O

April 17, 2014

Financial Results for the Fiscal Period
From September 1, 2013 to February 28, 2014
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.
Kosei Murakami
Satoshi Nohara, Director and Chief Financial Officer
Tel: +81-3-3246-3677
Scheduled Filing Date of Securities Report:
May 28, 2014
Scheduled Commencement Date of Cash Distribution Payment: May 15, 2014

1. Business Results for the Fiscal Period from September 1, 2013 to February 28,
2014(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, 2014

9,241

2.7

4,181

5.5

3,435

8.5

August 31, 2013

9,002

11.4

3,964

8.5

3,165

9.1

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

Net income

(%)*

(yen)

(%)

(%)

(%)

For the period ended
February 28, 2014

3,434

8.5

7,443

2.7

1.2

37.2

August 31, 2013

3,164

9.2

6,866

2.7

1.2

35.2

* Percent figures show changes from previous period.

Note:
NAF implemented a two-for-one split of investment units with the effective date of March 1,
2014. “Net income per unit” is calculated on the assumption that this split of investment units
was implemented at the start of the period ended August 31, 2013. Net income per unit is1calculated by dividing net income by the weighted average number of investment units:
461,422 units as of February 28, 2014, and 460,879 units as of August 31, 2013.

(2) Distributions(in millions of yen, rounded down; except as noted)
Distribution
per unit

Distribution in
Total
excess of
distributions inDistributions/
Payout ratio
earnings
excess of
net assets
per unit
earnings
(yen)
(%)
(%)

Total
distributions(yen)

For the period ended
February 28, 2014

14,888

3,434

–

–

100.0

2.7

August 31, 2013

13,717

3,164

–

–

100.0

2.5

(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, 2014
August 31, 2013
Note:277,125

129,191

46.6

279,985

273,872

128,92147.1

279,400

NAF implemented a two-for-one split of investment units with the effective date of March 1,
2014. “Net assets per unit” is calculated on the assumption that this split of investment units
was implemented at the start of the period ended August 31, 2013.

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

Cash flows fromoperating activities

Cash flows frominvesting activities

Cash flows fromfinancing activities

Cash and cash
equivalents

For the period ended
February 28, 2014

5,259

(4,693)

(164)

8,579

August 31, 2013

5,556

(25,981)

24,0068,178

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2. Forecasts for the Fiscal Period from March 1, 2014 to August 31, 2014
(in millions of yen, rounded down; except as noted)

Total
revenues(%)*

For the period ending

August 31, 2014

10,092

9.2

IncomeDistribution
beforeNet income
per unit
income taxes

Operatingincome4,219

Distribution inexcess of
earnings
per unit

(%)*

(%)*

(%)*

(yen)

(yen)

0.9

3,369 (1.9)

3,368 (1.9)

7,300

–

* Percent figures show changes from previous period.

Notes:
1. “Distribution per unit” does not include distribution in excess of earnings per unit.
2. Projected net income per unit for the fiscal period ending August 31, 2014 is ¥7,300.
3. NAF implemented a two-for-one split of investment units with the effective date of March 1,
2014. Calculation of “Distribution per unit” assumes the number of investment units issued
following the implementation of the said split, which is 461,422 units.

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, 2014:

230,711 units

As of August 31, 2013:

230,711 units(2) The number of treasury investment units as of the period-end
As of February 28, 2014:- units

As of August 31, 2013:- units

Note:
NAF implemented a two-for-one split of investment units with the effective date of March 1,
2014. “Net income per unit” is calculated on the assumption that this split of investment units
was implemented at the start of the period ended August 31, 2013.

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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16th Period (February 2014) Overview of Operating Results(in millions of yen, rounded down; except as noted)

Result of the 16th
Period(February 2014)(1)
Number ofoperating days
Total revenues
Income before
income taxes
Net income
Distribution perunit (yen)Number ofinvestment
properties
Averageoccupancy rate at
the end of period(%)

Forecast of the
16th Period

Result of the 15th
Period(August 2013)(2)

Comparison withthe 15th Period(1)-(2)

181

181

184

(3)

9,241

9,162

9,002

239

3,435

3,323

3,165

270

3,434

3,322

3,164

270

14,88814,40013,717

1,171

108

108

105

3

97.0

Approx. 95

95.6

1.4

Overview of Performance and Distribution
In the period under review, NAF recorded total revenues of ¥9,241 million, operating income of¥4,181 million, income before income taxes of ¥3,435 million and net income of ¥3,434 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 ¥14,888.

16th Period (February 2014) Overview of Investment
External Growth (Acquisition of properties)
During the period under review, NAF acquired 3 new properties in September 2013 (totalacquisition price: ¥4,307 million).

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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 the period under review, NAF changed the property management fee structure which it pays to
Mitsui Fudosan Housing Lease Co., Ltd. on November 2013 for certain properties. The new fee
structure is linked with revenue and income of NAF’s rental business. NAF believes that, with bothparties sharing an even firmer common goal, which is to maximize unitholder value, further
improvement in NAF’s property management capabilities, further enhancement of the value chainof the Mitsui Fudosan Group, and further utilization of this value chain can be expected.
In order to maintain and improve the competiveness of NAF’s portfolio, operations are adequately
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 asenvironmentally 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. Changes implemented at other properties include reviews ofcontract capacity for electricity through the introduction of controllable circuit breakers, and work
to change the lighting in common areas to LED lighting, etc.
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 ¥142,000 million, thelong-term loans ratio was 97.2%, the fixed-rate loans ratio was 87.3%, the LTV (loan-to-value
ratio) was 51.2%. The average annual current maturity of long-term interest-bearing loans was 4.2
years and the number of financial institutions was 17. Furthermore, the weighted average interest
rate at the end of the period was 1.02%, 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-registration
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 at5

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, 2014 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)

6Significant Subsequent Events
Split of Investment Units
As of February 28, 2014 as the record date and as of March 1, 2014 as the effective date, NAF
implemented a two-for-one split of investment units.
a. Purpose of Split
With the introduction of the individual savings account system of Japan (“NISA”) on January 1,
2014, NAF has decided to reduce the amount of each investment unit through the split ofinvestment units. NAF expects an increase of long-term investors while expanding the investor
base by creating an environment for investors to make investments more easily through the splitof investment units.
b. Method of Split
As of February 28, 2014 as the record date, NAF implemented a two-for-one split of investment
units owned by unitholders registered or recorded in the final unitholders registry on this date.
c. Number of Investment Units, etc. Increased through Split
Number of investment units issued and outstanding before split:
Number of investment units increased through split:
Number of investment units issued and outstanding after split:
Total number of investment units authorized after split:

230,711 units
230,711 units
461,422 units
4,000,000 units(Reference information)
Partial Amendment to the Articles of Incorporation
NAF amended Article 6 Paragraph 1 of its Articles of Incorporation in order to increase the total
number of investment units authorized in proportion to the ratio of split of investment units under
the provisions of Article 184 Paragraph 2 of Companies Act, which is applied mutatis mutandis
pursuant to the provisions of Article 81-3 Paragraph 2 of the Act on Investment Trusts andInvestment Corporations.
a. Contents of Amendment
Contents of amendment are as follows.
(Underlined part was changed)
Before Amendment

After Amendment

Article 6. (Total Number of Units

Article 6. (Total Number of Units

Authorized to Be Issued by the

Authorized to Be Issued by theCompany)

Company)

1. The total number of units authorized

1. The total number of units authorized

to be issued by the Company shall be

to be issued by the Company shall be

two million (2,000,000) units.

four million (4,000,000) units.

b. Date of Amendment
March 1, 20147

Acquisition of properties
The following assets were acquired on March 7, 2014. The “Acquisition price” is exclusive of
miscellaneous expenses for acquisition, fixed property taxes, urban planning taxes,
consumption taxes, and local consumption taxes.
Park Cube Nishigahara Stage
Acquisition price:
Appraised value:
Type of property:
Location (residence indication):
Completion date:
Structure/number of stories:
Rentable units:
Rentable area:
Seller:Park Cube Atagoyama Tower
Acquisition price:
Appraised value:
Type of property:
Location (residence indication):
Completion date:
Structure/number of stories:¥4,110 million¥4,580 million(date of value appraisal: December 31, 2013)
Real estate and land lease rights
51-35, Nishigahara 4-chome, Kita-ku, Tokyo; etc.
November 6, 2009
Flat-roof reinforced concrete structure / 14 stories
with 2 underground stories
357 residential, 1 retail, etc.
19,693.35 m2
ITOCHU Property Development, Ltd.

¥8,650 million¥8,690 million(date of value appraisal: January 31, 2014)
Real estate
17-7, Nishi Shinbashi 3-chome, Minato-ku, Tokyo
January 10, 2007
Flat-roof reinforced concrete and steel structure / 31stories with 1 underground story

Rentable units:

165

Rentable area:
Seller:8,389.91 m2
Not disclosed by seller’s request

Okawabata Parking
Acquisition price:
Appraised value:
Type of property:
Location (registration number):Completion date:
Structure/number of stories:
Gross floor area:
Seller:¥1,120 million¥1,300 million(date of value appraisal: January 31, 2014)
Real estate
50-1, Tsukuda 1-chome, Chuo-ku, Tokyo
Completion on March 30, 1989, Extension on
August 26, 1991, Extension on February 23, 1993
Reinforced concrete structure, steel framed
reinforced concrete structure / 3 underground stories
32,137.93 m2
Mitsui Fudosan Co., Ltd.

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The following assets were acquired on April 1, 2014. The “Acquisition price” is exclusive of
miscellaneous expenses for acquisition, fixed property taxes, urban planning taxes,
consumption taxes, and local consumption taxes.
Park Axis Shibaura
Acquisition price:
Appraised value:
Type of property:
Location (residence indication):
Completion date:
Structure/number of stories:
Rentable units:
Rentable area:
Seller:Park Axis Asakusa Kuramae
Acquisition price:
Appraised value:
Type of property:
Location (residence indication):
Completion date:
Structure/number of stories:
Rentable units:
Rentable area:
Seller:¥1,045 million¥1,080 million(date of value appraisal: January 31, 2014)
Real estate
8-11, Shibaura 2-chome, Minato-ku, Tokyo
October 31, 2012
Flat-roof reinforced concrete structure / 10 stories
42
1,273.60 m2
Mitsui Fudosan Co., Ltd.

¥1,095 million¥1,130 million(date of value appraisal: January 31, 2014)
Real estate
13-6, Kotobuki 3-chome, Taito-ku, Tokyo
May 22, 2013
Flat-roof reinforced concrete structure / 13 stories
45
1,456.35 m2
Mitsui Fudosan Co., Ltd.

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Forecasts of Investment Performance
The forecasts for the 17th period (from March 1, 2014 to August 31, 2014) 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 (yen)Distribution in excess of earnings per unit (yen)17th period(August 2014)
10,092
4,219
3,369
3,368
7,300
―

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

Expenses:

Interest-bearing debt:

Number of units issued:-From March 1, 2014 to August 31, 2014 (184 days)-The number of properties held by NAF as of the date of thisdocument is 112. In the forecasts of investment performance, it isassumed that no subsequent transfer of properties (such as
acquisition of new properties, sale of properties acquired, etc.)
shall occur until August 31, 2014.
-The average month-end occupancy rate during the 17th period
for total properties is expected to be 95.7%.
-The following expenses are assumed.
(in millions of yen)
17th period
Fixed property taxes and urban planning
509
taxes
Depreciation and amortization
2,086Interest expense and interest expenses on849
investment corporation bonds-It is assumed that NAF’s balance of interest-bearing debt that is¥159,500 million as of the date of this document shall not change
until August 31, 2014.
- NAF implemented a two-for-one split of investment units with theeffective date of March 1, 2014. As a result of this split ofinvestment units, the number of investment units issued as of thedate of this document is 461,422.
-It is assumed that, there shall be no issuance of new units until
August 31, 2014.

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.

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Management Policy and Issues for the 17th 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 17th 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.
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 some categories. 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 3.6% at the end of the 16th period.
We will also continue to work towards achieving high quality due diligence at acquiring properties
in order to avoid risk.

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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.
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.

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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