O

October 20, 2015

Financial Results for the Fiscal Period
From March 1, 2015 to August 31, 2015
Nippon Accommodations Fund Inc. (NAF) is listed on the Tokyo Stock Exchange (J-REIT) withthe securities code number 3226. (Website: http://www.naf-r.jp/english/)
Executive Director:
Investment TrustManagement Company:
President and CEO:Inquiries:

Nobumi Tobari

Mitsui Fudosan Accommodations Fund Management Co., Ltd.
Tateyuki Ikura
Satoshi Nohara, Director and Chief Financial Officer
Tel: +81-3-3246-3677
Scheduled Filing Date of Securities Report:
November 27, 2015
Scheduled Commencement Date of Cash Distribution Payment: November 16, 2015

1. Business Results for the Fiscal Period from March 1, 2015 to August 31, 2015
(1) Operating Results(in millions of yen, rounded down; except as noted)
Total revenues

Operating income(%)*

Income before income
taxes

(%)*

(%)*

For the period ended
August 31, 2015

10,435

3.0

4,372

(0.1)

3,725

1.1

February 28, 2015

10,129

(0.2)

4,374

1.6

3,685

4.1

IncomeIncomebeforebeforeNet income Net income/incomeincometaxes/
per unit
net assets
taxes/
operatingtotal assets
incomeNet income

(%)*

(yen)

(%)

(%)

(%)

For the period ended
August 31, 2015

3,725

1.1

7,692

2.8

1.3

35.7

February 28, 2015

3,684

4.1

7,984

2.8

1.3

36.4

* Percent figures show changes from previous period.

1(2) Distributions(in millions of yen, rounded down; except as noted)
Distribution
Total
Total
per unit
distributions Distribution inexcess of(not including (not including
distributions inDistributions/
Payout ratio
earnings
distributions in distributions inexcess of
net assets
per unit
excess ofexcess of
earnings
earnings)
earnings)
(yen)
(yen)
(%)
(%)

For the period ended
August 31, 2015

7,688

3,725

–

–

100.0

2.7

February 28, 2015

7,984

3,683

–

–

100.0

2.8

(3) Financial Position(in millions of yen, rounded down; except as noted)

Total assets

Net assets

Net assets/
total assets

Net assets per
unit

(%)

(yen)

As of
August 31, 2015

295,644

139,39847.2

287,703

February 28, 2015

290,463

129,44144.6

280,526

Cash flows fromoperating activities

Cash flows frominvesting activities(4) Cash Flows(in millions of yen, rounded down; except as noted)

Cash flows fromfinancing activities

Cash and cash
equivalents

For the period ended
August 31, 2015

5,922

(7,683)

1,208

7,666

February 28, 2015

5,659

(219)

(5,539)8,219

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2. Forecasts for the Fiscal Period from September 1, 2015 to February 29, 2016
(in millions of yen, rounded down; except as noted)

Total
revenues

Distribution
per unit
Distribution in(not
Incomeexcess ofbeforeNet income including
earnings
income taxes
distributions
per unit
in excess ofearnings)

Operatingincome

(%)*

(%)*

(%)*

(%)*

(yen)

(yen)

1.5

3,779 1.5

7,800

–

For the period ending

February 29, 2016 10,369 (0.6)

4,429

1.3

3,780

* Percent figures show changes from previous period.

Note:
Projected net income per unit for the fiscal period ending February 29, 2016 is ¥7,800.

3. Other
1. Changes in significant accounting policies, Changes in accounting estimates and Restatement(1) Changes due to revisions in accounting standards and others: None
(2) Changes other than in the above item (1): None
(3) Changes in accounting estimates: None
(4) Restatement: None
2. Number of investment units issued(1) The number of investment units issued (including treasury investment units) as of theperiod-end
As of August 31, 2015:

484,522 units

As of February 28, 2015:

461,422 units(2) The number of treasury investment units as of the period-end
As of August 31, 2015:- units

As of February 28, 2015:- units

Disclaimer:
The above forecasts are based on information currently available to NAF and on certain
assumptions deemed to be reasonable. Actual operations may differ substantially due to anumber of factors.

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19th Period (August 2015) Overview of Investment
External Growth (Acquisition of properties)
During the period under review, NAF acquired a total of 4 new properties with a total acquisition
price of ¥7,185 million: 1 property in March 2015 and 3 properties in April 2015.
Internal Growth (Management and operation of properties held by NAF)
NAF has chosen Mitsui Fudosan Housing Lease Co., Ltd. as master property managementcompany (below, “Master PM”) on management of NAF’s rental apartments portfolio. The
company and the asset management company collaborate in the management of properties NAF
owns with the aim of implementing effective management and operational activities based onregional characteristics and the individual features of each property. These include efforts such as
speedy management and operations by the Master PM by applying the portfolio management
system, the tenant recruiting activities suited to the circumstances of individual properties, thestreamlining efforts such as reduction of management cost, etc., and providing tenants the“accommodation” services by corresponding to various needs based on the results of resident
questionnaires.
In order to maintain and improve the competitiveness of NAF’s portfolio, operations areadequately planned and carried out at the asset management company. These include
appropriate renewal work according to the property age, and work to enhance the property value
at Okawabata Apartment Communities, which is one of the core properties of NAF. 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 common areas and private areas at
Okawabata Apartment Communities. Changes implemented at other properties include reviews ofcontract capacity for electricity through the introduction of controllable circuit breakers, and work
to change the lighting in common areas to LED lighting.
Financial Strategy (Overview of funds procurement)
One of NAF’s basic policies is to carry out financing in a conservative manner while giving
consideration to such matters as maintaining stable distributions in the medium and long term,and paying attention to various risk factors and market trends. Based on this policy, during theperiod under review, NAF issued investment units with a total amount of ¥9,916 million as funds
for the acquisition of new properties, etc. Also, while taking into account market trends and interest
rate levels, NAF refinanced its existing loans and repaid ¥5,000 million of its loans.
As a result, at the end of the period, total interest-bearing debt amounted to ¥149,500 million, thelong-term loans ratio was 96.7%, the fixed-rate loans ratio was 96.7%, the LTV (loan-to-value)
ratio was 50.6%. The average annual current maturity of long-term interest-bearing loans was 4.8
years and the number of financial institutions was 20. Furthermore, the weighted average interest
rate at the end of the period was 0.85%.
NAF has also established a commitment line with a total maximum borrowing amount of ¥10,000
million, for the purpose of securing flexible and stable fund procurement methods. In the period
under review, the expiration date of the commitment line agreement was extended for another
year.

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With respect to financing through investment corporation bonds, NAF filed a shelf-registration
statement regarding its establishment of a maximum issuance amount for investment corporation
bonds for public offering in July 2015. The remaining balance of the planned issuance amount at
the end of the period is ¥100,000 million.
Planned issuance amount
Scheduled period of issuancePurpose for funds

Up to ¥100,000 million
From July 18, 2015 to July 17, 2017
Acquisition of specified new assets (as defined in Article 2,
Paragraph 1 of the Act on Investment Trusts and Investment
Corporations), repayment of borrowings, redemption of
investment corporation bonds, repayment of tenant security
deposit, payments for maintenance and renovations, andoperational use

Rating of NAF as of August 31, 2015 is as follows.
Rating agency
Rating and Investment Information, Inc.
(R&I)
Standard & Poor’s Ratings Japan K.K.
(S&P)
Moody’s Japan K.K. (Moody’s)

Rating subject
Issuer credit rating

RatingA A - (Trend of rating: Stable)

Long-term corporate
Short-term corporate
Issuer credit rating

A + (Outlook for rating: Stable)
A -1
A 3 (Outlook for rating: Stable)

Overview of Performance and Distribution
In the period under review, NAF recorded total revenues of ¥10,435 million, operating income of¥4,372 million, income before income taxes of ¥3,725 million and net income of ¥3,725 million. In
addition to the above, NAF has decided to distribute nearly the entire amount of earnings inaccordance with the Distribution Policy (Article 34 of the Articles of Incorporation) set forth by NAF.
The distribution per unit was ¥7,688.

Management Policy and Issues for the 20th Period Onward

NAF has always aimed to maximize its unitholder value through investments in “Accommodation
Assets” and utilization of the Mitsui Fudosan Group as well as formulation and management of ahigh quality portfolio centered on “Rental Apartments” located in the 23 wards of Tokyo.
From the 20th period onward, we aim to manage our portfolio stably based on theabove-mentioned policies and further maximize the unitholder value by achieving internal andexternal growth expectations.
On October 1, 2015, the residential leasing business of Mitsui Fudosan Co., Ltd. was transferredto Mitsui Fudosan Residential Co., Ltd. by way of a company split. Accordingly, residential leasing
business and residential property sales business were integrated within Mitsui Fudosan
Residential Co., Ltd.

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External Growth (New acquisition of properties)
We will strive to obtain the best real estate information possible by utilizing our pipeline to the
Mitsui Fudosan Group and fortifying the asset management company’s unique information
channel. Our basic strategy will be to stably expand our portfolio based on the acquisition of thePark Axis Series developed by the Mitsui Fudosan Group in addition to the Park Cube Series
constructed by companies outside the Mitsui Fudosan Group. Moreover, we will work to steadilyacquire properties considered to possess mid- to long-term competitive advantages throughNAF’s individual strategies such as enhancing our portfolio within the 23 wards of Tokyo and otherparts of the Tokyo area, mainly with single-occupant and compact residential properties for whicha high occupancy rate is expected, and carefully selecting properties for investment in major cities
of regional areas. We will also consider making investments in “Equity Interests in Anonymous
Partnerships relating to Real Estate” or “Real Estate-Backed Securities” (including obtaining firstrefusal rights) for such purposes as securing opportunities of property acquisitions.
The main part of NAF’s acquisition strategy continues to be stable acquisition of “Rental
Apartments”. However, we will continue making acquisitions of “Dormitories” and “Student
Apartments”, “Corporate Housing” and “Senior Residences”, as the investment market in “Other
Accommodation Assets” appears to have matured. In the management of its portfolio, NAF has
set the upper limit of the share of “Other Accommodation Assets” in the overall portfolio to around
10% on an acquisition price basis for the time being. The share of “Other Accommodation Assets”
in the overall portfolio was 3.6% at the end of the 19th period.
We will also continue to work towards achieving high quality due diligence at acquiring properties
in order to avoid risk.
Internal Growth (Management and operation of leasehold properties)
NAF will aim to improve its rent levels and occupancy rate through the formulation andimplementation of a leasing strategy that takes into account the characteristics of each individual
property with the objective of maximizing rent revenues over the mid- to long-term range of years.
NAF will review the adequacy of the grade of property management, cost of management andoperation as to each invested property in an appropriate timeframe and manner, and reduce thecost by reviewing rationally the management cost by utilizing the merits of outsourcing all property
management tasks to the Master PM. NAF will continue to maintain and enhance market
competitiveness by implementing strategic renovations, primarily at Okawabata Apartment
Communities.
Further, NAF will collaborate with the Mitsui Fudosan Group to establish brand power byconcentrating on the “Park Axis” brand, NAF’s main investment asset to penetrate the market andfurther enhance brand recognition in the rental housing market.
Financial Strategy
NAF will emphasize the continued use of long-term, fixed-rate loans by taking measures tocounter future interest rate and refinancing risks. With respect to the upper limit of LTV(loan-to-value) ratio, although the limit is set at around 60% in the asset management guidelines,

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NAF is aiming for a near-term upper limit at a level of around 55% in its external growth process.
NAF will examine the necessity of issuance of new units by paying attention to market trends anddistribution amount levels, and taking into consideration the demand for funds for the purpose ofproperty acquisition, as well as our financial position. Additionally, NAF will examine futureissuances of investment corporation bonds in accordance with market trends, within the range ofthe remaining balance of planned issuance amount for which shelf-registration of NAF bonds has
been carried out.
Significant Subsequent Events
Not applicable7Forecasts of Investment Performance
The forecasts for the 20th period (from September 1, 2015 to February 29, 2016) are as follows.
(in millions of yen, rounded down; except as noted)

Total revenues
Operating income
Income before income taxes
Net income
Distribution per unit (not including distributions
in excess of earnings) (yen)Distribution in excess of earnings per unit (yen)20th period(February 2016)
10,369
4,429
3,780
3,779
7,800
―

Notes: Underlying assumptions of forecasts
Number of operating days:
Investment assets:

Expenses:

Interest-bearing debt:

Number of units issued:-From September 1, 2015 to February 29, 2016 (182 days)-The number of properties held by NAF as of the date of thisdocument is 116. In the forecasts of investment performance, it isassumed that no subsequent transfer of properties (such as
acquisition of new properties, sale of properties acquired, etc.)
shall occur until February 29, 2016.
-The average month-end occupancy rate during the 20th period for
total properties is expected to be 96.1%.
-The following expenses are assumed.
(in millions of yen)
20th period
Fixed property taxes and urban planning taxes
580
Depreciation and amortization
2,073
Interest expense and interest expenses on645
investment corporation bonds
Amortization of investment unit issuance4
expenses- It is assumed that NAF’s balance of interest-bearing debt that is¥149,500 million as of the date of this document shall not change
until February 29, 2016.
- We assume 484,522 units outstanding as of the date of thisdocument.
- It is assumed that, there shall be no issuance of new units until
February 29, 2016.

The forecasts are the figures calculated based on the above assumptions at the time of
preparation of this information. Therefore, actual total revenues, income before income taxes,
net income and distribution per unit may change due to future acquisitions or sale of investment
assets, fluctuation in the real estate market or other changes in the environment in which NAF
operates. Accordingly, the forecasts are not a guarantee of any cash distribution amount.

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Disclaimer:This financial report has been prepared in accordance with Japanese accounting standards andJapanese laws. Figures have been rounded down to eliminate amounts of less than one million
yen.
Please note that this English translation, a summary of the Japanese original document, isprovided solely for informational purposes. In the event of any discrepancy between the Japaneseoriginal and this English translation, the Japanese original shall prevail.

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