Nippon Building Fund, Inc. · TSE:8951
Nippon Building Fund — H2 2019 Earnings Presentation
67 slides from Nippon Building Fund's earnings presentation, Feb 18, 2020
Slide 1: Investor Presentation July-December 2019 (37th Period)
July-December 2019（37th Period） Investor Presentation February 18, 2020 Nippon Building Fund Inc. Nippon Building Fund Management Ltd. 0
Slide 2: Contents
CONTENTS 1. Financial Highlights 7. ESG initiaives 1-1 Financial Highlights (1/3) 3 7-1 ESG Initiatives（Highlight） _37 1-1 Financial Highlights (2/3) 4 7-2 ESG Initiative Policy _38 1-1 Financial Highlights (3/3) 5 7-3 Environmental Initiatives(1/2) _39 7-3 Environmental Initiatives(2/2) _40 2. Fina
Slide 3: Financial Highlights
1. Financial Highlights 2
Slide 4: Financial Highlights (1/3)
1-1 Financial Highlights （1/3） Actual Forecast 2H/2019 1H/2020 2H/2020 (37th Period) (38th Period) (39th Period) PoP Change Total operating revenues 39,134 million yen +604 million yen +1.6% 38,732 million yen 40,005 million yen Operating income 16,916 million yen +185 million yen +1.1% 16,402 milli
Slide 5: Financial Highlights (2/3): Assets, Debt, Equity
1-1 Financial Highlights （2/3） Asset Scale Unrealized gain Average Occupancy Location (Total Acquisition Price) on appraisal value (Rate during the Period) Note 1 Assets 23 wards of Tokyo:81.4％ 1,132.7 billion yen 274.0 billion yen Central 5 wards of Tokyo: 99.4% 51.7％ Long-term fixed-rate Average L
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 11,011 566,917 558,516 11,000 10,560 545,190 10,283 550,000 537,915 523,821 10,000 9,650 9,370 505,308 9,129 500,000 9,000 8,000 45
Slide 7: Financial Results: Definition of Terms
2. Financial Results 【Definition of Term】 Fiscal period Terms Definitions Property Name G-BASE TAMACHI (36th Period acquisition) 1 Property acquired / Additional acquisitions at 2 properties during Osaki Bright Core - Bright Plaza (36th Period additional acquisition) 6 properties the period ended Ju
Slide 8: 2H/2019 (37th Period) Statement of Income
2-1 2H/2019 (37th Period) Statement of Income （million yen） ●Summary of PoP Change （million yen） 1H/2019 2H/2019 PoP Change Total operating revenues: +604 (36th Period) (37th Period) Amount Percentage Total operating revenues 38,529 39,134 604 1.6% Rental revenues +796 Operating revenues 38,050 39,1
Slide 9: 2H/2019 (37th Period) Balance Sheet
2-2 2H/2019 (37th Period) Balance Sheet Assets （million yen） ●Summary of PoP Change （million yen） June 30,2019 December 31,2019 PoP Change (36th Period end) (37th Period end) Amount Percentage Total assets: -1,011 Current assets 19,088 17,058 -2,030 -10.6% Current assets -2,030 Cash and cash equival
Slide 10: Memo
— Nippon Bufiding Func (MEMO)
Slide 11: Operating Results & Outlook
3. Operating Results & Outlook 10
Slide 12: Internal Growth (1/3): Low moving-out ratio and high occupancy
3-1 Internal Growth(1/3) Low moving-out ratio and high occupancy continuing ●Average occupancy rate during the period, the percentage of floor space of tenants moving in and out （％） （ Forecast ） （％） 15.0 100 98.7 99.3 99.5 99.5 98.2 99.4 97.9 99.2 98.9 98.8 10.0 98 96.8 Tenant move-in at NBF Shinaga
Slide 13: Internal Growth (2/3): Upward rent revisions
3-2 Internal Growth(2/3) Upward rent revisions at existing properties for 11 consecutive periods ● Breakdown of PoP Change in Rental Revenues from Existing Properties (rent revisions and replacement, etc.) （％） （ Forecast ） 2.0 1.0 0.0 -1.0 Rent revision Replacement, etc. Rent revision ＋ Replacement,
Slide 14: Internal Growth (3/3): The NBF Shinkawa Building
3-3 Internal Growth(3/3) The NBF Shinkawa Building Overview Outstanding Property Features • The current tenant of NBF Shinkawa Building plans to move out due to Feature 1 Highly convenient location contract expiration in November 2020 • Highly convenient location about 1.2 km from Tokyo Station • We
Slide 15: External Growth
3-4 External Growth Move ahead with additional acquisition of sectional ownership at three existing properties 【Osaki Bright Core – Bright Plaza】 (Additional acquisition) 【Nishi-Shinjuku Mitsui Bldg.】 (Additional acquisition) Location Shinjuku-ku, Tokyo Acquisition date July 26, 2019 Acquisition pri
Slide 16: Finance (1/2)
3-5 Finance （1/2） Diversified maturities, stabilized funding, lowered cost of funding ●New Funding and Repayment ●Financial Data 2H/2019 (37th Period) Long-Term Borrowings & Investment Corporation Bonds 1H/2019 2H/2019 PoP (36th Period) (37th Period) Change Repayment Overview New Funding Overview LT
Slide 17: Finance (2/2)
3-5 Finance （2/2） ●Long-Term Borrowings Procured in 2H/2019 (37th Period) ●Interest-Bearing Debt （Million yen） Financing Amount Term Fixed/ Interest 1H/2018 2H/2019 PoP Lender Date (Million yen） (Years) Floating Rate (36th Period) (37th Period) Change 2019/7/2 MUFG Bank,LTD. 5,000 10.0 years Fixed 0
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） 1,400 1H/2019 2H/2019 PoP (36th Period end) (37th Period end) Change Book value (period end) Appraisal value (period end)
Slide 19: Forecast
Forecast NBF 18
Slide 20: 1H/2020 and 2H/2020 Forecasts
4-1 1H/2020 (38th Period), 2H/2020 (39th Period) Forecasts (million yen） （ million yen） 2H/2019 1H/2020 2H/2020 ●Summary of PoP Change 38th period 39th period PoP Change PoP Change （Actual） （Forecast） (Forecast) (37th Period） (38th Period） Amount Percentage (39th Period） Amount Percentage Total oper
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） ・・・NBF Shinagawa Tower: Other income etc 36,500 36,1
Slide 22: Memo
— Nippon Bufiding Func (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 73 months in a row ●Market Rents for Office Buildings in Tokyo Business Districts* (Average Asking Rent & Average Vacancy Rate) （Yen/tsubo） （％） 25,000 9.43％ 10.00 8.57％ 22,901yen （‘12.6） （‘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 1,000 500 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Slide 27: NBF Unit Price, TSE REIT Index & 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 NBF unit price (left scale) TSE REIT Index (right scale) 900,000 3,000
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) （Million yen） Central 5 Wards of Tokyo (incl. in abo
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） 11,274 12,000 11,126 10,064 10,887 11,011 9,904 9,836 10,283 10,560 9,513 9,695 9,612 9,650 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 7,683 7,592 7,569 7,600 7,740 7,
Slide 31: The Largest J-REIT in Size
6-2 The Largest J-REIT in Size （As of December 31, 2019） ●Market Capitalization Ratio of J-REITs （Billion yen） by Type 1,200 1,122.5 billion yen Office buildings 22.1% 1,000 J-REIT Total Market Capitalization … 16,438.0 billion yen 800 Diversified and hybrid 45.3% Logistics 12.6% 600 400 Residential
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 December 31, 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 Valu
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 （％） （10 thousand ㎡） 100 99.5 99.5 210 NBF’s Average occupancy rate during the period (nationwide)Note 1 (left scale) 99.3 99.4 Reference: Average market occupancy rate
Slide 35: Collaboration with Sponsor (3/3) Property Management
6-4 Collaboration with Sponsor (Mitsui Fudosan Group) (3/3) 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 NBFOM is NBF’s dedicated PM company. It builds re
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 5 5.60 5.54 5.53 95.2 5.16 5.15 5.22 5.24 90 94.0 93.5 4 4.99 93.8 92.5 93.3 92.6 92.9 Target : 90% or higher for the long-term 3 fixed-rate debt ratio 80 2 1
Slide 37: ESG Initiatives
7. ESG initiatives （Initiatives by NBF and NBFM） 36
Slide 38: ESG Initiatives (Highlight)
7-1 ESG Initiatives（Highlight） Participated in GRESB since 2015 Initiatives for Environment "Green Star" evaluation, for the 5th consecutive year Various environmental performance indicators improved through the environmental initiatives. 2019 GRESB Real Estate Assessment Energy consumption CO2 emis
Slide 39: 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 40: Environmental Initiatives (1/2)
7-3 Environmental Initiatives (1/2) ● Environmental Initiatives: Some Examples Following the policies of “promoting energy efficiency and reduction of CO2 emissions” and “preserving water environment, and promoting resource saving and waste reduction”, NBF invests in facilities for energy efficien
Slide 41: Environmental Initiatives (2/2)
7-3 Environmental Initiatives (2/2) ● Promoting LED lighting（tenant areas・common areas） Objectives Case Examples ●Reduction of CO2 emissions. NBF has completed LED replacement at 18 buildings during the 36th and 37th fiscal period. ●Improvement in asset value by green building initiative ●Main Cases
Slide 42: Social Initiatives (1/2)
7-4 Social Initiatives (1/2) ● Social Initiatives : Some Examples Bldg. management with consideration Initiatives for Local Communities for a historical and cultural site As a part of local communities, NBF holds initiatives such as Toranomon Kotohira Tower was developed with 【 Toranomon lunchti
Slide 43: Social Initiatives (2/2)
7-4 Social Initiatives (2/2) ● Initiatives for NBFM Employees: Some Examples Securing talented professionals Initiatives to Promote Health and Well-being NBFM takes in human resources who are experts in property NBFM supports a diversity of working styles, e.g. using shared office investment and
Slide 44: Governance Initiatives
7-5 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 45: Memo
— Nippon Bufiding Func (MEMO) 44
Slide 46: Appendix
og Appendix NBF 45
Slide 47: 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 （As of December 31, 2019) Warehousing &Transportation Other 8.7% Ratio of Total Leased Property Leased Areas Rentable 1.7% Tenant Name (㎡) Service 21.5% Area (%) Other pr
Slide 48: 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 49: Property Age
3 Property Age 1H/2019 2H/2019 （36th Period） （37th Period） 16.8% 15.9% 42.4% 42.5% Average Property Age Average Property Age 18.8 years 19.2 years 40.7% 41.7% 10 years or less 11-20 years Over 20 years 48
Slide 50: 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 93.5 95.2 95.1 92.9 94.2 93.8 94.0 92.6 92.9 9
Slide 51: Lenders & Borrowings
5 Lenders & Borrowings （Million yen） 1H/2019 2H/2019 Repayment Lender Other 36th Period End 37th Period End Method Short- TermBorrowings Subtotal - - Development Bank of Japan Inc. 76,750 76,500 MUFG Bank,LTD. 72,000 69,000 Sumitomo Mitsui Trust Bank, Ltd. 39,000 39,000 Sumitomo Mitsui Banking Corpo
Slide 52: Overview of Unit Ownership
6 Overview of Unit Ownership Ownership by Unitholder Number of Unitholders by Type Jun. 30, 2019 Dec. 31, 2019 Jun. 30, 2019 Dec. 31, 2019 PoP PoP Change Uniholder Category (36th Period end) (37th Period end) Uniholder Category (36th Period end) (37th Period end) Change Units % Units % Units Units %
Slide 53: Historical Summary of Main Management Indicators and Other Data
7 Historical Summary of Main Management Indicators and Other Data 33rd Period 34th Period 35th Period 36th Period 37th Period Note 1: NOI from property leasing activities does not 2H/2017 1H/2018 2H/2018 1H/2019 2H/2019 include such items as gain or loss on sale of investment properties. Operating r
Slide 54: 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 55: 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 56: Appraisal Value (1/3) – 23 Wards of Tokyo
9 Appraisal Value（1/3） – 23 Wards of Tokyo ● 23 Wards of Tokyo 2H/2019 37th Period End 1H/2019 36th Period End Direct Direct Unrealized Gain PoP Change in Acquisition Price (1) (Loss) Appraisal Value Property Name (2) Return DCF Method (3) Return DCF Method （million yen） Book Value at (2) - (1) (2)
Slide 57: Appraisal Value (2/3) – 23 Wards of Tokyo
9 Appraisal Value（2/3） – 23 Wards of Tokyo 2H/2019 37th Period End 1H/2019 36th Period End Direct Direct Unrealized Gain PoP Change in Acquisition Price (1) (Loss) Appraisal Value Property Name (2) Return DCF Method (3) Return DCF Method （million yen） Book Value at (2) - (1) (2) - (3) Appraisal Valu
Slide 58: Appraisal Value (3/3) – Other Greater Tokyo & Other Cities
9 Appraisal Value（3/3） – Other Greater Tokyo & Other Cities ●Other Greater Tokyo / Other Cities 2H/2019 37th Period End 1H/2019 36th Period End Unrealized Gain PoP Change in (1) Direct Direct Acquisition Price (2) (3) (Loss) Appraisal Value Property Name Book Value at Return DCF Method Return DCF Me
Slide 59: 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 60: Revenue by Property (2/3)
10 Revenue by Property (2/3) – 23 Wards of Tokyo & Other Greater Tokyo ●23 Wards of Tokyo (Million yen） Ueno Osaki Bright NBF Higashi Toyo-cho NBF NBF NBF Toyosu NBF Toyosu Nakameguro East Tower Core - Bright NBF Ueno Bldg. Ikebukuro Gotanda Center Bldg. Ikebukuro Ikebukuro City Canal Front Garden F
Slide 61: Revenue by Property (3/3) – Other Cities
10 Revenue by Property (3/3) – Other Cities ●Other Cities (Million yen） Sumitomo NBF NBF NBF Sapporo NBF Niigata Nakanoshima Sakaisuji- Hiroshima NBF Sapporo NBF Unix Mitsui NBF Nagoya Aqua Dojima Shinanobashi Sun Mullion Hiroshima Matsuyama Hakata Gion Minami Nijo Telecom Central Honmachi Fukuromac
Slide 62: Portfolio Map
Portfolio Map 23 Wards of Tokyo 47 Properties ¥922.4 billion e 1 6 Properties ¥1 27 .Bpition oe $— o's f ¢ 3 20066 Other Greater Tokyo 8 Properties ¥82.6 billion 61 NBF Nippon Building Fund [1 eanishtion Price crete 71 Properties ¥1 | 32.7 billion @ Investment by Region Other Cities one 11.3% Greate
Slide 63: 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 NBF Toranomon Bldg. 1-1, Roppongi 1-30, Shiba 7-5, Ginza 5- 6-21, 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 Location L
Slide 64: 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 17-4, Samoncho, 2-12, Akasaka 2- 5-1, Higashi- 4-16, Jingumae 1- 6-52, Toyosu 5- Location Location Location Location
Slide 65: 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 66: 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 67: Disclaimer
Disclaimer This English language notice is a translation of the Japanese language Investor Presentation dated February 18, 2020 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