O

October 17, 2013

Financial Results for the Fiscal Period
From March 1, 2013 to August 31, 2013
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.
Kosei Murakami
Satoshi Nohara, Director and Chief Financial Officer
Tel: +81-3-3246-3677
Scheduled Filing Date of Securities Report:
November 27, 2013
Scheduled Commencement Date of Cash Distribution Payment: November 15, 2013

1. Business Results for the Fiscal Period from March 1, 2013 to August 31, 2013
(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, 2013

9,002

11.4

3,964

8.5

3,165

9.1

February 28, 2013

8,082

(0.3)

3,655

0.6

2,900

1.5

IncomeIncomebeforebeforeincomeNet income Net income/ income
taxes/
per unit
net assets
taxes/
operatingtotal assets income

Net income

(%)*

(yen)

(%)

(%)

(%)

For the period ended
August 31, 2013

3,164

9.2

13,732

2.7

1.2

35.2

February 28, 2013

2,899

1.5

14,890

2.7

1.2

35.9

*Percent figures show changes from previous period1(2) Distributions(in millions of yen, rounded down; except as noted)
Distribution
per unit

Distribution in
Total
excess of
distributions inDistributions/
Payout ratio
earnings
net assets
excess of
per unit
earnings
(yen)
(%)
(%)

Total
distributions(yen)

For the period ended
August 31, 2013

13,717

3,164

–

–

100.0

2.5

February 28, 2013

14,890

2,899

–

–

100.0

2.7

(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, 2013

273,872

128,92147.1

558,800

February 28, 2013

245,982

106,204

43.2

545,447(4) Cash Flows(in millions of yen, rounded down; except as noted)

Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash
equivalents

For the period ended
August 31, 2013

5,556

(25,981)

24,0068,178

February 28, 2013

4,368

(11,147)

5,215

4,596

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2. Forecasts for the Fiscal Period from September 1, 2013 to February 28, 2014
(in millions of yen, rounded down; except as noted)

Total
revenues(%)*

For the period ending

February 28, 2014 9,162

1.8

Distribution in
IncomeDistribution excess of
beforeNet income
per unit
earnings
income taxes
per unit

Operatingincome
(%)*

4,117

3.9

3,323

(%)*

(%)*

(yen)

(yen)

5.0

3,322 5.0

14,400–*Percent figures show changes from previous period

Notes:
1. “Distribution per unit” does not include distribution in excess of earnings per unit.
2. Projected net income per unit for the fiscal period ending February 28, 2014 is ¥14,400.

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, 2013:

230,711 units

As of February 28, 2013:

194,711 units(2) The number of treasury investment units as of the period-end:
As of August 31, 2013:- units

As of February 28, 2013:- units

Note:
Net income per unit is calculated by dividing net income by the weighted average number ofinvestment units: 230,439 units as of August 31, 2013, and 194,711 units as of February 28,
2013.

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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15th Period (August 2013) Overview of Operating Results(in millions of yen, rounded down; except as noted)

Result of the 15th
Period(August 2013)(1)
Number ofoperating days
Total revenues
Income before
income taxes
Net income
Distribution perunit (yen)Number ofinvestment
properties
Averageoccupancy rate at
the end of period(%)

Forecast of the
15th Period

Result of the 14th
Period(February 2013)(2)

Comparison withthe 14th Period(1)-(2)

184

184

181

3

9,002

8,958

8,082

920

3,165

3,138

2,900

265

3,164

3,137

2,899

265

13,717

13,60014,890(1,173)

105

105

90

15

95.6

Approx. 95

96.4

(0.8)

Overview of Performance and Distribution
In the period under review, NAF recorded total revenues of ¥9,002 million, operating income of¥3,964 million, income before income taxes of ¥3,165 million and net income of ¥3,164 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 ¥13,717.

15th Period (August 2013) Overview of Investment
External Growth (Acquisition of properties)
During the period under review, NAF acquired 15 new properties in total — 11 properties in March2013 (total acquisition price: ¥16,237 million), 1 property in April 2013 (acquisition price: ¥1,369
million), 1 property in June 2013 (acquisition price: ¥2,670 million), and 2 properties in July 2013
(total acquisition price: ¥4,990 million).

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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 of efforts to reduce management cost, etc., and renovations at Okawabata Apartment
Communities which is one of the core properties of NAF, as well as providing tenants the“accommodation” services by corresponding to various needs based on the results of resident
questionnaires.
Financial Strategy (Overview of funds procurement)
During the period under review, NAF issued investment units with a total amount of ¥22,451
million and borrowed ¥8,000 million from multiple financial institutions as funds for the acquisitionof new properties, etc. Also, while taking into account market trends and interest rate levels, NAF
refinanced its existing loans. In addition, NAF repaid a total of ¥3,500 million of its short-term loans
with cash reserves.
As a result, total interest-bearing debt at the end of the period amounted to ¥139,000 million, while
the long-term loans to total interest-bearing debt ratio was 97.5% (ratio excluding long-term loans
due within one year was 83.8%). Also, LTV (loan-to-value ratio) at the end of the period was
50.8%.
NAF 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 August, 2013.
A shelf-registration statement of investment corporation bonds for public offering was filed at the
Kanto Local Finance Bureau in July 2013. An overview of the shelf-registration statement is given
below. 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, 2013 to July 17, 2015
Acquisition of specified new assets (as defined in Article 2,
Paragraph 1 of the Investment Trust and Investment
Corporation Act of Japan), repayment of borrowings,
redemption of investment corporation bonds, repayment of
tenant security deposit, payments for maintenance andrenovations, and operational use

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Rating of NAF as of August 31, 2013 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)

6Significant Subsequent Events
Not applicable(Reference information)
The following assets were acquired on September 27, 2013. The “Acquisition price” is exclusiveof miscellaneous expenses for acquisition, fixed property taxes, urban planning taxes,
consumption taxes, and local consumption taxes.
Park Axis Shin Okachimachi East
Acquisition price:
Appraised value:
Type of property:
Location (residence indication):
Completion date:
Structure/number of stories:
Rentable units:
Rentable area:
Seller:Park Axis Yokohama Yamashitacho
Acquisition price:
Appraised value:
Type of property:
Location (registration number):Completion date:
Structure/number of stories:
Rentable units:
Rentable area:
Seller:Park Axis Nihonbashi Honcho
Acquisition price:
Appraised value:
Type of property:
Location (residence indication):
Completion date:
Structure/number of stories:
Rentable units:
Rentable area:
Seller:¥1,299 million¥1,300 million(date of value appraisal: August 31, 2013)
Real estate
21-10, Misuji 2-chome, Taito-ku, Tokyo
September 2012
Flat-roof reinforced concrete structure/14 stories
49
1,847.01 m2
Mitsui Fudosan Co., Ltd.

¥1,539 million¥1,540 million(date of value appraisal: August 31, 2013)
Real estate210-3, Yamashitacho, Naka-ku, Yokohama-shi,
Kanagawa (district where residence indication has
not been implemented yet)
October 2012
Flat-roof reinforced concrete structure/ 9 stories
70 residential 1 retail etc.
2,325.92 m2
Mitsui Fudosan Co., Ltd.

¥1,469 million¥1,470 million(date of value appraisal: August 31, 2013)
Real estate
6-8, Nihonbashi Honcho 4-chome, Chuo-ku, Tokyo
February 2013
Flat-roof reinforced concrete structure/14 stories
49
1,808.12 m2
Mitsui Fudosan Co., Ltd.

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Forecasts of Investment Performance
The forecasts for the 16th period (from September 1, 2013 to February 28, 2014) are as follows.
(in millions of yen, rounded down; except as noted)

Total revenues
Income before income taxes
Net income
Distribution per unit (yen)Distribution in excess of earnings per unit (yen)16th period(February 2014)
9,162
3,323
3,322
14,400―Notes: Underlying assumptions of forecasts
Number of operating
days:
Investment assets:

Expenses:

Interest-bearing debt:

Number of units
issued:-From September 1, 2013 to February 28, 2014 (181 days)-The number of properties held by NAF as of the date of this document
is 108. In the forecasts of investment performance, it is assumed thatno subsequent transfer of properties (such as acquisition of new
properties, sale of properties acquired, etc.) shall occur until February
28, 2014.
-The occupancy rate at the end of the 16th period for total properties is
expected to be approximately 95%.
-The following expenses are assumed.
(in millions of yen)
16th period
Fixed property taxes and422
urban planning taxes
Depreciation and amortization
1,981Interest expense and interest
expenses on investment794
corporation bonds-It is assumed that NAF’s balance of interest-bearing debt that is¥143,500 million as of the date of this document shall not change until
February 28, 2014.
-We assume 230,711 units outstanding as of the date of this document.
-It is assumed that, there shall be no issuance of new units until
February 28, 2014.

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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Management Policy and Issues for the 16th 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 16th period onward, we aim to manage our portfolio stably based on theabove-mentioned policies and further increase our unitholder value by achieving internal andexternal growth expectations.
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 Park Axis Series
developed by Mitsui Fudosan Co., Ltd. in addition to the Park Cube Series constructed by otherdevelopers. Moreover, we will work to steadily acquire properties considered to possess mid- tolong-term competitive advantages through individual strategies such as enhancing our portfolio
within the 23 wards of Tokyo and other parts of the Tokyo area, mainly with single-occupant andcompact residential properties for which a high occupancy rate is expected, and carefully
selecting properties for investment in major cities of regional areas. We will also consider making
investments (including obtaining first refusal rights) in “Equity Interests in Anonymous
Partnerships relating to Real Estate” or “Real Estate-Backed Securities” 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 “Other Accommodation Assets”,
including dormitories and corporate housings, as the investment market in “Other Accommodation
Assets”, appears to have matured in some categories. In the management of its portfolio, NAF
has set the upper limit of the share of “Other Accommodation Assets” in the overall portfolio toaround 10% (on the basis of acquisition price) for the time being (the share of “Other
Accommodation Assets” in the overall portfolio was 3.7% at the end of the 15th period).
We will also continue to work towards achieving high quality due diligence at acquiring properties
in order to avoid risk.

9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 costby the rational review of 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 Mitsui Fudosan Co., Ltd., 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. Regarding LTV (loan-to-value ratio), the upper
limit is set at around 60%. NAF will examine the necessity of issuance of new units by paying
attention to market trends and distribution amount levels, and taking into consideration the
demand for funds for the purpose of property acquisition, as well as our financial position.
Additionally, NAF will examine future issuances of investment corporation bonds in accordancewith market trends, within the range of the remaining balance of planned issuance amount for
which shelf-registration of NAF bonds has been carried out.

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 of the Japanese original document is provided solely for
informational purposes. In the event of any discrepancy between the Japanese original and thisEnglish translation, the Japanese original shall prevail.

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