NAF Report 28th Period
September 2019 – February 2020

Nippon Accommodations Fund Inc.
4-1, Nihonbashi 1-chome, Chuo-ku, Tokyo
https://www.naf-r.jp/english/

Contents
Strategies and Features of NAF.............................................. 2
To Our Stakeholders.............................................................. 4
Financial Highlights............................................................... 5
Status of Portfolio................................................................. 6
Portfolio Map........................................................................ 7
Sustainability Initiatives......................................................... 8
Portfolio Summary............................................................... 10
Management’s Discussion and Analysis................................ 13
Financial Statements............................................................ 22
Notes to Financial Statements.............................................. 26
Independent Auditor’s Report.............................................. 38
Summary of REIT................................................................. 39
Summary of Asset Management Company........................... 40
Status of Unitholders........................................................... 41
Disclaimer........................................................................... 42

Distribution
Confirmed distribution

28th

Period ( Feb.20 )Per unit

10,042¥

Expected distribution

29th Period (9,780

Aug.20 )¥Per unit

Expected distribution

30th Period Feb.21(

Per unit)

10,150¥* The forecasted figures are calculated based on certain assumptions as of April 16, 2020.
The actual figures may change due to various factors including fluctuations in rent revenues
owing to changes in tenants and other factors, changes in properties, fluctuation in interest,
and additional issuance of investment units. Accordingly, the forecasts are not a guaranteeof any cash distribution amount, etc. The forecasted figures are stated based on the details
announced in the Financial Results for the Fiscal Period from September 1, 2019 to February
29, 2020 released on April 16, 2020.
(Please view the above Financial Results from the NAF website (https://www.naf-r.jp/english/).)1Strategies and Features of NAF
NAF’s basic policy is to secure stable earnings and steady growth in the Investment Assets from themedium- and long-term view, aiming to maximize the value of unitholders.
1. Investment in Accommodation Assets
NAF defines real estate that is mainly used/may be used for residence or hotels as “Accommodation Assets” and invests in two areas of“Rental Apartments” and “Hospitality Facilities.”
NAF’s core investment strategy is to continue acquisition of “Rental Apartments” and stable operations.
■ Investment in Accommodation Assets■ Proportion of Investment in Assets

Accommodation Assets

Rental Apartments(Real estate that is primarily used as residences or hotels)

Over 90%(As of February 29, 2020: 94.9%)

Rental Apartments

Rental Apartments

Portfolio share■ Investment Areas

Tokyo 23 Wards

Over 80%

Hospitality Facilities
Dormitories,
Corporate Housing
Senior Residences(As of February 29, 2020: 84.9%)

Tokyo 23 Wards

Serviced Apartments

Portfolio share
Rental Apartments: Greater Tokyo*1, mainly Tokyo 23 wards, and Other Major Cities*2
Hospitality Facilities: Major cities throughout Japan and their suburbs*1. Tokyo, Kanagawa, Chiba and Saitama*2. Each of the urban areas of Sapporo, Sendai, Nagoya, Osaka, Kyoto, Kobe, Hiroshima and Fukuoka cities

Hotels

2. Leveraging the Mitsui Fudosan GroupNAF utilizes to the full extent comprehensive capabilities of the Mitsui Fudosan Group, such as in information gathering, planning/development and management/operation, in order to achieve its external and internal growth.

Parent Company of
REIT Management Company

Operation, Planning / Development ofResidential Leasing Business
Provision of Property Information

Market Research/
Analysis
REIT Management

Residential Building MaintenanceFeedback to Planning/
Development

Provision of Property Information

Site Acquisition

Comprehensive
operating system
conducted by the
Mitsui Fudosan GroupManagement/
Operation

Mitsui Housing Loop

Leasing– Membership services –Planning and
DesignConstruction
Management/
Supervision

Provide various housing and lifestyle services
for continued strong customer relationships
2

Property Management

Tenant Brokerage

Intensive investment inTokyo 23 Wards

Focus on single andcompact type apartments

88.1

82.5

%

%

NAF follows a basic policy of making intensive investment
in Tokyo 23 wards and selective investment in other major
cities.

NAF invests more heavily in single and compact units
designed for single tenants or small-sized households.

High quality Rental Apartments

Portfolio scale(total acquisition value)

309.7

¥

billionNAF is expanding the Park Axis (developed by the Mitsui
Fudosan Group) and Park Cube (developed by third
parties) brands.

NAF aims to secure stable earnings and steady growthin the Investment Assets, from the medium- and longterm view.

Maintain a high occupancy rate

Earning of high credit ratings

97.7

R&I.............AA-%

S&P............A+(28th period: average month-end occupancy rate)

NAF has earned the highest credit ratings among
Residential J-REITs.

Since IPO in August 2006, NAF has consistently
maintained a high occupancy rate.

* Unless stated otherwise, information stated above is current as of the end of the 28th period (February 29, 2020).
The ratio of properties in Tokyo 23 wards is based on acquision price of Rental Apartments only.
The ratio of properties that consist of single and compact units is based on units of Rental Apartments only (excluding retail units).

3

To Our Stakeholders
First of all, I would like to convey my sincere appreciation to you, our unitholders.
Thank you all very much for your kind support of Nippon Accommodations
Fund (NAF).
NAF was listed on the Real Estate Investment Trust Securities Market (J-REIT
Market) of the Tokyo Stock Exchange in August 4, 2006. Ever since, we havecontinued to achieve a steady track record, and as of February 29, 2020, we havecompleted our 28th fiscal period (fiscal period ended February 29, 2020). This is
entirely due to the support of our unitholders, and for this I would like to express mygratitude.
At its Board of Directors’ meeting held on April 16, 2020, NAF approved thefinancial statements, etc. prescribed by Article 131, paragraph 2 of the Act on
Investment Trusts and Investment Corporations. Accordingly, I am pleased to report
here an overview of our asset management and operating results for the 28th period(ended February 29, 2020).
As of February 29, 2020, NAF’s portfolio consisted of 126 properties and a totalacquisition value of ¥309.7 billion. As a result of above operations during the period,
NAF recorded total revenues of ¥11,401 million, operating income of ¥5,307 million
and net income of ¥4,865 million. The distribution per unit was ¥10,042.
NAF will continue to leverage the strength of the Mitsui Fudosan Group to the
maximum and invest its assets to secure stable earnings and steady growth in the

Nippon Accommodations Fund Inc.
Management Team

Investment Assets from the medium- and long-term view.
NAF will continue working to earn the trust of our unitholders and requests yourcontinued support and cooperation.

From left: Hiroaki Saito, Takashi Ikeda,
Tateyuki Ikura, Tsunehisa Ota,
Mitsutoshi Masuda

Takashi Ikeda

Executive Director

Tateyuki Ikura

Executive Director

Tateyuki Ikura
Executive Director of Nippon Accommodations Fund Inc.
President and CEO of Mitsui Fudosan Accommodations Fund Management Co., Ltd.

Tsunehisa Ota
Supervisory Director(Attorney at Law) 		
Hiroaki Saito(Real Estate Appraiser)

Mitsutoshi Masuda(Certified Public Accountant)

Supervisory Director
Supervisory Director

4Financial Highlights
・Due to high occupancy rates, distribution per unit exceeded the forecast and came to ¥10,042.
・Total assets at the end of the period were ¥301,946 million,interest-bearing debt was ¥153,500 million, and LTV (Loan-to-Value) ratio was 50.8%.
・Net assets were ¥141,181 million (down ¥197 million from the end of the previous fiscal period).

27th Period (Actual)

28th Period (Actual)

29th Period (Forecast)

30th Period (Forecast)(Ended August 31, 2019)(Ended February 29, 2020)(Ending August 31, 2020)(Ending February 28, 2021)

Total revenues¥12,361 million¥11,401 million¥11,567 million¥11,552 million

Operating income¥6,084 million¥5,307 million¥5,201 million¥5,382 million

Net income¥5,623 million¥4,865 million¥4,739 million¥4,918 million

51.0%

50.8%

51.1%

51.1%

LTV (Loan-to-Value) ratio*1
Distribution per unit

¥10,449¥10,042¥9,780¥10,150

Acquisition price basis¥309,723 million¥309,723 million¥312,143 million¥312,143 million

Number of properties

126

126

127

127

Assets under management*Amount does not include consumption tax or local consumption tax.
*1 LTV (Loan-to-Value) ratio = Total interest-bearing debt / Total assets x 100

Track record of Distribution per Unit
(Yen)
12,00010,000
8,000

7,688

8,036

8,130

8,428

8,497

19th
Period(Aug.15)20th
Period(Feb.16)

21st
Period(Aug.16)

22nd
Period(Feb.17)

23rd
Period(Aug.17)

9,179

9,161

24th
Period(Feb.18)

25th
Period(Aug.18)

9,706

10,44910,042

10,1509,780(Forecast)

29th
Period(Aug.20)30th
Period(Feb.21)(Forecast)

6,000
4,000
2,000
0
26th
Period(Feb.19)27th
Period(Aug.19)28th
Period(Feb.20)

Notes: 1. NAF implemented a two-for-one split of investment units with an effective date of March 1, 2014. Distribution per unit for the 16th period and earlier is adjusted for this split (actual		 distribution divided in half, rounded down to the nearest yen).
2. The forecasted figures are calculated based on certain assumptions as of April 16, 2020. The actual figures may change due to various factors including fluctuations in rent revenues
		 owing to changes in tenants and other factors, changes in properties, fluctuation in interest, and additional issuance of investment units. Accordingly, the forecasts are not a guarantee
		 of any cash distribution amount, etc. The forecasted figures are stated based on the details announced in the Financial Results for the Fiscal Period from September 1, 2019 to		 February 29, 2020 released on April 16, 2020.
		 (Please view the above Financial Results from the NAF website (https://www.naf-r.jp/english/).)5Status of Portfolio
NAF is realizing steady external growth and stable revenues by leveraging the value chain of
the Mitsui Fudosan Group, acquiring stable and selective properties, and conducting suitable
management of operations.
New Acquisitions in 29th Period■ New Acquisitions in the 29th Period

Rental Apartments

Property nameLocation

Acquisition date

Acquisition price(Yen in millions)

Rentable units
Number of rooms(Units/rooms)

Park Axis Akatsuka

Itabashi-ku, Tokyo

March 30, 2020

2,420

86 residental,
2 retail, etc.

* NAF acquired 55% co-ownership of Park Axis Akatsuka, and “rentable units” are calculated by multiplying co-ownership by the total number of rooms and rounding to the nearest whole number.

Park Axis Akatsuka

Stable Acquisitions of Park Axis Series Developed by the Mitsui Fudosan GroupNAF’s core acquisition strateg y is the stableacquisitions of Park Axis Series properties, which are
Rental Apartments developed by the Mitsui FudosanGroup.
Park Axis Series have many merits. By utilizing the
Mitsui Fudosan Group’s long-standing knowhow of
the housing business, their location is chosen for its
suitability for Rental Apartment development and theproperties are planned and designed flexibly to fit with
their surroundings. In addition, the properties are built tostrictly comply with originally established design standards
and are subject to stringent quality. Due to such highquality and strong brand awareness, the Park Axis Series
has established a powerful brand presence in the Rental
Apartment market.

Asset Classification of Rental Apartments
Okawabata Apartment Communities: 10.5%
Shibaura Island Air Tower: 2.7%

Park Cube Series:
27.6%
Park Axis Series:
59.2%

Investment mainly focused on Rental Apartments
developed by the Mitsui Fudosan Group■ Developed by the Mitsui Fudosan Group■ Developed by third-parties

6* As of the end of the 28th period (February 29, 2020).
* The calculation is based on an acquisition price.

Portfolio Map

Tokyo 23 Wards

91 properties

Adachi-ku
Itabashi-ku
Kita-ku
Nerima-ku

Katsushika-ku

Arakawa-ku
Toshima-ku
Taito-ku

Bunkyo-ku

Sumida-ku

Nakano-ku
Shinjuku-ku

Suginami-ku

Edogawa-ku

Chiyoda-ku
Imperial
PalaceKoto-ku

Shibuya-ku
Minato-ku

Setagaya-ku

Meguro-ku

Chuo-ku

5km

10km

Shinagawa-ku

Ota-kuGreater Tokyo

12 properties

Other major cities

23 properties

Rental Apartments
Hospitality Facilities* As of the end of the 28th period (February 29, 2020).

7

Sustainability Initiatives
1

Structure for Promotion and External Assessment■ In-House Structure for Promotion of Sustainability

Sustainability Policy

Sustainability Promotion Office established to ensure effective
sustainability policies

Reduction of Environmental Load

Formulate plans

Chairperson
CEO

Initiatives for Governance

Decide■ Identification of materiality

All officers andemployees

Objectives andimplementation plans

Share objectives
and plans

Status of progress
and achievements

Implement

ReportSustainability
Decision Maker

https://www.naf-r.jp/english/profile/3-4.html

Review↓■ Consistently Acquire External Certification of

Sustainability

NAF identifies materiality for relevant initiatives when promoting
sustainability.

We consistently acquire external certification including GRESB Real
Estate Assessment as opportunities to improve NAF’s sustainability
initiatives.

Promote Energy Efficiency and CO2 Emissions Reduction
Acquire External Certification and Assessment on Sustainability
Develop Human Capital and Raise Sustainability Awareness Among
Our Employees
Enhance Tenant Satisfaction, Safety and Comfort
Build Partnerships with Property Companies and Operators
Contribute to Community Development
Ensure Fairness and Transparency of Corporate Governance2

Sustainability
Promotion Office

Investment
Committee

Collaborations with Various
Internal and External Stakeholders■ GRESB Real Estate Assessment■ SMBC Environmental Assessment

Assessment

Assessment

Green StarA

Initiatives withgood environmental
consideration

Rating3 Stars

Environment■ Installation of LED lighting in common areas■ External Certification of Investment Properties

Systematically installing LED lighting promotes energy saving andreduction of CO2 emissions throughout our portfolio.

We strive to acquire DBJ Green Building certification to ensure the validity
and objectivity of the results of our initiatives to reduce environmental
impact.

Installation completed

Property Name

Certification rank

Certification Details

82 properties

Okawabata Apartment
Communities

No. of properties

In the 28th Period

Park Axis Toyosu

Total floor space

Park Cube Nishigahara
Stage

Percentage of floor
space certified

10 properties(As of February 29, 2020)

Okawabata Apartment Communities (Parking)4
181,579m2
25.3 %(As of February 29, 2020)

Park Cube Meguro Tower■ Environmental Performance■ Targets■ Results

Energy consumption,
CO2 emissions from energy use
Average annual reduction of 1%
over five years using 2015 as thebaseline (based on intensity)

CO2 emissions from energy use
CO2 emissions

Intensity

Water consumption

(t)
6,000
5,038

Water consumption

4,958

4,509

4,000

(t/m2)
0.06(m3)
30,0004,042 0.04

20,000(m3 /m2)
0.3
24,273

4,309

Intensity

23,836

23,811

24,056

22,8160.2

Water consumption
0.0249No increase in amount usedover five years using 2015 as thebaseline (based on intensity)

0.02432,000

0.02090.0195 0.02

10,000

0

0

2017

2018

2019

0
2015

2016

0.11980.022080.11690.11630.11690.1101
0.1

0
2015

2016

2017

2018

2019

3

Social■ Employees of the Asset Management Company■ Tenants

The Asset Management Company recognizes that human resources are
its most valuable assets and has implemented various initiatives for its
employees.

We conduct various initiatives to improve safety, security and comfort inassets under management to enhance tenant satisfaction.
Greater Satisfaction
Initiatives in collaboration with property management company (Mitsui Fudosan
Residential Lease)● Toll-Free Helpline for Tenants● Chatbot to Answer Inquiries● Renovation of Common Areas● Tenant Satisfaction Surveys

Human Resource Development
The Company takes various measures to foster human resources having a highlevel of expertise, deep knowledge and ethical values.
● Support for Acquisition of Qualifications● Support for Education and Training● Interviews for Setting Objectives of Individual Employees● Performance Evaluations■ Local Communities

Health and Safety, Respect for Human Rights

As a member of local communities in which the assets we manage arelocated, we contribute to community formation and vitalization.

We maintain healthy workplaces that facilitate work so that all officers andemployees can fully demonstrate their abilities.
● Implementation of Periodic Medical Examinations, etc.
● Work-Life Balance● Special Leave Program (maternity leave, caregiver leave and time off for sick/injured childcare, etc.)● Consultation Service Office for Compliance● Promotion of Active Roles for Women● Support for Childcare and Nursing Care

Cooperation in Local Events
At the Okawabata Apartment Communities, NAF has proactively cooperated in
activities of the management association and strives to contribute to formation ofa local community.

■ Supply Chains
When selecting/evaluating suppliers, which are important in NAF's
asset management, NAF keeps in mind the promotion of sustainability
throughout its supply chain by also confirming suppliers’ initiatives inconsideration of society, the environment, etc.

4Disaster prevention event (Demonstration of
Water discharge by fire department members)

Disaster prevention event (Disaster prevention
drills for local residents)

Governance■ The Asset Management Company’s decision making process flow for acquiring or selling investment assets
Compliance Checking System

Preliminary Plan●●

1

Related-party transaction
When CCO determines that acompliance issue has arisen

1 Confirmation by Chief Compliance Officer (CCO)
The following require approval of the Compliance Committee● Related-party transactions*● When CCO determines that a compliance issue has arisen

Approval of CCO
2*Property acquisition price from sponsor-related parties is below appraisal value

Approval of Compliance
Committee

2 The Compliance Committee
Requires approval by independent external professionals
Members: CCO (Chairperson), CEO, 2 external professionals (Currently 1 lawyer
and 1 CPA)
External professionals: Appoint professionals independent from sponsor-relatedparties
Resolution: Requires the votes of 2/3 or more members and at least 1 of the 2
independent external professionals

Proposal by CIO

3Investment Committee(Note)

3 Functions as a Check on the Investment Committee
CCO can suspend discussion when he sees any problem in the discussion process

Report to Board of NAF

Note: When NAF acquires or sells of assets in transactions with related parties as defined by the Investment Trust and Investment Corporation Act of Japan, the AssetManagement Company must obtain consent from NAF based on the approval of NAF’s Board of Directors prior to the deliberations of the Investment Committee.
However, such consent is not required for property or other real estate acquisitions stipulated by Article 245-2-1 of the Investment Trust and Investment Corporation
Act as having immaterial impact on NAF’s assets because the acquisition cost represents less than 10 percent of the book value of NAF’s investment properties.

9Portfolio Summary (As of February 29, 2020)
No.
1

Name
Okawabata Apartment Communities

Location
Chuo-ku, Tokyo

Acquisition Price(Yen in millions)Portfolio Share(%)

Rentable Area(m2)

30,8169.9

43,812.41(Note 1)

Rentable Units
Number of Rooms(Units/rooms)

PML(Note2)(%)
544

River Point Tower

1.8

Park Side Wings

2.7

Pier West House

2.7

Okawabata Parking

1.7

2Park Axis Gakugei Daigaku

Setagaya-ku, Tokyo

1,760

0.6

2,437.66

64

5.0

4

Park Axis Shibuya Jinnan

Shibuya-ku, Tokyo

3,230

1.0

2,766.62

75

4.1

5

Park Axis Aoyama Kotto DoriMinato-ku, Tokyo

1,730

0.6

1,537.24

40

4.5

6

Park Axis Kagurazaka Stage

Shinjuku-ku, Tokyo

1,400

0.5

1,891.05

59

3.0

7

Park Axis Shirokanedai

Minato-ku, Tokyo

5,140

1.7

4,704.44

99

4.2

8

Park Axis Bunkyo Stage

Bunkyo-ku, Tokyo

4,440

1.4

6,078.93

154

3.6

9

Park Axis Tsukishima

Chuo-ku, Tokyo

930

0.3

1,383.99

30

3.2

10

Park Axis Otsuka

Toshima-ku, Tokyo

1,655

0.5

2,606.37

52

2.4

11

Park Axis Minami Azabu

Minato-ku, Tokyo

3,939

1.3

3,938.14

64

3.0

13

Park Axis Nihonbashi Stage

Chuo-ku, Tokyo

7,557

2.4

10,025.40

184 residential, 1 retail, etc.

4.5

14

Park Axis Hamamatsucho

Minato-ku, Tokyo

2,025

0.7

2,426.45

80

3.3

15

Park Axis Hongo no Mori

Bunkyo-ku, Tokyo

2,910

0.9

3,317.94

86 residential, 1 retail, etc.

4.0

16

Park Axis Tameike Sanno

Minato-ku, Tokyo

2,860

0.9

2,710.69

70

3.5

17

Park Axis Roppongi Hinokicho Koen

Minato-ku, Tokyo

2,170

0.7

2,054.46

46

5.8

18

Park Axis Ochanomizu Stage

Bunkyo-ku, Tokyo

9,710

3.1

12,025.25

324

3.9

19

Park Axis Okachimachi

Taito-ku, Tokyo

1,070

0.3

1,621.73

42

4.0

20

Park Cube Hongo

Bunkyo-ku, Tokyo

1,760

0.6

2,160.12

60

3.9

21

Park Cube Kanda

Chiyoda-ku, Tokyo

2,454

0.8

3,194.59

95

2.4

22

Park Cube Ichigaya

Shinjuku-ku, Tokyo

1,949

0.6

2,288.46

53

2.9

23

Park Cube Asakusa Tawaramachi

Taito-ku, Tokyo

2,508

0.8

4,012.68

76

2.8

24

Park Cube Ueno

Taito-ku, Tokyo

2,233

0.7

3,041.61

91

2.8

29

Park Axis Meguro Honcho

Meguro-ku, Tokyo

1,810

0.6

1,884.77

60

5.8

30

Park Axis Shin Itabashi

Itabashi-ku, Tokyo

3,430

1.1

4,395.99

152

East

3.4

West

3.3

31

Park Axis Akihabara

Chiyoda-ku, Tokyo

1,200

0.4

1,346.07

41

3.3

32

Park Axis Toyocho

Koto-ku, Tokyo

3,950

1.3

5,412.40

140

5.8

33

Park Axis Takinogawa

Kita-ku, Tokyo

1,820

0.6

2,924.75

48 residential, 1 retail, etc.

4.0

34

Park Axis Asakusabashi

Taito-ku, Tokyo

2,717

0.9

3,400.78

78 residential, 1 retail, etc.

3.2

38

Park Axis Nihonbashi Hamacho

Chuo-ku, Tokyo

5,540

1.8

6,999.83

118

4.2

39

Park Cube Yoyogi Tomigaya

Shibuya-ku, Tokyo

1,975

0.6

1,929.10

38

5.8

41

Park Axis Monzen Nakacho

Koto-ku, Tokyo

1,700

0.5

1,886.39

55

5.1

42

Park Cube Itabashi Honcho

Itabashi-ku, Tokyo

4,170

1.3

5,317.07

165 residential, 1 retail, etc.

2.9

43

Park Cube Gakugei Daigaku

Meguro-ku, Tokyo

910

0.3

957.88

24

6.8

44

Park Cube Oimachi

Shinagawa-ku, Tokyo

1,440

0.5

1,511.12

65

3.2

46

Park Axis Nishigahara

Kita-ku, Tokyo

840

0.3

1,435.83

46

2.4

47

Park Axis Kinshicho

Sumida-ku, Tokyo

1,448

0.5

2,288.13

65

4.2

48

Park Axis Tatsumi Stage

Koto-ku, Tokyo

7,464

2.4

16,474.06

299 residential, 1 retail, etc.

5.1

51

Park Axis Kameido

Koto-ku, Tokyo

2,359

0.8

3,986.78

118

5.6

52

Park Axis Honancho

Nakano-ku, Tokyo

745

0.2

1,231.08

31

3.0

53

Park Axis Itabashi

Kita-ku, Tokyo

1,448

0.5

2,567.96

64

5.3

54

Park Axis Oshiage

Sumida-ku, Tokyo

1,193

0.4

2,121.29

57 residential, 1 retail, etc.

4.9

55

Park Axis Takadanobaba

Toshima-ku, Tokyo

1,222

0.4

1,463.25

36 residential, 1 retail, etc.

2.7

10

Acquisition Price

PML(Note 2)(%)

(Yen in millions)

59

Park Axis Toyosu

Koto-ku, Tokyo

14,300

4.6

25,537.94

401 residential, 2 retail, etc.

60

Park Axis Hatchobori

Chuo-ku, Tokyo

1,760

0.6

2,416.29

63 residential, 1 retail, etc.

3.2

61

Park Axis Itabashi Honcho

Itabashi-ku, Tokyo

987

0.3

2,048.31

66

4.0

Name

Location(Note 1)

Rentable Area(m2)

Rentable Units
Number of Rooms(Units/rooms)

Portfolio Share
(%)

No.

3.9

62

Park Axis Sumiyoshi

Sumida-ku, Tokyo

1,006

0.3

1,785.72

60

7.4

63

Park Cube Yotsuya Sanchome

Shinjuku-ku, Tokyo

2,749

0.9

3,599.82

130

5.1

64

Park Cube Hatchobori

Chuo-ku, Tokyo

4,200

1.4

5,191.86

118 residential, 2 retail, etc.

2.4

68

Park Axis Kamata Ichibankan

Ota-ku, Tokyo

1,069

0.3

1,721.28

63

6.7

70

Park Axis Taito Negishi

Taito-ku, Tokyo

672

0.2

1,283.13

40

4.2

72

Park Axis Komagome

Toshima-ku, Tokyo

1,389

0.4

1,979.51

39 residential, 1 retail, etc.

2.5

74

Park Axis Itabashi Honcho Nibankan

Itabashi-ku, Tokyo

1,859

0.6

3,661.58

99

3.1

75

Shibaura Island Air Tower (Note 3)

Minato-ku, Tokyo

7,905

2.6

17,646.33

270 residential, 2 retail, etc.

Air Tower

1.9

Air Terrace

7.5

84

Park Cube Higashi Shinagawa

Shinagawa-ku, Tokyo

6,060

2.0

10,636.67

201

3.5

86

Park Cube Sasazuka

Shibuya-ku, Tokyo

2,200

0.7

2,416.00

92 residential, 1 retail, etc.

3.4

88

Park Axis Higashi Jujo

Kita-ku, Tokyo

1,700

0.5

2,893.54

70 residential, 1 retail, etc.

3.1
2.8

91

Park Cube Heiwadai

Nerima-ku, Tokyo

1,204

0.4

2,656.00

34

92

Park Cube Meguro Tower

Meguro-ku, Tokyo

9,000

2.9

12,367.62

193 residential, 1 retail, etc.

2.2

93

Park Cube Nihonbashi Suitengu

Chuo-ku, Tokyo

2,711

0.9

4,235.33

77

4.4
3.0

94

Park Cube Ginza East

Chuo-ku, Tokyo

2,269

0.7

3,358.63

77

95

Park Cube KayabachoChuo-ku, Tokyo

1,105

0.4

1,695.06

27 residential, 1 retail, etc.

3.2

96

Park Cube Honjo Azumabashi

Sumida-ku, Tokyo

1,252

0.4

2,241.63

45

4.6

97

Park Axis Kiyosumi Shirakawa

Koto-ku, Tokyo

696

0.2

1,159.84

36

3.7

98

Park Axis Asakusabashi Nichome

Taito-ku, Tokyo

1,079

0.3

1,569.00

48

3.4

99

Park Axis Nishi Sugamo

Kita-ku, Tokyo

1,439

0.5

2,326.32

56

3.9

100

Park Axis Ueno

Taito-ku, Tokyo

1,389

0.4

1,992.29

59

3.3

101

Park Axis Akihabara East

Taito-ku, Tokyo

1,369

0.4

1,890.20

58

3.8

103

Park Axis KayabachoChuo-ku, Tokyo

1,809

0.6

2,355.07

72

3.0

104

Park Axis Kinshicho Shinsui Koen

Sumida-ku, Tokyo

1,369

0.4

2,085.62

60

7.5
2.7

105

Park Cube Kasuga Andozaka

Bunkyo-ku, Tokyo

2,670

0.9

3,581.0968

106Park Cube Kameido

Koto-ku, Tokyo

3,020

1.0

4,442.09

121 residential, 1 retail, etc.

5.5

108

Park Axis Shin Okachimachi East

Taito-ku, Tokyo

1,299

0.4

1,847.01

49

3.0

110

Park Axis Nihonbashi Honcho

Chuo-ku, Tokyo

1,469

0.5

1,808.12

49

2.5

111

Park Cube Nishigahara Stage

Kita-ku, Tokyo

4,110

1.3

19,693.35

357 residential, 1 retail, etc.

2.5

112

Park Cube Atagoyama Tower

Minato-ku, Tokyo

8,650

2.8

8,389.91

165

2.4

113

Park Axis Shibaura

Minato-ku, Tokyo

1,045

0.3

1,273.60

42

5.2
3.0

114

Park Axis Asakusa Kuramae

Taito-ku, Tokyo

1,095

0.4

1,456.35

45

115

Park Axis Kamata Station Gate

Ota-ku, Tokyo

4,144

1.3

4,582.72

157 residential, 1 retail, etc.

3.2

116

Park Axis Kinshicho Residence

Sumida-ku, Tokyo

1,251

0.4

1,793.33

56

4.0

117

Park Axis Oshiage Sumida Koen

Sumida-ku, Tokyo

1,055

0.3

1,610.49

49

5.2

120

Park Axis Magome Residence

Ota-ku, Tokyo

1,450

0.5

1,621.94

55

9.6

121

Park Axis Higashi Ueno

Taito-ku, Tokyo

1,250

0.4

1,460.10

45

4.0

122

Park Axis Higashi Koenji

Suginami-ku, Tokyo

2,300

0.7

2,679.96

85

5.1

125

Park Cube Shin Itabashi

Itabashi-ku, Tokyo

1,700

0.5

1,930.1270 residential, 1 retail, etc.

2.9

126

Park Cube Nishi Shinjuku

Shinjuku-ku, Tokyo

2,400

0.8

1,809.56

57 residential, 1 retail, etc.

3.4

129

Park Axis Oshiage Terrace

Sumida-ku, Tokyo

2,610

0.8

2,498.08

80

6.6

130

Park Axis Ikegami

Ota-ku, Tokyo

1,391.34

45

6.7

Tokyo 23 Wards Total

1,260

0.4

258,95383.6

11376,190.51 8,237 residential, 25 retail, etc.

Acquisition Price

PML(Note2)(%)(Yen in millions)

26

Park Cube Keio Hachioji II

Hachioji-shi, Tokyo

1,130

0.4

3,082.32

47 residential, 1 retail, etc.

40

Park Axis Nishi Funabashi

Funabashi-shi, Chiba

1,020

0.3

2,074.35

55

3.2

66

Park Axis Yokohama Idogaya

Yokohama-shi, Kanagawa

1,419

0.5

2,706.59

99 residential, 1 retail, etc.

6.3

67

Park Axis Chiba Shinmachi

Chiba-shi, Chiba

1,679

0.5

3,318.15

77 residential, 7 retail, etc.

1.9

69

Park Axis Chiba

Chiba-shi, Chiba

970

0.3

2,270.32

91

2.3

85

Park Cube Kita Matsudo

Matsudo-shi, Chiba

1,200

0.4

2,358.66

108 residential, 1 retail, etc.

1.6

Name

Location(Note 1)

Rentable Area(m2)

Rentable Units
Number of Rooms(Units/rooms)

Portfolio Share
(%)

No.

4.0

87

Park Cube Musashi Kosugi

Kawasaki-shi, Kanagawa

2,250

0.7

3,057.36

136

3.3

102

Park Axis Yokohama Tanmachi Koen

Yokohama-shi, Kanagawa

1,119

0.4

1,682.46

63

4.1

109

Park Axis Yokohama Yamashitacho

Yokohama-shi, Kanagawa

8.2

Greater Tokyo Total

1,539

0.5

2,325.92

70 residential, 1 retail, etc.

12,326

4.0

22,876.13

746 residential, 11 retail, etc.

27

Park Axis Meieki Minami

Nagoya-shi, Aichi

2,440

0.8

5,565.13

169

3.7

35

Park Axis Marunouchi

Nagoya-shi, Aichi

1,920

0.6

3,821.75

98 residential, 1 retail, etc.

2.9

36

Park Axis Ropponmatsu

Fukuoka-shi, Fukuoka

1,515

0.5

3,473.67

111 residential, 1 retail, etc.

2.5

37

Park Axis Hakataeki Minami

Fukuoka-shi, Fukuoka

1,890

0.6

4,668.29

176 residential, 1 retail, etc.

3.0

45

Park Axis Naka Gofukumachi

Fukuoka-shi, Fukuoka

742

0.2

2,707.88

112

2.9

49

Park Axis Shirakabe

Nagoya-shi, Aichi

1,547

0.5

4,735.89

86

3.0

50

Park Axis Sendai

Sendai-shi, Miyagi

2,320

0.7

8,843.17

204

2.8

56

Park Axis Hakata Minoshima

Fukuoka-shi, Fukuoka

960

0.3

3,461.85

112

2.7

57

Park Axis Takamiya Higashi

Fukuoka-shi, Fukuoka

605

0.2

2,289.21

70

5.1

58

Park Axis Sapporo Shokubutsuen Mae

Sapporo-shi, Hokkaido

1,650

0.5

7,845.01

146

1.1

65

Park Axis Shin Sapporo

Sapporo-shi, Hokkaido

827

0.3

3,729.05

84 residential, 1 retail, etc.

2.4

73

Park Axis Utsubo Koen

Osaka-shi, Osaka

2,399

0.8

4,952.45

133

8.6

107

Park Cube Kitahama

Osaka-shi, Osaka

1,970

0.6

4,683.33

138

5.7

127

Park Axis Kanayama WEST

Nagoya-shi, Aichi

4,795.13

63

4.4

1,770

0.6

Other Major Cities Total

22,555

7.3

65,571.81 1,702 residential, 4 retail, etc.

Rental Apartments Total

464,638.45 10,685 residential, 40 retail, etc.

293,834

94.9

76

Dormy Ashiya

Ashiya-shi, Hyogo

928

0.3

3,729.45

140

6.6

77

Kawaijuku Kyoto Gakushin Ryo

Kyoto-shi, Kyoto

991

0.3

3,492.88

134

12.9

78

Sundai Horikawa Ryo

Kyoto-shi, Kyoto

916

0.3

2,793.71

113

8.8

79

Dormy Rakuhoku

Kyoto-shi, Kyoto

374

0.1

1,489.86

70

8.8

80

Rikkyo University International
Dormitory (RUID) Shiki

Shiki-shi, Saitama

1,478

0.5

3,061.89

127

3.0

81

Dormy Naka Itabashi

Itabashi-ku, Tokyo

1,041

0.3

2,439.17

106

5.5

82

Philosophia Nishidai

Itabashi-ku, Tokyo

1,249

0.4

2,969.25

121

5.3

83

Dormy Musashi Kosugi

Kawasaki-shi, Kanagawa

1,152

0.4

3,017.34

112

7.3

89

Artis Sendai Kakyoin

Sendai-shi, Miyagi

540

0.2

2,234.24

60

3.0

90

Artis Sendai Kimachi DoriSendai-shi, Miyagi

1,160

0.4

4,864.04

142

2.7

118

Medical Home Granda Sangen Jaya
(Land with leasehold interest)

Setagaya-ku, Tokyo

735

0.2

—

—

—

119

Dormy Nishi Ogikubo

Suginami-ku, Tokyo

1,100

0.4

1,616.52

71

8.8

123

Granda Kanazawa Hakkei

Yokohama-shi, Kanagawa

774

0.2

1,826.29

58

9.6

124

Dormy Kamisugi

Sendai-shi, Miyagi

1,050

0.3

3,151.56

124

4.6

128

Dormy Odawara

Sendai-shi, Miyagi

521

0.2

2,452.14

78

0.2

131

Chisun Hotel Hiroshima

Hiroshima-shi, Hiroshima

1,880

0.6

4,275.59

170

6.4

Hospitality Facilities Total

15,8895.1

43,413.93

1,626Grand Total

309,723100.0

508,052.38

12,351

2.4(Portfolio PML)

Notes: 1. Acquisition Price does not include acquisition-related expenses, property tax or consumption tax.
2. PML = Probable maximum loss
Portfolio PML is the PML for all NAF’s portfolio, 125 properties excluding Medical Home Granda Sangen Jaya (Land with leasehold interest).
3. Rentable units and rentable area for Shibaura Island Air Tower are calculated by multiplying NAF’s equity share (31%) by the property’s total rentable units and total rentable area and rounded to the nearest unit
and one-hundredth of a square meter, respectively.
4. The name of the property has changed to “Dormy Kyoto Nijo” from “Kawaijuku Kyoto Gakushin Ryo” as of the date of April 1, 2020.

12

Management’s Discussion and Analysis
Summary of Selected Financial Data
28th Period

September 1, 2019
to February 29, 2020

Total revenues (Note 2)
Rental revenues
Other revenues related to property leasing
Gain on sale of investment properties
Operating expenses
Income before income taxes
Net income (a)Funds from operations (Note 3)
Net operating income from property leasing activities (Note 3)
Total amount of cash distribution (b)Depreciation and amortization
Capital expenditures¥

11,401
10,934
467
—
6,094
4,866
4,865

Yen in millions

U.S. dollars in thousands(Except per unit data or
where otherwise indicated)(Note 1)
(Except per unit data)

27th Period

March 1, 2019
to August 31, 2019¥12,361
10,877
544
939
6,277
5,624
5,623

26th Period

September 1, 2018
to February 28, 2019¥28th Period

September 1, 2019
to February 29, 2020

11,186
10,695
441
48
6,001
4,729
4,728

$ 104,185
99,917
4,267—
55,68844,46644,457

6,863
8,564
4,865
1,998
600

6,704
8,454
5,062
2,020
346

6,687
8,348
4,702
2,007
465

62,71578,26044,457
18,258
5,482

Total assets (c)Interest-bearing debt
Total net assets (d)301,946
153,500
141,181

303,133
154,500
141,378

296,877
149,500
140,457

2,759,261
1,402,723
1,290,148

Total number of common units issued (Units) (e)Net assets per unit (Yen/$) (d) / (e)Distribution per unit (Yen/$) (b) / (e)Funds from operations per unit (Yen/$) (Note 3)

484,522
291,382
10,042
14,165484,522291,790
10,44913,838484,522289,889
9,706
13,802

2,662.72
91.76
129.44

ROA (Note 4)(Annual rate)
ROE (Note 4)(Annual rate)
LTV (Loan-to-value) ratio (Note 3)
Capital ratio (d) / (c)Payout ratio (b) / (a) (Note 5)
Number of days in the period

1.6%(3.2%)
3.4%(6.9%)
50.8%
46.8%
100.0%
182

1.9%(3.7%)
4.0%(7.9%)
51.0%
46.6%
90.0%
184

1.6%
(3.2%)
3.4%(6.8%)
50.4%
47.3%
99.5%
181

Number of investment properties (Note 6)
Total rentable area (m2)The occupancy rate at the end of the period (Note 6)

126
508,05298.3%

126508,05297.7%

124504,19698.1%

Notes: 1. U.S. dollar amounts are translated from yen, for convenience only, at the rate of ¥109.43 = U.S.$1.00, the approximate exchange rate as of February 29, 2020.
2. “Total revenues” do not include consumption tax.
3. Funds from operations: Net income + Depreciation and amortization – Gain on sale of investment properties
Net operating income from property leasing activities: (Revenues from property leasing – Rental expenses) + Depreciation and amortization
Funds from operations per unit: (Net income + Depreciation and amortization – Gain on sale of investment properties) ÷ Total number of units issued and outstanding at the end of the period
LTV ratio: Interest-bearing debt ÷ Total assets
4. ROA: Income before income taxes ÷ {(Initial total assets + Total assets at the end of the period) ÷ 2}
ROE: Net income ÷ {(Initial net assets + Net assets at the end of the period) ÷ 2}
The figures in parentheses are annualized based on the number of actual days in each period.
Annual equivalent amounts for the period ended February 29, 2020: Amount for the period ÷ Actual days in the period (182) x 366 days
Annual equivalent amounts for the period ended August 31, 2019: Amount for the period ÷ Actual days in the period (184) x 365 days
Annual equivalent amounts for the period ended February 28, 2019: Amount for the period ÷ Actual days in the period (181) x 365 days
Net assets and total assets used in calculating ROA and ROE are beginning-of-period and period-end averages, respectively.
5. “Payout ratio” is calculated to one decimal place only.
6. “Number of investment properties” means properties generally perceived to be one residential building.
“The occupancy rate at the end of the period” is the ratio of gross leased area to total rentable area at the end of the period.

Overview
Investment Environment and Operating Performance
During the six months ended February 29, 2020 (the “28th Period”), despite signs of weakness primarily in exports and production
due to a slowdown in overseas economies and the impact of natural disasters, etc., the Japanese economy stayed on a moderate
recovery trend, including moderate increases in capital investment, against a backdrop of improvements in corporate earnings andthe employment and income situation. However, a novel coronavirus (COVID-19) has been spreading since January, and it has begun
to have a major impact on the economy and society.
In NAF’s main investment area, the residential rental market, occupancy rates remained high at rental apartments in central areas,
with an ongoing trend of increases in rents. Stable demand for rental apartments is expected in the 23 wards of Tokyo, where nearly
90 percent of NAF’s rental apartments portfolio is located, and in the urban areas of other major cities (Note 1). Contributing factors
include the continuing influx of people into these areas from other regions. At the same time, the balance of supply and demand is
expected to remain favorable for the time being due to the limited supply of the quality rental apartments in which NAF typicallyinvests.
Concerning the real estate trading market, the acquisition environment remains challenging due to factors such as acquisitionand disposition prices for quality rental real estate remaining high.
No properties were acquired during the period under review, and NAF’s assets under management at the end of the period underreview were unchanged from the end of the previous period.
As a result, NAF’s portfolio as of February 29, 2020 consisted of 126 properties valued at ¥309,723 million on an acquisition pricebasis.
NAF has chosen Mitsui Fudosan Residential Lease Co., Ltd. as property management company on management of NAF’s rental
apartments portfolio. The company and Mitsui Fudosan Accommodations Fund Management Co., Ltd., the asset managementcompany of NAF, collaborate in the management of properties NAF owns, implementing effective management and operational
activities based on regional characteristics and the individual features of each property. Specifically, NAF maintains and improves its
rent levels and occupancy rate through the implementation of a leasing strategy that has been formulated for each individual property.
In addition, NAF aims to reduce costs by utilizing the merits of outsourcing all property management tasks to the property managementcompany while examining, whenever necessary, the adequacy of the grade of property management, cost of management andoperation.
Meanwhile in the management of “Hospitality Facilities” (Note 2), NAF contracts out the management and operational activities
to a professional operator or business corporation. The asset management company regularly monitors the management andoperational activities, and makes adjustments through professional dialog with the operator or business corporation as necessary.
In order to maintain and improve the competitiveness of NAF’s portfolio, operations are adequately planned and carried out at
the asset management company. These include appropriate renewal work according to the property age, and work to enhance theproperty value. In addition, NAF is not only making continuous efforts to reduce costs, but also introducing such features asenvironmentally friendly, energy-saving facilities in a timely manner.
In the period under review, NAF carried out renovations in private areas at Okawabata Apartment Communities. At otherproperties, NAF planned and implemented such works as changing the lighting in common areas to LED lighting.
As a result of these activities, the occupancy rate for NAF’s overall portfolio as of February 29, 2020 remained at a high level of
98.3%.
Consequently, for the 28th Period, NAF recorded total revenues of ¥11,401 million, operating income of ¥5,307 million, income
before income taxes of ¥4,866 million and net income of ¥4,865 million.
Notes: 1. “Other major cities” refers to each of the urban areas of Sapporo, Sendai, Nagoya, Osaka, Kyoto, Kobe, Hiroshima andFukuoka.
2. “Hospitality Facilities” is a generic term for “Accommodation Assets” that includes the four categories of “Dormitories,
Corporate Housing,” “Serviced Apartments,” “Senior Residences,” and “Hotels,” excluding “Rental Apartments.”Changes in Assets, Liabilities and Net Assets
Total assets as of February 29, 2020 were essentially unchanged, a decrease of ¥1,186 million from August 31, 2019 to ¥301,946
million. Total current assets increased by ¥128 million to ¥14,319 million and total investment properties net of accumulated
depreciation compared with August 31, 2019 decreased by ¥1,299 million to ¥285,853 million as a result of normal depreciation.
NAF’s basic policy is to carry out operations in a conservative manner that gives consideration to such matters as maintaining
stable distributions in the medium and long term. During the period under review, while taking into account market trends and interest
rate levels, NAF pursued financing from various sources with diversified repayment dates and an emphasis on long-term, fixed-rateloans in its procurement of funds.
As a result, at the end of the period, total interest-bearing debt amounted to ¥153,500 million (¥1,000 million decrease fromprevious period), the long-term debt ratio was 98.0%, the long-term, fixed-rate debt ratio was 95.4%, and the loan-to-value (LTV) ratio
was 50.8%. The average annual current maturity of long-term interest-bearing debt was 4.4 years and the number of financial
institutions was 25. Furthermore, the weighted average interest rate at the end of the period was 0.57%.
NAF also has secured a commitment line for the purpose of securing flexible and stable fund procurement methods. At the endof the period under review, its total maximum borrowable amount was ¥15,000 million.
Net assets totaled ¥141,181 million as of February 29, 2020. Unitholders’ capital was unchanged at ¥135,603 million, and retained
earnings decreased to ¥5,577 million from ¥5,775 million as of August 31, 2019.

Distributions to Unitholders
NAF determines the amount of cash distributions such that they exceed 90 percent of NAF’s retained earnings available fordividends as set forth in Article 67-15 of the Act on Special Measures Concerning Taxation. For the 28th Period, cash distributions
totaled ¥4,865,569,924 or ¥10,042 per unit.
Yen in thousands, except per unit amounts

28th Period

27th Period

26th Period

September 1, 2019
to February 29, 2020

March 1, 2019
to August 31, 2019

September 1, 2018
to February 28, 2019

Retained earnings
Reserve for reduction entry
Undistributed earnings¥4,865,756—
187¥5,624,099
561,000
328¥4,729,071
26,000301

Total cash distribution

4,865,569

5,062,770

4,702,770(Per unit)
Distribution of retained earnings(Per unit)
Cash distribution in excess of retained earnings(Per unit)

10,042
4,865,569
10,042——

10,4495,062,770
10,449——9,706
4,702,770
9,706
—
—

Note: The above cash distributions were paid after the close of the period.

Funding
Balance of Paid-in Capital
NAF was established on October 12, 2005 with initial paid-in capital of ¥100 million. NAF began investing activities on November
29, 2005 after ¥21,140 million was raised through private placement. As of February 29, 2020, NAF had issued 484,522 investment
units out of 4,000,000 total authorized units. NAF’s investment units were listed on the J-REIT section of the Tokyo Stock Exchange
in August 2006 upon the completion of a public offering. As the Act on Investment Trusts and Investment Corporations does notcontain any provision for the issuance of more than one class of units, NAF’s investment units comprise the sole class of units
authorized and issued by NAF.

The following are changes in paid-in capital and units outstanding over the last five years.
Units outstanding
Issue date

Remarks

Increase

Paid-in capital

Balance(Units)Increase

Balance

Notes(Yen in millions)

March 2, 2015

Public offering

22,000483,4229,444

135,131

Note 1March 24, 2015

Third-party allocation

1,100

484,522472

135,603

Note 2

Notes: 1. Public offering of new units for ¥443,868 per unit (excluding underwriting fee: ¥429,300) to fund property acquisition.
2. Additional issue of new units (third-party allocation) for ¥429,300 per unit undertaken pursuant to the public offering in Note 1.

Market Price of Units
High/Low (closing price) of units on the Tokyo Stock Exchange:
28th Period
September 1, 2019
to February 29, 2020

27th Period
March 1, 2019
to August 31, 2019

26th Period
September 1, 2018
to February 28, 2019

25th Period
March 1, 2018
to August 31, 2018

24th Period
September 1, 2017
to February 28, 2018

(Yen)

(Yen)

(Yen)

(Yen)

(Yen)

High

¥728,000¥682,000¥582,000¥532,000¥499,000

Low

652,000

544,000

499,000

455,500

426,000

Borrowings
Borrowings from financial institution as of February 29, 2020 are shown below.
Short-term loans
LenderBalance(Yen in millions)Interest rate
(Note 1)

Date of maturity(Note 2)

Sumitomo Mitsui Trust Bank,
Limited

¥1,0000.09409%

May 29, 2020

The 77 Bank, Ltd.

1,000

0.09909%(Note 5)

November 30, 2020

Mizuho Bank, Ltd.

1,000

0.09409%(Note 6)

November 30, 2020

Total short-term loans¥3,000

Repayment
methodUse of
funds

Notes

Bulletpayment(Note 3)

Unsecured/
unguaranteed/pari passu(Note 4)

Long-term loans (Note 7)
LenderBalance(Yen in millions)Interest rate
(Note 1)

¥ 3,000
2,000

0.65750%
0.51375%
0.20409%(Note 5)0.19950%0.20700%
0.16000%
0.18000%
0.26000%
0.44625%0.11909%(Note 5)0.15909%(Note 5)0.93375%
0.98750%
0.51375%
1.05400%
1.32900%
1.39800%
1.17750%0.18248%0.54779%
0.64293%
0.63900%
0.23550%0.29000%
0.72250%
0.82500%
0.10630%
0.11988%0.18561%0.21561%
0.42456%0.55000%
0.21880%0.22000%
1.22500%
0.65750%
0.99250%
0.38880%0.30950%0.12930%
0.26930%
0.38178%

1,500
Sumitomo Mitsui Banking
Corporation

2,000
2,000
2,000
4,500
1,000
2,000

Sumitomo Mitsui Trust Bank,
Limited

1,500
1,000

NIPPON LIFE INSURANCECOMPANY

Development Bank of JapanInc.

The Hachijuni Bank, Ltd.

Mizuho Bank, Ltd.

The Chugoku Bank, Limited

Shinsei Bank, Limited

Shinkin Central Bank

2,000
3,000
1,000
3,000
2,500
2,500
2,500
2,000
4,000
3,000
1,000
1,000
1,500
2,000
2,000
1,000
1,000
1,000
1,000
2,000
2,000
2,000
1,000
1,000
1,000
1,000
2,000
3,000
2,000
2,000
3,000

Date of maturity

Repayment
methodUse of
funds

Notes

Bulletpayment(Note 3)

Unsecured/
unguaranteed/pari passu(Note 4)

May 28, 2021
November 30, 2021
July 31, 2029
August 15, 2022
September 30, 2022
May 31, 2023
February 29, 2024
February 27, 2026
September 30, 2020
August 31, 2023
August 31, 2027
November 30, 2022
May 31, 2024
November 30, 2021
April 11, 2023
February 6, 2024
August 6, 2024
April 1, 2025
December 30, 2027
April 18, 2029
October 21, 2030
April 9, 2021
September 17, 2024
May 29, 2026
June 15, 2020
November 30, 2021
August 31, 2020
February 26, 2021
May 31, 2022
May 31, 2023
March 31, 2027
July 31, 2023
May 29, 2026
November 29, 2024
January 19, 2023
May 28, 2021
May 28, 2024
January 29, 2027
July 31, 2025
January 31, 2025
January 31, 2028
December 29, 2028



Lender

The Bank of Fukuoka, Ltd.

MUFG Bank, Ltd.

The Norinchukin Bank

Mizuho Trust & Banking Co.,Ltd.

The Yamaguchi Bank, Ltd.

The Daishi Bank, Ltd.
TAIJU LIFE INSURANCECOMPANY LIMITEDThe Ashikaga Bank, Ltd.
DAIDO LIFE INSURANCECOMPANYTAIYO LIFE INSURANCECOMPANYThe Iyo Bank, Ltd.
The Yamanashi Chuo Bank,Ltd.
The 77 Bank, Ltd.
The Chiba Bank, Ltd.
SUMITOMO LIFE
INSURANCE COMPANY
Mitsui Sumitomo Insurance
Company, Limited
Total long-term loans
Total loans

Balance(Yen in millions)Interest rate
(Note 1)

Date of maturity¥ 2,500
2,000
2,000
1,000
2,000
4,000
1,000
3,000
3,000
3,000
2,000
3,000
3,000
3,000
2,000
1,000
2,000
1,000
1,000
1,000
1,000
1,500
1,000
1,000
1,000
1,000
1,000
2,000
1,000
1,000

0.59437%0.43500%
0.33500%
0.65000%
0.67000%
0.72750%
0.96250%
0.79375%
0.85500%
0.76500%
0.53250%
0.62125%0.54500%
0.69500%
0.43250%
0.27000%
0.37000%
1.04000%
1.15750%
1.02438%
1.08625%
0.38380%0.42000%
1.26000%
1.28125%0.98750%
0.55500%
0.59437%0.40062%0.09000%

April 28, 2020
February 26, 2027
April 30, 2026
January 8, 2032
March 16, 2020
September 15, 2020
August 23, 2021
March 7, 2022
September 7, 2022
May 31, 2022
October 1, 2021
October 3, 2022
April 27, 2029
November 30, 2020
December 30, 2021
December 30, 2025
April 28, 2028
June 14, 2021
June 14, 2022
February 23, 2022
August 23, 2022
March 29, 2028
February 28, 2029
June 14, 2023
July 19, 2023
May 31, 2024
April 27, 2029
April 28, 2020
June 30, 2021
July 30, 2021

1,000

1.04375%

March 28, 2024

2,000

0.27000%

December 30, 2025

1,000

0.57875%

June 30, 2021

2,000

0.64750%

December 30, 2024

1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000

0.09000%
0.31630%0.45000%
0.65000%
0.40500%
0.32250%
0.66000%
0.68000%

March 31, 2022
June 30, 2026
December 17, 2029
December 16, 2031
June 30, 2028
September 3, 2025
September 3, 2030
April 30, 2032

1,000

0.29000%

October 30, 2026

¥150,500¥153,500


Repayment
methodUse of
funds

Notes

Bulletpayment(Note 3)

Unsecured/
unguaranteed/pari passu(Note 4)

Notes: 1. “Interest rate” is rounded to the nearest hundred-thousandth. The weighted average interest rate is presented for the outstanding balance of short-term loans if theinstitution has provided more than one short-term loan.
2. The earliest maturity of short-term loans is presented if the institution has provided more than one short-term loan.
3. Use of the proceeds of debt financing included purchase of property or real estate trust beneficiary interests, refinancing of other loans, and operating expenses.
4. The loan agreements between NAF and each financial institution stipulate that the above loans from all financial institutions rank pari passu to each other.
5. The interest rate is applied from February 28, 2020 to March 30, 2020.
6. The interest rate is applied from February 28, 2020 to May 28, 2020.
7. The expected annual maturities of long-term loans within five years (excluding maturities within one year) of the balance sheet date are as follows.
(Yen in millions)

Amount1 to 2 years

2 to 3 years

3 to 4 years

4 to 5 years¥20,000¥23,000¥18,500¥14,500

Bonds
None applicable

Capital Expenditures
1. Planned
NAF is planning or conducting the following capital expenditures for the renovation of its properties. The amounts below include
repairs and maintenance costs that will be expensed as incurred. Moreover, in addition to a steady planning of expenditures forconstruction, repair and renovation of facilities, a plan of renewal construction is being implemented in order to increase competitive
power in the market as well as to increase the level of tenant satisfaction.
Estimated amounts
Name of property

Objective

Estimated duration

Total amounts

Payment for thecurrent period(September 1, 2019
to February 29, 2020)

Cumulative
amount paid

(Yen in millions)Okawabata Apartment
Renewal of waterCommunities, Riverpoint Tower
heating system
and Other

From May 2020 toFebruary 2021

¥100

¥—

¥—

From November 2020
to December 2020

100

—

—

Renewal of air
Okawabata Apartment
From September 2019conditioners in rentable
Communities, Park Side Wings
to March 2020
areas

89

17

—

Okawabata Apartment
Renovation of rentable
Communities, Riverpoint Tower
areas
and Other

From March 2020 toAugust 2020

80

—

—

Park Axis Naka Gofukumachi

Repair of outside walls

From May 2020 to July
2020

40

—

—

Okawabata Apartment
Communities, Okawabata
Parking Lot

Replacement of parts for
From July 2020 tomechanical parking
February 2021
system36——

Okawabata Apartment
Communities, Okawabata
Parking Lot

Renewal of carcompartments formechanical parking
system

2. Capital Expenditures for the Current Period
The following table sets forth the capital expenditures for the current period. NAF posted ¥600 million in capital expenditures
together with ¥465 million for repairs and maintenance expenses.
Name of property

Objective

Expenditure(Yen in millions)

PeriodOkawabata Apartment
Communities, Riverpoint Tower

Renewal of elevator equipment

From September 2019 toFebruary 2020

¥215

Okawabata Apartment
Communities, Okawabata
Parking Lot

Renewal of car compartments for mechanicalparking system

From September 2019 toFebruary 2020

72

Okawabata Apartment
Communities, Okawabata
Parking Lot

Replacement of parts for mechanical parking
systemFrom September 2019 toFebruary 202033

Okawabata Apartment
Communities, Riverpoint Tower
and Other

Renovation of 5 rentable areas

From September 2019 toFebruary 2020

33

Dormy Ashiya

Repair of outside walls

From September 2019 toFebruary 2020

30

Dormy Odawara

Renewal of air conditioners in rentable areas

From September 2019 toFebruary 2020

22Park Axis Okachimachi

Repair of outside walls

From September 2019 toFebruary 202020

From September 2019 toFebruary 2020

171

Other capital expenditures
Total

¥600

3. Cash Reserve for Capital Improvements
NAF accumulates a cash reserve from cash flows to prepare for large-scale mid-term to long-term capital improvements andrepairs and maintenance that will be conducted based on NAF’s business plan for each property.
Yen in millions
As of February 29, 2020

Reserve balance at the beginning of the period
Amount accumulated in the current period
Withdrawal from reserves in the current period

¥

—
—
—

As of August 31, 2019

¥

—
—
—

Amount carried forward——
NAF has decided not to accumulate money for long-term capital improvements from the 26th Period onward.

As of February 28, 2019

¥3,148—3,148—

Expenses regarding Entrustment, etc.
The following table sets forth the breakdown of entrustment fees, etc. paid by NAF.
Yen in millions

28th Period

27th Period

26th Period

September 1, 2019
to February 29, 2020

March 1, 2019
to August 31, 2019

September 1, 2018
to February 28, 2019

¥ 856
14
28
7
12
339

¥ 928
14
35
7
12
291

¥ 851
14
29
7
12
288

¥1,259¥1,289¥1,204

Asset management fees
Asset custody fees
Agent fees (stock transfer, accounting and administrative)
Directors’ remuneration
Auditor’s fees
Other expenses
Total



Related Party Transactions
1. Transactions
None applicable
2. Fees Paid for the Period from September 1, 2019 to February 29, 2020
Description of transactions with related parties (Note 1)
Total fees paid (A)(Yen in millions)Category

Property management fees

¥750

Building management fees

384

Operation management fees

4

Leasing-related service fees, etc.

149

Amount ofpayment (B)(Yen in millions)

B/A(Note 2)

Mitsui Fudosan Residential Lease Co., Ltd.

¥750

100.0%

Mitsui Fudosan Residential Lease Co., Ltd.

379

98.7%

4

1.3%

Mitsui Fudosan Investment Advisors, Inc.

4

100.0%RESIDENT FIRST CO., LTD.

14

9.4%

Mitsui Fudosan Realty Tohoku Co., Ltd.

0

0.3%

Mitsui Fudosan Realty Co., Ltd.

0

0.3%

Mitsui Fudosan Realty Kyushu Co., Ltd.

0

0.1%

Mitsui Fudosan Realty Sapporo Co., Ltd.

0

0.0%

Paid toMitsui Fudosan Realty Co., Ltd.

3. Other Payments to Related Parties (Note 1)
Paid toAmount of payment(Yen in millions)

Mitsui Fudosan Facilities Co., Ltd.

¥11

Repair and maintenance costs

Accommodation First Co., Ltd.

5

Repair and maintenance costs

MITSUI Designtec Co., Ltd.

1

Repair and maintenance costs

Item

Notes: 1. “Related parties” means parties defined in the government ordinance regarding the Act on Investment Trusts and Investment Corporations, principally, parties related toan asset management company.
2. Figures indicate percentages of total price.

Financial Statements
Balance Sheets
Nippon Accommodations Fund Inc.
As of February 29, 2020 and August 31, 2019

U.S. dollars in thousands

Yen in millions

28th Period

As of February 29, 2020

AssetsCurrent assets:
Cash and cash equivalents (Note 2, 12)
Rent receivables
Other current assets¥

12,741
1,482
94(Note 1)27th Period

As of August 31, 2019¥28th Period

As of February 29, 2020

12,702
1,406
82$ 116,430
13,542858

Total current assets
Investment properties (Note 2, 3):Land including trust accounts
Depreciable property and improvements including trust accounts
Accumulated depreciation

14,31914,190130,850

189,792
138,785(42,723)

189,782
138,097(40,726)

1,734,369
1,268,253(390,413)

Total investment properties
Other assets

285,853
1,773

287,153
1,788

2,612,199
16,202¥ 301,946¥ 303,133$ 2,759,261

¥

¥

$

Total Assets
Liabilities and Net Assets
Liabilities
Current liabilities:
Short-term loans (Note 4, 12)Long-term loans due within one year (Note 4, 12)
Accounts payable
Rent received in advanceAccrued expenses and other liabilities

3,000
19,500
1,490
1,846
228

6,000
19,000
1,413
1,811
301

27,414
178,196
13,616
16,8692,083

Total current liabilities
Long-term liabilities:
Long-term loans (Note 4, 12)
Tenant security deposits (Note 12)

26,06628,526238,197

131,000
3,699

129,500
3,727

1,197,112
33,802

Total long-term liabilities

134,699

133,227

1,230,914

Total Liabilities¥ 160,765¥ 161,754$ 1,469,112

Net Assets
Unitholders’ capital (Note 5)
Retained earnings¥ 135,603
5,577¥ 135,603
5,775$ 1,239,175
50,964

Total Net Assets¥ 141,181¥ 141,378$ 1,290,148

Total Liabilities and Net Assets¥ 301,946¥ 303,133$ 2,759,261

The accompanying notes to financial statements are an integral part of these statements.

Statements of Income
Nippon Accommodations Fund Inc.

September 1, 2019 to February 29, 2020, March 1, 2019 to August 31, 2019 and September 1, 2018 to February 28, 2019

U.S. dollars in thousands

Yen in millions

28th Period

Revenues
Rental (Note 6)
Other revenues related to property leasing(Note 6)
Gain on sale of investment properties (Note 7)
Total revenues
Operating Expenses
Property management fees (Note 6)
Real estate taxes and insurance (Note 6)
Repairs and maintenance (Note 6)
Other rental expenses (Note 6)
Depreciation and amortization (Note 6)
Asset management fees
Other expenses
Total operating expenses

27th Period(Note 1)

26th Period

28th Period

September 1, 2019
to February 29, 2020

March 1, 2019
to August 31, 2019

September 1, 2018
to February 28, 2019

September 1, 2019
to February 29, 2020

¥ 10,934¥ 10,877¥ 10,695$ 99,917

467

544

441

4,267

—

939

48

—

11,401

12,361

11,186104,185

1,174
621
465
575
1,998
856
402

1,187
627
513
638
2,020
928
361

1,171
615
426
575
2,007
851
353

10,728
5,674
4,249
5,254
18,258
7,822
3,673

6,094

6,277

6,001

55,688Operating Income

5,307

6,084

5,185

48,496

Interest and other income
Interest expense
Other expenses

21
(454)
(8)

6
(456)
(9)

10
(457)
(7)

191
(4,148)(73)

Income before Income Taxes

4,866

5,624

4,729

44,466

Current and deferred income taxes (Note 9)
Net Income

0

0

0

0

¥ 4,865¥ 5,623¥ 4,728$ 44,457

The accompanying notes to financial statements are an integral part of these statements.

Statements of Changes in Net Assets
Nippon Accommodations Fund Inc.

For the period from September 1, 2018 to February 29, 2020

Yen in millions

Balance as of September 1, 2018
Cash distribution
Net income
Balance as of February 28, 2019
Cash distribution
Net income
Balance as of August 31, 2019
Cash distribution
Net income
Balance as of February 29, 2020

Number of
Units(Note 5)Unitholders’Capital484,522¥ 135,603

—
—

—
—

484,522——484,522——484,522¥ 135,603

Retained
Earnings

¥

Total

4,563

¥ 140,167(4,438)4,728(4,438)
4,728

135,603

4,854

140,457——(4,702)
5,623(4,702)
5,623

135,603

5,775

141,378——(5,062)
4,865(5,062)
4,865

5,577

¥ 141,181¥

U.S. dollars in thousands (Note 1)

Balance as of August 31, 2019
Cash distribution
Net income
Balance as of February 29, 2020
The accompanying notes to financial statements are an integral part of these statements.



Number of
Units(Note 5)Unitholders’CapitalRetained
Earnings

Total

484,522$1,239,175$ 52,773$ 1,291,949

—
—

—
—

(46,257)
44,457(46,257)
44,457484,522$1,239,175$ 50,964$ 1,290,148

Statements of Cash Flows
Nippon Accommodations Fund Inc.

September 1, 2019 to February 29, 2020, March 1, 2019 to August 31, 2019 and September 1, 2018 to February 28, 2019

U.S. dollars in thousands

Yen in millions

28th Period

27th Period(Note 1)

26th Period

28th Period

September 1, 2019
to February 29, 2020

March 1, 2019
to August 31, 2019

September 1, 2018
to February 28, 2019

September 1, 2019
to February 29, 2020

¥ 4,866
1,998
454
(76)
77

¥ 5,624
2,021
456
41
259

¥ 4,729
2,007
457
(62)
(177)

$ 44,466
18,258
4,148
(694)
703

35

4

27

319

—
(460)

2,086
(450)

1,544
(470)

—
(4,203)

(12)
(50)

—
59

—
37

(109)
(456)

Net Cash Provided by Operating Activities

6,832

10,103

8,093

62,432

Cash Flows from Investing Activities:
Payments for purchases ofinvestment properties
Proceeds from tenant security deposits
Payments for tenant security deposits
Other, net

(698)
243
(272)
(3)

(6,193)
406
(379)
(3)

(5,599)
318
(280)
(3)

(6,378)2,220(2,485)(27)

Net Cash Used in Investing Activities(730)(6,170)(5,564)(6,670)Cash Flows from Financing Activities:
Proceeds from short-term loans
Repayment of short-term loans
Proceeds from long-term loans
Repayment of long-term loans
Payment of distribution

13,000(16,000)
11,500(9,500)(5,063)50,000(52,000)
15,500(8,500)(4,702)58,000(57,000)
10,000(9,000)(4,438)

118,797(146,212)
105,090(86,813)(46,267)

Net Cash Provided by (Used in) Financing Activities(6,063)297(2,438)(55,405)

Net Change in Cash and Cash Equivalents
Cash and Cash Equivalents at the Beginningof the Period

38

4,231

90

347

12,702

8,471

8,380

116,074¥ 12,741¥ 12,702¥ 8,471$ 116,430

Cash Flows from Operating Activities:
Income before income taxes
Depreciation and amortization
Interest expense(Increase) Decrease in rent receivables
Increase (Decrease) in accounts payable
Increase (Decrease) in rents received
in advance
Decrease in investment properties
due to sales
Cash payments of interest expense(Increase) Decrease in consumption tax
refund receivable
Other, net

Cash and Cash Equivalents at the Endof the Period (Note 2)

The accompanying notes to financial statements are an integral part of these statements.

Notes to Financial Statements
Nippon Accommodations Fund Inc.
September 1, 2019 to February 29, 2020, March 1, 2019 to August 31, 2019 and September 1, 2018 to February 28, 2019

Note 1

Organization and Basis of Presentation

Organization
Nippon Accommodations Fund Inc. (hereinafter “NAF”) was established on October 12, 2005 as an investment corporation under the Act
on Investment Trusts and Investment Corporations with Mitsui Fudosan Accommodations Fund Management Co., Ltd. (hereinafter “MFAFM”)
acting as a sponsor. Registration with the Kanto Local Finance Bureau of the Ministry of Finance was completed on November 11, 2005 andNAF started acquisition of properties on November 30, 2005.
NAF is an externally managed real estate fund, formed as an investment corporation. MFAFM, as NAF’s asset management company,
is engaged in the acquisition, management, and renovation of accommodation assets. MFAFM is a 100% subsidiary of Mitsui Fudosan Co.,Ltd.
On August 3, 2006, NAF had raised approximately ¥40,000 million through an initial public offering of investment units. Those investment
units are listed on the J-REIT section of the Tokyo Stock Exchange.
As of February 29, 2020, NAF had ownership and/or beneficiary interests in 126 properties containing approximately 508,052 square
meters of rentable space. As of February 29, 2020, NAF had leased approximately 499,235 square meters to tenants. The occupancy rate
for the properties was approximately 98.3%.

Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in the Act on Investment Trusts
and Investment Corporations and the Financial Instruments and Exchange Act and its related accounting regulations, and in conformity withaccounting principles generally accepted in Japan (hereinafter “Japanese GAAP”), which are different in certain respects as to applicationand disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements have been restructured and translated into English from the financial statements of NAF preparedin accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the
Financial Instruments and Exchange Act. Some supplementary information included in the statutory Japanese language financial statements,
but not required for fair presentation, is not presented in the accompanying financial statements. NAF does not prepare consolidated financial
statements, as NAF has no subsidiaries.
Amounts less than 1 million yen have been omitted. As a result, the totals in Japanese yen shown in the financial statements do notnecessarily agree with the sum of the individual amounts.
The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of readers outside Japan, using theapproximate exchange rate on February 29, 2020, which was ¥109.43 to U.S.$1.00. The convenience translation should not be construed
as representation that the Japanese yen amounts have been, or could in future be, converted into U.S. dollars at this or any other rate ofexchange.

Note 2

Summary of Significant Accounting Policies

Cash and Cash Equivalents
NAF considers all highly liquid investments with original maturity of three months or less to be cash and cash equivalents.

Investment Properties
Investment properties are recorded at cost, which includes the purchase price and related costs and expenses for acquisition of theproperties and the beneficiary interests of properties in trust. Property and equipment balances are depreciated using the straight-line method
over the estimated useful lives. The estimated useful lives of the principal investment properties (including assets held in trust) are as follows:
Buildings and improvements
Structures
Machinery and equipment
Tools, furniture and fixtures

2-63 years
2-60 years
2-45 years
2-15 years

Costs related to the renovation, construction and improvement of properties are capitalized. Expenditures for repairs and maintenancewhich do not add to the value or prolong the useful life of a property, are expensed as incurred.

Income Taxes
Income taxes are accounted for on the basis of income for financial statement purposes. The tax effect of temporary differences between
the amounts of assets and liabilities for financial statements and for income tax purposes is recognized as deferred taxes.

Real Estate Taxes
Properties are subject to taxes including property tax, city planning tax and depreciable asset tax. Taxes for each fiscal period are charged
to income on an accrual basis.
The owner of properties is registered in a record maintained by the local government in each jurisdiction, and the taxes are imposed on
the owner registered in the record, as of January 1, based on the assessment made by the local government.
Even when a property is purchased on a date other than January 1 of any given calendar year, these taxes for that year are imposed on
the seller. The buyer pays the seller the corresponding tax amounts for the period from the property’s transfer date to December 31 of thatyear as part of the purchase prices of each property, and capitalizes these amounts as the cost of the property. Capitalized property tax forthe period ended August 31, 2019 amounted to ¥12 million. No property tax was capitalized for the period ended February 29, 2020.

Accounting Treatment of Beneficiary Interests in Trust Assets including Real Estate
For trust beneficiary interests in real estate, all assets and liabilities associated with assets in trust as well as all income generated andexpenses incurred from assets in trust are recorded in the relevant balance sheet and income statement accounts.

Note 3

Schedule of Investment Properties

Investment properties as of February 29, 2020 and August 31, 2019 consisted of the following:
Yen in millions

As of February 29, 2020

Land
Land in trust
Land including trust total

Acquisition
costs

Accumulated
depreciation¥ 133,007
56,784¥As of August 31, 2019

Book value

Acquisition
costs

Accumulated
depreciation——¥ 133,007
56,784¥ 132,998
56,784¥

Book value——¥ 132,998
56,784

189,792—

189,792

189,782—

189,782

Buildings and improvements
Buildings and improvements in trust

94,48737,058(26,273)(11,552)

68,21425,506

94,28736,742(24,938)(11,048)

69,34825,693

Buildings and improvements
including those in trust total

131,546(37,825)

93,720131,029(35,987)

95,041

Structures
Machinery and equipment
Tools, furniture and fixtures
Construction in process
Structures in trust
Machinery and equipment in trust
Tools, furniture and fixtures in trust
Construction in process in trust

1,676
2,175
1,187
1
1,127
584
461
25

(970)
(1,597)
(988)
—
(466)
(501)
(373)
—

705
577
198
1
661
83
88
25

1,675
2,082
1,149
2
1,125
578
448
6

(933)
(1,531)
(971)
—
(447)
(492)
(362)
—

741
551
177
2
677
86
86
6

Other investment properties total
Total

7,239

(4,898)

2,341

7,068

(4,738)2,329¥ 328,577¥ (42,723)¥ 285,853¥ 327,880¥ (40,726)¥ 287,153



Note 4

Short-Term Loans and Long-Term Debt

The annual interest rate on short-term loans as of February 29, 2020 was 0.1% and the rate as of August 31, 2019 was 0.1%.
Long-term debt consists of the following:
Yen in millions

As of February 29, 2020

Unsecured loans due 2020 to 2032 principallyfrom banks and insurance companies withinterest rates mainly ranging from 0.1% to 1.4%

As of August 31, 2019

¥150,500¥148,500¥150,500¥148,500

The annual maturities of long-term debt as of February 29, 2020 were as follows:
Yen in millions

Due after one to two years
Due after two to three years
Due after three to four years
Due after four to five years
Due after five years¥20,000
23,00018,50014,50055,000

NAF currently has commitment line contracts of ¥15,000 million with three financial institutions. The unused amount of such commitmentline was ¥15,000 million as of February 29, 2020.
Note 5Unitholders’ Capital
As of February 29, 2020

As of August 31, 2019

As of February 28, 2019

4,000,000
484,5224,000,000
484,5224,000,000
484,522

Total number of common units authorized
Total number of common units issued and outstanding

NAF shall maintain minimum net assets of at least ¥50 million as required by the Act on Investment Trusts and Investment Corporations.

Note 6

Rental Revenues and Expenses

Rental revenues and expenses for the periods ended February 29, 2020, August 31, 2019 and February 28, 2019 were as follows:
Yen in millions

28th Period

Revenues from Property Leasing:
Rental:Rental revenues
Facility charge

27th Period

26th Period

September 1, 2019
to February 29, 2020

March 1, 2019
to August 31, 2019

September 1, 2018
to February 28, 2019

¥ 10,462
472¥ 10,397
479¥ 10,217
478

10,934

10,877

10,695

359
107

423
120

334
107

Subtotal
Other revenues related to property leasing:
Income from leasing rights, etc.
Miscellaneous income

467

544

441

Total revenues from property leasing

Subtotal

11,401

11,421

11,137

Rental Expenses:
Property management fees
Repairs and maintenanceReal estate taxes
Trust fees
Utilities
Insurance
Depreciation and amortization
Leasing-related service fees, etc.
Other rental expenses

1,174
465
603
10
115
17
1,998
149
299

1,187
513
608
10
117
18
2,020
179
331

1,171
426
597
10
109
17
2,007
156
300

Total rental expenses
Operating income from property leasing activities

Note 7

4,835

4,988

4,796

¥ 6,566¥ 6,433¥ 6,340

Breakdown of Gain on Sale of Investment Properties

Gain on sale of investment properties for the periods ended February 29, 2020, August 31, 2019 and February 28, 2019 were as follows:
28th Period (September 1, 2019 to February 29, 2020)
None applicable
27th Period (March 1, 2019 to August 31, 2019)
Park Axis Esaka Hiroshibacho

Yen in millions

Revenues from sale of investment properties
Cost of investment properties sold
Other sales expenses¥3,0892,086
62Gain on sale of investment properties¥ 939

26th Period (September 1, 2018 to February 28, 2019)
Park Cube Ikebukuro Kanamecho

Yen in millions

Revenues from sale of investment properties
Cost of investment properties sold
Other sales expenses¥1,6201,544
26Gain on sale of investment properties

¥



48

Note 8

LeasesNAF leases some of its investment properties to outside parties under non-cancelable operating leases. As of February 29, 2020 andAugust 31, 2019, future minimum rental revenues under the non-cancelable operating leases were as follows:
Yen in millions

As of February 29, 2020

Due within one year
Due after one year
Total

Note 9As of August 31, 2019

¥1,141
1,029¥1,0991,434¥2,170¥2,533

Income Taxes

NAF is subject to income taxes in Japan. The effective tax rates on NAF’s income based on applicable Japanese tax law were 0.02%,
0.02% and 0.02% for the periods ended February 29, 2020, August 31, 2019 and February 28, 2019, respectively. The following tablesummarizes the significant differences between the statutory tax rates and NAF’s effective tax rates for financial statement purposes.
28th Period

September 1, 2019
to February 29, 2020

Statutory effective tax rate
Deductible distributions paid
Others
Effective tax rate

27th Period

March 1, 2019
to August 31, 2019

26th Period

September 1, 2018
to February 28, 201931.51%(31.50)0.01

31.51%(28.36)(3.13)

31.51%(31.33)(0.16)

0.02%

0.02%

0.02%

The tax effects of significant temporary differences that resulted in net deferred tax assets or liabilities as of February 29, 2020, August
31, 2019 and February 28, 2019 were as follows:
Yen in thousands

As of February 29, 2020

As of August 31, 2019

As of February 28, 2019

Deferred tax assets:
Enterprise taxes
Total deferred tax assets

¥10
10

¥13
13

¥17
17

Net deferred tax assets

¥10

¥13

¥17

NAF was established as an investment corporation under the Act on Investment Trusts and Investment Corporations, and as long as aninvestment corporation distributes to its unitholders at least 90% of earnings available for dividends for a period and other requirements
prescribed in Japanese tax regulations are met, the investment corporation is allowed to deduct the total amount of distributions paid in
calculating its taxable income under Japanese tax regulations.

Note 10Per Unit Information

Information about earnings per unit for the periods ended February 29, 2020, August 31, 2019 and February 28, 2019 and net assets perunit as of February 29, 2020, August 31, 2019 and February 28, 2019 were as follows.
The computation of earnings per unit is based on the weighted average number of common units outstanding during the period. The
computation of net assets per unit is based on the number of common units outstanding at each period end.
Yen

Earnings per Unit:
Net income
Weighted average number ofcommon units outstanding

Net Assets per Unit

Note 1128th Period

27th Period

26th Period

September 1, 2019
to February 29, 2020

March 1, 2019
to August 31, 2019

September 1, 2018
to February 28, 2019¥10,041¥11,606¥9,759484,522484,522484,522

As of February 29, 2020

As of August 31, 2019

As of February 28, 2019

¥291,382¥291,790¥289,889

Transactions with Related Parties(September 1, 2019 - February 29, 2020)(1) Parent Company and Major Corporate Unitholders: None applicable(2) Affiliates: None applicable(3) Sister Companies: None applicable(4) Directors and Major Individual Unitholders
Classification

Director and/or
close relative

Name

Tateyuki Ikura

Principal businessor occupation

Nature of transaction

Amount oftransaction

Account(Yen in millions)Payment of asset management
fee to MFAFM (Note 1)
Executive Directorof NAF and
President & CEO
Payment for the provision ofof MFAFM
general administration relating toorganizational management to
MFAFM (Note 3)

Balance at theend of the period(Yen in millions)¥856(Note 2)

Accounts payable

¥941

¥1

—

—

Notes: 1. Tateyuki Ikura entered into this transaction as a representative of MFAFM, and this amount is subject to the conditions set forth in the by-laws of NAF.
2. No fees for management related to acquisition of properties included in the book value of each investment property, etc. were required to be disclosed as asset
management fees.
3. Tateyuki Ikura entered into this transaction as a representative of MFAFM, and this amount is set forth in the “General Administration Agreement relating to Organizational
Management” concluded between NAF and MFAFM.
4. “Amount of transaction” does not include consumption taxes.
“Balance at the end of the period” includes consumption taxes.

(March 1, 2019 - August 31, 2019)(1) Parent Company and Major Corporate Unitholders: None applicable(2) Affiliates: None applicable(3) Sister Companies: None applicable(4) Directors and Major Individual Unitholders
Classification

Director and/or
close relative

Name

Tateyuki Ikura

Principal businessor occupation

Nature of transaction

Amount oftransaction

Account(Yen in millions)Payment of asset management
fee to MFAFM (Note 1)
Executive Directorof NAF and
President & CEO
Payment for the provision ofof MFAFM
general administration relating toorganizational management to
MFAFM (Note 3)

Balance at theend of the period(Yen in millions)¥972(Note 2)

Accounts payable¥1,002¥6——

Notes: 1. Tateyuki Ikura entered into this transaction as a representative of MFAFM, and this amount is subject to the conditions set forth in the by-laws of NAF.
2. The amount of asset management fees includes ¥44 million of management fees related to acquisition of properties included in the book value of each investment
property, etc.
3. Tateyuki Ikura entered into this transaction as a representative of MFAFM, and this amount is set forth in the “General Administration Agreement relating to Organizational
Management” concluded between NAF and MFAFM.
4. “Amount of transaction” does not include consumption taxes.
“Balance at the end of the period” includes consumption taxes.

(September 1, 2018 - February 28, 2019)(1) Parent Company and Major Corporate Unitholders: None applicable(2) Affiliates: None applicable(3) Sister Companies: None applicable(4) Directors and Major Individual Unitholders
Classification

Director and/or
close relative

Name

Tateyuki Ikura

Principal businessor occupation

Nature of transaction

Amount oftransaction

Account(Yen in millions)Payment of asset management
fee to MFAFM (Note 1)
Executive Directorof NAF and
President & CEO
Payment for the provision ofof MFAFM
general administration relating toorganizational management to
MFAFM (Note 3)

Balance at theend of the period(Yen in millions)¥898(Note 2)

Accounts payable

¥901

¥0

—

—

Notes: 1. Tateyuki Ikura entered into this transaction as a representative of MFAFM, and this amount is subject to the conditions set forth in the by-laws of NAF.
2. The amount of asset management fees includes ¥46 million of management fees related to acquisition of properties included in the book value of each investment
property, etc.
3. Tateyuki Ikura entered into this transaction as a representative of MFAFM, and this amount is set forth in the “General Administration Agreement relating to Organizational
Management” concluded between NAF and MFAFM.
4. “Amount of transaction” does not include consumption taxes.
“Balance at the end of the period” includes consumption taxes.

Note 12Financial Instruments(September 1, 2019 – February 29, 2020)

1. Status of Financial Instruments(1) Policy for Financial Instruments
NAF procures funds for acquisition of assets and other uses through bank loans, issuance of bonds and investment units.
NAF may enter into derivative transactions solely for the purpose of hedging interest rate risk. Currently, NAF is not engaged in any
derivative transactions. NAF strives for efficiency in its funding plans and has an operating policy of minimizing surplus funds.
(2) Financial Instruments, Their Risks and Risk Management System
Funds from loans are primarily used for acquiring assets and to repay interest-bearing debt. NAF manages associated liquidity andinterest rate fluctuation risk in ways such as diversifying its credit sources and maturities, and by mainly using fixed-rate loans.
(3) Supplemental Explanation regarding Fair Values of Financial Instruments
The fair value of financial instruments is based on their observable market value, if available. When there is no observable market
value available, fair value is based on a price that is reasonably estimated. Since various factors are reflected in estimating the fair value,
different assumptions and factors could result in a different value.

2. Estimated Fair Value of Financial Instruments
Book value, fair value and the difference between the two as of February 29, 2020 were as follows. The financial instruments for which it is very
difficult to estimate the fair value are excluded from the following table (See Note 2, below).
Yen in millions

Assets(1) Cash and cash equivalents
Total
Liabilities(1) Short-term loans(2) Long-term loans due within one year
(3) Long-term loans
Total

Book value

Fair value¥ 12,741¥ 12,741¥—¥ 12,741¥ 12,741

¥

—

¥

¥

3,000
19,575
133,772

¥

—
75
2,772

¥ 156,347

¥

2,847

3,000
19,500131,000¥ 153,500

Difference

Notes: 1. Methods to estimate fair value of financial instruments
Assets:(1) Cash and cash equivalents
Book values of these instruments are used to determine their fair values, as the book values are considered to approximate fair values because these instruments aresettled within a short-term period.
Liabilities:(1) Short-term loans
Book values of these instruments are used to determine their fair values, as the book values are considered to approximate fair values because these instruments aresettled within a short-term period.
(2) Long-term loans due within one year and (3) Long-term loans
Fair values of fixed-rate instruments are based on the present value of principal and interest cash flows discounted at the current interest rate estimated to be applied
if similar new loans were entered into. Fair values of variable-rate instruments are considered to be their book values because these instruments reflect market interest
rates over short time periods.
2. Financial instruments for which it is very difficult to estimate the fair value
Yen in millions
Book value

Tenant security deposits¥3,699Security deposits from tenants are not subject to fair value disclosure because they are not marketable, and the actual deposit period is not estimable as leases may
be cancelled, renewed or re-signed even if a lease term is set in the lease contract, making a reasonable estimate of future cash flows difficult.
3. Redemption schedule for monetary claims with maturity dates after February 29, 2020
Yen in millions
Due within
one year

Cash and cash equivalents¥12,741

4. Repayment schedule for loans after February 29, 2020
Yen in millions
Due within
one year

Due after
one to two years

—

—

¥

—

Due after
four to five years¥—

Due after
five years¥ 3,000

Long-term loans

19,50020,00023,00018,50014,50055,000¥ 22,500¥ 20,000¥ 23,000¥ 18,500¥ 14,500¥ 55,000¥

Due after
three to four years

Short-term loans
Total

¥

Due after
two to three years¥—

(March 1, 2019 – August 31, 2019)

1. Status of Financial Instruments
Same as above.

2. Estimated Fair Value of Financial Instruments
Book value, fair value and the difference between the two as of August 31, 2019 were as follows. The financial instruments for which it is very
difficult to estimate the fair value are excluded from the following table (See Note 2, below).
Yen in millions

Assets(1) Cash and cash equivalents
Total
Liabilities(1) Short-term loans(2) Long-term loans due within one year
(3) Long-term loans
Total

Book value

Fair value¥ 12,702¥ 12,702¥—¥ 12,702¥ 12,702

¥

—

¥

¥

6,000
19,078132,433

¥

—
78
2,933

¥ 157,511

¥

3,011

6,000
19,000129,500¥ 154,500

Difference

Notes: 1. Methods to estimate fair value of financial instruments
Assets:(1) Cash and cash equivalents
Book values of these instruments are used to determine their fair values, as the book values are considered to approximate fair values because these instruments aresettled within a short-term period.
Liabilities:(1) Short-term loans
Book values of these instruments are used to determine their fair values, as the book values are considered to approximate fair values because these instruments aresettled within a short-term period.
(2) Long-term loans due within one year and (3) Long-term loans
Fair values of fixed-rate instruments are based on the present value of principal and interest cash flows discounted at the current interest rate estimated to be applied
if similar new loans were entered into. Fair values of variable-rate instruments are considered to be their book values because these instruments reflect market interest
rates over short time periods.
2. Financial instruments for which it is very difficult to estimate the fair value
Yen in millions
Book value

Tenant security deposits¥3,727

Security deposits from tenants are not subject to fair value disclosure because they are not marketable, and the actual deposit period is not estimable as leases may
be cancelled, renewed or re-signed even if a lease term is set in the lease contract, making a reasonable estimate of future cash flows difficult.
3. Redemption schedule for monetary claims with maturity dates after August 31, 2019
Yen in millions
Due within
one year

Cash and cash equivalents¥12,702

4. Repayment schedule for loans after August 31, 2019
Yen in millions
Due within
one year

Due after
one to two years

—

—

¥

—

Due after
four to five years¥—

Due after
five years¥ 6,000

Long-term loans

19,00020,00022,00022,50011,00054,000¥ 25,000¥ 20,000¥ 22,000¥ 22,500¥ 11,000¥ 54,000¥

Due after
three to four years

Short-term loans
Total

¥

Due after
two to three years¥—

Note 13

Investment and Rental Properties(September 1, 2019 - February 29, 2020)
NAF owns rental properties including land located in Tokyo and other areas. The book value, net changes in the book value and the fair value ofthe investment and rental properties were as follows.
Yen in millions
Book value

Fair value

As of September 1, 2019

Change during the 28th Period

As of February 29, 2020

As of February 29, 2020

¥287,761(¥1,317)¥286,443¥384,280

Notes: 1. “Book value” is the acquisition cost inclusive of acquisition expenses less accumulated depreciation and excluding expenses for construction in process.
2. In “Change during the 28th Period,” the main factor for the decrease in book value was depreciation.
3. “Fair value as of February 29, 2020” is based on appraisals provided by independent real estate appraisers.

Information about profit and loss from investment and rental properties for the period ended February 29, 2020 is disclosed in Note 6, Rental
Revenues and Expenses.

(March 1, 2019 - August 31, 2019)
NAF owns rental properties including land located in Tokyo and other areas. The book value, net changes in the book value and the fair value ofthe investment and rental properties were as follows.
Yen in millions
Book value

Fair value

As of March 1, 2019

Change during the 27th Period

As of August 31, 2019

As of August 31, 2019

¥285,482¥2,279¥287,761¥372,352

Notes: 1. “Book value” is the acquisition cost inclusive of acquisition expenses less accumulated depreciation and excluding expenses for construction in process.
2. In “Change during the 27th Period,” the main factor for the increase in book value was the acquisition of properties for ¥5,997 million. The main factors for the decreasein book value were ¥2,086 million for the sale of Park Axis Esaka Hiroshibacho and depreciation.
3. “Fair value as of August 31, 2019” is based on appraisals provided by independent real estate appraisers.

Information about profit and loss from investment and rental properties for the period ended August 31, 2019 is disclosed in Note 6, Rental
Revenues and Expenses and Note 7, Breakdown of Gain on Sale of Investment Properties.

Note 14Segment Information(September 1, 2019 - February 29, 2020)

1. Segment Information
Segment information has been omitted as NAF has only one segment, which is real estate leasing business.

2. Related Information(1) Information by Products and Services
Disclosure of this information has been omitted as NAF has a single product/service line that accounts for more than 90% of total revenues.

(2) Information by Geographic Areas
1) Operating revenues
Disclosure of this information has been omitted as total domestic revenues account for more than 90% of total revenues.
2) Investment properties
Disclosure of this information has been omitted as total domestic investment properties account for more than 90% of the book value of total
investment properties.

(3) Information on Major Tenants
TenantMitsui Fudosan Residential Lease Co., Ltd.

Operating revenues(Yen in millions)¥10,781

Related segment

Real estate leasing business(March 1, 2019 - August 31, 2019)

1. Segment Information
Segment information has been omitted as NAF has only one segment, which is real estate leasing business.

2. Related Information(1) Information by Products and Services
Disclosure of this information has been omitted as NAF has a single product/service line that accounts for more than 90% of total revenues.

(2) Information by Geographic Areas
1) Operating revenues
Disclosure of this information has been omitted as total domestic revenues account for more than 90% of total revenues.
2) Investment properties
Disclosure of this information has been omitted as total domestic investment properties account for more than 90% of the book value of total
investment properties.

(3) Information on Major Tenants
TenantMitsui Fudosan Residential Lease Co., Ltd.

Operating revenues(Yen in millions)¥10,831

Related segment

Real estate leasing business(September 1, 2018 - February 28, 2019)

1. Segment Information
Segment information has been omitted as NAF has only one segment, which is real estate leasing business.

2. Related Information(1) Information by Products and Services
Disclosure of this information has been omitted as NAF has a single product/service line that accounts for more than 90% of total revenues.

(2) Information by Geographic Areas
1) Operating revenues
Disclosure of this information has been omitted as total domestic revenues account for more than 90% of total revenues.
2) Investment properties
Disclosure of this information has been omitted as total domestic investment properties account for more than 90% of the book value of total
investment properties.

(3) Information on Major Tenants
TenantMitsui Fudosan Residential Lease Co., Ltd.

Note 15

Operating revenues(Yen in millions)¥10,599

Significant Subsequent Events

None applicable

Related segment

Real estate leasing businessIndependent Auditor’s ReportSummary of REIT
Structure of REIT (as of February 29, 2020)
Asset Custodian
Sumitomo Mitsui
Trust Bank, Limited

Independent Auditor

REIT
Master Lease and Property
Management Agreement

Asset Custody Agreement

Property Management
Company

Transfer Agent
Sumitomo Mitsui
Trust Bank, Limited
General Administrative Agent(Accounting)
RWA Accounting Holdings Co., Ltd.*

Mitsui Fudosan
Residential Lease Co., Ltd.

Transfer Agency Service
Agreement/ Agreement regarding
Management of Special Accounts

General Administrative Service
Agreement (Accounting)General Administrative Agent(Tax Return Filing)

PwC Zeirishi-Hojin

KPMG AZSA LLC

Fiscal Administrative Service
Agreement (Tax Return Filing)

Nippon Accommodations
Fund Inc.
(TSE 3226)
REIT Management Agreement andGeneral Administrative Service Agreement

REIT Management
Company

Real Estate Information/
Advisory Service Provider
Mitsui Fudosan
Residential Co., Ltd.

Real Estate Information
ProviderMitsui Fudosan
Realty Co., Ltd.

Agreement on Provisionof Real Estate Information/
Advisory Service

Memorandum on Provisionof Real Estate Brokerage
Information

Mitsui Fudosan
Accommodations FundManagement Co., Ltd.

Property Management
Company
Basic Agreement on
Property Management

Mitsui Fudosan
Residential Lease Co., Ltd.

Parent Company of
REIT Management
Company
Mitsui Fudosan Co., Ltd.

* On October 1, 2019, NAF terminated its contract for accounting services with Heisei Kaikeisha Tax Corporation due to restructuring at Heisei Kaikeisha Tax Corporationand signed a contract for accounting services with RWA Accounting Holdings Co., Ltd.

Nippon Accommodations Fund Inc. (“NAF”) has
concluded a REIT Management Agreement with Mitsui
Fudosan Accommodations Fund Management Co., Ltd.,the asset management company required under the Act on
Investment Trusts and Investment Corporations, and has
entrusted management of all of its assets.
Mitsui Fudosan Accommodations Fund Management
Co., Ltd. is a 100 percent subsidiary of Mitsui Fudosan Co.,
Ltd., and has concluded contracts with other companies
in the Mitsui Fudosan Group to promote smooth, effective
management of NAF’s assets. Through an Agreement on

Provision of Real Estate Information/Advisory Service with
Mitsui Fudosan Residential Co., Ltd., information regarding
real estate sales and other management advisory information
is provided. In addition, a Memorandum on Provision ofReal Estate Brokerage Information with Mitsui Fudosan
Realty Co., Ltd. provides access to certain real estate
property information. Also, a Basic Agreement on Property
Management with Mitsui Fudosan Residential Lease Co.,
Ltd., is fundamental to NAF’s policy of outsourcing property
management services of all its rental apartments.

39

Summary of Asset Management Company
Summary of Asset Management Company (as of February 29, 2020)
Trade name

Mitsui Fudosan Accommodations Fund Management Co., Ltd.

Corporate office

4-1, Nihonbashi 1-chome, Chuo-ku, Tokyo 103-0027, JapanTEL+81-3-3246-3677

Date of incorporation

January 4, 2005

Capital¥300 million

Unitholder

Mitsui Fudosan Co., Ltd. (100%)

Representative

Tateyuki Ikura
President & CEO

Main Business

Investment Management Business
Financial instruments business operator Director-General of the Kanto Local Finance Bureau(financial instruments business) No. 401

Independent auditor

KPMG AZSA LLC

History
January 4, 2005

EstablishedMarch 4, 2005

Obtained license as a building lots and building transactions agent under the Building Lots andBuilding Transactions Law

March 25, 2005

Changed name (from “MF Residential Asset Management Co., Ltd.” to“Mitsui Fudosan Residential Fund Management Co., Ltd.”)

July 8, 2005

Obtained approval as a discretionary transaction agent under the Building Lots andBuilding Transactions Law

September 26, 2005

Obtained approval as a REIT management company under the Investment Trust and Investment
Corporation Act of Japan

December 15, 2005

Changed name to Mitsui Fudosan Accommodations Fund Management Co., Ltd.

February 8, 2006

Obtained approval to undertake management of the institutions

September 30, 2007

Registration of financial instruments and exchange business

Organization Chart
General Meeting ofStockholders
AuditorBoard of Directors
Compliance Committee

CCO
CEO

Investment Committee

Investment
Division

Investment, Research &Strategy Team

CIO

CFO

Asset Management Team

Financial Team40

Financial
Division

Corporate Operation
TeamStatus of Unitholders
Historical Unit Price since IPO
Index: Date of IPO (NAF: August 4, 2006) = 100
240

NAF Unit Price (Closing Price)
Tokyo Stock Exchange REIT Index (Closing Price)*

220
200
180
160
140
120
100
80
60
40
20
0
06/08

07/02

07/08

08/02

08/08

09/02

09/08

10/02

10/08

11/02

11/08

12/02

12/08

13/02

13/08

14/02

14/08

15/02

15/08

16/02

16/08

17/02

17/08

18/02

18/08

19/02

19/08

20/02

* The Tokyo Stock Exchange calculates and presents the Tokyo Stock Exchange REIT Index, which is a weighted average aggregate market price index for all real estate investment trusts listed on the Tokyo Stock Exchange.

Composition and Distribution of Unitholders (as of February 29, 2020)
Other financial institutions:66(1.40%)

Overseas investors:
224(4.73%)

Regional banks:42(0.89%)

Other:
117(2.47%)

Other:
38,872(8.02%)

Trust banks (investment trusts, etc.):
16(0.34%)

Individuals:
20,440(4.22%)

Overseas investors:
80,933(16.70%)

Other financial institutions:
28,669(5.92%)

Individuals:
4,266(90.17%)

Trust banks(investment trusts, etc.):
261,270(53.92%)

Regional banks:
54,338(11.22%)

Number of unitholders(Total 4,731 people)

Number of units held
(Total 484,522 units)

41Disclaimer
This document was prepared solely for the convenience ofand reference by overseas investors and does not correspondto the original Japanese documents. The information
provided in this document does not constitute the disclosure
or asset management reports required under the Financial
Instruments and Exchange Act or Act on Investment Trusts
and Investment Corporations.
This English document contains selected information
including a partial translation of the Securities Report (Yuka
shoken hokokusho) filed on May 29, 2020 pursuant to the
Financial Instruments and Exchange Law of Japan, and the
Financial Statements and Performance Information Report forthe period from September 1, 2019 to February 29, 2020 of
Nippon Accommodations Fund Inc. prepared pursuant to the
Act on Investment Trusts and Investment Corporations. This
document should not be deemed a summary of the above
mentioned Securities Report and the Financial Statements andPerformance Information Report. Nippon Accommodations
Fund Inc. has exercised due care in providing the informationin this document, but does not guarantee its accuracy orcompleteness.
The contents of this document do not constitute an offer
to sell or solicitation of an offer to buy or sell any securities
of Nippon Accommodations Fund Inc. or otherwise, nor is it
advice or the recommendation of Nippon Accommodations
Fund Inc. to enter into any transaction. Factors includingchanges in the price or earning capacity of real estate undermanagement, or worsening of the financial condition of theissuing entity, may cause the trading price of real estate
investment securities to drop, resulting in a loss for theinvestor. Investment decisions should be based on your own
judgment and responsibility. Please consult with a securities
company regarding the purchase of units or investment
corporation bonds of Nippon Accommodations Fund Inc.
English terms for Japanese legal, accounting, tax andbusiness concepts used herein may not be precisely identicalto the concept of the equivalent Japanese terms. If there
exist any discrepancies in the meaning or interpretation
with respect to any and all terms herein including, without
limitation, financial statements, between the original Japanese

documents and English statements contained herein, theoriginal Japanese documents will always govern the meaning
and interpretation. None of Nippon Accommodations Fund
Inc., Mitsui Fudosan Accommodations Fund Management
Co., Ltd. or any of their respective directors, officers,
employees, partners, unitholders, agents, parent company oraffiliates will be responsible or liable for the completeness,
appropriateness or accuracy of English translations containedin this document. No person has been authorized to give
any information or make any representations other than as
contained in this document in relation to the matters set out
in this document, and if given or made, such information
or representation must not be relied upon as having beenauthorized by Nippon Accommodations Fund Inc., Mitsui
Fudosan Accommodations Fund Management Co., Ltd. or anyof their respective directors, officers, employees, partners,
unitholders, agents, parent company or affiliates.
The financial statements of Nippon Accommodations
Fund Inc. have been prepared in accordance with generally
accepted accounting principles in Japan (Japanese GAAP),
which may materially differ in certain respects from generally
accepted accounting principles in other jurisdictions.
This document contains forward-looking statements
and information. We base these statements on our beliefs
as well as our assumptions based solely on certain limited
information currently available to us. Because thesestatements reflect our current views concerning future
events, these statements involve known and unknown risks,
uncertainties and assumptions. Our future performance could
materially differ from those set out in these forward-looking
statements. We do not undertake and will not undertake torelease revisions of forward-looking statements to reflect
future events or circumstances or of any other statements orinformation contained herein.
The information in this document may be changed
without prior notice.
Duplication or use of information in this documentfor other purposes without the prior consent of Nippon
Accommodations Fund Inc. is prohibited.

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