Nomura Real Estate Master Fund : (Reference) SUMMARY OF FINANCIAL RESULTS (REIT)

(Reference) SUMMARY OF FINANCIAL RESULTS (REIT)

For the 12th Fiscal Period Ended August 31, 2021

				October 13, 2021
REIT securities issuer:	Nomura Real Estate Master Fund, Inc. ("NMF")	Stock exchange listing:	Tokyo Stock Exchange
Securities code:	3462
Representative:	Shuhei Yoshida, Executive Director	URL: https://www.nre-mf.co.jp/en/
Asset Management Company:	Nomura Real Estate Asset Management Co., Ltd.
Representative:	Koki Miura, President and Chief Executive Officer
Inquiries:	Hiroshi Ishigooka, Head of NMF Investment Management Group	TEL:	[phone]

Scheduled date of filing of securities report:		November 29, 2021
Scheduled date of commencement of distribution payout:	November 19, 2021
Preparation of supplementary materials on financial results:	Yes
Holding of briefing session on financial results:		Yes
					[Amounts less than one million yen are truncated]
1. Financial Results for the 12th Fiscal Period (from March 1, 2021 to August 31, 2021)
(1) Operating Results			[ figures are the rate of increase (decrease) compared with the previous period]
	Operating revenues	Operating profit	Ordinary income	Net income
Period ended	million yen	%	million yen	%	million yen	%	million yen	%
August 31, 2021	37,519	(1.4)	14,741	(4.1)	12,435	(4.7)	12,434	(4.5)
February 28, 2021	38,064	1.3	15,370	1.0	13,048	1.9	13,016	1.7
	Net income	Return on unitholders'	Ratio of	Ratio of
	ordinary income	ordinary income
	per unit	equity
	to total assets	to operating revenues
Period ended		yen		%		%		%
August 31, 2021	2,637		2.0		1.0	33.1
February 28, 2021	2,760		2.1		1.1	34.3
(2) Distributions
	Distribution	Total	Distribution	Total	Distribution	Total
	per unit	distributions	per unit	distributions		Ratio of
	(excluding	(excluding	in excess of	distributions	(including	(including	Distribution
	distributions to
	distribution	distribution	net income per	in excess of	distribution in	distribution	payout ratio
	net assets
	in excess of net	in excess of	unit	net income	excess of net	in excess of
	income)	net income)			income)	net income)
Period ended	yen	million yen	yen	million yen	yen	million yen	%	%
August 31, 2021	2,637	12,433	651	3,069	3,288	15,503	99.9	2.0
February 28, 2021	2,761	13,018	569	2,682	3,330	15,701	100.0	2.0

(Note 1) Of the ¥569 distribution in excess of net income per unit in the fiscal period ended February 28, 2021, ¥374 is a distribution of the allowance for temporary difference adjustments and ¥195 is other distributions in excess of net income. Furthermore, the ratio of decreasing surplus is 0.002. Of the ¥651 distribution in excess of net income per unit in the fiscal period ended August 31, 2021, ¥387 is a distribution of the allowance for temporary difference adjustments and ¥264 is other distributions in excess of net income. Furthermore, the ratio of decreasing surplus is 0.003.

(Note 2) Distribution Payout Ratio is calculated using the below formula and truncated at the first decimal place.

Distribution Payout Ratio = Total Distributions (excluding distribution in excess of Net Income) / Net Income × 100 (Note 3) Ratio of Distributions to Net Assets is calculated using the below formula and truncated at the first decimal place.

Ratio of Distributions to Net Assets = Distribution Per Unit (excluding distribution in excess of Net Income) / {(Net Assets per Unit at the beginning of the fiscal period + Net Assets per Unit at the end of the fiscal period) / 2} × 100

(3) Financial Position

	Total assets	Net assets	Net assets to total assets	Net assets per unit
Period ended	million yen	million yen	%	yen
August 31, 2021	1,192,507	619,901	52.0	131,468
February 28, 2021	1,196,357	623,014	52.1	132,129

(4) Status of Cash Flows

	Net cash	Net cash	Net cash	Cash and
	provided by (used in)	provided by (used in)	provided by (used in)	cash equivalents
	operating activities	investing activities	financing activities	at end of period
Period ended	million yen	million yen	million yen	million yen
August 31, 2021	21,261	(6,251)	(15,739)	63,111
February 28, 2021	22,057	(17,701)	(15,681)	63,840

2. Earnings Forecasts for the 13th Fiscal Period (from September 1, 2021 to February 28, 2022) and the 14th Fiscal Period (from March 1, 2022 to August 31, 2022)

[

figures

are the

ratio of

increase (decrease)

compared with

the previous period]

Distribution

Distribution

Distribution

Operating

per unit

per unit

in excess of net

Operating profit

Ordinary income

Net income

(excluding

(including

revenues

income per

distribution

distribution

in excess of

unit

in excess of net

net income)

income)

Period ending

million yen

%

mllion yen

%

million yen

%

million yen

%

yen

yen

yen

February 28, 2022

37,466

(0.1)

14,812

0.5

12,596

1.3

12,595

1.3

2,669

558

3,227

August 31, 2022

37,833

1.0

14,861

0.3

12,667

0.6

12,666

0.6

2,685

557

3,242

(Reference) Forecasted net income per unit

For the fiscal period ending February 28, 2022: ¥2,671

For the fiscal period ending August 31, 2022: ¥2,686

*Other

(1) Changes in Accounting Policies, Changes in Accounting Estimates and Retrospective Restatements

① Changes in accounting policies accompanying amendments to accounting standards, etc.:

None

② Changes in accounting policies other than those in

①:

None

③ Changes in accounting estimates:

None

④ Retrospective restatements:

None

1. Number of Investment Units Issued and Treasury Investment Units

• Number of investment units issued (including treasury investment units)

As of August 31, 2021:	4,715,200 units
As of February 28, 2021:	4,715,200 units

• Number of treasury investment units

As of August 31, 2021:	- units
As of February 28, 2021:	- units

(Note) For the number of investment units used as the basis for calculation of net income per unit, please refer to "Notes on Per Unit Information" on page 28.

• This summary of financial results is not subject to audit procedures by a certified public accountant or an audit firm.
• Forward-lookingstatements

The earnings forecasts and other forward-looking statements contained in this document are based on information currently available to and certain assumptions deemed reasonable by NMF. Accordingly, actual earnings performance and other results may differ materially due to a variety of factors. Furthermore, such forward-looking statements do not constitute a guarantee of future distributions. For more information on the assumptions underlying forward-looking statements and the use of such statements, please refer to "Assumptions Underlying Earnings Forecasts for the Fiscal Period Ending February 28, 2022 (13th fiscal

period: September 1, 2021 to February 28, 2022) and the Fiscal Period Ending August 31, 2022 (14th fiscal period: March 1, 2022 to August 31 2022) " on page 7.

This is an English language translation of the original Japanese announcement of the financial statements ("Kessan Tanshin"). This translation is provided for information purpose only. Should there be any discrepancy between this translation and the Japanese original, the Japanese original shall prevail.

			Attachment
		Table of Contents
1.	Management Status .......................................................................	2
	(1)	Management Status ......................................................................	2
2.	Financial Statements .....................................................................	10
	(1)	Balance Sheet ..........................................................................	10
	(2)	Statement of Income and Retained Earnings ..................................................	13
	(3)	Statement of Changes in Net Assets .........................................................	14
	(4)	Statement of Cash Distributions ............................................................	18
	(5)	Statement of Cash Flows .................................................................	19
	(6)	Notes Concerning the Going Concern Assumption .............................................	20
	(7)	Notes Concerning Significant Accounting Policies ..............................................	20
	(8)	Notes to Financial Statements .............................................................	23
	(9)	Increase (Decrease) in Total Number of Investment Units Issued and Outstanding .....................	29
3. Reference Information......................................................................	31
	(1)	Investment Status .......................................................................	31
	(2)	Investment Assets ......................................................................	32

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Nomura Real Estate Master Fund, Inc. (3462)

Financial Results for the 12th Fiscal Period Ended August 31, 2021

1. Management Status

1. Management Status

• Outline of Fiscal Period under Review

NMF's basic policy is to manage its assets mainly as investments in real estate, etc. (meaning the assets specified in the Ordinance for Enforcement of the Act on Investment Trusts and Investment Corporations (Prime Minister's Office Ordinance No. 129 of 2000, including subsequent amendments)), specifically real estate, leaseholds of real estate, surface rights, and the beneficial interests of trusts formed by entrustment of only these assets, to secure stable income over the medium to long term and steady growth of assets under management (Note). In order to realize this basic policy, NMF adopts an investment strategy that centers on the Greater Tokyo area (Tokyo, Kanagawa, Chiba and Saitama prefectures), which offers strong tenant demand, while also considering regional diversification through investment in all of Japan's three major metropolitan areas and other major cities. By combining the "diversified type strategy" which enables sustainable growth by investing in a variety of facilities, such as offices, retail facilities, logistics facilities, residential facilities and other facilities, the "large-scale REIT strategy" which increases portfolio stability through property and tenant diversification, the "portfolio centered on the Greater Tokyo area" which is expected to improve cash flow stability through investment area diversification, and a strong property supply and operation support system based on the "leasing value chain" with the Sponsor, Nomura Real Estate Development Co. Ltd. which is one of the group company of the Nomura Real Estate Group (Nomura Real Estate Holdings, Inc. and its consolidated subsidiaries etc. The same shall apply hereinafter.), NMF aims to increase unitholder value by securing stable income over the medium to long term and the steady growth of assets under management.

(Note) Throughout this document, "assets under management" refers to assets that belong to NMF.

Furthermore, "Real estate, etc." refers to assets defined in Article 29, Paragraph 1 (1) or (2) of NMF's Articles of Incorporation, and "real estate backed securities" refers to assets defined in Article 29, Paragraph 1 (3) of NMF's Articles of Incorporation ("Real estate, etc." and "real estate-backed securities" are hereinafter collectively referred to as "real estate-related assets"). Real estate and the underlying real estate of real estate-related assets are together referred to as the "real estate under management" or "properties."

1. Investment Environment (Japanese Economy)

The Japanese economy during the fiscal period under review continued to see an improvement in business conditions, especially in manufacturing industries, as exports remained robust. However, the plunge in personal consumption caused by the repeated spread of COVID-19 put a damper on economic recovery.

(Real Estate Leasing Market)

As was the case in the previous fiscal period, the situation in the real estate leasing market during the fiscal period under review varied according to the sector.

The office sector continued to see a higher vacancy rate and lower advertised rents in Tokyo as in the previous fiscal period, affected by decreased office demand resulting from concern over an economic downturn due to the impact of COVID-19 and the expansion of teleworking. The vacancy rate increased in regional cities as well. However, the rates of increase were generally moderate due in part to low teleworking rates compared to Tokyo, resulting in a limited decline in advertised rents.

In the retail facility sector, business continued to be robust at retailers, especially supermarkets and drug stores. Meanwhile, sales remained weak particularly in the restaurant industry due to the spread of COVID-19 and the subsequent declaration of a state of emergency.

In the logistics sector, overall performance was firm as demand from third-party logistics(Note) providers, NMF's main logistics tenants, and e-commerce-related operators remained strong. In the Greater Tokyo area and the Kinki area, strong demand helped keep the vacancy rate low despite a continued large supply of logistics facilities.

(Note) Third-party logistics (3PL) refers to logistics services outsourced by shippers for part or all of their logistics functions.

In the rental apartment sector, Tokyo continued to maintain a high occupancy rate, but an overall net outflow of people has been recorded since July 2020, despite a net inflow recorded in March and April 2021,

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Nomura Real Estate Master Fund, Inc. (3462)

Financial Results for the 12th Fiscal Period Ended August 31, 2021

with more people moving out due to the expansion of teleworking and less people moving in due to deterioration in employment conditions.

In the hotel sector, the occupancy rate also remained low following the spread of COVID-19.

(Real Estate Transaction Market)

The trading volume of commercial real estate for the first half of 2021 was almost flat year on year. While some companies sold properties after their financial performance deteriorated due to the COVID-19 pandemic, there continued to be large-scale acquisitions by foreign capital.

(J-REIT Market)

Although the TSE REIT Index fell significantly due to the impact of COVID-19, closing at 1,145.53 points on March 19, 2020, it was subsequently on a recovery trend following the global trend of monetary easing and economic recovery. The Index remained on a rising trend during the fiscal period under review. It reached 2,142.91 points on August 31, 2021, showing firm trends.

B. Management Performance

Under the circumstances described above in A. Investment Environment, during the fiscal period under review (12th fiscal period), NMF acquired 1 property (Universal CityWalk Osaka (Land) (Additional acquisition); acquisition price: ¥2,139 million). As a result, at the end of the fiscal period under review (as of August 31, 2021), NMF held 299 properties (total acquisition price: ¥1,068,409 million), the ratio of investment in the Greater Tokyo area was 82.8%, the gross leasable area of the portfolio was 2,106,273.85m2 , and the portfolio remained highly diversified.

In terms of property and facility management, as described above in A. Investment Environment, the impact of the renewed spread of COVID-19 infections varies according to sector. Although NMF offered rent reduction/exemption (¥280 million) and other relief to support some of its retail tenants that closed or took other measures in response to the renewed spread of COVID-19 infections and the declaration of the second state of emergency, the impact on entire portfolio revenue was limited. Furthermore, the office sector and the rental apartment sector saw a rise in the vacancy rate and a decrease in advertised rents alongside other moves in the market as a whole. While properties held by NMF were impacted by an increase in the number of contract terminations and a longer period of tenant recruitment, NMF continued to manage the properties with an eye to securing stable revenues through internal growth, with appropriate and flexible leasing activity based on market trends as well as rent increases upon tenant change or contract renewal. As a result, NMF maintained a high occupancy rate as of the end of the fiscal period under review at 98.1%, down 0.7% from the previous fiscal period.

In February 2019, NMF set ESG materiality issues that are of high importance to be addressed by NMF in order to contribute to the realization of a sustainable society by resolving social issues through its business activities. Based on the policies, targets and key performance indicators (KPI) set for each materiality, NMF engages in investment in environmentally friendly properties while working to enhance the efficiency of its energy use by, for example, introducing eco-friendly and energy-saving countermeasures at its properties, striving for building a portfolio with low environmental impact. NMF promotes acquisition of Green certification (Note2) under such policy. As of the end of the fiscal period under review, NMF has acquired DBJ Green Building certification for a total of 83 properties and BELS certification for a total of 32 properties. As a result, the percentage of properties (Note3) with DBJ Green Building certification stood at 66.5 and that of BELS certification stood at 24.7.

Furthermore, as of the end of the fiscal period under review, the progress toward the newly established KPI, "Achieving 70 of green certification with three stars or more or equivalent up to fiscal year 2030", reached at 56.3(Note4).

In addition, based on the recommendations of the Task Force on Climate-related Financial Disclosure ("TCFD") for which Nomura Real Estate Asset Management Co., Ltd. ("NREAM"), the asset management company to which NMF entrusts management of its assets, expressed its support on July 14, 2020, NMF summarized policies and initiatives of NMF and NREAM according to the four disclosure items recommended by the TCFD-Governance, Strategy, Risk Management, and Metrics and Targets-and disclosed them on NMF's official website on February 26, 2021. Note that in analyzing and verifying the financial impact in Strategy, NMF first assessed the risks and opportunities that climate change risks bring to

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