the largest keys for successful internal growth or simply general overall performance of a REIT is the successof its leasing team in attracting new tenancies and successfully contracting with existing tenants. An open unrented
existing space is the same as lost income. Therefore, Nomura Master Fund’s asset manager is quick to initiate leasing
activities and has begun activities in areas where lease contracts are maturing in the Fifth and Sixth Fiscal Periods.

Leasing of Areas Maturing in the Fifth Fiscal Period

Leasing of Areas Maturing in the Sixth Fiscal Period

Leasing activities underway: 5.7% (1,257 tsubos)
Landport Hachioji 13 companies have visited
Already leased for at least five years: 94.3%

Renewals:

Leased:In negotiation:

24.8%

75.2%

Renewals: 100.0%(actually raised if taking into account the impact of free rents)
Remainedthe same

Rents raised:

54.0%

22.2%

Tenants of Universal CityWalk Osaka™ have seen rises in sales with the increase in customers at Universal Studios Japan®. This
has led to the successful capture of rent upsides in the performance-based rent portion of total rents, which is presently around20-30% of total rents. The property had 375 tsubos of empty space as of February 28, 2015. This space has been successfully
leased to a tenant with customer drawing power that will open in July 2015.

History of Sales and Performance-based Rents

New contracts: 77.8%

22.2%

Operations of Universal CityWalk Osaka™

Rents lowered:Rents raised: 100.0%

23.7%

Performance-based rents (right axis)
Sales (left axis)
300(Jan. 2013 = 100)
The Wizarding World of270
Harry Potter™ Opens
240
210
180
150
120
90
60
30
0
Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb.
2013
2014
2015
TM & © Warner Bros. Entertainment Inc. Harry Potter Publishing Rights © JKR. (s15)TM &Specific Cases for Logistics Properties® Universal Studios. All rights reserved. CR15-1640

Future Prospects
Universal Studios Japan®

Area Around Universal CityWalk Osaka™

●●  Universal Wonderland is being renovated in March 2015●● 	Tokyu Hotels is opening a new hotel in August 2015 thatis to be connected to Universal CityWalk Osaka™ via
pedestrian deck●●  New attractions and shops to open

Funabashi Logistics Center

Atsugi Minami Logistics Center B Tower

Leasing teams took advantage oftenant’s need for new space to alreadycomplete leasing.

Replaced existing lighting with LED
lighting and consequently finishedleasing activities.

300
270
240
210
180
150
120
90
60
30
0

Landport Kawagoe

Landport Hachioji

Successful conclusion of new contract
extensions that include raised rents withexisting tenants.

Leasing completed for space on second
and third floors and activities continue
for the first floor.

Stable customer drawing power tofurther increase customers

Development will raise the energy of the area and is expected
to raise sales as facility attracts new overnight guests

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

Fukuyama Transporting 10.2%
Izumiya 7.7%
Amazon Japan Logistics 6.2%
Neovia Logistics Services 5.5%
Yokohama Okadaya 5.3%
Mitsui-Soko Logistics 4.7%

Total number of tenants

284

10

15

10
12.3

5
2

Nomura Real Estate Master Fund

Retail1.1

Total rent area

909,577.85m

Logistics(%)

Other 44.1%
Shinkai Transport Systems 3.8%
Otsuka Warehouse 3.9%
ASKUL 4.1%
Not disclosed 4.5%

1.6

4.4
0

3.5

1.3
1.5

4.0
1.2

1.7

4.5

2.2

9.7
3.4
3.5

6.4
3.0

1.5

4.5
0.3

0.2

2.2

0.5

0.2

0.3

4.0
1.0

0.2
1.4

0.6

5th FP 6th FP 7th FP 8th FP 9th FP 10th FP 11th FP 12th FP 13th FP 14th FP 15th FP 16th FP 17th FP 18th FP 19th FP 20th FP 21st FP 22nd FP 23rd FP 24th FP
Aug. Feb. Aug.
Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb.
Aug. Feb. Aug. Feb.
2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020 2021 2021 2022 2022 2023 2023 2024 2024 2025

Note: The above figures are based on data as of February 28, 2015.

Nomura Real Estate Master Fund

11

Finance Strategy

Finance Strategy

Prudent Financial Strategy Driving Execution
Nomura Master Fund is committed to growth while
maintaining a prudent LTV and a high degree of financial
stability. The Fourth Fiscal Period revealed continued
execution of this strategy.
The average remaining years to maturity of loans were
kept long at 4.6 years with the maturities broadly spreadout. Additionally, despite borrowing an additional 18.8
billion yen primarily to grow the portfolio, LTV was
kept to 35.9%, average interest rate was lowered to anamazing 1.00% and the issuer credit rating remained at
AA- (stable).

Diversification of Maturities

Nomura Master Fund also issued unsecured investment
corporation bonds totaling 3 billion yen. The date ofpayment of the bonds was October 30, 2014 with aninterest rate of 0.87% per annum. The 10-year bond wasissued to further the conservative strategy of Nomura
Master Fund by repaying debt, lengthening remaining
years to maturity of loans and diversifying funding.
Nomura Master Fund is committed to following thepresent course that has proven growth is possible despite
adherence to a prudent and conservative financial policy.

Nomura Master Fund has clearly spread out maturities enabling refinancing even in potentially serious conditions.
(billions of yen)
16

Debt

14

13.0

12.2

12

10.8

10.0

10

9.0

8
6.0

6
4

Investment corporation bonds

6.7

4.0

5.5
4.0

3.0

2.1

2.0

2

5.0

4.0

0.9

0
5th FP 6th FP 7th FP 8th FP 9th FP 10th FP 11th FP 12th FP 13th FP 14th FP 15th FP 16th FP 17th FP 18th FP 19th FP 20th FP 21st FP 22nd FP 23rd FP 24th FP 25th FP
Aug. Feb. Aug.
Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb. Aug. Feb.
Aug. Feb. Aug. Feb. Aug.
2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020 2021 2021 2022 2022 2023 2023 2024 2024 2025 2025

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

Total amount ofinterest-bearing debt

99.2

billion yen*Has increased in line with growth in portfolio

Average interest rate

1.00%

*Drops 0.12%

Bank Formation

Credit Ratings

Nomura Master Fund boasts an excellent bank formation ofJapan’s leading financial institutions and an amazing averageinterest rate of a mere 1.00%.

This credit rating is at a level that allows the Bank of Japan toinvest in Nomura Master Fund’s investment units.

Financial Institution

95.9%

Long-term debt ratio

Ratio of fixed interest rate

*Continues to hold strong in the upper-nineties*Though it has dropped, still a robust number

Average remaining years
to maturity*Shortened by less than one fiscal period

4.6
years

35.9%

89.9%

LTV
(ratio of interest-bearing liabilities to total assets)*Continues to hold steady at a low rate

(billions of yen)

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

18.5

Sumitomo Mitsui Banking Corporation

18.5

Mizuho Bank, Ltd.

13.0

Mitsubishi UFJ Trust and Banking Corporation

8.3

Sumitomo Mitsui Trust Bank, Ltd.

8.3

The Norinchukin Bank

8.3

Development Bank of Japan Inc.

7.8

Mizuho Trust & Banking Co., Ltd.

7.2

Resona Bank, Ltd.

2.0

Nippon Life Insurance Company

2.0

The Bank of Fukuoka

2.0
Total

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

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

Commitment Line
Agreement

10billion yen

96.1
Mizuho Bank, Ltd.

Note: The figures are based on data as of February 28, 2015.

AAStableLong-Term
Issuer Rating(Commitment period:
1 year)

Note 1: The figures are based on data as of February 28, 2015.
Note 2: The total may differ from the sum of the figures due to rounding.

12

Nomura Real Estate Master Fund

Nomura Real Estate Master Fund

13

Portfolio Gallery

Portfolio Gallery

Logistics/Tokyo Area
The fruits of NMF’s commitment tobalanced growth of logistics and retail facilities.

Atsugi Minami Logistics Center A Tower

Funabashi Logistics Center

Landport Urayasu

Landport Kawagoe

Kawaguchi Logistics Center A Tower

Landport KasukabeLandport Hachioji

Landport Itabashi

Sagamihara Onodai Logistics Center

Sagamihara Tana Logistics Center

Ota Kiyohara Logistics Center

Chiyodamachi Logistics Center

Ota Higashishinmachi Logistics Center

Ota Nitta Logistics Center

Landport Atsugi

Logistics/Other

Kawaguchi Logistics Center B Tower

14

Nomura Real Estate Master Fund

Hanyu Logistics Center

Atsugi Minami Logistics Center B Tower

Nomura Real Estate Master Fund

15

Portfolio Gallery

Portfolio Gallery

Retail/Tokyo

Retail/Kinki

Station-front type

Station-front type

Residential facility type

Residential facility type
Recipe SHIMOKITAGEMS Shibuya

Universal CityWalk Osaka™

Izumiya Senrioka
Morisia Tsudanuma

Kawasaki More’s

Konami Sports Club Fuchu

EQUINIA Ikebukuro

Sundai Azamino

EQUINIA Shinjuku

Merad Owada

Izumiya Obayashi

EQUINIA Aobadori

Ichibancho stear

Izumiya Yao

Retail/Other
Station-front type
Nitori Makuhari

EQUINIA Aobadai

covirna machida

Residential facility type

Retail (land only)/Tokyo

Megalos Kanagawa

16

Nomura Real Estate Master Fund

FESTA SQUARE

Yokosuka More’s City

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

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

Mitsubishi Motors
Ibaraki Maintenance Center (to be soldon September 1, 2015)

Nomura Real Estate Master Fund

17

Corporate GovernanceCompliance that Ensures Investment Integrity and Investor
Confidence
Nomura Real Estate Asset Management (NREAM) createdits compliance rules and structure at the dawn of theJapanese real estate investment management businessin the 1990s to meet the strict standards of foreign
investors. Over the years, NREAM has established ahighly refined compliance structure for the many facetsof investment management, including private funds,
J-REITs and discretionary investment services.
The key elements of NREAM’s compliance structure are
the Compliance Division, the Compliance Officer, who is
the head of the Compliance Division, and the Compliance
Committee.

Manual and Compliance Program. It also handles
countermeasures when required and instructed to do
so by the Compliance Officer in the event of complianceviolations by NREAM. The Compliance Committee also
analyzes deals with interested parties at the behest of theCompliance Officer and considers improvements needed
to maintain compliance with laws and regulations. The
Compliance Committee additionally administers andverifies achievement of the company-wide Compliance
Program.

The Compliance Division handles risk management andRisk Management Committee matters along with thoserelated to compliance and the Compliance Committee.
Thus, the Compliance Division is the corporate body that
ensures day-to-day compliance in decision-making andactions.

The Compliance Officer constantly monitors and inspects
legal compliance of NREAM’s investment and advisory
activities. The Compliance Officer verifies the complianceof all matters under discussion by the Investment
Committee and voices his or her opinion. The Compliance
Officer also verifies daily compliance and reports to the
President when compliance issues are discovered andseeks implementation of proper countermeasures.

The Compliance Committee revises complianceregulations, and establishes and revises the Compliance

The flow of compliance matters regarding investment isshown in the table below.

Contents

Preparer and Presenter of Proposal
Preparation of proposal

Submission

Compliance Officer

Proposal is redirected if the proposal relates to a materialtransaction with a related party or if the Compliance Officer
otherwise deems it necessary

Compliance Committee

提出 of proposal
Confirmation

Approval

Investment Committee
Investment decision

If transaction falls
under Article 201-2, Paragraph 1 ofthe Investment Trusts Act
Board of Directors Meeting
Approval

18

Nomura Real Estate Master Fund

Financial Section

Deliberation/Approval

Report Deliberation Progress and Investment Decision
Proposal is redirected when the Compliance Officer identifies any criticalissue with the proposal during Investment Committee deliberations
Deliberations by Investment Committee are suspended and deliberations
by Compliance Committee are initiated.

Balance Sheet

20

Statement of Income and Retained Earnings

22

Statement of Changes in Net Assets

23

Statement of Cash Flows24

Notes to Financial Statements

25

Independent Auditor’s Report34Balance Sheet			Thousands of Yen

As of February 28, 2015

Thousands of Yen

As of August 31, 2014

As of February 28, 2015

ASSETSAs of August 31, 2014

LIABILITIESCurrent Assets:
Cash and bank deposits
Rental receivables
Income taxes receivable¥18,820,188¥16,627,667

206,479

219,443

3,610

654

Consumption taxes receivable571,566–

Other current assets

373,425

310,976

Total current assets

19,975,268

17,158,740

Current Liabilities:
Trade accounts payable¥493,922

Short-term debt

4,000,000–

Current portion of long-term debt

85,60085,600

Other accounts payable

235,326

267,880

Accrued expenses

26,211

24,489Accrued income taxes
Accrued consumption taxes

Property and Equipment, at Cost:
139,623,188

Rent received in advance

108,354,443

98,472,843

Other current liabilities

20,397

14,789148,064,486

Land
Buildings and structures
Tools, furniture and fixtures¥408,450

Total current liabilities

549

716

–

275,529

1,509,801

1,482,281

956

1,464

6,352,365

2,546,409

4,318

3,306

Subtotal

256,443,644

238,114,126

Less accumulated depreciation(5,436,452)(3,731,614)

Investment corporation bonds

3,000,000–

234,382,512

Long-term debt

92,064,600

80,307,400

Construction in progress

Net property and equipment

251,007,192

Long-term Liabilities:

9,855,829

8,985,005

Total long-term liabilities

104,920,429

89,292,405

Total Liabilities

111,272,794

91,838,814

161,120,405

161,120,405

4,146,739

4,080,847

Total surplus

4,146,739

4,080,847

Total unitholders’ equity

165,267,144

165,201,252

Total Net Assets

165,267,144

165,201,252

Total Liabilities and Net Assets¥276,539,938¥257,040,066

Security deposits from tenants
Investments and Other Assets:
Leasehold rights

3,828,327

3,828,713

Intangible assets

15,55912,694

Investment securities

463,151

487,473

Long-term prepaid expenses

588,613614,602

Long-term deposits

89,206

39,206

Security deposits
Deferred investment corporation bondissuance costs

546,095

516,126

26,527–

5,557,478

5,498,814¥276,539,938¥257,040,066

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

NET ASSETS
Unitholders’ Equity:
Unitholders’ capital
SurplusRetained earnings

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

20

Nomura Real Estate Master Fund

Nomura Real Estate Master Fund

21

Statement of Income and Retained Earnings

Statement of Changes in Net Assets
Thousands of Yen

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

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

For the period
from March 1, 2014
to August 31, 2014

Thousands of Yen

Unitholders’ Equity

Operating Revenues and Expenses
Operating Revenues:
Real estate rental revenues
Gain on investments in silent partnership
Operating Expenses:
Real estate rental expenses
Asset management fees
Asset custody fees
Administrative service fees
Other operating expenses

Operating Profit¥10,049,350
16,745
10,066,095¥9,464,316
4,151
9,468,467

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

3,872,940
791,955
14,756
63,23287,3804,830,263

4,750,552

4,638,204

Balance as of
September 1, 2014
Cash distribution paid

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

Retained
Earnings–

Net income
Balance as ofFebruary 28, 2015

Surplus

Units

Total Surplus

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

4,145,780

4,145,780

4,145,780

4,145,780

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

For the period from March 1, 2014 to August 31, 2014
Thousands of Yen

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

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

1,790
36
1,826

1,709
14
1,723

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

443,426––
114,228
1,042
558,696

Ordinary Income

4,146,526

4,081,231

Income before Income Taxes

4,146,526

4,081,231

Income Taxes:
Current
Deferred

722
24

1,257
(17)

Net Income

4,145,780

4,079,991

Retained earnings brought forward

959

856

Retained Earnings at End of Period¥4,146,739¥4,080,847

Balance as ofMarch 1, 2014
Cash distribution paid

Surplus

Units

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

Retained
Earnings–

Total Surplus

Total
Unitholders’EquityTotal
Net Assets¥4,861,749¥4,861,749¥165,982,154¥165,982,154(4,860,893)(4,860,893)(4,860,893)(4,860,893)

Net income––

4,079,991

4,079,991

4,079,991

4,079,991

Balance as ofAugust 31, 2014

1,665,260¥161,120,405¥4,080,847¥4,080,847¥165,201,252¥165,201,252

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

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

22

Nomura Real Estate Master Fund

Nomura Real Estate Master Fund23

Statement of Cash Flows

Notes to Financial Statements
Thousands of Yen

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

For the period
from March 1, 2014
to August 31, 2014

Cash Flows
Cash Flows from Operating Activities
Income before income taxes
Depreciation
Amortization of investment corporation bond issuance costs
Interest income
Interest expense
Decrease (Increase) in rental receivables
Decrease (Increase) in consumption taxes receivable
Decrease (Increase) in long-term prepaid expenses
Decrease (Increase) in long-term deposits
Increase (Decrease) in trade accounts payable
Increase (Decrease) in other accounts payable
Increase (Decrease) in accrued consumption taxes
Increase (Decrease) in rent received in advance
Other
SubtotalInterest received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities¥4,146,526
1,706,848
1,143(1,790)482,775
12,964(571,566)
25,989(50,000)
85,472(4,823)(275,529)
27,520(77,667)
5,507,862
1,790(481,053)(3,845)5,024,754¥4,081,231
1,537,049–(1,709)443,426(111,532)–(720)–
78,313
7,575
96,40922,384(64,648)
6,087,778
1,709(428,990)(1,682)
5,658,815

Cash Flows from Investing Activities
Payments for purchases of property and equipment
Payments for purchases of leasehold rights and intangible assets
Purchases of investment securities
Proceeds from withdrawal of investment securities
Reimbursement of security deposits to tenants
Proceeds from security deposits from tenants
Payments for security deposits(18,358,111)(4,489)–24,322(75,227)
960,736(29,969)(674,392)(3,102)(511,356)
23,883(79,169)
102,688–

Net cash provided by (used in) investing activities(17,482,738)(1,141,448)

Cash Flows from Financing Activities
Proceeds from short-term debt
Repayment of short-term debt
Proceeds from long-term debt
Repayment of long-term debt
Proceeds from issuance of investment corporation bonds
Payments of investment corporation bonds issuance costs
Distributions to unitholders

7,000,000(3,000,000)
11,800,000(42,800)
3,000,000(27,670)(4,079,025)–(16,500,000)
12,500,000(42,800)––(4,835,719)

14,650,505(8,878,519)

Net Increase (Decrease) in Cash and Cash Equivalents

2,192,521(4,361,152)

Cash and Cash Equivalents at Beginning of Period

16,627,667

20,988,819

Cash and Cash Equivalents at End of Period¥18,820,188¥16,627,667

Net cash provided by (used in) financing activities

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

1. ORGANIZATION
Nomura Real Estate Master Fund, Inc. (the “Company”) is a real estate investment corporation formed to own and invest
primarily in logistics facilities and retail facilities. The Company is externally managed by a licensed asset management company,
Nomura Real Estate Asset Management Co., Ltd. (“NREAM”). NREAM is a wholly-owned subsidiary of Nomura Real Estate
Holdings, Inc.
On January 31, 2013, the Company was incorporated under the Act on Investment Trusts and Investment Corporations(the “Investment Trust Act”) of Japan. On June 12, 2013, the Company was listed on the Tokyo Stock Exchange and started
operations on the following day. As of February 28, 2015, the Company owned a portfolio of 56 logistics facilities and retailfacilities containing an aggregate of approximately 911,615.63 square meters of leasable area and leased space to 284 tenants.

2. BASIS OF PRESENTATIONThe Company maintains its accounting records and prepares its financial statements in accordance with accounting principles
generally accepted in Japan (“Japanese GAAP”), including provisions set forth in the Investment Trust Act of Japan, theCompanies Act of Japan, the Financial Instruments and Exchange Act of Japan and related regulations, which are different incertain respects as to the application and disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Company, which were preparedin accordance with Japanese GAAP and were presented in the Securities Report of the Company filed with the Kanto Local Finance
Bureau. In preparing the accompanying financial statements, certain reclassifications and modifications have been made to thefinancial statements issued domestically in order to present them in a format that is more familiar to readers outside Japan. In
addition, the notes to financial statements include certain information that might not be required under Japanese GAAP but
is presented herein as additional information. Amounts have been rounded to the nearest thousand yen in the accompanying
financial statements and the notes thereto, whereas amounts were truncated in the Japanese financial statements prepared inaccordance with Japanese GAAP.
The Company’s fiscal period is a six-month period which ends at the end of February or August. The Company does not prepare
consolidated financial statements because it has no subsidiaries.

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

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

3 - 70 years

		 Structures

2 - 20 years

		 Tools, furniture and fixtures

2 - 10 years

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

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

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

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

Deferred investment corporation bond issuance costs
Deferred investment corporation bond issuance costs are amortized by the straight-line method over the respective terms of thebonds.
24

Nomura Real Estate Master Fund

Nomura Real Estate Master Fund

25

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

6. SHORT-TERM DEBT AND CURRENT PORTION OF LONG-TERM DEBT
Short-term debt and current portion of long-term debt as of February 28, 2015 and August 31, 2014 consist of the following:
As of February 28, 2015
Amount(Thousands of Yen)

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

Property-related taxes
Property in Japan is subject to property taxes, urban planning taxes and depreciable property taxes on a calendar year basis. The
taxes related to property are generally imposed based on the value of the relevant property and incurred for fiscal period.
The seller of a property is liable for property-related taxes for the period from the purchase date through the end of that calendar
year because taxes are imposed on the owner registered in the record as of January 1 for the entire year based on the assessment
made by the local government. The amount applicable to the buyer of a property is usually settled between each party andcapitalized as part of the acquisition cost of the property. No capitalized property-related taxes were incurred in the fiscal period
ended August 31, 2014 and the capitalized property-related taxes amounted to ¥12,000 thousand for the fiscal period ended
February 28, 2015.

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

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

Although the deferred hedge treatment is generally applied, the Company applies special treatment to those interest-rate swap
contracts that meet the criteria for such special treatment. Under the special treatment, interest-rate swaps are not remeasured
at fair value; instead, the net amount paid or received under the interest-rate swap contract is recognized and included in interest
expense or income.

4. CASH AND CASH EQUIVALENTS
Cash and cash equivalents as of February 28, 2015 and August 31, 2014 consist of the following:Thousands of Yen

As of February 28, 2015
¥18,820,188

As of August 31, 2014¥16,627,667¥18,820,188¥16,627,667

Cash and cash equivalents

Property and equipment as of February 28, 2015 and August 31, 2014 consist of the following:Thousands of Yen

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

26

Nomura Real Estate Master Fund––

42,8002.21812%¥42,800

2.21812%42,8002.17000%

42,8002.17000%¥4,085,600¥85,600

7. LONG-TERM DEBT
Long-term debt as of February 28, 2015 and August 31, 2014 consist of the following:Amount(Thousands of Yen)

As of February 28, 2015
Acquisition costs
Book value¥10,923,206¥10,923,206
3,531,906(168,254)
137,141,280
104,822,537(5,264,992)
20,397(3,206)4,318¥251,007,192

As of August 31, 2014
Acquisition costs
Book value¥10,923,206¥10,923,206
3,522,797

3,363,652
137,141,280
99,557,545
17,191
4,318¥251,007,192

Unsecured loans from banks due on
November 26, 2016
Unsecured loans from banks due on
March 26, 2017
Unsecured loans from banks due on
August 26, 2017
Unsecured loans from banks due on
May 26, 2018
Unsecured loans from banks due on
November 26, 2018
Unsecured loans from banks due on
November 26, 2018
Unsecured loans from banks due on
November 26, 2018
Unsecured loans from banks due on
May 26, 2019
Unsecured loans from a bank due
on May 26, 2019
Unsecured loans from banks due on
November 26, 2019

5. SCHEDULE OF PROPERTY AND EQUIPMENT

Land

2.30000%

The Company entered into ¥10,000 million credit facilities in the form of commitment lines with three financial institutions for the
fiscal period ended February 28, 2015. The total unused amounts of such credit facilities were ¥10,000 million as of February 28, 2015.

Consumption taxes received and paid are not included in the accompanying statement of income and retained earnings.
The Company utilizes interest-rate swap contracts as derivative financial instruments only for the purpose of hedging its exposure
to changes in interest rates. The Company defers recognition of gains or losses resulting from changes in the fair value of interestrate swap contracts which meet the criteria for deferral hedge accounting.

(106,680)
128,699,982
94,950,046(3,623,387)
14,789(1,547)3,306¥234,382,512

3,416,117
128,699,982
91,326,659
13,242
3,306¥234,382,512

Weighted-averageinterest rate (Note 1)¥4,000,000

As of February 28, 2015

Derivative financial instruments

Amount(Thousands of Yen)

Note 1: The weighted-average interest rate is weighted by the balance of each borrowing at the end of the period and rounded to the nearest fifth decimal place. As for the borrowings, which were
hedged by interest-rate swaps for the purpose of avoiding interest rate fluctuation risk, the swapped interest rates are used to calculate the weighted average of interest.
Note 2: Installments of ¥10.7 million will be made on the 26th day of every three months starting on August 26, 2013, with the remaining payment of ¥497.1 million to be repaid on May 26, 2025.

Consumption taxes

Cash and bank deposits

As of August 31, 2014

Weighted-averageinterest rate (Note 1)

Unsecured loans from banks due on
May 26, 2020
Unsecured loans from a bank due
on May 26, 2020
Unsecured loans from banks due on
February 26, 2021
Unsecured loans from banks due on
May 26, 2021
Unsecured loans from a bank due
on May 26, 2021
Unsecured loans from a bank due
on November 26, 2021
Unsecured loans from a bank due
on November 26, 2021
Unsecured loans from a bank due
on May 26, 2022

As of August 31, 2014

Weighted-averageinterest rate (Note 1)

Amount(Thousands of Yen)

Weighted-averageinterest rate (Note 1)¥13,000,000

0.64250%¥13,000,000

0.64250%

1,000,000

0.31000%

1,000,000

0.32636%5,000,000

0.31000%––

12,200,000

0.86250%

12,200,000

0.86250%

4,000,000

0.72500%

4,000,000

0.72500%

1,000,000

0.48250%––

1,700,000

0.50250%––

9,000,000

1.11750%

9,000,000

1.11750%

1,000,000

1.04875%

1,000,000

1.04875%

4,000,000

0.72650%

4,000,000

0.72650%

10,000,000

1.33750%

10,000,000

1.33750%

800,000

1.25875%

800,000

1.25875%

2,000,000

0.80832%––

8,000,000

1.56250%

8,000,000

1.56250%

1,000,000

1.46375%

1,000,000

1.46375%

2,000,000

1.30289%2,000,000

1.30289%2,000,000

1.11662%2,000,000

1.11662%5,500,000

1.25900%

5,500,000

1.25900%

Nomura Real Estate Master Fund

27

Notes to Financial Statements
As of February 28, 2015
AmountWeighted-average(Thousands of Yen)
interest rate (Note 1)
Unsecured loans from a bank due
on November 26, 2022
Unsecured loans from a bank due
on May 26, 2023
Unsecured loans from a bank due
on May 26, 2023
Unsecured loans from a bank due
on May 26, 2023
Unsecured loans from a bank due
on May 26, 2025 (Note 2)
Unsecured loans from a bank due
on May 26, 2025 (Note 2)
Total

10. PER UNIT INFORMATIONAs of August 31, 2014
AmountWeighted-average(Thousands of Yen)
interest rate (Note 1)

The net asset values per unit and the net income per unit as of February 28, 2015 and August 31, 2014 were as follows:––

2,000,000

1.89500%¥2,000,000

1.89500%

Net assets per unit

¥99,244¥99,204

2,000,000

1.86500%

2,000,000

1.86500%

Net income per unit

¥2,490¥2,4501,000,000

1.83875%

1,000,000

1.83875%

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

882,300

2.21812%903,700

2.21812%882,300

2.17000%

903,700

2.17000%¥92,064,600

Thousands of Yen

1-2 years

2-3 years

3-4 years

4-5 years

13,085,600

6,085,600

18,985,600

14,085,600

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

Total

¥3,000,000––¥4,145,780¥4,079,991

Average number of units during the period

1,665,260

1,665,260

11. RELATED PARTY TRANSACTIONS
For the periods from September 1, 2014 to February 28, 2015 and from March 1, 2014 to August 31, 2014
Parent Company and major corporate unitholders
		Not applicable		Not applicable

As of August 31, 2014
AmountWeighted-average(Thousands of Yen)
interest rate

0.87000%–

Directors and major individual unitholders
		Not applicable––Thousands of Yen

1-2 years–

Amount not available to ordinary unitholders (Thousands of Yen)
Net income available to ordinary unitholders (Thousands of Yen)

Fellow subsidiary companies

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

2-3 years–

3-4 years–

4-5 years–

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

–12. INCOME TAXESThe Company, as an investment corporation, is subject to corporate income taxes at a statutory tax rate of approximately 37% for
the fiscal periods ended February 28, 2015 and August 31, 2014. However, the Company may deduct dividend distributions paid
to its unitholders from its taxable income amounts, provided such distributions meet the requirements under the Act on Special
Measures Concerning Taxation of Japan. Under this act, an investment corporation must meet a number of tax requirements,
including a requirement to distribute in excess of 90% of its distributable income for the fiscal period, in order to deduct suchamounts. If the investment corporation does not satisfy all of the requirements, the entire taxable income of the investment
corporation will be subject to regular corporate income taxes.
Since the Company distributed in excess of 90% of its distributable income in the form of cash distributions totaling ¥4,146,497
thousand and ¥4,079,887 thousand for the fiscal periods ended February 28, 2015 and August 31, 2014 respectively, such
distributions were treated as deductible distributions for purposes of corporate income taxes. The following summarizes thesignificant differences between the statutory tax rate and the effective tax rate:
For the period
from September 1, 2014
to February 28, 2015
Statutory tax rate
Deductible cash distributions
Other
Effective tax rate

28

Nomura Real Estate Master FundFor the period
from March 1, 2014
to August 31, 2014
¥4,079,991

		Not applicable

Details of investment corporation bonds outstanding are summarized as follows:¥3,000,000

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

Subsidiaries and affiliates

8. INVESTMENT CORPORATION BONDSFirst series of unsecured investment
corporation bonds
Due on October 30, 2024

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

Net income (Thousands of Yen)

¥80,307,400

The scheduled repayment amounts of long-term debt for each of the five years after the balance sheet date (excluding the current
portion of long-term debt) are as follows:

Investment corporation bonds

For the period
from March 1, 2014
to August 31, 2014

0.92280%

Note 1: The weighted-average interest rate is weighted by the balance of each borrowing at the end of the period and rounded to the nearest fifth decimal place. As for the borrowings, which were
hedged by interest-rate swaps for the purpose of avoiding interest rate fluctuation risk, the swapped interest rates are used to calculate the weighted average of interest.
Note 2: Installments of ¥10.7 million will be made on the 26th day of every three months starting on August 26, 2013, with the remaining payment of ¥497.1 million to be repaid on May 26, 2025.

Long-term debt

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

¥2,100,000

For the period
from March 1, 2014
to August 31, 201434.16%(34.16)0.02
0.02%

36.59%(36.57)0.01
0.03%

Nomura Real Estate Master Fund

29

Notes to Financial Statements
13. FINANCIAL INSTRUMENTS

Note 3: Financial instruments for which fair value is difficult to determine
Thousands of Yen

Overview(1) Policy for Financial Instruments
Upon acquisition of property-related assets, the Company may raise funds through certain financing methods including
borrowings, issuance of investment corporation bonds and issuance of investment units. In financing through interestbearing debt, to secure stable financing capability and reduce future risks of rising interest rates, the Company’s investment
policy is to secure longer-term, fixed-rate borrowings with well-diversified maturities.
The Company enters into derivative transactions only for the purpose of reducing risk of future interest rate fluctuations anddoes not engage in speculative transactions.
(2) Type and Risk of Financial Instruments and Related Risk Management
Debts and investment corporation bonds are primarily used to fund the acquisition of property-related assets as well as therepayment of debts and redemption of investment corporation bonds. The Company is exposed to liquidity risk of being unable
to meet its obligations on scheduled due dates. The Company controls and limits such risk by diversifying not only 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 fluctuationsin interest rates on its floating-rate debts. However, the effect of such risk on the operation of the Company is limited bymaintaining the LTV ratio at low levels and the ratio of long-term fixed-rate debts to total debt at high levels. Furthermore, theCompany may utilize derivative transactions (interest-rate swap transactions) as a hedging instrument to reduce the market
risk under floating-rate debts by swapping such floating-rate interest payments for fixed-rate interest payments.
Bank deposits are held as a means of investing surplus funds, and the Company is exposed to the credit risk that financial
institutions may default. However, the effect of such risk is limited by diversifying the financial institutions with which surplus
funds are deposited.
(3) Supplementary Explanation on Estimated Fair Value of Financial Instruments
The fair value of financial instruments is based on the quoted market price, if applicable. When there is no quoted market
price available, fair value is reasonably estimated. Certain assumptions are used for the estimation of fair value. Accordingly,
the result of such estimation may change if different assumptions are used. Furthermore, the contractual amounts ofderivative transactions stated in “18. Derivatives and Hedge Accounting” below do not represent the market risk involved inthese derivative transactions.

Fair Value of Financial Instruments
For the period from September 1, 2014 to February 28, 2015
The following table summarizes the carrying value and the estimated fair values of financial instruments as of February 28, 2015.
Thousands of Yen(i) Cash and bank deposits(ii) Short-term debt(iii) Current portion of long-term debt(iv) Investment corporation bonds(v) Long-term debt(vi) Derivative transactions

Carrying value (Note 1)¥18,820,188(4,000,000)(85,600)(3,000,000)(92,064,600)–

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

Difference––¥1,04233,7832,070,335–

Type of asset
Investment securities

As of February 28, 2015
¥463,151*The fair value of the investment securities is not disclosed because there is no quoted market price available for these securities and it is extremely difficult to determine the fair value.
Note 4: Redemption schedule for cash and bank deposits as of February 28, 2015
Thousands of Yen

Cash and bank deposits
Total

Due within
After one year,
After two years, After three years, After four years,
one yearwithin two years within three years within four years within five years¥18,820,188––––¥18,820,188––––

Thousands of Yen(Note 1)(i) Cash and bank deposits(ii) Short-term debt(iii) Current portion of long-term debt(iv) Long-term debt(v) Derivative transactions

Carrying value¥16,627,667–(85,600)(80,307,400)–(Note 1)

Fair value¥16,627,667–(86,597)(82,146,818)–

Difference––¥997
1,839,418–

Note 1: The numbers in parentheses indicate liabilities.
Note 2: Method for determining the fair value of financial instruments and derivative transactions(i)	Cash and bank deposits and (ii) Short-term debt
		 As these items are settled within a short-term period, their fair value is nearly equal to the carrying value. Therefore, for these items, the carrying value is reported as the fair value.
(iii) 	Current portion of long-term debt and (iv) Long-term debt
		For floating-rate long-term debt, the carrying value is reported as it is considered to be approximately equal to the fair value because such debt reflects the market interest rates
within a short-term period. (However, the fair value of certain floating-rate long-term debt that qualifies for the special treatment of interest-rate swaps (see “18. Derivatives andHedge Accounting”) is determined by discounting the sum of its principal and interest payments net of any cash flows from the interest-rate swap at a rate reasonably estimated tobe applicable to similar fixed-rate debt.) The fair value of fixed-rate long-term debt is determined by discounting the sum of its principal and interest payments at a rate reasonably
estimated to be applicable to similar fixed-rate debt.
(v) Derivative transactions
		 See “18. Derivatives and Hedge Accounting.”

30

Nomura Real Estate Master Fund

After five years––

Redemption schedule for cash and bank deposits as of August 31, 2014
Thousands of Yen

Cash and bank deposits
Total

Due within
After one year,
After two years, After three years, After four years,
one yearwithin two years within three years within four years within five years¥16,627,667––––¥16,627,667––––

After five years––

Note 5: Redemption schedule for debt as of February 28, 2015
Thousands of Yen

Short-term debt
Investment corporationbonds
Long-term debt
Total

Due within
After one year,
After two years, After three years, After four years,
one yearwithin two years within three years within four years within five years¥4,000,000––––

After five years
–

–

–

–

–

–

¥3,000,000

85,600¥4,085,600¥13,085,600¥13,085,600¥6,085,600¥6,085,600¥18,985,600¥18,985,600¥14,085,600¥14,085,600¥39,822,200¥42,822,200

		 Redemption schedule for debt as of August 31, 2014
Thousands of Yen

Due within
one year
Short-term debt
Long-term debt
Total

After one year,
After two years, After three years, After four years,
within two years within three years within four years within five years
–
–
–
–
–
¥85,600¥85,600¥14,085,600¥12,285,600¥14,085,600¥85,600¥85,600¥14,085,600¥12,285,600¥14,085,600

After five years–¥39,765,000¥39,765,000

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

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

For the period from March 1, 2014 to August 31, 2014
The following table summarizes the carrying value and the estimated fair values of financial instruments as of August 31, 2014.

As of August 31, 2014
¥487,473

Carrying value
Balance at beginning of the period
Amount of increase (decrease) during the period
Balance at end of the period
Fair value at end of the period¥238,207,920
16,627,599
254,835,519¥280,180,000

For the period
from March 1, 2014
to August 31, 2014
¥239,044,902(836,982)
238,207,920¥257,123,000

Note 1: The carrying value represents the acquisition cost less accumulated depreciation.
Note 2: The major increase in the carrying value during the period ended February 28, 2015 was mainly due to the acquisition of Universal CityWalk OsakaTM (15,961,434 thousand yen) and
Kawasaki More’s (2,110,212 thousand yen) and decrease in the carrying value during the period ended February 28, 2015 was mainly due to depreciation (total 1,705,224 thousandyen). The major decrease in the carrying value during the period ended August 31, 2014 was mainly due to depreciation (total 1,535,675 thousand yen).
Note 3: The fair value as of February 28, 2015 and as of August 31, 2014 represents the sum of the appraisal values estimated by external real estate appraisers.
However, the estimated transfer price is used for the fair value as of February 28, 2015 for the Mitsubishi Motors Ibaraki Maintenance Center.

The real estate rental revenues and expenses for the fiscal periods ended February 28, 2015 and August 31, 2014 are presented in“16. Breakdown of Real Estate Rental Revenues and Expenses.”

Nomura Real Estate Master Fund

31

Notes to Financial Statements
15. SEGMENT INFORMATION

17. LEASESFor the periods from September 1, 2014 to February 28, 2015 and from March 1, 2014 to August 31, 2014

The future minimum rental revenues from tenants under non-cancelable operating lease of properties as of February 28, 2015 andAugust 31, 2014 are summarized as follows:

Segment Information

Thousands of Yen

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

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

16. BREAKDOWN OF REAL ESTATE RENTAL REVENUES AND EXPENSES
Real estate rental revenues and expenses for the fiscal periods ended February 28, 2015 and August 31, 2014 consist of the following:Thousands of Yen

For the period
from March 1, 2014
to August 31, 2014

Real estate rental revenues¥10,049,350¥9,464,316

Rental revenues

9,068,948

8,663,943

Common area charges
Other rental revenues

8,763,844

8,428,400

305,104

235,543

980,402800,373

Parking revenues

91,01773,750Incidental income

801,535

631,826

Other miscellaneous revenues

87,85094,797

4,358,151

3,872,940

Property management costs

391,935

355,167

Property management fees

270,561

213,770

Property and other taxes

726,772

731,211

Utility expenses

672,711596,791

Casualty insurance

18,405

18,435

Repairs and maintenance258,742

216,187

Land rents

96,48071,963

1,705,559

1,535,761

Real estate rental expenses

Depreciation
Other rental expenses
Real estate rental profits

18. DERIVATIVES AND HEDGE ACCOUNTING(2) Derivative financial instruments subject to hedge accounting were as follows:(2) Property and equipment

Rental revenues

Due within one year
Due after one year
Total

As of August 31, 2014¥12,763,044
41,764,249¥54,527,293

Derivative transactions as of February 28, 2015
(1) There were no derivative financial instruments not subject to hedge accounting.

		Since more than 90 percent of the total operating revenues were generated from external customers in Japan,
geographical breakdown of revenues has been omitted.

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

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

216,986

133,655¥5,691,199¥5,591,376

Thousands of Yen

Notional amount
Hedge accounting
methodType of derivative
instruments

Main hedged
item

Special treatment ofinterest-rate swaps

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

Due after
one year
72,425,100

72,382,300

Fair
value

Method used for
determining fair
value

(*)

*Since the derivative financial instruments qualifying for the special treatment of interest-rate swaps are accounted for as one transaction together with their hedged item, long-term debt, the fairvalue of these derivatives is included in that of related long-term debt (see “13. Financial Instruments (Note 2) (iii) Current portion of long-term debt and (iv) Long-term debt”).

Derivative transactions as of August 31, 2014
(1) There were no derivative financial instruments not subject to hedge accounting.
(2) Derivative financial instruments subject to hedge accounting were as follows:
Thousands of Yen

Notional amount
Hedge accounting
methodType of derivative
instruments

Main hedged
item

Special treatment ofinterest-rate swaps

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

Due after
one year
68,646,500

68,603,700

Fair
value

Method used for
determining fair
value

(*)

*Since the derivative financial instruments qualifying for the special treatment of interest-rate swaps are accounted for as one transaction together with their hedged item, long-term debt, the fairvalue of these derivatives is included in that of related long-term debt (see “13. Financial Instruments (Note 2) (iii) Current portion of long-term debt and (iv) Long-term debt”).

19. SIGNIFICANT SUBSEQUENT EVENTSTransfer of a property
After the end of 4th fiscal period (February 28, 2015), on April 30, 2015, the Company entered into a sale and purchase agreement
regarding the transfer of the property stated below. Consumption taxes and adjustments of property taxes are excluded from thetransfer price.
Mitsubishi Motors Ibaraki Maintenance Center
Type of Assets:
Trust beneficial interest mainly from real estate
Date of Agreement:

April 30, 2015

Scheduled Transfer Date: September 1, 2015
Scheduled Transfer Price: ¥1,133,000 thousand
Transferee:

Japanese General Operating Company

Impact on Revenues:	Approximately ¥240 million (sales expenses excluded) of gain on sales of real estate will be recorded forthe 6th fiscal period (from September 1, 2015 to February 29, 2016).

32

Nomura Real Estate Master Fund

Nomura Real Estate Master Fund33

Independent Auditor’s Report

Investor Information
Structure
Specified Related Party
Parent Company of the Asset Management Company

Asset Custodian
Sumitomo Mitsui Trust Bank, Limited

Nomura Real Estate Master Fund, Inc.

Nomura Real Estate Holdings, Inc.

Asset Custody Agreement
Unitholders’ Meeting
General Administrator(Organizational Administration, Accounting)
Administrator of Unitholders’ Register
Mitsubishi UFJ Trust and Banking Corporation

Board of Directors' Meeting
Asset Management Company
Nomura Real Estate Asset Management Co., Ltd.

Information Provision
Agreement

AssetManagement
Agreement

Executive Director

Satoshi Yanagita

Supervisory Director

Sadahiko Yoshimura

Supervisory Director

Shuhei YoshidaTransfer Agency Agreement andGeneral Administration Agreement
General Administrator (Financial Agent)
The Bank of Tokyo-Mitsubishi UFJ, Ltd.

AuditorErnst & Young Shin Nihon LLC

Information Provider
Nomura Real Estate Development Co., Ltd.

Financial agency agreement

IR Calendar
Announcement of financial results(mid-April)

January

March

February

Fiscal period end(end of February)

April

Announcement of financial results(mid-October)

June

May

July

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

Breakdown of Unitholders

SeptemberAugustFiscal period end(end of August)October

151,431 units
9.1%

852,245 units
51.2%

300,118 units
18.0%
3rd
Fiscal Period

Foreign corporations and individuals

Other domestic corporations

Financial institutions(including financial instruments
business operators)

Individuals and others

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

Top 10 Unitholders
Unitholder

361,466 units
21.7%

November

Units heldShare

416,162 units
25.0%

1 Japan Trustee Services Bank, Ltd.

336,835 20.23%

2 The Master Trust Bank of Japan, Ltd.

143,926

8.64%

144,735 units
8.7%

3 Trust & Custody Services Bank, Ltd.

119,512

7.18%

4 Nomura Real Estate Development Co., Ltd.

87,8205.27%

5 Nomura Bank Luxembourg S.A.

77,497

4.65%

6 The Nomura Trust and Banking Co., Ltd.

69,013

4.14%

Nomura PB Nominees Limited Omnibus-Margin(Cash PB)

23,646

1.42%

8 Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

20,661

1.24%

State Street Bank – West Pension Fund Clients –Exempt17,0471.02%

17,025

1.02%

865,875 units
52.0%

238,488 units
14.3%
4th
Fiscal Period79

10 The Bank of New York Mellon SA/NV 10
Total

912,982 54.83%

Note: The figures are based on data as of February 28, 2015.

34

Nomura Real Estate Master Fund

Nomura Real Estate Master Fund35