NEWS RELEASE
Jun 06, 2022

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 (REIT) which was listed in2006. NAF invests primarily in rental apartments located in Tokyo 23 wards. The sponsor is Mitsui
Fudosan Co., Ltd.
NAF has been investing in the rental apartments of the "Park Axis" series developed by the Mitsui
Fudosan Group. The asset quality is sound, reflecting the profile of properties in terms of location with
88.5% of NAF's rental apartments located in Tokyo 23 wards and in terms of property age which is 15.2
years on average as of February 2022. The portfolio is well diversified, with the asset size reachingapproximately 340 billion yen, consisting of approximately 13,000 units/rooms.
In the period ended February 2022, the average month-end occupancy rate rose to 96.8%, marking arecovery on a year-over-year basis. The occupancy rate stays at a high level thanks to the flexibility of
NAF in setting the level of rents and other conditions, despite the single-type units for one-personhousehold whose demand has weakened slightly reflecting the decrease of in-migration to the central
area of Tokyo in excess of out-migration from there amid the COVID-19 pandemic. The demand forcompact units for family household has remained solid, and the overall level of rent per unit is continuing
to rise.
The trading price of residential rental properties is continuing to rise, because of the strongerinvestment demand owing to the relatively small impact of COVID-19 pandemic in this category and thestability of cash flows. However, NAF has been able to acquire relatively new properties located in thecentral area of Tokyo at proper prices, by using the pipeline of the sponsor.
On the front of ESG (Environmental, Social and Governance), NAF has been enhancing the initiatives
toward improvement of environmental performance and a higher percentage of properties that obtained
the green building certificate, and the GRESB (Global Real Estate Sustainability Benchmark) in 2021
gave NAF a rating of three stars, a high rating for a REIT focusing on the residential properties.
The LTV ratio as of February 2022 was 51.4%, a level comparable with other REITs focusing on theresidential properties. Backed by the rising appraisal value, the unrealized gains have increased to 41.8%of the book value. NAF has been raising funds stably, mainly by borrowing long-term fixed-rate loans frommajor domestic financial institutions. The average remaining term of long-term debts is long at 4.9 years
and the due dates are staggered. The funding cost stands at a lower level than other REITs.
The Rating Outlook is Stable. NAF has constructed a portfolio of high quality by investing intensively inthe sponsor's properties located in Tokyo 23 wards. In spite of the weakening demand of units for singleperson household in the central area of Tokyo, the occupancy rate has already recovered, along with theupward trend in the overall level of rents. The level of leverage is kept within the target range set by NAF
for asset management and the funding base is robust.
The primary rating methodology applied to this rating is provided at "Rating Methodology for REITs".
The methodology is available at the web site listed below, together with other rating methodologies thatare taken into consideration when assigning the rating.
https://www.r-i.co.jp/en/rating/about/rating_method.html■Contact: Sales and Marketing Division, Customer Service Dept.
■Media Contact : Corporate Planning Division (Public Relations)Rating and Investment Information, Inc.

TEL.+81-(0)3-6273-7471 E-mail. infodept@r-i.co.jp
TEL.+81-(0)3-6273-7273

TERRACE SQUARE, 3-22 Kanda Nishikicho, Chiyoda-ku, Tokyo 101-0054, Japan https://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 https://www.r-i.co.jp/en/docs/policy/site.html.
© Rating and Investment Information, Inc.

NEWS RELEASE
R&I RATINGS:ISSUER:RATING:

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

RATING OUTLOOK:

StableUnsec. Str. Bonds No.3

Issue Date

Maturity Date

Issue Amount (mn)

Jul 16, 2020

Jul 16, 2025

JPY 2,000

RATING:

AA-, Affirmed

Unsec. Str. Bonds No.4

Issue Date

Maturity Date

Issue Amount (mn)

Jul 16, 2020

Jul 16, 2030

JPY 2,000

RATING:

AA-, Affirmed

Unsec. Str. Bonds No.5

Issue Date

Maturity Date

Issue Amount (mn)Sep 30, 2021

Sep 28, 2029

JPY 1,000

RATING:

AA-, Affirmed

Unsec. Str. Bonds No.6

Issue Date

Maturity Date

Issue Amount (mn)Sep 30, 2021Sep 30, 2031

JPY 2,000

RATING:

AA-, Affirmed

Unsec. Str. Bonds No.7

Issue Date

Maturity Date

Issue Amount (mn)Sep 30, 2021

Sep 30, 2036

JPY 1,000

RATING:

AA-, Affirmed■Contact: Sales and Marketing Division, Customer Service Dept.
■Media Contact : Corporate Planning Division (Public Relations)Rating and Investment Information, Inc.

TEL.+81-(0)3-6273-7471 E-mail. infodept@r-i.co.jp
TEL.+81-(0)3-6273-7273

TERRACE SQUARE, 3-22 Kanda Nishikicho, Chiyoda-ku, Tokyo 101-0054, Japan https://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 https://www.r-i.co.jp/en/docs/policy/site.html.
© Rating and Investment Information, Inc.