NEWS RELEASE
Jun 07, 2023

R&I Affirms AA-, Stable: Nippon Accommodations Fund Inc.
Rating and Investment Information, Inc. (R&I) has announced the following:
ISSUER:

Nippon Accommodations Fund Inc.
Issuer Rating: AA-, Affirmed
Rating Outlook: Stable

RATIONALE:
Nippon Accommodations Fund Inc. (NAF) is a real estate investment trust (REIT) that went public in2006. NAF invests primarily in rental apartments located in Tokyo 23 wards. The sponsor is Mitsui
Fudosan Co., Ltd.
NAF has been investing continuously in the rental apartments of the "Park Axis" series developed by
the Mitsui Fudosan Group. The asset quality is sound, with 88.5% of NAF's rental apartments located inTokyo 23 wards and the average age of properties standing at 16.2 years as of February 2023. The
portfolio is well diversified, with the asset size reaching approximately 340 billion yen, as well asapproximately 13,000 units under management.
During the fiscal period ended February 2023, the average month-end occupancy rate recovered to
97.0% and the rent change rate at tenant turnover was positive at 3.5% on average. NAF has seen
improvement in tenant demand for single type units, continuing to show strong performance in thecategories of family- and large-type units simultaneously, thanks to the revival of population inflow into
Central Tokyo following the downturn during the COVID-19 pandemic. As there is no particular factor ofconcern in terms of asset management at this point, NAF will continue to generate stable cash flows, in
R&I's view.
While NAF has not acquired any new property in the past year, it will likely achieve steady external
growth even under the unfavorable environment for property acquisition, given the rich pipeline properties
developed by sponsor.
As for "Okawabata Apartment Communities", or NAF's largest property, it is making valueenhancement investments for private areas and has realized huge rent increases. NAF also plans toconduct large-scale renovation works to maintain or improve the competitiveness of other properties,
which are increasingly comprised of properties of over 15 years in age. Among the ESG initiatives, NAF isadopting LED lightings proactively and striving to obtain green building certificates.
The LTV ratio as of February 2023 was 51.5%, on a par with other REITs focusing on residentialproperties. The unrealized gains have increased considerably to 49.1% of the book value and the LTV
ratio is low on an appraisal-value basis. NAF has been raising stable funds primarily through long-term
fixed-rate loans provided by major domestic financial institutions, and the average remaining term of longterm debts is long at 4.7 years with the staggered due dates. Backed by the sponsor's strong
creditworthiness, NAF is better positioned than other J-REITs in terms of funding costs.
The Rating Outlook is Stable. NAF has built up a quality portfolio by investing intensively in thesponsor's properties located in Tokyo 23 wards. The occupancy rate has recovered nearly to the prepandemic level and the outlook for cash flows is stable. The leverage level is controlled within NAF's own
benchmark range and the funding base is solid.
The primary rating methodology applied to this rating is provided at "Rating Methodology for REITs".
The methodology is available at the web site listed below, together with other rating methodologies thatare taken into consideration when assigning the rating.
https://www.r-i.co.jp/en/rating/about/rating_method.html■Contact: Sales and Marketing Division, Customer Service Dept.
■Media Contact : Corporate Planning Division (Public Relations)Rating and Investment Information, Inc.

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

TERRACE SQUARE, 3-22 Kanda Nishikicho, Chiyoda-ku, Tokyo 101-0054, Japan https://www.r-i.co.jp

Credit ratings are R&I's opinions on an issuer's general capacity to fulfill its financial obligations and the certainty of the fulfillment of its individual obligations as promised (creditworthiness) and are notstatements of fact. Further, R&I does not state its opinions about any risks other than credit risk, give advice regarding investment decisions or financial matters, or endorse the merits of any investment.
R&I does not undertake any independent verification of the accuracy or other aspects of the related information when issuing a credit rating and makes no related representations or warranties. R&I is notliable in any way for any damage arising in relation to credit ratings (including amendment or withdrawal thereof). As a general rule, R&I issues a credit rating for a fee paid by the issuer. For details,
please refer to https://www.r-i.co.jp/en/docs/policy/site.html.
© Rating and Investment Information, Inc.

NEWS RELEASE
R&I RATINGS:ISSUER:RATING:

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

RATING OUTLOOK:

StableUnsec. Str. Bonds No.3

Issue Date

Maturity Date

Issue Amount (mn)

Jul 16, 2020

Jul 16, 2025

JPY 2,000

RATING:

AA-, Affirmed

Unsec. Str. Bonds No.4

Issue Date

Maturity Date

Issue Amount (mn)

Jul 16, 2020

Jul 16, 2030

JPY 2,000

RATING:

AA-, Affirmed

Unsec. Str. Bonds No.5

Issue Date

Maturity Date

Issue Amount (mn)Sep 30, 2021

Sep 28, 2029

JPY 1,000

RATING:

AA-, Affirmed

Unsec. Str. Bonds No.6

Issue Date

Maturity Date

Issue Amount (mn)Sep 30, 2021

Sep 30, 2031

JPY 2,000

RATING:

AA-, Affirmed

Unsec. Str. Bonds No.7

Issue Date

Maturity Date

Issue Amount (mn)Sep 30, 2021Sep 30, 2036

JPY 1,000

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

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

TERRACE SQUARE, 3-22 Kanda Nishikicho, Chiyoda-ku, Tokyo 101-0054, Japan https://www.r-i.co.jp

Credit ratings are R&I's opinions on an issuer's general capacity to fulfill its financial obligations and the certainty of the fulfillment of its individual obligations as promised (creditworthiness) and are notstatements of fact. Further, R&I does not state its opinions about any risks other than credit risk, give advice regarding investment decisions or financial matters, or endorse the merits of any investment.
R&I does not undertake any independent verification of the accuracy or other aspects of the related information when issuing a credit rating and makes no related representations or warranties. R&I is notliable in any way for any damage arising in relation to credit ratings (including amendment or withdrawal thereof). As a general rule, R&I issues a credit rating for a fee paid by the issuer. For details,
please refer to https://www.r-i.co.jp/en/docs/policy/site.html.
© Rating and Investment Information, Inc.