Nippon Building Fund, Inc. · TSE:8951
Nippon Building Fund — H2 2021 Earnings Presentation
67 slides from Nippon Building Fund's earnings presentation, Feb 16, 2022
Slide 1: 2H 2021 (41st Period) Investor Presentation
Nippon Building Fund Inc. Nippon Building Fund Management Ltd. 2H 2021 (41st Period) Investor Presentation February,16 2022 0
Slide 2: Contents
CONTENTS 1. Financial Highlights 1-1 Financial Highlights (1/3) 3 6-4 Collaboration with Sponsor 1-1 Financial Highlights (2/3) 4 (Mitsui Fudosan Group) (3/4): Leasing 36 1-1 Financial Highlights (3/3) 5 6-4 Collaboration with Sponsor (Mitsui Fudosan Group) (4/4): Property Management _ 37 2. Financi
Slide 3: Financial Highlights
1. Financial Highlights 2
Slide 4: Financial Highlights (1/3)
1-1 Financial Highlights (1/3) Actual Forecast 2H/2021 1H/2022 2H/2022 (41st Period) (42nd Period) (43rd Period) PoP Change Total operating revenues 50,334 million yen +4,121 million yen +8.9％ 52,022 million yen 47,309 million yen Operating income 23,004 million yen +225 million yen +1.0％ 25,988 mil
Slide 5: Financial Highlights (2/3)
1-1 Financial Highlights (2/3) (As of December 31, 2021) Average Occupancy Unrealized gain Total assets on appraisal value Location Rate during the Period Note 1 Asset 82.9％ 1,382.2 billion yen 314.4 billion yen 96.4% 23 wards of Tokyo: Central 5 wards of Tokyo: 59.4％ Long-term fixed-rate Average LT
Slide 6: Financial Highlights (3/3)
1-1 Financial Highlights (3/3) NBF’s basic policy is to pursue growth in unitholder value through mid-to-long-term stable growth of our DPU and increasing our NAV per unit. Distributions per Unit (DPU) NAV per Unit (yen) (yen) 13,000 11,848 600,000 585,254 12,000 11,684 572,136 573,646 566,917 564,2
Slide 7: Financial Results
2. Financial Results 【Definition of Term 】 Fiscal period Terms Definitions Property Name Shinjuku Mitsui Bldg. (40th Period acquisition) 1H 2021 (40th Period): 2 properties acquired and 1 additional property GranTokyo South Tower (40th Period acquisition) Properties acquired Ueno East Tower (40th Pe
Slide 8: 2H/2021 (41st Period) Statement of Income
2-1 2H/2021 (41st Period) Statement of Income (million yen) ● Summary of PoP Change (million yen) 1H/2021 2H/2021 PoP Change (40th Period) (41st Period) Amount Percentage Total operating revenues +4,121 Total operating revenues 46,213 50,334 4,121 8.9% Rental revenues -690 Operating revenues 44,688
Slide 9: 2H/2021 (41st Period) Balance Sheet
2-2 2H/2021 (41st Period) Balance Sheet ●Summary of PoP Change Assets (million yen) (million yen) June 30,2021 December 31, 2021 PoP Change (40th Period end) (41st Period end) Total assets +1,466 Amount Percentage Current assets 45,324 26,972 -18,351 -40.5% Current assets - 18,351 Cash and cash equi
Slide 10: Memo
7 Nippon Building Fund (MEMO)
Slide 11: Operating Results & Outlook
3. Operating Results & Outlook 10
Slide 12: Operating Policies
3-1 Operating Policies Leverage our outstanding portfolio and the strengths of our sponsor to adapt flexibly to market changes. Internal Growth/Office Leasing Market External Growth/Office Trading Market Office Building Leasing Market Outlook Office Building Trading Market Outlook • Economic activit
Slide 13: Replacement Strategy (Announced after March 2021)
3-2 Replacement Strategy (Announced after March 2021) Outcomes from property replacement that includes public offering Replacement with competitive properties (announced from March 2021) Portfolio change Ueno Yokohama Acquisition of additional New acquisition through the Transactions East Tower ST B
Slide 14: External Growth: Property Acquisition (1/2)
3-3 External Growth: Property Acquisition (1/2) Nakanoshima Mitsui Building Property Features An office building reimagined with “people x work x dining x AI” Location Good access to all parts of Osaka • 1-minute walk from Watanabebashi station on the Keihan Nakanoshima line, and the availability of
Slide 15: External Growth: Property Acquisition (2/2)
3-3 External Growth: Property Acquisition （2/2） IIDABASHI GRAND BLOOM (After additional acquisition Approx. 58.55%） Property Features High-grade mixed-use commercial and office building Location Good access to major areas of Tokyo • 1-minute walk from JR Iidabashi station, 5 lines available includin
Slide 16: Internal Growth (1/2)
3-4 Internal Growth（1/2） Assumptions about the rate of moving in and out are conservative, occupancy rate will bottom in 1H 2022 ●Average occupancy rate during the period, and the percentage of floor space of tenants moving in and out (%) (%) 99.5 99.5 99.4 99.4 15.0 98.8 99.3 98.8 97.8 Occupancy ra
Slide 17: Internal Growth (2/2)
3-4 Internal Growth（2/2） Decrease in rental revenues will bottom in 2H 2022 ● Breakdown of PoP Change in Rental Revenues from Existing Properties (rent revisions and replacement, etc.) （％） 4.0 Rent revision Replacement, etc. 3.0 Rent revision ＋ Replacement, etc. 2.0 1.0 Bottom 0.0 in 2H 2022 -1.0 -2
Slide 18: Construction Expenses (CAPEX+Repair Costs)
3-5 Construction Expenses（CAPEX+Repair Costs） ● We improve portfolio quality through means including investments to add value • We improve property value by preparation work including support for multi-tenancy when moving out of a large tenant and by adding value in ways such renewing properties and
Slide 19: Finance
3-6 Finance Diversified maturities, stabilized funding, lowered cost of funding ●Interest-Bearing Debt (Million yen) ●Financial Data June 30,2021 December 31, 2021 June 30,2021 December 31, 2021 PoP PoP (40th Period) (41st Period) Change Change (40th Period end) (41st Period end) LTV 42.2％ *42.1％ -0
Slide 20: Appraisal Value
3-7 Appraisal Value Apraisal value is generally high and stable ●Appraisal Value ●Appraisal Value & Book Value (billion yen) June 30,2021 December 31, 2021 PoP 16,000 (40th Period end) (41st Period end) Change Book value Appraisal value Number of properties 75 properties 73 properties -2 properties
Slide 21: Forecast
Forecast NBF 20
Slide 22: 1H/2022 (42nd Period), 2H/2022 (43rd Period) Forecasts
4-1 1H/2022 (42nd Period), 2H/2022 (43rd Period) Forecasts (million yen) 2H/2021 1H/2022 2H/2022 PoP Change PoP Change (Actual) (Forecast) (Forecast) ●Summary of PoP Change (million yen) (41st Period) (42nd Period) Amount Percentage (43rd Period) Amount Percentage 42nd period 43rd period Total opera
Slide 23: (Reference) Performance Forecast
(Reference) Performance Forecast DPU Aim to stable growth in DPU by deploying gains on transfers to supplement internal growth. (yen) Gain on disposition –retained profits External Internal growth growth Other Other External growth Gain on disposition Internal –retained profits growth Property tax (
Slide 24: Policy for Using Retained Profits and Gains on Transfer
4-2 Policy for Using Retained Profits and Gains on Transfer Return retained profits and gains on transfer to unitholders over the medium and long term Policy for Use • We will aggressively deploy retained profits, which we forecast will total ¥14.1 billion at 43rd period end, and gains on transfer f
Slide 25: Market Data
Market Data NBF 24
Slide 26: Trends in the Office Building Leasing Market (1/2)
5-1 Trends in the Office Building Leasing Market (1/2) The vacancy rate in Tokyo business districts in January 2022 was 6.26%, and the asking rent was ¥20,508. ●Market Rents for Office Buildings in Tokyo Business Districts* (Average Asking Rent & Average Vacancy Rate) (Yen/tsubo) （％） 25,000 10.00 8.
Slide 27: 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: Compiled by asset management company using data from Mori Building Co., Ltd. as of May 27, 2021 (10 thousand m2) 300 (Forecast) 250 Average of 0.94 million m2/year 216
Slide 28: 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 2018 2019 2020 2021 Source: Compiled by asset management
Slide 29: 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 （pt） (yen) 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
Slide 30: NBF's Competitive Advantages
6. NBF’s Competitive Advantages 29
Slide 31: 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 32: 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) 11,848 11,274 11,684 12,000 11,126 11,011 11,000 10,064 10,887 10,986 9,904 9,836 10,283 10,560 9,513 9,695 9,650 9,612 8,562 8,645 9,370 8,126 8,427 8,397 8,867 9,129 9,000 8,645 8,446 8,523 7,747 8,152 8,001 7,68
Slide 33: The Largest J-REIT in Size
6-2 The Largest J-REIT in Size (As of December 31, 2021) ●Market Capitalization Ratio of J-REITs (Billion yen) 1,107.1 billion yen by Type 1,200 1,100 Office buildings 1,000 J-REIT Total Market Capitalization 18.1% 900 … 16,995.7 billion yen 800 Diversified and hybrid 700 45.4% 600 Logistics 21.0% 5
Slide 34: A Portfolio Focused on Tokyo
6-3 A Portfolio Focused on Tokyo ● Investment Ratio by Area(Acquisition price basis) 23 Wards of Tokyo Central 5 Wards of Tokyo (As of December 31, 2021） Other Cities 149.8 billion yen 23 Wards of Tokyo (10.8%) 1,146.5 billion yen Other (82.9%) Greater Tokyo Shinjuku Mitsui Bldg. (Shinjuku-ku, Tokyo
Slide 35: Collaboration with Sponsor (Mitsui Fudosan Group) (1/4) Pipeline
6-4 Collaboration with Sponsor (Mitsui Fudosan Group) (1/4) Pipeline ●Total Acquisitions by Seller ●Co-Existence Model with Mitsui Fudosan Group Since our IPO, we have acquired approximately 70% of our properties from the Mitsui Fudosan Own Group (acquisitions and brokerage). Manage (Billion yen) 1,
Slide 36: Collaboration with Sponsor (Mitsui Fudosan Group) (2/4) Portfolio
6-4 Collaboration with Sponsor (Mitsui Fudosan Group) (2/4) Portfolio Portfolio (70 properties) after property replacement Investment ratio by area Acquisition price per property Percentage from Mitsui Fudosan（ML etc) \40.0bn ~ 23 Wards of Tokyo \20.0bn - <\40.0bn Other Greater Tokyo <\20.0bn Aver
Slide 37: Collaboration with Sponsor (Mitsui Fudosan Group) (3/4) Leasing
6-4 Collaboration with Sponsor (Mitsui Fudosan Group) (3/4) Leasing ●Average Occupancy Rate during the Period & Total Rentable Area (%) (10 thousand ㎡) 100 99.3 99.5 99.5 99.4 99.4 210 NBF’s Average occupancy rate during the period (nationwide) Note 1 (left scale) 98.7 98.8 98.8 Reference: Average m
Slide 38: Collaboration with Sponsor (Mitsui Fudosan Group) (4/4) Property Management
Collaboration with Sponsor (Mitsui Fudosan Group) (4/4) 6-4 Property Management Support from both Nippon Building Fund Management and NBF Office Management NBFOM Strengths and Features ●Strong relationships with existing tenants Nippon Building Fund Build relationships with existing tenants as NBF’s
Slide 39: Stable Financial Management
6-5 Stable Financial Management ●LTV & Long-Term Fixed-Rate Debt Ratio ●Average Maturity (Long-Term Interest-Bearing Debt) (%) (years) 100 7 6 95.1 5 6.08 90 92.9 93.5 93.6 95.1 5.60 5.62 5.76 93.3 92.6 5.54 5.53 5.35 91.7 4 5.24 Target : 90% or higher for the long-term 3 80 fixed-rate debt ratio 2
Slide 40: ESG Initiatives
7. ESG Initiatives (NBF and NBFM) 39
Slide 41: ESG Initiatives Policy
7-1 ESG Initiatives Policy NBF’s basic approach is to obtain the following external evaluations and certifications, and to support and participate in international initiatives. NBF recognizes that consideration for ESG is an important issue in real estate investment management. Based on the Mitsui F
Slide 42: Setting Materiality and KPI
7-2 Setting Materiality and KPI Identifying Materiality Extracted important social issues for stakeholders and NBF and identified materiality Green building certification CO2 emission intensity 46% reduction by 2030 compared to 2013 100% KPI coverage and numerical Water consumption 5% reduction by 2
Slide 43: Environment Initiatives
7-3 Environment Initiatives Environment Initiatives to Improve Environmental Performance • All executives and employees of the asset management company promote ESG and create an internal system that ensures the PDCA cycle is implemented. • We aim to reduce energy-derived CO² emissions by 46% or more
Slide 44: Social Initiatives for Tenants and NBFM Employees
7-4 Social Initiatives for Tenants and NBFM Employees Social Implementation of initiatives for tenants and communities Support for Employees during COVID-19 Pandemic Implementation of disaster prevention measures A Safe Work Environment ● Emergency generator inspection / update • Implemented COVID-1
Slide 45: Governance Initiatives
7-5 Governance Initiatives Governance NBFM has established a governance structure such as with its Compliance Committee, Risk Management Meeting, Investment Review Meeting and Executive Board, and endeavors to thoroughly implement risk management and compliance in its operations and improve corporat
Slide 46: Appendix
og Appendix NBF 45
Slide 47: Top 10 Tenants / Tenants by Industry
8-1 Top 10 Tenants (Leased Floor Space Basis) /Tenants by Industry ●Top 10 Tenants (Leased Floor Space Basis) ●Tenants by Industry2 （As of December 31, 2021) （As of December 31, 2021) Other Ratio of Total Warehousing 8.6% Leased Areas Tenant Name Leased Property Rentable &Transportation 2.1% (㎡) Are
Slide 48: Floor Space of Tenants Moving in and out by Property (2H/2021)
NBF Kumamoto Bldg. Hakata Gion M-SQUARE NBF Matsuyama Nichigin-mae Bldg. Hiroshima Fukuromachi Bldg. NBF Hiroshima Tatemachi Bldg. Other Cities Sun Mullion NBF Tower Sakaisuji-Honmachi Center Bldg. Shinanobashi Mitsui Bldg. Nakanoshima Central Tower Aqua Dojima NBF Tower Number in parenthesises is a
Slide 49: Property Age
8-3 Property Age 1H/2021 2H/2021 （40th Period end） （41st Period end） 8.7% 13.4% 43.8% 47.3% Average Property Age Average Property Age 23.2 years 23.0 years 43.9% 42.8% 10 years or less 11-20 years Over 20 years 48
Slide 50: Financial Management
8-4 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） 99.6 （％） 97.5 97.7 600 95.1 95.1 100 95.2 95.0 95.2 95.2 95.1 92.9 94.2 93.8 94.0 92.6 92.9
Slide 51: Lenders & Borrowings
8-5 Lenders & Borrowings （Million yen） 1H/2021 2H/2021 Repayment Lender Other 40th Period End 41st Period End Method Development Bank of Japan Inc. 79,500 79,500 MUFG Bank,LTD. 79,000 79,000 Sumitomo Mitsui Banking Corporation 67,000 67,000 Sumitomo Mitsui Trust Bank, Ltd. 44,000 44,000 Sumitomo Lif
Slide 52: Overview of Unit Ownership
8-6 Overview of Unit Ownership Ownership by Unitholder Number of Unitholders by Type Jun. 30, 2021 Dec. 31, 2021 PoP Jun. 30, 2021 Dec. 31, 2021 (40th Period end) (41st Period end) Change PoP Change Unitholder Category Unitholder Category (40th Period end) (41st Period end) Units % Units % Units Uni
Slide 53: Historical Summary of Main Management Indicators and Other Data
8-7 Historical Summary of Main Management Indicators and Other Data 37th Period 38th Period 39th Period 40th Period 41st Period 2H/2019 1H/2020 2H/2020 1H/2021 2H/2021 Operating revenues (Million yen) 39,134 38,591 41,747 46,213 50,334 Note 1: NOI from property leasing activities does not include su
Slide 54: Property Portfolio Overview (1/2) (23 Wards of Tokyo)
8-8 Property Portfolio Overview (1/2)(23 Wards of Tokyo) ●23 Wards of Tokyo Occupancy Total Occupancy Total Total Total Leased Total Total Leased Rate at Number Rate at Number Property Name Rentable Area (㎡) PML (%) Property Name Rentable Area (㎡) PML (%) End of of End of of Area (㎡) (incl. sublease
Slide 55: Property Portfolio Overview (2/2) (Other Greater Tokyo & Other Cities)
8-8 Property Portfolio Overview (2/2)(Other Greater Tokyo & Other Cities) ●Other Greater Tokyo ●Other Cities Occupancy Total Occupancy Total Total Total Leased Total Total Leased Rate at Number Rate at Number Property Name Rentable Area (㎡) PML (%) Property Name Rentable Area (㎡) PML (%) End of of E
Slide 56: Appraisal Value (1/3) (23 Wards of Tokyo)
8-9 Appraisal Value(1/3)(23 Wards of Tokyo) ●23 Wards of Tokyo 2H/2021 41st Period End 1H/2021 40th Period End Direct Direct Unrealized Gain PoP Change in Acquisition Price (1) (Loss) Appraisal Value Property Name (2) Capitalization DCF Method (3) Capitalization DCF Method （million yen） Book Value a
Slide 57: Appraisal Value (2/3) (23 Wards of Tokyo)
8-9 Appraisal Value(2/3)(23 Wards of Tokyo) 2H/2021 41st Period End 1H/2021 40th Period End Direct Direct Unrealized Gain PoP Change in Acquisition Price (1) (Loss) Appraisal Value Property Name (2) Capitalization DCF Method (3) Capitalization DCF Method （million yen） Book Value at Method Method (2)
Slide 58: Appraisal Value (3/3) (Other Greater Tokyo & Other Cities)
8-9 Appraisal Value(3/3)(Other Greater Tokyo & Other Cities) ●Other Greater Tokyo / Other Cities 2H/2021 41st Period End 1H/2021 40th Period End Unrealized Gain PoP Change in Acquisition Price (1) Direct Direct (Loss) Appraisal Value Property Name (2) Capitalization DCF Method (3) Capitalization DCF
Slide 59: Revenue by Property (1/3) (23 Wards of Tokyo)
8-10 Revenue by Property (1/3)(23 Wards of Tokyo) ●23 Wards of Tokyo (million yen） NBF NBF NBF Kowa IIDABASHI Nishi- Celestine NBF NBF Toranomon NBF Shinjuku Shinjuku Roppongi GranTokyo Shinagawa Shiba G-BASE Shibuya Ginza Street Nishi- River City GRAND Shinjuku Shiba Mitsui Platinum COMODIO Kotohir
Slide 60: Revenue by Property (2/3)
8-10 Revenue by Property (2/3)(23 Wards of Tokyo & Other Greater Tokyo) ●23 Wards of Tokyo (million yen） Nakanosakaue Ueno Osaki Bright Osaki Bright NBF Higashi Toyo-cho NBF NBF Gate City NBF Toyosu NBF Toyosu Nakameguro NBF Ueno Sunbright East Tower Core - Bright Tower Ikebukuro Gotanda Center Bldg
Slide 61: Revenue by Property (3/3) (Other Cities)
8-10 Revenue by Property(3/3)(Other Cities) ●Other Cities (million yen） Sumitomo NBF NBF NBF Sapporo NBF Niigata Nagoya Nagoya Nakanoshima Sakaisuji- Hiroshima NBF Sapporo NBF Unix Mitsui NBF Nagoya Aqua Dojima Shinanobashi Sun Mullion Hiroshima Matsuyama Hakata Gion Minami Nijo Telecom Mitsui New M
Slide 62: Portfolio Map
Portfolio Map NBF Greater Tokyo outside the 23 wards ] Other Greater Tokyo 8 Properties ¥85.8 billion 7 Acqutsition Price (Total) 73 Properties ¥1 382. 2eition @ investment by Region Regional Cities 10.8% Greater Tokyo outside the 23 wards 6.2% 23 Wards of Tokyo 48 Properties ¥1 5 1 46 5 billion Cen
Slide 63: Properties (1/4) (23 Wards of Tokyo)
8-12 Properties (1/4)(23 Wards of Tokyo) 1 Shinjuku Mitsui Bldg. 4 5 Nishi-Shinjuku Mitsui Bldg. 9 NBF Platinum Tower 13 NBF Shibuya Garden Front 17 River City M-SQUARE Nishi-Shinjuku 2-1- 24-1, Nishi- 17-3, Shirokane 1-6, Tsukuda 2- Location Location Location 25-18, 26-3, Shibuya Location Location
Slide 64: Properties (2/4) (23 Wards of Tokyo)
8-12 Properties (2/4) (23 Wards of Tokyo) 21 Yotsuya Medical Bldg. 25 NBF Akasaka Sanno Square 29 NBF Higashi-Ginza Square 33 Ryukakusan Bldg. 37 NBF Toyosu Canal Front Location 17-4, Samoncho, 2-12, Akasaka 2- 13-14, Tsukiji 1- 5-12, Higashi- 6-52, Toyosu 5- Location Location Location Location chom
Slide 65: Properties (3/4) (23 Wards of Tokyo & Other Greater Tokyo)
8-12 Properties (3/4) (23 Wards of Tokyo & Other Greater Tokyo) 41 Nakameguro GT Tower 45 Higashi Gotanda Square 49 Chofu South Gate Bldg. 53 Tsukuba Mitsui Bldg. Location 1-1, Kami-Meguro 10-2, Higashi- Location 48-26, Kojimacho 6-1, Takezono 1- Location Location Gotanda chome, 2-chome, Meguro- 2-c
Slide 66: Properties (4/4) (Other Cities)
8-12 Properties (4/4)(Other Cities) 57 Sapporo L-Plaza 61 Nagoya Mitsui New Bldg. 65 Nakanoshima Central Tower 69 NBF Hiroshima Tatemachi Bldg. 73 NBF Kumamoto Bldg. 28, Kita Hachijo 24-30 Meieki- Location 2-7, Nakanoshima 2-27, Tatemachi, 3-20, Location Location Location Nishi minami 1chome, 2-chom
Slide 67: Disclaimer
Disclaimer This English language notice is a translation of the Japanese language Investor Presentation dated February 16, 2021 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