NEWS RELEASE
Jun 7, 2024
Rating and Investment Information, Inc. (R&I) has announced the following:

Nippon Accommodations Fund Inc. (Sec. Code: 3226)[Affirmed]
Issuer Rating: AA-, Stable
Bond Rating: AARATIONALE:
Nippon Accommodations Fund Inc. (NAF) is a real estate investment trust (REIT) that went public
in 2006. NAF invests primarily in rental apartments located in Tokyo 23 wards. The sponsor is Mitsui
Fudosan Co., Ltd.
NAF has invested continuously in the rental apartments of the "Park Axis" series developed bythe Mitsui Fudosan Group. The asset quality is sound, with 88.5% of NAF's rental apartments located inTokyo 23 wards and the average age of properties standing at 17.2 years as of February 2024. The
portfolio is highly diversified, with the asset size reaching approximately 340 billion yen in value, as well
as approximately 13,000 units under management. In addition to rental apartments, NAF also invests in
hospitality facilities up to a cap of 10% of the total portfolio as laid out in the portfolio structure policy,and NAF acquired three fixed-rent hotels specialized in lodging for 3.1 billion yen in total in September
2023.
During the fiscal period ended February 2024, the average month-end occupancy rate remained
high at 97.1%. The rent change rate at tenant turnover was positive at 5.6% on average, indicating thegrowing momentum in the pace of rent rise. Reflecting the recovery in population influx to central Tokyo
mostly to the pre-pandemic level, the tenant demand for single apartments has improved, while that offamily apartments and large apartments remains as firm as ever. In present situation, there is no
particular factor that may cause concern in terms of investment performance, and the cash flow will
likely stay on a firm trend for some time to come.
As for "Okawabata Apartment Communities", or NAF's largest property, NAF has been working
on the value-enhancement initiatives for private areas, realizing considerable rent increases forapplicable units. As for the other remaining properties, which are increasingly comprised of properties
built more than 15 years ago, NAF plans to maintain or improve their competitiveness by carrying out
large-scale renovation projects in an appropriate manner. On the front of ESG (Environmental, Social,and Governance), NAF has been pushing ahead with measures including the switch to LED lightings
and the acquisition of green building certifications.
The LTV ratio as of February 2024 was 51.2%, which is on a par with other REITs specialized inresidential properties. The unrealized gains have increased considerably to 54.8% of the book value
and the LTV ratio is low on an appraisal-value basis. NAF has met its funding needs stably depending
mainly on long-term fixed-rate loans disbursed by major domestic financial institutions, and the averageremaining term of long-term debts is long at 4.4 years with the staggered due dates. The sponsor'sstrong creditworthiness has given NAF an advantage over the other J-REITs in terms of funding cost.
The Rating Outlook is Stable. NAF has built up a quality portfolio by investing intensively in thesponsor's properties located in Tokyo 23 wards. The occupancy rate remains high and there is agrowing momentum in rent rise at tenant turnover. The leverage is controlled at a level that falls within
the scope of target and the financing base is solid.

.

R&I RATINGS:ISSUER: Nippon Accommodations Fund Inc.
[Affirmed]
Rating
AA-Issuer Rating■Contact■Media Contact: Sales and Marketing Division, Customer Service Dept.
: Corporate Planning Dept. (Public Relations)Rating and Investment Information, Inc.

Rating Outlook
StableTEL.+81-(0)3-6273-7471 E-mail. infodept@r-i.co.jp
TEL.+81-(0)3-6273-7273

TERRACE SQUARE, 3-22 Kanda Nishikicho, Chiyoda-ku, Tokyo 101-0054, Japan

https://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 https://www.r-i.co.jp/en/docs/policy/site.html.

©Rating and Investment Information, Inc.

NEWS RELEASE
Unsec. Str. Bonds No.3 (Green Bonds)
Unsec. Str. Bonds No.4 (Green Bonds)
Unsec. Str. Bonds No.5 (Green Bonds)
Unsec. Str. Bonds No.6
Unsec. Str. Bonds No.7

Issue AmountJPY 2,000 mn
JPY 2,000 mn
JPY 1,000 mn
JPY 2,000 mn
JPY 1,000 mn

Issue Date
Jul 16, 2020
Jul 16, 2020
Sep 30, 2021
Sep 30, 2021
Sep 30, 2021

Maturity Date
Jul 16, 2025
Jul 16, 2030
Sep 28, 2029
Sep 30, 2031
Sep 30, 2036

RatingAAAAAAAAAA-Primary rating methodologies applied:
Rating Methodology for REITs [Jul 1, 2022]■Contact■Media Contact: Sales and Marketing Division, Customer Service Dept.
: Corporate Planning Dept. (Public Relations)Rating and Investment Information, Inc.

TEL.+81-(0)3-6273-7471 E-mail. infodept@r-i.co.jp
TEL.+81-(0)3-6273-7273

TERRACE SQUARE, 3-22 Kanda Nishikicho, Chiyoda-ku, Tokyo 101-0054, Japan

https://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 https://www.r-i.co.jp/en/docs/policy/site.html.

©Rating and Investment Information, Inc.