Nippon Accommodations Fund Inc.
32nd Period (September 2021 – February 2022) Investor Presentation
Q&AＱ

Although rent fluctuation at the time of tenant turnover for single units further declined
to minus 4% following the 31st Period, turnover of tenants who entered into contracts
when rents were high has increased, which would appear to relax the downward
pressure on rent fluctuation. What is NAF’s future outlook for single unit rents?

ＡAs a general trend, approximately two-thirds of tenants at our rental apartments
turnover four years after their contract period begins. Therefore, turnover of tenants
who entered into contracts when rents were high has already passed its peak for single
units as well, which indicates that turnover rent fluctuation has likely bottomed out.
However, we feel some time will still be required before we see a full transition fromthis bottom to rent recovery.

Ｑ

As the new president, please tell us about your policy regarding property acquisitions
and the disposition of NAF-owned properties when aiming to grow distribution.

ＡAlthough the sponsor pipeline has steadily accumulated, amid today’s overheatedproperty trade, there is no question that it will be difficult for us to acquire properties
in a way that meets our conditions. Conversely, the overheated market also presents agood opportunity for us to secure unrealized profits. As we search out potential within
the market, we will manage the REIT by also including dispositions that contribute toincreasing the distribution as one option.

Ｑ

We are aware that J-REITs tended to prioritize occupancy rates during the second halfof 2021, for example by loosening solicitation conditions. Considering that the busy
season for leasing this year proceeded smoothly, particularly during March, however,does it appear that tenant demand has firmly recovered?

ＡAlthough the peak period during the busy season this year fell backward from January
and February to March and beyond, leasing trends remained robust. If this strong trend
continues with supply and demand remaining solid, we feel occupancy rates and rents

will reflect this to a similar degree.

ＱAccording to NAF’s past explanations, the pipeline is building, so you commented tothe effect that you wanted to accelerate external growth. Based on your explanation thistime around, however, it seems you have changed this strategy slightly.

ＡAlthough we have not changed our policy of aggressively engaging in external growthwith a focus on acquisitions from the sponsor pipeline, amid today’s extremely
overheated market, there is a risk that acquiring expensive properties and properties
with slim yields will fail to contribute to growth in distributions. Accordingly, we intend
to carefully consider external growth with our sights on new acquisitions in addition toproperty turnover.

ＱAlthough you have gradually expanded the number of renovated units in Okawabata
Apartment Communities, do you plan to continue increasing the number going
forward? Can you also tell us about the return on renovation investments?

Ａ

At 15 units, the number of units renovated during the 32nd Period was higher thanusual, but we generally aim to renovate at a pace of 10 units per period at most. We also
aim to achieve a rate of return on investment of at least 5%, which we have sufficiently
cleared based on our past track record.

Q

Please tell us about your policy regarding hospitality facility acquisitions.

A

Amid the current economic environment, we have not found any hotels that meet theconditions for consideration. And good conditions for dormitories and corporate
housing also remain elusive. We do hope to aggressively acquire hospitality facilities
as a valuable opportunity for external growth if we find any properties that meet ourrequired conditions.

Q

Under the 33rd and 34th Period forecasts, you foresee a 50% rent reduction as a resultof supporting the operator of Chisun Hotel Hiroshima. Will this measure come to anend during the 34th Period?

AWe concluded a rent reduction for Chisun Hotel Hiroshima for one year starting at theoutset of the 33rd Period and closing at the end of the 34th Period. So, the impact on
distributions will only last through the 34th Period.

Q

You commented that NAF will aim for external growth that contributes to distributions.
What, if any, is your policy on acquisition yields?

A

Our perspective on acquisition yields has always been based on a lower limit of 4%
flat. However, we will also consider urban properties at the 3% yield level within therealm of possibility if the property can be expected to see future rent growth.

Q

In terms of internal growth, are there any differences in the balance in NAF’s rent andoccupancy rate priorities by category and area?

A

Since profits are only gained through occupancy, we will maintain a policy ofprioritizing occupancy rates. In terms of actual management, we make detailed
adjustments based on the conditions of individual properties, rather than by category orarea.

QAlthough demographics in the Tokyo 23 Ward area have been improving recently, howwill this impact the Investment Corporation?

AIf we assume an end to the tendency toward net out-migration from the Tokyo 23 Wardarea, in which our portfolio is focused, this would be a positive for the Investment
Corporation. We expect this would have a beneficial impact, particularly on single andcompact units.

■ This document is intended for informational purposes, and is not intended to sell or solicit
an offer to buy or sell any security or other financial instrument of the Investment
Corporation.
■ Unless explicitly indicated, the information provided in this document does not constitutethe disclosure or asset management reports required under the Financial Instruments andExchange Act or the Act on Investment Trusts and Investment Corporations.
■ Nippon Accommodations Fund Inc. has exercised due care in providing the information inthis document, but does not guarantee its accuracy or completeness.
■ The information in this document contains future projections, but such statements do notguarantee future performance.
■ The Investment Corporation is not responsible for updating the information in this document.
The information in this document may be changed without prior notice.
REIT Management Company: Mitsui Fudosan Accommodations Fund Management Co., Ltd.
(Financial Instruments Firm: Kanto Finance Bureau (registration) No. 401
Member of the Investment Trusts Association, Japan)