Nomura Real Estate Master Fund : Notice Concerning Property Acquisition and Disposition

[For Translation Purposes Only]

October 13, 2021

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.

Koki Miura, President & Chief Executive Officer

Inquiries:

Hiroshi Ishigooka

Executive Officer

Head of NMF Investment Management Group

TEL [phone] [e-mail]

Notice Concerning Property Acquisition and Disposition

Nomura Real Estate Master Fund, Inc. ("NMF" or the "Fund") announces the decision made today by Nomura Real Estate Asset Management Co., Ltd., a licensed asset management company retained by the Fund to provide asset management services, to acquire or dispose of a property (the "Acquisition" or the "Disposition" or collectively the "Transaction"), as described below.

1. Summary of Assets to Be Acquired/Disposed of

(1) Summary of Asset to Be Acquired

		Date of	Scheduled		Anticipated
			Acquisition
Property Name	Use	Purchase and	Date of	Seller
Price (million)
		Sale Agreement	Acquisition
			(Note 1)
				Nomura Real
Landport Ome Ⅲ	Logistics	October 13,	January 6,	Estate	17,000
2021	2022	Development,
				Co., Ltd.

(Note 1)The amounts stated exclude acquisition-related costs, property tax, city planning tax, consumption tax and local consumption tax. (Note 2)There is no brokerage involved in the acquisition of the asset to be Acquired.

(Note 3)The asset to be Acquired are a trust beneficial interest in trust of real estate.

The above property is referred to hereinafter as the "Asset to be Acquired."

(2) Summary of Asset to Be Disposed of

		Scheduled	Scheduled		Scheduled	Book	Difference
			Transfer	Value
Property Name	Use	Date of	Date of	Transferee	(¥ million)
Price	(¥ million)
		Agreement	Disposition		(Note 4)
			(¥ million)	(Note 3)
NMF Utsunomiya		October 14,	October 29,	Undisclo
Office	-sed	2,720	2,445	274
Building	2021	2021
	(Note 2)

(Note 1)The amounts stated exclude adjustment amounts of both property taxes and city planning taxes, as well as consumption taxes and local consumption tax, etc.

(Note 2)Undisclosed, since a consent has not obtained from the transferee. (Note 3) Anticipated book value at the date of disposition.

(Note 4) This is only a reference value which is the difference between the scheduled transfer price and the anticipated book value, therefore, it is different from gain or loss on sale.

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(Note 5)The brokerage involved in the disposition of the asset to be Disposed of is not considered a related party under the Act on Investment Trusts and Investment Corporations ("Investment Trust Act").

(Note 6)The asset to be Disposed of are a trust beneficial interest in trust of real estate.

The above property is referred to hereinafter as the "Asset to be Disposed of." The Asset to be Acquired and Asset to be Disposed of may be separately referred to as the "Asset."

2. Reasons for the Transaction

The Fund determined that the Transaction would help secure stable income and steady growth of the Fund's portfolio over the medium to long term, in line with the asset management objectives and policies specified in the Fund's Articles of Incorporation. Furthermore, replacement of assets in the Fund's portfolio in accordance with the Transaction will improve the quality of the portfolio as follows.

• Improved NOI yield after depreciation
• Improved asset age
• Improved percentage(Note) of properties with Green certification for materiality (three stars or more or equivalent)
• Expanded investment ratio in logistics facilities, which is a stable sector

(Note) Green certification (with three stars or more or equivalent to) refers to DBJ Green Building Certification (three stars or more) or BELS Certification (three stars or more), or CASBEE for Real Estate (B+ or higher)

The portfolio indicators of the properties are as follows.

	NMF Utsunomiya Building	Landport Ome III
	(Asset to be Disposed of)	(Asset to be Acquired)
NOI yield after depreciation	2.9%(Note 1)	3.7%(Note 2)
Asset age(Note 3)	21.8 years	1.1 years
Green certification status (Note 4)	-	DBJ Green Building Certification: ★★★★
BELS Certification: ★★★★★

(Note 1) The value entered is calculated by dividing the total NOI after depreciation, for the 11th fiscal period ended February 28, 2021 and 12th fiscal period ended August 31, 2021, by the Anticipated Disposition Price. The value is rounded to the first decimal place.

(Note 2) The value entered is calculated by deducting the estimated depreciation value, calculated by the asset management company, from the NOI based on the direct capitalization approach recorded in the appraisal summary, and then dividing by the Anticipated Acquisition Price. The value is rounded to the first decimal place.

(Note 3) The asset age entered is as of the scheduled transfer date for the Asset to be Disposed of and as of the scheduled date of Acquisition for the Asset to be Acquired.

(Note 4) The number of stars entered in the certification is as of today.

Reference: Changes in Portfolio Diversification by Property Type

Retail(Residential areas)	Other 0.5%	Retail (Residential areas) Other 0.5%
5.5%	Hotels	5.4%	Hotels
Retail	Retail
0.6%		0.6%
(Station areas)	(Station areas)
11.4%			11.2%
Residential		Office	Residential	Office
	44.3%	43.5%
18.9%		18.7%
Logistics			Logistics
18.8%			20.1%

End of August 2021	After the Transaction
(Note) Based on the (scheduled) acquisition

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3. Summary of Assets to Be Acquired/Disposed of

(1)Summary of Asset to Be Acquired

Landport Ome Ⅲ

＜Reasons for the Acquisition＞

The main strengths of the Asset to be Acquired are as follows.

• The Asset to be Acquired is in a favorable location allowing for wide-area delivery to the entire Tokyo metropolitan area as it is located approximately 2.9 km from the Ome Interchange on the Ken-O Expressway and close to National Route 16.
• The Asset to be Acquired is located in the Nishi-Tokyo Industrial Park, which is a 10-minute walk from Ozaku Station on the JR Ome Line, the nearest station, so it can operate 24 hours a day, 365 days a year and allows tenants to maintain a favorable employment environment.
• The building is a box-like facility where cars can park at two berths(Note 1) on the north and south sides of the first floor. The interior of the building is equipped with two freight elevators. It offers improved rack storage efficiency(Note 1) by adopting a 10.5 m × 10.5 m grid(Note 1) and a first-floor beam effective height of 7.0 m and a second- and third-floor beam effective height of 5.5 m. In addition to the versatile specifications that ensure high operational efficiency, environmentally friendly LED lighting is adopted in the whole building. Furthermore, it is a logistics facility that pursues optimization and efficiency by adopting a category-wide multi- function(Note 2) that adds functions specific to the target tenant's needs for a mechanized warehouse (first floor weight capacity of 2.0 t/m2, shuttered fire partitions, increased electric power capacity, etc.).

(Note 1) A "berth" is a space where cargo trucks can stop for loading and unloading, a "grid" is a lattice-shaped space formed by pillars and joints, and "rack storage efficiency" refers to the storage efficiency of a rack.

(Note 2) A "category-widemulti-function" refers to a logistics facility which identifies the industry (category) of the target tenant and adds functions specific to the category as standard specifications in the general specifications.

Property Name	Landport Ome Ⅲ
Type of Asset	Trust beneficiary interest in real estate
Trustee		Mitsubishi UFJ Trust and Banking Corporation
Term of Trust Agreement	From January 6, 2022 to November 30, 2035
Location	Registry	2-9-14,Suehiro-cho, Ome City, Tokyo
(Note 1)
		Street	2-9-14,Suehiro-cho, Ome City, Tokyo(Note 2)
Access		2.9 km from the Ome Interchange on the Ken-O Expressway
	10-minute walk from Ozaku Station on the JR Ome Line
Completion Date (Note 1)	November 6, 2020
Use (Note 1)	Warehouse
Structure (Note 1)	RC, Alloy plating copper roofing 3F
Architect	The Zenitaka Corporation, Class 1 Architect Office
Builder		The Zenitaka Corporation
Building Inspection Agency	Japan Constructive Inspect Association
Area (Note 1)		Land	39,747.10 m2
Floor Area	73,087.15 m2 (Note 3)
Type of		Land	Ownership
Ownership	Building	Ownership
Building Coverage Ratio	70% (Note 4)
Floor Area Ratio	200%
Collateral	None
Property Management	Nomura Real Estate Development Co., Ltd.
Nomura Real Estate Partners Co., Ltd.
Company (Note 5)
Master Leasing Company	－
				- 3 -

Type of Master Leasing	－
Seismic Risk (PML)(Note 6)	2.97% (Based on the Earthquake PML Appraisal Report as of September 2021 by
Sompo Risk Management Inc.)
		・The property management companies, Nomura Real Estate Development Co.,
		Ltd. and Nomura Real Estate Partners, Co., Ltd., are each considered a related
	Notes	party under Investment Trust Act.
	・A part of the land of the Asset to be Acquired is the servient land for the easement
		of entering the land for the purpose of the installation and maintenance of electric
		cables.
	Anticipated	¥17,000 million
Acquisition Price
Appraisal Value and Method	¥18,300 million (Based on the capitalization approach as of	September 1, 2021)
(Appraiser: Japan Valuers Co., Ltd.)
Appraisal NOI (Note 7)	¥760 million
Leasing Status (As of October 13, 2021) (Note 8)
Total Number of Tenants	1
Name of Tenants	Not disclosed
	Total Rental	Not disclosed
Income(Annual)
Security Deposits	Not disclosed
Occupancy Rate	100.0%
Total Leased Floor Space	67,353.35 m2
Total Leasable Floor Space	67,353.35 m2
Historical Occupancy Rates	August	August		August		August			August
2017		2018	2019	2020			2021
	(Note 9)
	-			-		-		-		100.0%
(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)	Street Address
	As the Street Address is not indicated officially, the building location in the real estate registry is noted.
(Note 3)	Floor Area
	Area of adjacent building, including parking lots, (5,744.32 m2) is also included.
(Note 4) Building Coverage Ratio
	The Asset to be Acquired is located in an industrial zone where the building coverage ratio is 60% in principle.
	Because the Asset to be Acquired is in a corner lot, however, the applied coverage ratio is 70%.
(Note 5) Property Management Company
	Refers to the property management company that is scheduled to be appointed after acquisition.
(Note 6) PML (Probable Maximum Loss)
	PML shows the probable losses which would be caused by a maximum size earthquake (a great earthquake which is
	expected to occur once every 475 years, or with 10% probability of once every 50 years) during the anticipated period
	of use (i.e. 50 years as expected life time of a standard building), as a percentage of the expected recovery cost to the
	replacement cost.
(Note 7)	Appraisal NOI
	"Appraisal NOI" is the annual NOI (operating income - operating expenses) described in the real estate appraisal report
	with September 1, 2021 as the appraisal date.
(Note 8)	Leasing Status
	"Total Number of Tenants" is the total number of end tenant actually leasing space in the building of the Asset to be
	Acquired as of today.
	"Name of Tenants", "Total Rental Income (annual)" and "Security Deposits" are not disclosed because consent of the
	end tenant to such disclosure has not been obtained.
	"Occupancy Rate" is calculated by dividing Total Leased Floor Space as of today by Total Leasable Floor Space.
	"Total Leased Floor Space" indicates the total floor space leased to end tenants as of today.
	"Total Leasable Floor Space" is the total floor space of	offices, retail facilities, logistics facilities, residential facilities,

hotels, etc. within the Asset to be Acquired that can be leased as of today (If the common area, etc. is leased, the floor space thereof is included).

(Note 9) Historical Occupancy Rates

There are no applicable occupancy rates for the end of August 2020 and before because the building was not yet completed. The historical occupancy rates are based on the information from the seller.

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(2)Summary of Asset to Be Disposed of

NMF Utsunomiya Building

＜Reasons for the Disposition＞

Based on a comprehensive consideration of such factors as the possibility of future competitiveness decline based on the increase in repair costs due to the aging of the building and the future supply situation, as part of asset replacement aimed at improving the quality of the portfolio, it was decided to dispose of the Asset.

＜Summary of the Asset to be	Disposed of＞
Property Name		NMF Utsunomiya Building
Type of Asset		Trust beneficiary interest in real estate
	Trustee		Mitsubishi UFJ Trust and Banking Corporation
Term of Trust Agreement		From July 5, 2001 to July 4, 2031
Location		Registry		2-1-1 (Total 10 parcels of land) Baba-dori,Utsunomiya-shi,	Tochigi
		Prefecture)
(Note 1)
	Street		2-1-1Baba-dori,Utsunomiya-shi, Tochigi Prefecture
					5-minute walk from Tobu-Utsunomiya Station on the Tobu-Utsunomiya
	Access		Line
					15-minute walk from Utsunomiya Station on the JR Utsunomiya Line
Completion Date (Note 1)		December 7, 1999
	Use (Note 1)		Retail,Office
Structure (Note 1)		Ten-floorsteel-framed/steel framed reinforced concrete structure with
	flat roof and two underground levels
Area (Note 1)		Land		1,545,13 m2 (Note 2)
	Floor Area	10,479.63 m2
Type of		Land		Ownership (Partial land lease right)
Ownership		Building		Ownership
Building Coverage Ratio		100% (Note 3)
Floor Area Ratio		600%
	Collateral		None
Property Management Company	Nomura Real Estate Partners Co., Ltd.
Master Leasing Company		-
Type of Master Leasing		-
Seismic Risk (PML)(Note 4)		2.67% (Based on the Earthquake PML Appraisal Report	as of
	September 2021 by Sompo Risk Management Inc.)
					・The property management companies, Nomura Real Estate Partners,
	Notes		Co., Ltd., are each considered a related party under Investment Trust
					Act.
Acquisition Price		¥2,320 million
Scheduled Transfer Price		¥2,720 million
Book Value(Note 5)		¥2,445 million
	Difference		¥274 million
Appraisal Value and Method		¥2,390 million (Based on the capitalization approach as of August 31,
	2021) (Appraiser: The Tanizawa Sogo Appraisal Co., Ltd.)
Appraisal NOI (Note 6)		¥145 million
Leasing Status (As of October 13, 2021) (Note 7)
Total Number of Tenants	32
Total Rental Income(Annual)	¥243 million (Including common area management fee)
Security Deposits	¥185 million
Occupancy Rate	100.0%
Total Leased Floor Space		5,882.20 m2

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