NEWS RELEASE
Jun 10, 2016

R&I Affirms AA-, Stable: Nippon Accommodations Fund Inc.
Rating and Investment Information, Inc. (R&I) has announced the following:
ISSUER:

Nippon Accommodations Fund Inc.
Issuer Rating: AA-, Affirmed
Rating Outlook: Stable

RATIONALE:
Nippon Accommodations Fund Inc. (NAF) is a real estate investment trust that went public in August
2006. The REIT invests in "accommodation assets", which are primarily rental apartments but also include
dormitories, student apartments, serviced apartments, senior residences and corporate housing. MitsuiFudosan Co., Ltd. serves as a sponsor.
NAF invests in properties such as the "Park Axis" series developed by the Mitsui Fudosan Group.
NAF's rental apartment assets, of which 87.5% are located in Tokyo's 23 wards, are mostly newer asshown by the average building age of around 10.5 years (as of end-February 2016). The REIT has a very
diverse portfolio, with an asset size exceeding 290 billion yen.
Because of intense competition, the pace of property acquisitions is slowing down. Given the sponsor's
abundant pipeline of properties, however, NAF will likely be able to continue acquiring a certain number ofproperties.
The occupancy rate stays high at more than 95%, and unit rent rates are on the rise, albeit gradually.
Thanks to the sustained influx of population into Tokyo's 23 wards as well as a low level of new apartment
supply, the supply-demand balance of rental apartments remains favorable. R&I believes NAF's
properties will keep performing well.
In the process of external growth, its upper limit of the LTV ratio is set at 55% for the foreseeable
future. This suggests that its leverage is somewhat high as with the case of other residential REITs. Thatsaid, the LTV fell to about 50.2% as of end-February 2016. With the appraisal value rising, unrealized
gains are growing.
NAF has stable funding sources, most of which being long-term, fixed-rate loans from major domestic
financial institutions. The average remaining term of long-term debts is 4.3 years (as of end-February2016), with due dates staggered. Financing costs are also lower compared to those of other REITs.
The Rating Outlook is Stable. NAF intends to continue acquiring properties, particularly large buildings
located in Tokyo's 23 wards where tenant demand is robust, with a focus on those developed by thesponsor in recent years. The REIT is thereby expected to maintain portfolio quality and the highoccupancy rate. Its leverage is controlled below the target level, and the funding base is solid.
The primary rating methodology applied to this rating is provided at "Rating Methodology for J-REIT".
The methodology is available at the web site listed below, together with other rating methodologies thatare taken into consideration when assigning the rating.
http://www.r-i.co.jp/eng/cfp/about/methodology/index.html
R&I RATINGS:ISSUER:RATING:

Nippon Accommodations Fund Inc. (Sec. Code: 3226)
Issuer Rating
AA-, Affirmed

RATING OUTLOOK:

Stable■Contact: Investors Service Department
TEL.+81-(0)3-3276-3511■Media Contact : Corporate Planning Division (Public Relations) TEL.+81-(0)3-3276-3438

Rating and Investment Information, Inc.

E-mail. infodept@r-i.co.jp

Nihonbashi 1-chome Mitsui Bldg., 1-4-1, Nihonbashi, Chuo-ku, Tokyo 103-0027,

http://www.r-i.co.jp

Credit ratings are R&I's opinions on an issuer's general capacity to fulfill its financial obligations and the certainty of the fulfillment of its individual obligations as promised (creditworthiness) and are notstatements of fact. Further, R&I does not state its opinions about any risks other than credit risk, give advice regarding investment decisions or financial matters, or endorse the merits of any investment.
R&I does not undertake any independent verification of the accuracy or other aspects of the related information when issuing a credit rating and makes no related representations or warranties. R&I is notliable in any way for any damage arising in relation to credit ratings (including amendment or withdrawal thereof). As a general rule, R&I issues a credit rating for a fee paid by the issuer. For details,
please refer to http://www.r-i.co.jp/eng/policy/policy.html.
© Rating and Investment Information, Inc.

NEWS RELEASE
Unsec. Str. Bonds No.2

Issue Date

Maturity Date

Issue Amount (mn)

Jul 30, 2010

Jul 29, 2016

JPY 7,000■Contact: Investors Service DepartmentTEL.+81-(0)3-3276-3511■Media Contact : Corporate Planning Division (Public Relations) TEL.+81-(0)3-3276-3438

E-mail. infodept@r-i.co.jp

RATING:AA-, Affirmed

Rating and Investment Information, Inc.

Nihonbashi 1-chome Mitsui Bldg., 1-4-1, Nihonbashi, Chuo-ku, Tokyo 103-0027,

http://www.r-i.co.jp

Credit ratings are R&I's opinions on an issuer's general capacity to fulfill its financial obligations and the certainty of the fulfillment of its individual obligations as promised (creditworthiness) and are notstatements of fact. Further, R&I does not state its opinions about any risks other than credit risk, give advice regarding investment decisions or financial matters, or endorse the merits of any investment.
R&I does not undertake any independent verification of the accuracy or other aspects of the related information when issuing a credit rating and makes no related representations or warranties. R&I is notliable in any way for any damage arising in relation to credit ratings (including amendment or withdrawal thereof). As a general rule, R&I issues a credit rating for a fee paid by the issuer. For details,
please refer to http://www.r-i.co.jp/eng/policy/policy.html.
© Rating and Investment Information, Inc.