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October 19, 2017

Financial Results for the Fiscal Period
From March 1, 2017 to August 31, 2017
Nippon Accommodations Fund Inc. (NAF) is listed on the Tokyo Stock Exchange (J-REIT) withthe securities code number 3226. (Website: https://www.naf-r.jp/english/)
Executive Director:
Investment TrustManagement Company:
President and CEO:Inquiries:

Takashi Ikeda

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 30, 2017
Scheduled Commencement Date of Cash Distribution Payment: November 15, 2017

1. Business Results for the Fiscal Period from March 1, 2017 to August 31, 2017
(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, 2017

10,775

1.2

4,675

(0.9)

4,118(0.5)

February 28, 2017

10,650

0.3

4,717

3.3

4,139

5.1

IncomeIncomebeforebeforeincomeNet income Net income/ income
taxes/
per unit
net assets
taxes/
operatingtotal assets
incomeNet income(%)*

(yen)

(%)

(%)

(%)

For the period ended
August 31, 2017

4,117(0.5)

8,497

2.9

1.4

38.2

February 28, 2017

4,138

5.1

8,541

3.0

1.4

38.9

* Percent figures show changes from previous period.

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

For the period ended
August 31, 2017

8,497

4,116

––

100.0

2.9

February 28, 2017
Note:

8,428

4,083––

98.7

2.9

For the period ended February 28, 2017, the amounts of “Total distributions” and “Net income”
are different because a part of retained earnings (¥55 million) was retained internally.

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

Total assets

Net assets

Net assets/
total assets

Net assets perunit

(%)

(yen)

As of
August 31, 2017294,828

139,84547.4

288,626February 28, 2017

293,446

139,81247.6

288,557

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, 2017

6,330

(4,450)(3,081)

6,849

February 28, 2017

7,170(272)(5,939)8,050

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2. Forecasts for the Fiscal Period from September 1, 2017 to February 28, 2018
(in millions of yen, rounded down; except as noted)

Total
revenues

Distribution
per unit
Distribution in(notIncome
excess ofbeforeNet income including
earnings
income taxes
distributions
per unit
in excess ofearnings)

Operatingincome(%)*

(%)*

(%)*

(%)*

(yen)

(yen)

3.0

4,239 3.0

8,750–For the period ending

February 28, 2018 10,728 (0.4)

4,769

2.0

4,240

* Percent figures show changes from previous period.

Note:
Projected net income per unit for the fiscal period ending February 28, 2018 is ¥8,750.

3. Other
1. Changes in significant accounting policies, Changes in accounting estimates and Restatement(1) Changes in significant accounting policies due to revisions in accounting standards andothers: None
(2) Changes other than in the above item (1): None
(3) Changes in accounting estimates: None
(4) Restatement: None
2. Total number of investment units issued(1) The total number of investment units issued (including treasury investment units) as of theperiod-end
As of August 31, 2017:484,522 units

As of February 28, 2017:484,522 units(2) The number of treasury investment units as of the period-end
As of August 31, 2017:- units

As of February 28, 2017:- 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. Accordingly, the forecasts are not a guarantee of any cash distribution
amount.

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23rd Period (August 2017) Overview of Investment
External Growth (Acquisition of properties)
During the period under review, NAF acquired a total of 3 new properties with a total acquisition
price of ¥4,124 million: 1 property in April 2017 and 2 properties in June 2017.
Internal Growth (Management and operation of properties held by NAF)
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 management company of NAF,
collaborate in the management of properties NAF owns with the aim of implementing effectivemanagement and operational activities based on regional characteristics and the individualfeatures of each property. Specifically, NAF aims to maintain and improve its rent levels andoccupancy rate through the formulation and implementation of a leasing strategy that takes into
account the characteristics of each individual property and reduce costs through rational meansby reviewing the adequacy of the grade of property management, cost of management andoperation in an appropriate timeframe and by utilizing the merits of outsourcing all property
management tasks to the property management company.
Meanwhile in the management of “Hospitality Facilities” (Note), NAF will contract out themanagement and operational activities to a professional operator or business corporation. The
asset management company regularly monitors the management and operational activities, andmakes adjustments through professional dialog with the operator or business corporation asnecessary.
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.
In addition, NAF is not only making continuous efforts to reduce costs, but also introducing suchfeatures as environmentally 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.
(Note) “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.” The Hotels category was added as an investment target by amending the Articles ofIncorporation at NAF’s 8th General Meeting of Unitholders held on May 19, 2017.

Financial Strategy (Overview of funds procurement)
NAF’s basic policies 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, while paying
attention to risk factors and market trends. During the period under review, while taking into
account market trends and interest rate levels, NAF and the asset management company pursued
financing from various sources with diversified repayment dates and an emphasis on long-termloans in its procurement of funds.

4As a result, at the end of the period, total interest-bearing debt amounted to ¥148,000 million(¥1,000 million increase from previous period), the long-term debt ratio was 97.3%, the long-term,
fixed-rate debt ratio was 94.6%, and the loan-to-value (LTV) ratio was 50.2%. The average annual
current maturity of long-term interest-bearing debt was 4.3 years and the number of financial
institutions was 22. Furthermore, the weighted average interest rate at the end of the period was0.72%.
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 anotheryear.
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 2017. The remaining balance of the planned issuance amount at
the end of the period is ¥100,000 million.
Planned issuance amountUp to ¥100,000 million

Scheduled period of issuance

From July 18, 2017 to July 17, 2019

Purpose for funds

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 ofinvestment corporation bonds, repayment of tenant security
deposits, payment for maintenance and renovations, andoperational use

Rating of NAF as of August 31, 2017 is as follows.
Rating agency
Rating and Investment Information, Inc.
(R&I)
S&P Global Ratings Japan Inc. (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 )* Standard & Poor’s Ratings Japan K.K. changed its trade name to S&P Global Ratings Japan Inc. on April 1, 2017.

Overview of Performance and Distribution
In the period under review, NAF recorded total revenues of ¥10,775 million, operating income of¥4,675 million, income before income taxes of ¥4,118 million and net income of ¥4,117 million. Inaddition 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 ¥8,497.

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Management Policy and Issues for the 24th Period Onward
External Growth (New acquisition of properties)
Concerning the real estate trading market, competition for property acquisitions is expected toremain overheated.
NAF aims to achieve steady external growth by striving to acquire “Accommodation Assets”
owned or under development by the Mitsui Fudosan Group stably and continuously, and at thesame time, utilizing the Mitsui Fudosan Group’s information network as well as the asset
management company’s unique information collection channel to acquire highly competitive, thebest real estates from outside the Mitsui Fudosan Group.
Internal Growth (Management and operation of leasehold properties)
In the residential rental market, the balance of supply and demand is expected to remain favorable
for the time being.
NAF aims to achieve solid internal growth in accordance with the investment policies bymaintaining customer satisfaction and asset value over the long term, maintaining and improving
rent levels and occupancy rate, and reducing costs, through brand strategies and tenant services
for the investment assets as well as through optimal management and operational activities thatutilize the value chain and highly specialized knowhow of the Mitsui Fudosan Group.
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 ratio,
although the limit is set at around 60% in the asset management guidelines, NAF is aiming for anear-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 applicable6Forecasts of Investment Performance
The forecasts for the 24th period (from September 1, 2017 to February 28, 2018) 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)24th period(February 2018)
10,728
4,769
4,240
4,239
8,750
―

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

Expenses:

Interest-bearing debt:

Number of units issued:- From September 1, 2017 to February 28, 2018 (181 days)- The number of properties held by NAF as of the date of thisdocument is 121. In the forecasts of investment performance, it isassumed that no subsequent transfer of properties (such asacquisition of new properties, sale of properties acquired, etc.)
shall occur until February 28, 2018.
- The average month-end occupancy rate during the 24th period
for total properties is expected to be 96.8%.
- The following expenses are assumed.
(in millions of yen)
24th period
Fixed property taxes and urban planning taxes
587
Depreciation and amortization
2,041
Interest expense, etc.
524
Amortization of investment unit issuance4
expenses- It is assumed that NAF’s balance of interest-bearing debt that is¥148,000 million as of the date of this document shall not change
until February 28, 2018.
- 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 28, 2018.

The above forecasted figures are calculated based on certain assumptions at the time of
preparation of this information. Therefore, actual total revenues, operating income, income
before income taxes, net income and distribution per unit may change due to future acquisitionor sale of investment assets, fluctuation in the real estate market or other changes in theenvironment 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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