Nippon Building Fund, Inc. · TSE:8951
Nippon Building Fund — H1 2019 Earnings Presentation
69 slides from Nippon Building Fund's earnings presentation, Aug 16, 2019
Slide 1: January-June 2019 (36th Period) Investor Presentation
January-June 2019 (36th Period) Investor Presentation —E——— EEE SS NBF Nippon Building Fund Inc. August 16, 2019 Nippon Building Fund Nippon Building Management Ltd.
Slide 2: Contents
CONTENTS 1. Financial Highlights 7. ESG initiaives 1-1 Financial Highlights (1/3) 3 7-1 ESG Initiatives（Highlight） _38 1-1 Financial Highlights (2/3) 4 7-2 ESG Initiative Policy _39 1-1 Financial Highlights (3/3) 5 7-3 Environment Initiatives(1/3) _40 7-3 Environment Initiatives(2/3) _41 2. Financia
Slide 3: 1. Financial Highlights
1. Financial Highlights 2
Slide 4: Financial Highlights (1/3)
1-1 Financial Highlights （1/3） Actual Forecast 1H/2019 2H/2019 1H/2020 (36th Period) (37th Period) (38th Period) PoP Change Total operating revenues 38,529 million yen +1,061 million yen +2.8% 39,201 million yen 38,389 million yen Operating income 16,731 million yen +699 million yen +4.4% 16,835 mil
Slide 5: Financial Highlights (2/3)
1-1 Financial Highlights （2/3） Average Occupancy Unrealized gain Total assets on appraisal value Location Rate during Note 1 the Period Assets 23 wards of Tokyo:81.4％ 1,043.7 billion yen 262.1 billion yen Central 5 wards of Tokyo: 99.5% 51.8％ Long-term fixed-rate Average LTV Average maturity debt ra
Slide 6: Financial Highlights (3/3)
1-1 Financial Highlights （3/3） Steady growth in DPU and NAV(based on the strong real estate market) Distributions per Unit (DPU) NAV per Unit （yen） （yen） 12,000 600,000 11,000 558,516 10,560 545,190 10,283 550,000 537,915 523,821 10,000 9,650 9,370 505,308 9,129 497,513 8,867 500,000 9,000 8,000 450
Slide 7: 2. Financial Results
2. Financial Results 【Definition of Term】 Fiscal period Terms Definitions Property Name G-BASE TAMACHI 3 properties 3 properties acquired (including additional acquisition) during the period Osaki Bright Core - Bright Plaza（additional acquisition） acquired ended June 30, 2019 (36th Period). Nakanosa
Slide 8: 1H/2019 (36th Period) Statement of Income
2-1 1H/2019 (36th Period) Statement of Income (million yen) ●Summary of PoP Change （ million yen ） 2H/2018 1H/2019 PoP Change (35th Period) (36th Period) Amount Percentage Total operating revenues: +1,061 Total operating revenues 37,468 38,529 1,061 2.8% Rental revenues +394 Operating revenues 37,46
Slide 9: 1H/2019 (36th Period) Balance Sheet
2-2 1H/2019 (36th Period) Balance Sheet ●Summary of PoP Change Assets (million yen ） （ million yen ） December 31,2018 June 30,2019 PoP Change (35th Period end) (36th Period end) Amount Percentage Total assets: +18,871 Current assets 21,408 19,088 -2,319 -10.8% Current assets -2,319 Cash and cash equ
Slide 10: Memo
dl NBF (MEMO)
Slide 11: 3. Operating Results & Outlook
3. Operating Results & Outlook 10
Slide 12: Internal Growth (1/3)
3-1 Internal Growth(1/3) Low moving-out ratio and high occupancy continuing * Tenant move-in’s and out’s to both be around 1.5% in the next 2 periods (2H/’19 and 1H/’20), when excluding NBF Shinagawa Tower ●Average occupancy rate during the period, the percentage of floor space of tenants moving in
Slide 13: Internal Growth (2/3)
3-2 Internal Growth(2/3) Upward rent revisions continuing for 10 periods in a row (for existing properties) ●Breakdown of PoP Change in Rental Revenues from Existing Properties (rent revisions and replacement, etc.) （％） （ Forecast ） 3.0 Rent revision Replacement, etc. Rent revision ＋ Replacement, et
Slide 14: Internal Growth (3/3) Strategic initiatives for NBF Shinagawa Tower
3-3 Internal Growth(3/3) Strategic intiatives for NBF shinagawa Tower Internal growth and improved competitiveness through tenant replacement Leasing initiatives Initiatives to improve building specifications • Expanded rentable area Longer contract terms • Environment-friendly lighting. Water-savin
Slide 15: External Growth
3-4 External Growth Continued replacement of properties, to improve mid-to-long term profitability Improvement of portfolio performance 1H/2019 (36th Period) ・ 2H/2019 (37th Period) （2H/2018） （1H/2019） 35th 36th 【Nakanosakaue 【Nishi-Shinjuku Mitsui 【Kowa Nishi-Shinbashi Asset Scale Sunbright Twin】
Slide 16: Finance (1/2)
3-5 Finance （1/2） Diversified maturities, stabilized funding, lowered cost of funding ●New Funding and Repayment ●Financial Data 1H/2019 (36th Period) Long-Term Borrowings 2H/2018 1H/2019 PoP & Investment Corporation Bonds (35th Period) (36th Period) Change Repayment Overview New Funding Overview LT
Slide 17: Finance (2/2)
3-5 Finance （2/2） ●Long-Term Borrowings Procured in 1H/2019 (36th Period) ●Interest-Bearing Debt （Million yen） Financing Amount Term Fixed/ Interest Lender 2H/2018 1H/2019 PoP Date (Million yen） (Years) Floating Rate (35th Period) (36th Period) Change 2019/1/25 Sumitomo Mitsui Trust Bank, Ltd. 5,000
Slide 18: Appraisal Value Assessment
3-6 Appraisal Value Assessment Appraisal values continue to improve(backed by strong leasing and transaction market) ●Appraisal Value ●Appraisal Value & Book Value (Billion yen) 2H/2018 1H/2019 PoP 1,400 (35th Period end) (36th Period end) Change Book value (period end) Number of properties 72 prope
Slide 19: Forecast
Forecast NBF 18
Slide 20: 2H/2019, 1H/2020 Forecasts
4-1 2H/2019 (37th Period), 1H/2020 (38th Period) Forecasts (Million yen） （Million yen） 1H/2019 2H/2019 1H/2020 ●Summary of PoP Change 37th period 38th period PoP Change PoP Change （Actual） （Forecast） (Forecast) Total operating revenues +672 -811 (36th Period） (37th Period） Amount Percentage (38th Pe
Slide 21: (Reference) Performance Forecast
（Reference） Performance Forecast Steady growth of core rental revenues and leasing income Rental revenues Operating income from property leasing activities （Million yen） Previous period Internal growth External growth Rental revenues （Million yen） Other income 19,000 35,500 35,483 35,232 18,522 18,5
Slide 22: Memo
dl NBF (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） Robust demand for Tokyo offices. Asking rents up for 67 months in a row ●Market Rents for Office Buildings in Tokyo Business Districts* (Average Asking Rent & Average Vacancy Rate) （Yen/tsubo） (％） 9.43％ 25,000 （‘12.6） 10.00 8.57％ 22,901yen （‘03.
Slide 25: Trends in the Office Building Leasing Market (2/2)
5-1 Trends in the Office Building Leasing Market （2/2） Tenant demand outpacing new supply ●New Supply of Large-Scale Office Buildings* in the 23 Wards of Tokyo （10 thousand m2） Source: Compiled by asset management company using data from Mori Building Co., Ltd. as of April 16, 2019 300 （Forecast） 25
Slide 26: Trends in the Real Estate Trading Market
5-2 Trends in the Real Estate Trading Market Yield benchmarks for real estate transactions continue to compress ●Real Estate Trading Value (Office Buildings) （Billion yen） 2,500 First half Second half 2,000 1,500 10,000 5,000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20
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 Steady rise in unit price, thanks to strong leasing market and low interest rates worldwide ●NBF Unit Price ＆ TSE REIT Index （yen） （pt） 1,200,000 4,000 900,000 NBF unit price (left scale) NBF（左軸） TSE REIT Index (right scale
Slide 28: Memo
dl NBF (MEMO) 27
Slide 29: 6. 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 28
Slide 30: 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) （Billion yen） Central 5 Wards of Tokyo (incl. in abo
Slide 31: 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） 11,274 10,887 12,000 11,126 9,695 10,064 10,283 10,560 9,904 9,836 9,650 9,513 8,645 8,523 9,612 8,562 8,645 9,370 8,126 8,427 8,397 8,867 9,129 9,000 7,683 8,446 7,747 8,152 8,001 7,592 7,569 7,600 7,740 7,877 7,6
Slide 32: The Largest J-REIT in Size
6-2 The Largest J-REIT in Size Ratio of J-REITs （As of June 30, 2019） ●Market Capitalization by Type （Billion yen） 1,200 Office buildings 1,042.0 billion yen 22.8% 1,000 J-REIT Total Market Capitalization … 14,556.1 billion yen 800 Diversified and hybrid 44.8% Residentia 8.0% 600 Commercial faciliti
Slide 33: 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, 2019) (20 properties over 10,000 tsubo) *The size of the dot for each property Continued Appraisal indicates amount of NOI for the 36th Other Cities Value (B
Slide 34: 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 35: 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 （％） （10 thousand ㎡） 100 99.3 99.5 99.5 210 NBF’s Average occupancy rate during the period (nationwide)Note 1 (left scale) 98.7 98.8 Reference: Average market occupancy
Slide 36: Collaboration with Sponsor (3/3) Property Management
Collaboration with Sponsor (Mitsui Fudosan Group) (3/3) 6-4 Property Management ●Support from both Nippon Building Fund Management and NBF Office Management NBFOM Strengths and Features Nippon Building Fund ●Strong relationships with existing tenants NBFOM is NBF’s dedicated PM company. It builds re
Slide 37: Stable Financial Management
6-5 Stable Financial Management ●LTV & Long-Term Fixed-Rate Debt Ratio ●Average Maturity (Long-Term Interest-Bearing Debt) （％） （Years） 6 100 5 5.60 5.54 5.16 5.15 5.22 5.24 90 95.2 94.0 95.2 4 4.99 93.8 92.5 93.3 92.9 92.6 4.11 Target : 90% or higher for the long-term 3 80 fixed-rate debt ratio 2 1
Slide 38: ESG Initiatives
ESG initiaives NBF 37
Slide 39: ESG Initiatives (Highlight)
7-1 ESG Initiatives（Highlight） Participated in GRESB from 2015 Initiatives for reduce CO2 Approx. 60% reduction* of CO2 emissions will be expected to be 2018 GRESB achieved by LED lighting installation by June 2020 (the 38th fiscal Real Estate Assessment period). 【Case Examples】 "Green Star" evalu
Slide 40: ESG Initiative Policy
7-2 ESG Initiative Policy NBFM are promoting ESG initiatives, such as the reduction of environmental load in portfolio management, considerations for stakeholders such as local communities and employees, etc., in accordance with the Basic Policy for ESG Initiatives. NBFM, in recognition of the impor
Slide 41: Environment Initiatives (1/3)
7-3 Environment Initiatives （1/3） ● Initiatives for Green Building Certification ・NBF endeavors to utilize DBJ Green Building Certifications in an aim to increase the credibility and objectivity of its efforts to reduce environmental load as well as increase the value of its buildings in the mid-to-
Slide 42: Environment Initiatives (2/3)
7-3 Environment Initiatives （2/3） ● Environment Initiatives : Some Examples Improvement of Environmental Performance and Physical Environmental Performance Security through Building / Facility Renovations / Retrofits ●Environmental performance indicators are improved except Water consumption intensi
Slide 43: Environment Initiatives (3/3)
7-3 Environment Initiatives （3/3） ● Promoting LED lighting（tenant areas・common areas） Objectives Case Examples ●Reduction of CO2 emissions. NBF has completed LED replacement at 12 buildings during the 35th and 36th fiscal period. ●Improvement in asset value by green building initiative ●Meeting Tena
Slide 44: Social Initiatives (1/2)
7-4 Social Initiatives(1/2) ● Social Initiatives : Some Examples Initiatives for Local Communities Building management with consideration for a historical and cultural site As a part of local communities, NBF holds initiatives such as Toranomon Kotohira Tower was developed with 【 Toranomon lunch
Slide 45: Social Initiatives (2/2)
7-4 Social Initiatives(2/2) ● Initiatives for NBFM Employees: Some Examples Securing talented professionals Initiatives for Employees’ Health and Well-being NBFM takes in human resources who are experts in property NBFM has conducted workplace reform in order to improve investment and management
Slide 46: Governance Initiatives
7-4 Governance Initiatives ・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 corporate governan
Slide 47: Memo
dl NBF (MEMO) 46
Slide 48: Appendix
og Appendix NBF 47
Slide 49: Top 10 Tenants / Tenants by Industry
1 Top 10 Tenants (Leased Floor Space Basis) /Tenants by Industry ●Top 10 Tenants (Leased Floor Space Basis) ●Tenants by Industry2 Warehousing & （As of June 30, 2019) Transportation Other 1.6% 8.5% Ratio of Total Other products Leased Areas Tenant Name Leased Property Rentable (㎡) 2.1% Service 20.0%
Slide 50: 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 NBF Hiroshima Tatemachi Bldg. Number in parenthesis is an average of total rentable area at the end of each month Sun Mullion NBF Tower Sakaisuji-Honmachi Center Bldg. Shinanobashi Mitsu
Slide 51: Property Age
3 Property Age 2H/2018 1H/2019 （35th Period） （36th Period） 17.5% 16.8% 34.9% 42.5% Average Property Age Average Property Age 18.82 years 18.76 years 40.7% 47.6% 10 years or less 11-20 years Over 20 years 50
Slide 52: Financial Management
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 97.7 600 100 95.2 95.0 95.2 93.3 92.6 92.9 95.2 95.1 92.9 94.2 93.8 94.0 97.7 9
Slide 53: Lenders & Borrowings
5 Lenders & Borrowings （Million yen） 2H/2018 1H/2019 Repayment Lender Other 35th Period End 36th Period End Method Short-Term Borrowings Subtotal - - Development Bank of Japan Inc. (Note 1) 77,125 76,750 MUFG Bank,LTD. 77,000 72,000 Sumitomo Mitsui Trust Bank, Ltd. 39,000 39,000 Sumitomo Mitsui Bank
Slide 54: Overview of Unit Ownership
6 Overview of Unit Ownership Ownership by Unitholder Number of Unitholders by Type Dec. 31, 2018 Jun. 30, 2019 Dec. 31, 2018 Jun. 30, 2019 PoP PoP Change Uniholder Category (35th Period end) (36th Period end) Uniholder Category (35th Period end) (36th Period end) Change Units % Units % Units Units %
Slide 55: Historical Summary of Main Management Indicators and Other Data
7 Historical Summary of Main Management Indicators and Other Data 32nd Period 33rd Period 34th Period 35th Period 36th Period 1H/2017 2H/2017 1H/2018 2H/2018 1H/2019 Operating revenues (Million yen) 36,409 42,125 36,635 37,468 38,529 Note 1: NOI from property leasing activities does not include such
Slide 56: Property Portfolio Overview (1/2) – 23 Wards of Tokyo
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. subleases
Slide 57: Property Portfolio Overview (2/2) – Other Greater Tokyo & Other Cities
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 En
Slide 58: Appraisal Value (1/3) – 23 Wards of Tokyo
9 Appraisal Value（1/3） – 23 Wards of Tokyo ● 23 Wards of Tokyo 1H/2019 36th Period End 2H/2018 35th Period End Unrealized Gain PoP Change in Acquisition Price (1) Direct Direct (Loss) Appraisal Value Property Name (2) Return DCF Method (3) Return DCF Method （million yen） Book Value at (2) - (1) (2)
Slide 59: Appraisal Value (2/3) – 23 Wards of Tokyo
9 Appraisal Value（2/3） – 23 Wards of Tokyo 1H/2019 36th Period End 2H/2018 35th Period End Unrealized Gain PoP Change in Acquisition Price (1) Direct Direct (Loss) Appraisal Value Property Name (2) (3) （million yen） Book Value at Return DCF Method Return DCF Method (2) - (1) (2) - (3) Appraisal Valu
Slide 60: Appraisal Value (3/3) – Other Greater Tokyo & Other Cities
9 Appraisal Value（3/3） – Other Greater Tokyo & Other Cities ●Other Greater Tokyo / Other Cities 1H/2019 36th Period End 2H/2018 35th Period End Unrealized Gain PoP Change in Acquisition Price (1) Direct Direct (Loss) Appraisal Value Property Name (2) (3) （million yen） Book Value at Return DCF Method
Slide 61: Revenue by Property (1/3) – 23 Wards of Tokyo
10 Revenue by Property (1/3) – 23 Wards of Tokyo ●23 Wards of Tokyo (Million yen） NBF Kowa NBF NBF NBF Toranomon NBF NBF NBF Shinjuku NBF NBF Nishi- Celestine Nishi- Roppongi Shinagawa Shiba Minami- G-BASE Shibuya Ginza Street River City Shinkawa Shinjuku Shiba Mitsui Platinum COMODIO Kotohira Ochan
Slide 62: Revenue by Property (2/3)
10 Revenue by Property (2/3) – 23 Wards of Tokyo & Other Greater Tokyo ●23 Wards of Tokyo (Million yen） Nakano NBF Toyosu Ueno Osaki Bright NBF Higashi Toyo-cho NBF NBF sakaue NBF Toyosu Nakameguro NBF Ueno Garden Core - Ikebukuro Gotanda Center Bldg. Ikebukuro Ikebukuro Sunbright Canal Front GT Tow
Slide 63: Revenue by Property (3/3) – Other Cities
10 Revenue by Property (3/3) – Other Cities ●Other Cities (Million yen） Sumitomo NBF NBF NBF Sapporo Nakanoshima Sakaisuji- Hiroshima NBF Sapporo NBF Unix NBF Niigata Mitsui NBF Nagoya Aqua Dojima Shinanobashi Sun Mullion Hiroshima Matsuyama Hakata Gion Minami Nijo Central Honmachi Fukuromachi Kumam
Slide 64: Portfolio Map
Portfolio Map Other Cities 1 G Properties ¥127.Gition 23 Wards of Tokyo 47 Properties ¥919.1 ition e Other Greater Tokyo 8 Properties ¥82 . 6 billion 63 NBF Nippon Building Fund Acquisition Price (Total) 71 Properties ¥1 1 29.4 billion @ Investment by Region Other Cities other 11-63% Groater Tokyo 7
Slide 65: Properties (1/4) – 23 Wards of Tokyo
12 Properties (1/4) – 23 Wards of Tokyo 1 Roppongi T-CUBE 六本木ティーキューブ 55 Shiba NBF Tower 芝NBFタワー 9 G-BASE TAMACHI 13 NBF Ginza Street Bldg. 13 17 Kowa Nishi-Shinbashi Bldg. B 1-1, Roppongi 1-30, Shiba 7-5, Ginza 5- 14-1, Nishi- 所 在 地 Location 東京都港区六本木 所 在 地 Location 東京都港区芝大門一丁目 Location 29-11,Shiba L
Slide 66: Properties (2/4) – 23 Wards of Tokyo
12 Properties (2/4) – 23 Wards of Tokyo 21 Yotsuya Medical Bldg. 25 NBF Akasaka Sanno Square 29 Panasonic Tokyo Shiodome Bldg. 33 Jingumae M-SQUARE 37 NBF Toyosu Canal Front Location 20, Samoncho, 2-12, Akasaka 2- 5-1, Higashi- 4-16, Jingumae 1- 6-52, Toyosu 5- Location Location Location Location ch
Slide 67: Properties (3/4) – 23 Wards of Tokyo & Other Greater Tokyo
12 Properties (3/4) – 23 Wards of Tokyo & Other Greater Tokyo 41 Osaki Bright Core - Bright Plaza 45 Toyo-cho Center Bldg. 48 Chofu South Gate Bldg. 52 Tsukuba Mitsui Bldg. Bright Core: Location 48-26, Kojimacho 6-1, Takezono 1- Location Location 3-2, Toyo 2-chome, Location 5-15, Kita-Shinagawa 5- c
Slide 68: Properties (4/4) – Other Cities
12 Properties (4/4) – Other Cities 56 Sapporo L-Plaza 60 Sumitomo Mitsui Banking Nagoya Bldg. 64 Shinanobashi Mitsui Bldg. 68 Hiroshima Fukuromachi Bldg. 28, Kita Hachijo 18-19, Nishiki 2- 11-7, 5-25, Fukuromachi, Location Location Location Location Nishi chome, Utsubohonmachi Nakaku, 3-chome, kita-
Slide 69: Disclaimer
Disclaimer This English language notice is a translation of the Japanese language Investor Presentation dated August 16, 2019 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 acc