Supplement Documentation for Press Release“Acquisition and Disposition of the Assets” dated today
May 9, 2016

2nd Shot of SPR
An Exchange Deal with the Sponsor
Promote construction of sustainable portfolio with exchange deal utilizing strength that having NRE,
general developer, as a sponsor.
Acquisition of 1 properties with ¥10.8 Billion

Prime property✔ Landport series property which is an advanced
logistics facility developed by Nomura Real Estate
Development, will be acquired

Outside of the group

NewlyBuilt

Acquisition

Development
Landport Kashiwa Shonan IISPR（※）
Disposition of 3 properties with ¥18.1 Billion✔ The Three Properties for the Sponsor that areaging and are expected to see their profitability
decrease even though they are in excellent locations

NOF Nihonbashi
Honcho Building

NOF TameikeBuilding

Disposition
Possible forredevelopment

NOFMinami
Shinjuku Building(※) Based on Mid-to Long-term Management Strategy disclosed by “Brief session regarding the Investment Principles presentation” held on November 9, 2015

AssetManagement
Disposition tooutside of the group
Inadequate forredevelopment

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3rd Shot of SPR
An Exchange Deal with the outside of the group
Promote construction of sustainable portfolio transferring properties that is inadequate for re-development
and purchasing good location land.
Acquisition of 1 properties with ¥4.9 Billion✔ Stable cash flow will be obtained based on a fixedterm lease agreement for long-term business andthe land has very high versatility

Prime property
Outside of the group

NewlyBuilt

Acquisition

Development

Ryotokuji University Shin-Urayasu Campus(Land)

Disposition of 6 properties with ¥10.6 Billion✔ Disposed properties which building age are oldand hard to anticipate future internal growththrough “bidding process & bulk transaction”

SPR（※）

Disposition
Possible forredevelopment

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

NOF Shinagawa
Konan Building

Yokohama Odori
Koen Building

JCB Sapporo Higashi
Building

PRIME URBAN
Hatagaya

PRIME URBAN
Sangen Jaya II

PRIME URBAN
Kamikitazawa

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Purpose of 2nd Shot of SPR

The Sponsor✔ Acquisition of brand property of the sponsor development（Landport Kashiwa Shonan Ⅱ）✔ The Three Properties for the Sponsor that are aging and are expected tosee their profitability decrease even though they are in excellent will besold to the sponsor

Transaction utilizing
diversified type REIＴ

✔ Stable cash flow will be obtained based on a fixed-term lease agreement
for long-term business of 50 years and the land has very high versatility.
✔ Cross-over deal
（Disposition of office and residential, Acquisition of logistics and land）

Exchange deal withAccelerating the Property
Replacement PlanImprovement ofthe portfolio quality✔ Accelerated property replacement of ¥34 billion, from original plan of¥50 billion within 3-5 years✔ Disposed properties which building age are old and hard to anticipate
future internal growth for the outside of the group✔ Reduction of building age （▲1.2years）✔ Reduction of medium- and long-term repair cost （▲23 million yen ）(※) Based on Mid-to Long-term Management Strategy disclosed by “Brief session regarding the Investment Principles presentation” held on November 9, 2015

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Replacement Properties of 2nd Shot of SPR

List of Replacement Properties

Disposition the buildings in excellent locations for sponsor bidding process & bulk transaction

Disposition
NameSPR
2ndSPR
3rdUseNOF Nihonbashi Honcho Building (49%)
NOF Tameike Building
NOF Minami Shinjuku Building
NOF Shinagawa Konan Building
Yokohama Odori Koen Building
JCB Sapporo Higashi Building
PRIME URBAN Hatagaya
PRIME URBAN Sangen Jaya II
PRIME URBAN Kamikitazawa
Total 9 Properties

Acquisition

Others

OfficeOfficeOfficeOfficeOfficeOfficeResidential
Residential
Residential

Landport Kashiwa Shyonan II
Ryotokuji University Shin-Urayasu Campus(Land)
Total 2 Properties

Book value(B)10,449
4,802
2,214
3,457
1,806
3,252470484
597
27,530(A)-(B)

Appraisal value

820-302
166

574

1,243

10,437
4,480
2,210
3,310
1,800
3,260
472
488
601
27,058

Building Age NOI yield
55.1
56.8
30.2
28.5
27.2
49.6
23.5
25.5
29.0
46.0

4.8%
4.2%
3.5%
3.9%
5.7%
6.0%
4.2%
4.4%
4.5%
4.7%

Sponsor support ＆ Acquisition of the land unique characterizes the location

Name
SPR
2ndSPR
3rdAcquisition
Transfer price
price
(A)
10,486
11,270
4,810
4,500
2,210
2,380
3,460
1,810
3,270
10,633469
483
597
27,59528,783

UseLogistics
Other(Land)

Acquisition
price(A)The time ofacquisition Appraisal
value(B)(B)-(A)

Building Age NOI yield

10,80011,000

200

0.1

4.9%

4,900

5,090

190

-3.9%

15,70016,090

390

0.1

4.6%

(※) Indicates anticipated Book value as of the date of disposition.

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Overview of 2nd Shot of SPR(Strategic Property Replacement)

Effect of SPR

Beforethe implementation of SPR

After
the implementation of SPR

EffectNumber of properties

259 properties

253 properties―

Acquisition price¥807,302mln.

¥795,407mln.

―

Building age

19.3 years

18.1 years

Repair cost

¥45,619mln.

¥42,736mln.

Reduction of 2,882 million yen

Unrealized gain/loss¥39,005mln.

¥39,028mln.

Unrealized gains increaseof 23 million yen¥1,242mln.

―Transfer price-Book value

External growth

Reduction of 1.2 years

A provision granting preferential negotiation rights to NMF for if and when
Nomura Real Estate Development is to sell the properties after
redevelopment is expected.

(※1) Building age are as of May 9, 2016(※2) Repair cost is Compared forecast of long-term repair costs (12years) written in the Engineering Report of the Property6

List of Disposed Properties（ Disposition to Sponsor ）The Three Properties for the Sponsor that are aging and are expected to see their profitability decrease
even though they are in excellent locations will be sold to the Sponsor
NOF Nihonbashi Honcho
Building （49％）

NOF Tameike Building

NOF Minami Shinjuku Building

Adress2-7-1 Nihonbashi Honcho,Chuo Ward, Tokyo

Adress1-1-14 Akasaka,Minato Ward, Tokyo

Adress5-32-7 Sendagaya,Shibuya Ward, Tokyo

AccessMitsukoshimae Station (Tokyo Metro Ginza Line )AccessTameike-Sanno Station (Tokyo Metro Ginza Line)

Access

Shinjuku Station and Yoyogi Station (JR Line)

Building Age

55.0years

Building Age

56.7years

Building Age

30.1years

Gross Floor area

19,157.05㎡

Gross Floor area

4,715.20㎡

Gross Floor area

2,464.71㎡※ Access denotes major station only.

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List of Disposed Properties （Disposition to outside of the group）
Disposed properties which building age are old and hard to anticipate future internal growth through“bidding process & bulk transaction”
NOF Shinagawa Konan Building

Adress

1-2-5 Higashi Citynagawa,Shinagawa Ward, Tokyo

Yokohama Odori Koen Building

Adress2-4-1 Horai-cho, Naka Ward, Yokohama City, Kanagawa

JCB Sapporo Higashi Building

Adress

1-1 Minamiichijo-Nishi, Chuo Ward, Sapporo City, Hokkaido

Odori Station (Shiei Toho Line and Tozai Line)

AccessShinagawa Station (JR Line and Keikyu Line)

AccessKannai Station (JR Line and Yokohama Municipal Subw ay Line)

AccessBuilding Age

28.4years

Building Age

27.1years

Building Age

49.5years

Gross Floor area

7,378.55㎡

Gross Floor area

4,234.62㎡

Gross Floor area

9,062.04㎡

PRIME URBAN Hatagaya

PRIME URBAN Sangen Jaya IIPRIME URBAN Kamikitazawa

Adress3-28-6 Hatagaya, Shibuya Ward, TokyoAdress

2-4-16 Taishido, Setagaya Ward, TokyoAdress

5-21-22 Kami Kitazawa, Setagaya Ward, Tokyo

AccessHatagaya Station (Keio New Line)

AccessSangen Jaya Station (Tokyu Denentoshi Line)

AccessKamikitazaw a Station and Hachimanyama Station (Keio Line)

Building Age

23.4years

Building Age

25.4years

Building Age

29.0years

650.60㎡

Gross Floor area

810.98㎡

Gross Floor area

1,384.45㎡

Gross Floor area
※ Access denotes major station only.

8Overview of New Properties
Take advantage of the sponsor pipeline

Landport Kashiwa Shonan IIAcquisition Date

September 1, 2016

Address

1043-1Wakashiraga, Kashiwa City, Chiba

Completion date

Apr 2016

Gross Floor area

50,539.27㎡

Acquisition Price(A)¥10,800mln.

Number of Tenants/Main TenantNon-disclosure

Appraisal Value(B)¥11,000mln.

(A)/(B)

98.2%

Investment Highlights✔ The Landport series advanced and high-functioning logistics facility developed byNomura Real Estate Development has high brand strengths addressing the detailed
needs of tenants.
✔The property has a facility specification that takes the working environment into
consideration such as with onsite parking space, office space, excellent cafeteria
space, changing rooms, etc✔ As a slope-type facility, vehicles can connect to first and second floor berths.

Moreover, the effective height under beams is 5.5m to 6.5m, an 11m×11m grid isemployed for pillar span, floor space can be increased through utilization of thesurplus volume ratio and adaptation to seasonal fluctuations of demand and increaseof logistics volume after occupancy is possible. As such, the facility has a highfunctioning capacity and can meet the demands of various tenants.

9Overview of New Properties
OthersRyotokuji University Shin-Urayasu Campus(Land)

Acquisition of university’s land

Tokyo

Tokyo Disney Resort

JR Keiyo Line

Shin Urayasu st.
Acquisition
planned site

Acquisition
planned site

Acquisition Date

May 26, 2016

Address

5-8-1Akemi, Urayasu City, Chiba

Completion date

－Gross Floor area

14,431.35㎡

Acquisition Price(A)¥4,900mln.

Number of Tenants/Main Tenant

Ryotokuji University

Appraisal Value(B)¥5,040mln.

(A)/(B)

97.2%

Investment Highlights✔ This will be the first time for a J-REIT to acquire a university’s land with leasehold right.

Only a diversified type REIT that does not limit its sectors of investment can undertakesuch an initiative.
✔ Stable cash flow will be obtained based on a fixed-term lease agreement for long-termbusiness of 50 years and the land has very high versatility.
✔ Various retail facilities, lodging facilities, bridal facilities, condominiums, medicalfacilities, etc. are being developed and established on a schedule basis around ShinUrayasu Station with the opening of the adjacent large-scale resort facility. A very
beautiful townscape that stands out even in the Tokyo bayside area is in place and asense of uniqueness characterizes the location.

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Action Plans of SPR

Action Plan

Disclosed
concepts ofSPR

1st shotofSPR

2nd, 3rdshot ofSPR

Continuously Considering asset
swap with sponsor

Strong sponsor commitment

Completedselecting properties
for disposition

Acquire sponsor developed
properties
Redevelopment by sponsor

Merger

2nd FP

1st FP

Realization of replacement of¥50 bln in totalof sustainable portfolio▶ Construction※1

Dynamic investment utilizing
acquisition capacity

Consider acceleration of SPR bymonitoring sales market

Quality phase :AroundImage of Disposition

19.4 years

19.2 years¥50 bln18.1 years
3rd shot of SPR

Average building age※2¥34.1 bln

Target:15 years

2nd shot of SPR¥23.5 bln
1st shot of SPR¥5.35 bln

Selective investment inproperties outside of the group

Consideracceleration

Utilizing sponsor pipelines※1 For details of the “sustainable portfolio,” please refer to page 2 of “Supplement Documentation for Press Release ‘Acquisi tion and Disposition of the Assets’ dated March 29, 2016” announced on March 29, 2016.
※2 Image of disposition describes the total amount.

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

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

10years after

Quality phase

Growth phase

Master phase

Around ¥50 bln
in total

Around ¥10 blnper year

Maintain highquality of portfolio

Point✔ Crossover deals✔ Optimization of sector timing✔ Utilization of the sponsor pipeline※ Based on “Brief session regarding the Investment Principles presentation” held on November 9, 201512

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