[For Translation Purposes Only]
September 1, 2016

For Immediate Release
To Whom It May Concern
Nomura Real Estate Master Fund, Inc.
Securities Code: 3462
Satoshi Yanagita, 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 Revision to Forecasts of Financial Results
for the Fiscal Period Ending February 28, 2017 (3rd Fiscal Period)
Nomura Real Estate Master Fund, Inc. (“NMF”) announced its decision to revise the forecasts of the financial results
and distributions for the Fiscal Period Ending February 28, 2017 (3rd Fiscal Period), which was announced in “NoticeConcerning Forecasts of Financial Results for the Fiscal Period Ending February 28, 2017 following the Merger between
Nomura Real Estate Master Fund, Inc., and Top REIT, Inc.” dated May 26, 2016.

1. Revised Forecasts of Financial Results for the Fiscal Period Ending February 28, 2017

Previous
Forecast (A)Revised
Forecast (B)Distribution in
Excess of Net
Income Per Unit(Yen)

Total
DistributionsPer Unit(Including
Distribution in
Excess of Net
Income)(Yen)

OperatingRevenues(Millions ofYen)

Operating Profit(Millions ofYen)

OrdinaryIncome(Millions ofYen)

Net Income(Millions ofYen)

Distribution Per
Unit (Excluding
Distribution in
Excess of Net
Income)(Yen)

34,493

10,912

8,245

8,244

1,872

1,032

2,904

34,527

10,893

8,158

8,157

1,850

1,055

2,905

33

△19△86

△86

△2223

1%
0.1%
△0.2%
△1.1%
△1.1%
△1.2%
2.2%0.0

Amount ofIncrease/
Decrease(B－A)
Ratio ofIncrease/
Decrease1(Reference)
Anticipated total number of investment units as of the end of the fiscal period: 4,183,130 units
Anticipated net income per unit: 1,950 yen[Notes]
1.

2.

3.

4.
5.

The forecasts presented in this document are calculated as of today, based on the assumptions set forth in the attached “Assumptions
for Forecasts of the Financial Results for the Fiscal Period Ending February 28, 2017 (3rd Fiscal Period)” as an exhibit. The actual
operating revenues, operating profit, ordinary income, net income, distributions per unit or other items may differ due to futureacquisition or disposition of properties, changes in the real estate market and other factors affecting NMF. NMF does not guarantee
the amount of cash distribution stated above.
In these forecasts, goodwill from an absorption-type merger, with NMF as the surviving corporation and Top REIT, Inc. (“TOP”) as
the absorbed corporation (the “Merger”) is provisionally estimated to be 27,091 million yen and the goodwill is scheduled to beaccounted as assets and amortized using the straight-line method over 20 years on a regular basis, premised on the adoption of theAccounting Standards for Business Combinations (Accounting Standards Board of Japan Statement No. 21, as amended on
September 13, 2013 (the “Business Combination Accounting Standards”)). The actual amount of goodwill may differ from theamount stated above. Please refer to “Amortization of goodwill” in the attached “Assumptions for Forecasts of the Financial Results
for the Fiscal Period Ending February 28, 2017 (3rd Fiscal Period)” as an exhibit for details.
Distribution in excess of net income per unit consists of distribution of the reserve for temporary difference adjustments anddistribution other than that (the “Other Distribution in Excess of Net Income”). In the forecasts, out of 1,055 yen of distribution inexcess of net income per unit for the fiscal period ending February 28, 2017 (3rd Fiscal Period), distribution of the reserve fortemporary difference adjustments is expected to be 683 yen and the other distribution in excess of net income is expected to be 372yen. For your reference, the reserve for temporary difference adjustments is treated as dividends for tax purposes and is subject towithholding. In addition, the other distribution in excess of net income falls under a return of capital for tax purpose, and in principle,
the large part of such amount is treated as the amount of income generated from transfer of investment units (some part may betreated as deemed dividend).
The forecasts may be revised if a certain variance from the forecasts mentioned above is expected.
Amounts less than the stated units are rounded down.

2. Reason for Revision
The amount of goodwill that is scheduled to be accounted due to the Merger has almost been determined throughprovisional estimation of the total amount of investment unites of NMF to be delivered to the unitholders of TOP(consideration for the Merger) based on the market price of the investment units of NMF, the acquiring corporation
under the Business Combination Accounting Standards, on the effective date of the Merger (closing price of theinvestment units on August 31, 2016). In relation thereto, NMF announced the revised forecast of the financial results forthe fiscal period ending February 28, 2017 as of today.

*Nomura Real Estate Master Fund, Inc. URL: http://www.nre-mf.co.jp/english/

2[Exhibit]

Assumptions for Forecasts of the Financial Results for the Fiscal PeriodEnding February 28, 2017 (3rd Fiscal Period)
Item
Calculation period

Assumption
 3rd Fiscal Period: September 1, 2016 to February 28, 2017

 With respect to 272 properties held by NMF as of today, it is assumed that there
will be no changes in assets under management (new property acquisitions or sales
Assets under managementof portfolio properties) through February 28, 2017.
 The forecasts may be revised due to actual changes in the portfolio or otherreasons.
Operating revenues

 Rental revenues are estimated based on the tenant trends, competitive properties
located in adjacent areas, and the real estate market conditions, among otherfactors, and assume that there are no arrears and nonpayment cases.

 Leasing expenses is expected to be ¥16,142 million.
 It is estimated that a tax amount of ¥3,016 million will be recorded as leasingexpenses.
 Outsourcing expenses of ¥3,240 million is estimated to be recorded as leasingexpenses.
 Expenses for repairs and maintenance required for the fiscal period are calculated
as leasing expenses, based on the mid-to-long term repair plans the AssetManagement Company of NMF has established. However, the actual expenses forOperating expenses
repairs and maintenance for the fiscal period may differ significantly from the(excluding amortization ofestimates due to expenses for urgent repair on damages to a building caused bygoodwill)
events difficult to foresee, and the tendency for significant fluctuation in amounts
year by year or expenses for certain types of repair not required periodically.
 Depreciation of ¥4,797 million is estimated to be recorded as leasing expenses.
However, the book values of the properties that were succeeded to NMF fromTOP as of the effective date of the Merger are not fixed and may be revised.
 Merger expenses are estimated to be ¥1,377 million.
 Other operating expenses (including asset management fees, asset custody fees andgeneral administration fees) are estimated at ¥4,867 million.
 Goodwill which accrued upon the Merger will be accounted as assets andamortized using the straight-line method over 20 years on a regular basis pursuant
to the Business Combination Accounting Standards. Currently, the amount of
goodwill accrued upon the Merger is provisionally estimated to be ¥27,091
million. Such amount is calculated on the assumption NMF will succeed the assets(¥148,870 million in total) and liabilities (¥97,249 million in total) from TOP, theacquiree under such accounting standards, and the acquisition cost of the merger
will be ¥78,713 million (calculated based on the closing price (¥170,700) of theinvestment unit of NMF, the acquirer under such accounting standards, on August
31, 2016, which will be allotted as the consideration for the acquisition). However,Amortization of goodwill
the amount of goodwill is not fixed and is subject to change.
 The amount of amortization of goodwill is estimated to be ¥2,624 million, whichis calculated by totaling (i) amortization expenses (¥1,946 million) for the goodwill
held by NMF (¥76,252 million) as of the end of the first fiscal period, and (ii)amortization expenses (¥677 million) for the goodwill accrued upon the Merger(¥27,091 million).
 Amortization of goodwill is an item that causes a difference between accounting
and tax treatment and may result in the imposition of corporation tax or other tax.
NMF intends to make distributions in excess of net income for the purpose of tax
relief during the goodwill amortization period, and it is expected that NMF will be3

Item

Non-operating expenses

Interest-bearing liabilities

Investment units

Distributions per unit

Distribution in excess of
net income per unit

Assumption
able to avoid such taxation.
 Interest expenses and other borrowing related expenses are estimated to be ¥2,727
million.
 As of today, the outstanding interest-bearing liabilities of NMF are ¥499,889
million, consisting of the amount of ¥467,389 million of outstanding borrowings
and the amount of ¥32,500 million of investment corporation bonds (including
short-term investment corporation bonds).
 Of the portions of the borrowings (¥49,012 million) that will become due andpayable by the end of the fiscal period ending February 28, 2017 (3rd FiscalPeriod), it is assumed that NMF will repay ¥42 million by using cash on hand, andrefinance the entire remaining amount through borrowings. While a total of 5,000
million yen of the investment corporation bonds will reach maturity in the fiscal
period ending February 28, 2017 (3rd Fiscal Period), it is assumed NMF willredeem such bonds through the funds raised by borrowings or other funding
methods.
 It is assumed that, through the end of the Fiscal Period Ending February 28, 2017
(3rd Fiscal Period), there will be no changes in the amount of the outstanding
interest-bearing liabilities, other than as stated above.
 NMF assumes that there will be no changes in the number of investment units
issued and outstanding as of the date of this report of 4,183,130 units and there
will be no additional issuance of new investment units by the end of the fiscal
period ending February 28, 2017 (3rd Fiscal Period).
 Distribution per unit is calculated according to the NMF’s distribution policy
outlined in its Articles of Incorporation.
 Out of the reserve for temporary difference adjustments accrued up to thepresent, the amount eliminated in the fiscal period ending February 28, 2017 (3rdFiscal Period) will be reversed from retained earnings at end of period.
 Assuming there is no change, in the fiscal period ending February 28, 2017 (3rdFiscal Period), to the deferred loss on hedge of the interest rate swap, which
continues from the fiscal period ended February 29, 2016 (First Fiscal Period), in
respect of its transactions in the amount of ¥2,867 million as the valuation andconversion adjustments, etc. while expecting ¥412 million for the deferred loss onhedge of the interest rate swap succeeded from TOP upon the Merger,distributions per unit (excluding distribution in excess of net income per unit) is
calculated by subtracting the amount from the distributable amount.
 Distribution per unit may vary due to various factors, including changes in theinvestment portfolio, changes in rent income caused by tenant replacements, andunforeseen repairs.
 The amount of distribution in excess of net income is estimated on theassumption NMF will distribute the amount obtained by deducting the valuationand conversion adjustments, etc. from the total of the difference between
accounting and tax treatment and the distributable amount as reserve fortemporary difference adjustments for the purpose of tax relief. In order to alleviate
the impact of the amortization of goodwill and other merger related expenses (the“Merger Expenses”) and the reserve for temporary difference adjustments ondistributions, the estimate is based on the assumption that, if the total amount of
the difference between accounting and tax treatment for the relevant fiscal period
is less than the total amount of the Merger Expenses and the reversal of reserve
for temporary difference adjustments, NMF will make a distribution in excess ofnet income, up to the amount equivalent to the portion of the gap, within the limit
as prescribed by the regulations of the Investment Trusts Association, Japan (the“Investment Trusts Association Japan Regulations”)(the amount equivalent to60/100 of the total amount of the depreciation and amortization recorded as ofthe end of the relevant fiscal period less the total amount of the depreciation and4

Item

OthersAssumption
amortization recorded as of the end of the immediately preceding fiscal period)
with respect to the other distribution in excess of net income.
 In the current forecast, distribution in excess of net income per unit for the Fiscal
Period Ending February 28, 2017 (3rd Fiscal Period) is expected to be ¥1,055, outof which the distribution of the reserve for temporary difference adjustments isexpected to be ¥683 and the other distribution in excess of net income ¥372.
 It is assumed that there will be no amendments in legislation, taxation, accounting
principles, listing requirements, the Investment Trusts Association Japan
Regulations or other laws or regulations that would affect the above forecasts.
 It is assumed that there will be no material changes in general economic conditions
and real estate markets.

5