August 8, 2019
To All Concerned Parties
Issuer of Real Estate Investment Trust Securities:
Nippon Accommodations Fund Inc.
Takashi Ikeda, Executive Director(TSE Code: 3226)
Investment Trust Management Company:
Mitsui Fudosan Accommodations FundManagement Co., Ltd.
Tateyuki Ikura, President and CEO
Inquiries: Tetsuji Kawakami, CFO and Director(TEL: +81-3-3246-3677)

Notification Concerning Sale of Domestic Real Estate Property(Park Axis Esaka Hiroshibacho)
This is a notification that Mitsui Fudosan Accommodations Fund Management Co., Ltd., an investment trust
management company that has been commissioned by Nippon Accommodations Fund Inc. (“NAF“) to manage its
assets, decided on the sale (the “Sale”) of a real estate property in Japan as shown below.
1. Reason for the Sale
Based on the provisions for investment and policies on asset management provided in the Articles ofIncorporation of NAF, NAF has decided on the sale of the property after comprehensively considering thecomposition of the portfolio and trends in the real estate market, etc.
The sale price for the Sale surpasses the book value of the property, and thus unrealized gain is likely to beincurred. NAF plans to internally reserve part of gain from the Sale as reserve.
2. Overview of the Sale
(1)

Name of property soldPark Axis Esaka Hiroshibacho(2)

Type of property sold (Note 1)

Real estate(3)

Sale price (Note 2)¥3,089,000 thousand(4)

Book value¥2,106,212 thousand (as of February 28, 2019)(5)

Differences between sale price and book value¥982,787 thousand(6)

Appraised value (Note 3)¥2,650,000 thousand(7)

Date of conclusion of sale contract

August 8, 2019(8)

Date of handoverAugust 8, 2019

(9)

Buyer

Not disclosed (Note 4)(10)

Settlement

Lump sum settlement at time of handover(11)

Use of proceeds

Future acquisitions of properties, repayment ofborrowings, payment for repairs and maintenance,
working funds, etc.

(Note 1) As to the property sold, NAF sold trust beneficiary interests of which trust property is the property sold after entrusting thesold property to the trustee as of today.
(Note 2) “Sale price” denotes the trading value (exclusive of miscellaneous expenses, fixed property taxes, urban planning taxes,
consumption taxes, and local consumption taxes) specified in the trust beneficiary interest sale contract for the property sold.
(Note 3) “Appraised value” is based on the amount mentioned in the real estate appraisal report (date of value appraisal: February
28, 2019) which Daiwa Real Estate Appraisal Co., Ltd. prepared for the property sold.
(Note 4) Not disclosed as consent from the buyer has not been obtained.

13．Outline of the property soldName of property soldType of property sold (Note 1)
Appraisal company
Appraisal value upon sale (Note 2)Date of value appraisal (Note 2)
Location Residence indication
Building-to-land ratio (Note 3)
Floor-area ratio (Note 3)
LandZoning
Site area (Note 4)
Ownership form
Completion date (Note 5)

Building

Details oftenants(Note 7)Park Axis Esaka Hiroshibacho
Real estate
Daiwa Real Estate Appraisal Co., Ltd.
¥2,650,000 thousand
February 28, 20196-26 Hiroshibacho, Suita-shi, Osaka
80%
400%
Commercial district
1,180.69 m2
Proprietorship (percentage of right of site: 100%)
September 28, 2009

Structure / Number of stories(Note 6)

Flat-roofed reinforced concrete structure / 14 stories

Use (Note 6)
Gross floor area (Note 6)
Ownership form
Rentable units

Apartment building, parking lot, garbage disposal site
4,899.88 m2
Proprietorship (unit ownership interest: 100%)130

Rentable area

4,309.24 m2

Total number of tenants
Rentable units
Rented units
Rentable area
Rented area
Occupancy Rate
Deposit /Security deposit
Monthly rental revenue

1
130
121
4,309.24 m2
4,014.04 m2
93.1%¥17,964 thousand¥13,073 thousand(Note 1) As to the property sold, NAF sold trust beneficiary interests of which trust property is the property sold after entrusting theproperty sold to the trustee as of today.
(Note 2) “Appraisal value upon sale” and “Date of value appraisal” are based on the description in the real estate appraisal reportwhich Daiwa Real Estate Appraisal Co., Ltd. prepared for the property sold.
(Note 3) “Building-to-land ratio” is the ratio of the building’s construction area to the site area as stipulated in Article 53 of the BuildingStandards Act, and the figure stipulated by city planning in accordance with zoning, etc. is indicated. “Floor-area ratio” is theratio of the building’s gross floor area to the site area as stipulated in Article 52 of the Building Standards Act, and the figure
stipulated by city planning in accordance with zoning, etc. is indicated.
(Note 4) “Site area” denotes the land area included in the register(Note 5) “Completion date” of the building denotes the date included in the register.
(Note 6) “Structure / Number of stories,” “use,” and “gross floor area” are based on the description in the register.
(Note 7) Explanation on “details of tenants”(i) “Total number of tenants” is entered as 1 since a master lease agreement (bulk lease agreement) is concluded with Mitsui
Fudosan Residential Lease Co., Ltd. as the master lease company.
(ii) “Rentable units” denotes the number of units that can be rented.
(iii) Figures for “Rented units,” “Rented area,” and “Deposit / Security deposit” are based on information valid as of June 30, 2019.
(iv) “Rentable area” denotes the total area of the building that can be rented within the property sold.
(v) “Occupancy rate” denotes the ratio of the “rented area” against the “rentable area” and the figures are rounded to one
decimal place.
(vi) “Monthly rental revenue” is the total monthly rent indicated in the lease agreement concluded between the master lease
company and end tenant as of June 30, 2019 (including common service fees and excluding usage fees of attachedfacilities such as parking lot and trunk room). Amounts are rounded down to the nearest thousand yen and do not include
consumption tax.

24. Outline of buyer
The buyer of the property sold is a domestic corporation, but information is not disclosed as consent from thebuyer has not been obtained. There are no capital, personnel or business relationships between the buyer andNAF or the investment trust management company. Also, the buyer does not fall under the category of relatedparties of NAF or the investment trust management company.
5.Outline of brokerage(1) Outline of broker
NameAddress
Representative
Description of principal
operations

Mitsui Fudosan Realty Co., Ltd.
3-2-5, Kasumigaseki, Chiyoda-ku, Tokyo
Yasuhiko Yamashiro, President and Chief Executive Officer
Real estate brokerage services, parking lot business, etc.

Capital¥20,000 million
Date of establishment
July 15, 1969
Relationship with NAF or the investment trust management company
There are no capital relationships between NAF and the broker. The broker is aCapitalsubsidiary (100%) of Mitsui Fudosan Co., Ltd., the parent company of the investment
relationships
trust management company.
Personnel
There are no personnel relationships between NAF or the investment trust
relationships
management company and the broker.
The broker has brokered NAF’s property acquisition deals in the period ending August
2019. In addition, it has concluded a parking lot lease agreement, service agreement,Businessetc. with NAF.
relationships
Other than the above, there are no business relationships to report between NAF or
the investment trust management company and the broker.
The broker does not fall under the category of related parties of NAF. Furthermore,
the broker is a subsidiary (100%) of Mitsui Fudosan Co., Ltd., the parent company ofApplicability to
the investment trust management company, and thus falls under the category ofrelated parties
related parties of the investment trust management company.
(2) Amount of brokerage fee¥61,780 thousand (Excluding consumption taxes and local consumption taxes)
6. Transactions with related parties and the like
Since Mitsui Fudosan Realty Co., Ltd., the broker, corresponds to related parties and the like (Note 1), theconclusion of the agreement on the brokerage (Note 2) has been carried out through deliberation and approvalby the compliance committee and deliberation and decision by the investment committee of the investment trust
management company, in accordance with NAF’s self-established rules on asset management relevant totransactions with related parties and the like.
(Note 1) “Related parties and the like” means related parties and the like of an investment trust management company which hasconcluded an asset management agreement with NAF, as determined in the Order for Enforcement of the Act onInvestment Trust and Investment Corporation, Article 123.
(Note 2) The agreement on the brokerage means a private placement handling service agreement concerning handling of issuanceof trust beneficiary interests.

7. Outlook for management after the Sale
The outlook for NAF’s financial results for the period ending August 31, 2019 (27th Period) taking into accountthe impact of the Sale is as described in “Notification Concerning Revision to Financial Results Forecast for thePeriod Ending August 31, 2019 (27th Period)” dated today. The impact of the Sale on NAF’s financial results
for the period ending February 29, 2020 (28th Period) is minimal, and there is no change to the financial results
forecast for the period.

3

8. Summary of appraisal report
Appraised value¥2,650,000 thousand

Appraisal company

Daiwa Real Estate Appraisal Co., Ltd.

Date of value appraisal

February 28, 2019

Item
Value of earnings
Value calculated by the direct capitalization
method [(4)÷(5)](1) Operating revenues [(a)−(b)]Details
2,650,000
2,690,000
181,241(a) Potential gross revenue

192,217(b) Vacancy loss, etc.

10,976(2) Operating expenses[(c)+(d)+(e)+(f)+(g)+(h)+(i)+(j)](c) Maintenance expenses

7,227
1,877

(e) Repair expenses

10,240(f) Property management fees

5,991(g) Tenant soliciting fees, etc.

5,970(h) Taxes and public dues

10,042(i) Property insurance fees314(j) Other expenses

625(l) ) Capital expenditures(4) Net income [(3)+(k)−(l)](5) Cap rate

Value calculated by the discounted cash
flow method
Discount rate

Appraised based on medium- and long-term stablerental income, etc. based on current condition, etc.
Appraised based on standard vacancy rates giving
consideration to individual characteristics of the subject
real estate.

42,289(d) Utilities expenses(3) Net operating income [(1)−(2)](k) Earnings from temporarydeposits(Unit: thousands of yen)
Summary, etc.
Calculated judging the value of earnings found by thediscounted cash flow method to be more convincing andalso verifying with the value of earnings found by thedirect capitalization method.

Appraised based on the agreed amount.
Utilities expenses are appraised to be ¥120 per month
per tsubo of rentable area.
Repair expenses are appraised based on the 12-yearperiod average repair expenses stated in theengineering report. Tenant replacement expenses areappraised by appraising maintenance expenses forrental rooms arising upon move-outs of lessees andconsidering the turnover rate.
Posted the amount equivalent to 3.5% of rental
revenues, etc. based on the fee rates, etc. at similar realestate.
Posted 1.5-month equivalent of fees for newly movingin tenants, making reference to fees at similar realestate.
Posted after an appraisal based on the actual amountfor fiscal 2018.
Posted assuming the estimated amount to beappropriate.
As discretionary reserve, other expenses are appraised
to be ¥40 per month per tsubo of rentable area basedon actual records of past fiscal years.

138,952
124

12,522

Investment yield is appraised to be 1.0%.
Capital expenditures are appraised based on the 12year-period average renewal expenses stated in theengineering report. Furniture/home appliance renewal
expanses, etc. are appraised to be ¥84,000 per
furnished unit.

126,554

4.7%

With the cap rate for real estate with similar use locatedin a lowest-risk area as the standard, appraised byadding/subtracting the spread attributable to the locationand other conditions of the subject real estate, making
reference to the cap rate of real estate in the same
supply and demand areas, etc.

2,630,000
4.5%

4Appraised using the comparison with discount rates oftransactions of similar real estate and yields of otherfinancial instruments, etc.

4.9%

Terminal cap rate

Appraised taking into account the marketability, etc. ofthe subject real estate at the end of the holding period
subject to the cap rate.

1,650,000

Cost method value
Land ratio

40.2%

Building ratio

59.8%

Other items considered by the appraisal
company in making the appraisal－・NAF website: https://www.naf-r.jp/english/index.html

Please note that this English translation of the Japanese original document is provided solely for information purposes.
In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shallprevail.
<Attached Document> Portfolio status after the Sale

Total Acquisition Price¥309,723 million

Number of Investment Properties

126 properties

Total Rentable Units (including retail units)

12,351 units

Proportion of Investment in Assets
Acquisition Price (Note 1)

Portfolio Share (%)(Note 2)

Rental Apartments¥293,834 million

94.9%

Hospitality Facilities¥15,889 million

5.1%¥309,723 million

100.0%

Acquisition Price (Note 1)

Portfolio Share (%)

Grand Total
Proportion of “Rental Apartments” by Area

(Note 3)
Tokyo 23 Wards¥258,953 million

88.1%

Greater Tokyo (Note 4)¥12,326 million

4.2%

Other Major Cities (Note 5)¥22,555 million

7.7%¥293,834 million

100.0%

Total of “Rental Apartments”(Note 1) “Acquisition Price” excludes miscellaneous expenses for acquisition, fixed property taxes, urban planning taxes,
consumption taxes and local consumption taxes.
(Note 2) The figure indicates the percentage of asset category to the total acquisition price.
(Note 3) The figure indicates the percentage of Rental Apartments by area to the total acquisition price.
(Note 4) “Greater Tokyo” indicates Tokyo metropolis (excluding Tokyo 23 wards), and the 3 prefectures of Kanagawa,
Saitama and Chiba.
(Note 5) “Other Major Cities” indicates major cities across Japan and their surrounding areas, excluding the Tokyo area.
(Note 6) Please refer to NAF’s website for the latest portfolio list:
https://www.naf-r.jp/english/portfolio/6-2.html

5