Nippon Building Fund, Inc. · TSE:8951
Nippon Building Fund — H1 2017 Earnings Presentation
65 slides from Nippon Building Fund's earnings presentation, Aug 16, 2017
Slide 1: January-June 2017 (32nd Period) Investor Presentation
January-June 2017 (32nd Period) Investor Presentation August 16, 2017 NBF Nippon Building Fund Inc. Nippon Building Fund Nippon Building Management Ltd.
Slide 2: Contents
CONTENTS 1. Financial Highlights 7. Sustainability Initiatives 1-1 Financial Highlights (1/3) 3 7-1 Sustainability Initiatives 37 1-1 Financial Highlights (2/3) 4 7-2 Sustainability Initiatives: 1-1 Financial Highlights (3/3) 5 Environmental Evaluation & Certification 38 7-3 Sustainability Initiativ
Slide 3: Financial Highlights
1. Financial Highlights 2
Slide 4: Financial Highlights (1/3)
1-1 Financial Highlights (1/3) Actual Forecast 1H/2017 2H/2017 1H/2018 (34th Period) (32nd Period) (33rd Period) (Reference) PoP Change Total operating revenues 36,409 million yen +560 +1.6% 36,604 million yen 36,120 million yen Operating Income 15,113 million yen +509 +3.5% 14,896 million yen 14,89
Slide 5: Financial Highlights (2/3)
1-1 Financial Highlights (2/3) （As of June 30,2017) Average Occupancy Unrealized gain Total assets on appraisal value Location Rateduring the Period Note 1 Assets 23 wards of Tokyo: 79.4% 1,023.9 billion yen 189.3 billion yen Central 5 wards of Tokyo: 98.7% 50.5% Long-term fixed- Average LTV Average
Slide 6: Financial Highlights (3/3)
1-1 Financial Highlights (3/3) Distributions per Unit(DPU) NAV per Unit （yen） （yen） 10,000 550,000 9,129 505,308 8,867 497,513 9,000 500,000 484,767 8,397 460,478 8,036 7,787 444,359 8,000 7,681 450,000 430,707 (7,773) 7,000 400,000 6,000 350,000 5,000 0 0 0 300,000 2H/'14 1H/'15 2H/'15 1H/'16 2H/'1
Slide 7: Financial Results
2. Financial Results Definition of Term Fiscal period Terms Definitions Property Name Toyo-cho Center Bldg., Osaki Bright Core-Bright Plaza, 3 properties acquired (one property is an additional acquisition) during the period ended 4 new Nishi-Shinjuku Mitsui Bldg. December 31, 2016 (31st period), an
Slide 8: 1H/2017 (32nd Period) Statement of Income
2-1 1H/2017 (32nd Period) Statement of Income (million yen) 2H/2016 1H/2017 PoP Change ●Summary of PoP Change (million yen) (31st Period) (32nd Period) Amount Percentage Total operating revenues 35,849 36,409 560 1.6% Total operating revenues ＋560 Operating revenues 35,849 36,189 340 0.9% Rental rev
Slide 9: 1H/2017 (32nd Period) Balance Sheet
2-2 1H/2017 (32nd Period) Balance Sheet Assets (million yen) December 31,2016 June 30,2017 PoP Change ●Summary of PoP Change (million yen) (31st Period end) (32nd Period end) Amount Percentage Current assets 13,136 12,516 -620 -4.7% Total assets: -6,533 Cash and cash equivalents 12,038 11,376 -661 -
Slide 10: Memo
| Nippon Buliding Fund (MEMO)
Slide 11: Operating Results & Outlook
3. Operating Results & Outlook 10
Slide 12: Internal Growth (1/2)
3-1 Internal Growth (1/2) ●Average occupancy rate during the period, the percentage of floor space of tenants moving in and out （％） （％） （Forecast） 15.0 100 Average occupancy rate during the period (right scale)Note1 Percentage of floor space of tenants moving in (left scale)Note2 98.7 98.7 Percentag
Slide 13: Internal Growth (2/2)
3-1 Internal Growth (2/2) ●Breakdown of PoP Change in Rental Revenues （％） （Forecast） 3.0 Rent revision Replacement Replacement＋rent revision 2.0 We forecast that rent revisions will be net positive PoP for the sixth consecutive period 1.0 0.0 Impact of a tenant -1.0 moving out of GSK Bldg. (Jan. 201
Slide 14: External Growth (1/2)
3-2 External Growth (1/2) ●Acquisitions & Dispositions 23 wards of Tokyo Other Greater Tokyo Other cities 2015 2016 2017 （28th & 29th Period ） （30th & 31st Period ） （32nd Period） Acquisitions Main NBF Kandasudacho Bldg. Ueno East Tower Osaki Bright Core-Bright Plaza Toyo-cho Center Bldg. Kowa Nishi-
Slide 15: External Growth (2/2)
3-2 External Growth (2/2) ●Disposition Summary ●Internal Reserves Note 2 Aqua Dojima East (million yen） (Approx. 23% Net Floor Area Ownership Ratio) 6,000 Reversal of reserve for advanced depreciation 4,987 Provision of reserve for advanced depreciation 4,767 4,767 5,000 219 4,185 4,185 4,185 951 4,
Slide 16: Finance (1/2)
3-3 Finance (１/2) ●Financial Data ●Interest-Bearing Debt （million yen） 2H/2016 1H/2017 PoP 2H/2016 1H/2017 PoP (31st Period) (32nd Period) Change (31st Period) (32nd Period) Change LTV 41.9% * 41.5% -0.4pt Short-Term Debt 7,000 12,000 5,000 Long-Term Fixed-Rate Long-Term Debt 19,000 20,000 Debt Rati
Slide 17: Finance (2/2)
3-3 Finance (2/2) ●New Funding and Repayment ●Long-Term Debt Procured in 1H/2017 (32nd Period) 1H/2017 (32nd Period) Long-Term Borrowings ・Long-term borrowings & Investment Corporation Bonds Borrowing Amount Term Fixed/ Interest Lender Date (million yen) (years) Floating Rate Repayment Overview New
Slide 18: Appraisal Value Assessment
3-4 Appraisal Value Assessment ●Appraisal Value ●Appraisal Value & Book Value (billion yen) 1,400 2H/2016 1H/2017 PoP Book value (period end) (31st Period) (32nd Period) Change Appraisal value (period end) Number of properties 75 properties 74 properties -1 property Appraisal 1,200 value 1,188.8 bil
Slide 19: Forecast
Forecast NBF 18
Slide 20: 2H/2017 (33rd Period) Forecast
4-1 2H/2017 (33rd Period) Forecast (million yen) 1H/2017 2H/2017 1H/2018 ●Summary of PoP change for 2H/2017 PoP Change PoP Change (Actual) （Forecast） （Reference） （million yen） (32nd Period) (33rd Period) Amount Percentage (34th Period) Amount Percentage Total operating revenues +194 Total operating
Slide 21: (Reference) Performance Forecast
(Reference) Performance Forecast Rental revenues (excl. GSK Bldg.) Other revenues related to property leasing （million yen） （million yen） 33,000 4,500 ■Previous 前期実績period ■Internal 内部成長 growth ■External 外部成長 growth 32,500 4,000 3,500 3,378 32,000 3,279 3,349 Cancellation fees 3,059 From GSK Bldg. 3
Slide 22: Memo
| Nippon Buliding Fund (MEMO) 21
Slide 23: Market Data
Market Data NBF 22
Slide 24: Trends in the Office Building Leasing Market (1/2)
5-1 Trends in the Office Building Leasing Market （1/2） ●Market Rents for Office Buildings in Tokyo Business Districts* (Average Asking Rent & Average Vacancy Rate) (Yen/tsubo) （％） 9.43% 25,000 10.00 8.57% ¥22,901 （'12.6） （'03.6・8） （'08.8） 9.00 8.00 7.00 20,000 ¥18,916 （'17.7） 6.00 5.00 ¥17,526 （'04.
Slide 25: Trends in the Office Building Leasing Market (2/2)
5-1 Trends in the Office Building Leasing Market （2/2） ●New Supply of Large-Scale Office Buildings* in the 23 Wards of Tokyo Source: Prepared by Nippon Building Fund Management (10 thousand m2) using data from Mori Building Co., Ltd. as of April 25, 2017 300 （Forecast） 250 216 Average of 1.03 millio
Slide 26: Trends in the Real Estate Trading Market
5-2 Trends in the Real Estate Trading Market ●Real estate trading value (office buildings) （billion yen） 2,500 First half Second half 2,000 1,500 1,000 500 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Compiled by asset management company from data pu
Slide 27: NBF Unit Price, TSE REIT Index & 10-Year JGB Yields
5-3 NBF Unit Price, TSE REIT Index＆10-Year Japanese Government Bond Yields ●NBF Unit Price＆TSE REIT Index (yen） (pt） 1,200,000 4,000 NBF unit price (left scale) TSE REIT Index (right scale) 900,000 3,000 600,000 2,000 300,000 1,000 0 0 '01.9 '02.9 '03.9 '04.9 '05.9 '06.9 '07.9 '08.9 '09.9 '10.9 '11.
Slide 28: NBF's Competitive Advantages
6. NBF’s Competitive Advantages 6-1 J-REIT with the Longest Track Record 6-2 The Largest J-REIT in Size 6-3 A Portfolio Focused on Tokyo 6-4 Collaboration with Sponsor (Mitsui Fudosan Group) ・Pipeline ・Leasing ・Property Management 6-5 Stable Financial Management 27
Slide 29: J-REIT with the Longest Track Record (1/2)
6-1 J-REIT with the Longest Track Record (1/2) ●Asset Scale (Total Acquisition Price) & Average Occupancy Rate during the Period 23 wards of Tokyo (left scale) Other greater Tokyo (left scale) Average occupancy rate during the period (right scale) Central 5 Wards of Tokyo (incl. in above) (left scal
Slide 30: J-REIT with the Longest Track Record (2/2)
6-1 J-REIT with the Longest Track Record (2/2) ●Distributions per Unit (Note 1) （yen） 11,27411,126 12,000 10,887 9,695 10,064 9,513 9,836 9,129 9,612 9,904 8,645 8,867 8,645 8,523 8,562 9,000 8,126 8,446 8,427 8,152 8,036 8,397 8,001 7,683 7,592 7,747 7,600 7,740 7,877 7,681 7,787 7,291 7,569 6,000
Slide 31: The Largest J-REIT in Size
6-2 The Largest J-REIT in Size ●Market Capitalization （As of June 30,2017) Ratio of J-REITs (billion yen） by Type 900 810.4 billion yen Office buildings 20.5% 800 700 J-REIT Total Market Capitalization 600 … 11,434.5 billion yen Diversified and hybrid 44.1% Commercial facilities 500 9.7% 400 300 Res
Slide 32: A Portfolio Focused on Tokyo
6-3 A Portfolio Focused on Tokyo ● Investment Ratio by Area ● Continued Appraisal Value & Floor Space (Acquisition price basis; as of June 30, 2017) (21 properties over 10,000 tsubo) 23 Wards of Tokyo Other Greater Tokyo Other Cities Other Cities ¥127.6 billion Continued Appraisal *The size of the d
Slide 33: Collaboration with Sponsor (1/3) Pipeline
6-4 Collaboration with Sponsor (Mitsui Fudosan Group) (1/3) Pipeline ●Total Acquisitions by Seller ●Co-Existence Model with Mitsui Fudosan Group Since our IPO, we have acquired approximately 60% of our properties from the Mitsui Fudosan Own Group (acquisitions and brokerage). Manage (billion yen) Ni
Slide 34: Collaboration with Sponsor (2/3) Leasing
6-4 Collaboration with Sponsor (Mitsui Fudosan Group) (2/3) Leasing ●Average Occupancy Rate during the Period & Total Rentable Area NBF’s average occupancy rate during the period (nationwide)Note 1 (left scale) （%） (10 thousand ㎡) Reference: average market occupancy rate during the periodNote 2 100
Slide 35: Collaboration with Sponsor (3/3) Property Management
6-4 Collaboration with Sponsor (Mitsui Fudosan Group) (3/3) Property Management ●Property Management Structure ●Strategic Additional Investment with Clear Objectives • Formulate & execute management & operation plans Formulate and execute • Formulate & execute large-scale repair plans Set building g
Slide 36: Stable Financial Management
6-5 Stable Financial Management ●LTV & Long-Term Fixed-Rate Debt Ratio ●Average Maturity (Long-Term Interest-Bearing Debt) (％) (years) 100 6 99.6 96.4 97.7 96.5 5 95.2 94.0 90 93.8 92.5 4.73 5.16 4.99 5.15 4 4.53 Target : 90% or higher for the long-term 4.29 4.02 4.11 fixed-rate debt ratio 3 80 2 70
Slide 37: Sustainability Initiatives
7. Sustainability Initiatives (Initiatives by NBF and NBFM) 36
Slide 38: Sustainability Initiatives: Basic Policy
7-1 Sustainability Initiatives NBFM, in recognition of the importance of environmental considerations etc. for carrying out real property investment and management activities, strives to achieve asset management activities Basic Policy giving consideration to reduction of environmental load, enhance
Slide 39: Environmental Evaluation & Certification
7-2 Sustainability Initiatives: Environmental Evaluation & Certification GRESB CASBEE NBF received a Green Star, the highest Property Name Ranking rating, in the 2016 GRESB survey. Gate City Ohsaki S CASBEE – Existing Building DBJ Green Building Property Name Ranking Tokyo Metropolitan Top-Level-Fac
Slide 40: Sustainability Initiatives: Some Examples
7-3 Sustainability Initiatives: Some Examples Disaster Prevention and BCP Measures Enhancement work on Renewal and earthquake-resistance emergency power generator oil tank improvement of elevators Enabling longer hours of emergency power Seismic performance improvement by control supply mechanism re
Slide 41: Customer Satisfaction Survey
7-4 Sustainability Initiatives: Customer Satisfaction Survey ●Program to Raise Management & Operation Quality ●Overall Customer Satisfaction Demonstrated by (PDCA cycle based on customer satisfaction surveys) the Customer Satisfaction Survey* ・Tenant (General Affairs Manager) Survey （Points） 900 851
Slide 42: Corporate Governance
7-5 Sustainability Initiatives: Corporate Governance Organizational Chart Flow chart for making decisions on acquisition and sale of assets under management at NBFM General Meeting of Original proposal by Investment & Finance Group Shareholders ・ Check compliance, including various risks and illeg
Slide 43: Appendix
8 Appendix NBF 42
Slide 44: Top 10 Tenants (Leased Floor Space Basis)
1 Top 10 Tenants (Leased Floor Space Basis) （As of June 30,2017) Ratio of Leased Areas Total Tenant Name Leased Property (㎡) Rentable Area (%) Gate City Ohsaki 1. Mitsui Fudosan Co., Ltd.(Note) 229,457 21.1 & 11 other properties Note: Mitsui Fudosan Co., Ltd. Mitsui Fudosan Co., Ltd. generally 2. So
Slide 45: Tenants by Industry
2 Tenants by Industry （As of June 30,2017) Ratio of Industry Leased Leased Property Areas 1. Service 22.1% Transcosmos inc., Hakuhodo DY Holdings Inc. Warehousing & 2. Electrical equipment 11.4% Sony Corporation, NEC Corporation transportation Information & 1.7% 3. 11.4% NS Solutions Corporation, So
Slide 46: Floor Space of Tenants Moving In and Out by Property
NBF Kumamoto Bldg. Hakata Gion M-SQUARE NBF Matsuyama Nichigin-mae Bldg. Hiroshima Fukuromachi Bldg. Other Cities Aqua Dojima East Sun Mullion NBF Tower Number in parenthesis is an average of total rentable area at the end of each month Sakaisuji-Honmachi Center Bldg. Shinanobashi Mitsui Bldg. Nakan
Slide 47: Property Age
4 Property Age 2H/2016 1H/2017 （31st Period） （32nd Period） 20.1% 20.1% 43.4% 43.4% Average Property Age Average Property Age 18.36 years 18.85 years 36.5% 36.5% Under 10 years Over 10 years but under 20 years 20 years or older 46
Slide 48: Financial Management
5 Financial Management Borrowings (left scale) Long-term fixed-rate debt ratio (right scale) Investment corporation bonds (left scale) LTV (Interest-bearing debt to total assets) (right scale) （billion yen） （％） 600 100 94.2 93.8 94.0 92.5 92.9 92.2 99.6 550 97.5 97.7 96.4 97.7 96.5 85.8 95.2 87.3 87
Slide 49: Lenders & Borrowings
6 Lenders & Borrowings (million yen) 2H/2016 1H/2017 Repayment Lender Other 31st Period End 32nd Period End Method Sumitomo Mitsui Trust Bank, Ltd. - 4,000 Unsecured, Shinkin Central Bank 4,000 3,000 Lump sum unguaranteed, Resona Bank, Ltd. 1,000 2,000 repayment on Short-Term ranked pari Mizuho Bank
Slide 50: Overview of Unit Ownership
7 Overview of Unit Ownership 【Ownership by Unitholder】 【Number of Unitholders by Type】 Dec. 31, 2016 Jun. 30, 2017 Dec. 31, 2016 Jun. 30, 2017 Uniholder (31st Period end) (32nd Period end) PoP Change Uniholder (31st Period end) (32nd Period end) PoP Change Category Category Units % Units % Units % U
Slide 51: Historical Summary of Main Management Indicators and Other Data
8 Historical Summary of Main Management Indicators and Other Data 1H/2015 2H/2015 1H/2016 2H/2016 1H/2017 28th Period 29th Period 30th Period 31st Period 32nd Period Note 1: Figures in parentheses are annualized from Operating revenues (million yen) 34,593 34,640 35,671 35,849 36,409 monthly data. L
Slide 52: Property Portfolio Overview (1/2) – 23 Wards of Tokyo
9 Property Portfolio Overview (1/2) – 23 Wards of Tokyo ●23 Wards of Tokyo Total Leased Occupancy Rate Total Leased Occupancy Rate Total Rentable Total Number Total Rentable Total Number Property Name Area (㎡) at End of Period PML (%) Property Name Area (㎡) at End of Period PML (%) Area (㎡) of Tenan
Slide 53: Property Portfolio Overview (2/2) – Other Greater Tokyo & Other Cities
9 Property Portfolio Overview (2/2) – Other Greater Tokyo & Other Cities ●Other Greater Tokyo ●Other Cities Total Leased Occupancy Rate Total Leased Occupancy Rate Total Rentable Total Number Total Rentable Total Number Property Name Area (㎡) at End of Period PML (%) Property Name Area (㎡) at End of
Slide 54: Appraisal Value (1/3) – 23 Wards of Tokyo
10 Appraisal Value (1/3) – 23 Wards of Tokyo ●23 Wards of Tokyo 1H/2017 32nd Period End 2H/2016 31st Period End Direct Direct Unrealized PoP change in Acquisition Price (1) gain(loss) appraisal value Property Name (2) Return DCF Method (3) Return DCF Method （million yen） Book value at (2) - (1) (2)
Slide 55: Appraisal Value (2/3) – 23 Wards of Tokyo
10 Appraisal Value (2/3) – 23 Wards of Tokyo 1H/2017 32nd Period End 2H/2016 31st Period End Direct Direct Unrealized PoP change in Acquisition Price (1) gain(loss) appraisal value Property Name (2) Return DCF Method (3) Return DCF Method （million yen） Book value at (2) - (1) (2) - (3) Appraisal Val
Slide 56: Appraisal Value (3/3) – Other Greater Tokyo & Other Cities
10 Appraisal Value (3/3) – Other Greater Tokyo & Other Cities ●Other Greater Tokyo / Other Cities 1H/2017 32nd Period End 2H/2016 31st Period End Direct Direct Unrealized PoP change in Acquisition Price (1) gain(loss) appraisal value Property Name (2) Return DCF Method (3) Return DCF Method （million
Slide 57: Revenue by Property (1/3) – 23 Wards of Tokyo
11 Revenue by Property (1/3) – 23 Wards of Tokyo ●23 Wards of Tokyo (million yen) Mitsubishi NBF NBF Toranomon NBF NBF NBF NBF Kowa NBF Nishi-Shinjuku Shiba NBF Celestine Shiba Shinjuku Mitsui River City NBF Heavy Industries Minami-Aoyama COMODIO Kotohira Ochanomizu Shibuya Garden Ginza Street GSK B
Slide 58: Revenue by Property (2/3)
11 Revenue by Property (2/3) – 23 Wards of Tokyo & Other Greater Tokyo ●23 Wards of Tokyo (million yen) Higashi Osaki Bright Total of 23 Nakanosakaue NBF Toyosu NBF Toyosu Nakameguro Ueno NBF Ikebukuro Toyo-cho NBF NBF Ikebukuro NBF Ueno Bldg. Gotanda Core - Bright Wards of Tokyo Sunbright Twin Cana
Slide 59: Revenue by Property (3/3) – Other Cities
11 Revenue by Property (3/3) – Other Cities ●Other Cities (million yen) NBF NBF Sapporo Sumitomo Mitsui Sakaisuji- Hiroshima NBF Aqua Dojima Total of Other Sapporo NBF Niigata NBF Nagoya Aqua Dojima Nakanoshima Shinanobashi Sun Mullion NBF Hiroshima Matsuyama Hakata Gion Minami Nijo NBF Unix Bldg. B
Slide 60: Portfolio Map
Portfolio Map Kita-ku om Setagaya-ku | } | © ° 7 28 on Meare Ku) {Nearer} "2 O & 36) \ SY shinagawa-ku ) < NT Arakawa-ku / } Bunkyo-ku ~S Talto-ku 5? | ‘Sumida-ku / 8° = /@/ Other Cities 1 6 Properties ¥1 27.6 billion 23 Wards of Tokyo 48 Propertios ¥878. 2y billion Other Greater Tokyo 1 Orroperties
Slide 61: Properties (1/4) – 23 Wards of Tokyo
13 Properties (1/4) – 23 Wards of Tokyo 60
Slide 62: Properties (2/4) – 23 Wards of Tokyo
13 Properties (2/4) – 23 Wards of Tokyo 61
Slide 63: Properties (3/4) – 23 Wards of Tokyo & Other Greater Tokyo
13 Properties (3/4) – 23 Wards of Tokyo & Other Greater Tokyo 62
Slide 64: Properties (4/4) – Other Cities
13 Properties (4/4) – Other Cities 63
Slide 65: Disclaimer
Disclaimer This English language notice is a translation of the Japanese language Investor Presentation dated February 16, 2017 and was prepared solely for the convenience of, and reference by, overseas investors. Neither NBF nor Nippon Building Fund Management, Ltd. makes any warranties as to its a