September 27, 2018
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 and Sale of Domestic Real Estate Properties(Acquisition: Park Axis Kanayama WEST, Sale: Park Cube Ikebukuro Kanamecho)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 acquisition and sale (the “Acquisition” and “Sale,” respectively; collectively, the “Transaction”)
of real estate properties in Japan as shown below, and completed the Transaction today.
1. Overview of the Transaction(1) Overview of the Acquisition
1)

Name of property acquired (Note 1)

Park Axis Kanayama WEST

2)Type of property acquired (Note 2)

Real estate3)

Acquisition price (Note 3)¥1,770,000 thousand

4)

Appraised value (Note 4)¥1,840,000 thousand

5)

Date of conclusion of sales contract

September 27, 20186)

Date of handover

September 27, 2018

7)

SellerNot disclosed (Note 6)8)

Acquisition funds

Borrowings and own funds (Note 7)

9)

Method of payment

Full payment at the time of delivery(2) Overview of the Sale
1)

Name of property soldPark Cube Ikebukuro Kanamecho

2)

Type of property sold (Note 2)

Real estate

3)

Sales price (Note 5)¥1,620,000 thousand

4)

Book value¥1,551,584 thousand (as of February 28, 2018)5)

Differences between sale price and book value¥68,415 thousand

6)

Appraised value (Note 4)¥1,620,000 thousand

7)

Date of conclusion of sales contract

September 27, 20188)

Date of handover

September 27, 2018

9)

Buyer

Not disclosed (Note 6)10) Settlement

Lump sum settlement at time of handover11) Use of proceeds

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

(Note 1) Current name of the property acquired is “Famildo Kanayama,” but NAF plans to rename the property without delay after
the acquisition of the property. Since the property was developed by Mitsui Fudosan Co., Ltd. and satisfies quality standards
for the "Park Axis" series which are planned and developed by Mitsui Fudosan Group, the new name is planned to be “Park
Axis Kanayama WEST.”(Note 2) As to the property acquired, NAF terminated the trust as of today after acquiring trust beneficiary interests of which trust1

property is the property acquired. As to the property sold, NAF sold trust beneficiary interests of which trust property is theproperty sold after entrusting the sold property to the trustee as of today.
(Note 3) ”Acquisition price” denotes the trading value (exclusive of miscellaneous expenses, fixed property taxes, urban planningtaxes, consumption taxes, and local consumption taxes) specified in the trust beneficiary interest sales contract for theproperty acquired.
(Note 4) “Appraised value” is based on the amount mentioned in the real estate appraisal reports (date of value appraisal on August
31, 2018 for the property acquired and on February 28, 2018 for the property sold) which JLL Morii Valuation & Advisory
K.K. prepared for the property acquired and property sold.
(Note 5) “Sales 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 sales contract for the property
sold.
(Note 6) Not disclosed as the consent from the seller and buyer has not been obtained.
(Note 7) Borrowings to compensate for the decrease in own funds are planned to be newly conducted after the acquisition of theproperty with own funds as of today. Details of new borrowings will be announced once finalized.

2. Reason for the Transaction
Based on the provisions for investments and policies on asset management provided in the Articles ofIncorporation of NAF, the decision on the Transaction was made to ensure the steady growth of assets undermanagement and the further diversification and enhancement of the investment portfolio.
NAF believes that the Acquisition will secure a stable revenue base through investment in a family-typeapartment which enjoys strong demand and high scarcity value. With respect to the Sale, NAF received a request
for sale with a purchase price surpassing the book value, which was likely to actualize unrealized gain, and thus
entered an agreement.
The Transaction is expected to result in improvement of portfolio profitability, leading to an increase in
distribution per unit. NAF plans to internally reserve part of gain from the Sale as a reserve and distribute theremaining amount.

3. Description of the property acquired and property sold(1) Outline of the property acquired
Name of property acquired
Type of property acquired (Note 1)
Appraisal company
Appraised value upon acquisition (Note 2)
Date of value appraisal (Note 2)
Location Residence indication
Building-to-land ratio (Note 3)
Floor-area ratio (Note 3)
Land
ZoningSite area (Note 4)
Ownership form
Completion date (Note 5)
Structure / Number of stories (Note 6)
Use (Note 6)
Building Gross floor area (Note 6)
Ownership form
Rentable units
Rentable area
Existence of security interests
Special affairs (Note 7)

Park Axis Kanayama WEST
Real estate
JLL Morii Valuation & Advisory K.K.
¥1,840,000 thousand
August 31, 2018
4-3 Masaki 2-chome, Naka-ku, Nagoya-shi, Aichi
80%
400%
Neighborhood commercial district
1,261.70 m2
Proprietorship
February 17, 2006
Flat-roofed reinforced concrete structure / 14 stories
Apartment building
5,223.73 m2
Proprietorship
63
4,795.13 m2
None
None

2

Special features of the property

Details oftenants(Note 8)The property is approximately a 9-minute walk from
Otobashi Station on the JR Tokaido Main Line andapproximately a 13-minute walk from Kanayama Station on
the Nagoya Municipal Subway Meijo Line and other lines,
allowing use of multiple lines.
In addition, there are many commercial facilities,
supermarkets, convenient stores, etc. in the neighboringarea and the vicinity of the stations.
Demand can be expected from DINK households,
families and others who place importance on pleasant living
conditions and convenience.

Total number of tenants

1

Rentable units

63

Rented units

61

Rentable area

4,795.13 m2

Rented area

4,627.57 m2

Occupancy Rate

96.5%

Deposit /Security deposit¥16,837 thousand

Total rental revenues

Refer to “10. Summary of appraisal report” below.

(2) 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)
Zoning
Land
Site area (Note 4)
Ownership form
Completion date (Note 5)

Building

Details oftenants(Note 8)(Note 1)

Park Cube Ikebukuro Kanamecho
Real estate
JLL Morii Valuation & Advisory K.K.
¥1,620,000 thousand
February 28, 201827-9 Nishi-ikebukuro 5-chome, Toshima-ku, Tokyo
80% / 60%
500% / 300%
Commercial district, category 1 residential district
458.05 m2
Proprietorship
March 23, 2007

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
Rentable area

Apartment building, parking lot for bicycles
2,041.39 m2
Proprietorship
65
1,886.82 m2

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

165
63
1,886.82 m2
1,828.78 m2
96.9%¥13,715 thousand
Refer to “10. Summary of appraisal report” below.

As to the property acquired, NAF terminated the trust as of today after acquiring trust beneficiary interests of which trust
property is the property acquired. As to the property sold, NAF sold trust beneficiary interests of which trust property is theproperty sold after entrusting the property sold to the trustee as of today.

(Note 2)

”Appraisal value upon acquisition,” “Appraisal value upon sale” and “Date of value appraisal” are based on the description in
the real estate appraisal report which JLL Morii Valuation & Advisory K.K. prepared for the property acquired and property sold.

3

(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” isthe ratio of the building’s gross floor area to the site area as stipulated in Article 52 of the Building Standards Act, and thefigure 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”, “uses”, and “gross floor area” are based on the description in the register.

(Note 7)

“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 properties to be acquired.

(Note 8)

Explanation on “details of tenants”(i)“Total number of tenants” is entered as 1 if there is a master lease agreement (a bulk lease agreement) concluded witha master lease company. With regard to the property acquired, a master lease agreement is concluded with Mitsui
Fudosan Residential Lease Co., Ltd. as the master lease company. The “total number of tenants” above is therefore thenumber of tenants after such a master lease agreement is concluded. With regard to the property sold, a master leaseagreement (bulk lease agreement) is concluded with Mitsui Fudosan Residential Lease Co., Ltd. as the master lease
company. The “total number of tenants” above is entered as 1.
(ii) “Rentable units” denotes the number of units that can be rented within the property sold.
(iii) Figures for “Rented units” and “Rented area” and “Deposit / Security deposit” are based on information valid as ofAugust 31, 2018.
(iv) “Rentable area” denotes the total area of the building that can be rented within the property acquired and 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.

(3) Outline of investigations into the state of the building, etc. for the property acquired
Consigned investigating
SOMPO Risk Management & Health Care Inc.
company
Investigation report
September 7, 2018
date
Urgent repair cost－
Investigations
into the state
Short-term repair cost－of building
Repair and renewal
costs expected to be¥97,880 thousand
necessary within 12
years
Replacement value¥1,029,000 thousand
Consigned investigating
Tokio Marine & Nichido Risk Consulting Co., Ltd.
company
Earthquake
Investigation report
September 5, 2018
risk diagnosis
date
PML value (Note)
4.4%(Note)The report on earthquake risk diagnosis only states the views of the consigned investigating company and does notprovide any guarantee for its contents. PML (Probable Maximum Loss) value represents the rate of probablemaximum loss to be caused by earthquakes. In this case, it means the extent of damage to be caused by one of thebiggest earthquakes anticipated to happen within the expected duration of service (the biggest earthquake whichhappens once every 475 years = 10% chance of a big earthquake happening once every 50 years) represented by
the rate (%) of the estimated cost of restoration from the damage to the replacement cost.

Profile of third-party investigative bodyName
SOMPO Risk Management & Health Care Inc.
Address
24-1, Nishishinjuku 1-chome, Shinjuku-ku, Tokyo
Representative
Yasushi Fuse, President and Chief Executive Officer
Study, research, assessment, provision of information, consulting, etc. on
Description of principal
security, disaster prevention, environment conservation, and risk
operations
management, etc.
Capital¥30 million
Relationship with NAF
or investment trust
None
management company

4

Name
Address

Tokio Marine & Nichido Risk Consulting Co., Ltd.

Representative

Taizo Shimakura, President and Chief Executive Officer
Research, study, provision of information, assessment, consulting, holdingof seminars, publishing, provision of training, etc. on security, disasterprevention, sanitation, environment, product safety and information
management, etc.
¥100 million

Description of principal
operations
CapitalRelationship with NAF
or investment trust
management company

5-1, Otemachi 1-chome, Chiyoda-ku, Tokyo

None

4. Outline of seller and buyer(1) Outline of seller
The seller of the property acquired is a domestic Godo Kaisha, but information is not disclosed as consent fromthe seller has not been obtained. There are no capital, personal or business relationships to report between theseller and NAF, the investment trust management company, or any related parties or associated companies of
NAF or the investment trust management company. Moreover, the seller and any related parties or associatedcompanies of the seller do not fall under the category of related parties of NAF or the investment trust
management company.
(2) Outline of buyer
The buyer of the property sold is a domestic Godo Kaisha (different from the seller of the property acquired,
who is mentioned in (1) above), but information is not disclosed as consent from the buyer has not been obtained.
There are no capital, personal or business relationships to report between the buyer and NAF, the investment
trust management company, or any related parties or associated companies of NAF or the investment trust
management company. Also, the buyer and any related parties or associated companies of the buyer do not fallunder the category of related parties of NAF or the investment trust management company.
5. Situation of the acquirer of the property
The acquisition of the property acquired is not acquisition from a party classified as having a relationship ofspecial interest with NAF or the investment trust management company, therefore the situation of the acquirer is
not stated.
6. Outline of brokerage(1) Outline of brokerage for the property acquired
The broker for the acquisition of the property acquired is a financial institution in Japan, but information is notdisclosed as consent from the company has not been obtained. The company holds 0.82% of total NAF
investment units issued as of August 31, 2018, and falls under the category of trustee of real estate owned by
NAF, NAF’s lender, asset custodian, transfer agent, and special accounts management institution. There are no
personnel relationships to report between NAF or the investment trust management company and the company
and there are no personnel relationship to report between any related parties or associated companies of NAF
or the investment trust management company and any related parties or associated companies of the company.
Furthermore, the company or any related parties or associated companies of the company do not fall under the
category of related parties of NAF or the investment trust management company.

5(2) Outline of brokerage for the property soldThe broker for the sale of the property sold is the same broker as that for the acquisition of the property acquired,
who is mentioned in (1) above.

7. Transactions with related parties and the like
The acquisition of the property acquired is not acquisition from a party having a relationship of special interest
with NAF or the investment trust management company, and the sale of the property sold is not sale to a party
having a relationship of special interest with NAF or the investment trust management company.
8. Earthquake resistance matters
NAF outsourced the inspection and verification of the details of earthquake-resistant structures including
structural calculation sheets and, for the building of the property acquired, obtained confirmation that, no
falsification is suspected in the structural calculation and structural drawings with respect to their structure, which
ensures earthquake resistance as per the Building Standards Act.
In addition, NAF always entrusts earthquake risk diagnosis to the third-party investigating company to review
drawings using structural design drawings, structural calculation sheets, etc., as well as on-site inspection andthe like during the course of due diligence upon acquisition of properties, besides building certification
investigations performed by an inspection and certification agency.
9. Outlook for management after the Transaction
The outlook for NAF’s financial results for the period ending February 28, 2019 (26th Period: September 1,
2018 to February 28, 2019) will be disclosed when financial results for the period ended August 31, 2018 areannounced (the announcement is scheduled for October 18, 2018) with due consideration of the status ofoperations of the overall portfolio.

610．Summary of appraisal report(1) Property acquired: Park Axis Kanayama WEST
Appraised value¥1,840,000 thousand

Appraisal company
Date of value appraisal

JLL Morii Valuation & Advisory K.K.
August 31, 2018
(Unit: thousands of yen)

Item
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.
(2) Operating expenses[(c)+(d)+(e)+(f)+(g)+(h)+(i)+(j)](c) Maintenance expenses(d) Utilities expenses

Details
1,840,000
1,860,000
116,935
123,593
6,658

1,956
1,740

5,474

(f) Property management fees

3,484(g) Tenant soliciting fees, etc.

3,011(h) Taxes and public dues

7,251(i) Property insurance fees

251(j) Other expenses

680

167

(l) Capital expenditures

5,710(4) Net income [(3)+(k)−(l)]87,545

Value calculated by the discounted cash
flow method

4.7%

The cost of restoration to original condition isappraised giving consideration to actual records andthe evacuation rate, making reference to levels at
similar real estate. Repair expenses are posted as
30% of a standardized amount assuming the estimate
in the engineering report to be appropriate.
Appraised making reference to levels at similar realestate.
Appraised taking into account local practice and theevacuation rate of the subject real estate.
Appraised by considering actual amounts and making
reference to the fluctuation rate and annual
depreciation, etc.
The amount is posted assuming the estimate to beappropriate.
Neighborhood association fees, CATV usage fees
Appraised by multiplying the amount obtained bysubtracting the amount equivalent to security deposits
of vacancies from the amount of security deposits,
etc.at full occupancy, by yield of 1.0%.
Posted 70% of a standardized amount assuming theestimate in the engineering report to be appropriate.
Appraised by considering the income and capitalfluctuation risk in addition to the discount rate.

1,810,000

Discount rate

4.5%

Terminal cap rate

4.9%

Cost method value

Appraised based on actual records making reference
to levels at similar real estate.

93,088(k) Earnings from temporary
deposits(5) Cap 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 thesubject real estate.

23,847(e) Repair expenses(3) Net operating income [(1)−(2)]Summary, etc.
Calculated making correlation to the value of earnings
found by the direct capitalization method and thevalue of earnings found by the discounted cash flow
method.

Appraised comprehensively taking into accountoverall market trends for buyers and sellers, etc. after
considering risk factors of location and individual
characteristics of the subject real estate as well as
standard cap rate.
Appraised by considering uncertainty of fluctuation
projections for future net income, future deteriorationof the building, and risk of sale, in addition tocapitalization rate.

1,020,000

Land ratio

60.3%

Building ratio

39.7%

Other items considered by the appraisal
company in making the appraisal－

7(2) Property sold: Park Cube Ikebukuro Kanamecho
Appraised value¥1,620,000 thousand

Appraisal company
Date of value appraisal

JLL Morii Valuation & Advisory K.K.
February 28, 2018
(Unit: thousands of yen)

Item
Value of earnings
Value calculated by the direct capitalization
method [(4)÷(5)](1) Operating revenues [(a)−(b)]Details
1,620,000
1,650,000
84,581(a) Potential gross revenue

89,728(b) Vacancy loss, etc.

5,147(2) Operating expenses[(c)+(d)+(e)+(f)+(g)+(h)+(i)+(j)](c) Maintenance expenses(d) Utilities expenses

2,326
1,027

1,829

(f) Property management fees

2,459(g) Tenant soliciting fees, etc.

3,283(h) Taxes and public dues

3,304(i) Property insurance fees

109(j) Other expenses

78

125

(l) Capital expenditures

1,596(4) Net income [(3)+(k)−(l)]67,848

Value calculated by the discounted cash
flow method

Appraised based on actual records making reference
to levels at similar real estate.
The cost of restoration to original condition isappraised giving consideration to actual records andthe evacuation rate, making reference to levels at
similar real estate. Repair expenses are posted as
30% of a standardized amount assuming the estimate
in the engineering report to be appropriate.
Appraised making reference to levels at similar realestate.
Appraised taking into account local practice and theevacuation rate of the subject real estate.
Appraised by considering actual amounts and making
reference to the fluctuation rate and annual
depreciation, etc.
The amount is posted assuming the estimate to beappropriate.
Neighborhood association fees

69,319(k) Earnings from temporary
deposits(5) Cap 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 thesubject real estate.

15,262(e) Repair expenses(3) Net operating income [(1)−(2)]Summary, etc.
Calculated making correlation to the value of earnings
found by the direct capitalization method and thevalue of earnings found by the discounted cash flow
method.

4.1%

Appraised by multiplying the amount obtained bysubtracting the amount equivalent to security deposits
of vacancies from the amount of security deposits,
etc.at full occupancy, by yield of 1.0%.
Posted 70% of a standardized amount assuming theestimate in the engineering report to be appropriate.
Appraised by considering the income and capitalfluctuation risk in addition to the discount rate.

1,590,000

Discount rate

3.9%

Terminal cap rate

4.3%

Cost method value

849,000

Land ratio

78.6%

Building ratio

21.4%

Other items considered by the appraisal
company in making the appraisal

Appraised comprehensively taking into accountoverall market trends for buyers and sellers, etc. after
considering risk factors of location and individual
characteristics of the subject real estate as well as
standard cap rate.
Appraised by considering uncertainty of fluctuation
projections for future net income, future deteriorationof the building, and risk of sale, in addition tocapitalization rate.

－

8



Japanese original document was distributed to the press clubs within Tokyo Stock Exchange (KabutoClub) and the press club of the Ministry of Land, Infrastructure, Transport and Tourism, and to the pressclub for construction publications of the Ministry of Land, Infrastructure, Transport and Tourism.

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 Japaneseoriginal shall prevail.

<Attached Documents>
1. Portfolio status after the Transaction
2. Photo and map of the property acquired9<Attached Document 1> Portfolio status after the Transaction

Total Acquisition Price¥305,821

Number of Investment Properties

123

Total Rentable Units (including retail units)

12,108millionproperties
units

Proportion of Investment in Assets
Acquisition Price

Portfolio Share(Note 1)(%) (Note 2)

Rental Apartments¥292,333 million

95.6%

Hospitality Facilities¥13,488 million

4.4%¥305,821 million

100.0%

Grand Total
Proportion of “Rental Apartments” by Area

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”(Note 1)“Acquisition Price” excludes miscellaneous expenses for acquisition, fixed property taxes, urban planning(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.

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 Tokyo(Note 6)

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

10

<Attached Document 2> Photo and map of the property acquired

Masaki Elementary School

Otobashi Station

Iseyama Junior High School

Kanayama Station

11