Nippon Accommodations Fund Inc.
30th Period (September 2020 – February 2021) Investor Presentation
Q&AQA

What is the impact of the recent excessive out-migration trend from Tokyo on theportfolio, and what will be the impact if the trend turns back to an excess of inmigration?
It could be said that an impact was felt in terms of supply and demand easing and theoccupancy rate trending downward. However, as outlined in the investor presentationmaterials, instances where tenants that have cancelled their contracts are relocating
outside Tokyo are limited. As such, the Investment Corporation’s portfolio is not being
affected to any major degree.

QA

What is your future investment policy for suburban and family-type properties?
There are no plans to focus investment on suburban and family-type properties. Supplyof these types of rental apartment is low, making investment difficult. Single-type
properties in central Tokyo with inherent strengths also continue to exhibit highoccupancy rates and rising rents. Accordingly, we will adopt a more stringent approach
toward identifying properties even in central Tokyo. In addition, a combination withmore spacious units is preferable, rather than comprising all studio-type.

QI hear that competition to acquire housing is getting fierce. What is the status ofA

QAQ

property acquisition opportunities?
Even with the COVID-19 environment, in fact, perhaps it was recognized as anopportunity, new players entering the market is making competition for the acquisitionof properties increasingly fierce. While lowering our LTV following the public offering
last year, we have not been able to acquire any properties from external sources. We
believe this will continue for the foreseeable future with external growth centered on
the sponsor pipeline.
The occupancy rate of residential REITs in general has shown a recovery of late. Have
any moves been made to drastically relax rental terms and conditions?
Tenant demand was expected to recover after lifting of the state of emergency in April
last year. Rents were adjusted due to the lack of sufficient inquiries. In making
adjustments, rents were restored to the levels recorded from 2017 to 2018, prior to theperiod of accelerated increase. Should supply and demand recover again in the future,
we believe it will be possible to set high rents based on the strength of products.
There appears to have been a slight movement of people to the suburbs in the other 20wards. Is this a temporary or structural trend?

A

The number of suburban and family-type rental apartments is limited, andcondominiums for sale are also increasing in price. With only a slight current shift tothe suburbs, we do not believe the trend will become structural.

Q

While the rate of rent increase at the time of tenant turnover for single-type properties
is +0.1%, is there a possibility that it will fall further? In light of the trend in rent
increase rates at the time of tenant turnover and the number of turnover years, do you
see the current level, which is about the same as the rate of change three years ago, as
the point where rents bottom out?
While the supply of single-type rental apartments is high, there is also a considerable
depth of demand. We do not expect market conditions will deteriorate to any significant
degree in the future. The Investment Corporation’s portfolio is competitive.
Accordingly, we believe that the range would be small even if rents were to fall further.
With an upswing in tenants applying to take up space at rent levels after adjusting
asking rents, we anticipate current rent levels will continue for the foreseeable future
provided that economic and employment conditions situation do not worsen in thefuture.

AQ
A

While the pace of external growth is increasing, what is your outlook for the future?
Despite the pace of external growth increasing since last year due to the sponsor’s
intention to sell properties, we do not see any major change in trends this year. Looking
ahead, we will consider external growth opportunities after also confirming thesponsor’s policy for FY2021. We expect external growth will be at the same pace aslast year.

QOccupancy rates are recovering. As far as areas and types are concerned, where is thisrecovery occurring?
There are no notable characteristics in terms of such aspects as area or type inconnection with operations under the COVID-19 environment. We have taken steps toincrease occupancy rates while adjusting rents to match demand. While there are noproperties where tenant demand does not exist even after adjusting rents, we believe
the strength of demand by area and type is indicated by the rate of tenant turnoverfluctuation.

AQ
A

The balance between supply and demand has eased since last summer. What are yourthoughts on the background behind this trend?
I would have to say that I am not entirely sure. To use an analogy, however, conditions
around 2019 were much like a tightly packed box. When the box was shaken, thecontents did not move. At that time, when notices of cancellation were issued,
applications to move in were received even when there were no vacancies and spacecould not be inspected prior to the tenant moving out. Going back to the analogy, if one
or two items are removed from the box, the remaining contents suddenly become more
flexible. In this instance, I am not sure what this first item was. It could have been acancellation related to COVID-19, or it could have been the return of space by acompany. In any case, demand, which had stood at a maximum, eased as tenants
increasingly enjoyed more room to select a property from a rent, size, location, or otherperspective, which in turn led to tenant mobility.
■ 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 the Act on Investment Trusts and 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)