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April 16, 2015

Financial Results for the Fiscal Period
From September 1, 2014 to February 28, 2015
Nippon Accommodations Fund Inc. (NAF) is listed on the Tokyo Stock Exchange (J-REIT) withthe securities code number 3226. (Website: http://www.naf-r.jp/english/)
Executive Director:
Investment TrustManagement Company:
President and CEO:Inquiries:

Nobumi Tobari

Mitsui Fudosan Accommodations Fund Management Co., Ltd.
Tateyuki Ikura
Satoshi Nohara, Director and Chief Financial Officer
Tel: +81-3-3246-3677
Scheduled Filing Date of Securities Report:
May 29, 2015
Scheduled Commencement Date of Cash Distribution Payment: May 15, 2015

1. Business Results for the Fiscal Period from September 1, 2014 to February 28,
2015(1) Operating Results(in millions of yen, rounded down; except as noted)
Total revenues

Operating income(%)*

Income before income
taxes

(%)*

(%)*

For the period ended
February 28, 2015

10,129

(0.2)

4,374

1.6

3,685

4.1

August 31, 2014

10,152

9.9

4,304

3.0

3,541

3.1

IncomeIncomebeforebeforeincomeNet income Net income/ income
taxes/
per unit
net assets
taxes/
operatingtotal assets
incomeNet income

(%)*

(yen)

(%)

(%)

(%)

For the period ended
February 28, 2015

3,684

4.1

7,984

2.8

1.3

36.4

August 31, 2014

3,540

3.1

7,672

2.7

1.2

34.9

* Percent figures show changes from previous period.

1(2) Distributions(in millions of yen, rounded down; except as noted)
Distribution
Total
Total
per unit
distributions Distribution inexcess of
distributions inDistributions/(not including (not including
Payout ratio
earnings
excess of
net assets
distributions in distributions in
per unit
earnings
excess ofexcess of
earnings)
earnings)
(yen)
(yen)
(%)
(%)

For the period ended
February 28, 2015

7,984

3,683

–

–

100.0

2.8

August 31, 2014

7,672

3,540

–

–

100.0

2.7

(3) Financial Position(in millions of yen, rounded down; except as noted)

Total assets

Net assets

Net assets/
total assets

Net assets per
unit

(%)

(yen)

As of
February 28, 2015

290,463

129,44144.6

280,526

August 31, 2014

292,317

129,29644.2

280,214

Cash flows fromoperating activities

Cash flows frominvesting activities(4) Cash Flows(in millions of yen, rounded down; except as noted)

Cash flows fromfinancing activities

Cash and cash
equivalents

For the period ended
February 28, 2015

5,659

(219)

(5,539)8,219

August 31, 2014

6,031

(17,358)

11,0658,318

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2. Forecasts for the Fiscal Period from March 1, 2015 to August 31, 2015
(in millions of yen, rounded down; except as noted)

Total
revenues

For the period ending

August 31, 2015

10,370Distribution
per unit
Distribution in
Income(notexcess ofbeforeNet income including
earnings
income taxes
distributions
per unit
in excess ofearnings)

Operatingincome

(%)*

(%)*

2.4

4,317 (1.3)

(%)*

(%)*

(yen)

(yen)

3,635 （1.4） 3,634（1.4）

7,500

–

* Percent figures show changes from previous period.

Note:
Projected net income per unit for the fiscal period ending August 31, 2015 is ¥7,500.

3. Other
1. Changes in significant accounting policies, Changes in accounting estimates and Restatement(1) Changes due to revisions in accounting standards and others: None
(2) Changes other than in the above item (1): None
(3) Changes in accounting estimates: None
(4) Restatement: None
2. Number of investment units issued(1) The number of investment units issued (including treasury investment units) as of theperiod-end
As of February 28, 2015:

461,422 units

As of August 31, 2014:

461,422 units(2) The number of treasury investment units as of the period-end
As of February 28, 2015:- units

As of August 31, 2014:- units

Disclaimer:
The above forecasts are based on information currently available to NAF and on certain
assumptions deemed to be reasonable. Actual operations may differ substantially due to anumber of factors.

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18th Period (February 2015) Overview of Investment
External Growth (Acquisition of properties)
No properties were acquired during the period under review, and NAF’s assets undermanagement at the end of the period under review were unchanged from the end of the previous
period.
Internal Growth (Management and operation of properties held by NAF)
NAF has chosen Mitsui Fudosan Housing Lease Co., Ltd. as master property managementcompany (below, “Master PM”) on management of NAF’s rental apartments portfolio. The
company and the asset management company collaborate in the management of properties NAF
owns with the aim of implementing effective management and operational activities based onregional characteristics and the individual features of each property. These include efforts such as
speedy management and operations by the Master PM by applying the portfolio management
system, the tenant recruiting activities suited to the circumstances of individual properties, thestreamlining efforts such as reduction of management cost, etc., and providing tenants the“accommodation” services by corresponding to various needs based on the results of resident
questionnaires.
In order to maintain and improve the competitiveness of NAF’s portfolio, operations areadequately planned and carried out at the asset management company. These include
appropriate renewal work according to the property age, and work to enhance the value of
properties such as Okawabata Apartment Communities, which is one of the core properties of
NAF. In addition, NAF is not only making continuous efforts to reduce costs, but also introducing
such features as environmentally friendly, energy-saving facilities in a timely manner.
In the period under review, NAF carried out renovations in common areas and private areas at
Okawabata Apartment Communities. Other than the above, changes planned and implemented
include reviews of contract capacity for electricity through the introduction of controllable circuit
breakers, and work to change the lighting in common areas to LED lighting.
Financial Strategy (Overview of funds procurement)
One of NAF’s basic policies is to carry out financing in a conservative manner while giving
consideration to such matters as maintaining stable distributions in the medium and long term,and paying attention to various risk factors and market trends. Based on this policy, NAF has
pursued financing from various sources with diversified repayment dates and long-term fixedinterest rates in its procurement of funds during the period under review.
As a result, at the end of the period, total interest-bearing debt amounted to ¥154,500 million, thelong-term loans ratio was 97.4%, the fixed-rate loans ratio was 97.4%, the LTV (loan-to-value
ratio) was 53.2%. The average annual current maturity of long-term interest-bearing loans was 4.9
years and the number of financial institutions was 22. Furthermore, the weighted average interest
rate at the end of the period was 0.87%, and NAF achieved both further progress in its conversion
to long-term borrowing and a reduction in financing costs.
NAF has also established a commitment line with a total maximum borrowing amount of ¥10,000
million, for the purpose of securing flexible and stable fund procurement methods.
With respect to financing through investment corporation bonds, NAF filed a shelf-registration4

statement regarding its establishment of a maximum issuance amount for investment corporation
bonds for public offering in July 2013. The remaining balance of the planned issuance amount at
the end of the period is ¥100,000 million.
Planned issuance amount
Scheduled period of issuancePurpose for funds

Up to ¥100,000 million
From July 18, 2013 to July 17, 2015
Acquisition of specified new assets (as defined in Article 2,
Paragraph 1 of the Act on Investment Trusts and Investment
Corporations), repayment of borrowings, redemption of
investment corporation bonds, repayment of tenant security
deposit, payments for maintenance and renovations, andoperational use

Rating of NAF as of February 28, 2015 is as follows.
Rating agency
Rating and Investment Information, Inc.
(R&I)
Standard & Poor’s Ratings Japan K.K.
(S&P)
Moody’s Japan K.K. (Moody’s)

Rating subject
Issuer credit rating

RatingA A - (Trend of rating: Stable)

Long-term corporate
Short-term corporate
Issuer credit rating

A + (Outlook for rating: Stable)
A -1
A 3 (Outlook for rating: Stable)

Overview of Performance and Distribution
In the period under review, NAF recorded total revenues of ¥10,129 million, operating income of¥4,374 million, income before income taxes of ¥3,685 million and net income of ¥3,684 million. In
addition to the above, NAF has decided to distribute nearly the entire amount of earnings inaccordance with the Distribution Policy (Article 34 of the Articles of Incorporation) set forth by NAF.
The distribution per unit was ¥7,984.

Management Policy and Issues for the 19th Period Onward
NAF has always aimed to maximize its unitholder value through investments in “Accommodation
Assets” and utilization of the Mitsui Fudosan Group as well as formulation and management of ahigh quality portfolio centered on “Rental Apartments” located in the 23 wards of Tokyo.
From the 19th period onward, we aim to manage our portfolio stably based on theabove-mentioned policies and further maximize the unitholder value by achieving internal andexternal growth expectations.
NAF adopted the resolutions for the issuance of new investment units by public offering and third
party allocation in February 2015, and payment of a total of ¥9,916 million was completed in
March 2015. Using the resultant increase in its own capital, NAF completed acquisitions of 1
property in March 2015 and 3 properties in April 2015, acquiring a total of 4 properties at a totalacquisition price of ¥7,185 million. In addition, as a result of the issuance of the new investment
units, LTV (loan-to-value ratio) has decreased. Looking forward, we plan to continue our efforts tofurther increase our external growth5External Growth (New acquisition of properties)
We will strive to obtain the best real estate information possible by utilizing our pipeline to the
Mitsui Fudosan Group and fortifying the asset management company’s unique information
channel. Our basic strategy will be to stably expand our portfolio based on the Park Axis Series
developed by the Mitsui Fudosan Group in addition to the Park Cube Series constructed bycompanies outside the Mitsui Fudosan Group. Moreover, we will work to steadily acquire
properties considered to possess mid- to long-term competitive advantages through NAF’s
individual strategies such as enhancing our portfolio within the 23 wards of Tokyo and other partsof the Tokyo area, mainly with single-occupant and compact residential properties for which a highoccupancy rate is expected, and carefully selecting properties for investment in major cities ofregional areas. We will also consider making investments in “Equity Interests in Anonymous
Partnerships relating to Real Estate” or “Real Estate-Backed Securities” (including obtaining firstrefusal rights) for such purposes as securing opportunities of property acquisitions.
The main part of NAF’s acquisition strategy continues to be stable acquisition of “Rental
Apartments”. However, we will continue making acquisitions of “Dormitories” and “Student
Apartments”, “Corporate Housing” and “Senior Residences”, as the investment market in “Other
Accommodation Assets” appears to have matured. In the management of its portfolio, NAF has
set the upper limit of the share of “Other Accommodation Assets” in the overall portfolio to around
10% on an acquisition price basis for the time being. The share of “Other Accommodation Assets”
in the overall portfolio was 3.4% at the end of the 18th period.
We will also continue to work towards achieving high quality due diligence at acquiring properties
in order to avoid risk.
Internal Growth (Management and operation of leasehold properties)
NAF will aim to improve its rent levels and occupancy rate through the formulation andimplementation of a leasing strategy that takes into account the characteristics of each individual
property with the objective of maximizing rent revenues over the mid- to long-term range of years.
NAF will review the adequacy of the grade of property management, cost of management andoperation as to each invested property in an appropriate timeframe and manner, and reduce thecost by reviewing rationally the management cost by utilizing the merits of outsourcing all property
management tasks to the Master PM. NAF will continue to maintain and enhance market
competitiveness by implementing strategic renovations, primarily at Okawabata Apartment
Communities.
Further, NAF will collaborate with Mitsui Fudosan Co., Ltd. to establish brand power byconcentrating on the “Park Axis” brand, NAF’s main investment asset to penetrate the market andfurther enhance brand recognition in the rental housing market.
Financial Strategy
NAF will emphasize the continued use of long-term, fixed-rate loans by taking measures tocounter future interest rate and refinancing risks. With respect to the upper limit of LTV(loan-to-value ratio), although the limit is set at around 60% in the asset management guidelines,
NAF is aiming for a near-term upper limit at a level of around 55% in its external growth process.

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NAF will examine the necessity of issuance of new units by paying attention to market trends anddistribution amount levels, and taking into consideration the demand for funds for the purpose ofproperty acquisition, as well as our financial position. Additionally, NAF will examine futureissuances of investment corporation bonds in accordance with market trends, within the range ofthe remaining balance of planned issuance amount for which shelf-registration of NAF bonds has
been carried out.
Significant Subsequent Events
Issuance of new investment units
Concerning the issuance of new investment units that were resolved at the Board of Directors’Meetings held on February 6, 2015 and February 18, 2015, payment relating to the issuance of
new investment units by public offering was completed on March 2, 2015, and payment relating
to the issuance of new investment units by third-party allocation was completed on March 24,
2015. The details are provided below.
As a result, the total investment amount paid in was ¥135,603,623,618 and the total number ofinvestment units issued was 484,522 units.
A.

Issuance of new investment units by public offering
Number of new investment units issued
22,000 units
Issue price¥443,868 per unit
Total amount of issue price¥9,765,096,000
Amount paid in (issue value)¥429,300 per unit
Total amount paid in (issue value)¥9,444,600,000
Payment date
March 2, 2015

B.

Issuance of new investment units by third-party allocation
Number of new investment units issued
1,100 units
Amount paid in (issue value)¥429,300 per unit
Total amount paid in (issue value)¥472,230,000
Payment date
March 24, 2015
Allottee
Nomura Securities Co., Ltd.

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(Reference information)
The following assets were acquired on March 31, 2015. The “Acquisition price” is exclusive of
miscellaneous expenses for acquisition, fixed property taxes, urban planning taxes,
consumption taxes, and local consumption taxes.
Medical Home Granda Sangen Jaya (Land with leasehold interest)
Acquisition price:¥735 million
Appraised value (Note):¥757 million(date of value appraisal: December 31, 2014)
Type of property:
Real estate
Location (residence indication):
37-2, Taishido 2-chome, Setagaya-ku, Tokyo
Seller:Benesse Style Care Co., Ltd.
The following assets were acquired on April 3, 2015. The “Acquisition price” is exclusive of
miscellaneous expenses for acquisition, fixed property taxes, urban planning taxes,
consumption taxes, and local consumption taxes.
Park Axis Kamata Station Gate
Acquisition price:
Appraised value (Note):
Type of property:
Location (residence indication):
Completion date:
Structure/number of stories:
Rentable units:
Rentable area:
Seller:Park Axis Kinshicho Residence
Acquisition price:
Appraised value (Note):
Type of property:
Location (residence indication):
Completion date:
Structure/number of stories:
Rentable units:
Rentable area:
Seller:¥4,144 million¥4,290 million(date of value appraisal: December 31, 2014)
Real estate
23-1, Nishi-kamata 8-chome, Ota-ku, Tokyo
September 18, 2012
Flat-roofed reinforced concrete structure/14 stories
157 residential, 1 retail, etc.
4,582.72 m2
Mitsui Fudosan Co., Ltd.

¥1,251 million¥1,310 million(date of value appraisal: December 31, 2014)
Real estate
2-6, Kotobashi 1-chome, Sumida-ku, Tokyo
September 20, 2013
Flat-roofed reinforced concrete structure/14 stories
56
1,793.33 m2
Mitsui Fudosan Co., Ltd.

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Park Axis Oshiage Sumida Koen
Acquisition price:
Appraised value (Note):
Type of property:
Location (residence indication):
Completion date:
Structure/number of stories:
Rentable units:
Rentable area:
Seller:¥1,055 million¥1,090 million(date of value appraisal: December 31, 2014)
Real estate and land lease rights
11-3, Mukojima 1-chome, Sumida-ku, Tokyo
January 31, 2014
Flat-roofed reinforced concrete structure/12 stories
49
1,610.49 m2
Mitsui Fudosan Co., Ltd.

(Note)The outline of real estate appraisal reports (obtained from Morii Appraisal & Investment
Consulting, Inc. and Japan Real Estate Institute) as of February 28, 2015, which is the 18th
period closing date, is as follows.
(in millions of yen, except as noted)
CostmethodIncome capitalization method
Name of property

Appraised
value

Value
calculated bydirectcapitalization
methodDirectcap rateValue
calculatedby DCFmethodDiscount
rate

Terminal
cap rate

Costmethodvalue

Park Axis
Kamata Station Gate

4,380

4,450

4.5%

4,310

4.3%

4.7%

2,890

Park Axis
Kinshicho Residence

1,340

1,360

4.5%

1,320

4.3%

4.7%

904

1,110

1,130

4.8%

1,090

4.6%

5.0%

775

757

769

4.3%

744

4.1%

4.5%

*748

Park Axis
Oshiage Sumida
Koen
Medical Home
Granda Sangen
Jaya (Land withleasehold interest)

Appraisalcompany

Morii Appraisal& Investment
Consulting, Inc.
Morii Appraisal& Investment
Consulting, Inc.
Morii Appraisal& Investment
Consulting, Inc.
Japan Real
Estate Institute* The “Cost method value” of Medical Home Granda Sangen Jaya (Land with leasehold interest) isshown in value calculated by the ratio method.

These properties are applicable to forward commitments (refers to the postdated sales
contract under which payment and delivery shall be made at least one month after theconclusion of the contract, or any other contract similar thereto) by investment corporationsas provided for in the Comprehensive Guidelines for Supervision of Financial Instruments
Business Operators etc., defined by the Financial Services Agency. In the case of properties
applicable to forward commitments, if the closing date of the accounting period falls in the
period between the conclusion of the sales contract and the date of payment and delivery, it
is specified in the internal rules of the asset management company to disclose the continuallyconducted appraised value as of the 18th period closing date.

9Forecasts of Investment Performance
The forecasts for the 19th period (from March 1, 2015 to August 31, 2015) and 20th period (fromSeptember 1, 2015 to February 29, 2016) are as follows.
(in millions of yen, rounded down; except as noted)

Total revenues
Operating income
Income before income taxes
Net income
Distribution per unit (not including distributions
in excess of earnings) (yen)Distribution in excess of earnings per unit (yen)19th period(August 2015)
10,370
4,317
3,635
3,634

20th period(February 2016)
10,336
4,388
3,707
3,706

7,500

7,650

―

―

Notes: Underlying assumptions of forecasts
Number of operating
days:
Investment assets:

Expenses:

Interest-bearing debt:

Number of units
issued:-From March 1, 2015 to August 31, 2015 (184 days)-From September 1, 2015 to February 29, 2016 (182 days)-The number of properties held by NAF as of the date of this document
is 116. In the forecasts of investment performance, it is assumed thatno subsequent transfer of properties (such as acquisition of new
properties, sale of properties acquired, etc.) shall occur until February
29, 2016.
-The average month-end occupancy rate during the 19th period for
total properties is expected to be 95.7%, during the 20th period for total
properties is expected to be 96.0%.
-The following expenses are assumed.
(in millions of yen)
19th period
20th period
Fixed property taxes and urban
580
580
planning taxes
Depreciation and amortization
2,084
2,073
Interest expense and interest
expenses on investment
677
675
corporation bonds
Amortization of investment unit
5
5
issuance expenses- It is assumed that NAF’s balance of interest-bearing debt that is¥154,500 million as of the date of this document shall not change until
February 29, 2016.
- We assume 484,522 units outstanding as of the date of thisdocument.
- It is assumed that, there shall be no issuance of new units until
February 29, 2016.

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The forecasts are the figures calculated based on the above assumptions at the time of
preparation of this information. Therefore, actual total revenues, income before income taxes,
net income and distribution per unit may change due to future acquisitions or sale of investment
assets, fluctuation in the real estate market or other changes in the environment in which NAF
operates. Accordingly, the forecasts are not a guarantee of any cash distribution amount.

Disclaimer:This financial report has been prepared in accordance with Japanese accounting standards andJapanese laws. Figures have been rounded down to eliminate amounts of less than one million
yen.
Please note that this English translation of the Japanese original document is provided solely for
informational purposes. In the event of any discrepancy between the Japanese original and thisEnglish translation, the Japanese original shall prevail.

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