[For Translation Purposes Only]
September 26 , 2017

For Immediate Release
To Whom It May Concern
Nomura Real Estate Master Fund, Inc.
Securities Code: 3462
Shuhei Yoshida, Executive Director
Asset Management Company:
Nomura Real Estate Asset Management Co., Ltd.
Norio Ambe, President & Chief Executive Officer
Inquiries:
Ken Okada
Director and Managing Executive Officer
TEL. +81-3-3365-8767 nmf3462@nomura-re.co.jp

Notice Concerning Property Acquisition and Disposition
Nomura Real Estate Master Fund, Inc. (“Nomura Master Fund” or the “Fund”) announces the decision madetoday by Nomura Real Estate Asset Management Co., Ltd., a licensed investment trust management company
retained by the Fund to provide asset management services, to acquire and dispose of assets (the “Acquisition”
and the “Disposition,” respectively; collectively referred to as the “Transaction”), as described below.
1. Summary of Assets to Be Acquired/Disposed Of(1) Summary of Assets to Be Acquired(Scheduled)No.

Property Name

Use

(Scheduled)(Scheduled)

Date ofAgreement

Date of
Acquisition

SellerAcquisitionPrice(¥ million)(Note 1)

1

PMO Hirakawacho

Office2

PMO Shinnihonbashi

Office3

GEMS Kanda

Retail4

GEMS Daimon

Retail3,410
September 29,
2017

September 29,
2017

Nomura Real
EstateDevelopment
Co., Ltd.

4,440
1,500
2,060

Total

11,410(Note 1) The amounts stated exclude acquisition-related costs, property tax, city planning tax, consumption tax and local consumption tax.
(Note 2) The assets to be acquired are all actual real estate.
(Note 3) Payments for the acquisition of the assets to be acquired will be settled with the proceeds from the sale of Morisia Tsudanuma,
as listed below under “(2) Summary of Assets Scheduled to Be Disposed Of.” Note that the Transaction is planned on theassumption that the acquisition of all of the properties to be acquired and the sale of the property to be disposed of are
executed simultaneously. Should the agreements concerning the acquisition or disposal of any of the said properties or theiractual acquisition or disposal be cancelled for any reason, the entire Transaction will be cancelled.

The above four properties are collectively referred to hereinafter as the “Four Properties to Be Acquired.”－ 1 －(2) Summary of Assets to Be Disposed Of
No.

1Property
Name

Morisia
Tsudanuma

Use

Retail(Scheduled)
Date ofAgreement(Scheduled)
Date ofTransferee

Disposition

Nomura Real
September 29, September 29,
Estate2017
2017
Development
Co., Ltd.

Total

—

(Scheduled)

Book

Transfer

Value

Price
(¥ million)(¥ million)

18,00017,896103

18,00017,896103

Difference(¥ million)(Note 2)

(Note 1)

(Note 1) Anticipated book value at the date of disposition.
(Note 2) For reference only, this indicates the difference between the scheduled transfer price and anticipated book value; it is not equal togain or loss on sale.
(Note 3) The above asset to be disposed of is a beneficiary interest in a trust for which real estate is the principal trust asset.
(Note 4) Under the sale contract for the Property to Be Sold, regarding the future sale of rental or other facilities on the property’s land,should Nomura Real Estate Development Co., Ltd., redevelop and sell said property in the future, the Fund will be granted
preferential negotiation rights regarding said sale.

The above property is referred to hereinafter as the “Property to Be Sold.” Individual properties among theFour Properties to Be Acquired and the Property to Be Sold are also referred to individually hereinafter as “theProperty.”
2. Reasons for the Transaction
In accordance with the Medium- to Long-term Management Strategy announced in November 2015, Nomura
Master Fund designated the three years following that date as its Quality Phase and has been implementing various
related measures.
One key measure is Strategic Property Replacement (SPR), which is aimed at improving the quality of ourportfolio. As part of this measure, the Fund has decided to execute an asset swap with the Sponsor, Nomura Real
Estate Development Co., Ltd., comprising the sale of Morisia Tsudanuma, an aging building with an excellent
location, and the acquisition of four properties developed by Nomura Real Estate Development Co., Ltd.,
comprising two office (PMO) and two retail (GEMS) facilities.
The Fund will continue to actively use its leasing value chain, consisting of its property acquisition pipeline andmanagement pipeline, thereby working to accelerate mutual growth with the Nomura Real Estate Group.
3. Summary of Assets to Be Acquired and Sold
(1) Summary of Assets to Be Acquired
a. PMO Hirakawacho
Strengths of the Asset to Be Acquired
The main strengths of the asset to be acquired are as follows.
・Located one minute on foot from Nagatacho Station on the Tokyo Metro Hanzomon, Nanboku andYurakucho lines and four minutes on foot from Akasaka-Mitsuke Station on the Tokyo Metro Marunouchi
and Ginza lines, the Property is easily accessible via multiple train lines and stations, providing excellent
transportation convenience.
・The Nagatacho area, where the Property is located, is close to The Imperial Palace, the Supreme Court ofJapan and the National Diet Building and is home to numerous government offices, educational institutions
and foreign embassies. As such, stable demand is expected from foundations and other extra-governmentorganizations, law firms, foreign-owned corporations that prioritize their external appearance, consulting
firms and other such tenants.

－ 2 －Summary of Asset to Be Acquired
Property Name
Type of AssetRegistry
Location(Note 1)StreetAccessCompletion Date (Note 1)
Use (Note 1)
Structure (Note 1)
Architect
BuilderPMO Hirakawacho
Real estate
2-7-6 Hirakawacho, Chiyoda Ward, Tokyo and 2 other lots
2-7-3 Hirakawacho, Chiyoda Ward, Tokyo
1-minute walk from Nagatacho Station on the Tokyo Metro Hanzomon,
Nanboku and Yurakucho lines
4-minute walk from Akasaka-Mitsuke Station on the Tokyo Metro Marunouchi
and Ginza lines
9-minute walk from Kojimachi Station on the Tokyo Metro Yurakucho Line
10-minute walk from Kokkaigijido-Mae Station on the Tokyo Metro Chiyoda andMarunouchi lines
January 29, 2016
OfficeS 10F
Nomura Real Estate Development Co., Ltd., First-Class Architect Office
Tokyu Construction Co., Ltd.

Building Inspection Agency

UHEC

Land
Floor Area
Land
Type ofOwnership
Building
Building Coverage Ratio
Floor Area Ratio
Collateral
Property Management
Company (Note 3)
Master Leasing Company

307.79 m2
2,402.91 m2
Ownership
Ownership
100% (Note 2)
700%
None
Nomura Real Estate Development, Co., Ltd.

Area (Note 1)(Note 4)

Type of Master Leasing
Seismic Risk (PML) (Note 5)

Nomura Real Estate Development, Co., Ltd.
Pass through3.87%(Based on an September 2017 Earthquake PML Appraisal Report by SOMPORISK MANAGEMENT & HEALTH CARE Inc.)

Notes

Scheduled
Acquisition Price・To conform with urban planning, a road is to be constructed on the Property’s
west side. The timing of this construction has yet to be determined. When theplan is executed, the Property’s boundary will move back approximately 1 mfrom the current boundary line of the road on its north side, and the property’s
land area will decrease by approximately12.76 m2.
・The property management company and master leasing company, Nomura Real
Estate Development Co., Ltd., is considered a related party under the Law
Concerning Investment Trust and Investment Corporations (“Investment TrustLaw”).
¥3,410 million¥3,560 million (Based on the capitalization approach as of September 1, 2017)(Appraiser: Japan Real Estate Institute)
Appraisal NOI (Note 6)¥130 million
Leasing Status (As of September 26, 2017) (Note 7)
Total Number of Tenants
9
Total Rental Income¥180 million
Security Deposits¥170 million
Occupancy Rate
100.0%

Appraisal Value and Method－ 3 －Total Leased Floor Space
Total Leasable Floor SpaceHistorical Occupancy Rates

1,871.08 m2
1,871.08 m2
July 2013

July 2014—(Note 8)—July 2015—

July 2016
66.7%

July 2017100.0%(Note 1) Location and Other Items
Location (registry), Completion Date, Use, Structure and Area are based on the information in the real estate registry.
(Note 2) Building Coverage Ratio
The Property is located in a commercial zone where the building coverage ratio is 80% in principle. Because the Property
is in a fire prevention zone and certified fireproof, however, the applied coverage ratio is 100%.
(Note 3) Property Management Company
Refers to the property management company that is scheduled to be appointed after acquisition.
(Note 4) Master Lease
Upon the acquisition of the Property, the Fund plans to enter into a master lease agreement with Nomura Real Estate
Development Co., Ltd. Under this agreement, the building of the Property will be collectively leased to Nomura Real
Estate Development Co., for the purpose of subleasing. The master lease agreement is a pass-through scheme, in which
Nomura Real Estate Development Co., Ltd., the master lease company, pays to the Fund the same amount as the totalsum of the rent based on the lease agreements that the master lease company concludes with end tenants.
(Note 5) PML (Probable Maximum Loss)
The PML figure indicates the probable losses caused by a major earthquake, expressed as the expected recovery costpresented as a percentage of replacement cost. PML is calculated based on a statistical assumption that there is a 0.211%
annual chance (approximately 10% probability once every 50 years, i.e., the average lifespan of a building) of a major
earthquake occurring.
(Note 6) Appraisal NOI“Appraisal NOI” is the annual NOI (operating income-operating expenses) described in the real estate appraisal report,with September 1, 2017 as the appraisal date.
(Note 7) Leasing Status“Total Number of Tenants” is the total number of end tenants actually leasing space in the building of the Property as ofthis document’s publication.
“Total Rental Income” is the amount obtained by multiplying the monthly rent stated in the lease agreements by the total
number of end tenants actually leasing space in the building of the Property as of the date of this publication by 12(truncated at the nearest million yen).
“Security Deposits” indicates the amount of security and other deposits specified in the aforementioned lease agreements(truncated at the nearest million yen).
“Total Leased Floor Space” indicates the total floor space leased to end tenants as of the date of this publication.
(Note 8) Historical Occupancy Rates
There are no applicable occupancy rates for July 2015 and before because the building was not yet completed.

b. PMO Shinnihonbashi
Strengths of the Asset to Be Acquired
The main strengths of the asset to be acquired are as follows.
・Located two minutes on foot from Shin-Nihombashi Station on the JR Sobu Line, five minutes on footfrom Mitsukoshimae Station on the Tokyo Metro Ginza and Hazomon lines, and five minutes on foot from
Kanda Station on the JR Yamanote, Keihin Tohoku and Chuo lines, the Property offers excellent access topublic transportation.
・The Nihonbashi Area, where the Property is located, is home to the headquarters of the Bank of Japan andnear the Tokyo Stock Exchange. Because of this, many domestic financial institutions, such as banks andsecurities firms, are located in the area. The Nihonbashi-Honcho area, specifically, was historically home tonumerous medicine merchants, and today remains the location of many pharmaceuticals companies. As
such, the Property is expected to enjoy stable demand from the Group companies and business partners ofcompanies in said industries.
Summary of Asset to Be Acquired
Property Name
Type of AssetRegistry
Location(Note 1)StreetPMO Shinnihonbashi
Real estate
4-11-2 Nihonbashi-Honcho, Chuo Ward, Tokyo and 2 other lots
4-3-6 Nihonbashi-Honcho, Chuo Ward, Tokyo－ 4 －Access

Completion Date (Note 1)
Use (Note 1)
Structure (Note 1)
Architect
Builder
Building Inspection Agency
Land
Area (Note 1)
Floor Area
Land
Type ofOwnership
Building
Building Coverage Ratio
Floor Area Ratio
Collateral
Property Management
Company (Note 3)
Master Leasing Company(Note 4)

Type of Master Leasing
Seismic Risk (PML) (Note 5)
Notes
Scheduled
Acquisition PriceAppraisal Value and Method
Appraisal NOI (Note 6)

2-minute walk from Shin-Nihombashi Station on the JR Sobu Line
5-minute walk from Mitsukoshimae Station on the Tokyo Metro Ginza andHanzomon lines
5-minute walk from Kanda Station on the JR Yamanote, Keihin-Tohoku andChuo lines
7-minute walk from Kodemmacho Station on the Tokyo Metro Hibiya Line
November 30, 2016
Office, parking
S/SRC B1F/9F
Nomura Real Estate Development Co., Ltd., First-Class Architect OfficeSato Kogyo Co., Ltd.
UHEC
552.11 m2 (owned portion: 473.11 m2; leased portion: 79.00 m2)
3,721.63 m2
Ownership, leasehold
Ownership
100% (Note 2)
600%
None
Nomura Real Estate Development, Co., Ltd.
Nomura Real Estate Development, Co., Ltd.
Pass through5.53% (Based on an September 2017 Earthquake PML Appraisal Report by
SOMPO RISK MANAGEMENT & HEALTH CARE Inc.)
・The property management company and master leasing company, Nomura Real
Estate Development Co., Ltd., is considered a related party under theInvestment Trust Law.
¥4,440 million¥4,680 million (Based on the capitalization approach as of September 1, 2017)(Appraiser: Japan Real Estate Institute)¥180 million

Leasing Status (As of September 26, 2017) (Note 7)
Total Number of Tenants
Total Rental Income
Security Deposits
Occupancy Rate
Total Leased Floor Space
Total Leasable Floor SpaceHistorical Occupancy Rates(Note 8)4¥255 million¥250 million
100.0%
2,971.76 m2
2,971.76 m2
July 2013—

July 2014—

July 2015—

July 2016—

July 2017100.0%(Note 1) Location and Other Items
Location (registry), Completion Date, Use, Structure and Area are based on the information in the real estate registry.
(Note 2) Building Coverage Ratio
The Property is located in a commercial zone where the building coverage ratio is 80% in principle. Because the Property
is in a fire prevention zone and certified fireproof, however, the applied coverage ratio is 100%.
(Note 3) Property Management Company
Refers to the property management company that is scheduled to be appointed after acquisition.
(Note 4) Master Lease
Upon the acquisition of the Property, the Fund plans to enter into a master lease agreement with Nomura Real Estate
Development Co., Ltd. Under this agreement, the building of the Property will be collectively leased to Nomura Real
Estate Development Co., Ltd. for the purpose of subleasing. The master lease agreement is a pass-through scheme, inwhich Nomura Real Estate Development Co., Ltd., the master lease company, pays to the Fund the same amount as thetotal sum of the rent based on the lease agreements that the master lease company concludes with end tenants.
(Note 5) PML (Probable Maximum Loss)－ 5 －The PML figure indicates shows the probable losses caused by a major earthquake, expressed as the expected recovery
cost presented as a percentage of replacement cost. PML is calculated based on a statistical assumption that there is a
0.211% annual chance (approximately 10% probability once every 50 years, i.e., the average lifespan of a building) of amajor earthquake occurring.
(Note 6) Appraisal NOI“Appraisal NOI” is the annual NOI (operating income-operating expenses) described in the real estate appraisal report,with September 1, 2017 as the appraisal date.
(Note 7) Leasing Status“Total Number of Tenants” is the total number of end tenants actually leasing space in the building of the Property as ofthis document’s publication.
“Total Rental Income” is the amount obtained by multiplying the monthly rent stated in the lease agreements by the total
number of end tenants actually leasing space in the building of the Property as of the date of this publication by 12(truncated at the nearest million yen).
“Security Deposits” indicates the amount of security and other deposits specified in the aforementioned lease agreements(truncated at the nearest million yen).
“Total Leased Floor Space” indicates the total floor space leased to end tenants as of the date of this publication.
(Note 8) Historical Occupancy Rates
There are no applicable occupancy rates for July 2016 and before because the building was not yet completed.

c.

GEMS Kanda
Strengths of the Asset to Be Acquired
The main strengths of the asset to be acquired are as follows.
・Located four minutes on foot from Kanda Station on the JR Yamanote, Keihin-Tohoku and Chuo lines,
three minutes on foot from Shin-Nihombashi Station on the JR Sobu Line and five minutes on foot from
Mitsukoshimae Station on the Tokyo Metro Ginza Line, the Property offers excellent access to public
transportation.
・The Kanda area, where the Property is located, contains numerous pharmaceutical-related companies andfinancial institutions, mainly regional banks. As such, robust retail demand is expected, mainly from nearby
office workers.

Summary of Asset to Be Acquired
Property Name
Type of AssetRegistry
Location(Note 1)StreetAccessCompletion Date (Note 1)
Use (Note 1)
Structure (Note 1)
Architect
Builder
Building Inspection Agency
Land
Area (Note 1)
Floor Area
Land
Type ofOwnership
Building
Building Coverage Ratio
Floor Area Ratio
Collateral

GEMS Kanda
Real estate
1-4-3 Kajicho, Chiyoda Ward, Tokyo and 2 other lots
1-9-19 Kajicho, Chiyoda Ward, Tokyo
4-minute walk from Kanda Station on the JR Yamanote and Chuo lines (among
others)3-minute walk from Shin-Nihombashi Station on the JR Sobu Line
4-minute walk from Kanda Station on the Tokyo Metro Ginza Line
5-minue walk from Mitsukoshimae Station on the Tokyo Metro Ginza Line
June 15, 2016
RetailS/SRC B1F/8F
Nomura Real Estate Development Co., Ltd., First-Class Architect Office
Real Estate Developer
UHEC
198.73 m2
1,177.49 m2
Ownership
Ownership
100% (Note 2)
600%
None

－ 6 －

Property Management
Company (Note 3)
Master Leasing Company(Note 4)

GEO-AKAMATSU Co., Ltd.
GEO-AKAMATSU Co., Ltd.

Type of Master Leasing

Pass throughSeismic Risk (PML) (Note 5)

5.24% (Based on an August 2017 Earthquake PML Appraisal Report by
SOMPO RISK MANAGEMENT & HEALTH CARE Inc.)

Notes

・The property management company and master leasing company, GEOAKAMATSU Co., Ltd., is considered a related party under the Investment
Trust Law.

Scheduled
Acquisition Price¥1,500 million¥1,530 million (Based on the capitalization approach as of September 1, 2017)(Appraiser: Daiwa Real Estate Appraisal Co., Ltd.)
Appraisal NOI (Note 6)
60 million
Leasing Status (As of September 26, 2017) (Note 7)
Total Number of Tenants
9
Total Rental Income¥90 million
Security Deposits¥66 million
Occupancy Rate
100.0%
Total Leased Floor Space
1,023.60 m2
Total Leasable Floor Space
1,023.60 m2
July 2013
July 2014
July 2015
July 2016
July 2017
Historical Occupancy Rates(Note 8)———100.0%
100.0%
Appraisal Value and Method(Note 1) Location and Other Items
Location (registry), Completion Date, Use, Structure and Area are based on the information in the real estate registry.
(Note 2) Building Coverage Ratio
The Property is located in a commercial zone where the building coverage ratio is 80% in principle. Because the Property
is in a fire prevention zone and certified fireproof, however, the applied coverage ratio is 100%.
(Note 3) Property Management Company
Refers to the property management company that is scheduled to be appointed after acquisition.
(Note 4) Master Lease
Upon the acquisition of the Property, the Fund plans to enter into a master lease agreement with GEO-AKAMATSU
Co., Ltd. Under this agreement, the building of the Property will be collectively leased to GEO-AKAMATSU Co., Ltd.
for the purpose of subleasing. The master lease agreement is a pass-through scheme, in which GEO-AKAMATSU Co.,
Ltd., the master lease company, pays to the Fund the same amount as the total sum of the rent based on the leaseagreements that the master lease company concludes with end tenants.
(Note 5) PML (Probable Maximum Loss)
The PML figure shows indicates the probable losses caused by a major earthquake, expressed as the expected recovery
cost presented as a percentage of replacement cost. PML is calculated based on a statistical assumption that there is a
0.211% annual chance (approximately 10% probability once every 50 years, i.e., the average lifespan of a building) of amajor earthquake occurring.
(Note 6) Appraisal NOI“Appraisal NOI” is the annual NOI (operating income-operating expenses) described in the real estate appraisal report,with September 1, 2017 as the appraisal date.
(Note 7) Leasing Status“Total Number of Tenants” is the total number of end tenants actually leasing space in the building of the Property as ofthis document’s publication.
“Total Rental Income” is the amount obtained by multiplying the monthly rent stated in the lease agreements by the total
number of end tenants actually leasing the space in the building of the Property as of the date of this publication by 12(truncated at the nearest million yen).
“Security Deposits” indicates the amount of security and other deposits specified in the aforementioned lease agreements(truncated at the nearest million yen).
“Total Leased Floor Space” indicates the total floor space leased to end tenants as of the date of this publication.
(Note 8) Historical Occupancy Rates
There are no applicable occupancy rates for July 2015 and before because the building was not yet completed.

－ 7 －d. GEMS Daimon
Strengths of the Asset to Be Acquired
The main strengths of the asset to be acquired are as follows.
・Located one minute on foot from Daimon Station on the Toei Asakusa and Oedo lines and five minutes onfoot from Hamamatsucho Station on the JR Yamanote and Keihin-Tohoku lines and the Tokyo Monorail,
the Property offers excellent access to public transportation. Furthermore, the Property is located on acorner lot and faces a wide road, affording it excellent visibility.
・The Hamamatsucho/Daimon area, where the Property is located, offers excellent access to Tokyo andShinagawa stations and is home to numerous major manufacturing companies and foreign-owned
companies that require superior access to Shinkansen stations and the airport. As such, robust retaildemand is expected, mainly from nearby office workers.
Summary of Asset to Be Acquired
Property Name
Type of AssetRegistry
Location(Note 1)StreetAccessCompletion Date (Note 1)
Use (Note 1)
Structure (Note 1)

GEMS Daimon
Real estate
1-401-1 Daimon, Minato Ward, Tokyo and 3 other lots
1-15-3 Daimon, Minato Ward, Tokyo
1-minute walk from Daimon Station on the Toei Asakusa and Oedo lines
5-minute walk from Hamamatsucho Station on the JR Yamanote and KeihinTohoku lines
February 15, 2016
RetailS/SRC B1F/9F

Architect

Nomura Real Estate Development Co., Ltd., First-Class Architect Office

Builder

Goda Koumuten Co., Ltd.

Building Inspection Agency

UHEC

Land
Floor Area
Land
Type ofOwnership
Building
Building Coverage Ratio
Floor Area Ratio
Collateral
Property Management
Company (Note 3)
Master Leasing Company

241.43 m2
1,387.89 m2
Ownership
Ownership
100% (Note 2)
600%
None

Area (Note 1)(Note 4)

Type of Master Leasing
Seismic Risk (PML) (Note 5)
Notes
Scheduled
Acquisition Price

GEO-AKAMATSU Co., Ltd.
GEO-AKAMATSU Co., Ltd.
Pass through
6.44% (Based on an September 2017 Earthquake PML Appraisal Report by
SOMPO RISK MANAGEMENT & HEALTH CARE Inc.)
・The property management company and master leasing company, GEOAKAMATSU Co., Ltd., is considered a related party under the Investment TrustLaw.
¥ 2,060 million¥2,110 million (Based on the capitalization approach as of September 1, 2017)(Appraiser: Daiwa Real Estate Appraisal Co., Ltd.)
Appraisal NOI (Note 6)
82 million
Leasing Status (As of September 26, 2017) (Note 7)

Appraisal Value and Method－ 8 －Total Number of Tenants
Total Rental Income
Security Deposits
Occupancy Rate
Total Leased Floor Space
Total Leasable Floor SpaceHistorical Occupancy Rates(Note 8)9¥114 million¥86 million
100.0%
1,175.42 m2
1,175.42 m2
July 2013—

July 2014—

July 2015—

July 2016
100.0%

July 2017100.0%(Note 1) Location and Other Items
Location (registry), Completion Date, Use, Structure and Area are based on the information in the real estate registry.
(Note 2) Building Coverage Ratio
The Property is located in a commercial zone where the building coverage ratio is 80% in principle. Because the Property
is in a fire prevention zone and certified fireproof, however, the applied coverage ratio is 100%.
(Note 3) Property Management Company
Refers to the property management company that is scheduled to be appointed after acquisition.
(Note 4) Master Lease
Upon the acquisition of the Property, the Fund plans to enter into a master lease agreement with GEO-AKAMATSU
Co., Ltd. Under this agreement, the building of the Property will be collectively leased to GEO-AKAMATSU Co., Ltd.
for the purpose of subleasing. The master lease agreement is a pass-through scheme, in which GEO-AKAMATSU Co.,
Ltd., the master lease company, pays to the Fund the same amount as the total sum of the rent based on the leaseagreements that the master lease company concludes with end tenants.
(Note 5) PML (Probable Maximum Loss)
The PML figure indicates the probable losses caused by a major earthquake, expressed as the expected recovery costpresented as a percentage of replacement cost. PML is calculated based on a statistical assumption that there is a 0.211%
annual chance (approximately 10% probability once every 50 years, i.e., the average lifespan of a building) of a major
earthquake occurring.
(Note 6) Appraisal NOI“Appraisal NOI” is the annual NOI (operating income-operating expenses) described in the real estate appraisal report,with September 1, 2017 as the appraisal date.
(Note 7) Leasing Status“Total Number of Tenants” is the total number of end tenants actually leasing space in the building of the Property as ofthis document’s publication.
“Total Rental Income” is the amount obtained by multiplying the monthly rent stated in the lease agreements by the total
number of end tenants actually leasing space in the building of the Property by 12 (truncated at the nearest million yen).
“Security Deposits” indicates the amount of security and other deposits specified in the aforementioned lease agreements(truncated at the nearest million yen).
“Total Leased Floor Space” indicates the total floor space leased to end tenants as of the date of this publication.
(Note 8) Historical Occupancy Rates
There are no applicable occupancy rates for July 2015 and before because the building was not yet completed.

(2) Summary of Asset to Be Solda. Morisia Tsudanuma
Property Name
Type of Asset
Trustee
Trust Term
Registry
StreetLocation(Note 1)

AccessCompletion Date (Note 1)
Use (Note 1)
Structure (Note 1)

Morisia Tsudanuma
Trust beneficiary interest in real estate
Sumitomo Mitsui Trust Bank, Limited(Low-rise retail building, etc.) August 30, 2006 to June 30, 2023
(Parking structure) August 30, 2006 to June 30, 2023
1-1340-10 Yatsu, Narashino City, Chiba and 2 other lots
1-16-1 Yatsu, Narashino City, Chiba
2-minute walk from Tsudanuma Station on the JR Sobu Line
(Low-rise retail building, etc.) October 1, 1978
(Parking structure) November 20, 1987
(Low-rise retail building, etc.) Retail, office, parking(Parking structure) Parking(Low-rise retail building, etc.) SRC/RC B3F/12F(Parking structure) S, 8F

－ 9 －

Land
Area (Note 1)
Floor Area
Type ofOwnershipLand
Building

Building Coverage Ratio
Floor Area Ratio
Collateral
Scheduled
Acquisition Price
ScheduledTransfer PriceBook Value (Note 5)
Difference(Low-rise retail building, etc.) 16,707.61 m2(Parking structure) 2,487.03 m2(Low-rise retail building, etc.) 94,067.53 m2(Parking structure) 11,423.50 m2(Low-rise retail building, etc.) Ownership(Parking structure) Ownership(Low-rise retail building, etc.) Compartmentalized ownership (Note 2)(Parking structure) Ownership(Low-rise retail building, etc.) 100% (Note 3)(Parking structure) 100% (Note 3)(Low-rise retail building, etc.) 630% (Note 4)(Parking structure) 600%
None
¥16,600 million¥18,000 million¥17,896 million¥103 million¥17,500 million (Based on the capitalization approach as of August 31 2017)
Appraisal Value and Method(Appraiser: Daiwa Real Estate Appraisal Co., Ltd.)
Leasing Status (As of September 26, 2017) (Note 6)
Total Number of Tenants
104
Total Rental Income¥1,673 million
Security Deposits¥831 million
Occupancy Rate
97.8%
Total Leased Floor Space
38,529.17 m2
Total Leasable Floor Space39,395.03 m2
August 2013
August 2014
August 2015
August 2016
August 2017
Historical Occupancy Rates
97.2%
98.6%
98.3%
97.2%
97.8%
(Note 1) Location and Other Items
Location (registry), Completion Date, Use, Structure and Area are based on the information in the real estate registry.
(Note2) Type of Ownership
The trustee owns 92.57% of the Property’s common areas, and Narashino City owns the remaining 7.43%.
(Note 3) Building Coverage Ratio
The Property is located in a commercial zone where the building coverage ratio is 80% in principle. Because the Property
is in a fire prevention zone and certified fireproof, however, the applied coverage ratio is 100%.
(Note 4) Floor Area Ratio
The Property’s low-rise retail building, etc., has a legally designated maximum floor area ratio of 600% in principle.
However, as the location was designated as the Narashino-shi Yatsu-cho Specified Block in Narashino City Public NoticeNo. 11, promulgated March 5, 1974, the applied floor area ratio is 630%.
(Note 5) Book Value“Book Value” is the anticipated book value at the date of disposition.
(Note 6) Leasing Status“Total Number of Tenants” is the total number of end tenants actually leasing space in the building of the Property.
“Total Rental Income” is the amount obtained by multiplying the monthly rent stated in the lease agreements by the total
number of end tenants actually leasing space in the building of the Property by 12 (truncated at the nearest million yen).
“Security Deposits” indicates the amount of security and other deposits specified in the aforementioned lease agreements(truncated at the nearest million yen).
“Total Leased Floor Space” indicates the total floor space leased to end tenants.

4. Profile of Seller of the Properties to Be Acquired and Buyer of the Property to Be Sold
Company Name

Nomura Real Estate Development, Co., Ltd.

Head Office

1-26-2 Nishi-Shinjuku, Shinjuku Ward, Tokyo

Representative

Seiichi Miyajima, President & CEO

Principal Business

Real Estate－ 10 －

Capital¥2,000 million (as of April 1, 2017)

Established

April 15, 1957

Net Assets¥145.2 billion (as of March 31, 2017)

Total Assets¥1,124.6 billion (as of March 31, 2017)

Major Shareholder
Nomura Real Estate Holdings, Inc. (100.0%) (as of March 31, 2017)(Stockholding Ratio)
Relationships with the Fund and/or the Asset Management Company
CapitalPersonal
Transactions

Related Party
Status

Nomura Real Estate Development, Co., Ltd. holds 5.04% of the Fund’s investment
units (as of February 28, 2017). As a wholly owned subsidiary of Nomura Real
Estate Holdings, Inc., which also holds 100% ownership of the Asset Management
Company, Nomura Real Estate Development, Co., Ltd. is a related party of the AssetManagement Company as defined in the Investment Trust Law.
The Asset Management Company’s employees and officers are dispatched from
Nomura Real Estate Development, Co., Ltd.
Nomura Real Estate Development, Co., Ltd. is the property management companyof the Fund and a lessee of real estate owned by the Fund. Moreover, the AssetManagement Company has concluded an agreement on provision of information
and a basic agreement on the leasing value chain with the said company.
Nomura Real Estate Development, Co., Ltd. does not fall under the definition of a
related party of the Fund. However, as stated above, the said company is a related
party of the Asset Management Company as they are fellow subsidiaries of acommon parent company.

5. Status of Owner of Properties to Be Acquired
PMO Hirakawacho, PMO Shinnihonbashi, GEMS Kanda, GEMS Daimon
Status of Owner (Note)

Current Owner and/or Trustee

Company Name

Nomura Real Estate Development,

Previous Owner and/or TrusteeCo., Ltd.
Relationship With Parties

Please refer to “4. Profile of Seller

with Special Interestof the Properties to Be Acquiredand Buyer of the Property to Be——

Sold,” above
Background/Reasons for

For development for later sale

Acquisition, etc.
Acquisition Price(Including Other RelatedExpenses)Acquisition Date

—

—

—

—

—

(Note) All four of the Four Properties to Be Acquired as part of the Transaction have the same owner.

6.

Transactions with Related Parties(1) Transactions related to the acquisition of assets to be acquired and the sale of assets to be sold
The transactions related to the acquisition of assets to be acquired and the sale of assets to be sold areconsidered transactions with a related party under the Investment Trust Law, as stated above. Accordingly,
the acquisition and sale of each property, the acquisition and sale prices, and other relevant terms have been
duly examined and authorized by the Asset Management Company’s compliance committee and investmentcommittee pursuant to its investment committee rules, rules of compliance, compliance manual, rules
concerning transactions with related parties, and other relevant rules and guidelines.
(2) The property management company and master leasing company of PMO Hirakawacho and PMO－ 11 －

Shinnihonbashi
The property management company and master leasing company of PMO Hirakawacho and PMO
Shinnihonbashi, Nomura Real Estate Development Co., Ltd., is considered a related party under theInvestment Trust Law, as stated above. Accordingly, the fees and other terms of the consignment ofproperty management as well as the lease period, rental rate, and other leasing terms related to PMO
Hirakawacho and PMO Shinnihonbashi have been duly examined and authorized by the Asset Management
Company’s compliance committee and investment committee pursuant to its investment committee rules,
rules of compliance, compliance manual, rules concerning transactions with related parties, and otherrelevant rules and guidelines.
(3) The property management company and master leasing company of GEMS Kanda and GEMS Daimon
The property management company and master leasing company of GEMS Kanda and GEMS Daimon,
GEO-AKAMATSU Co., Ltd., is considered a related party under the Investment Trust Law, as stated above.
Accordingly, the fees and other terms of the consignment of property management as well as the lease
period, rental rate, and other leasing terms related to GEMS Kanda and GEMS Daimon have been duly
examined and authorized by the Asset Management Company’s compliance committee and investmentcommittee pursuant to its investment committee rules, rules of compliance, compliance manual, rules
concerning transactions with related parties, and other relevant rules and guidelines.
7.

BrokerThere is no brokerage involved in the disposition of the assets to be acquired and sold.

8.

Form of Payment, etc.
(1) The Four Properties to Be Acquired and the Property to Be Sold
Because the acquisitions and sale are between the same parties, said parties intend to settle the accountbased on the difference between the acquisition and sales prices. Accordingly, on the scheduledacquisition and sale date, Nomura Master Fund will receive from the seller the sale price of the Property
to Be Sold, less the acquisition prices of the Four Properties to Be Acquired, in a lump sum.
Note that the Transaction is planned on the assumption that the acquisition of all of the properties tobe acquired and the sale of the property to be disposed of will be executed simultaneously. Should theagreements concerning the acquisition or disposal of any of the said properties or their actual
acquisition or disposal be cancelled for any reason, the entire Transaction will be cancelled.

9.

Schedule for the Transaction
September 29, 2017Conclusion of purchase and sale agreements for and acquisition of the Four
Properties to Be Acquired (delivery of real estate)
Conclusion of a purchase and sale agreement for and sale of the Property to Be
Sold (delivery of trust beneficiary interests)

10.

Forecast of Financial Results
The effects of the Transaction on the overall portfolio are expected to be minor and will be accounted for,along with expectations regarding the operating status of the remainder of the portfolio, in the forecast offinancial results for the period ending February 28, 2018 (September 1, 2017 to February 28, 2018). The
announcement of this forecast is planned for October 13, 2017, in tandem with the announcement of theresults of the period ended August 31, 2017.

－ 12 －

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

Appraisal Vale

¥3,560,000,000

Appraiser

Japan Real Estate Institute

Appraisal Date

September 1, 2017
(Yen)
Amount orPercentage

Item
Capitalization Approach Price

3,560,000,000

Price Calculated by the Direct Capitalization
Approach(1) Operating Income (a)-(b)(a) Gross Rental Income(b) Losses due to Vacancies,etc.
(2) Operating Expenses

3,610,000,000

184,602,000
11,030,000

Utilities Costs

9,280,000

Repair Costs
990,000
Property Management Fees

4,339,000

Advertisement for Leasing, etc.

1,375,000

Taxes

15,714,000

Insurance Premium

112,000

Other Expenses

840,000(4) Profit through Management of
Temporary Deposits, etc.

(5) Capital Expenditure Reserve(6) Net Cash Flow (NCF = (3)+(4)-(5))(7) Capitalization Rate
Price Calculated by the Discounted Cash Flow
ApproachCalculated based on the expected medium- to long-term stablerent.
Calculated based on the expected medium- to long-term stable
occupancy rate.

42,723,000
10,073,000

fromCalculated taking into account income-based values determinedusing both the direct capitalization approach and the discounted
cash flow approach.
Calculated by reducing the expected level of stable net revenue
over the medium to long term by the capitalization rate.

173,572,000

Maintenance(3) Net Operating Income
Leasing Business (NOI=(1)-(2))

Grounds

Calculated based on scheduled maintenance and management
costs and the costs at similar buildings.
Calculated based on costs at similar properties and the occupancy
rate of the leased portion of the Property.
Calculated based on costs at similar properties and the averageannual maintenance and renewal fees given in the engineering
report.
Calculated based on agreed-upon fee rates, with reference to rates
for similar properties.
Calculated as an annualized amount based on assumed tenant
turnover rates.
Calculated based on taxes paid in the 2017 tax year (depreciable
asset tax is an assumed amount).
Calculated based on insurance quotes and the premiums of similar
properties.
Fees paid for the use of adjacent parking lots recorded as otherexpenses.

130,849,000
1,551,000

Estimated profit based on an investment yield of 1%.

2,430,000

Calculated based on the assumption of average allocations eachperiod, with reference to capital expenditure levels at similar
properties, the building’s age and the average annual maintenanceand renewal fees given in the engineering report.

129,970,000
3.6%Calculated based on a comprehensive consideration of suchfactors as the yield on investment in similar properties and theProperty’s specific characteristics.

3,510,000,000

Discount Rate
3.4%

－ 13 －

Calculated based on a comprehensive consideration of suchfactors as the yield on investment in similar properties and theProperty’s specific characteristics.

Terminal Capitalization Rate
3.8%

Cost Approach Price
Ratio of Land
Ratio of Building

Matters Noted in
Reconciliation of Indicated
Value and Determinationof Appraisal Value

Calculated based on a comprehensive consideration of suchfactors as the yield on investment of similar buildings, theprobable future movement of the yield on investment, risks of theProperty as an investment, general forecasts of the economic
growth rate and price trends in real estate and rents.

3,390,000,000
77.9%
22.1%
The Property is situated on the west side of the Imperial Palace in the historic Hirakawacho area, where demandcan be expected from a broad range of businesses. Very close to Nagatacho Station—just one minute away on
foot—and within walking distance of Akasaka-Mitsuke, Kojimachi and Kokkaigijido-Mae stations, the Property’s
location offers excellent transportation convenience and is highly competitive as an office location. Furthermore,
the building is relatively new and designed as a high-value-added office building, offering superior quality andfacilities compared with other office buildings of similar size.
These factors were taken into consideration in the determination of the Property’s appraisal value.

－ 14 －

Property NamePMO Shinnihonbashi

Appraisal Vale

¥4,680,000,000

Appraiser

Japan Real Estate Institute

Appraisal Date

September 1, 2017
(Yen)
Item

Capitalization Approach Price
Price Calculated by the Direct Capitalization
Approach(1) Operating Income (a)-(b)(a) Gross Rental Income

Amount orPercentage
4,680,000,000

4,690,000,000

13,096,000

15,000,000

Utilities Costs

15,840,000

Repair Costs
1,553,000
Property Management Fees

6,024,000

Advertisement for Leasing, etc.

1,904,000

Taxes

16,730,000

Insurance Premium

178,000

Other Expenses

3,580,000(4) Profit through Management of
Temporary Deposits, etc.

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

stable rent.
Calculated based on the expected medium- to long-term
stable occupancy rate.
Calculated based on scheduled maintenance and management
costs and the costs at similar buildings.
Calculated based on costs at similar properties and theoccupancy rate of the leased portion of the Property.
Calculated based on costs at similar properties and theaverage annual maintenance and renewal fees given in theengineering report.
Calculated based on agreed-upon fee rates, with reference torates for similar properties.
Calculated as an annualized amount based on assumed tenant
turnover rates.
Calculated based on taxes paid in the 2017 tax year
(depreciable asset tax is an assumed amount).
Calculated based on insurance quotes and the premiums ofsimilar properties.
Land rents recorded as other expenses.

180,156,000
1,882,000

Estimated profit based on an investment yield of 1%.

3,810,000

Calculated based on the assumption of average allocations
each period, with reference to capital expenditure levels at
similar properties, the building’s age and the average annual
maintenance and renewal fees given in the engineering report.

178,228,000(7) Capitalization Rate
Price Calculated by the Discounted Cash Flow
ApproachCalculated based on the expected medium- to long-term

60,809,000

Maintenance(3) Net Operating Income from Leasing
Business (NOI=(1)-(2))

Calculated taking into account income-based values
determined using both the direct capitalization approach andthe discounted cash flow approach.
Calculated by reducing the expected level of stable net
revenue over the medium to long term by the capitalization
rate.

240,965,000
254,061,000(b) Losses due to Vacancies,etc.
(2) Operating Expenses

Grounds

3.8%

Calculated based on a comprehensive consideration of theconditions of the Property’s location, building and contract.

4,660,000,000

Discount Rate
3.5%
Terminal Capitalization Rate
4.0%

－ 15 －

Calculated based on a comprehensive consideration of suchfactors as the yield on investment in similar properties and theProperty’s specific characteristics.
Calculated based on a comprehensive consideration of suchfactors as the yield on investment of similar buildings, theprobable future movement of the yield on investment, risksof the Property as an investment, general forecasts of theeconomic growth rate and price trends in real estate and rents.

Cost Approach Price
Ratio of Land
Ratio of Building
Matters Noted in
Reconciliation of Indicated
Value and Determination of
Appraisal Value

4,460,000,000
74.1%
25.9%
The Property is located in the distinguished Nihonbashi-Honcho area, just two minutes on foot from ShinNihombashi, the nearest station, and within easy walking distance of Mitsukoshimae, Kanda and Kodemmacho
stations, providing excellent access to such city-center areas as Otemachi and Marunouchi. Furthermore, thebuilding is relatively new and designed as a high-value-added office building, offering superior quality andfacilities compared with other office buildings of similar size.
These factors were taken into consideration in the determination of the Property’s appraisal value.

－ 16 －

Property NameGEMS Kanda

Appraisal Vale

¥1,530,000,000

Appraiser

Daiwa Real Estate Appraisal Co., Ltd.

Appraisal Date

September 1, 2017
(Yen)

Item
Capitalization Approach Price
Price Calculated by the Direct Capitalization
Approach(1) Operating Income (a)-(b)(a) Gross Rental Income(b) Losses due to Vacancies,etc.
(2) Operating Expenses

Amount orPercentage
1,530,000,000
1,510,000,000

106,234,344
2,516,935

Utilities Costs

19,319,664

Repair Costs

468,583

Property Management Fees

2,481,043

Advertisement for Leasing, etc.

598,571

Taxes

5,114,800

Insurance Premium

68,000

Other Expenses

6,040,290

Temporary Deposits, etc.

(5) Capital Expenditure Reserve(6) Net Cash Flow (NCF = (3)+(4)-(5))(7) Capitalization Rate
Price Calculated by the Discounted Cash Flow
ApproachCalculated based on medium- and long-term occupancy rates.
Calculated based on evaluations of rates at similar properties andmaintenance fees stipulated in the planned contract.
Calculated based on utilities costs in previous years and theoccupancy rate of the leased portion of the Property.
Calculated based on the 12-year average repair cost in theengineering report provided by the client.
Calculated based on the fee rates in the planned contract and therates for similar properties.
Calculated as an annualized amount based on assumed tenant
turnover rates.
Based on the 2017 tax year results.
Calculated based on evaluations of insurance rates for similar
properties and insurance premium quotes provided by the client.
Calculated as sales promotion expenses, supply expenses andothers based on evaluations referencing the expenses of similar
properties.

60,903,058
598,571

Estimated profit based on an investment yield of 1%.

922,037

Calculated based on the assumption of average allocations eachperiod, with reference to capital expenditure levels at similar
properties, by deducting the repair costs listed above from repair
and renewal costs estimated from a medium- to long-term
perspective.

60,579,592
4.0%

Calculated based on a comprehensive consideration of suchfactors as the yield on investment in similar properties and theProperty’s specific characteristics.

1,540,000,000

Discount Rate
3.8%
Terminal Capitalization Rate
4.2%

Cost Approach Price

Calculated based on the expected medium- to long-term stable
rent.

42,814,351
8,723,400(4) Profit through Management of

The income-based value calculated using the discounted cash flow
approach was used as the baseline and evaluated using the incomebased approach calculated using the direct capitalization approach.
Calculated by reducing the expected level of stable net revenue
over the medium to long term by the capitalization rate.

103,717,409

Maintenance(3) Net Operating Income from
Leasing Business (NOI=(1)-(2))

Grounds

1,360,000,000－ 17 －

Calculated based on a comprehensive consideration of suchfactors as the yield on investment in similar properties and theProperty’s specific characteristics.
Calculated based on a comprehensive consideration of suchfactors as the yield on investment of similar buildings, theprobable future movement of the yield on investment, risks of theProperty as an investment, general forecasts of the economic
growth rate and price trends in real estate and rents.

Ratio of Land
Ratio of Building

Matters
Noted
inReconciliation of Indicated
Value and Determinationof Appraisal Value

73.2%
26.8%
The Property is a building of restaurants and is located near Shin-Nihombashi Station on the JR Sobu Line andKanda Station on multiple JR and Tokyo Metro lines. Surrounded by large office districts, the area in which theproperty is located enjoys firm restaurant demand, mainly from office workers. Furthermore, as the Property has awide variety of tenants, it is expected to enjoy demand from a broad customer base and to perform stably well into
the future. The Property is expected to be in demand among investors seeking to acquire it in order to secure
profit.
In view of the above factors, the appraisal value was determined with an emphasis on the capitalization approachprice, in which the investment value was appropriately reflected.

－ 18 －

Property NameGEMS Daimon

Appraisal Vale

¥2,110,000,000

Appraiser

Daiwa Real Estate Appraisal Co., Ltd.

Appraisal Date

September 1, 2017
(Yen)
Item

Capitalization Approach Price
Price Calculated by the Direct Capitalization
Approach

Amount orPercentage
2,110,000,000

2,120,000,000(1) Operating Income (a)-(b)(a) Gross Rental Income

133,807,893(b) Losses due to Vacancies, etc.
(2) Operating Expenses

3,219,947
51,187,413

137,027,840

Maintenance

9,927,000

Utilities Costs

23,463,660

Repair Costs

1,171,917

Property Management Fees

3,273,016

Advertisement for Leasing, etc.

805,093

Taxes

6,393,500

Insurance Premium
86,697

Other Expenses(3) Net Operating Income from Leasing
Business (NOI=(1)-(2))(4) Profit through Management of
Temporary Deposits, etc.

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

6,066,530

The income-based value calculated using the discounted cash
flow approach was used as the baseline and evaluated using
the income-based amount calculated using the direct
capitalization approach.
Calculated by reducing the expected level of stable net
revenue over the medium to long term by the capitalization
rate.
Calculated based on the expected medium- to long-term
stable rent.
Calculated based on medium- and long-term occupancy rates.
Calculated based on evaluations of rates at similar properties
and maintenance fees stipulated in the planned contract.
Calculated based on utilities costs in previous years and theoccupancy rate of the leased portion of the Property.
Calculated based on the 12-year average repair cost in theengineering report provided by the client.
Calculated based on the fee rates in the planned contract andthe rates for similar properties.
Calculated as an annualized amount based on assumed tenant
turnover rates.
Based on the 2017 tax year results.
Calculated based on evaluations made using insurance rates
for similar properties and insurance premium quotes
provided by the client.
Calculated as sales promotion expenses, supply expenses andothers based on evaluations referencing expenses of similar
properties.

82,620,480
770,415

Estimated profit based on an investment yield of 1%.

636,603

Calculated based on the assumption of average allocations
each period, with reference to capital expenditure levels at
similar properties, by deducting the repair costs listed abovefrom repair and renewal costs estimated from a medium- tolong-term perspective.

82,754,292(7) Capitalization Rate
Price Calculated by the Discounted Cash Flow
Approach

Grounds

3.9%

Calculated based on a comprehensive consideration of suchfactors as the yield on investment in similar properties andthe Property’s specific characteristics.

2,100,000,000

Discount Rate
3.7%

－ 19 －

Calculated based on a comprehensive consideration of suchfactors as the yield on investment in similar properties andthe Property’s specific characteristics.

Terminal Capitalization Rate
4.1%

Cost Approach Price

1,550,000,000

Ratio of Land

70.5%

Ratio of Building

29.5%

Matters
Noted
inReconciliation of Indicated
Value and Determination of
Appraisal Value

Calculated based on a comprehensive consideration of suchfactors as the yield on investment of similar buildings, theprobable future movement of the yield on investment, risksof the Property as an investment, general forecasts of theeconomic growth rate and price trends in real estate andrents.

The Property is a building of restaurants located near Daimon Station on the Toei Asakusa and Oedo lines andHamamatsucho Station on the JR Yamanote and Keihin-Tohoku lines and Tokyo Monorail. Surrounded by large
office districts, the area in which the property is located enjoys firm restaurant demand, mainly from office
workers. Furthermore, as the Property commands a strong presence as a restaurant building and its tenants are
relatively upscale, it is expected to perform stably well into the future. The Property is expected to be in demand
among investors seeking to acquire it in order to secure profit.
In view of the above factors, the appraisal value was determined with an emphasis on the capitalization approachprice, in which the investment value was appropriately reflected.

－ 20 －

(2) Property to Be Sold
Property Name

Morisia Tsudanuma

Appraisal Vale

¥17,500,000,000

Appraiser

Daiwa Real Estate Appraisal Co., Ltd.

Appraisal Date

August 31, 2017
(Yen)

Item

Capitalization Approach Price
Price Calculated by the Direct Capitalization
Approach(1) Operating Income (a)-(b)(a) Gross Rental Income(b) Losses due to Vacancies,etc.
(2) Operating Expenses

Amount orPercentage
17,500,000,000

17,100,000,000

Grounds
An income-based value was calculated using the capitalization
approach by using the value calculated using the discounted cash
flow approach as the baseline and evaluating it using the incomebased approach.
Calculated based on standard net cash flows reduced by thecapitalization rate.

2,154,059,917
2,187,488,208
33,428,291

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

1,113,137,779

Maintenance

328,561,164

Calculated based on results in previous years.

Utilities Costs

385,702,236

Calculated based on results in previous years.

Repair Costs

18,694,583

Calculated based on the engineering report, building age andperformance at similar properties.

Property Management Fees

120,240,000

Calculated based on the property management contract.

Advertisement for Leasing,
etc.
Taxes

8,689,096

Calculated based on the current contract.

132,484,100

Calculated based on 2017 tax-year rents

Insurance Premium

3,715,600

Other Expenses

115,051,000(3) Net Operating Income from
Leasing Business (NOI=(1)-(2))(4) Profit through Management of
Temporary Deposits, etc.
(5) Capital Expenditure Reserve(6) Net Cash Flow (NCF = (3)+(4)(5))(7) Capitalization Rate

Price Calculated by the Discounted Cash Flow
ApproachCalculated based on past expenses.

1,040,922,138
9,214,565

195,146,000

Estimated profit based on an investment yield of 1%.
Calculated as capital expenditures estimated based on theengineering report, building age and performance at similar
properties.

854,990,703

5.0%Calculated based mainly on the yield on investment of buildingsthat have similar uses with reference to the characteristics of thearea surrounding the Property, the Property’s particularcharacteristics and other factors.

17,700,000,000

Calculated by adding the cash flows for each year of the period
analyzed and the present value of the terminal value.

Discount Rate
4.8%
Terminal Capitalization Rate

Calculated based on insurance premium rate tables.

5.2%－ 21 －

Calculated with reference to the characteristics of the areasurrounding the Property, the Property’s particular characteristics
and other factors.
Calculated based on the capitalization rate with consideration
given to future unpredictability and uncertainty.

Cost Approach Price
15,500,000,000

Matters

Ratio of Land

82.0%

Ratio of Building

18.0%

Noted

in

Reconciliation of Indicated
Value and Determination of—

Appraisal Value－ 22 －

Calculated using the cost approach by marking down theProperty’s replacement cost at the appraisal date, withconsideration given to the marketability of the land and building
together.

Exhibits
Exhibit 1 Overview of the Portfolio after the Transaction
Exhibit 2 Photos of the Four Properties to Be Acquired
Exhibit 3 Maps of the Four Properties to Be Acquired*Nomura Real Estate Master Fund, Inc.’s website: http://www.nre-mf.co.jp/en/－ 23 －

Exhibit 1
Overview of the Portfolio after the Transaction(¥ million)
Area

Greater Tokyo
Area (Note 1)

Sector(Scheduled) Total

Other Areas

Acquisition Price

Percentage of Total(Note 2)(by Sector)

Office356,180

71,930428,110

46.4

Retail

95,32759,356

154,683

16.8

Logistics

146,9303,460

150,390

16.3

Residential

151,518

32,527

184,045

20.0

Others

4,900

—

4,900

0.5

(Scheduled) Total Acquisition
Price(by Area)

754,855

167,273922,128

100.0

Percentage of Total (Note 2)

81.9

18.1

100.0

(Note 1) “Greater Tokyo Area” refers to Tokyo Prefecture, Kanagawa Prefecture, Chiba Prefecture and Saitama Prefecture.
“Other Areas” refers to cabinet-order designated cities, prefectural capitals, and cities having a population of at least
100,000 and their peripheral areas, excluding Greater Tokyo.
(Note 2) “Percentage of Total” indicates the ratio of the (Scheduled) total acquisition price of properties for each use and ineach area to the total acquisition price of the entire portfolio. As the figures are rounded to the first decimal place,they may not add up to exactly 100%.

Exhibit 2
Photos of the Four Properties to Be Acquired
PMO Hirakawacho（view photo）

PMO Shinnihonbashi

GEMS Kanda

GEMS Daimon

Exhibit 3
Maps of the Four Properties to Be Acquired
Wide area map

PMO Hirakawacho

PMO Shinnihonbashi

GEMS Kanda

GEMS Daimon