NEWS RELEASE
May 27, 2013

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 (J-REIT) that went public inAugust 2006. The reit invests in "accommodation assets" primarily for rental purposes, including
dormitories, student apartments, serviced apartments, senior residences and corporate housing. MitsuiFudosan Co., Ltd. serves as a sponsor.
NAF places a focus on convenient areas in Tokyo's 23 wards. It has created a quality portfolio
consisting mainly of "Park Axis" brand rental apartments developed by its sponsor. Although properties
acquired from the sponsor represent a large part, NAF has also steadily piled up the number of properties
formerly owned by external sources. In December 2012, it acquired a tower apartment building in Meguro,
currently one of its flagship properties, for 9 billion yen. The asset size of the reit has grown toapproximately 260 billion yen.
Despite the harsh environment for acquiring residential buildings, NAF has generally been able toacquire properties with NOI yields equivalent or higher than the yield of its current portfolio. Goingforward, NAF is expected to steadily expand its asset size without eroding portfolio quality andprofitability.
Of NAF's property holdings, 87.2% are located in Tokyo's 23 wards, with most of them being large
buildings priced at 2.7 billion yen on average at the time of acquisition. In addition, since the averagebuilding age stands at approximately 7.9 years, NAF has kept its portfolio quality at high levels.
Furthermore, apartments for rent are well-diversified, exceeding 9,000 units.
While the occupancy rate (rental apartments only) is trending high at 95-96%, a fall in the unit rent isonly negligible. Thanks to the sustained influx of population into the Greater Tokyo area as well as a low
level of new apartment supply, the supply-demand balance of rental apartments is projected to remainfavorable for the time being. R&I believes NAF's competitive properties will keep performing well going
forward.
NAF made a public offering of investments units in March 2013, which lowered the LTV ratio to slightly
below 50%. The ratio could rise again after property acquisitions in the future. However, since NAF has
comfortable access to the capital market and its funding capacity is sufficient, financing risk is limited.
All debts are unsecured. NAF has been able to finance debts, most of which being long-term, fixed
rate loans from major domestic financial institutions. The average remaining term of debts exceeds threeyears, with due dates staggered every year through 2023. Since its financing costs are lower than otherreits' and the financing environment is currently favorable, NAF has been able to lower costs.
The Rating Outlook is Stable. R&I believes NAF plans to continuously acquire properties, mainly large,relatively new buildings developed by the sponsor, located in Tokyo's 23 wards where tenant demand ishigh, going forward. The reit is expected to maintain portfolio quality and a high occupancy rate, andcontinue with healthy financial management.
The primary rating methodologies applied to this rating are provided at "Basic Methodologies for R&I's
Credit Rating" and "Rating Methodology for J-REIT". The methodologies are available at the web site
listed below, together with other rating methodologies that are taken into consideration when assigning
the rating.
http://www.r-i.co.jp/eng/cfp/about/methodology/index.html■Contact: Investors Service Division
TEL.+81-(0)3-3276-3511■Media Contact : Corporate Planning Division (Public Relations) TEL.+81-(0)3-3276-3438

Rating and Investment Information, Inc.

E-mail. infodept@r-i.co.jp

Nihonbashi 1-chome Bldg., 1-4-1, Nihonbashi, Chuo-ku, Tokyo 103-0027, Japan

http://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 http://www.r-i.co.jp/eng/policy/policy.html.
© Rating and Investment Information, Inc.

NEWS RELEASE
R&I RATINGS:ISSUER:RATING:RATING OUTLOOK:

Nippon Accommodations Fund Inc. (Sec. Code: 3226)
Issuer Rating
AA-, Affirmed
StableUnsec. Str. Bonds No.1

Issue Date

Maturity Date

Issue Amount (mn)Nov 14, 2014

JPY 10,000

RATING:

Nov 15, 2007
AA-, Affirmed

Unsec. Str. Bonds No.2

Issue Date

Maturity Date

Issue Amount (mn)

Jul 29, 2016

JPY 7,000

RATING:

Jul 30, 2010
AA-, Affirmed■Contact: Investors Service Division
TEL.+81-(0)3-3276-3511■Media Contact : Corporate Planning Division (Public Relations) TEL.+81-(0)3-3276-3438

E-mail. infodept@r-i.co.jp

Rating and Investment Information, Inc.

Nihonbashi 1-chome Bldg., 1-4-1, Nihonbashi, Chuo-ku, Tokyo 103-0027, Japan

http://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 http://www.r-i.co.jp/eng/policy/policy.html.
© Rating and Investment Information, Inc.