DISCLAIMER
This document has been prepared solely for the purpose of providing U.K. and Dutch
investors with certain information under Article 23 of the European Alternative Investment
Fund Managers Directive (European Directive 2011/61/EU) (the “AIFMD”) as implemented
in their respective jurisdictions. Accordingly, you should not use this document for any otherpurpose.
Netherlands
The units of Nippon Accommodations Fund Inc. (“NAF” or the “AIF”) are being marketed in
the Netherlands under Section 1:13b of the Dutch Financial Supervision Act (Wet op het
financieel toezicht, or the “Wft”). In accordance with this provision, Mitsui Fudosan
Accommodations Fund Management Co., Ltd. (the “AIFM”) has submitted a notification
with the Dutch Authority for the Financial Markets. The units of NAF will not, directly or
indirectly, be offered, sold, transferred or delivered in the Netherlands, except to or byindividuals or entities that are qualified investors (gekwalificeerde beleggers) within themeaning of Article 1:1 of the Wft, and as a consequence neither the AIFM nor NAF is subject
to the license requirement pursuant to the Wft. Consequently, neither the AIFM nor NAF is
subject to supervision of the Dutch Central Bank (De Nederlandsche Bank, “DNB”) or the
Netherlands Authority for Financial Markets (Autoriteit Financiële Markten, the “AFM”) andthis Article 23 AIFMD Prospectus is not subject to approval by the AFM. No approved
prospectus is required to be published in the Netherlands pursuant to Article 3 of theRegulation (EU) 2017/1129 (the “Prospectus Regulation”) as amended and applicable in the
Netherlands. The AIFM is therefore solely subject to limited ongoing regulatory
requirements as referred to in Article 42 of the AIFMD.
United Kingdom
The units of NAF are being marketed in the United Kingdom pursuant to Article 59 of theUnited Kingdom Alternative Investment Fund Managers Regulations 2013. In accordancewith this provision, the AIFM has notified the Financial Conduct Authority (the “FCA”) of its
intention to offer these units in the United Kingdom.
For the purposes of the United Kingdom Financial Services and Markets Act 2000 (“FSMA”)
NAF is an unregulated collective investment scheme which has not been authorized by the
FCA.
Accordingly, any communication of an invitation or inducement to invest in NAF may only
be made to (i) investment professionals falling within Article 19(5) of the Financial Services
and Markets Act 2000 (Financial Promotion) Order 2005, as amended, or “the Order”; or (ii)high net worth companies falling within Articles 49(2)(a) to (d) of the Order and otherpersons to whom it may lawfully be communicated (all such persons referred to under (i)and (ii) of this paragraph, together being referred to as “Relevant Persons”).

In the United Kingdom, this document and its contents are directed only at Relevant Persons
and must not be acted on or relied on by persons who are not Relevant Persons. The
transmission of this document and its contents in the United Kingdom to any person otherthan a Relevant Person is unauthorized and may contravene the FSMA and other United
Kingdom securities laws and regulations.
European Economic Area and United Kingdom
In addition to the restrictions under the AIFMD, the units of NAF are not intended to beoffered, sold or otherwise made available to and should not be offered, sold or otherwise
made available to any retail investor in the European Economic Area (the “EEA”) or theUnited Kingdom. For these purposes, a retail investor means a person who is one (or more)of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU, as
amended, (the “MiFID II”); (ii) a customer within the meaning of Directive (EU) 2016/97,
where that customer would not qualify as a professional client as defined in point (10) of
Article 4(1) of the MiFID II; or (iii) not a qualified investor as defined in the Prospectus
Regulation, as amended. Consequently no key information document required byRegulation (EU) No 1286/2014 (the “PRIIPs Regulation”) for offering or selling the units of
NAF or otherwise making them available to retail investors in the EEA or the United
Kingdom has been prepared and therefore offering or selling the units of NAF, or otherwise
making them available, to any retail investor in the EEA or the United Kingdom may beunlawful under the PRIIPs Regulation.

2

Article 23 (1)(a)Objectives of the

Nippon Accommodations Fund Inc. (“NAF” or the “AIF”) invests in “Accommodation Assets”,

AIF

which includes rental apartments, dormitories, serviced apartments, senior residences ,corporate housing and hotels; particularly, NAF invests in newly developed residential
properties created in response to ongoing social and lifestyle changes.
The basic policy of NAF is to maximize the value of “Accommodation Assets” by providing
accommodations, i.e., services that satisfy diverse tenant needs. NAF takes a medium‐to‐long‐term perspective in managing assets to secure stable earnings and steadily increase
assets under management.

Investment

NAF emphasizes Greater Tokyo and other major cities in investing in Accommodation Assets.

strategy

By region, approximately 80 percent of NAF’s assets are in the 23 wards of Tokyo. NAF mostly
invests in large‐scale properties and utilizes Mitsui Fudosan Group’s value chain for its
investment management from planning/development to management/operation of
Accommodation Assets. NAF further utilizes Mitsui Fudosan Group properties and extensive
real estate information network to give NAF greater access to investment opportunities.

Types of assets theReal estate, trust beneficiary interests in real estate, real estate securities, specified assets

AIF may invest in

and other assets.

Techniques it may

NAF achieves its objective by investing in real estate consisting of Accommodation Assets.

employ and all

NAF also invests in securities, beneficiary certificates representing beneficial interests in trusts

associated risks

and other assets backed by Accommodation Assets.
The principal risks with respect to investment in NAF are as follows:

any adverse conditions in the Japanese economy could adversely affect NAF;



NAF may not be able to acquire properties to execute the growth and investment
strategy in a manner that is accretive to earnings;

illiquidity in the real estate market may limit the ability to grow or adjust theportfolio;the past experience of our asset manager, Mitsui Fudosan Accommodations FundManagement Co., Ltd., in the Japanese real estate market is not an indicator or
guarantee of future results;

NAF’s reliance on Mitsui Fudosan Group, Mitsui Fudosan Accommodations FundManagement Co., Ltd. and other third service providers could have a material adverse
effect on business;there are potential conflicts of interest between NAF and Mitsui Fudosan Group as
well as the AIFM;



NAF’s revenues largely comprise leasing revenues from the portfolio properties,
which may be negatively affected by vacancies, decreases in rent, and late or missed
payments by tenants;3

NAF faces significant competition in seeking tenants and it may be difficult to findreplacement tenants;

increases in prevailing market interest rates may increase interest expense and may
result in a decline in the market price of NAF’s units;NAF may suffer large losses if any of the properties incurs damage from a natural or
man‐made disaster;most of the properties in the portfolio are concentrated in Tokyo 23 wards and areresidential properties;



any inability to obtain financing for future acquisitions could adversely affect thegrowth of the portfolio;NAF’s failure to satisfy a complex series of requirements pursuant to Japanese tax
regulations would disqualify NAF from certain taxation benefits and significantly
reduce the cash distributions to the unitholders; andownership rights in some of NAF’s properties may be declared invalid or limited.

In addition, we are subject to the following risks:risks related to increasing operating costs;

risks related to NAF’s dependence on the efforts of the AIFM’s key personnel;risks related to the restrictive covenants under debt financing arrangement;risks related to entering into forward commitment contracts;risks related to third party leasehold interests in the land underlying NAF properties;risks related to holding the property in the form of stratified ownership (kubun shoyū)interests or co‐ownership interests (kyōyū‐mochibun);risks related to holding the property through trust beneficiary interests;risks related to properties not in operation (including properties under development);risks related to the defective title, design, construction or other defects or problems
in the properties;risks related to impairment losses relating to the properties;risks related to tenant leasehold deposits and/or security deposits;risks related to tenant’s default as a result of financial difficulty or insolvency;risks related to the insolvency of master lessors;

risks related to the insolvency of a property seller following our purchase of aproperty;risks related to relying on expert appraisals and engineering, environmental andseismic reports as well as industry and market data;risks related to the presence of hazardous or toxic substances in the properties, orthe failure to properly remediate such substances;

risks related to strict environmental liabilities for the properties;risks related to the amendment of applicable administrative laws and local
ordinances;4

risks related to holding Japanese anonymous association (tokumei kumiai) interests;risks related to investments in trust beneficiary interests;risks related to the tight supervision by regulatory authorities and compliance withapplicable rules and regulations;risks related to tax authority disagreement with the AIFM’s interpretations of theJapanese tax laws and regulations;risks related to being unable to benefit from reductions in certain real estate taxes
enjoyed by qualified J‐REITs; andrisks related to changes in Japanese tax laws.

Any applicable

NAF is subject to investment restrictions under Japanese laws and regulations (e.g., the Act on

investment

Investment Trusts and Investment Corporations (the “ITA”), the Financial Instruments andrestrictions

Exchange Act (the “FIEA”)) as well as its articles of incorporation.
NAF must invest primarily in specified assets as defined in the ITA. Specified assets include,
but are not limited to, securities, real estate, leaseholds of real estate, surface rights (chijō‐ken) (i.e., right to use land for the purpose of having a structure on it) or trust beneficiaryinterests for securities or real estate, leaseholds of real estate or surface rights. A listed J‐REIT
must invest substantially all of its assets in real estate, real estate‐related assets and liquid
assets as provided by the listing requirements. Real estate in this context includes, but is not
limited to, real estate, leaseholds of real estate, surface rights, and trust beneficiary interests
for these assets, and real estate‐related assets in this context include, but are not limited to,anonymous association (tokumei kumiai) interests for investment in real estate. Pursuant to
the ITA, investment corporations may not independently develop land or construct buildings,
but must outsource such activities.

Circumstances in

NAF may take out loans or issue long‐term or short‐term corporate bonds for the purpose ofwhich the AIF may

investing in properties, conducting repairs and related work, paying cash distributions,use leverage

operating capital, repaying obligations (including repayment of tenant leasehold or security
deposits, and obligations related to loans or long‐term or short‐term corporate bonds) andother activities.

The types andLoans or investment corporation bonds. Currently all of NAF’s outstanding long‐ and short‐sources of leverageterm loans as well as outstanding bonds are unsecured and unguaranteed.

permitted andassociated risks

Loans or investment corporation bonds in which NAF enters or NAF issues may be subject torestrictive covenants in connection with any future indebtedness that may restrict operations
and limit its ability to make cash distributions to unitholders, to dispose of properties or toacquire additional properties. Furthermore, if NAF were to violate such restrictive covenants,
such as with regard to loan‐to‐value ratios, lenders may be entitled to require NAF tocollateralize portfolio properties or demand that the entire outstanding balance be paid.

5In the event of an increase in interest rates, to the extent that NAF has any debt withunhedged floating rates of interest or NAF incurs new debt, interest payments may increase,which in turn could reduce the amount of cash available for distributions to unitholders.
Higher interest rates may also limit the capacity for short‐ and long‐term borrowings, which
would in turn limit NAF’s ability to acquire properties, and could cause the market price of theunits to decline.
Any restrictions on

The maximum amount of each loan and corporate bond issuance is 1 trillion yen, and theleverageaggregate amount of all such debt cannot exceed 1 trillion yen.

Any restrictions on

No applicable arrangements.

collateral and asset
reusearrangements
Maximum level of

NAF has set an upper limit of 60% as a general rule for its loan‐to‐value, or LTV, ratio in orderleverage which theto operate with a stable financial condition. NAF may, however, temporarily exceed such

AIFM is entitled tolevels as a result of property acquisitions or other events.

employ on behalfof the AIF
Article 23(1) (b)Procedure by

Amendment of the articles of incorporation. Amendment requires a quorum of a majority ofwhich the AIF may

the total issued units and at least a two‐thirds vote of the voting rights represented at thechange its

meeting. However, the guidelines of the AIFM, which provide more detailed policies within

investment

NAF’s overall investment strategy and policy, can be modified without such formal

strategy /amendment of the articles of incorporation.

investment policy
Article 23(1) (c)Description of the

NAF is a corporate‐type investment trust in the form of investment corporation (toshi hojin)

main legal

provided for under the ITA. Therefore, the relationship between NAF and its unitholders is

implications of thegoverned by NAF’s articles of incorporation (as opposed to individual agreements), which cancontractual

be amended from time to time upon resolution of a general unitholders’ meeting. NAF’s

relationshiparticles of incorporation stipulate rules relating to general unitholders meetings, including theentered into forconvocation, setting of record date, exercise of voting rights, resolutions and election of NAF’s

the purpose of

directors.

investment,

The relationship between NAF and its unitholders is also governed by, and is subject to theincludingprovisions of, Japanese law, including the ITA.

jurisdiction,
applicable law, andThe courts in Japan would recognize as a valid judgment any final and conclusive civil

the existence or

judgment for monetary claims (which, for this purpose, are limited to those of a purely civil

not of any legal

nature and do not include monetary claims of the nature of criminal or administrative

instruments

sanction, such as punitive damages, even though they take the form of civil claims) against6

providing for the

NAF obtained in a foreign court provided that (i) the jurisdiction of such foreign court isrecognition andadmitted under the laws of Japan, (ii) NAF has received service of process for theenforcement ofcommencement of the relevant proceedings, otherwise than by a public notice or any method

judgments in thecomparable thereto, or has appeared without any reservation before such foreign court, (iii)

territory where theneither such judgment nor the relevant proceeding is repugnant to public policy as applied in

AIF is establishedJapan, (iv) there exists reciprocity as to the recognition by such foreign court of a final
judgment obtained in a Japanese court and (v) there is no conflicting judgement on thesubject matter by any Japanese court.
AIFM has entered into the following agreements with Mitsui Fudosan Residential Co., Ltd.:

An agreement on the provision of real estate information and advisory services.

NAF has entered into the following agreements with Sumitomo Mitsui Trust Bank, Limited:

An asset custody agreement regarding NAF’s assets;



A transfer agency agreement regarding the units;

Loan agreements over certain of our short‐ and long‐term loans; andAgreements establishing Sumitomo Mitsui Trust Bank, Limited as the trustee forcertain trust beneficiary rights held by NAF;

All of the above agreements are governed by Japanese law.
NAF is not involved in or threatened by any legal arbitration, administrative or otherproceedings, the results of which might, individually or in the aggregate, be material.
Article 23(1) (d)The identity of the AIFM (Asset Manager): Mitsui Fudosan Accommodations Fund Management Co., Ltd.

AIFM, AIF's

 Auditor: KPMG AZSA LLC

depositary, auditor Custodian and Transfer Agent: Sumitomo Mitsui Trust Bank, Ltd.

and any other General Administrative Agent(Accounting): RWA Accounting Holdings Co.,Ltd

service providers

 General Administrative Agent(Tax Return Filling): PwC Tax Japanand a descriptionof their duties andService providers owe contractual obligations under their respective agreements with the AIF

the investors' rights or AIFM, as the case may be. In addition, the FIEA provides that an asset manager owes a J‐
thereto

REIT a fiduciary duty and must conduct its activities as the asset manager in good faith. The
FIEA also prohibits an asset manager from engaging in certain specified conduct, including
entering into transactions outside the ordinary course of business or with related parties of
the asset manager that are contrary to or violate the J‐REIT’s interests. Pursuant to the ITA,
the unitholders have the right to approve the execution or termination of the asset
management agreement at a general meeting of unitholders.

Article 23(1) (e)7Description of how

Not applicable.

the AIFM complies
with therequirements tocover professional
liability risks (ownfunds /
professional
indemnity
insurance)

Article 23(1) (f)Description of any

Not applicable. There is no delegation of such functions beyond the AIFM, which isdelegated

responsible for portfolio and risk management, and the Custodian, which is responsible formanagement

safekeeping activities.

function such as
portfolio
management orrisk management
and of any
safekeeping
function delegatedby the depositary,
the identificationof the delegate andany conflicts ofinterest that may
arise from suchdelegations
Article 23(1) (g)Description of the

NAF makes investment decisions based on its investment strategies and in accordance with its

AIF’s valuation

articles of incorporation and based on the results of due diligence, including the valuation ofprocedure andproperties and consideration of the property appraisal value.

pricing

NAF shall evaluate assets in accordance with its Article of Incorporation. The methods andmethodology,

standards that NAF uses for the evaluation of assets are based on the Regulations Concerning

including thethe Calculations of Investment Corporations, as well as the Regulations Concerning Realmethods used in

Estate Investment Trusts and Real Estate Investment Corporations and other regulations
stipulated by ITA, in addition to Japanese GAAP. J‐REITs may only use the valuation methods

8valuing hard‐to‐prescribed in the rules of the Investment Trusts Association, Japan, which emphasize market

value assets

price valuation.
Regarding hard to value assets, such assets comprise tenant security deposits including trust
accounts. Security deposits from tenants are not subject to fair value disclosure because they
are not marketable, and actual deposit period is not estimable as leases may be cancelled,
renewed or re‐signed even if a lease term is set in the lease contract. This makes a reasonableestimate of future cash flows difficult. Valuation of such hard to value assets is included in thenotes to our financial statements.

Article 23(1) (h)Description of the

NAF seeks to manage the capital resources and liquidity sources to provide adequate funds

AIF’s liquidity risk

for current and future financial obligations and other cash needs and acquisitions. Funds frommanagement,

loans and bonds are primarily used for acquiring assets and to repay interest‐bearing debt.

including

NAF manages associated liquidity and interest rate fluctuation risk in ways such as diversifying

redemption rights

its credit sources and maturities, and by mainly using fixed‐rate loans. NAF currently has

in normal andcommitment line contracts of ¥15,000 million with three financial institutions. The unused

exceptionalamount of such commitment line was ¥15,000 million as of August 31, 2021.

circumstances andexisting

NAF is a closed‐end investment corporation, and unitholders are not entitled to request theredemption

redemption of their investment.

arrangements withinvestors
Article 23(1) (i)Description of all Compensation: The articles of incorporation provide that the AIF may pay its executive andfees, charges andsupervisory officers up to 700,000 yen per month. The board of officers is responsible for

expenses and adetermining a reasonable compensation amount for the executive officer and each of the

maximum amountsupervisory officers.

which is directly /indirectly borne by
the investors Asset Management Fee: The AIF will pay the Asset Manager an asset management fee asfollows:
Management Fees 1 – The amount equivalent to 5% of the amount of the revenue arisingfrom real estate, real estate‐related and real estate‐backed assets (“Real Estate”) as
calculated on each closing date (provided, however, that revenues from the sale of Real
Estate and other managed assets will be excluded) will be payable.
Management Fees 2 – The amount equivalent to 5% of income before income tax

9prior to deduction of Management Fees 1 and 2 as calculated on each closing date will bepayable.
Management Fees 3 – In the event that Real Estate is newly acquired, compensationequivalent to 1 percent (0.5 percent if it is acquired from Related Parties) of the total amountof the acquisition price of said Real Estate (excluding consumption tax, local consumption tax,
and acquisition costs) will be payable.
Management Fees 4 – In the event that Real Estate is sold, compensation equivalent to 1
percent (0.5 percent if it is sold to Related Parties) of the total amount of the sales price of
said Real Estate (excluding consumption tax, local consumption tax) will be payable.
Management Fees 5 – In a merger with other investment corporation, if the AIFM researches
and evaluates assets etc. that such other investment corporation owns and conducts otherbusinesses related thereto and such merger comes into effect, the AIF shall pay the amountprovided for in the asset management agreement, up to the amount equivalent to thatobtained by multiplying the appraised price of Real Estate and Real Estate‐Backed Securities
at the time of the merger that such other investment corporation owns at such time by 0.5
percent.
 General Administrators Fee: The AIF will pay the General Administrators as follows:
250,000 yen per meeting for services related to the meetings of the board of officers and
5,000,000 yen per meeting for services related to the meeting of unitholders.
 Tax Services Fee: A fixed amount of 1,500,000 yen per fiscal period.
 Accounting Fee:
One‐twelfth of the following in either (1) or (2) below each month:(1) A fixed amount of 9,500,000 yen plus 500,000 yen multiplied by the number ofproperties in NAF’s portfolio as of June 1 and December 1 of each year.
(2) A variable amount calculated at June 1 and December 1 of each year in accordancewith the following, based on the total value of our assets:
150 billion or less...................................................................

25.5 million yen

More than 150 and 250 or less25.5 million yen + (Total asset value – 150...................................................................

billion yen) x 0.012%

More than 250 billion

37.5 million yen + (Total asset value – 250...................................................................

billion yen) x 0.008%

10 Transfer Agent Fee (Standard Fee):
Standard transfer agent fees are for services such as the preparation, maintenance andstorage of NAF’s unitholder register; and preparation of materials concerning end‐of‐period
unitholder statistical data (number of unitholders, total units held, and distribution per
geographic area). Monthly standard fees are determined by calculating one sixth of the total
number of unitholders falling under each section as shown below.
There is a minimum monthly fee of ¥200,000.
Up to 5,000 ......................................................................

480 yen5,001 to 10,000 ................................................................

420 yen

10,001 to 30,000 ..............................................................

360 yen30,001 to 50,000 ..............................................................

300 yen50,001 to 100,000 ............................................................

260 yenMore than 100,000 ..........................................................

225 yen

NAF also pays certain other fees in addition to the standard fee in connection with theadministration and handling of distributions (minimum of 350,000 yen per distribution) andother shareholder related functions.
 Custodian Fee: The AIF will pay the Custodian a fee for each fiscal period calculated asfollows:
A maximum amount equal to the amount of total assets as indicated at the beginning of theperiod trial balance x 0.02%
 Auditor Fee: A fixed amount set by the board of officers of up to 20 million yen per fiscal
period.

NAF also pays fees to certain service providers in connection with;oAdministration of special accounts;o

Property Management;

Article 23(1) (j)Description of theUnder Article 77 paragraph 4 of the Act on Investment Trusts and Investment Corporations of

AIFM's procedure

Japan, which applies the requirements of Article 109 paragraph 1 of the Companies Act toto ensure fair

investment corporations, investment corporations are required to treat unitholders equallytreatment ofdepending on the number and content of units held. In addition, upon liquidation, theinvestors andallotment of residual assets to unitholders is required to be made equally depending on thedetails of any

number units held under Article 77 paragraph 2 item 2 and Article 158 of the ITA.

11

preferential
treatment received
by investors,
including detailingthe type ofinvestors and theirlegal or economic
links with the AIF
or AIFM
Article 23(1) (k)The latest annual

Additional information may be found in our most recent semi‐annual report prepared inreport referred toaccordance with Article 22 of the AIFMD, which is available at the Asset Manager’s officein Article 22(1)located at 1‐4‐1 Nihonbashi, Chuo‐ku, Tokyo.

Article 23(1) (l)The procedure and

NAF is authorized under the articles of incorporation to issue up to 4 million units. Its units

conditions for thehave been listed on the Tokyo Stock Exchange since August 4, 2006. Secondary market sales

issue and sale ofand transfers of units will be conducted in accordance with the rules of the Tokyo Stockthe units

Exchange. Unit prices on the Tokyo Stock Exchange are determined on a real‐time basis by theequilibrium between bids and offers. The Tokyo Stock Exchange sets daily price limits, which
limit the maximum range of fluctuation within a single trading day. Daily price limits are set
according to the previous day’s closing price or special quote.

Article 23(1) (m)Latest net asset

NAF’s unit’s latest market price is publicly available at the Tokyo Stock Exchange or fromvalue of the AIF or

financial information vendors (including Reuters, which can be viewed at

latest market price

http://www.reuters.com/finance/stocks/overview?symbol=3226.T ).

of the unit or shareof the AIF
Article 23(1) (n)12Details of the

The units of NAF were listed on the Tokyo Stock Exchange on August 4, 2006.

historical

The most recent five fiscal period performance of the units is as follows.

performance of the

Fiscal period (six months

Total Assets

Total Net Assets

Net Assets per unit

AIF, whereended)(JPY million)(JPY million)(base value) (JPY)available

August 31, 2021

327,824

150,926

299,772

February 28, 2021

317,740

151,023

299,964

August 31, 2020

305,840

141,213

291,448

February 29, 2020

301,946

141,181291,382

August 31, 2019

303,133

141,378

291,790

Article 23(1) (o)Identity of the

Not applicable.

prime broker, anymaterial
arrangements of
the AIF with its
prime brokers, howconflicts of interest
are managed withthe prime broker
and the provisionin the contract withthe depositary on
the possibility oftransfer and reuseof AIF assets, andinformation about
any transfer of
liability to theprime broker that
may exist
Article 23(1) (p)Description of how

The AIFM will disclose the matters described in Articles 23(4) and 23(5) periodically throughand when periodic

its Internet website or semi‐annual report.

disclosures will bemade in relation to13

leverage, liquidity
and risk profile of
the assets,pursuant to Articles
23(4) and 23(5)Article 23(2)The AIFM shallNot applicable.

inform theinvestors before
they invest in the
AIF of any
arrangement madeby the depositary
to contractuallydischarge itself ofliability inaccordance with
Article 21(13)The AIFM shall also

Not applicable.

inform investors of
any changes withrespect todepositary liability
without delay
Article 23(4)(a)Percentage of the AIF's assets which

There are no assets that are subject to special arrangements arising fromare subject to special arrangements

their illiquid nature.

arising from their illiquid nature. The
percentage shall be calculated as the
net value of those assets subject tospecial arrangements divided by the
net asset value of the AIF concerned
Overview of any special

There are no such special arrangements.

arrangements, including whether
they relate to side pockets, gates orother arrangements

14

Valuation methodology applied to

There are no such special arrangements.

assets which are subject to sucharrangements
How management and performance

There are no such special arrangements.

fees apply to such assets
Article 23(4)(b)Any new arrangements for managing

Any new arrangements or change in applicable arrangements will be

the liquidity of the AIF

disclosed at an appropriate time.

For each AIF that the AIFM manages

Any new arrangements or change in applicable arrangements will bethat is not an unleveraged closed‐end

disclosed at an appropriate time.

AIF, notify to investors whenever they
make changes to its liquidity
management systems (which enable
an AIFM to monitor the liquidity riskof the AIF and to ensure the liquidity
profile of the investments of the AIF
complies with its underlying
obligations) that are material inaccordance with Article 106(1) ofRegulation (EU) No 231/2013 (ie.
there is a substantial likelihood that areasonable investor, becoming awareof such information, would reconsider
its investment in the AIF, including
because such information could
impact an investor’s ability to
exercise its rights in relation to its
investment, or otherwise prejudice
the interests of one or more investors
in the AIF).
Immediately notify investors where

Any new arrangements or change in applicable arrangements will bethey activate gates, side pockets ordisclosed at an appropriate time.

similar special arrangements or
where they decide to suspend
redemptions
Overview of changes to liquidity

Any new arrangements or change in applicable arrangements will bearrangements, even if not special

disclosed at an appropriate time.

arrangements

15

Terms of redemption and

NAF is a closed‐end investment corporation, and unitholders are notcircumstances where management

entitled to request the redemption of their investment.

discretion applies, where relevant
Also any voting or other restrictions

There are no voting or other restrictions on the rights attaching to units.

exercisable, the length of any lock‐up
or any provision concerning ‘first inline’ or ‘pro‐rating’ on gates andsuspensions shall be included
Article 23(4)(c)
The current risk profile of the AIF and

The appropriateness and effectiveness of the risk management structure

the risk management systems

are regularly evaluated and enhanced by the AIFM.

employed by the AIFM to manage
those risks

Deposits are exposed to risks of failure of the financial institution holding
the deposit and other credit risks, but such risks are controlled by striving todiversify the financial institutions holding the deposits.
Funds from loans and bonds are primarily used for acquiring assets and to
repay interest‐bearing debt. NAF manages associated liquidity and interest
rate fluctuation risk in ways such as bydiversifying its credit sources andmaturities, dispersing repayment dates, establishing committed credit lines,
keeping sufficient liquidity in hand, and mainly using fixed‐rate loans. Our
credit line is in the amount of 15 billion yen; no amount has been drawn
down as of August 31, 2021.
Debt with a floating interest rate is exposed to interest rate fluctuation
risks, but the impact that interest rate rises have on the operations islimited by keeping the appraisal LTV at low levels, maintaining the
proportion of debt that is long‐term fixed‐rate debt at high levels, andsetting a procurement limit depending on the economic and financial
environment, terms of lease agreements with tenants, asset holding period
and other factors.
Furthermore, derivative transactions (interest rate swap transactions) areavailable as hedging instruments to mitigate the risks of rises in floatinginterest rates. NAF may enter into derivative transactions solely for the
purpose of hedging interest rate risk. Currently, NAF is not engaged in any
derivative transactions. NAF strives for efficiency in its funding plans andhas an operating policy of minimizing surplus funds.

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Tenant security deposits are exposed to liquidity risk arising from vacatingof properties by tenants due to the termination of contract.
NAF manages this risk by monitoring forecasted cash flows on a monthly
basis to ensure it has sufficient funds.
Measures to assess the sensitivity of

No such measures have been implemented.

the AIF’s portfolio to the most
relevant risks to which the AIF is or
could be exposed
If risk limits set by the AIFM have

No such situation has occurred.

been or are likely to be exceeded andwhere these risk limits have been
exceeded a description of thecircumstances and the remedial
measures taken
Article 23(5)(a)Any changes to the maximum amountAny new arrangements or change in applicable arrangements will beof leverage which the AIFM may

disclosed at an appropriate time.

employ on behalf of the AIF,
calculated in accordance with thegross and commitment methods. This
shall include the original and revised
maximum level of leverage calculated
in accordance with Articles 7 and 8 ofRegulation (EU) No 231/2013,
whereby the level of leverage shall becalculated as the relevant exposure
divided by the net asset value of the
AIF.
Any right of the reuse of collateral or

No such right or guarantee exists.

any guarantee granted under theleveraging agreement, including thenature of the rights granted for thereuse of collateral and the nature of
the guarantees granted
Details of any change in service

Any new arrangements or change in applicable arrangements will be

providers relating to the above.

disclosed at an appropriate time.

Article 23(5)(b)Information on the total amount of

The aggregate amount of debt with interest is JPY 169,500 million as ofleverage employed by the AIF

August 31, 2021.

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calculated in accordance with thegross and commitment methods

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