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

[For Translation Purposes Only]

March 8, 2022

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]

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)
PRIME URBAN Higashi Nakano	Residential	March 8,	March 15,	Undisclosed	7,020
Court (Note 2)	2022	2022	(Note 3)

(Note 1)The amounts stated exclude acquisition-related costs, property tax, city planning tax, consumption tax and local consumption tax. (Note 2)The name of the property is scheduled to be changed to "PRIME URBAN Higashi Nakano Court" from the present name of

"ACOLT Shinjuku Ochiai" after the Fund's acquisition of the property. (Note 3)Undisclosed, since a consent has not been obtained from the seller.

(Note 4)There is no brokerage involved in the acquisition of the asset to be Acquired.

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
Property			Transfer	Value
Use	Date of	Date of	Transferee	(¥ million)
Name	Price	(¥ million)
	Agreement	Disposition		(Note 4)
			(¥ million)	(Note 3)
			September 15,
			2022		2,260	1,835	424
NRE Higashi-			(Quasi co-ownership
	March 8,	of 50%)	Undisclosed
nihonbashi	Office
2022	March 15,	(Note 2)
Building
		2023		2,260	1,822	437
			(Quasi co-ownership
			of 50%)

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

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and local consumption tax, etc.

(Note 2)Undisclosed, since a consent has not obtained from the transferee. Note that the purchaser is the same as the seller of the Asset to be acquired.

(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.

(Note 5) There is no brokerage involved in the disposition of the asset to be Disposed of.

(Note 6) As of the date of this document, the asset to be Disposed of is an actual real estate, however, through consultation with the transferee, NMF will conclude the trust agreement on the same date of the scheduled date of disposition and transfer the asset to be Disposed of as a trust beneficiary right. The same shall be applied throughout this document.

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. The Transaction is a replacement transaction by mutual trading with a business company and is a crossover deal that crosses over sectors, taking advantage of the strengths of a diversified type REIT. The property to be acquired is very rare because it is located in a good area and is a large-scale residential facility with a substantial number of large units (two-bedroom and three-bedroom units, etc.), demand for which is rising further due to the COVID-19 pandemic. In addition, there is no significant future concern about the Asset to be Disposed of being a candidate for sale through replacement in an external growth strategy. The Fund judged that investors' interests can be improved by replacing it with an excellent residential facility and securing profits on sale, and determined the Asset to be Disposed of as a result of negotiation with the Counterparty. The Transaction was realized by a solid relationship between the Fund as a comprehensive developer group company and the business company, and will also improve the portfolio quality mentioned below through asset replacement with the Transaction. Please refer to 3. Summary of Assets to Be Acquired/Disposed of below for details of the reasons for Assets to be Acquired and the reasons for Assets to be Disposed of.

Note that, in line with the sale of NRE Higashi-nihonbashi Building, profits on sale of 398 million yen and 414 million yen are expected to be realized in the fiscal periods ending February 28, 2023 (September 1, 2022 to February 28, 2023) and August 31, 2023 (March 1, 2023 to August 31, 2023), respectively. The profits on sale will be directed to internal reserves, with the intention of raising the distribution level or stabilizing future distributions, while considering the future management status of the existing portfolio.

Reference: The portfolio indicators of the properties

	NRE Higashi-nihonbashi Building	PRIME URBAN Higashi Nakano Court
	(Asset to be Disposed of)	(Asset to be Acquired)
NOI yield	4.1%(Note 1)	4.4%(Note 2)
NOI yield after depreciation	3.0%(Note 3)	3.7%(Note 4)
Asset age(Note 5)	32.4 years	12.9 years

(Note 1) The value entered is calculated by dividing the total NOI, 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 dividing the NOI based on the direct capitalization approach recorded in the appraisal summary by the anticipated acquisition price. In addition, the value is rounded to the first decimal place.

(Note 3) 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 4) 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

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Acquisition Price. The value is rounded to the first decimal place.

(Note 5) 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.

	January 27, 2022	After asset replacement
	After asset replacement already
	announced this time
	announced
Greater Tokyo Area	83.7%	83.8%

3. Summary of Assets to Be Acquired/Disposed of

(1)Summary of Asset to Be Acquired

PRIME URBAN Higashi Nakano Court

＜Reasons for the Acquisition＞

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

・The Asset is an eight-minute walk from Higashi-Nakano Station on the JR Chuo and Sobu Lines, a twelve- minute walk from Higashi-Nakano Station on the Toei Oedo Line and an eight-minute walk from Ochiai Station on the Tokyo Metro Tozai Line. Accordingly, with access to three stations on several lines, the Asset is excellent for convenient transportation to business and commercial areas such as Shinjuku, Roppongi, Iidabashi and Otemachi.

• The Asset is highly convenient for daily living because there are supermarkets and other stores in the surrounding area and various retail facilities near Higashi-Nakano and Ochiai Stations.

・The unit plan of the Asset consists of a studio or studio with kitchenette type (25.24 to 27.67 m2), a one- bedroom type (44.31 to 46.42 m2), a two-bedroom type (55.41 to 68.83 m2) and a three-bedroom type (82.92 to 104.54 m2). Therefore, stable demand can be expected from single person, DINKs and family households who commute to major business areas in Tokyo.

Property Name	PRIME URBAN Higashi Nakano Court
Type of Asset	Real estate
Location			Registry	4-9-5,4-9-4Kita-Shinjuku, Shinjuku Ward, Tokyo
(Note 1)
		Street	4-9-12Kita-Shinjuku, Shinjuku Ward, Tokyo
				8-minute walk from Higashi-Nakano Station on the JR Chuo and Sobu Lines
Access		12-minute walk from Higashi-Nakano Station on the Toei Oedo Line
				8-minute walk from Ochiai Station on the Tokyo Metro Tozai Line
Completion Date (Note 1)	April 20, 2009
Use (Note 1)	Apartment
Structure (Note 1)	Ten-floor steel reinforced concrete structure with flat roof
Leasable Unit	173
Architect	Kume Sekkei Co., Ltd.
Builder		Consortium of Toda Corporation and Keio Construction Co., Ltd.
Building Inspection Agency	The Building Center of Japan
Area (Note 1)		Land	3,025.78 m2
Floor Area	9,235.40 m2
Type of		Land	Ownership
Ownership		Building	Ownership

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Building Coverage Ratio	80% (Note 2)
Floor Area Ratio	316.4%(Note 3)
	Collateral	None
Property Management	Mitsui Fudosan Residential Lease Co., Ltd.
Company (Note 4)
Master Leasing Company	Mitsui Fudosan Residential Lease Co., Ltd.
Type of Master Leasing	Pass through
	(Note 5)
Seismic Risk (PML)(Note 6)	5.87% (Based on the Earthquake PML Appraisal Report as of February 2022 by
Sompo Risk Management Inc.)
	Notes	－
	Anticipated	¥7,020 million
Acquisition Price
Appraisal Value and Method	¥8,020 million (Based on the	capitalization approach as of February 1, 2022)
(Appraiser: Daiwa Real Estate Appraisal Co., Ltd.)
Appraisal NOI (Note 7)	¥309 million
Leasing Status (As of February 28, 2022) (Note 8)
Total Number of Tenants	1
	Total Rental	¥349 million (Including common area management fee)
Income(Annual)
Security Deposits	¥493 million
Occupancy Rate	98.7%
Total Leased Floor Space	8,253.56 m2
Total Leasable Floor Space	8,361.15 m2
Historical Occupancy Rates	January		January		January		January	January
2018		2019		2020		2021	2022
	(Note 9)
	96.4%		98.8%		97.5%		97.9%	96.5%
(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)	Floor Area
	While the building coverage ratio for the category I residential zone is 60% in principle, the applied building coverage
	ratio is 80% because the Asset is a certified fireproof building in a fire prevention zone and is located at a corner
	designated by the Specified Administrative Agency.
(Note 3) Building Coverage Ratio
	The designated floor area ratio for the land of the Asset is the category I residential zone of 400%. However, a value
	multiplied by the ratio stipulated for each specific-use district (forty-hundredths) is applied to the road on the western
	side (7.91m) because it falls under road width restrictions.
(Note 4) Property Management Company
	Refers to the property management company that is scheduled to be appointed after acquisition.
(Note 5)	Master Lease
	The master lease scheme that is scheduled to apply after the Acquisition is stated. Note that "pass-through" is a scheme
	where the master lease company pays the same amount as the rent based on the lease agreement with end tenants.
(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 February 1, 2022 as the appraisal date.
(Note 8)	Leasing Status
	"Total Number of Tenants" is stated as "1" because, for the purpose of subleasing, all of the rooms are leased as a
	block, and then the lessee under such lease agreement (the master lease agreement) sub-leases each of the rooms to

the end tenants.

"Total Rental Income" is the amount obtained by multiplying by 12 the monthly rent and common area charges stated in the lease agreements by the total number of end tenants as of February 28, 2022, actually leasing space in the building of the Asset (rounded down to the nearest million yen). The figure does not include any other incidental rent that may be agreed upon in connection with the said lease agreements, such as parking fees, signboard fees and warehouse fees.

• Security Deposits" indicates the amount of security and other deposits specified in the aforementioned lease agreements (rounded down to the nearest million yen).

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"Occupancy Rate" is calculated by dividing Total Leased Floor Space as of February 28, 2022, by Total Leasable Floor Space.

"Total Leased Floor Space" indicates the total floor space leased to end tenants as of February 28, 2022.

"Total Leasable Floor Space" is the total floor space of offices, retail facilities, logistics facilities, residential facilities, hotels, etc. within the Asset that can be leased as of February 28, 2022 (if the common area, etc. is leased, the floor space thereof is included).

(Note 9) Historical Occupancy Rates

The historical occupancy rates are based on the information from the seller.

(2)Summary of Asset to Be Disposed of

NRE Higashi-nihonbashi Building

＜Reasons for the Disposition＞

In addition to the acquisition of an excellent property through mutual trading, the Fund decided on the Disposition because it judged that securing profits on sale and improving the portfolio quality with the Disposition will contribute to investors' interests over the medium to long term.

＜Summary of the Asset to be Disposed of＞

Property Name	NRE Higashi-nihonbashi Building
Type of Asset	Real estate
Location		Registry	1-118-1Higashi-nihonbashi,Chuo-ku, Tokyo
(Note 1)		Street	1-1-7Higashi-nihonbashi,Chuo-ku, Tokyo
			2-minute walk from Higashi-nihonbashi Station on the Toei Asakusa
	Access	Line
	3-minute walk from Bakuro-yokoyama Station on the Toei Shinjuku Line
			8-minute walk from Bakurocho Station on the JR Sobu Line
Completion Date (Note 1)	September 28, 1990
	Use (Note 1)	Office and warehouse
Structure (Note 1)	Nine-floor steel framed steel reinforced concrete structure with flat roof
and one underground level
Area (Note 1)		Land	918.56 m2 (Note 2)
	Floor Area	6,704.53 m2
Type of		Land	Ownership
Ownership		Building	Ownership
Building Coverage Ratio	100% (Note 3)
Floor Area Ratio	700%
	Collateral	None
Property Management Company	Nomura Real Estate Development Co., Ltd.
Master Leasing Company	-
Type of Master Leasing	-
Seismic Risk (PML)(Note 4)	4.95% (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., is considered a related party under Investment
	Notes	Trust Act.
			・ Tokyo has a sectional surface right on a portion of the land of	the
			Asset as the superficiary for the purpose of owning subway facilities.
Acquisition Price	¥3,570 million
Scheduled Transfer Price	¥4,520 million
Book Value(Note 5)	¥3,657 million
	Difference	¥862 million

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