January 29, 2019
To All Concerned Parties
Issuer of Real Estate Investment Trust Securities
4-1, Nihonbashi 1-chome, Chuo-ku, Tokyo 103-0027
Nippon Accommodations Fund Inc.
Executive Director
Takashi Ikeda(Code Number 3226)
Investment Trust Management Company
Mitsui Fudosan Accommodations Fund Management Co., Ltd.
President and CEO
Tateyuki Ikura
Contact CFO and Director
Tetsuji Kawakami(TEL. 03-3246-3677)

Notification Concerning Acquisition of Domestic Real Estate Property(Chisun Hotel Hiroshima)
This is a notification that Mitsui Fudosan Accommodations Fund Management Co., Ltd., an investment trustmanagement company, which has been commissioned by Nippon Accommodations Fund Inc. (“NAF”) to manage
its assets, decided on the acquisition of real estate properties in Japan as shown below.
1. Reason for acquisition
Based on the provisions for investments and policies on asset management provided in the Articles of Incorporation,
the decision to acquire the following property was made to ensure the steady growth of assets under management,
and for the diversification and further enhancement of the investment portfolio.
2. Overview for acquisition(1) Name of property to be acquired

Chisun Hotel Hiroshima(2) Type of property to be acquired

Real estate(3) Planned acquisition price (Note 1)¥1,880,000 thousand(4) Appraised value (Note 2)¥1,910,000 thousand(5) Date of conclusion of sale contract

January 29, 2019(6) Planned date of handoverMay 30, 2019 (Note 3)(7) Seller

Not disclosed (Note 4)(8) Acquisition funds

Borrowings and own funds(9) Method of payment

Deposit of ¥188,000 thousand upon conclusion of contract(Note 5)
Remaining amount upon delivery(Note 1) “Planned acquisition price” denotes the trading value (exclusive of miscellaneous expenses for acquisition, fixed propertytaxes, urban planning taxes, consumption taxes, and local consumption taxes) specified in the real estate sale contract forthe property to be acquired.
(Note 2) “Appraised value” is based on the amount mentioned in the real estate appraisal report (date of value appraisal on
November 30, 2018) which Daiwa Real Estate Appraisal Co., Ltd. prepared for the property to be acquired.
(Note 3) Planned date of handover may be changed to a date which the buyer and the seller agree on separately.
(Note 4) Not disclosed as the consent from the seller has not been obtained.
(Note 5) The deposit will not bear interest and will be allocated to part of payment upon settlement. It is not a deposit to allow forcancellation. Furthermore, as a measure of protection, domestic financial institution jointly guarantees the return obligationof the deposit.

3. Description of the property acquired(1) Outline of the property acquired
Name of property to be acquired
Type of property to be acquired
Appraisal company
Appraised value (Note 1)
Date of value appraisal (Note 1)
Location Residence indication

LandBuilding

Chisun Hotel Hiroshima
Real EstateDaiwa Real Estate Appraisal Co., Ltd.
¥1,910,000 thousand
November 30, 201814-7 Nobori-cho, Naka-ku, Hiroshima-shi, Hiroshima

Building-to-land ratio (Note 2)
Floor-area ratio (Note 2)
ZoningSite area (Note 3)
Ownership form
Completion date (Note 4)

80%
900%
Commercial district
724.13 m2
Proprietorship
November 22, 1986

Structure / Number of stories(Note 5)

Flat-roof steel frame reinforced concrete structure / 11 stories

Use (Note 5)
Gross floor area (Note 5)
Ownership form

Hotel4,275.59 m2
Proprietorship

Number of guestrooms

170

Rentable area

4,275.59 m2

Existence of security interests

A revolving mortgage for the land and structure of the property isplanned to be released by the delivery date at the responsibility andexpense of the seller.

Special affairs (Note 6)

・Although the property presently does not satisfy the obligatory numberof parking spaces, the seller has agreed, in the real estate sale
contract for the property, to secure a parking lot with a sufficientnumber of parking spaces required within the property by thehandover date at the expense and under the responsibility of theseller.
・The part of the borderline between the land for the property and theadjoining land is not confirmed.
・Under the fixed-building lease agreement for the property, when thelessor intends to sell the property, the lessee holds the preferential
negotiation right for preemption (including negotiation by an agent) tothe lessor.

The property is a hotel specialized in lodging, located a 14-minute walkfrom JR Hiroshima Station and close to Kanayama-cho Station on theHiroshima Electric Railway. Access to major sightseeing spots inHiroshima such as Peace Memorial Park and Atomic Bomb Dome isconvenient by using the Hiroshima Electric Railway which goes tovarious locations in central Hiroshima. Furthermore, given the close
proximity of the Hacchobori/Kamiya-cho area where department
stores and shops as well as office buildings, etc. are concentrated, andthe Nagarekawa-cho/Yagenbori area where restaurant buildings areconcentrated, the property stands in a location capable of attracting
business persons and tourists. The property has a total of 170
guestrooms: 143 single rooms and 27 twin rooms. A wide range ofservices is offered to respond mainly to the needs of business persons
and also to those of foreign visitors and other leisure travelers,
including a directly-operated restaurant on the first floor serving
breakfast and lunch and four meeting rooms, some of which can bepartitioned, on the second floor.

Special features of the property

Details oftenants(Note 7)

Total number of tenants

1

Number of guestrooms

170

Rentable area
Rented areaOccupancy rate
Deposit / Security
deposit

4,275.59 m2
4,275.59 m2
100.0%

Total rental revenues¥10,200 thousand¥76,000 thousand(Note 1) “Appraised value” and “date of value appraisal” are based on the real estate appraisal report prepared by Daiwa Real EstateAppraisal Co., Ltd. for the property to be acquired.
(Note 2) “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 3) “Site area” denotes the land area included in the register.
(Note 4) “Completion date” of the building denotes the date included in the register.
(Note 5) “Structure / Number of stories,” “uses,” and “gross floor area” are based on the description in the register.
(Note 6) “Special affairs” include issues considered to be important by NAF as of today, with consideration of influence on the rights,
uses, and appraisal values as well as profits of the property to be acquired.
(Note 7) Explanation on “details of tenants(i) “Total number of tenants” is denoted as “1” where a master lease agreement (blanket lease agreement) has been concluded
with the lessee. As to the property to be acquired, a fixed-term building lease agreement has been concluded with theSeller as the lessor and SHR Hotel Lease Co., Ltd. as the lessee, and NAF shall succeed the status of the seller as alessor on the handover date. The above “Total number of tenants” is denoted as “1” indicating the number of said lessee.
(ii) “Rentable area” denotes the total area of the building that can be rented within the properties to be acquired.
(iii) “Rented area” and “Deposit /Security deposit” are based on the fixed term building lease agreement.
(iv) “Occupancy rate” denotes the ratio of the “rented area” against the “rentable area” and the figures are rounded to onedecimal place.
(v) ”Total rental revenues” denotes monthly rent (fixed rent) stated in the fixed term building lease agreement.

(2) Effect on NAF’s financial position in the event of inability to execute forward commitments, etc.
The property to be acquired is applicable to forward commitments (Note) by investment corporations asprovided for in the Comprehensive Guidelines for Supervision of Financial Instruments Business Operators,etc. defined by the Financial Services Agency.
In the event of a violation of the terms and conditions of any sales contract related to the above property(the “Sales Contract”) made by NAF or the seller, the counterparty may cancel the Sales Contract and claim,
as a penalty, an amount equivalent to 20% of the trading value of the property whose contract was cancelled.
Note: Refers to the postdated sales contract under which payment and delivery shall be made at least one month after the conclusionof the contract, or any other contract similar thereto.

(3) Outline of investigations into the state of the building, etc.
Consigned investigating
Tokio Marine & Nichido Risk Consulting Co., Ltd.
company
Investigation report date
January 21, 2019
Urgent repair cost
－Investigations
into the state ofShort-term repair cost－buildingRepair and renewal costs
expected to be necessary ¥185,308 thousand
within 12 years
Replacement value¥1,140,000 thousand
Consigned investigating
Tokio Marine & Nichido Risk Consulting Co., Ltd.
company
Earthquake risk
Investigation report date
January 21, 2019
diagnosis
PML value (Note)
6.4%(Note)

The report on earthquake risk diagnosis only states the views of the consigned investigating company and does not provide
any guarantee for its contents. PML (Probable Maximum Loss) value represents the rate of probable maximum loss to becaused by earthquakes. In this case, it means the extent of damage to be caused by one of the biggest earthquakes
anticipated to happen within the expected duration of service (the biggest earthquake which happens once every 475 years= 10% chance of a big earthquake happening once every 50 years) represented by the rate (%) of the estimated cost ofrestoration from the damage to the replacement cost.

Profile of third-party investigative bodyName
Address
Representative
Description of principal
operations

Tokio Marine & Nichido Risk Consulting Co., Ltd.
5-1, Otemachi 1-chome, Chiyoda-ku, Tokyo
Taizo Shimakura, President and Chief Executive Officer
Research, study, provision of information, assessment, consulting, holding ofseminars, publishing, provision of training, etc. on security, disaster prevention,sanitation, environment, product safety and information management, etc.

Capital¥100 million

Relationship with NAF
or the investment trust
management company

None

4. Outline of seller
The sellers are a domestic business corporation and several individuals, but information is not disclosed as consent
has not been obtained. There are no capital, personal or business relationships to report between the sellers andNAF, the investment trust management company, or any related parties or associated companies of NAF or theinvestment trust management company. Moreover, the sellers do not fall under the category of related parties ofNAF or the investment trust management company.

5. Situation of the acquirer of the property
The property to be acquired is not an acquisition from a party classified as having a relationship of special interestwith NAF or the investment trust management company, therefore the situation of the acquirer is not stated.
6. Outline of brokerage(1) Outline of broker

NameAddress

Mitsui Fudosan Realty Co., Ltd.
3-2-5, Kasumigaseki, Chiyoda-ku, Tokyo

Representative

Yasuhiko Yamashiro, President and Chief Executive Officer

Description of principal
operations

Real estate brokerage services for individuals, real estate brokerage services forbusiness corporations, parking lot business, insurance agency services, etc.

CapitalDate of establishment¥20,000 million
July 15, 1969
There are no capital, personnel or business relationships to report between thebroker and NAF, the investment trust management company, or any relatedparties or associated companies of NAF or the investment trust managementcompany. The broker does not fall under the category of a related party of NAF.
Moreover, the broker is a subsidiary of Mitsui Fudosan Co., Ltd., the parent
company of the investment trust management company.

Relationship with NAF or
the investment trustmanagement company(2) Amount of brokerage fee¥56,460 thousand (Excluding consumption taxes and local consumption taxes)
7. Transactions with related parties and the like
Since Mitsui Fudosan Realty Co., Ltd., the broker, corresponds to related parties and the like (see Note), theconclusion of the general brokerage agreement has been carried out through deliberation and approval by thecompliance 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) “Related parties and the like” means related parties and the like of an investment trust management company which has concluded
an asset management contract with NAF, as determined in the Order for Enforcement of the Act on Investment Trust and Investment
Corporation, Article 123.

8. Earthquake resistance matters
NAF outsourced the inspection and verification of the details of earthquake-resistant structures of the property to
be acquired and, for the building of the property to be acquired, obtained confirmation that the structure of thebuilding ensures earthquake resistance as per the Building Standards Act.
In addition, NAF entrusts earthquake risk diagnosis to the third-party investigating company to review drawings
using structural design drawings, structural calculation sheets, etc. and the like during the course of due diligence
upon acquisition of properties, besides building certification investigations performed by an inspection andcertification agency.
9. Outlook for management after acquisition of the property
The acquisition will have no impact on NAF’s financial results for the period ending February 28, 2019 (26th Period:September 1, 2018 to February 28, 2019) as the acquisition is planned for May 30, 2019.
The outlook for NAF’s financial results for the period ending August 31, 2019 (27th Period: March 1, 2019 toAugust 31, 2019) after the acquisition will be disclosed at the time when the financial results for the period ending
February 28, 2019 are announced (scheduled for the middle of April 2019) with due consideration of the status ofoperations for the entire portfolio.

10. Summary of appraisal report
Appraised value¥1,910,000 thousand

Appraisal company

Daiwa Real Estate Appraisal Co., Ltd.

Date of value appraisal

November 30, 2018

ItemDetails
1,910,000

Value of earnings
Value calculated by the direct capitalization
method [(4)÷(5)](1) Operating revenues [(a)−(b)](a) Potential gross revenue(b) Vacancy loss, etc.

1,910,000
122,400
122,400

0(2) Operating expenses[(c)+(d)+(e)+(f)+(g)+(h)+(i)+(j)]15,843(c) Maintenance expenses

0(d) Utilities expenses

0(e) Repair expenses

1,936(f) Property management fees

1,800(g) Tenant soliciting fees, etc.

0(h) Taxes and public dues

11,591(i) Property insurance fees276(j) Other expenses

240(3) Net operating income [(1)−(2)]106,556(k) Earnings from temporary
deposits

760(l) Capital expenditures

13,506(4) Net income [(3)+(k)−(l)]93,810(5) Cap rate

4.9%

Value calculated by discounted cash flow
method

4.7%

Terminal cap rate

5.1%
1,800,000
88.5%

Building ratio
Other items
considered by theappraisal company inmaking the appraisal

11.5%－Appraised based on the contract rent after taking into
account the rent-paying capacity and medium- to longterm competitiveness of the subject hotel.
Not posted as tenancy is recognized to be stable overthe medium to long term considering the individual
characteristics including the tenant attribute andcontract terms.
Not posted assuming the expenses will be borne by thelessee.
Not posted assuming the expenses will be borne by thelessee.
Posted based on the engineering report.
Posted based on the level of PM fees of similar realestate.
Tenant soliciting fees for tenant replacement not posted,assuming a long-term tenancy.
Appraised based on the actual amount in fiscal 2018,etc.
The amount is posted assuming the estimate to beappropriate.
Posted based on the estimate for facility maintenanceinspection expenses.
Appraised assuming an investment yield of 1.0% after
comprehensively taking into account the management
status, etc. of temporary deposits.
Posted based on the engineering report.
Appraised making reference to the cap rate of similar
real estate, etc. after taking into account the recent
market trends for hotel assets.

1,910,000

Discount rate

Cost method value
Land ratio(Unit: Thousands of yen)
Summary, etc.
Calculated the value of earnings through the income
approach, judging the appropriateness of the value ofearnings found by the discounted cash flow method has
been verified with the value of earnings found by thedirect capitalization method.

Appraised using the comparison with discount rates oftransactions of similar real estate and yields of otherfinancial instruments, etc.
Appraised taking into account the marketability, etc. ofthe subject real estate at the end of the holding period
subject to the cap rate.

* NAF’s website: https://www.naf-r.jp/english/

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 Japaneseoriginal shall prevail.

<Attached Documents>
1. Portfolio status after the purchase of the property to be acquired
2. Photos of the property to be acquired and map of the area

<Attached Document 1> Portfolio status after the Acquisition

Total Planned Acquisition Price¥308,222

Number of Investment Properties

125

Total Rentable Units (including retail units)

12,356

millionproperties
units

Proportion of Investment in Assets
Planned Acquisition Price

Portfolio Share(Note 1)

(Note 2)

Rental Apartments¥292,333 million

Hospitality Facilities
Grand Total

94.8%¥15,889 million

5.2%¥308,222 million

100.0%

Proportion of “Rental Apartments” by Area
Planned Acquisition Price

Portfolio Share(Note 1)

(Note 3)

Tokyo 23 Wards¥255,083 million

87.3%

Greater Tokyo (Note 4)¥12,326 million

4.2%

Other Major Cities (Note 5)¥24,924 million

8.5%¥292,333 million

100.0%

Total of “Rental Apartments”

The above table includes the property acquired which was announced in “Notification Concerning Acquisition of Domestic
Real Estate Property (Dormy Odawara)” dated January 29, 2019.
(Note 1)

“Planned Acquisition Price” excludes miscellaneous expenses for acquisition, fixed property taxes, urban(Note 2)

The figure indicates the percentage of asset category to the total planned acquisition price.

(Note 3)

The figure indicates the percentage of Rental Apartments by area to the total planned acquisition priceplanning taxes, consumption taxes and local consumption taxes.

(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 Tokyoarea.

(Note 6)

Please refer to NAF’s website for the latest portfolio list:
https://www.naf-r.jp/english/portfolio/6-2.html

<Attached Document 2> Photos of the property to be acquired and map of the area

Hiroshima Station

Kanayama‐cho Station