N OM U RA
MASTE R
FUND

2nd

Analyst Meeting Presentation Material

April 17, 2014

Contents
1. Investment Highlights

・Investment Highlights
・2nd Fiscal Period Financial Overview

4. APPENDIX
2～34

2. 2nd Fiscal Period Overview

・Overview of Equity Interest in Silent Partnership・Asset Management
・Approach to Photovoltaic Power Generation
・Management Status of Portfolio
・Timing of Tenant Rent Renewals
・Appraisal Value Status (2nd Fiscal Period)
・Financial Status
・Financial Strategy

6
7～10
11
12
13
14
15
16

3. Investment Management Strategy

・Road Map of Growth Strategy
・Main Property Development Status of the Sponsor
・Future Distribution Level
・Analyst Coverage, Inclusion to the Index

18
19～20

・Income Statement
・Balance Sheet・Cash Flow Statement
・Forecasts for the 3rd and 4th Fiscal Period・Path to Growth・External Growth Strategy
・Overview of Property Acquired During 2nd Fiscal Period
・Portfolio Data
・Portfolio List
・List of End-of Period Appraisal Value・Portfolio Map
・Unitholders (at end of 2nd Fiscal Period)
・Tenant Status (at end of 2nd Fiscal Period)
・Changes in Financial Performance
・Logistics Facilities Environment
・Retail Facilities Environment
・Overview of Nomura Master Fund
・Overview of the Asset Management Company

21
22

April 17, 2014

24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41

Investment Highlights

1

Investment Highlights
Highlights for 2nd Fiscal Period Dividend per Unit 2,919 yen (Forecast 2,780 yen）
 Acquisition of Recipe SHIMOKITA （December 13, 2013）
 Concluded Purchase Agreement of Equity Interest in Silent Partnership of
Ryoke Capital G.K. （November 29, 2013）

 Seismic Strengthening Works for
Izumiya Obayashi Renewal of Morisia Tsudanmua

Investment Strategy
 Concluded Purchase Agreement of Equity Interest in
Silent Partnership of Ryoke Capital G.K.

 Acquisition of Recipe SHIMOKITA
Acquisition Price：¥10,407 mln

Investment Amount：

Leasable Floor Space

：6,295.22 m2

Leasable Floor Space： 42,840.91 m2

Age (As of Feb. 28, 2014)：

2.6 years

Age (As of Feb. 28, 2014)：¥500 mln

10.4 years

 Portfolio Status

end of 1st FP end of 2nd FP

end of 1st FP end of 2nd FP

Number of Properties

：

54

55

Average Building Age： 13.3 years

13.3 years

Asset Size

： ¥227.6 bln¥238.0 bln

Average Lease Term

： 12.2 years

12.4 years

Portfolio NOI Yield

：

6.6 %

Ratio of Tokyo Area

：

6.7 %

83.9 %

84.6 %

2

Investment Highlights
Financial Strategy

Management Strategy
 Generation of stable cash flow backed by long lease periods

Ratio of contracts of
10 years or more:

1st FP

2nd FP

71.3%

70.9％

 Financed ¥11 bln on December 12, 2013 forthe acquisition of Recipe SHIMOKITA
 Repaid ¥5 bln on January 6, 2014
 Diversification of repayment dates

 Maintenance of high occupancy rate through management skills backed by
the management experience of the Asset Management Company[Period-end Occupancy Rate]
1st FP
Total： 99.8 %2nd FP[Period-end Average Rent]
1st FP

2nd FP

100.0 %

¥3,707/tsubo¥3,707/tsubo： 99.4 %99.4 %¥8,312/tsubo¥8,737/tsubo

 Increase of appraisal value

End of 1st FP

End of 2nd FP

Total Appraisal Value ：¥239.3 bln¥252.8 bln

Total Book Value：¥229.4 bln¥239.0 bln

Unrealized Gain：

+ ¥9.8 bln+ ¥13.7 bln

2nd FP

4.8 years

4.4 yeras Financial management that takes stability into
consideration

99.8 % ¥5,149/tsubo ¥5,308/tsubo

Logistics ： 100.0 %RetailAverage Duration:

1st FPLTV:

1st FP

2nd FP

31.1%

32.3％

 Low level of Average Interest Rate
Average

1st FP

2nd FPInterest Rate:

0.99%

0.98%

 Long-term issuer rating
Japan Credit Rating
Agency, Ltd. (JCR):AA – (Stable)

32nd Fiscal Period Financial Overview
Performance of the 2nd fiscal period and previous forecast
2nd Period(ended Feb. 28, 2014)

Operating Revenues¥9,176 million

2nd Period Forecasts(announced on Oct. 15, 2013)¥9,099 million

Decrease / Increase(comparison)+\76million

Major Difference

0.8%<Difference in NOI>

¥7,755 million¥7,616 million+\138million

Rental Profit¥6,257 million¥6,123 million+\134million

2.2%

Operating Profits¥5,348 million¥5,168 million+\180million

3.5%

Ordinary Income¥4,861 million¥4,630 million+\231million

5.0%

NOI

1.8%

Penalty Charges
Reduction in Repairs¥4,860 million

Cash Distribution
per Unit¥2,919 /unit

Total Assets¥261,582 million

Interest-Bearing Debt

¥84,435 million

LTV

32.3 %¥4,629 million+\231million

5.0%+\139million

5.0%- million－－- million

－

－

-%

－

－

¥2,780 /unit(+\91 mln)

<Difference in Operating Profits>
Reduction in Other Fees(+\51 mln)
<Difference in Net Income>Interest in Refund ofConsumption Tax

Net Income(+\38 mln)(+\22 mln)

Reduction in Interest, Loan Arrangement
Fees(+\22 mln)

4

2nd Fiscal Period Overview

5Overview of Equity Interest in Silent Partnership
Summary of silent partnership equity<Photo>Ryoke Capital Godo Gaisha

Beneficiary interest in realestate in trust, etc.
¥11,440 million

Non-recourse loans¥8,640 million
Silent partnership equity¥2,800 million• The Fund acquired¥500 million (17.9%)• Obtained preferential
right to purchase thebeneficiary interest inreal estate<MAP>

Summary of the property (NIPPON EXPRESS CO.,LTD. North Tokyo Distribution Center)

Completion Date

October 2003

Location

Ryoke, Kawaguchi-City, Saitama

Access1.5km from Kawaguchi-Motogo
Station on the Saitama Railway line

Appraisal Value¥11,000 million (as of Oct. 31, 2013)

Appraisal NOI
yield

5.2%

Leasable floor
space

42,840.91m2 (12,959.37 tsubo)

Occupancy rate

100.0% (as of Feb. 28, 2014)NIPPON EXPRESS CO., LTD.
North Tokyo Distribution Center

6

Asset Management
GEMS Shibuya
Leasing policy
Implemented leasing aiming to improve the freshness of the entire facility andcapacity to attract customers by inviting a wide variety of businesses thatdiffered from existing tenants.

・1st floor, GABURI SHARE (American and international cuisine) opened on April 4・8th floor, Chinese Dining Kahin (Chinese restaurant) concluded new leaseagreement (lease started on April 1, opening scheduled for June 10)

Izumiya Senrioka
Efforts to extend leasehold/building lease agreements
Extended leasehold period for the land and the building leasing period(6 months), so the agreements will end at the same time.
Improved stability of each agreement
Expect activation through further investments instores by tenants going forward

7

Asset Management: Renewal of Morisia Tsudanuma
Purpose of renewal<Kanade-no-Mori Land use plan>
Planned population increase: approx. 7,000 (20% increase in 1km radius)

 Gain foothold toward becoming No.1 local retail facility
 Strategic tenant replacement taking advantage of expiration of
fixed-term lease agreements at the 6th anniversary since opening Differentiation through practical tenant structure that local families
can use daily<Condominium> Improve the facility with consideration given to development
・Scheduled move-in: Sep. 2015
trends in the surrounding areas
・No. of units: 869
・Operator Nomura Real Estate Create a facility that is amiable with locals
Mitsubishi Jisho Residence⇒Promote sales by utilizing mascot
Mitsui Fudosan Residential<Retail>
Kanadeno-mori Forte

Utilization Example
Make visits to local kindergartens and form
partnership with local sports teamIntroduction of Mascot<Condominium>
・Already moved-in
・No. of units: 721
・Operator Mitsubishi Jisho Residence

Original Morisia character

Forest fairy “Tsudanun”

Helping everyone’s“a little bit of happiness”<Condominium>
・Scheduled move-in: TBD
・No. of units: 750
・Operator Nomura Real Estate
Mitsubishi Jisho Residence
Mitsui Fudosan Residential(Source) Prepared by Nomura Real Estate Asset Management Co., Ltd. based on Narashino-City JR Tsudanuma Station
South Exit Land Readjustment Associations

8

Asset Management: Renewal of Morisia Tsudanuma(After)<West Corridor, 1F>

Overview of renewal
 Simplify people traffic within the building by integrating spaces⇒ Improve mobility<2F Consolidation of compartments, Attraction of core tenant >(Before)(After)<West Deck, 2F>

6 compartments(275 tsubo)

Casualclothings(341 tsubo)

Aims of renewal
 Improve awareness of facility by providing topics ofinterest⇒ Increase number of visitors
 Promote shopping-around by making it easier tomove around⇒ Increase average spending per customer
 Improve tenant satisfaction through increased sales⇒ Plan rent increase through future tenant
replacements and contract renewals(Before)<Effect of Renewal (Forecast)>
Items

Before Renewal

After Renewal

Difference

1,097

Apporx. 1,105+8

Average Sales per
Customer (¥)

842

Approx. 878+36

Sales (¥ mln / year)

9,246

Apporx. 9,700+460

Rent (¥ mln / year)916

Approx. 970+50

Number of Customers(10 thousands / year)(Note) Number of Customers, Average Sales per Customer, and Sales are based on estimate by Geo Akamatsu.
Rent is based on hearing to the tenants

9Asset Management: Seismic Strengthening Works for Izumiya Obayashi
Plotting and implementing work that takes into
consideration the business of tenants(Work period: Dec. 2013 to Mar. 2014)<Installment of steel frame brace at escalator side on each floor>(Before)(After)Devisal of NMF
 Minimize the impact on shop layouts by mainly conducting
renovations in the back portions of shops
 Minimize the impact on the business of tenants bythoroughly conducting discussions with tenants inadvance⇒ Completed work without shops suspending
operations
 Budget: ¥238 million

Actual: ¥174 million⇒ Realized reduction of ¥109 million<Installment of new RC wall in store backyard>(Before)(After)Effect of Seismic Strengthening Works Realized rent increase (+3.4%/year) Realized extension of leasing periods⇒ Expiration of fixed-term leases extended 15 years
 Increased appraisal price (lower cap rate)⇒Satisfied new earthquake resistant standards -10bps,-10bps due to reflecting sales market

10Approach to Photovoltaic Power Generation
Significance of installing photovoltaic
power generation equipment

Structure

Socialcontribution

Environment-conscious facility thatgenerates energy without CO2 emissions

Tenantcontribution

Thermal barrier/energy–saving effectfrom solar panels

BCP
measures
IncreaseincomeAble to use electricity even during
unexpected power outages
Receive stable income from lending roof
areas (expected annual rent: ¥18 million)

Power Generation Company(TEPCO)Electricity sale

Revenue from salesof electric power

Location: Yokohama-City, Kanagawa

Photovoltaic Power Generation Company

Established : April, 1987

(Yokohama Business Park Heating andCooling Supply)

Parent Co. : Nomura Real Estate Holdings

Roof rental

Rental income

Schedule
Nomura Master Fund
Jan. 2014
Aug. 2014
Sep. 2014
Oct. 2014

Yokohama Business Park Heating andCooling Supply

Approval by METI
Start construction
Completion of construction
Start power generation

Business
outline: District heating and coolingof the Yokohama businesspark by the supply of theheat source for airconditioning, hot watersupply<Target Properties>
Landport Kawagoe

Landport Atsugi

Landport Urayasu

Landport KasukabeLandport Hachioji

11Management Status of Portfolio
Tenant diversification (based on leased floor space)
Mitsui-Soko Logistics
Undisclosed

Total number of tenants

251 tenants

Total leased floor space

895,510.83㎡

ASKUL
Fukuyama Transporting
Otsuka Warehouse

Area
ratio

10.3%

7.9%

6.3%

5.6%

4.9%

Izumiya

4.7% 4.6% 4.2% 3.9% 3.9%

43.7%

Yokohama Okadaya
Shinkai Transport Systems

Neovia Logistics Services

Other

Amazon Japan Logistics

Diversification of lease maturity (based on rent)
福山通運
キャタピラー・ロジスティクス・サービセス

イズミヤ
横浜岡田屋

アマゾンジャパン・ロジスティクス
三井倉庫ロジスティクス

15.0%

10.0%

0.8%

Retail

1.2%
3.2%

1.9%

5.0%

9.7%

0.1%
3.4%

6.4%
3.0%

4.4%

4.7%

4.1%
1.2%

0.0%
FP3
2014/8FP4
2015/2FP5
2015/8

FP6
2016/2

FP7
2016/8

5.7%

6.6%

1.6%
FP9
2017/8

4.2%
4.7%

3.9%

0.7%
FP8
2017/2

Logistics

2.3%

FP10
2018/2

FP11
2018/8FP12
2019/2

FP13
2019/8

1.8%

0.1%

FP14
2020/2FP15
2020/81.9%FP162021/2FP172021/80.4%
FP182022/2

0.2%

0.3%

FP19
2022/8FP202023/21.1%
FP212023/8FP222024/2

12

Timing of Tenant Rent Renewals
Property Name

Tenant Name

Lease
Term

FP3

FP4

FP5

FP6

FP7

FP8

FP9

FP10

FP11

FP12

Aug. 2014

Feb. 2015

Aug. 2015

Feb. 2016

Aug. 2016

Feb. 2017

Aug. 2017

Feb. 2018

Aug. 2018

Feb. 2019

Logistics
Fukuyama Transporting

Fixed

Otsuka Warehouse 1

Fixed

Otsuka Warehouse 2

Fixed

Landport Kawagoe

KEIAI

Fixed

Sagamihara Tana Logistics Center

Neovia Logistics Services

Fixed

Sagamihara Onodai Logistics Center

Fukuyama Transporting

NormalLandport Kasukabe

DIC

Fixed

Hanyu Logistics Center

Nippon Express

Fixed

Ota Nitta Ligistics Center

Mitsui-Soko Logistics

NormalOta Higashishinmachi Logistics Center

VantecNormalLandport Urayasu

Ota Kiyohara Logistics Center Ota International Cargo Terminal

NormalRetailYamada Denki

Fixed

Aeon Retail

Fixed

Nitori Makuhari

Nitori

NormalKonami Sports Club Fuchu

Konami Sports & Life

NormalFESTA SQURE

Yaoko

Fixed

Sundai Azamino

Sundai Education Promotion

Fixed

MegalosKanagawa

Megalos

NormalMerad Owada (Retail)Kansai Super Market

NormalMerad Owada (Logistics)

Kansai Super Market

NormalNot disclosed

Fixed

Not disclosed

Fixed

Morisia Tsudanuma

Land Only 4 properties(Shibuya, Setagaya,
Suginami, Ibaraki)
Land Only(Other than above)(Note) Extracted the tenants that the rent renewal becomes due by FP12 (Feb. 2019) and leasing area that is higher than a constant scale

13

Appraisal Value Status (2nd Fiscal Period End)
Status as of the end of 2nd FP
Total appraisal value¥252.8 billion

Total book value¥239.0 billion

Appraisal value¥249.9 billion¥252.8 billion

1.2%

Unrealized gain / loss

+ ¥13.7 billion

Logistics¥128.0 billion¥129.9 billion

1.5%<Reference>
Unrealized gain/loss per unit:

+ ¥ 8,270

Retail(excluding land)¥106.1 billion¥107.0 billion

0.8%

Net asset per unit:

¥ 99,673

NAV per unit:

¥ 107,944

Retail(land)¥15.7 billion¥15.8 billion

0.6%

End of 1st period End of 2nd period Comparison

Change in total appraisal value and cap rate
Logistics(¥ mln)(¥ mln)131,000

5.80%+¥1,873 million

5.60%

129,000

Retail (excluding land)

110,000

5.80%

5.20%

Retail (land)

18,0005.80%▲0.05%▲0.07%

5.60%

108,000

5.60%

16,0005.40%
127,000(¥ mln)+¥129 million

5.40%+¥890 million

106,000

5.20%

5.40%

14,0005.20%▲0.09%

125,000

5.00%

1st period

Appraisal value
Increase
Unchanged
Decrease

15
30

104,000

2nd period

Cap rate
Decrease
Flat
Increase

5.00%

1st period

Appraisal value
1260Increase
Unchanged
Decrease127
1

12,000

2nd period

Appraisal value

Cap rate
Decrease
Flat
Increase

5.00%

1st period

1460Increase
Unchanged
Decrease15
20

2nd period

Cap rate
Decrease
Flat
Increase980(Note 1) For the 1st period, appraisal of Recipe SHIMOKITA at acquisition is included(Note 2) Cap rates are the weighted average of the appraisal value by direct capitalization approach14

Financial Status
Interest-bearing liabilities

Bank formation(¥ bln)Financial institution

Total Interestbearing liabilities

Average interest rate
0.98 %¥84.4 billion

Ratio of long-term
debt

Ratio of fixed-rate
debt

80.4 %

80.5 %The Bank of TokyoMitsubishi UFJ, Ltd.

19.9

Sumitomo Mitsui Trust Bank,
Ltd.

6.8

Sumitomo Mitsui Banking
Corporation

19.9

The Norinchukin Bank

6.8

Mizuho Bank, Ltd.

13.5

Development Bank of Japan

5.8

6.8

Mizuho Trust & Banking Co.,
Ltd.

4.8

Total Debt

84.4

Mitsubishi UFJ Trust andBanking Corporation* Including fixed interest by IR swap

LTV

Average remaining
duration

Diversification of repayment dates(loan-to-value)

4.4 years

32.3 %(¥ bln)
25
20
16.5

15

13.0

12.2
10.0

10

Credit ratings

10.8

9.0
5.0

4.0

5

2.0

0.9

0

Rating agency

LT issuer rating

OutlookJCR

AA -Stable

3rd
Period5th
Period7th
Period9th
Period11th
Period13th
Period15th
Period17th
Period19th
Period21th
Period23th
Period25th
PeriodCommitment line
Commitment line agreement
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation¥10 billion

Mizuho Bank, Ltd.

(Commitment period: 1year)

15

Financial Strategy: Establish Strong Financial Base Supporting Target AUM of ¥400 Billion
Approach for FP3● Further promotion of long-term fixed interest rate loan agreements and diversification of repayment dates
Refinancing of short-term debt(¥16.5 bln)
(Due May 26, 2014)

・Partial early repayment of debt (¥8.5 billion) and converted ¥5.5 billion into long-term debt with fixedinterest rate taking into consideration the fluctuation risks of interest rates
・With remaining ¥8.0 billion, plan to convert part (¥6.0 billion) into long-term debt with fixed interest rate

Execution Date
(Scheduled)

Measures

March 26, 2014

・Repaid ¥8.5 billion with ¥3.0 billion cash on hand and ¥5.5 billion long-term debt
・Fix interest rate by concluding interest-rate swap agreement (¥5.5 billion)

May 26, 2014

・Plan partial repayment with ¥1.0 billion cash on hand and refinancing of ¥7.0 billion
into long-term debt
・Plan to fix interest rate for part of debt (¥6.0 billion) by concluding interest-rate
swap agreement
・Consider fund procurement from new lenders by taking into account the securing ofstability of funds and diversification of lenders

EffectFixedCash efficiency improvement

Prolonged

Fixed

Cash efficiency improvement

Prolonged

Lender diversification

Diversification of maturity

Promotion of long-term fixed interest rate(¥ bln)Today

End of FP3(Assumed)

Average Duration

4.9 years

5.1 years

Long-Term Ratio

90.1%

99.9%

Fixed Ratio

90.2%

98.8%

¾ Construction of stable financial constitution

16

Investment Management Strategy

17

Road Map of Growth Strategy
External Growth
Pipeline by Nomura Real Estate Group

Medium-term asset
size target:

Acquisition Rout from Out Side

¥400 bln¥238.0 bln¥227.6 bln

Around 5 years
Stability

Internal Growth Leasing capability of NREG

 Creation of stable cash flow
based on long-term leaseagreements

Ratio of contracts of
10 years or more:

FP1

FP2

40%

70.9%

 Tenant satisfaction improvement byappropriate renewal enforcement
 Earning capacity improvement byfurther increase in incidental profit andthe cost cut

Assuming acquisition of North
Tokyo Distribution Center

Operational LTV level: 30%~40%

LTV
30%

31%

32%

Aim to diversify real estate under management and tenants by expanding asset size,
and realize the building of an increasingly stable portfolio(Note) Based on an assumption that the acquisition of the North Tokyo Distribution Center (Trust Beneficiary Interest) was realized. NMF has notdetermined to acquire the Trust Beneficiary Interest, and NMF does not guarantee to acquire the Trust Beneficiary Interest as of today.

18

Main Property Development Status of the Sponsor (1)(Tentative name) Landport Kashiwa-Shonan

GEMS Ichigaya

Property Name

Location

Completion Total Floor
Date
Space

RetailGEMS Ichigaya

Rokubancho, ChiyodaWard

Oct. 2014

Logistics(Tentative Name)
Landport Kashiwa-Shonan

Kashiwa South-Central Land
readjustment project place

May 2016

Logistics(Tentative name)Landport Hachioji II

Ishikawa-cho, HachiojiCity

May 2016

452
Tsubo
15,344Tsubo
10,987
Tsubo(Tentative name) Landport Hachioji II(Note) NMF is not scheduled to acquire the properties stated above as of today

19

Main Property Development Status of the Sponsor (2)Landport Atsugi Kaneda

NREG Kawasaki Logistics Center
Property Name
Logistics NREG Kawasaki Logistics Center
Logistics Landport Atsugi Kaneda
Retail(Tentative name) Kichijoji Project

Location

Completion Total Floor
Date
Space

Kawasaki-Ward,
Mar. 2014
Kawasaki-City
Kaneda,Jan. 2015
Atsugi-City
KichijojiHoncho,
Jul. 2014
Musashino-City

15,017Tsubo
11,694
Tsubo
1,982
Tsubo

(Tentative name) Kichijoji Project(Note) NMF is not scheduled to acquire the properties stated above as of today20Future Distribution Level
Forecasts for the 3rd and 4th fiscal periods
2nd Period(ended Feb. 28, 2014)

3rd Period Forecasts(w ill end Aug. 31, 2014)

Operating Revenues¥9,176 million¥9,294 million

1.3%¥9,383 million

1.0%

Operating Profits¥5,348 million¥4,564 million-14.7%¥4,552 million-0.3%

Net Income¥4,860 million¥3,998 million-17.7%¥3,996 million-0.0%

Cash Distribution
per Unit¥2,919 /unit¥2,400 /unit-¥519¥2,400 /unit

¥0

LTV

32.3 %

31.2 %-1.1%

31.2 %

0.0%(Comparison)

4th Period Forecasts(w ill end Feb. 28, 2015)(Comparison)(Note) Forecasts of distributions for the periods ending August 31, 2014 and February 28, 2015 are based on Nomura Master Fund’s summary of financial results dated April 15, 2014 and may change
in the future depending on acquisitions and sales of real estate, etc., changes in the real estate market, etc. and other circumstances surrounding Nomura Master Fund. Moreover, the above
forecasts do not guarantee the amounts of distributions.

Change in distributions(¥ / unit)

3,000¥2,919

+¥48

-¥431

・Expensing of fixed
asset / city planning

2,000

1,500

1,000

500

¥2,400-¥136

・Full-period operation of
Recipe SHIMOKITA

2,500(forecast)・PM Fee-¥29
・Amount equivalent
to cancellation
charges-¥23
・Repair costs-¥18・Interest expences-¥25
・Others
-¥41

+¥53

-¥61

・Rental income, CAM
・Repair costs+¥5-¥40
・Distribution from silent ・Others
partnership-¥21+¥7・Subsidy (Note)+¥31
・Others+¥10+¥8¥2,400(forecast)・Loan related fees+¥80
2nd FP
Cash Distribution

3rd FP
Cash Distribution

Earnings

Expenses

Others

4th FP
Cash Distribution(Note) Leasable facilities setting subsidy based on the company location support regulations of Hachioji-City for Landport Hachioji21

Analyst Coverage, Inclusion to the Index
Inclusion to the index

Analyst coverage

Security Firm

AnalystCoverage Date

Tomohiro Araki

July 26, 2013

Hiroshi Torii

Mitsubishi UFJ Morgan Stanley
Daiwa

NomuraSMBC Nikko

Index

Inclusion Date

FTSE EPRA/NA-REIT
Global Real Estate Index

June 24, 2013

January 10, 2014

TSE REIT Index

July 31, 2013

Kazufumi Takeuchi

January 16, 2014

Russel Global Index

October 1, 2013

Tomohiro Sumiya

March 12, 2014MSCI Japan Small Cap Index

November 26, 2013

S&P Global Property Index

March 24, 2014

Trading status after listing(units)130

250,000

120

200,000

110

150,000

100

100,000

90

50,00080
2013/060
2013/072013/08
Trading Volume (units)

2013/09

2013/10
NMF

2013/112013/12TSE REIT Index

2014/01

2014/02
2014/03
TSE Retail & Logistics, Others Index

2014/04(Note) Indexed with the closing price of listing date as 100.
(Source) Prepared by Nomura Real Estate Asset Management Co., Ltd. based on Bloomberg

22

ＡＰＰＥＮＤＩＸ

23

Income Statement

1st Fiscal Period

2nd Fiscal Period

From Jan. 31, 2013

From Sep. 1, 2013

forecast

To Aug. 31, 2013
Amount(￥000)
3,683,130

To Feb. 28, 2014
Amount(￥000)
9,176,390(2nd FP actual - 1st FP actual)
Difference
Difference(￥000)
Ratio (%)
5,493,260
149.1

3,683,130

9,176,390

5,493,260

149.1

3,392,015

8,478,425

5,086,409

150.0

Other rental revenues

291,114

697,965

406,850139.8

Parking revenues

34,57878,08643,508125.8*2253,525

578,563

325,038

128.2

Other miscellaneous revenues *3

3,010

41,31538,304

1,272.2

1,593,500

3,827,980

2,234,480

140.2

1,258,501

2,918,848

1,660,347

131.9

Operating revenues
Real estate rental revenues*1

Rental revenues

Incidental income

Operating expenses
Real estate rental expenses*1

Difference from

Repairs and maintenance

58,104

185,676

127,572

219.6

Depreciation

698,5121,497,862

799,349

114.4

Other rental expenses

501,883

1,235,309

733,425146.1

277,764

750,575

472,811

170.2

Asset management fees
Other operating expenses*4

Operating profit

57,235

158,556

101,321177.0

2,089,629

5,348,409

3,258,780

156.0
2,597.2

2. Incidental income
Utility charges

893

24,09623,202Non-operating expenses

837,317

510,792(326,524)(39.0)

Interest expense

144,738

398,386

253,647

175.2

Investment units issuance costs

293,249-(293,249)(100.0)

Other offering costs associated with the issuance of investment units

149,006-(149,006)(100.0)Organization expenses

100,000-(100,000)(100.0)150,323

112,406(37,916)(25.2)

Ordinary income

1,253,205

4,861,713

3,608,507

287.9

Income before income taxes

1,253,205

4,861,713

3,608,507

287.9

1,654

904

(750)

(45.3)

1,251,550

4,860,808

3,609,257

288.4

Income tax, etc.
Net income*5

Retained earnings brought forw ard

940

940

Retained earnings at end of period

1,251,550-

4,861,749

3,610,198

288.5

Total cash distribution

1,250,610

4,860,893

3,610,283

288.7

:

¥6,257,542 thousand¥3,832,913 thousand)¥490,853 thousand

3. Other real estate rental revenues
Cancellation penalties, etc.

Non-operating revenues

Other non-operating expenses*Reference [2nd Fiscal Period]
1. Real estate rental profits:(Change from previous FP :-4. Other operating expenses
Asset custody fee
Administrative service fees
Directors fee, etc.

:::

¥14,248 thousand¥64,036 thousand¥4,800 thousand

5. Other non-operating
expenses
Loan arrangement fees, etc.

:

¥108,656 thousand(reference) Renovation expenses
Repairs and maintenance:Capital expenditure
:
Total
:

¥185,676 thousand¥153,681 thousand¥339,358 thousand(22.7% of depreciation)*Figures are rounded dow n to the nearest thousand.

24Balance Sheet
Liabilities and net assets

Assets
1st Fiscal Period

2nd Fiscal Period

1st Fiscal Period

2nd Fiscal Period

as of Aug. 31, 2013
AmountRatio

as of Feb. 28, 2014
AmountRatio

as of Aug. 31, 2013
AmountRatio

as of Feb. 28, 2014
AmountRatio(￥000)
21,561,011(%)8.5(￥000)
21,357,367(%)8.2(￥000)
19,327,922(%)7.7(￥000)
18,774,345(%)7.2

Cash and bank deposits

5,054,509

2.0

8,271,101

3.2

Cash and bank deposits in trust

11,405,579

4.5

12,717,717

4.9

262,5870.1

330,137

0.1

Other current assets

5,100,922

2.0

368,548

0.1*2

16,500,000

6.5

16,500,000

6.3

230,704,391

91.5

240,225,504

91.8

Current portion of long-term debt *2

85,6000.0

85,6000.0

225,667,946

89.5

235,215,801

89.9

Other accounts payable

1,085,077

0.4

207,9460.1

3,542,982

1.4

14,377,435

5.5

Accrued income taxes

1,522

0.0

651

0.0

Buildings

1,102,648

0.4

3,460,368

1.3

－

－

179,1190.1

Land2,440,333

1.0

10,917,067

4.2

10,6570.0

10,053

0.0

Real estate in trust

222,124,964

88.1

220,815,140

84.4

1,335,425

0.5

1,459,897

0.6

Buildings in trust

93,420,419

37.0

92,115,158

35.2

Land in trust

128,704,544

51.0

128,699,981

49.2

-

-

23,2250.0

3,832,815

1.5

3,840,489

1.5

3,821,371

1.5

3,829,099

1.5

Current assets

Noncurrent assets
Property and equipment*1

Real estate

Construction in Progress
Intangible assets
Leasehold rights in trust
Other

Current Liabilities
Trade accounts payable
Short-term debt

Accrued consumption taxes
Accrued expenses
Rent received in advance
Other current liabilities
Long-term Liabilities
Long-term debt

*2

Security deposits from tenants
Security deposits from tenants in trust

Total liabilities

47,050

0.0

939

0.0

70,565,524

28.0

76,826,372

29.4

61,893,000

24.5

67,850,200

25.9
0.2

167,7620.1

525,160

8,504,761

3.4

8,451,011

3.2

89,893,446

35.6

95,600,717

36.5

162,371,955

64.4

165,982,154

63.5
61.6

11,4440.0

11,3890.0

Investment and other assets

1,203,629

0.5

1,169,214

0.4

Security deposits

515,9260.2

516,126

0.2

Unitholders' capital

161,120,405

63.9

161,120,405

Long-term prepaid expenses

648,601

0.3

613,8810.2

Retained earnings

1,251,550

0.5

4,861,749

1.9

Other

39,1010.0

39,2050.0

Total net assets

162,371,955

64.4

165,982,154

63.5

252,265,402

100.0

261,582,872

100.0

Total liabilities and net assets

252,265,402

100.0

261,582,872

100.0

Total assets*1 Property and equipment

Real estate, etc.
Buildings
Land
Buildings in trust
Land in trust
Construction in Progress(unit : million of yen)
AcqisitionPrice

Accumulated
Depreciation(Depreciation for
current FP)

Book value
at FP end

237,412
3,505
10,917
94,266
128,699
23

2,196
45
－
2,150
－
－

(1,497)(38)－(1,458)－－235,215
3,460
10,917
92,115
128,699
23

Unitholders' equity*2 Debt (long-term debt due whithin a year are included in the short-term debt)
Balance of interest-bearing debt (millions of yen)

84,435

Total asset interest-bearing debt ratio

Short-term debt＋Long-term debt
Total assets

32.3%

Long-term interest-bearing debt ratio

Long-term debt
Short-term debt＋Long-term debt

80.4%

25

Cash Flow Statement
1st Fiscal Period

2nd Fiscal Period

Jan. 31, 2013 - Aug. 31, 2013

Sep. 1, 2013 - Feb. 28, 2014(¥000)(¥000)

I.Cash flows from operating activities
Income before income taxes
Depreciation
Investment units issuance costs
Interest income
Interest expenses
Decrease (increase) in rental receivables
Decrease (increase) in prepaid expenses
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
Othe
SubtotalInterest received
Interest paid
Income taxes paid

1,253,205
699,118
293,249(889)
144,738(138,211)(228,972)(4,713,348)(648,601)(39,101)
262,587
376,561－
1,335,425
26,709(1,377,528)
889(134,081)(180)

4,861,713
1,499,067－(1,873)398,386
30,30130,8804,713,348
34,719(104)
67,549(327,789)
179,119
124,471(88,137)
11,521,651
1,873(398,990)(1,903)(1,510,901)

11,122,630(3,548,856)(222,115,087)(7,900)(3,819,519)－
167,762(23,066)
8,527,827(515,926)(221,334,766)(10,873,920)(743,476)(5,350)(9,155)(11,364)
368,763(103,402)
49,652(200)(11,328,454)

III.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 units
Payments for investment units issuance costs
Distributions to unitholders
Net cash provided by (used in) financing activities

16,500,000－
62,000,000(21,400)
161,120,405(293,249)－
239,305,755

5,000,000(5,000,000)
6,000,000(42,800)－－(1,222,645)
4,734,554

IV.Net increase (decrease) in cash and cash equivalents
V.Cash and cash equivalents at beginning of period
VI.Cash and cash equivalents at end of period

16,460,088－
16,460,088

4,528,730
16,460,088
20,988,819

Net cash provided by (used in) operating activities
II.Cash flows from investing activities
Payments for purchases of property and equipment
Payments for purchases of property and equipment in trust

Payments for purchases of intangible assets
Payments for purchases of intangible assets in trust
Reimbursement of security deposits to tenants
Proceeds from security deposits from tenants
Reimbursement of security deposits to tenants in trust

Proceeds from security deposits from tenants in trust
Payments for security deposits
Net cash provided by (used in) investing activities

26

Forecasts for the 3rd and 4th Fiscal Period

2nd FP Result

3rd FP Forecast

4th FP Forecast

From Sep. 1, 2013

From Mar. 1, 2014

From Sep. 1, 2014

Difference(3rd FP - 2nd FP)

Difference(4th FP - 3rd FP)

To Feb. 28, 2014
Amount(millions of yen)
9,176

To Aug. 31, 2014
Amount(millions of yen)
9,294

To Feb. 28, 2015
Amount(millions of yen)
9,383

Amount(millions of yen)
117

Amount(millions of yen)
88

9,176

9,294

9,383

117

88

* Does not include Silent Partnership Interest of Ryoke Capital Godo Gaisha

3,827

4,729

4,830

901

100

Total amount of acquisition price

2,918

3,808

3,854

889

46

185

216

282

30

66

-

733

733

733

0

1,497

1,531

1,544

33

12

Morisia Tsudanuma (Store renewal)：¥208 million

Asset management fees

750

792

766

41

(25)

covirna machida (Renewal of the air-conditioning system)：¥175 million

Other operating expenses

158

129

209

(29)

79

Izumiya Obayashi (Seismic strengthning)：¥174 million

5,348

4,564

4,552

(784)

(11)

(24)

-

Operating revenue
Real estate rental revenues
Operating expenses
Real estate rental expenses
Repairs and maintenanceTax and public dues

Assumptions【Properties】
Number of properties *：：55 properties¥238,023 million【Repair expenses 】\807 million for 3rd fiscal period (\590 million of which is capital expenditure)
Example)Depreciation

Operating profit
Non-operating revenues

24

Non-operating expenses

510

565

554

54

(10)

507

563

554

56

(9)

Ordinary income

4,861

3,999

3,997

(862)

(1)

Net income

4,860

3,998

3,996

(862)

(1)

Interest expenses,loan arrangement fees--

Number of investment units issued(units)1,665,260

1,665,260

1,665,260

00Cash distribution per unit

(yen)

2,919

2,400

2,400

(519)

0

55

55

55

0

0

\485 million for 4th Fiscal Period (\203 million of which is capital expenditure)
Example)Yokosuka More's City (Renewal of the exterior pachage 1st phase) ：¥108 million：¥44 million：¥84,435 million

Repayment through loans (March 2014, May 2014)：¥13,500 million

Agreed repayment (March 2014, May 2014, Aug. 2014)：¥3,042 million

Morisia Tsudanuma (Installation of LED)

【Loans】
Total Interest-bearing debt
(as of Feb. 28, 2014)

Interest-bearing debt repayment due during 3rd FP

Number of properties

Interest-bearing debt repayment due during 4th FP
Repayment through loans (-)：－ million

Agreed repayment (Nov. 2014, Feb. 2015)：¥42 million

27

Path to Growth

Realizing

Enhance investment
unit priceInvestment strategy

Secure stable income

Management strategy• Set mid-term asset size target

Based on long-term lease contracts,• Construct a stable portfolio• Maintain high occupancy rate

• Expand outside acquisition routs• Maintain and improve rent level

Maximize real estate
value

Financial strategy• Establish stable financial base
• Oversee finance along the market

Aim for stable distributions based on explicit concepts

28External Growth Strategy
Locations of properties owned

Investment target• Invest with greater Tokyo area as core (at least 80% in principle)with strong demand• Acquire competitive properties no older than 10 years

SectorYield target

Comments

Logistics

5.0% ～ 6.0%

High-functioning logistics facilities incompetitive locations with quality specs
regardless of size

Retail(residential area)

5.0% ～ 6.0%

NSC centering on food supermarkets with
dense population areas

Retail(station area)

Around 4.5%

Retail buildings (services, sales andrestaurants) near train stations in areas ofcommercial accumulation: Logistics: Retail29

Overview of Property Acquired During 2nd Fiscal Period
Recipe SHIMOKITA

Retail(station area)

Overview of property
Completion

July 2011

Location

Kitazawa, Setagaya-ku, Tokyo

Nearest station

Approx. 1-minute walk from Shimokitazawa station(Odakyu Odawara Line, Keio Inokashira Line)

Acquisition date

December 13, 2013

Agreement date

September 30, 2013

Acquisition price¥10,407 million

Estimated NOI yield

4.4%

Total leasable floor space

6,295.22㎡ (1,904.30 tsubo)

Occupancy rate

99.5% (February 28)<MAP><Key evaluation points>• Excellent location a 1-minute walk from
Shimokitazawa Station on the Odakyu
Odawara and Keio Inokashira lines• Further enhancement of the ratio ofinvestment in greater Tokyo area
• Completed in 2011, the property is new

Recipe SHIMOKITA<Portfolio status>
Greater Tokyo area

Average age

84.6% (+0.7%)

13.3 y(-0.5 y)* Based on acquisition price* As of Feb. 28, 201430

Portfolio Data (as of February 28, 2014)
Portfolio building age

Incorporation by use

Diversification by region
5.4%

15.2%

20.0%

10.0%

Retail : Logi.

GreaterTokyo area

48.7% : 51.3%

84.6 %

Average age 45.1%

51.3%

13.3 years

28.7%

39.6%

84.6%

Greater Tokyo area

Kinki area

Others

Logistics

Retail (station)

Lease term(based on leased floor space)
8.9%
19.9%

12.4 years
70.9%

5 to 10 years

Less than 5 years

Lease term remaining(based on leased floor space)
21.3%

Averagelease term

10 years or more

Retail (residential)

23.5%

Averageremaininglease term

6.2 years
29.9%

25.3%

10 years or more

5 to 10 years

10 years or more

5 to 10 years

2 to 5 years

Less than 2 years

2 to 5 years

Less than 2 years

31Portfolio List
Type

Area

Morisia Tsudanuma

Narashino City, Chiba

16,6007.0

17,30039,300.16

97.6

5.93

Yokosuka More’s City

Yokosuka City, Kanagawa

13,6405.7

14,40029,383.65

100.0

12.79

4.85

Recipe SHIMOKITA

Setagaya-ku, Tokyo

10,407

4.4

10,6006,295.22

99.5

2.71

10.06

EQUINIA Shinjuku

Shinjuku-ku, Tokyo

4,260

1.8

4,330

3,611.59

88.3

7.5

4.92

Kawasaki More’s

Kawasaki City, Kanagawa

4,000

1.7

4,200

14,446.48

100.0

11.24

100.0

12.96

EQUINA Ikebukuro

Toshima-ku, Tokyo

3,990

1.7

4,140

2,701.66

99.7

10.82

100.0

11.29

covirna machida

Machida City, Tokyo

3,440

1.4

3,840

2,891.32

100.0

14.8

29,630.48

100.0

7.33

Nitori Makuhari

Chiba City, Chiba

3,080

1.3

3,310

14,367.98

100.0

5.93

4,930

30,641.98

100.0

5.24

Konami Sports Club Fuchu

Fuchu City, Tokyo

2,730

1.1

3,050

12,385.18

100.0

2.4

1.9

4,850

24,909.96

100.0

12.38

FESTA SQUARE

Saitama City, Saitama

2,600

1.1

2,810

7,480.63

100.0

6.36

GEMS Shibuya

Shibuya-ku, Tokyo

2,490

1.0

2,500

1,791.34

89.9

1.81

Sundai Azamino

Yokohama City, Kanagawa

1,700

0.7

1,790

2,286.47

100.0

6.93

EQUINIA Aobadai

Yokohama City, Kanagawa

1,560

0.7

1,700

2,457.36

100.0

9.91

Megalos Kanagawa

Yokohama City, Kanagawa

1,000

0.4

1,210

6,217.85

100.0

11.24

Izumiya Senrioka

Suita City, Osaka

8,930

3.8

10,000

14.44

Merad Owada

Osaka City, Osaka

6,640

2.8

6,960

Investment
Rate
(%)

Landport Urayasu

Urayasu City, Chiba

17,400

7.3

Landport Itabashi

Itabashi-ku, Tokyo

15,710

6.6

Landport Kawagoe

Kawagoe City, Saitama

13,700Landport Atsugi

Atsugi City, Kanagawa

11,410

Sagamihara Tana Logistics Center

Sagamihara City, Kanagawa

AppraisalValue(in millions)Leasable Space(㎡)

Occupancy
Rate(%)

18,60070,045.85

100.0

4.61

16,90052,794.55

100.0

6.17

5.8

14,00071,569.89

100.0

4.8

12,10047,995.23

100.0

10,600

4.5

11,30050,450.00

100.0

Sagamihara Onodai Logistics Center Sagamihara City, Kanagawa

8,700

3.7

9,360

57,448.03

Landport Hachioji

Hachioji City, Tokyo

8,250

3.5

8,710

34,896.32

Landport Kasukabe

Kasukabe City, Saitama

7,340

3.1

7,710

Funabashi Logistics Center

Funabashi City, Chiba

4,660

2.0

Atsugi Minami Logistics Center B Tow er

Atsugi City, Kanagawa

4,590

Hanyu Logistics Center

Hanyu City, Saitama

PML
(%)

3,810

1.6

4,180

24,850.80

100.0

5.15

Kawaguchi Logistics Center B Tower Kawaguchi City, Saitama

3,750

1.6

4,080

13,648.70

100.0

5.05

Kawaguchi Logistics Center A Tower Kawaguchi City, Saitama

2,830

1.2

3,090

12,003.57

100.0

6.32

Atsugi City, Kanagawa

2,690

1.1

2,970

9,825.52

100.0

12.35

Ota Nitta Logistics Center

Ota City, Gunma

3,430

1.4

3,690

42,328.00

100.0

2.01

Ota Higashishinmachi Logistics Center

Ota City, Gunma

2,170

0.9

2,380

23,584.72

100.0

1.39

Ota Kiyohara Logistics Center

Ota City, Gunma

Chiyodamachi Logistics Center

Oura-Gun, Gunma

Logisticsl Subtotal (18 properties)

650

0.3

702

9,397.38

100.0

1.39

330

0.1

355

4,592.00

100.0

7.23

122,02051.3

129,907610,612.98

100.0

5.76

Area

Kinki Area

Atsugi Minami Logistics Center A Tow er

TypeRetail other than land-only property

Other

AcquisitionPrice(in millions)

AcquisitionPrice(in millions)Tokyo Area

Tokyo Area

Logistics

Location

Location

Property name

Property name

Investment
Rate
(%)

AppraisalValue(in millions)Leasable Space(㎡)

Occupancy
Rate(%)

24,399.12

100.0

14,941.54 (Retail)100.0

5,856.50 (Logistics)

100.0

PML
(%)

10.16

Other
Tokyo Area

Land-only retail property

Kinki
Area

Izumiya Yao

Yao City, Osaka

4,406

1.9

4,710

34,198.01

100.0

14.37

Izumiya Obayashi

Takarazuka City, Hyogo

3,020

1.3

3,270

11,714.36

100.0

12.95

Ichibancho stear

Sendai City, Miyagi

4,700

2.0

5,170

4,582.81

100.0

2.76

EQUINIA Aobadori

Sendai City, Miyagi

1,640

0.7

1,760

4,030.37

100.0

Mitsubishi Motors Meguro

Meguro-ku, Tokyo

2,740

1.2

2,810

3,381.19

100.0－

Mitsubishi Motors Chofu

Chofu-shi, Tokro

1,760

0.7

1,840

4,183.63

100.0－

Mitsubishi Motors Shibuya

Shibuya-ku, Tokyo

1,570

0.7

1,740

1,421.31

100.0－

Mitsubishi Motors Nerima

Nerima-ku, Tokyo

1,240

0.5

1,270

1,725.61

100.0－

Mitsubishi Motors Kawasaki

Kawasaki City, Kanagawa

950

0.4

1,010

3,057.02

100.0－

Mitsubishi Motors Takaido

Suginami-ku, Tokyo

850

0.4

898

1,923.64

100.0－

Mitsubishi Motors Katsushika

Katsushika-ku, Tokyo

800

0.3

815

1,930.05

100.0－

Mitsubishi Motors Higashikurume

Higashikurume City, Tokyo

800

0.3

815

4,105.00

100.0－

Mitsubishi Motors Setagaya

Setagaya-ku, Tokyo

770

0.3

783

1,305.78

100.0－

Mitsubishi Motors Suginami

Suginami-ku, Tokyo

740

0.3

793

1,831.00

100.0－

Mitsubishi Motors Sekimachi

Nerima-ku, Tokyo

600

0.3

614

989.77100.0－

Mitsubishi Motors Higashiyamato

Higashiyamato City, Toyko

450

0.2

488

2,783.79

100.0－

Mitsubishi Motors Motosumiyoshi

Kawasaki City, Kanagawa

370

0.2

375

1,646.97

100.0－

Mitsubishi Motors Kawagoe

Kawagoe City, Saitama

350

0.1

356

2,462.40

100.0－

Mitsubishi Motors Edogawa

Edogawa-ku, Tokyo

200

0.1

210

892.56100.0－

Mitsubishi Motors Sayama

Sayama City, Saitama

160

0.1

166

1,793.00

100.0

－

－

0.34

Mitsubishi Motors
820

0.3

878

5,704.24

100.0

Retail Subtotal (37 properties)

Ibaraki City, Osaka

116,00348.7

122,911

286,476.56

99.4

5.53

Total (55 properties)

227,616100.0

252,818

897,089.54

99.8

5.24

Ibaraki Maintenance Center

32

List of End-of Period Appraisal Value
AcquisitionPrice(¥ mln)Book Valueat 2nd Period End

Appraisal Valueat 2nd Period End

Appraisal Valueat 1st Period End(¥ mln)(¥ mln)(¥ mln)Morisia Tsudanuma

16,60016,73017,300

2.4%

Yokosuka More’s City

13,64013,681100

0.7%

Recipe SHIMOKITA

10,407

12,000100

0.8%

EQUINIA Shinjuku

11,300

11,100

200

1.8%

8,676

9,360

9,180

180

2.0%

8,206

8,710

8,690

20

0.2%

7,340

7,283

7,710

7,560

150

2.0%

4,660

4,692

4,930

4,840

90

1.9%

Atsugi Minami Logistics Center B Tower

4,590

4,573

4,850

4,750

100

2.1%

Hanyu Logistics Center

3,810

3,779

4,180

4,180

-

-

Kawaguchi Logistics Center B Tower

3,750

3,760

4,080

4,070

10

0.2%

Kawaguchi Logistics Center A Tower

2,830

2,845

3,090

3,030

60

2.0%

Atsugi Minami Logistics Center A Tower

2,690

2,691

2,970

2,910

60

2.1%

Ota Nitta Logistics Center

3,430

3,393

3,690

3,690

-

-

Ota Higashishinmachi Logistics Center

2,170

2,149

2,380

2,380

-

-

650

643

702

700

2

0.3%

AcquisitionPrice(¥ mln)Book Valueat 2nd Period End

Appraisal Valueat 2nd Period End

Appraisal Valueat 1st Period End

Difference
between(¥ mln)(¥ mln)(¥ mln)(¥ mln)Landport Urayasu

17,40017,36418,600Change18,200400

2.2%

Landport Itabashi

15,71015,69916,90016,500400

Landport Kawagoe

13,70013,637

14,00013,900Landport Atsugi

11,41011,322

12,100

Sagamihara Tana Logistics Center

10,60010,974

Sagamihara Onodai Logistics Center

8,700

Landport Hachioji

8,250

Landport Kasukabe
Funabashi Logistics Center

Property Name

Retail other than land-only property

Tokyo Area

Logistics

Tokyo Area

Kinki Aera

Other

Change17,200100

0.6%

14,40014,200200

1.4%

10,858

10,60010,600

-

-

4,260

4,297

4,330

4,330

-

-

Kawasaki More’s

4,000

4,052

4,200

4,220

▲20

▲0.5%

EQUINA Ikebukuro

3,990

4,015

4,140

4,140

-

-

covirna machida

3,440

3,465

3,840

3,780

60

1.6%

Nitori Makuhari

3,080

3,067

3,310

3,310

-

-

Konami Sports Club Fuchu

2,730

2,732

3,050

2,990

60

2.0%

FESTA SQUARE

2,600

2,587

2,810

2,810

-

-

GEMS Shibuya

2,490

2,517

2,500

2,500

-

-

Sundai Azamino

1,700

1,693

1,790

1,760

30

1.7%

EQUINIA Aobadai

1,560

1,570

1,700

1,690

10

0.6%

Megalos Kanagawa

1,000

1,024

1,210

1,190

20

1.7%

Izumiya Senrioka

8,930

8,931

10,000

9,820

180

1.8%

Merad Owada

6,640

6,667

6,960

6,960

-

-

Izumiya Yao

4,406

4,405

4,710

4,640

70

1.5%

Chiyodamachi Logistics Center

330

332

355

354

1

0.3%

Izumiya Obayashi

3,020

3,046

3,270

3,190

80

2.5%

Logistics Subtotal (18 properties)

122,020122,029

129,907

128,034

1,873

1.5%

Ichibancho stear

4,700

4,710

5,170

5,090

80

1.6%

EQUINIA Aobadori

1,640

1,624

1,760

1,740

20

1.1%

Mitsubishi Motors Meguro

2,740

2,764

2,810

2,800

10

0.4%

Mitsubishi Motors Chofu

1,760

1,776

1,840

1,820

20

1.1%

Mitsubishi Motors Shibuya

1,570

1,586

1,740

1,690

50

3.0%

Mitsubishi Motors Nerima

1,240

1,251

1,270

1,270

-

-

Mitsubishi Motors Kawasaki

950

959

1,010

1,010

-

-

Mitsubishi Motors Takaido

850

859

898

889

9

1.0%

Mitsubishi Motors Katsushika

800

808

815

810

5

0.6%

Mitsubishi Motors Higashikurume

800

808

815

813

2

0.2%

Mitsubishi Motors Setagaya

770

779

783

777

6

0.8%

Mitsubishi Motors Suginami

740

748

793

781

12

1.5%

Mitsubishi Motors Sekimachi

600

606

614

612

2

0.3%

Mitsubishi Motors Higashiyamato

450

455

488

484

4

0.8%

Mitsubishi Motors Motosumiyoshi

370

375

375

374

1

0.3%

Mitsubishi Motors Kawagoe

350

355

356

353

3

0.8%

Mitsubishi Motors Edogawa

200

204

210

207

3

1.4%

Mitsubishi Motors Sayama

160

163

166

165

1

0.6%

Mitsubishi Motors
Ibaraki Maintenance Center

820

829

878

877

1

0.1%

Retail Subtotal (37 properties)

116,003

117,015

122,911

121,892

1,019

0.8%

Total (55 properties)

238,023

239,044

252,818

249,926

2,892

1.2%

（Ａ）

（Ｂ）

±0
Decrease40
11
3

1st Period ⇒2nd Period

42
12
1

Other

Increase

Tokyo Area

Land-only retail property

Comparison with the previous period
At acuisition ⇒1st Period

Other

●

Ota Kiyohara Logistics Center

Difference
between(¥ mln)Property Name

Difference between Book Value and Appraisal Value¥13,773 mln(¥8,270/unit)（Ｂ）－（Ａ）(Note) Appraisal Value at acquisition is written for Appraisal Value at 1st Period End of Recipe SHIMOKITA

33

Portfolio Map
Logistics

Retail01 Landport Urayasu
02 Landport Itabashi
03 Landport Kawagoe
04 Landport Atsugi
05 Sagamihara Tana Logistics Center
06 Sagamihara Onodai Logistics Center
07 Landport Hachioji
08 Landport Kasukabe
09 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 Higashi-Shinmachi Logistics Center
17 Ota Kiyohara Logistics Center
18 Chiyodamachi Logistics Center

20
19

17
15
18
15
37
18
16 17

16
11

01 Morisia Tsudanuma
02 Yokosuka More’s City
03 Recipe SHIMOKITA
04 EQUINIA Shinjuku
05 Kawasaki More’s
06 EQUINIA Ikebukuro
07 Covirna machida08 Nitori Makuhari
09 Konami Sports Club Fuchu
10 FESTA SQUARE
11 GEMS Shibuya
12 Sundai Azamino
13 EQUINIA Aobadai
14 Megalos Kanagawa
15 Izumiya Senrioka
16 Merad Owada
17 Izumiya Yao
18 Izumiya Obayashi
19 Ichibancho stear
20 EQUINIA Aobadori
21 Mitsubishi Motors Meguro (Land)
22 Mitsubishi Motors Chofu (Land)
23 Mitsubishi Motors Shibuya (Land)
24 Mitsubishi Motors Nerima (Land)
25 Mitsubishi Motors Kawasaki (Land)
26 Mitsubishi Motors Takaido (Land)
27 Mitsubishi Motors Katsushika (Land)
28 Mitsubishi Motors Higashikurume (Land)
29 Mitsubishi Motors Setagaya (Land)
30 Mitsubishi Motors Suginami (Land)
31 Mitsubishi Motors Sekimachi (Land)
32 Mitsubishi Motors Higashiyamato (Land)
33 Mitsubishi Motors Motosumiyoshi (Land)
34 Mitsubishi Motors Kawagoe (Land)
35 Mitsubishi Motors Edogawa (Land)
36 Mitsubishi Motors Sayama (Land)
37 Mitsubishi Motors Ibaraki Maintenance Center(Land)

34

Unitholders (at end of 2nd Fiscal Period)
Number of unitholders

Breakdown of financial institutions: 134 (0.4%)
・Financial institutions
・Other domestic corporations : 891 (2.7%): 127 (0.4%)
・Foreign corporations
End of 1st FY(2013/8/31)
Unitholders
33,150End of 1st period

Individuals and others:
31,998 (96.5%): 141 (0.5%)
・Financial institutions
・Other domestic corporations : 575 (2.0%): 145 (0.5%)
・Foreign corporations

End of 2nd FY(2014/2/28)
Unitholders
28,583

Individuals and others:
27,722 (97.0%)

Banks27,131 units

1.63% 40,102 units

2.41%

Trust banks

415,931 units

24.98% 570,945 units

34.29%

Life insurance companies

25,640 units

1.54% 23,299 units

1.40%

Non-life insurance companies

2,100 units

0.13%

703 units

0.04%

Other financial institutions

77,831 units

4.67% 77,764 units

4.67%

548,633 units

32.95% 712,813 units

42.80%

Top 10 unitholders
Unitholder

Number of investment units
End of 1st FY(2013/8/31)
No. of Units
1,665,260

Other domestic corporations:
225,459 (13.5%)
Individuals and others: Financial institutions:
656,826 (39.4%)
548,633 (32.9%)

Foreign corporations:
234,342 (14.1%)

Other domestic corporations:
177,360 (10.6%)

End of 2nd FY
andEnd ofIndividuals
1st FY(2014/2/28)
Financial institutions:others:(2013/8/31)
No. of Units
712,813 (42.8%)
446,603 (26.8%)
1,665,260

End of 2nd period

Foreign corporations:
328,538 (19.7%)

Individuals and others

Financial institutions

Other domestic corporations

Foreign corporations

Number of units

Ratio

1 Japan Trustee Services Bank, Ltd.

282,629

16.97%

2 Trust & Custody Services Bank, Ltd.

90,6695.44%

3 Nomura Real Estate Development Co., Ltd.

87,820

5.27%

4 The Master Trust Bank of Japan, Ltd.

86,967

5.22%

5 The Nomura Trust and Banking Co., Ltd.

85,617

5.14%

6 Nomura Bank Luxembourg SA

51,443

3.09%

7 The Bank of New York, Non-Treaty JASDEC Account30,273

1.82%

20,775

1.25%

9 Northern Trust Co. (AVFC) RE 10PCT Treaty Account

17,267

1.04%

10 State Street Bank and Trust Company

15,9480.96%

769,408

46.20%

8

Credit Suisse Securities (Europe) Limited PB Omnibus
Client Account

Total

35

Tenant Status (at end of 2nd Fiscal Period)
Top 10 tenants (based on leased area)
TenantUse

Property Name

Total leased area
(㎡)

Ratio
(%)

92,389.48

10.3

70,311.49

7.9

Landport Urayasu
1

Fukuyama Transporting Co., Ltd.

Logistics
Sagamihara Onodai Logistics Center
Izumiya Senrioka

2

Izumiya Co., Ltd.

RetailIzumiya Yao
Izumiya Obayashi

3

Amazon Japan Logistics K.K.

Logistics

Landport Kawagoe

56,377.76

6.3

4

Neovia Logistics Service

Logistics

Sagamihara Tana Logistics Center

50,450.00

5.6

5Yokohama Okadaya

Retail

43,830.13

4.9

Yokosuka More’s City
Kawasaki More’s
6

Mitsui-Soko Logistics Co., Ltd.

Logistics

Ota Nitta Logistics Center

42,328.00

4.7

7

Undisclosed (Note)

Retail(land)

Mitsubishi Motors (Total 17 properties)

41,136.96

4.6

8

ASKUL Corporation

Logistics

Landport Itabashi

37,276.71

4.2

9

Otsuka Warehouse Co., Ltd.

Logistics

Landport Urayasu

35,104.40

3.9

10

Shinkai Transport Systems, Ltd.

Logistics

Landport Hachioji

34,896.32

3.9504,101.25

56.3

Top 10 tenants total(Note) The name of the tenant is undisclosed due to unavoidable circumstances.

36

Changes in Financial Performance
1st FP

2nd FP

Operating Revenues

million yen

3,683

9,176

Operating Profits

million yen

2,089

5,348

Net Income

million yen

1,251

4,860

Asset Total

million yen

252,265

261,582

Interest-bearing Debt Total

million yen

78,47884,435Net Asset

million yen

162,371

165,982Return on Assets (ROA)

%

2.5

3.8

Return on Equity (ROE)

%

3.5

6.0

FP End Capital Adequacy Ratio

%

64.4

63.5

LTV

%

31.1

32.3

times

9.6

13.2

Weighted Average Interest Rate

%

0.99

0.98

Debt Average Remaining Duration

years

4.8

4.4

million yen

3,123

7,755

%

6.26

6.57

FFO

million yen

1,950

6,359

Number of Properties

properties

54

55

Acquisition Price Total

million yen

227,616

238,023

Book Value Total

million yen

229,489

239,044

Appraisal Value Total

million yen

239,326

252,818

NAV per Unit

thousand yen

103

107

Interest Coverage Ratio

Rent NOINOI Yield (acquisition price base)

ROA=Current Profits/[(Total Asset Value at Start of FP+Total Asset Value at FP End)÷2]x100 *annual basis

Rent NOI=Real Estate Rental Business Revenues-Real Estate Rental Business Income+Current FP Depreciation and Amortization*For the total asset value at start of 1st FP, total assets amount on the date of commencement of the actual asset management (June 13, 2013) is usedNOI Yield (Acquisition Price Base)=Rent NOI/Total Acquisition Price x 100 *annual basis

ROE=Net Income/[(Net Asset at FP Start+Net Asset at FP End)÷2]x100 *annual basis

FFO=Net Income+Current FP Depreciation and Amortization+Investment Corporation Bond Issuance Ammortization-Real Estate Disposition Profit & Loss

*For the net asset at start of 1st FP, total net asset amount on the date of commencement of the actual asset management (June 13, 2013) is used

NAV per Unit=[Net Asset Total-(Income Statement Total-Appraisal Value Total)]/Total Number of Investment Units Issued

Capital Adequacy Ratio at FP End=Net Asset at FP End/Total Asset at FP End x 100*annual basis=each measure/operating days x 365 days

LTV=Total Interest-bearing Debt at FP End/Total Asset at FP End x 100
Interest Coverage Ratio=Net Income Before Interest Depreciation/(Interest Expenses+Investment Coroporation Bond Interest)37

Logistics Facilities Environment
Change in the size of the e-commerce retail market
and the number of home delivery service
Number of parcels
handled(million)
3,700(¥ billion)
5,000
4,500
4,000
3,500

Warehouse stock in greater Tokyo area
<Left axis>
Clothes andaccessories(thousand㎡)

supply > New demand
2,500
Warehouses
in greater TokyoNew
area
33 million tsubo 100.0%

3,500

Spots, books，music
and toys

3,300

Pharmaceuticalcosmetics

2,000

Food

Large-scale warehouses
1,500
7.4 million tsubo 22.5%

13.2

3,000
2,500

3,100

2,000
2,900

1,500
1,000

General retail

2,500<Right axis>
Number of parcels
handled1,000

New large-scale warehouses
8.7
3.6 million tsubo 11.1%

500
0
2005

2006

2007

2008

2009

2010

2011

2012

13.1

8.2

Furniture,
household goods,
etc.

2,700

New demand

500
3.9

Supply-demandbalance of rentable0large scale logistics
2006 facilities
2007
2008

Change in 3PL sales(2007=100)

New supply

130(thousand㎡)

New supply > New demand

2,500

2009

New demand

2010

Vacancy rate(%)

New demand > New supply

20.0

120
2,000

110

13.2

100

15.0

13.1

1,500
10.0

8.2

90
1,000
8.7

80

5.0

500

70

2.2

3.9

3.3

0

60
2007

2008

（出所）シービーアールイー株式会社

2009

2010

2011

2012

0.0
2006
New supply

2007

2008
New demand

2009

2010

2011

2012

Vacancy rate

(Source) Prepared by （注）公表資料に基づき3PL事業の売上がセグメント別(各社の定義に基づきます。）に6年間情報取得可能な9社を対象とし、平Nomura Real Estate Asset Management Co., Ltd. based on public data of the Ministry of Economy, Trade and Industry and the Ministry of Land, Infrastructure, Transport and Tourism (upper left), public data of the
成19年度を100として売上高合計（指数）の推移を示したものです。なお、M&A等による企業の事業拡大等も含まれます。
Ministry of Internal
Affairs and Communications and the Ministry of Economy, Trade and Industry (upper right), CBRE, Inc. (lower left) and Ichigo Real Estate Service Co, Ltd. (lower right).

38

Retail Facilities Environment
Retail sales (by item)

Change in retail industry corporate performance¥ trillion (total retail sales)
140
45
120

¥ trillion (sales by item)
50

Food and beverage

45
40

33

3

40

200

0.5

0

0

Total retail industry sale (excluding fuel)2005

Change in Economy Watcher’s index

2006

DI for current business conditions

2010

2011

2012

7-9

10-12

4-6

1-3

7-9

10-12

4-6

1-3

7-9

10-12

4-6

1-3

7-9

10-12

4-6

1-3

7-9

2009

10-12

4-6

1-3

7-9

10-12

4-6

1-3

2008

2013

(Reference) Impact of consumption tax hike (April 1997)
Non-Durable Goods( DI )
60

7-9

2007

10-12

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

4-6

0

1-3

7

7-9

20
10-12

Mechanical equipment

0

1

400

4-6

11

5

1.5
600

1-3

Automobile retail

Clothing and accessories

10

60

2

800

7-9

17

Commodities

16
12

2.5

10-12

21

5

3.5

1,400

100
80

20
15

(%)

Operating profit on sales

1,000

Other retail30
25

Ordinary income

1,200

35

35

(¥ billion)
1,600

DI for future conditions

Semi-Durable Goods

Non-Durable Goods

Services

6%
4%

55

2%

50

0%

45

-2%

40

-4%

35

-6%

30

-8%

25

-10%

20

-12%

15
2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Limited impact on non-durable goods (beverages, food, etc.) and services(Source) Prepared by Nomura Real Estate Asset Management Co., Ltd. based on public data of the Ministry of Economy, Trade and Industry (upper left), public data of the Ministry of Finance (upper right) and public data of the
Cabinet Office (lower left and lower right).

39

Overview of Nomura Master Fund
Structure
Specified Related Party

Investment Corporation

Asset custodyagreement

Parent company of the asset
management company

Sumitomo Mitsui Trust Bank, Ltd.

Nomura Real Estate
Master Fund, Inc.

Nomura Real Estate
Holdings, Inc.

Unitholder’s Meeting
Asset Management
Company
Nomura Real Estate
Asset Management Co., Ltd.

Asset managementagreement

Executive Director: Takashi kataoka
Supervisory Director: Sadahiko Yoshimura
Supervisory Director: Shuhei Yoshida

AuditorInformation provider
Ernst & Young Shin Nihon LLC
Development Co., Ltd.

General administration
Agreement /Transfer agency
agreement

General Administrator
and Transfer Agent
Mitsubishi UFJ Trustand Banking Corporation

Board of Directors

Information provisionagreement

Nomura Real Estate

CustodianHistory
January 28, 2013
Filing of incorporation by the founder (Nomura Real Estate
Asset Management Co., Ltd) under Article 69 of theInvestment Trusts Act.
January 31, 2013
Registration of incorporation under Article 166 of theInvestment Trusts Act, Incorporation of NMF
February 1, 2013
Application for registration under Article 188 of theInvestment Trusts Act.
February 22, 2013
Registered with the Prime Minister of Japan under Article
187 of the Investment Trusts Act.
(Registration No. 82, Kanto Local Finance Bureau)
June 12, 2013
Listed on the Tokyo Stock Exchange

40

Overview of the Asset Management Company
Organizational chart

Overview
Company name

Nomura Real Estate Asset Management Co., Ltd.

Shareholder

Nomura Real Estate Holdings, Inc. (100%)

Location

8-5-1 Nishi-Shinjuku, Shinjuku-ku, Tokyo

Contact Information +81-3-3365-8767
Registration,
License, etc.

Memberships

nmf3285@nomura-re.co.jp

・Financial instruments business operator registration:
Commissioner of the Kanto Local Finance Bureau(Financial Instruments) No. 374
・Licensed for discretionary proxy in realty trading:
Minister of Land, Infrastructure and Transport
Permit No.18
・Licensed for real estate trading: Governor of Tokyo (3)No. 81679
・The Investment Trusts Association, Japan; The Japan
Investment Advisers Association, The Association
for Real Estate Securitization, etc.

41

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 with any specific products. Investors
wishing to purchase the investment units of Nomura Real Estate Master Fund, Inc. should contact their own
securities brokers or dealers. A fee may be charged by your financial instruments business operator in relation
to the sale or purchase of investment units.
For management fees that the Fund pays to Nomura Real Estate Asset Management Co., Ltd., please refer tothe terms and conditions of the Fund, asset management reports, etc.
The forward-looking statements with respect to the future financial results contained in this document are basedon the current facts about the investment policy of the Fund, applicable laws and regulations, the market
environment, business practice, etc., as of the preparation date of this document and do 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 theactual operating and management results, financial conditions, etc., of the Fund.
Investment in real estate investment securities may result in a loss due to a decline in the transaction pricecaused 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 precision and safety of the same. Please note that the contents of this document is subject tochange or cancellation without prior notice.
It is prohibited to make duplication, reproduction, distribution or use of any part or whole of the information
contained in this document without express prior written consent.