Nomura Real Estate Asset Management Co., Ltd.Nomura Real Estate Asset Management Co., Ltd.

ABOUT US

Fiduciary Duty

Nomura Real Estate Asset Management Co., Ltd. (NREAM) has adopted all the Principles for Customer-Oriented Business Conduct, published by the Financial Services Agency on March 30, 2017 and revised on January 15, 2021. By ensuring fiduciary duty to investors, NREAM aims to be an asset management company that earns and retains the support of all investors.

  • Establish and Publish Policy Regarding Fiduciary Duty to Investors

    To ensure fiduciary duty to investors is applied in practice, NREAM will continually monitor progress, and where necessary, review its Policy Regarding Fiduciary Duty to Investors.

  • Pursue the Best Interests of Investors

    As a financial business operator, NREAM will work in the best interests of investors by maintaining the high standards of expertise and ethical behavior and by providing honest and fair advice.
    NREAM will also strive to make fiduciary duty an integral part of its corporate culture.

    Initiatives to Pursue the Best Interests of Investors
  • Appropriately Manage Conflicts of Interest

    To pursue the best interests of investors in the provision of asset management and other services, NREAM maximizes the expertise and network of the Nomura Real Estate Group. As part of that relationship, NREAM sells and purchases assets, carries out subcontracted business activities and conducts other business transactions with related parties in the Nomura Real Estate Group and other partners, creating the potential for conflicts of interest with investors. Furthermore, NREAM has been entrusted with the management of several investment funds, which also presents the potential for conflicts of interest with investors.
    NREAM is well aware of this aspect of its business. Consequently, NREAM will seek to retain the confidence of investors by putting in place systems to prevent transactions involving conflicts of interest and by appropriately managing any potential conflicts of interest.

    Initiatives to Appropriately Manage Conflicts of Interest
  • Clearly Communicate Fees and Other Charges

    NREAM will work to disclose more information to provide investors with a better understanding of its products and services, including detailed information regarding commissions and charges such as asset management fees paid by investors, as required by law, and information disclosed voluntarily by the Company.
    NREAM has been entrusted to carry out all asset management-related services for Nomura Real Estate Master Fund, Inc. (NMF). Asset management fees received for those services are explained in an easy-to-understand manner on NMF's website.

    Initiatives to Clearly Communicate Fees and Other Charges
  • Disclose Important Information that is Understandable to Investors

    To ensure investor understanding, NREAM will diligently provide easy-to-understand information about the funds it has been entrusted to manage and other financial products and services.
    Important information related to the operation of NMF is disclosed in a timely and understandable manner on NMF's website.

    Initiatives to Disclose Important Information that is Understandable to Investors
  • Provide Services Suitable for Each Investor

    NREAM will endeavor to understand the needs of investors and develop products and services and provide asset management services tailored to those needs.
    NREAM is committed to appropriately providing products and services upon considering the risks and complexity of such products and services and the attributes of investors.
    ※NREAM currently does not sell, recommend or otherwise handle packages of multiple financial products/services.

  • Create a Framework to Appropriately Motivate Employees to Fulfill Their Fiduciary Duties

    To ensure employees pursue the best interests of investors and to appropriately manage conflicts of interest, NREAM is raising awareness about compliance and establishing an investment management approach that puts fiduciary duty.

    Specifically, in principle, NREAM develops a compliance program each year, and based on that program, implements compliance training and other measures to raise awareness about compliance.
    As part of efforts to thoroughly establish a compliance mindset, NREAM has also developed a Compliance Manual for all employees and executives containing concrete advice about how to put compliance into practice.

    In entrusted fund management, NREAM strives to conduct asset management that puts even greater emphasis on returns for investors.
    Specifically, NMF revised its asset management fee structure in September 2017, creating a closer link between fees and investor returns. These changes to fee structure are designed to motivate employees to pursue the best interests of investors.

    Create a Framework to Appropriately Motivate Employees to Fulfill Their Fiduciary Duties

Enacted March 15, 2018
Revised June 24, 2021

As a financial business operator, Nomura Real Estate Asset Management Co., Ltd. (NREAM) strives to heighten professional competencies of its executives in part through human resource development initiatives. To that end, we encourage our executives and employees to gain professional qualifications such as those of Real Estate Transaction Agent certification and Association for Real Estate Securitization (ARES) Certified Master (ACM), and accordingly cover costs associated particularly with such studies, testing and maintaining qualifications.
We also hold regularly scheduled in-house training sessions with the aim of ensuring that business conducted by our executives and employees accords with sound ethical standards.

① Number of qualification holders and their percentage of the workforce (out of 161 employees and officers in Fiscal 2017 and 162 employees and officers in Fiscal 2018)

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Professional qualifications Fiscal 2019
156 executives and employees
Fiscal 2020
170 executives and employees
Fiscal 2021
160 executives and employees
※as of July 1, 2021
Qualification holders * Percentage Qualification holders * Percentage Qualification holders * Percentage
Real Estate Transaction Agent 133 85.3% 145 85.3% 133 83.1%
ARES Certified Master (ACM) 106 67.9% 116 68.2% 114 71.3%
Certified Building Administrator (CBA) 22 14.1% 21 12.4% 22 13.8%
Chartered Member of the Securities Analysts Association of Japan (CMA) 13 8.3% 14 8.2% 12 7.5%
Real Estate Consulting Master 6 3.8% 6 3.5% 6 3.8%
First-class Architect 7 4.5% 7 4.1% 6 3.8%
Real Estate Appraiser 4 2.6% 4 2.4% 3 1.9%
Logistics Operator, grade 3 8 5.1% 7 4.1% 6 3.8%
Licensed Strata Management Consultant 2 1.3% 3 1.8% 1 0.6%
Licensed Representative of Condominium Management Company 2 1.3% 2 1.2% 1 0.6%
Certified Shopping Center business Administrator (SCBA) 2 1.3% 2 1.2% 1 0.6%

* Including those who passed the test.

② Number of in-house training sessions

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In-house training Fiscal 2019 Fiscal 2020 Fiscal 2021
Compliance training 12 sessions 10 sessions 12 sessions
Sustainability training 1 sessions 1 sessions 1 sessions

NREAM has established and appropriately manages the Investment Committee and the Compliance Committee, both of which function as part of the framework for preventing conflicts of interest as cited in the Corporate Philosophy.

Flowchart on procedures for carrying out business transactions with stakeholders

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Stakeholders
  1. NREAM and any NREAM executive, employee or other such person
  2. A stakeholder or other such person as stipulated inArticle 201, Paragraph 1 of the Act on Investment Trusts and Investment Corporations
  3. A counterparty of an aforementioned party, such that manages the party's asssets or otherwise furnishes advice with respect to administering or managing such assets

*1 This does not include the Fund Managers or Executive Officers concurrently serving as general managers of respective departments established within the NMF operations group.
*2 Voting rights are possessed neither by Compliance Officers nor by Executive Officers in charge of administrative operations.

Number of Compliance Committee meetings held

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Compliance Committee Fiscal 2019 Fiscal 2020 Fiscal 2021
Number of meetings 18 17 17
Number of proposals 44 total 32 total 28 total
Acquisition or sale of Properties* 20 proposals 10 proposals 6 proposals
Leasing 15 proposals 9 proposals 13 proposals
Outsourcing
( property management,
intermediary services, etc. )
2 proposals 2 proposals 2 proposals
Repairs and capital expenditure 2 proposals 3 proposals 1 proposals
Other 5 proposals 8 proposals 6 proposals

* Items concerning the acquisition or sale of properties include outsourced cases (PM, mediation, etc.), specifically 16 in FY2019, 8 in FY2020 and 6 in FY2021.

Number of Investment Committee meetings held

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Investment Committee Fiscal 2019 Fiscal 2020 Fiscal 2021
Number of meetings 36 33 39
Number of proposals 101 total 97 total 87 total
Acquisition or sale of Properties 30 proposals 22 proposals 43 proposals
Borrowing and repayment 6 proposals 5 proposals 5 proposals
Repairs and capital expenditure 3 proposals 2 proposals 0 proposals
Capital increase 3 proposals 1 proposals 1 proposals
Financial results 11 proposals 15 proposals 7 proposals
Asset management policy 21 proposals 21 proposals 19 proposals
Lease 3 proposals 23 proposals 5 proposals
Other 24 proposals 8 proposals 7 proposals

NREAM undertakes business affairs with respect to managing assets and furnishing investment advice primarily to Nomura Real Estate Master Fund, Inc. (NMF), Nomura Real Estate Private REIT, Inc. (NPR) and other real estate funds.

In carrying out such duties, NREAM strives to take preventative action that would avoid the prospect of any conflicts of interest arising among the respective funds for which it manages assets, particularly when considering possibilities of making property acquisitions on the basis of third-party sales information to which it has gained access. To that end, NREAM stringently implements information management practices such that involve ensuring those who make investment decisions for the respective funds handle their duties separately. Meanwhile, NREAM has also adopted the Rotation Rule whereby it ensures that each fund is equitably granted preference to consider acquisition opportunities on a rotating basis particularly depending on the year in which construction was completed with respect to target properties ("completion year").

Moreover, NREAM makes decisions to acquire properties, or otherwise forgo such investment, in accordance with investment policies specific to each of the funds.

Flowchart for application of the Rotation Rule

*1 NPR: Nomura Real Estate Private REIT, Inc. (private-placement REIT)
*2 NMF: Nomura Real Estate Master Fund, Inc. (listed REIT)

NREAM has been entrusted to carry out all asset management-related services for Nomura Real Estate Master Fund, Inc. (NMF), and accordingly receives asset management fees as consideration for such services.

Types of fees

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Fee Description
Management Fee I The amount obtained by multiplying Total Assets by 0.45% (pro rata monthly amounts shall be calculated on the basis of 12 months in a calendar year; rounding down amounts less than one yen)
Management Fee II The amount obtained by multiplying Net Income Before Deduction of Management Fee II* by 5.5% (rounding down amounts less than one yen)

* Net Income Before Deduction of Management Fee II refers to the amount obtained by adding goodwill amortization cost and deducting gain on negative goodwill from net income before taxes (but before deduction of Management Fee II and non-deductible consumption taxes on Management Fee II), and after compensation of loss carried forward, if any

Acquisition Fee In the event where a specified asset has been acquired, the amount obtained by multiplying the Acquisition Price by 1.0% (maximum)

* 0.5% (maximum) in the event the acquisition is from a related party

Sales Fee In the event where a specified asset has been disposed, the amount obtained by multiplying the Disposition Price (the disposition price in the event of sale, or in the event of an exchange, the sale price stated in the exchange agreement of the asset being disposed of) by 1.0% (maximum)

* 0.5% (maximum) in the event the disposition is to a related party

*For further details, refer to the Articles of Incorporation of Nomura Real Estate Master Fund, Inc.

To ensure investor understanding, NREAM diligently provides easy-to-understand information about its management of the Nomura Real Estate Master Fund.

① Number of press releases issued by Nomura Real Estate Master Fund

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Number of press releases Fiscal 2019 Fiscal 2020 Fiscal 2021
Total number 47 total 32 total 30 total
Acquisition or sale of properties 4 2 4
Financial results 4 2 2
Borrowing and repayment 24 17 19
Capital increase 4 0 0
Other 11 11 5

Note: For further details, refer to the Press Release page of the Nomura Real Estate Master Fund, Inc. website.

② IR initiatives of Nomura Real Estate Master Fund

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IR activities Fiscal 2019 Fiscal 2020 Fiscal 2021
Earnings briefings 2 0 0
IR meetings (Japan) * 152 companies 113 companies 110 companies
IR meetings (overseas) * 62 companies 69 companies 57 companies
Conferences and seminars for individual investors (Japan) 1 days 0 days 0 days
Conferences and seminars for institutional investors (overseas) 3 days 11 days 10 days

*Includes conference calls

③ Credit ratings of Nomura Real Estate Master Fund (as of March 31, 2022)

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Rating company Rating target Rating Outlook
Japan Credit Rating Agency, Ltd. (ICR) Long-term Issuer Rating AA Stable
Rating and Investment Information, Inc. (R&I) Issuer Rating AA- Stable
④ Management of Nomura Real Estate Master Fund

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Fund information Link
Portfolio Summary https://www.nre-mf.co.jp/en/portfolio/
Interest-bearing Debt https://www.nre-mf.co.jp/en/finance/
Financial Highlights https://www.nre-mf.co.jp/en/ir/highlight.html
Policies, Systems and Targets (ESG initiatives) * https://www.nre-mf.co.jp/en/esg/
Disclosure Materials https://www.nre-mf.co.jp/en/ir/library.html
*Details on international initiatives of which NREAM and NMF are signatories and certifications from outside entities are as follows (as of March 2022)

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International initiatives and certifications Date Logo
Principles for Responsible Investment (PRI)
Nomura Real Estate Asset Management Co., Ltd.
December 2017
Signatory
United Nations Environment Programme Finance Initiative (UNEP FI)
Nomura Real Estate Asset Management Co., Ltd.
December 2017
Signatory
Japan Climate Initiative (JCI)
Nomura Real Estate Asset Management Co., Ltd.
October 2018
Participated
Principles for Financial Action for the 21st Century (PFA21)
Nomura Real Estate Asset Management Co., Ltd.
July 2019
Signatory
Proposals of Task Force on Climate-Related Financial Disclosures (TCFD)
Nomura Real Estate Asset Management Co., Ltd.
July 2020
Approved
TCFD Consortium
Nomura Real Estate Asset Management Co., Ltd.
July 2020
Joined
GRESB Real Estate Ratings "Green Star" and "4-Star" ratings
Nomura Real Estate Master Fund, Inc. (NMF)
October 2021
Obtained
GRESB Public Disclosure "A" rating
Nomura Real Estate Master Fund, Inc. (NMF)
October 2021
Obtained
DBJ Green Building Certification 75 properties at a total floor area of 56.1% (as of March 31, 2022)
Nomura Real Estate Master Fund, Inc. (NMF)
Obtained
periodically
BELS Certification 33 properties at a total floor area of 27.0% (as of March 31, 2022)
Nomura Real Estate Master Fund, Inc. (NMF)
Obtained
periodically
UN Global Compact
Nomura Real Estate Holdings, Inc.*1
May 2019
Signatory
CDP climate change score "A-"
Nomura Real Estate Holdings, Inc.*2
Approval acquired
in December 2021
SBTi(Science Based Targets Initiative)
Nomura Real Estate Holdings, Inc.*3
Approval acquired
in November 2020

*1 Nomura Real Estate Holdings , Inc. has signed the UN Global Compact, and the Nomura Real Estate Group was registered as a participating corporation in May 2019. At the same time, Nomura Real Estate Asset Management Co., Ltd. also participated as a member of the Nomura Real Estate Group.

*2 Nomura Real Estate Holdings has responded to the "CDP Climate Change" survey implemented by the CDP since fiscal 2019, and the entire Nomura Real Estate Group, including NREAM, received a A- rating in fiscal 2021.

*3 Nomura Real Estate Holdings , Inc. signed the SBTi and acquired approval for the Nomura Real Estate Group's targets in November 2020. At the same time, Nomura Real Estate Asset Management Co., Ltd. also participated as a member of the Nomura Real Estate Group.

At its first General Meeting of Unitholders held on May 26, 2017, Nomura Real Estate Master Fund, Inc. (NMF) resolved to modify its provisions on asset management fees with the aim of establishing an asset management fee structure that would be better geared to investor interests.
The change took effect from the fiscal period ended February 28, 2018 (from September 1, 2017 to February 28, 2018).