Nippon Building Fund, Inc. · TSE:8951
Nippon Building Fund — H1 2022 Earnings Presentation
69 slides from Nippon Building Fund's earnings presentation, Aug 16, 2022
Slide 1: 1H 2022 (42nd Period) Investor Presentation
UND Nippon Building Fund Inc. Nippon Building Fund Management Ltd. 1H 2022 (42nd Period) Investor Presentation August 16, 2022 0
Slide 2: Contents
CONTENTS 1. Financial Highlights 7. ESG Initiatives 1-1 Financial Highlights (1/3) 3 7-1 ESG Policy 41 1-1 Financial Highlights (2/3) 4 7-2 Key KPI 42 1-1 Financial Highlights (3/3) 5 7-3 Environment 43 7-4 Initiatives for tenants and employees of 2. Financial Results the asset management company (S
Slide 3: 1. Financial Highlights
1. Financial Highlights 2
Slide 4: 1-1 Financial Highlights (1/3)
1-1 Financial Highlights (1/3) Actual Forecast 1H/2022 2H/2022 1H/2023 (42nd Period) (43rd Period) (44th Period) PoP change Total operating revenue 52,215 million yen +1,880 million yen +3.7% 47,326 million yen 44,532 million yen Operating income 26,806 million yen +3,802 million yen +16.5% 21,442 m
Slide 5: 1-1 Financial Highlights (2/3)
1-1 Financial Highlights (2/3) (as of June 30, 2022) Unrealized gains Occupancy rate Total assets Location on appraisal value (Average for the period)*1 Asset 81.5% 1,451.6 billion yen 333.6 billion yen 96.3% 23 Wards of Tokyo : Central 5 Wards of Tokyo:59.0% Long-term fixed LTV interest rate ratio
Slide 6: 1-1 Financial Highlights (3/3)
1-1 Financial Highlights (3/3) Through stable growth of DPU over the medium to long term and an increase in NAV per unit, we aim to increase unitholder value. Distributions per Unit (DPU) NAV per Unit (yen) (yen) 14,500 13,476 13,500 599,556 600,000 585,254 572,136 573,646 12,500 566,917 564,249 11,
Slide 7: 2. Financial Results
2. Financial Results [Definition of Terms] Fiscal period Terms Definitions Property Name IIDABASHI GRAND BLOOM (41st Period) 2H 2021 (41st period) 1 property and 1 additional property acquired Yokohama ST Bldg. (Additional acquisition in the 41st period) Acquired properties 1H 2022 (42nd period) 1 p
Slide 8: 2-1 1H/2022 (42nd Period) Income Statement (P/L)
2-1 1H/2022 (42nd Period) Income Statement (P/L) (Millions of yen) Summary of PoP change 2H/2021 1H/2022 PoP Change (Millions of yen) (41st Period) (42nd Period) Amount Percentage Total operating revenues 50,334 52,215 1,880 3.7% Total operating revenues +1,880 Operating revenues 44,333 45,227 893 2
Slide 9: 2-2 1H/2022 (42nd Period) Balance Sheet (B/S)
2-2 1H/2022 (42nd Period) Balance Sheet（B/S） Assets (Millions of yen) Summary of PoP change December 31, 2021 June 30, 2022 PoP Change course (41st Period end) (42nd Period end) Amount Percentage (Millions of yen) Current assets 26,972 12,821 -14,151 -52.5% Cash and cash equivalents 25,981 11,430 -1
Slide 10: Memo
— Nippon Bufiding Func (MEMO)
Slide 11: 3. Investment Results and Outlook
3. Investment Results and Outlook 10
Slide 12: 3-1 Investment Policy
3-1 Investment Policy Investment policy: Stable growth of distribution per unit (DPU) Internal Growth / Office Leasing Market External Growth / Office Trading Market [Market Recognition] [Market Recognition] • Although the rise in the vacancy rate appears to be slowing • Acquisition demand remains s
Slide 13: 3-2 External growth (properties acquired and disposed)
3-2 External growth (properties acquired and disposed) Acquired Properties Figures are as of the release of the financial statements. IIDABASHI GRAND BLOOM Nakanoshima Mitsui Bldg. (additional acquisition) Acquisition Price 36.1 billion yen Acquisition Price 44.0 billion yen Appraisal value 40.2 bil
Slide 14: 3-3 Internal Growth (1/2)
3-3 Internal Growth（1/2） Occupancy rate flat, aiming to recover to the 97% range. Trends of average occupancy and move-in/out rates (%) (%) 99.3 99.5 99.5 99.4 99.4 15.0 98.8 97.8 Occupancy rate Occupancy rate 96.4 in the in the 97%- 97%-98% 96.3 96.1 range 95.8 98% range 10.0 95.0 5.0 4.4 2.5 2.4 2
Slide 15: 3-3 Internal Growth (2/2)
3-3 Internal Growth（2/2） Real estate rental revenues to bottom out in 1H/2023 and recover Breakdown of PoP change in real estate rental revenues from existing properties (impact of rent revision, replacement, etc.) （％） 4.0 Impact of rent revision Replacement impact, etc. 3.0 Impact of rent revision
Slide 16: 3-4 Finance (1/2)
3-4 Finance (1/2) Maintain high credit ratings through conservative financial strategy Interest-bearing debt (Millions of yen) Finance Data December 31, 2021 June 30, 2022 December 31, 2021 June 30, 2022 Item (41st Period end) (42nd Period end) PoP Change Item PoP Change (41st Period end) (42nd Peri
Slide 17: 3-4 Finance (2/2)
3-4 Finance (2/2) Diversify repayment deadlines and maintain good relationships with financial institutions 42nd period Long-term loans payable (Millions of yen) Date of Amount of Fixed/ Interest Lender Period borrowing money Floating rates ✓ 20,000 million yen of the long-term debt was 1/27/2022 Th
Slide 18: 3-5 Continuing Appraisal
3-5 Continuing Appraisal Decrease in caprate in appraisal Continuing appraisal value ● Changes in appraisal value and book value (Billions of yen) December 31, 2021 June 30, 2022 1,700 (41st Period end) (42nd Period end) PoP Change Book value Appraisal value Number of 73 properties 73 properties - p
Slide 19: 4. Forecast
Forecast NBF 18
Slide 20: 4-1 2H/2022 (43rd Period), 1H/2023 (44th Period) Forecasts
4-1 2H/2022 (43rd Period), 1H/2023 (44th Period) Forecasts (Millions of yen) 1H/2022 2H/2022 1H/2023 Summary of PoP change PoP Change PoP Change (Millions of yen) (Actual) (Forecast) (Forecast) 43rd period 44th period (42nd Period) (43rd Period) Amount Percentage (44th Period) Amount Percentage Tota
Slide 21: (Reference) Business Outlook
(Reference) Business Outlook Distribution per unit Stabilize distributions per unit by utilizing retained earnings and gains from transfers (Yen) External growth Internal growth Reversal of Other reserve, etc. External growth Gain on transfer - retained earnings Internal growth Gain on transfer - re
Slide 22: 4-2 Distribution Policy (1/2)
4-2 Distribution Policy (1/2): Utilization of retained earnings and gains from transfers Second source of distribution [Reserve Policy] In order to ensure stable growth of distribution per unit (DPU), the gain on transfer will be retained in consideration of tax efficiency. [Reversal Policy] The fol
Slide 23: 4-2 Distribution Policy (2/2)
4-2 Distribution Policy (2/2): Use of retained earnings and gains from transfers Distribution Policy: Assumptions for Earnings Forecasts • For the time being, we set the minimum distribution per unit (DPU) at 11,500 yen and manage to stabilize the DPU. Retained earnings Distribution per unit (DPU) (
Slide 24: Memo
— Nippon Bufiding Func (MEMO) 23
Slide 25: 5. About the Market
About the Market NBF 24
Slide 26: 5-1 Office Building Leasing Market Trends (1/2)
5-1 Office Building Leasing Market Trends (1/2) Vacancy rate in July 2022 in the Tokyo business district is 6.37%, and asking rent is ¥20,262 Tokyo Business District* Office Market Conditions (Average Asking Rent and Average Vacancy Rate) (yen/tsubo) (%) 25,000 10.00 8.57% 22,901 yen 9.43% 23,014 ye
Slide 27: 5-1 Office Building Leasing Market Trends (2/2)
5-1 Office Building Leasing Market Trends (2/2) New supply will increase in 2023 and 2025, but average after 2022 will be lower than historical average Supply of Large Office Buildings in 23 Wards of Tokyo (10 thousand ㎡ ) (Source) Prepared by Asset Manager based on data from Mori Building Co. 300 (
Slide 28: 5-2 Real Estate Market Trends
5-2 Real Estate Market Trends ● Transaction value of real estate (office) (Billions of 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 2022 (Source) Prepared by Asset Manager based on d
Slide 29: 5-3 NBF unit price, TSE REIT index, 10-year JGB interest rate
5-3 NBF unit price, TSE REIT index, 10-year JGB interest rate ● NBF's unit price TSE REIT Index (pt) (Yen) 1,200,000 4,000 NBF (left axis) Tokyo Stock Exchange REIT Index (right axis) 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 '11.9 '12.
Slide 30: Memo
— Nippon Bufiding Func (MEMO) 29
Slide 31: 6. Superiority of NBF
a Superiority of NBF NBF 30
Slide 32: 6-1 Longest track record for J-REIT (1/2)
6-1 Longest track record for J-REIT (1/2) ● Trends of asset size (cumulative acquisition price) and average occupancy rate 23 Wards of Tokyo (left axis) Tokyo and surrounding urban areas (left axis) Local urban area (left axis) Of which, 5 central wards of Tokyo (left axis) Average occupancy rate du
Slide 33: 6-1 Longest track record for J-REIT (2/2)
6-1 Longest track record for J-REIT (2/2) ● Distribution per unit *1 (Yen) 15,000 13,476 12,000 11,274 9,513 9,000 7,787 7,291 7,740 6,000 3,000 0 2H/'01 1H/'02 2H/'02 1H/'03 2H/'03 1H/'04 2H/'04 1H/'05 2H/'05 1H/'06 2H/'06 1H/'07 2H/'07 1H/'08 2H/'08 1H/'09 2H/'09 1H/'10 2H/'10 1H/'11 2H/'11 1H/'12
Slide 34: 6-2 Largest J-REIT
6-2 Largest J-REIT ● Market capitalization (as of June 30, 2022) Ratio of J-REITs by Type (Billions of yen) 1,149.8 billion yen 1,200 Office buildings 1,100 Total market capitalization of J-REITs: 18.6% 1,000 900 16,316.1 billion yen 800 Diversified/hybrid 46.4% 700 Logistics 18.5% 600 500 400 300 R
Slide 35: 6-3 Tokyo-based portfolio
6-3 Tokyo-based portfolio ● Investment ratio by region (based on acquisition price) 23 Wards of Tokyo (as of June 30, 2022) Central 5 Wards of Tokyo Other Cities 183.3 billion yen (12.6%) 23 Wards of Tokyo (17 Properties） 1,182.4 billion yen (81.5%) (48 Properties） Other Greater Tokyo Shinjuku Mitsu
Slide 36: 6-4 Use of Sponsor (Mitsui Fudosan Group) (1/4) Pipeline
6-4 Use of Sponsor (Mitsui Fudosan Group) (1/4) Pipeline ● Total acquisition value by seller ● Model of Value Creation with Mitsui Fudosan Group Approximately 70% of the properties acquired since listing Mitsui Fudosan Group related (acquisition and brokerage) possession operation (Billions of yen)
Slide 37: 6-4 Use of Sponsor (Mitsui Fudosan Group) (2/4) Portfolio
6-4 Use of 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 Average Other C
Slide 38: 6-4 Use of Sponsor (Mitsui Fudosan Group) (3/4) Leasing
6-4 Use of Sponsor (Mitsui Fudosan Group) (3/4) Leasing ● Trends of average occupancy rate and total rentable area (%) (10 thousand ㎡ ) 100 99.3 99.5 99.5 99.4 99.4 210 98.7 98.8 98.8 98.2 98.3 98.4 98.4 97.8 97.8 97.2 97.9 96.8 97.9 96.5 96.4 96.3 180 97.6 96.2 96.3 96.8 95.9 94.5 95 95.5 94.7 93.6
Slide 39: 6-4 Use of Sponsor (Mitsui Fudosan Group) (4/4) Property Management
6-4 Use of Sponsor (Mitsui Fudosan Group) (4/4) Property Management ● Nippon Building Fund Management and NBF Office Management support NBF as the two wheels of NBF Strengths and Features of NBFOM ● Strong relationships with existing tenants Nippon Building Fund Build relationships with existing ten
Slide 40: 6-5 Conservative financial management
6-5 Conservative financial management ● LTV and long-term fixed interest rate ratios ● Average remaining maturity of long-term interest-bearing debt (%) (Year) 100 7 6 93.6 5 6.08 90 93.5 95.1 95.1 5.54 5.53 5.62 5.76 5.64 92.6 92.9 91.7 91.3 5.24 5.35 4 80 Long-term fixed interest rate ratio target
Slide 41: 7. ESG Initiatives
7. ESG Initiatives (Initiatives of NBF and NBFM) 40
Slide 42: 7-1 ESG Policy
7-1 ESG Policy Major initiatives during the fiscal year Establishment of Strategy Planning and Sign up with the PRI ESG Promotion Department ✓ NBFM certified as a signatory ✓ Establish a dedicated ESG department in April 2022 institution in August 2022 ✓ Planning and promotion of business and enviro
Slide 43: 7-2 Key KPI
7-2 Key KPI Key KPIs and progress CO₂ emissions per unit of production (kg-CO₂/㎡) Reduction rate of water consumption (㎥/㎡) KPI: 46% reduction by 2030 (2013 baseline) KPI: 5% reduction by 2030 (2019 baseline) 0% 0% Improvement by refurbishing facilities such as LED target level -5% or less Introduct
Slide 44: 7-3 Environment
7-3 Environment Environment Initiatives to Improve Environmental Performance • All officers and employees of the asset management company promote ESG, and an internal system has been established to ensure that the PDCA cycle is implemented. • We will work on new measures such as the introduction of
Slide 45: 7-4 Initiatives for tenants and employees (Social)
7-4 Initiatives for tenants and employees of the asset management company (Social) Social Initiatives related to health, comfort, and social Tenant/Community Initiatives Events, etc. contribution activities Implementation of renewal work Childbirth and childcare support initiatives Restroom update <
Slide 46: 7-5 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 47: Memo
— Nippon Bufiding Func (MEMO) 46
Slide 48: 8. Appendix
og Appendix NBF 47
Slide 49: 8-1 Top 10 Major Tenants / Tenant Industry
8-1 Top 10 Major Tenants (based on leased area) / Tenant Industry ●Top 10 Tenants (Leased Floor Space Basis) ●Tenants by Industry2 （As of June 30, 2022) （As of June 30, 2022) Other Leased Ratio of Total 10.0% Tenant Name Leased Property Areas Rentable Warehousing (㎡) Area (%) &Transportation 1.9% Se
Slide 50: 8-2 List of Occupied and Vacated Square Feet by Building
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 parentheses is an
Slide 51: 8-3 Building Age Status
8-3 Building Age Status 2H/2021 1H/2022 （41st Period end） （42nd Period end） 13.4% 15.2% 43.8% 45.7% Average age of building Average age of building 23.0 years 23.0 years 42.8% 39.1% Less than 10 years More than 10 years but less than 20 years Over 20 years 50
Slide 52: 8-4 Changes in Financial Management
8-4 Changes in Financial Management Borrowings (left axis) Long-term fixed interest rate ratio (right axis) Investment corporation bonds (left axis) LTV (ratio of interest-bearing debt to total assets) (right axis) （Billions of yen） （％） 97.7 99.6 700 100 95.2 95.1 95.2 650 85.8 92.5 90 92.2 91.7 600
Slide 53: 8-5 List of Borrowing Sources
8-5 List of Borrowing Sources （Millions of yen） 2H/2021 1H/2022 Lender Repayment Method Other 41st Period End 42nd Period End 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 49,000 Sum
Slide 54: 8-6 Unitholders
8-6 Unitholders Ownership by Unitholder Number of Unitholders by Type Dec. 31, 2021 Jun. 30, 2022 Dec. 31, 2021 Jun. 30, 2022 PoP Change PoP Change Unitholder Category (41st Period end) (42nd Period end) Unitholder Category (41st Period end) (42nd Period end) Units % Units % Units Units % Units % Un
Slide 55: 8-7 Changes in Key Management Indicators, etc.
8-7 Changes in Key Management Indicators, etc. 38th Period 39th Period 40th Period 41st Period 42nd Period 1H/2020 2H/2020 1H/2021 2H/2021 1H/2022 Operating revenues (Millions of yen) 38,591 41,747 46,213 50,334 52,215 Note 1: NOI from property leasing activities does not include such items as gain
Slide 56: 8-8 List of properties (1/2) (23 Wards of Tokyo)
8-8 List of properties (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) Area (
Slide 57: 8-8 List of properties (2/2)
8-8 List of properties (2/2) (Tokyo and surrounding urban areas and regional cities) Tokyo and surrounding urban areas Local urban area Occupancy Total Occupancy Total Total Total Leased Total Total Leased Rate at Number Rate at Number Property Name Rentable Area (㎡) PML (%) Property Name Rentable A
Slide 58: 8-9 Property Price List (1/3) (23 Wards of Tokyo)
8-9 Property Price List (1/3) (23 Wards of Tokyo) 23 Wards of Tokyo 1H/2022 42nd Period End 2H/2021 41st 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 （Millions of yen） Boo
Slide 59: 8-9 Property Price List (2/3) (23 Wards of Tokyo)
8-9 Property Price List (2/3) (23 Wards of Tokyo) 1H/2022 42nd Period End 2H/2021 41st 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 （Millions of yen） Book Value at Method
Slide 60: 8-9 List of property prices (3/3)
8-9 List of property prices (3/3) (Tokyo and surrounding urban areas and regional cities) Urban areas around Tokyo and regional cities 1H/2022 42nd Period End 2H/2021 41st Period End Unrealized Gain PoP Change in Acquisition Price (1) Direct Direct (Loss) Appraisal Value Property Name (2) Capitaliza
Slide 61: 8-10 Income status of individual properties (1/3)
8-10 Income status of individual properties (1/3) (23 Wards of Tokyo) 23 Wards of Tokyo (Millions of yen) NBF NBF NBF Kowa IIDABASHI Nishi- Celestine NBF NBF Toranomon Shinjuku NBF Shinjuku Roppongi GranTokyo Shinagawa Shiba G-BASE Shibuya Ginza Street Nishi- River City GRAND Shinjuku Shiba Mitsui P
Slide 62: 8-10 Income status of individual properties (2/3)
Income status of individual properties (2/3) 8-10 (23 Wards of Tokyo, Tokyo and surrounding urban areas) 23 Wards of Tokyo (Millions of yen） Ueno Osaki Bright Osaki Bright NBF Higashi Toyo-cho NBF NBF NBF Toyosu NBF Toyosu Nakameguro NBF Ueno East Tower Core - Bright Tower Ikebukuro Gotanda Center B
Slide 63: 8-10 Income status of individual properties (3/3)
8-10 Income status of individual properties (3/3) (Local urban area) Local urban area (Millions of yen） Sumitomo NBF NBF NBF Sapporo NBF Niigata Nagoya Nagoya Nakanoshima Sakaisuji- Hiroshima NBF Sapporo Mitsui NBF Nagoya Nakanoshima Aqua Dojima Shinanobashi Sun Mullion Hiroshima Matsuyama Hakata Gi
Slide 64: 8-11 Portfolio Map
BEST >to wap [ Tokyo: 23 Wards and Central 5 Wards ] Greater Tokyo outside the 23 wards ] q ea / } loaraki / } = = Subway 23 Wards of Tokyo 48 Properties ¥1 y 1 82 4 billion Other Cities 1 7 Properties ¥1 83. 3 billion @ @ @ ® a outside 5.9% Greater Tokyo the 23 wards NBF Nippon Building Fund Other
Slide 65: 8-12 List of properties (1/4) (23 Wards of Tokyo)
8-12 List of properties (1/4) (23 Wards of Tokyo) 1 Shinjuku Mitsui Bldg. 4 Nishi-Shinjuku Mitsui Bldg. 5 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
Slide 66: 8-12 List of properties (2/4) (23 Wards of Tokyo)
8-12 List of 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 Locat
Slide 67: 8-12 List of properties (3/4)
8-12 List of properties (3/4) (23 Wards of Tokyo, Tokyo and surrounding urban areas) 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,
Slide 68: 8-12 List of properties (4/4) (Local urban area)
8-12 List of properties (4/4) (Local urban area) 57 Sapporo L-Plaza 61 Nagoya Mitsui New Bldg. 65 Aqua Dojima NBF Tower 69 NBF Hiroshima Tatemachi Bldg. 73 NBF Kumamoto Bldg. 28, Kita Hachijo 24-30 Meieki- 4-16, 2-27, Tatemachi, 3-20, Location Location Location Location Nishi minami 1chome, Dojimaha
Slide 69: Disclaimer
Disclaimer This English language notice is a translation of the Japanese language Investor Presentation dated August 16, 2022 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