Nippon Accommodations Fund Inc.
28th Period (September 2019 - February 2020) Investor Presentation
Q&AＱＡＱＡＱＡＱＡＱ

It was explained that the current situation in tenant leasing has not changed in relation
to the spread of novel coronavirus (COVID-19) infections, but was there any change
from last year in terms of the tenant turnover rate during the March and April busy
season? Also, what do you consider will be the likely future impact from the spread ofinfections?
The number of contract cancellations during the work transfer season in February andMarch was the same as a normal year, and the contracts for March were also good. In
the future, however, backfilling may take some time due to a number of factors, suchas people refraining from going out and the shortened business hours at brokerages.
Conversely, if the movements of people are delayed and fewer contracts cancelled,
renewal fees can be received without giving rise to downtime, so there is also a positive
aspect in terms of short-term earnings. In either event, the spread of infections is notexpected to have a significant impact from the earnings point of view.
Is it possible that tenant needs will change in the future, such as demanding larger rooms
due to working from home becoming more widespread?
Since it is assumed that dual-income households will work from home at the same time,
more people may want to increase the number of rooms from, for example, a studiorental apartment to a one-bedroom apartment with a living/dining room and a separate
kitchen.
We are hearing that apartment vendors are receiving requests from tenants for grace
periods from rent payments. Could you please say whether there are moves for grace
periods from rent payments from tenants in NAF-owned rental apartments and thereasons for those moves?
As of the present time, no requests for rent reductions or payment extensions have been
made to us. It may be because there are not many tenants whose income has decreased
sharply because our tenants are mainly company employees and professionals. If weassume that possibility exists, it would be more likely to be someone who is runningtheir own business and living in a high-rent unit whose business has declined, in whichcase he or she might choose to cancel the contract rather than requesting a rent reduction
or a payment extension.
Are rent hikes at the time of renewal driven by the special characteristics of individual
properties or by trends?
We request a rent hike at the time of renewal should there be a certain level of deviation
when compared with the asking rent. Since market prices have been rising overall,however, the number of tenants from whom we are requesting rent hikes is rising. The
rate of acceptance does not change greatly.
You think that there will be a slowdown in the real estate market, including indevelopment, due to the impact of the spread of novel coronavirus (COVID-19)
infections. I would, however, like to hear about the prospects with regard to thedevelopment of your sponsors’ rental apartments and the pace of NAF’s property
acquisitions.

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At the present time, we are unable to provide a straight prediction. Be it a site being
purchased for development or a rental property, both players—the sellers and thebuyers—are exercising caution, so we are likely to be in a situation where we are unable
to get a feel for the market. If it were only due to this that the market were so volatile,
I think we would be cautious at first, and would be able to gain a new feel for the market
once again.

Q

According to these latest results for changes in rents at the time of renewal, will theopportunities for future internal growth see a trend change, a shift from tenant turnovers
to renewals?
I think the trend of an increasing number of units that have their rents hiked at the timeof renewal will continue, but bearing in mind the prolongation of the impact of novel
coronavirus (COVID-19), we are carefully monitoring the pace of the rent increases.

AQAQAQAIn the event that the spread of novel coronavirus (COVID-19) infections is prolonged,
will there be a change in the NAF acquisition strategy (especially with regard tohotels)? Although players are exercising caution in the market, is there caution in termsof both cash flow and cap rates?
The residential rental market is NAF’s main investment area but, other than that, thepolicy of keeping the investment ratio at 10% or less, with a focus on long-term fixed
rents, remains unchanged. Assuming that the effects of novel coronavirus (COVID-19)
will be prolonged, we have no great intention of aggressively acquiring hotels. The
attitude of the market players is that the situation will probably be different, even withregard to aspects of fund procurement, and that—in terms of investment decisions—caution is thought prudent from various points of view, including as occupancy rate,
rent forecasts and cap rate adequacy.
Please provide a breakdown of the factors that contributed to the 126 yen decrease
under Others in the 29th Period Forecast (on page 23 of the investor presentationmaterials).
These include (1) diminished insurance income in the 28th Period; (2) consumption tax(in the 28th Period, the difference from when the tax rate was 10% for five months and,in the 29th Period, an increase in purchase tax that could not be deducted due toincreased costs incurred in the busy season); and (3) facility operating cost increases.
With regard to property acquisitions from sponsors, I think that, in recent years, there
have been cases in which properties were not readily being passed to NAF due toexternal players offering bullish prices. Under such market conditions, if the external
players’ willingness to buy were to recede, does NAF think it would become easier tobuy properties from sponsors? What are your thoughts on that?
The current situation is that sponsors are not selling properties externally. At the present
time we are not talking to sponsors individually, but we expect that price targets will
be easier to compare and adjust in the future.

■ This document is intended for informational purposes, and is not intended to sell or solicit
an offer to buy or sell any security or other financial instrument of the Investment
Corporation.
■ Unless explicitly indicated, the information provided in this document does not constitutethe disclosure or asset management reports required under the Financial Instruments andExchange Act or laws relevant to investment trusts or investment corporations.
■ Nippon Accommodations Fund Inc. has exercised due care in providing the information inthis document, but does not guarantee its accuracy or completeness.
■ The information in this document contains future projections, but such statements do notguarantee future performance.
■ The Investment Corporation is not responsible for updating the information in thisdocument. The information in this document may be changed without prior notice.
REIT Management Company: Mitsui Fudosan Accommodations Fund Management Co., Ltd.
(Financial Instruments Firm: Kanto Finance Bureau (registration) No. 401
Member of the Investment Trusts Association, Japan)