Nippon Building Fund Incorporation : INC. ANNOUNCES 41st PERIOD (SECOND-HALF 2021) RESULTS

February 15, 2022

To All Concerned Parties

Name of REIT Issuer: Nippon Building Fund Inc.

Koichi Nishiyama, Executive Director (TSE Code : 8951)

Contact:

Asset Management Company

Nippon Building Fund Management Ltd. Yoshiyuki Tanabe, President and CEO Person to Contact:

Yukio Handa, General Manager (TEL. [phone])

NIPPON BUILDING FUND INC.

ANNOUNCES 41st PERIOD (SECOND-HALF 2021) RESULTS

1. Financial Results for the Fiscal Period Ended December 31, 2021 (from July 1, 2021 to December 31, 2021)

					(Values are rounded down to the nearest million yen)
(1) Operating Results		(Percentages indicate a rate of increase/decrease from the previous period)
	Period ended	Operating revenues	Operating income	Ordinary income	Net income
	Yen in millions	%	Yen in millions	%	Yen in millions	%	Yen in millions	%
	December 31, 2021	50,334	8.9	23,004	1.0	21,728	1.4	21,727	1.4
	June 30, 2021	46,213	10.7	22,778	21.7	21,428	24.0	21,427	24.0
						Ratio of ordinary	Ratio of ordinary
				Return on		income
		Net income per unit		income to total
	Period ended	unitholders' equity	to operating
			assets
							revenues
			yen		%		%		%
	December 31, 2021	13,148		3.2		1.7		43.2
	June 30, 2021	12,966		3.2		1.7		46.4

(Note) Net income per unit = Net income ÷ Weighted average number of units issued and outstanding during the period.

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(2) Distributions
		Distribution	Total amount	Distribution	Total of
		per unit	of distributions	s	Payout	Ratio of
		(excluding	(excluding	in excess of	distributions	distributions
	Period ended	in excess of	ratio
	distributions in	distributions in	earnings	to net assets
		excess of	excess of	earnings
		per unit
		earnings)	earnings)
		Yen	Yen in millions	Yen	Yen in millions	%	%
	December 31, 2021	11,848	19,578	-	-	90.1	2.9
	June 30, 2021	11,684	19,307	-	-	90.1	2.9

(Note 1) The payout ratio is rounded down to the first decimal place.

(Note 2) Distribution per unit for the fiscal period ended June 30, 2021, is calculated by dividing the amount (¥19,307 million), which is arrived at by deducting provision of reserve for advanced depreciation (¥2,119 million) from retained earnings (¥21,427 million), by the total number of investment units issued and outstanding. The difference between distribution per unit and net income per unit is due to this calculation.

(Note 3) Distribution per unit for the fiscal period ended December 31, 2021, is calculated by dividing the amount (¥19,578 million) arrived at by deducting provision of reserve for advanced depreciation (¥4,170 million) from the sum of retained earnings (¥21,727 million) and reversal of reserve for advanced depreciation (¥2,021 million) by the total number of investment units issued and outstanding. The difference between distribution per unit and net income per unit is due to this calculation.

(3) Financial Position

		Total assets	Net assets	Ratio of unitholders'	Net assets per unit
	Period ended	equity to total assets
		Yen in millions	Yen in millions	%	Yen
	December 31, 2021	1,306,855	672,290	51.4	406,832
	June 30, 2021	1,305,388	669,870	51.3	405,368
(4) Cash Flow
					Cash and cash
		Cash flow from	Cash flow from	Cash flow from	equivalents at the
	Period ended	operating activities	investing activities	financing activities	end
					of period
		Yen in millions	Yen in millions	Yen in millions	Yen in millions
	December 31, 2021	87,756	(86,541)	(19,308)	25,981
	June 30, 2021	63,700	(226,152)	72,795	44,075

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2. Forecasts for the 42nd Fiscal Period (from January 1, 2022 to June 30, 2022) and the 43rd Fiscal Period (from July 1, 2022 to December 31, 2022)

(Percentages indicates rate of increase/decrease from the previous period)

									Distribution
	Operating	Operating	Ordinary			s per unit	Distribution
	Net income	(excluding	s in excess
	revenues	income	income
Period ending			distribution in	of earnings
								excess of
									earnings)
	Yen in		Yen in	Yen in	Yen in	Yen	Yen
	millions	%	millions	%	millions	%	millions	%
June 30, 2022	52,022	3.4	25,988	13.0	24,543	13.0	24,543	13.0	13,000	0
December 31, 2022	47,309	ሺ9.1)	22,021	ሺ15.3)	20,662	ሺ15.8)	20,662	ሺ15.8)	11,500	0

(Reference) Expected net income per unit (expected net income ÷ expected weighted average number of units issued and outstanding during the period)

・The 42nd Fiscal Period (from January 1, 2022 to June 30, 2022): ¥14,470

・The 43rd Fiscal Period (from July 1, 2022 to December 31, 2022): ¥12,147 (Note1) Expected distribution per unit for the fiscal period ending June 30, 2022, is arrived at by

subtracting provision of reserve for advanced depreciation (¥2,429 million) from expected net income and then dividing it by the total number of investment units issued and outstanding.

(Note2) Expected distribution per unit for the fiscal period ending December 31, 2022, is arrived at by subtracting ¥1,100 million (the difference between reversal of reserve for advanced depreciation [¥265 million] and provision of reserve for advanced depreciation [¥1,365 million]) from expected net income and then dividing it by the total number of investment units issued and outstanding.

3. Others

1. Changes in Accounting Policies, Accounting Estimates or Restatements

1. Changes in accounting policies due to revisions to accounting standards and other regulations : Yes

(ii) Changes in accounting policies due to reasons other than (i) above	:	None
(iii) Changes in accounting estimates	:	None
(iv) Restatements	:	None

1. Number of Investment Units Issued and Outstanding

1. Number of investment units issued and outstanding at the end of the fiscal period including treasury units:

As of December 31, 2021	1,652,500 units
As of June 30, 2021	1,652,500 units
(ii) Number of treasury units at end of period:
As of December 31, 2021	None
As of June 30, 2021	None

• This financial report has not undergone any audit performed by a certified public accountant or auditing firm.
• Special Consideration

The forward-looking statements concerning performance results in these materials are based on information currently available to us and certain assumptions which we believe are reasonable. Actual operating performance may differ substantially due to various factors. Furthermore, these forecasts are not intended to guarantee the amount of cash distribution.

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NBF Portfolio Profile:

As of December 31, 2021, NBF owned or had beneficiary interests in 73 office properties acquired for a total of ¥1.3822 trillion and containing approximately 1,197,970 rentable square meters of office space. As of December 31, 2021, NBF leased office space to 1,567 tenants (after taking sub leases into account) engaged in a variety of businesses, compared with 1,606 tenants at the close of the preceding fiscal period. The occupancy rate as of the end of the period was 96.4% (after taking sub leases into account), compared with 97.2% at the close of the preceding fiscal period.

Performance Results:

NBF has conducted asset management in accordance with its basic policy of "aim to achieve steady growth of assets under management and secure stable profits on a mid- to long-term basis."

During the fiscal period under review, while it was difficult to acquire prime properties, we acquired IIDABASHI GRAND BLOOM (real property, acquisition price: ¥77.6 billion) in September 2021, and additionally acquired 15% co-ownership interest of Yokohama ST Bldg. which we already own (trust beneficiary interest, acquisition price: ¥3.22 billion) in November 2021. Further, we reviewed our portfolio by disposing NBF Ochanomizu Bldg. (trust beneficiary interest, disposition price: ¥16.1 billion) in August 2021, Nakanosakaue Sunbright Twin (trust beneficiary interest, disposition price: ¥40 billion), and NBF Unix Bldg. (trust beneficiary interest, disposition price: ¥4.9 billion) in September 2021 to press ahead with a review its portfolio.

NBF also concluded a sale and purchase agreement regarding the disposition of Sun Mullion NBF Tower (trust beneficiary interest, disposition price: ¥14.4 billion) in August 2021, and the disposition was completed in January 2022.

With respect to the existing portfolio, NBF understands the market trends accurately, carries out appropriate and flexible leasing activities, maintains favorable relationships with tenants, and continuously works on rent increase upon renewal of contracts with an aim to recover the level of occupancy rates, which have entered a correction phase, with revenues from the rental business remaining stable. In addition, NBF has also put forth efforts to reduce costs by properly allocating the timing and cost of renovation/construction while striving to enhance competitiveness of properties by carrying out strategic and rightly focused additional investment.

NBF promotes ESG initiatives. During the fiscal period under review, NBF received a "Green Star", the highest rating in real estate evaluation of the Global Real Estate Sustainability Benchmark (GRESB) (for the seventh consecutive year), the highest 5-star accreditation in GRESB rating, and the highest A rating in GRESB disclosure evaluation.

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Financing:

NBF has conducted its financial management in a conservative manner with the targeted interest- bearing debt to value ratio (ratio of interest-bearing debt to total value, hereinafter the LTV) being between 36% and 46%, with 56% at the maximum.

As of the end of the period under review, NBF's LTV was 42.1% and its long-term fixed interest-bearing debt ratio (ratio of "long-term fixed interest-bearing debt" procured at fixed rates with repayment/redemption periods of over one year as of the time of loan agreement/issuance of bonds each such time representing the actual procurement of funds to "total interest-bearing debt"; hereinafter the same) was 95.1%.

The status of interest-bearing debt as of the end of the previous period and period under review is as follows.

			(Values are million yen)
	Balance as of	Balance as of
	the end of the	the end of the		Increase/decrease
	previous	period under
	period	review
Short-term borrowings	-	-		-
Long-term borrowings	27,000	27,000		-
(Floating interest rate)
Long-term borrowings	466,500	466,500		-
(Fixed interest rate)
Investment Corporation	57,000	57,000		-
Bonds
Total interest-bearing debt	550,500	550,500		-

It has also established long-term commitment lines in order to provide stable sources of funding thereby flexibly procuring necessary funds and reducing risks of refinancing, etc.

Credit Ratings:

NBF was awarded the following issuer credit ratings as a J-REIT (opinions of the respective credit rating agencies on NBF's creditability).

Credit Rating Agency	Rating Summary
JCR	Issuer Rating: AA+, Outlook: stable
R&I	Issuer Rating: AA, Outlook: stable
Standard & Poor's	Long-term: A+, Short-term:A-1, Outlook: stable

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