5th

Fiscal Period Business Report(Statement of Financial Performance)

May 1, 2016 – October 31, 2016

Hopeful future
for Japan

6-2-1 Ginza, Chuo Ward, Tokyo

http://www.nippon-healthcare.co.jp/en/

I. Overview of Nippon Healthcare Investment Corporation
To Our Investors
Message from Executive Director
We would like to express our deep gratitude to all our unitholders for your support of Nippon Healthcare Investment
Corporation (“NHI”).
NHI posted financial performance of 679 million yen in operating revenue, 274 million yen in operating income and 246
million yen in net income for the fiscal period ended October 2016 (5th Fiscal Period). Concerning distributions, NHI declareda distribution amount per unit of 3,306 yen and a distribution amount in excess of earnings per unit of 800 yen, bringing thetotal distribution amount per unit to 4,106 yen. See page 3 for Financial and Management Highlights
During the 5th Fiscal Period, NHI acquired Sompo no ie Nishitanabeekimae (acquisition price: 710 million yen) in
October 2016, expanding the asset size by 45.5% from 13,280 million yen at the time of listing to 19,318 million yen.
NHI will aim to enhance portfolio value through investments in carefully selected properties going forward.
See page 5 for details of External Growth

The number of operators of facilities owned by NHI has increased from 7 at the time of listing to 11 in the fiscal period
ended October 2016. NHI has realized maintenance and improvement of portfolio stability bypressing forward diversification of operators and concluding long-term fixed rent leaseagreements. See page 7 for Stable Management Strategy
On the financial front, NHI will continue to work to further strengthen its financial
standing while reducing refinancing risks in the future. See page 10 for Financial Conditions
Going forward, NHI will strive to maximize unitholders’ value together with the joint
efforts by Daiwa Real Estate Asset Management Co. Ltd., the asset manager for
NHI, Daiwa Securities Group Inc., the sponsor, and AIP Healthcare Japan GK, theadvisor.
We wish for the continued success of our unitholders and ask for yourcontinued support of NHI.

Hiroshi Takeuchi Nippon Healthcare Investment Corporation Executive Director
Contents

I. Overview of Nippon Healthcare Investment Corporation
To Our Investors……………………………………………… 2
Financial and Management Highlights………………………… 3
Characteristics of Nippon Healthcare Investment Corporation…… 4External Growth……………………………………………… 5

II. Investor Information…………………………………… 12
III. Asset Management Report…………………………… 14
IV. Balance Sheets… ……………………………………… 20
V. Statements of Income………………………………… 22

Portfolio Status……………………………………………… 6
Stable Management Strategy………………………………… 7
Portfolio List………………………………………………… 8
Portfolio Map………………………………………………… 9
Financial Conditions… ……………………………………… 10
Description of Asset Manager………………………………… 11

VI. Statements of Changes in Net Assets… ………… 23
VII. Statements of Cash Flows…………………………… 23
VIII. Notes to Financial Statements……………………… 24
IX. Independent Auditor’s Report… …………………… 33
Please refer to the pages starting from the back cover for information on the operators

2

Financial and Management Highlights
Steady growth in asset size and maintenance of stable distribution level■ Actual Financial Results for Fiscal Period Ended October 2016 (5th Fiscal Period), Fiscal Period Ending April 2017 (6th Fiscal Period)and Fiscal Period Ending October 2017 (7th Fiscal Period)
4th Fiscal
Period

5th Fiscal
Period(April 2016) (October 2016) Difference(result)(result)

6th Fiscal Difference 7th Fiscal Difference
from 5thfrom 6th
PeriodPeriod(April 2017)(October 2017) Fiscal
FiscalPeriodPeriod(forecast)(forecast)

No. of properties owned at the end of the
fiscal period

21

22

+1

22

-

22

-

Operating revenue (million yen)

667

679

+12

697

+18

697

-0

Operating expenses (million yen)

377

404

+27

422

+17

421

-0

Operating income (million yen)

289

274

-14

274

+0

275

+0

Non-operating expenses (million yen)

27

27

-0

27

+0

28

+0

Ordinary income (million yen)

261

247

-14

247

-0

247

+0

Net income (million yen)

260

246

-14

246

-0

246

+0

■ Distribution Result for 5th Fiscal Period, Distribution Forecast for 6th Fiscal Period and 7th Fiscal Period
6th Fiscal Difference 7th Fiscal Difference
from 5thfrom 6th
PeriodPeriod(April 2017)(October 2017) Fiscal
FiscalPeriodPeriod(forecast)(forecast)

4th Fiscal
Period

5th Fiscal
Period(result)(result)

74,632

74,632-

74,632-

74,632

-

4,295

4,106

-189

4,100

-6

4,100

-

3,495

3,306

-189

3,300

-6

3,300

-

800

800

-

800

-

800

-

(April 2016) (October 2016) Difference

Number of investment units issued andoutstanding at the end of the fiscal period (units)
Distribution per unit
(including distribution in excess of earnings) (yen)Distribution per unit

(excluding distribution in excess of earnings) (yen)Distribution in excess of earnings
per unit (yen)■ Distribution per Unit (including distribution in excess of earnings)
(yen)
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0

Distribution inexcess of
earnings per unit
Distribution
per unit
excluding
distribution inexcess of
earnings

（

）

3,471

4,067
768

4,295
800

4,106

4,100

4,100

800

800

800

3,306

3,300

3,300

810
2,661

3,299

3,495

Fiscal Period ended Fiscal Period ended Fiscal Period ended Fiscal Period ended Fiscal Period ending Fiscal Period ending
April 2015
October 2015
April 2016
October 2016
April 2017
October 2017
(2nd FP)(3rd FP)(4th FP)(5th FP)(6th FP)(7th FP)■ Asset Size (total amount of acquisition prices)(million yen)
20,00016,00013,28012,0008,000

16,05818,60819,318

7,265

4,000
0
Fiscal Period ended Fiscal Period ended Fiscal Period ended Fiscal Period ended Fiscal Period ended
October 2014
April 2015
October 2015
April 2016
October 2016
(1st FP)(2nd FP)(3rd FP)(4th FP)(5th FP)I. Overview of Nippon Healthcare Investment Corporation

3

Characteristics of Nippon Healthcare Investment Corporation
Contributing to society and delivering returns to unitholders through substantial support system

1

Growth through investment in the growing senior market◦ Social demand for healthcare facilities is expected to grow in the medium to long term through further aging of the population.
◦ NHI aims to expand assets under management in the medium to long term using our expertise on healthcare,extensive network and fund raising capabilities.

Japan’s graying
population
The ratio of thenumber of people 65
years or older(elderly population)
to the total
population(population agingrate) in Japan is
expected to rise, andthe population of theelderly living alone is
expected to growalong with the rising
population aging
rate.

2
3
4

■ Fill-Rate of Housing for Elderly to Elderly Population Target Rate for 2025
Fill-rate of housing for elderly toelderly population(%) 4.0

Capacity of housing for elderly
1.60 (million)

1.463

Fill-rate of housing for elderly to elderly population

2.1%(2014)

3.0

Housing for elderly for
approximately 770,000 is needed

4.0%(2025)

1.0

0.89

0.99

1.09

1.20

Approx. 0.77

Urgent need for widespread availabilityof housing for elderly

2.0

0.0

Policy target by
the Ministry ofLand, Infrastructure,
Transport and Tourism

1.85

1.18

1.23

1.30
0.383

2010

0.54

0.60

0.65

0.71

0.80

0.332

0.137

0.173

0.199

0.228

0.299

0.120

0.153

0.263

0.357

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2.04

2.10

0.651

0.693

2013

2014

1.48
0.571

0.80

0.40

0.441

0.00
2011

2012

2025

(Source) Cabinet Office, Ministry of Health, Labour and Welfare, Ministry of Internal Affairs and Communications, National Institute of Population and Social Security Research, etc.

Investment in social infrastructure
to contribute to society

Expansion of social demand in line with shortage of private nursing homes and facilities for the elderly◦ NHI will contribute to the development of quality healthcare
facilities which serve as social infrastructure.

Nippon Healthcare
Investment Corporation
Supply of capital to operators
through acquisition of private
nursing homes and facilities
for the elderly

Supply of capital
Sales of properties

Operators
Development of facilities
with funds gained fromsales of facilities

Promotion of supply of quality private nursing homes and facilities for the elderly

Stable cash flow
◦ To stabilize cash flow, NHI will sign long-term fixed-rent lease agreements with operating bodies (“operators”) of healthcare facilities.

Unitholder return policy utilizing asset characteristics◦ NHI will implement unitholder returns through distributions inexcess of earnings utilizing the asset characteristic of a high rateof depreciation.
◦ NHI offers a unitholder benefits program for the purpose of
expanding the horizons of NHI's unitholders, under theagreement with operators of healthcare facilities which NHI
owns.

5

Rental income
Rental business expenses
Depreciationand SG&A expenses
Distributions
Distributions in excess of earnings
in excess ofDistributions
earnings(refund of investment) with an upper
limit of 40% of depreciation
Distributions to unitholders

Income before taxes

Substantial support system by sponsor and advisor◦NHI will develop the support system that brings together thecomprehensive strengths of Daiwa Securities Group Inc. (sponsor),an expert finance company, and AIP Healthcare Japan GK(advisor), an expert healthcare company.
◦NHI’s asset manager is able to establish cooperative relations
with a wide range of operators as it is very independent with noparticipation of operator groups.

4

Investment Corporation
SponsorOperators

11 companies
Asset Manager

AdvisorExternal Growth
Continuous development of portfolio through acquisition of carefully selected properties■ Ratios of Investment in Regions
Ratios ofinvestment
in regions■ Ratios of Investment in Healthcare Facility Types
Targetincorporation
ratio

Definition

Tokyo, Kanagawa, Chiba and Saitama
Three Major The greater Tokyo area: prefectures
Metropolitan
The
Chukyoarea:
Aichi,
Mie and Gifu prefecturesAreas
The Kinki area: Osaka, Kyoto, Hyogo, Nara and Shiga prefectures

50%

or moreCore City
Areas

Cities outside the Three Major Metropolitan Areas withpopulations of 200,000 or more

50%
or less

Other

Cities outside the Three Major Metropolitan Areas and the Core
City Areas with populations under 200,000

10%or less

Classification of healthcare facility
Fee-based homes for the elderly (Note 1) (withPrivate nursing nursing care/health-type/residential-type)homes and otherfacilities for the Elderly housing with supportive services (Note 2)
elderly
Other private nursing homes and facilities for the elderly
Medical facilities
Other

Targetincorporation
ratio

60%
or more40% or less
10% or less

(Note 1) “Fee-based homes for the elderly” refer to facilities as defined by Article 29 of the Act on
Social Welfare for the Elderly. However, this excludes facilities that fall under the category ofelderly housing with supportive services.
(Note 2) “Elderly housing with supportive services” refers to rental housing registered by prefecturesthat meet the registration criteria stipulated by the Act on Securement of Stable Supply for
Elderly Persons’ Housing.

■ Properties Acquired in 5th FP (ended October 2016)

Sompo no ie Nishitanabeekimae
Location
Acquisition date

Osaka-shi, Osaka
October 6, 2016

Acquisition price(million yen)710

Total leased area (m2)

2,095.79

Nagaike Park
Nagaike
Elementary School

Nishitanabe Sta.

①RC/9F②RC/1F
Number of rooms (rooms) 42
Resident capacity (people) 42
Range of room size (m2) 25.03 ～ 25.08
Opening date
April 1, 2007

Subway Midosu
ji Line

Structure/floors

Sompo no ie
Nishitanabeekimae

0

150m

Site Features The Property is located an approximate two-minute walkfrom Nishitanabe Station on the Osaka Municipal Subway Midosuji Line.
Area Features In Abeno Ward where the subject facility is located, thepopulation of the elderly people aged 75 years or over is 13.8 thousand,accounting for 12.8% of the total population, which is a level slightly
above the national average of 12.2%. On the other hand, the supply
ratio of facilities for people requiring nursing care/requiring support in
Abeno Ward is 19.9%, lower than the national average of 28.5%, andthe supply ratio within 3km is also lower than national average at
24.3%. We believe that the supply of facilities for people requiring
nursing care/requiring support has not reached the point to fill demand.
Property Features Room area of the largest number of room type isrelatively large at 25 m² and every room is equipped with bathroom andmini-kitchen.

Operator

Facilities operated by the operator

Company name
Sompo Care Message Inc.
Head office552-1Nishiichi, Minami-ku, Okayama-shi, Okayama
Representative director Tetsuya Kikui
EstablishedMay 1997
Capital3,925 million yen
Operation of fee-based homes for the elderly, elderly
Business activities housing with supportive services and group homes.
home-visit care (home assistance) service business

Facilities operated
Fee-based homes for the elderly withnursing care
Elderly housing with supportive
services

No. of facilities

Group homes and others
Total

Resident capacity

182

9,777

125

7,279

26

588

333

17,644

Source: The operator’s website, financial results briefing material, etc. (Actual results as of March 31, 2016)■ Status of Property Acquisition by Sourcing Route
Properties acquired before listing
14 properties/13,280 million yen

AssetManagement
Company’s unique
network

Properties acquired in the 3rd FP
3 properties/2,778 million yen

Off-balancing
in line with
M&A

5 properties/
3,750 million yen

Change ofowners2 properties/
1,578 million yen

Advisor15 properties/
13,990 million yen

Silver Heights
Hitsujigaoka No.3

Sales &
Leaseback・M&A cases for businesssuccession
・Needs for securing liquidity
on handSponsor group14 properties/
13,280 million yen

Properties acquired in the 4th FP
4 properties/2,550 million yen

Properties acquired in the 5th FP
1 property/710 million yen

Alpha Living Okayama
Nishigawa Ryokudokoen
Alpha Living Okayama
Korakuen
Alpha Living Takamatsu
EkimaeAlpha Living Takamatsu
Hyakkenmachi
・Properties sold by developergroup which owns
operators
・Exclusive needs for facility
management

Minna-no-ie
Omiya Yoshinocho
Minna-no-ie
Chuo-ku En'nami
・Properties introduced by
the sponsor group
・Needs for asset managementfrom owners

Change ofowners

Sompo no ie
Nishitanabeekimae

6th FP~・Proactively
discussing
development
properties in
addition to
information on
existing
facilities
obtained fromthe sourcing
routes・Also listingcases via
bridge funds
funded by thesponsor as partof sponsor
support.
Discussing thecases while
acquiring
preferential
negotiationrights.

・Needs for asset managementfrom owners

I. Overview of Nippon Healthcare Investment Corporation

5

Portfolio Status
Focusing investment on private nursing homes and other facilities for the elderly for which large demand is expected

Diversification Status■ Region■ Type■ Operator

Elderly housingwith supportive
services

Nihon Kaigo Iryo
Center 4.9%

3.1%

Sompo Care Message 3.7%
Nichii Gakkan 1.4%

Silver Heights
SapporoSompo
Care Next

6.2%
Cedar
6.6%

Core City
Areas

Three Major
Metropolitan
Areas

38.9%

20.5%
Sawayaka
Club

Super Court

17.1%

8.1%

61.1%

AnabukiMedical Care
Wisnet

13.2%

8.2%

Fee-based home for the elderly 96.9%
With nursing care 67.0%
Residential-type 29.9%

Charm Care Corporation 10.1%(Note) The ratios in the above three pie charts are calculated based on total acquisition prices, and rounded to the first decimal place

Portfolio Status■ Proportion of Long-Term Care Fee (Note 2)■ Rent-Paying Capacity (Note 1)

More than 15%,
but 20% or lessMore than 60%,
but 70% or less

21.4%

1.2x or less

33.0%

1.5x More than
1.5x, but
2.0x or lessMore than
1.2x, but
1.5x or lessMore than
5%, but 15%% 5% or lessor less
on average

4.6

50.1

More than% 50％ or less
50%, but
60% or less on average 41.5%

on average

16.4%

8.0%

5.6%

More than
2.0x■ Proportion of One-Time Entrance Fee
Amortization Income (Note 3)

31.4%

52.9%

60.6%

29.2%

(Note 1) “Rent-paying capacity” refers to the multiple obtained by dividing the respective acquired asset's most recent EBITDAR by rent. EBITDAR ＝ Operating Income + Depreciation + Rent
(Note 2) “Proportion of long-term care fee” refers to the proportion of the acquired asset's net sales that is accounted for by long-term care fee (including residents’ co-payment portion).
(Note 3) “Proportion of one-time entrance fee amortization income” refers to the proportion of the acquired asset's net sales that is accounted for by one-time entrance fee amortization income(*) Data are based on information on business income and expenditures from October 2015 to September 2016 disclosed by the respective operator. However, data for Nichii Care Center Fukushima Omori arebased on information on business income and expenditures from July 2015 to June 2016; for La'nassica Arakogawa from April 2015 to March 2016; for Silver Heights Hitsujigaoka No.3 from September
2015 to August 2016; and for Sompo no ie Nishitanabeekimae from July 2015 to June 2016.

■ Portfolio Occupancy Rates
Total resident capacity (right axis)(%) 100

Occupancy rate (left axis)

2,000 (persons)

80

1,600

60

1,200

40

800

20

400

0

0
Nov.
2014

Dec.

Jan.
2015

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sept.

Oct.

Nov.

Dec.

Jan.
2016

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sept.

Oct.

Stable occupancy ・The overall occupancy rate has risen 0.4% from 87.3% at the end of April 2016 to 87.7% at the end of October 2016.
・The period average for the fiscal period ended October 2016 was 87.4%, unchanged from the period average for the fiscal period ended April 2016 at 87.4%.
rates(Note) Occupancy rates are obtained by dividing the number of residents based on interviews with all facilities, by resident capacity.

6

Stable Management Strategy
Concluding long-term fixed rent lease agreements

Lease Agreements with Highly Reliable Operators
Number of
Number of facilities
operated (cases) rooms operated(Note 1)(rooms) (Note 1)
421
13,560Operator
Nichiigakkan Co., Ltd.
Sompo Care Message Inc.
(Note 2)318

17,336

Wisnet Co., Ltd.

126

3,576

Sompo Care Next, Inc.

117

8,799

Sawayaka Club Co., Ltd.

69

4,128

Super Court Co., Ltd.
Cedar Co., Ltd.
Charm Care Corporation
Anabuki Medical Care Inc.
Nihon Kaigo Iryo Center Co., Ltd.
Silver Heights Sapporo Co., Ltd.

45
41
33
27
22
3

3,019
2,169
2,340
1,196
941
321

Established

Attributes

August 1973 Listed on the first section of the Tokyo Stock Exchange
Listed on JASDAQ Standard on the Tokyo Stock Exchange
May 1997 Subsidiary of Sompo Japan Nipponkoa Holdings, Inc., a company listed on the first section of
the Tokyo Stock Exchange
Subsidiary of Sohgo Security Services Co., Ltd. a company listed on the first section of theJanuary 1998 Tokyo Stock Exchange
Subsidiary of Sompo Japan Nipponkoa Holdings, Inc., a company listed on the first section ofNovember 1992 the Tokyo Stock Exchange
Subsidiary of Uchiyama Holdings Co., Ltd., a company listed on the first section of the Tokyo
December 2004
Stock Exchange
May 1995 April 1981 Listed on JASDAQ Standard on the Tokyo Stock Exchange
August 1984 Listed on JASDAQ Standard on the Tokyo Stock Exchange
June 2009 Subsidiary of Anabuki Kosan Inc., a company listed on the first section of the Tokyo Stock Exchange
October 1997 December 1961 -(Note 1) Number of facilities operated and Number of rooms operated indicate the number of facilities and the number of rooms for fee-based homes for the elderly, group homes and elderly housing with supportive
services based on operators’ websites and interviews with them (as of October 31, 2016).
(Note 2) Sompo Care Message Inc. was delisted on January 16, 2017.

Investment Corporation

Management

Ownership

Healthcare facility A

Healthcare facility B

Healthcare facility C

Operator A

Operator B

Operator C

Management Back-up Contractors

Hokkaido Area

No. of Operators: 5

Asset Manager…
…

Each operator has concluded a management
back-up agreement with NHI.
Discuss handover of operation to otheroperators in case of contingency

No. of Operators: 11

Chubu Area

No. of Operators: 5

Chugoku Area

Tohoku Area

No. of Operators: 5

Kyushu Area

No. of Operators: 5

No. of Operators: 4

Kanto Area

No. of Operators: 7

Kinki Area

No. of Operators: 9

Shikoku Area

No. of Operators: 5

Development of Quality Portfolio through Careful Selection and Continuous Evaluation of Operators■ Business operation cycle
Common items for evaluation at the time of new acquisitionand continuous evaluation• Quality and variety of services that the operator provides• Credibility and operational skills of the operator
Quantitative
perspective•Stability, profitability, growth potential and productivity of the operator’s
finances•Stability, profitability, growth potential of the operator’s healthcare business•The company’s history and the number of years in business(The items are confirmed on the basis that such financial data, etc. beprovided by the operator.)

Qualitative
perspective•The operator’s attitude towards information disclosure•Degree of importance, etc. of healthcare-related business in the operator
group•Strength, securement of human resources, etc. at the healthcare facility•Working environment and employment situation of facility workers•Compliance system at the operator or at each facility(Documents provided by the operator, results of interviews and researchby outside experts, etc. are used for confirming the items.)

Conducting the same evaluation as at the time of acquisitioneven after acquisition• Six members are placed in the Healthcare Management Team. (Including
those holding concurrent positions).
• Regularly conduct the same evaluation as at the time of property acquisition.
• In addition, visit facilities, etc. and conduct facility monitoring, interviews,
etc. including the following.
Monitoring (Twice or more/year)· The Asset Manager and PM companies visit operators’ facilities andconduct examinations every fiscal period.
Interviewing (Once or more/year)· Confirming the following items with directors and care providers at facilities:(1) Responses to residents(2) Employees training program(3) Status of governance (including items to check for prevention of resident
mistreatment)

I. Overview of Nippon Healthcare Investment Corporation

7

Portfolio List (as of October 31, 2016)
Consists of 11 operators and 22 properties

Acquisition(Note 1)
period
No

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Property nameFacility type

(Note 1)

(Note 1)Fee-based homes forthe elderly withnursing care
Residential-type
2nd Fiscal
Super Court JR Nara-Ekimae fee-based homes for
Periodthe elderly
homes for1st Fiscal Sompo Care LAVIER Hiroshima Fee-based
the elderly with
Period Hikarigaoka
nursing careFee-based homes for
1st Fiscal Sompo Care LAVIER
the elderly with
Period Sagamihara Chuo
nursing careFee-based homes for2nd Fiscal Sompo Care LAVIER
the elderly with
Period Kinugasayama Koen
nursing careFee-based homes for
1st Fiscal
the elderly with
Sawayaka Kaikyokan
Periodnursing careFee-based homes for
1st Fiscal
the elderly with
Sawayaka Meisuikan
Periodnursing care
Residential-type
SawayakaHeart
Life
1st Fiscal
fee-based homes for
Period Nishikyogoku
the elderly
Fee-based homes for2nd Fiscal
the elderly with
Sawayaka Hinodekan
Periodnursing care
Residential-type
2nd Fiscal
Sawayaka Riverside Kurinoki fee-based homes for
Periodthe elderly
Residential-type
2nd Fiscal Sawayaka Obatakefee-based homes for
Period Sanbankan
the elderly
homes for1st Fiscal Nichii Care Center Fukushima Fee-based
the elderly with
Period Omori
nursing careFee-based homes for2nd Fiscal
the elderly with
La’nassica Arakogawa
Periodnursing care
Residential-type
1st Fiscal
fee-based homes forVerger Hirakata
Periodthe elderly
Fee-based homes for3rd Fiscal Minna-no-ie Omiya
the elderly with
Period Yoshinocho
nursing careFee-based homes for3rd Fiscal
Minna-no-ie Chuo-ku En’nami the elderly with
Periodnursing careFee-based homes for3rd Fiscal Silver Heights Hitsujigaoka
the elderly with
Period No. 3
nursing care
Residential-type
4th Fiscal Alpha Living Okayama
fee-based homes for
Period Nishigawa Ryokudokoen
the elderly
Residential-type
4th Fiscal Alpha Living Okayama
fee-based homes for
Period Korakuen
the elderly
Residential-type
4th Fiscal Alpha Living Takamatsu
fee-based homes for
Period Ekimae
the elderly

1st Fiscal
Charm Suite Ryokuchi Koen
Period21

4th Fiscal Alpha Living Takamatsu
Period Hyakkenmachi

Elderly housing withsupportive services

22

5th Fiscal Sompo no ie
Period NishitanabeekimaeFee-based homes forthe elderly withnursing careAcquisition price(million yen) (Note 2)

Appraisal Number of
value
rooms
Share of (million yen) (rooms)(Note 3)(Note 4)
portfolio(%)

Operator

Location

Charm Care Corporation

Toyonaka City, Osaka

1,950

10.1

3,060

128

Super Court Co., Ltd.

Nara City, Nara

1,569

8.1

1,750

155

Hiroshima City,
Hiroshima

960

5.0

1,230

80

Sagamihara City,
Kanagawa

1,170

6.1

1,750

80

Yokosuka City,
Kanagawa

1,839

9.5

2,060

104

Kitakyushu City,
Fukuoka

630

3.3

897

65

Kitakyushu City,
Fukuoka

590

3.1

812

87

Kyoto City, Kyoto

750

3.9

1,210

84

Niigata City, Niigata

773

4.0

938

50

Niigata City, Niigata

266

1.4

323

33

Kitakyushu City,
Fukuoka

289

1.5

355

50

Nichiigakkan Co., Ltd.

Fukushima City,
Fukushima

265

1.4

353

52

Cedar Co., Ltd.

Nagoya City, Aichi

1,279

6.6

1,430

100

Nihon Kaigo Iryo Center
Co., Ltd.

Hirakata City, Osaka

950

4.9

1,590

104

Saitama City, Saitama

740

3.8

799

33

Saitama City, Saitama

838

4.3

890

51

Sapporo City, Hokkaido

1,200

6.2

1,330

109

Okayama City, Okayama

730

3.8

790

53

Okayama City, Okayama

610

3.2

672

45

Takamatsu City, Kagawa

605

3.1

641

43

Takamatsu City, Kagawa

605

3.1

627

50

Osaka City, Osaka

710

3.7

744

42

19,318100.0

24,251

1,598

Sompo Care Next Inc.

Sawayaka Club Co., Ltd.

Wisnet Co., Ltd.

Silver Heights SapporoCo., Ltd.

Anabuki Medical CareInc.

Sompo Care Message
Inc.

11 operators 22 properties Total(Note 1) Red numbers refer to Three Major Metropolitan Areas and blue numbers to Core City Areas. The background colors for Property name and Facility type columns indicate types of facilities; orange for fee-based
homes for the elderly with nursing care, blue for residential-type fee-based homes for the elderly and yellow-green for elderly housing with supportive services.
(Note 2) “Acquisition price” is excluding consumption tax, local consumption tax and the various expenses required for the acquisition. “Share of portfolio” is the respective acquisition price expressed as a percentageof the total of the acquisition prices, rounded to the first decimal place. Therefore, the total of “Share of portfolio” may be different from the figure indicated in “Total.”(Note 3) “Appraisal value” is as of October 31, 2016.
(Note 4) “Number of rooms” is the figure indicated in the written explanation of important matters pertaining to the fee-based home for the elderly provided by the operator.

8

Portfolio Map (as of October 31, 2016)
Making diversified investment in healthcare facilities in Japan

Three Major Metropolitan Areas
1

2

4

5

8

13

Charm Suite
Ryokuchi Koen

Super Court
JR Nara-Ekimae

Sompo Care LAVIER
Sagamihara Chuo

Sompo Care LAVIER
Kinugasayama Koen

Sawayaka Heart Life
Nishikyogoku

La’nassica Arakogawa

14

15

16

Toyonaka City, Osaka

Nara City, Nara

Sagamihara City, Kanagawa

Yokosuka City, Kanagawa

Kyoto City, Kyoto

Nagoya City, Aichi

17 Silver Heights Hitsujigaoka No. 3

Verger Hirakata
Hirakata City, Osaka

Minna-no-ie
Omiya Yoshinocho
Saitama City, Saitama

9 Sawayaka Hinodekan

Minna-no-ie
Chuo-ku En’nami

10

Saitama City, Saitama

22

Sawayaka Riverside
Kurinoki

8 Sawayaka Heart Life Nishikyogoku
1 Charm Suite Ryokuchi Koen
12 Nichii Care Center

19 Alpha Living Okayama Korakuen

Fukushima Omori

18 Alpha Living Okayama Nishigawa Ryokudokoen
3

15 Minna-no-ie Omiya Yoshinocho

Sompo Care LAVIERE Hiroshima Hikarigaoka

16 Minna-no-ie Chuo-ku En’nami
5 Sompo Care LAVIER

Sompo no ie
Nishitanabeekimae

Kinugasayama Koen

11 Sawayaka Obatake Sanbankan

Osaka City, Osaka

4 Sompo Care LAVIER

6 Sawayaka Kaikyokan

13 La’nassica Arakogawa

7 Sawayaka Meisuikan

Sagamihara Chuo

2 Super Court JR Nara-Ekimae
14 Verger Hirakata
22 Sompo no ie Nishitanabeekimae
21 Alpha Living Takamatsu Hyakkenmachi
20 Alpha Living Takamatsu EkimaeCore City Areas
3

6

7

9

10

11

Sompo Care LAVIER
Hiroshima Hikarigaoka

Sawayaka Kaikyokan

Sawayaka Meisuikan

Sawayaka Hinodekan

Sawayaka Riverside
Kurinoki

Sawayaka Obatake
Sanbankan

12

17

18

19

20

21

Nichii Care Center
Fukushima Omori

Silver Heights
Hitsujigaoka No. 3

Alpha Living Okayama
Nishigawa Ryokudokoen

Alpha Living Okayama
Korakuen

Alpha Living Takamatsu
EkimaeAlpha Living Takamatsu
Hyakkenmachi

Kitakyushu City, Fukuoka

Kitakyushu City, Fukuoka

Niigata City, Niigata

Hiroshima City, Hiroshima

Fukushima City, Fukushima

Niigata City, Niigata

Sapporo City, Hokkaido

Okayama City, Okayama

Okayama City, Okayama

Takamatsu City, Kagawa

Kitakyushu City, Fukuoka

Takamatsu City, Kagawa(Note) Red numbers refer to Three Major Metropolitan Areas and blue numbers to Core City Areas. The background colors for Property name and Facility type columns indicate types of facilities; orange for fee-based
homes for the elderly with nursing care, blue for residential-type fee-based homes for the elderly and yellow-green for elderly housing with supportive services.

I. Overview of Nippon Healthcare Investment Corporation

9

Financial Conditions
Conducting stable financial management by converting interest rate into a fixed rate and diversifying repayment dates

Status of Interest-Bearing Liabilities (as of October 31, 2016)
Term

Balance(million yen)

LenderShort-term
Mizuho Bank
(Note 2)Current portion Mizuho Bankof long-term The Musashino Bank (Note 2) (Note 3)loans payable Shinkin Central Bank

Long-term

Mizuho Bank (Note 2)
Resona Bank (Note 2)
Sumitomo Mitsui Trust Bank (Note 2)
Mizuho Trust & Banking (Note 2)
The Dai-ichi Life Insurance
Mizuho Bank (Note 2)
Mizuho Trust & Banking (Note 2)
The Musashino Bank (Note 2)
Resona Bank (Note 2)
Shinkin Central Bank (Note 2)
Sumitomo Mitsui Trust Bank (Note 2)
Total

500
800
500
500
1,000
1,200
1,200
700
500
500
500
500
500
400
500
9,800

Type of interest
Floating
Fixed

Fixed

-

Interest rate(%) (Note 1)
T+0.300
0.344
0.329
0.355
0.532
0.532
0.431
0.532
0.431
0.524
0.524
0.524
0.474
0.293
0.138
-

Drawdown date

Repayment deadline

October 6, 2016

September 29, 2017
October 31, 2017
October 31, 2017
October 31, 2017
October 31, 2019
October 31, 2019
October 31, 2018
October 31, 2019
October 31, 2018
May 29, 2020
May 29, 2020
May 29, 2020
October 30, 2020
October 31, 2018
April 30, 2020-

November 5, 2014

November 5, 2014

June 1, 2015
October 15, 2015
April 28, 2016-

(Note 1) Interest rates are rounded to the third decimal place.
(Note 2) For loans of which variable interest rates have been converted to, in effect, fixed rates through a swap agreement, interest rate indicates the rate after such conversion.
(Note 3) Interest rates are converted on a one year=365 days basis.

■ Ratio of Long-Term Loans
and Short-Term Loans■ Ratio of Fixed Rates
and Variable Rates

Ratio of floating rate

5.1%

Short-term loans
payable and current
portion of long-termloans payable

23.5%
Long-term loans

Ratio of fixed rate

76.5%

94.9%

■ Repayment Schedule(million yen)
3,000
2,500

Average remaining
period (Note 1)

2,000

2.5 years(as of October 31, 2016)

1,500
1,000

LTV (Note 2)

500
0
6th FP
7th FP
8th FP
9th FP
10th FP
11th FP
12th FP
13th FP
endingendingendingendingendingendingendingendingApr. 2017 Oct. 2017 Apr. 2018 Oct. 2018 Apr. 2019 Oct. 2019 Apr. 2020 Oct. 2020

(Note 1) Average remaining period is rounded to the first decimal place.
(Note 2) LTV is calculated based on total assets.

Indices that Include NHI

10

46.0%

(as of October 31, 2016)

Month/year

Name of index

September 2015

Thomson Reuters GPR/APREA Composite Index

Description of Asset Manager

Organization of Asset Manager (as of November 30, 2016)■ Corporate Profile■ Directors and Auditors

Company Name
Address
Established
Paid-in Capital
President

Daiwa Real Estate Asset Management Co., Ltd.
6-2-1 Ginza, Chuo-ku, Tokyo
October 21, 2004
200 million yen
Akira Yamanouchi

Board of Directors

9
Executive directors: 4; Executive auditors: 1
Non-executive directors: 2; Non-executive auditors: 2

Employees
69 (excluding dispatched employees)
Registration of Financial
Registration No. 355 (Financial Instruments), Director
Instruments Business Operator General, Kanto Local Finance Bureau (Kinsho)

President and Representative Director
Vice President and Representative Director
Vice President and Representative Director
Director
Director (non-executive)
Director (non-executive)
Auditor
Auditor (non-executive)
Auditor (non-executive)

Akira Yamanouchi
Yuji Shinotsuka
Yoshiki Nishigaki
Naoyuki Owa
Mikita Komatsu
Akihiko Ogino
Tamaki Shibayama
Morimasa Matsuda
Shinji Kiso

■ Organizational Chart

Building Lots and Buildings
Transaction Business License

License No. (3)-83920, Governor of Tokyo

Discretionary Agent for Real
Estate Transaction Approval

License No. 34, Minister of Land, Infrastructure, Transport
and Tourism

Association Membership

Member of The Investment Trusts Association, Japan
Member of Japan Investment Advisers Association
Member of Type II Financial Instruments Firms Association

Shareholders’ Meeting
Corporate Auditors
Board of Directors
Compliance Committee
Investment Committee（*）

Compliance Officer

President andRepresentative Director

Acquisition
Department
OfficeInvestment Team
Residential
Investment Team
Healthcare
Investment Team
Infrastructure
Investment Team

Origination
Department

Asset Management
Department
OfficeManagement Team
Residential
Management Team
Healthcare
Management Team
Investment
Planning Team
Construction
Management Team

Private FundManagement Department

Customer Relations
Department

Finance
Department

Internal Control Office

Administration
Department

Corporate Planning
Department

Finance Team
Accounting TeamManagement Team

*Set up separately for each
investment corporation.

Structure
Asset Custodian②

Investment Corporation③

Administrator of Unitholders’ Register

Mizuho Trust & Banking Co., Ltd.

Sumitomo Mitsui Trust Bank, Ltd.

Management Back-up Contractors
Sawayaka Club Co., Ltd.
Cedar Co., Ltd.
Super Court Co., Ltd.
Charm Care Corporation
Nichiigakkan Co., Ltd.
Nihon Kaigo Iryo Center Co., Ltd.
Sompo Care Next Inc.
Wisnet Co., Ltd.
Silver Heights Sapporo Co., Ltd.
Anabuki Medical Care Inc.
Sompo Care Message Inc.

General Meeting of Unitholders⑤

Board of Directors
Executive Director: Hiroshi Takeuchi
Supervisory Director: Tomohiko Shimizu
Supervisory Director: Chizuko Nakata④

General Administrator (Accounting, etc.)
Heiseikaikeisha Tax Corporation

Accounting Auditor
KPMG AZSA LLC①
Specially Related Company(Parent company of the Asset Manager)⑥

Asset Manager General Administration

Sponsor(Organization)

Daiwa Securities Group Inc.

Daiwa Real Estate Asset Management Co., Ltd.

⑦

AdvisorAIP Healthcare Japan GK① Asset management agreement/General administration affairs agreement related to operation ④ General administrator of accounting agreement② Asset custodian agreement⑤ Management back-up agreement③ General administrator of unitholders’ registry agreement⑥ Sponsor support agreement⑦ Advisory agreement

I. Overview of Nippon Healthcare Investment Corporation

11

II. Investor Information
History of Investment Unit Prices(yen) 350,000

24,000 (units)
Unit price (left axis)

Volume (right axis)

300,000

21,000250,000

15,000200,000

12,000150,000

9,000

100,000

6,000

50,000

3,000

0

0
Nov.
2014

Dec.

Jan.
2015

Feb.

Mar.

Apr. May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.
2016

Feb.

Mar.

Apr. May

Jun.

Jul.

Aug.

Sep.

Oct.

Overview of Investment Units and Unitholders (as of October 31, 2016)■ No. of Investment Units by Investor TypeFP ended
October 2016
(5th FP)

Individuals/others
35,829 units (48.0%)

Total 74,632 units

FP ended
April 2016
(4th FP)

Financial institutions
23,187 units (31.1%)■ No. of Unitholders
by Investor Type
Foreigners 2,439 units (3.3%)

Other domestic companies 12,146 units (16.3%)
Securities companies 1,031 units (1.4%)
Individuals/others
38,066 units (51.0%)

Total 74,632 units

Financial institutions
19,837 units (26.6%)

Foreigners 3,710 units (5.0%)

Other domestic companies 12,015 units (16.1%)
Securities companies 1,004 units (1.3%)

Top Ten Unitholders (as of October 31, 2016)
Name of Investor

12

8,784
(97.4%)

Financial
institutions
Other domestic
companies

30(0.3%)

Foreigners

37(0.4%)

Securities
companies

21(0.2%)

Total

9,016

144
(1.6%)(Note) Rounded to the first decimal place

IR Calendar
Number of Percentage
Units Owned
Share(units)(%)

1. Daiwa Securities Group Inc.
The Master Trust Bank of Japan, Ltd. (Investment Trust
2.
Account)
Japan Trustee Services Bank Ltd. (Trust Investment Trust
3.
Account)
Trust & Custody Services Bank Ltd. (Trust Investment Trust
4.
Account)
The Nomura Trust and Banking Co., Ltd. (Investment Trust
5.
Account)
6. Daiwa Real Estate Asset Management Co., Ltd.
7. THE BANK OF NEW YORK MELLON 140044
8. Fukui Medical Credit Association
9. Yonezawa Shinkin Bank
10. Osaka Shinkin Bank

7,600

10.2

5,676

7.6

5,602

7.5

Total
(Note) Rounded to the first decimal place

Individuals/others

3,883

5.2

1,873

2.5

1,000
850
745
700
690

1.3
1.1
1.0
0.9
0.9

28,61938.4

December 21, 2016・Announcement of results
for the fiscal period ended October 2016
January 23, 2017・Sending of Financial and Management
Status Report (Asset Management Report)
for FP ended October 2016
January 24, 2017・Commencement of payout of distributions
for the fiscal period ended October 2016

Oct.
July Account closing
month
June
Dec.
Account closing
month
Jan.
Apr.
June 2017・Announcement of results for the
fiscal period ending April 2017
July 2017・Sending of Financial and Management
Status Report (Asset Management Report)
for FP ending April 2017
July 2017・Commencement of payout of distributions
for the fiscal period ending April 2017

Investor Memo
End of fiscal period

April 30 and October 31 of each year

General Meeting of Unitholders

Held at least once every two years

Date for finalizing Unitholders with voting
rights for the General Meeting of Unitholders Date publicly announced beforehand
Reference date for finalizing payment of April 30 and October 31 of each year (distributions are paid within three months of the reference date)
distributions
Listed financial instruments exchangeTokyo Stock Exchange (securities code: 3308)

Newspaper in which notice is posted

Nihon Keizai Shimbun

Manager of Unitholder Registry, etc.

Sumitomo Mitsui Trust Bank, Limited, 1-4-1 Marunouchi, Chiyoda-ku, Tokyo 100-8233

Office handling administrative affairs

Transfer Agency Department of Sumitomo Mitsui Trust Bank, Limited, 2-8-4 Izumi, Suginami-ku, Tokyo 168-0063
Phone 0120-782-031 (toll-free in Japan)

Service counter

Head Office and all branches of the Sumitomo Mitsui Trust Bank nationwide

Procedures for Changing Address, Etc.
Please notify the securities company you are dealing with for changes in address, name, etc. For procedures concerning investment units recorded in
special account, please contact Stock Transfer Agency Department at Sumitomo Mitsui Trust Bank, Limited (TEL: 0120-782-031 (toll-free in Japan)).

Distributions
Distributions will be payable upon presenting the “Receipt for Distributions” at a post office nearby. In case the due date has been passed, please
designate the method of receiving on the back of the receipt and send it to Stock Transfer Agency Department at Sumitomo Mitsui Trust Bank,
Limited, or bring it to the head office or branch offices of the bank to receive it. Please note that distributions will not be payable after three years of
the payment start date as specified by the Articles of Incorporation of NHI. If you wish to receive distributions via bank transfer, etc. in the future,please contact the securities company you are dealing with.

Notice[Concerning Statement of Distributions]
The “Statement of Distributions” sent upon payment of distributions serves as a “Notice of Payment” required pursuant to the Act on Special
Measures Concerning Taxation. The document may be used to confirm the amount of distributions after receiving, or can serve as an attachment
document upon filing a tax return. Thus please make sure to keep it if you are planning to file a tax return. However, if you have selected the methodof allocation of dividends in proportion to the number of shares, the amount of withholding tax will be calculated by the securities company, etc.
Please confirm with the securities company you are dealing with for any attachment document required for filing a tax return.

Provision of Information via Website

Notice on Briefing Session on AssetManagement for 5th Fiscal Period
NHI will hold a briefing session on asset
management for the fiscal period ended October
2016 (5th fiscal period).
1. Date and time: January 31, 2017 (Tuesday)
10:00 a.m.~ (venue opening at
9:40 a.m.)

In order to have unitholders deepen understanding of NHI, NHI has been putting forth
effort to communicate information through its website. It provides information on theoverview of the portfolio and operators as well as healthcare REIT structure. A service
providing e-mail notification of news release updates and such to those registered on“IR Email Distribution Service” is also available.
NHI’s website

2. Venue:

18F, GranTokyo North Tower
1-9-1 Marunouchi,
Chiyoda-ku, Tokyo

3. Presenter:

Akira Yamanouchi, President of
Daiwa Real Estate AssetManagement Co., Ltd.

http://www.nippon-healthcare.co.jp/en/
II. Investor Information

13

III. Asset Management Report
1. Management Status and Other Performance Highlights Data
Fiscal Period(

5th Period
From May 1, 2016
To Oct. 31, 2016)(

4th Period
From Nov. 1, 2015
To Apr. 30, 2016)(

3rd Period 2nd Period
From May 1, 2015
To Oct. 31, 2015)(

From Nov. 1, 2014
To Apr. 30, 2015)(

1st Period
From Jan. 7, 2014
To Oct. 31, 2014)

(1) Operating Performance(Millions of yen, except per unit data or where otherwise indicated)
Operating revenues
679
667
556
508
355
Rental revenues
679
667
556
508
355
Operating expenses
405
377
331
262
185
Property-related expenses
272
258
208
166
113
Operating income
275
290
225
246
170
Ordinary income
248
262
201
163
131
Net income
247
261
201
162
130
(2) Properties, etc. (as of end of period)
Total assets
21,316
20,84817,667
15,135
8,466[period-on-period percentage changes][+2.2%][+18.0%][+16.7%][+78.8%][–]Interest-bearing liabilities
9,800
9,300
8,800
6,400
5,850
Net assets
10,595
10,669
8,035
8,046
2,110
[period-on-period percentage changes][-0.7%][+32.8%][-0.1%] [+281.4%][–]
Unitholders’ capital, net
Note 3
10,34910,408
7,835
7,884
1,980
(3) Distributions
Total distribution amount
306
321
247
211
130
Total distribution of retained earnings
246
261
200
162
130
Total distribution in excess of retained earnings
60
60
47
49
–
Dividend payout
Note 4
100%
100%
100%
100%
100%
(4) Per Unit Information
Total number of units issued (units)
74,632
74,63260,80060,80019,800Net assets per unit (yen)141,969
142,958
132,160
132,332
106,546
Distribution per unit (yen)
4,106
4,295
4,067
3,471
6,546
Distribution amount from earnings per unit (yen)
3,306
3,495
3,299
2,661
6,546
Distribution amount in excess of earnings per unit (yen)
800
800
768
810
–
(5) Financial Indicators
ROA
1.2%
1.4%
1.2%
1.4%
1.5%
Notes 5and 6[annual rate][2.3%][2.7%][2.4%][2.8%][2.6%]
ROE
2.3%
2.8%
2.5%
3.2%
6.1%
Notes 6and 7[annual rate][4.6%][5.6%][4.9%][6.4%][10.3%]
Capital ratio
49.7%
51.2%
45.5%
53.2%
24.9%
[period-on-period percentage changes][-1.5%][5.7%][-7.7%][28.2%][-]LTV (loan to value)
46.0%
44.6%
49.8%
42.3%
69.1%
Property leasing cash flows (NOI)
Note 8
596
596
499
479
336
(6) Other Referential Information
Number of investment properties
22
21
17
14
8
Number of tenants
Note 9
22
21
17
14
8
Total rentable area (m2)
67,298.83 65,203.04 57,173.22 46,142.60 27,793.71
Occupancy rate
Note 10100.0%
100.0%
100.0%
100.0%
100.0%
Depreciation
188
187
152
138
94
Capital expenditures
20
10
2
0
1
(Note 1)The Fund has two fiscal periods per year, a six-month period from May 1 to October 31, and November 1 to April 30 of the following
year. However, the first fiscal period of the Fund is from the date of incorporation (January 7, 2014) to the end of October 2014.
(Note 2) Operating revenues, etc. do not include consumption taxes, etc.
(Note 3) The indicated amounts are unitholders’ equity less deduction amount of unitholders’ equity.
(Note 4) Dividend payouts for the 1st, 2nd and 4th fiscal periods are calculated by the following formula since issuances of new investment
units were implemented.
Dividend payout: [Total distribution amount (excluding distribution in excess of earnings) ÷ Net income] × 100(Note 5) ROA: Ordinary income ÷ [(Total assets at beginning of period + Total assets at end of period) ÷ 2] × 100(Note 6) Annualized figures are calculated by using the asset management period of the respective fiscal period; 218 days from March 28,
2014, the actual commencement date of the asset management, to October 31, 2014 for the 1st Fiscal Period; 181 days for the 2nd
Fiscal Period; 184 days for the 3rd Fiscal Period; 182 days for the 4th Fiscal Period and 184 days for the 5th Fiscal Period.
ROA and ROE for the 1st Fiscal Period are calculated based on total assets at end of period and net assets at end of period,
respectively.
(Note 7) ROE: Net income ÷ [(Net assets at beginning of period + Net assets at end of period) ÷ 2] × 100(Note 8) Property leasing cash flows (NOI): Rental revenues − Property-related expenses + Depreciation(Note 9) Number of tenants is the total number of end tenants.
(Note 10) Occupancy rate: Total leased area ÷ Total rentable area × 100

14

2. Developments in Asset Management in the Fiscal Period under Review(1) Brief History of the Investment Corporation
Nippon Healthcare Investment Corporation (hereinafter referred to as “NHI”) was incorporated on January 7, 2014
under the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951; including amendments
thereto) (hereinafter referred to as the “Investment Trusts Act”) with Daiwa Real Estate Asset Management Co. Ltd.
(hereinafter referred to as the “Asset Management Company”) as the organizer. After its incorporation, NHI conducted
an additional issuance of investment units through private placement (18,800 units) on April 3, 2014. NHI commenced
actual management with the acquisition of eight properties on March 28, 2014 by using the proceeds from theconcerned capital increase through private placement and loans.
After accumulating a track record for roughly seven months after the start of asset management, in the previous
fiscal period, NHI conducted a public offering through the issuance of an additional 39,000 investment units on
November 4, 2014. On the following day, NHI made additional acquisitions of six properties concurrently with thelisting on the REIT Securities Section of the Tokyo Stock Exchange (the “TSE”) (Securities code: 3308). In the 3rd
Fiscal Period, NHI made additional acquisitions of three properties with borrowing and cash on hand, and in the
4th Fiscal Period, NHI implemented an additional issuance of investment units through public offering (12,130 units)
on November 17, 2015 and additionally acquired four properties. Furthermore, in the 5th Fiscal Period, NHI madeadditional acquisition of one property on October 6, 2016 with borrowing and cash on hand. Through the additional
acquisition of property, the total acquisition price which was 13,280 million yen as of the listing increased to 19,318
million yen as of October 31, 2016.
As the first Japanese REIT specializing in healthcare facilities in that it invests solely in properties of which theprincipal use is healthcare facilities, NHI effectively utilizes investor capital to initiate expansion of supply of highquality healthcare facilities that provide users with high-standard services, while at the same time produce ample
and dependable returns to investors for further capital circulation. In this way, NHI aims at creating a new value cyclefor healthcare facilities and the services provided, together with investors. Through these efforts, NHI would like tocontribute to the realization of Japan’s major policy to improve the residential environment for the elderly by effectively
utilizing private sector funds.
(2) Investment Environment and Management Performance(A) Investment Environment (from May 1, 2016 to October 31, 2016)
NHI was established to address Japan’s structural problem of age demographics where the younger
population is decreasing and the ratio of elderly people is increasing, and the associated social demand
for the enhancement of private nursing homes and other facilities for the elderly, which are thought to belacking.
Japan has the population of the elderly aged 65 years or over (hereinafter referred to as the elderly
population) accounting for approximately more than one-quarter of the total population as of June 1,2016 (according to the Ministry of Internal Affairs and Communications’ “Population Estimates”
announced on November 21, 2016), and the population of the elderly is forecast to continue to accountfor an increasingly greater proportion and the population of the elderly living alone is forecast to continue
to grow. There is thus recognized to be sufficient potential for greater development of housing for theelderly with nursing care services, etc. that are designed for the elderly to reside (referring to “silver
housing” (public housing for the elderly), “good rental housing for the elderly,” “elderly housing withsupportive services,” “fee-based homes for the elderly” and “low-cost homes for the elderly;” the same
shall apply hereinafter).
The Ministry of Land, Infrastructure, Transport and Tourism has set as a policy target that the ratio of
housing for the elderly to the elderly population shall be 4% in 2025. In order to accomplish this policy
target, new supply of housing for the elderly for approximately 770,000 people (estimate) is required by2025.
In this manner, as social demand is mounting for healthcare facilities – particularly, private nursing
homes and other facilities for the elderly – and the enhancement of private nursing homes and otherfacilities for the elderly is one of the priority tasks even as a national policy, NHI will focus investment for
the time being on private nursing homes and other facilities for the elderly among healthcare facilities andthereby seize opportunities to earn cash flows arising from the mounting social demand.
(B) Management Performance
In the 5th Fiscal Period (fiscal period ended October 2016), NHI acquired one property (Sompo no ie
Nishitanabe ekimae; acquisition price: 710 million yen) on October 6, 2016.
Concerning the properties held as of the end of the 5th Fiscal Period (October 31, 2016), the leasable floorarea was 67,298.83m2 and the occupancy rate was 100.0%.
III. Asset Management Report15

(3) Overview of Capital Procurement(A) Procurement of Funds for Acquisition
In the 5th Fiscal Period, NHI conducted the following borrowing of funds for use as funds for acquisition,etc. of a new property.
(a) NHI conducted borrowing of funds on October 6, 2016 from Mizuho Bank, Ltd of 500 million yen as
part of funds for the acquisition of a new property (Sompo no ie Nishitanabe ekimae) acquired on thesame day.
(B) Status of Interest-Bearing Liabilities
As a result of the above, the balance of interest-bearing liabilities outstanding as of the end of the 5th
Fiscal Period (October 31, 2016) stood at 9,800 million yen (short-term debt: 500 million yen; long-term
debt: 9,300 million yen). The balance of the current portion of long-term debt stood at 1,800 million yen.
In addition, the average remaining period at the end of the 5th Fiscal Period was 2.5 years.
During the 5th Fiscal Period, NHI concluded an interest rate swap agreement for the 500 million yen
borrowed on April 28, 2016, for the purpose of hedging the risk of interest rate fluctuations.
(4) Capital Expenditures During the Fiscal Period under Review
The following summarizes the main construction work that constitutes capital expenditures conductedduring the 5th Fiscal Period. Capital expenditures for the 5th Fiscal Period amounted to 20 million yen and,
when combined with the 22 million yen in repair expenses charged to 5th Fiscal Period expenses, totaled 42
million yen in construction work implemented.
Name of Property
Expenditure
Purpose
Period(Location)(Millions of yen)
Replacement of hot-water From: October 2016
Charm Suite Ryokuchi Koen
supply system for7(Toyonaka City, Osaka)
To: October 2016
bathroom

Super Court JR Nara-Ekimae(Nara City, Nara)
Nichii Care Center Fukushima Omori(Fukushima City, Fukushima)

Replacement of water
heater for bathroom
Replacement of airconditioners

Other
Total

From: August 2016
To: August 2016
From: October 2016
To: October 2016
From: May 2016
To: October 2016

2
1
10
20

(5) Overview of Financial Performance and Distributions
As a result of the management described above, NHI posted financial performance for the 5th Fiscal Period of
679 million yen in operating revenue, 275 million yen in operating income, 248 million yen in ordinary incomeand 247 million yen in net income.
Concerning distributions, to ensure that the amount equivalent to distributions from earnings would be
included in the amount of tax-deductible expenses based on application of special provisions for taxation on
investment corporations (Article 67-15 of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957;
including amendments thereto) (hereinafter referred to as the “Special Taxation Measures Act”)), NHI decided to
distribute the entire amount of unappropriated retained earnings, excluding fractions of the distribution amount
per unit that are less than 1 yen. Accordingly, NHI declared a distribution amount per unit of 3,306 yen.
In addition, in principle, NHI adopts a policy of implementing cash distributions in excess of earnings
uninterruptedly every fiscal period in accordance with the distribution policy set out in the articles ofincorporation (Note). Based on this policy, NHI decided to distribute 59,705,600 yen, which is the amountroughly equivalent to 32% of the 188 million yen in depreciation for the 5th Fiscal Period, as reimbursement ofinvestments in capital. Accordingly, NHI declared a distribution amount in excess of earnings per unit of 800
yen.
(Note) NHI adopts a policy of implementing uninterrupted distributions in excess of earnings (reimbursement of investments in capital) in an amount not toexceed 40% of depreciation in every accounting period within the scope that would not have adverse impact on the financial position of NHI after
setting aside the cash and deposits that NHI deems appropriate, taking into account the status of establishment of lines of credit, etc., in order to notaffect long-term repair plans in light of the capital expenditures for each accounting period assumed based on the long-term repair plans and to meetneeds for funds (new acquisition of investment assets, repairs and capital expenditures required to maintain and enhance portfolio assets, NHI’s
working capital, repayment of obligations, payout of distributions, etc.).
The six-month average amount of the sum total amount of emergency repair expenses, short-term repair expenses and long-term repair expenses
stated in the engineering report by Tokio Marine & Nichido Risk Consulting Co., Ltd. and Assets Research and Development Inc. for all assets held asof the end of the 5th Fiscal Period (22 properties) is 29 million yen.

16

3. Future Management Policy and Tasks(1) Investment Environment
Japan has the population of the elderly accounting for approximately more than one-quarter of the total
population, and the population of the elderly is expected to continue to account for an increasingly greater
proportion and the population of the elderly living alone is expected to continue to grow. With thedevelopment of medical technology, among other factors, the average life expectancy at birth for Japanesepeople is at 80.79 years for males and 87.05 years for females according to the Ministry of Health, Labourand Welfare’s “Abridged Life Tables for Japan 2015,” while record-highs were set in terms of the population
aged 65 years or over at 34 million people and the proportion of the elderly population is at 27.1% of the total
population of 127 million as of June 1, 2016 according to the Ministry of Internal Affairs and Communications’“Population Estimates” (announced on November 21, 2016).
According to the National Institute of Population and Social Security Research’s “Population Projections forJapan (January 2012),” the total population will increase to 124 million people, the elderly population to 36
million people and the proportion of the elderly population to 29.1% in 2020 and then, while the total
population will decrease by approximately 40 million people from that at present to 87 million people, theelderly population will reach 35 million people and the proportion of the elderly population to 39.9% in 2060.
To provide for future growth in demand for housing for the elderly, the Ministry of Land, Infrastructure,
Transport and Tourism has set as a policy target that the ratio of housing for the elderly to the elderly
population shall be 4% by 2025. In order to accomplish this policy target, new supply of housing for theelderly for approximately 770,000 people (estimate) is expected to be needed by 2025.
In such an environment, there is recognized to be sufficient potential for greater development of housing forthe elderly with nursing care services, etc. that are designed for the elderly to reside through effective
utilization of private sector funds.
(2) Management Policy and Tasks(A) Strategy for Managing Existing Properties
NHI implements the following measures to earn stable revenue and serve to maintain and enhanceunitholder value.
(a) Stabilization of earnings
In principle, NHI shall invest in properties with the actual remaining lease contract period at the timeof acquisition of 10 years of more, taking into account also the possibility of contract renewal. In viewof lease agreements concluded between NHI or trustees and operators realizing conversion of
expenses borne by operators into fixed rates and stabilization of earnings of NHI, the policy shall be to
make the lease agreements of content that, in principle, operators pay a fixed amount of rent. The
lease agreements with operators for the assets that NHI has acquired are all fixed-rent agreements.
(b) Criteria and methods for selecting operators
In the event of acquisition of healthcare facilities, not only the quality of the facilities as real estate,
but also the creditworthiness, operational capabilities, etc. of the operators operating the facilities are
regarded as important factors by NHI in realizing stable occupancy. This is because the operators
being capable of providing services of a quality and type that matches the entrance fee, monthly
service fee, etc. in order to be the residents’ choice and the operators being capable of operating thefacilities continuously are regarded as important factors in terms of also the profitability and asset valueof healthcare facilities.
(c) Employment of “Backup Operator Membership”
NHI has concluded an agreement on backup of operational management with each and every
operator of acquired assets. The main purpose of said agreement is that, in the event that a leaseagreement for a healthcare facility held by NHI has ended or is expected to end due to contract
termination, contract cancellation or other reason, where NHI requests the operator to operate thehealthcare facility by conclusion of a new lease agreement with NHI or the trustee, the operator shallsincerely discuss the request. In addition, NHI shall consider concluding a similar agreement with also
the operators of healthcare facilities to be acquired in the future. Such relationship by agreement with
operators is referred to as “Backup Operator Membership.”III. Asset Management Report17(B) Investment Strategy for New Properties
NHI aims to realize stable external growth through not only leveraging the track record and network of
the Asset Management Company, but also sourcing property information, etc. by working in collaboration
with the sponsor group and adviser.
(a) Track record and network of the Asset Management Company
The Asset Management Company is striving for property acquisitions that utilize the wide range ofproperty sourcing channels based on strong relationship building with various related parties (businesscompanies, financial institutions, major real estate brokerage companies and real estate brokerage
parties, etc.) accumulated through asset management of Daiwa Office Investment Corporation (balanceof assets for which management is entrusted as of the end of November 2016: approximately 467.7
billion yen) and Daiwa Residential Private Investment Corporation (balance of assets for which
management is entrusted as of the end of November 2016: approximately 90.7 billion yen). In addition,in order to expand and boost opportunities to acquire healthcare facilities in which NHI invests, theAsset Management Company has installed an investment team specializing in healthcare facilities andis promoting also the building of relationships with new suppliers and sources of property information(healthcare facility operators, developers, etc.) other than existing property sourcing channels to collectproperty information.
(b) Sourcing of property information, etc. by working in collaboration with the sponsor group
The Asset Management Company believes that leveraging the network of branches and clients
possessed by the sponsor group, the Daiwa Securities Group, as needed will enable a search acrossJapan for operators that meet the selection criteria set forth by the Asset Management Company andconsideration of the feasibility of collaboration in property acquisition and development, commissioningof facility operation, etc., and thinks that expansion of property acquisition opportunities can thus beexpected.
(c) Sourcing of property information, etc. by working in collaboration with the adviser
The Asset Management Company has concluded an advisory agreement with AIP Healthcare Japan
GK, which implements an investment strategy that has been focused on the healthcare sector(hospitals and nursing care facilities) since 2001 and has been engaged in investment specializing inprivate nursing homes and other facilities for the elderly since 2008. Based on this agreement, theAsset Management Company receives advice on information provision, management and operation ofhealthcare facilities that are the investment assets of NHI, collaboration with operators, etc. The AssetManagement Company believes that this would contribute to realization of stable performance in themedium to long term of NHI.
In the 5th Fiscal Period (fiscal period ended October 2016), NHI acquired one property (Sompo no ie
Nishitanabe ekimae; acquisition price: 710 million yen) on October 6, 2016.
(C) Financial Strategy
NHI will procure and manage funds in accordance with the following policy in pursuit of realization of
stable revenue and steady growth and efficient management of assets under management.
(a) Additional issuance of investment units
Additional issuance of investment units shall be implemented with agility, while comprehensively
taking into account the timing of acquisition of real estate that are to be newly acquired, ratio ofinterest-bearing liabilities to total assets (hereinafter referred to as “LTV”), economic and market
conditions, etc. and also taking into consideration the dilution of investment units.

18(b) Borrowing of funds and issuance of investment corporation bonds
LTV shall be set at a level that takes heed of securing of financing capacity and, in principle, nohigher than 60%. However, LTV may temporarily exceed 60% for such purposes as acquisition of new
investment assets and reduction of refinancing risk.
In order to build a stable financial base and underpin future growth strategies, NHI shall not only
establish a so-called main-bank system of having leading financial institutions as its main banks ofaccount, but also make proactive efforts to diversify fund procurement sources through such means as
borrowing from multiple lenders and issuing investment corporation bonds.
Funds shall be procured appropriately by negotiating with several financial institutions over borrowing
costs, borrowing period, whether or not collateral is provided and other terms and conditions upon the
borrowing of funds, and comprehensively considering the terms and conditions while taking into
consideration the balance of interest rate trends, market level, financial agility and security, lendercomposition and other factors.
In order to reduce the risk of interest rate fluctuations and refinancing risk, NHI shall consider
extending financing periods, converting interest rates to fixed rates, staggering repayment dates,
introducing highly-flexible financial covenants, etc. as needed.
NHI shall consider securing committed, revolving or other lines of credit as needed for agile
procurement of various required funds.
(c) Fund management
NHI shall retain at all times the cash and deposits that NHI deems appropriate, taking into accountalso the status of establishment of lines of credit, etc., in order to meet needs for funds (newacquisition of investment assets, repairs and capital expenditures required to maintain and enhance
portfolio assets, NHI’s working capital, repayment of obligations, payout of distributions, etc.).
NHI shall pursue efficient fund management whereby, of the amount equivalent to depreciation, theamount remaining after setting aside cash and deposits shall be allocated to implementing cash
distributions in excess of earnings to unitholders uninterruptedly every fiscal period in an amount not toexceed 40% of depreciation in every accounting period, comprehensively taking into account NHI’s
surrounding economic environment and real estate market trends, the status of portfolio assets andfinancial status of NHI and other factors.
There may be cases where surplus funds will be invested into securities and monetary claims that arehighly secure and liquid.
Derivative transactions (Article 2, Paragraph 6 of the Investment Trusts Act) shall be limited to thosemanaged for the purpose of hedging the risk of fluctuations in interest rates on the liabilities of NHI.
(D) Schedule of Capital Expenditures
The following summarizes the main capital expenditures in line with currently planned construction
works for renovation, etc. Furthermore, the scheduled construction amounts include portions that will becharged as expenses in terms of accounting.
Name of Property(Location)
Silver Heights
Hitsujigaoka No. 3(Sapporo City,
Hokkaido)
Verger Hirakata(Hirakata City, Osaka)
Sompo Care LAVIERE
Hiroshima Hikarigaoka(Hiroshima City,
Hiroshima)

PurposeRepair work ofelevators

Estimated Period

Estimated Cost (Millions of yen)
Payment for Cumulative
Total
the current amount paid
periodFrom: April 2017
To: April 2017

6

-

-

Renewal of lighting in From: April 2017
common areas
To: April 2017

5

-

-

Renewal of water
heater3--

From: April 2017
To: April 2017

III. Asset Management Report19IV. Balance Sheets
As of October 31, 2016 and April 30, 2016

(Thousands of yen)

As of
October 31, 2016

As ofApril 30, 2016

AssetsCurrent Assets:
Cash and cash equivalents [Notes 3, 4 and 5 ]1,466,184

1,601,495

–

2,191

20,29015,342

13

15

Other current assets

1,262

378

Total Current Assets

1,487,749

1,619,421

Land in trust accounts

7,949,066

7,528,825

Buildings and structures in trust accounts

12,559,576

12,189,211

7,811

3,915

Less: accumulated depreciation(759,125)(570,714)

Leasehold rights in trust accounts

40,88640,886

19,798,214

19,192,123

166

177

Software

2,218

2,585

Lease and guarantee deposits in trust

10,00010,000Long-term prepaid expenses

17,223

23,578

Total Other Assets

29,60736,34021,315,570

20,847,884

Consumption tax refundable
Prepaid expenses
Deferred tax assets [Note 12]

Investment Properties, at cost: [Notes 4, 6 and 7]

Tools, furniture and fixtures in trust accounts

Total Investment Properties, net
Other Assets:
Right of trademark

Total Assets
The accompanying notes are an integral part of these financial statements.

20

(Thousands of yen)

As of
October 31, 2016

As ofApril 30, 2016

Liabilities
Current Liabilities:
Operating accounts payable

24,83923,862

Short-term debt [Notes 4,5 and 10]

500,000–

1,800,000–

75,367

57,957

Income taxes payable

867

910

Accrued consumption taxes

337–

Rent received in advance

85,08674,027573

303

Other current liabilities

2,829

1,640

Total Current Liabilities

2,489,898

158,699

7,500,000

9,300,000

730,216

719,884

8,230,216

10,019,884

10,720,114

10,178,583

10,504,334

10,504,334(155,648)(95,942)

10,348,686

10,408,392

246,770

260,909

10,595,456

10,669,301

Total Net Assets

10,595,456

10,669,301

Total Liabilities and Net Assets

21,315,570

20,847,884

Long-term debt due within one year [Notes 4,5 and 10]
Accounts payable - other

Deposits received

Long-Term Liabilities:
Long-term debt [Notes 4, 5 and 10]
Tenant security deposits including trust accounts [Note 5]
Total Long-Term Liabilities
Total Liabilities

Net Assets [Notes 9 and 13]
Unitholders’ Equity:
Unitholders’ capital
Deduction from unitholders’ capital
Unitholders’ capital, net
Units authorized: 10,000,000 units
Units issued and outstanding: 74,632 units
Retained earnings
Total Unitholders’ Equity

The accompanying notes are an integral part of these financial statements.

IV. Balance Sheets

21

V. Statements of Income
For the six months ended October 31, 2016 and April 30, 2016

(Thousands of yen)

For the six months ended
October 31, 2016

For the six months endedApril 30, 2016

679,473

667,161

679,473

667,161

272,216

258,085

Asset management fees
Asset custody fees
Administrative service fees
Trust fees

61,226725
17,087
6,286

58,122
630
8,595
6,252

Directors’ compensation
Audit fees

4,200
6,000
37,0293,600
6,000
36,203404,769
274,704

377,487
289,674

3
3

34
2

6

36

20,892
6,248–

21,447
5,784
682

27,140247,570

27,913
261,797

Income Before Income Taxes
Income taxes - current
Income taxes - deferred
Total Income Taxes [Note 12]247,570

261,797

868
2

915
(0)

870

915

Net Income
Retained Earnings Brought Forward
Retained Earnings at End of Period

246,70070
246,770

260,88227
260,909

Operating Revenues and Expenses
Operating Revenues:
Rental revenues [Note 8]
Total Operating Revenues
Operating Expenses:
Property-related expenses [Note 8]

Other operating expenses
Total Operating Expenses
Operating Income
Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Other non-operating revenues
Total Non-Operating Revenues
Non-Operating Expenses:
Interest expense
Borrowing expenses
New Investment units issuance costs
Total Non-Operating Expenses
Ordinary Income

The accompanying notes are an integral part of these financial statements.

22

V. Statements of Income

VI. Statements of Changes in Net Assets
For the six months ended October 31, 2016

Balance as of April 30, 2016
Distributions in excess of retained
earnings
Distributions of earnings
Net income
Balance as of October 31, 2016

(Thousands of yen)

Deduction
Number of Unitholders’fromUnitholders’Units
CapitalUnitholders' Capital, net
capital74,632 10,504,334(95,942) 10,408,392
–

–

–
–
–
–
74,632 10,504,334(59,706)

Retained
Earnings

260,909 10,669,301(59,706)––––(155,648) 10,348,686

For the six months ended April 30, 2016

Total

–

(59,706)(260,839)(260,839)
246,700
246,700
246,770 10,595,456(Thousands of yen)

Deduction
Number of Unitholders’fromUnitholders’Units
CapitalUnitholders' Capital, net
capital60,800 7,884,000(49,248) 7,834,752
13,832 2,620,334– 2,620,334

Balance as of October 31, 2015
Issuance of new investment units
Distributions in excess of retained––(46,694)(46,694)
earnings
Distributions of earnings––––
Net income––––
Balance as of April 30, 2016
74,632 10,504,334(95,942) 10,408,392
The accompanying notes are an integral part of these financial statements.

Retained
Earnings

Total

200,606–

8,035,358
2,620,334–(46,694)(200,579)(200,579)
260,882
260,882
260,909 10,669,301

VII. Statements of Cash Flows
For the six months ended October 31, 2016 and April 30, 2016

Cash Flows from Operating Activities:
Income before income taxes
Depreciation and amortization
New investment units issuance costs
Interest expense
Increase (Decrease) in accounts payable
Increase (Decrease) in rent received in advanceCash payments of interest expense(Increase) Decrease in consumption taxes refundable
Other, net
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Payments for purchases of investment properties
Proceeds from tenant security deposits
Net Cash Used in Investing Activities
Cash Flows from Financing Activities:
Proceeds from short-term debt
Repayment of short-term debt
Proceeds from long-term debt
Proceeds from issuance of new investment units
Payments of distributions of earnings
Payments of distributions in excess of retained earnings
Net Cash Provided by Financing Activities
Net Change in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Period
Cash and Cash Equivalents at End of Period (Note 3)(Thousands of yen)

For the six months
ended
October 31, 2016

For the six months
ended
April 30, 2016

247,570
188,788–
20,892(3,328)
11,058(21,120)2,191
263
446,314

261,797
187,463682
21,447(14,263)
4,900(21,330)
(122)
8,040
448,614(772,830)
10,332(762,498)(2,760,003)
74,653(2,685,350)

500,000–––(259,733)(59,395)
180,872(135,311)
1,601,495
1,466,184

900,000(900,000)
500,000
2,619,653(200,064)(46,557)
2,873,032
636,296
965,199
1,601,495

The accompanying notes are an integral part of these financial statements.
VI. Statements of Changes in Net Assets
VII. Statements of Cash Flows23

VIII. Notes to Financial Statements
For the six months ended October 31, 2016 and April 30, 2016

Note 1 – Organization and Basis of Presentation
Organization
Nippon Healthcare Investment Corporation (hereinafter referred to as “NHI”) was established on January 7,
2014 as an investment corporation under the Act on Investment Trusts and Investment Corporations (Act No.
198 of 1951, including subsequent revisions, hereinafter referred to as the “Investment Trust Act”) by the founder(Daiwa Real Estate Asset Management (hereinafter referred to as “DREAM”)).
NHI is an externally managed real estate fund, established as an investment corporation. DREAM, as NHI’s
asset management company, is engaged in acquiring, managing, leasing, and renovating healthcare facilities.
Daiwa Securities Group Inc. currently owns 100% of DREAM.
On November 4, 2014, NHI had raised 5,616,000 thousand yen through an initial public offering of units. Those
units were listed on the J-REIT section of the Tokyo Stock Exchange.
As of October 31, 2016, NHI had trust beneficiary interests in 22 healthcare facilities with approximately 67,299
square meters of healthcare facilities space and had leased space to 22 tenants. The occupancy rate for thehealthcare facilities was 100%.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in theInvestment Trust Act, the Financial Instruments and Exchange Act and their related accounting regulations, andin conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different incertain respects as to application and disclosure requirements of International Financial Reporting Standards or
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been reformatted and translated into English from the financial
statements of NHI prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance
Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act. In preparing theaccompanying financial statements, relevant notes have been expanded and certain reclassifications have been
made from the Japanese GAAP financial statements. Certain supplementary information included in the statutory
Japanese GAAP financial statements, but not required for fair presentation, is not presented in theaccompanying financial statements.
NHI maintains its accounting records in Japanese yen.

Note 2 – Summary of Significant Accounting Policies
Cash and cash equivalents
Cash and cash equivalents consist of cash, demand deposits, and short-term investments which are highly
liquid, readily convertible to cash and with insignificant risk of market value fluctuation, with maturities of threemonths or less from the date of acquisition.
Investment Properties
Investment properties are recorded at cost, which includes the allocated purchase price, related costs andexpenses for acquisition of the properties. Property and equipment balances are depreciated using the straightline method over the estimated useful lives. The estimated useful lives of the principal tangible fixed assets(including assets held in trust) are as follows:
Buildings and structures
Tools, furniture and fixtures

As of October 31, 2016
4-58 years
3-10 years

As of April 30, 2016
4-58 years
3-10 years

Costs related to the renovation, construction and improvement of properties are capitalized. Expenditures for repairs
and maintenance which do not add to the value of a property or prolong its useful life are expensed as incurred.
New Investment Units Issuance Costs
The issuance costs of investment units are expensed when incurred.
Income Taxes
Income taxes are accounted for on the basis of income for financial statement purposes. The tax effect of temporary
differences between the amounts of assets and liabilities for financial statements and for income tax purposes isrecognized as deferred taxes.

24Real Estate Taxes
Real estate taxes are imposed on properties on a calendar year basis and expensed when incurred. In terms of
newly purchased properties, NHI capitalizes a portion of the real estate taxes that relate to a period from the purchasedate of each property until the end of the calendar year as part of the acquisition cost of the relevant property.
Capitalized real estate taxes amounted to 781 thousand yen for the six months ended October 31, 2016 and 1,345
thousand yen for the six months ended April 30, 2016.
Consumption Taxes
Consumption taxes are excluded from transaction amount.
Non-deductible consumption taxes on acquisition of assets are included in the acquisition costs of the relevant
asset.
Hedge Accounting
NHI conducts derivative transactions in order to hedge against risks defined in its Articles of Incorporation based on
its risk management policy. NHI utilizes derivative financial instruments such as interest-rate swap agreements only
for the purpose of hedging its exposure to changes in interest rates. NHI deferred recognition of gains or losses
resulting from changes in fair value of interest-rate swap agreements because its interest-rate agreements met thecriteria for deferral hedging accounting.
However, NHI applies special treatment to the interest-rate swap agreements that meet the criteria for such special
treatment. Under the special treatment, interest-rate swaps are not remeasured at fair value: instead, the net amount
paid or received under the interest-rate swap agreements is recognized and included in interest expense. The hedge
effectiveness for interest-rate swap agreements is assessed each fiscal period except for those that meet the criteriaof special treatment.
Revenue Recognition
Operating revenues consist of fixed rental revenues, which are recognized on an accrual basis over the life of eachlease.
Accounting Treatment of Beneficiary Interests in Trust Assets Including Real Estate
For trust beneficiary interests in real estate, all accounts of assets and liabilities within assets in trust, as well as all
income generated and expenses incurred from assets in trust, are recorded in the relevant balance sheet and income
statement accounts.

Note 3 – Cash and Cash Equivalents
Cash and cash equivalents stated on the accompanying balance sheets and statements of cash flows as of
October 31, 2016 and April 30, 2016 consisted of the following:(Thousands of yen)

Cash and deposits
Cash and deposits in trust
Cash and cash equivalents

As of October 31, 2016
1,029,613
436,571
1,466,184

As of April 30, 2016
1,193,868
407,627
1,601,495

Note 4 – Pledged Assets and Secured Liabilities
The carrying amount of assets pledged as collateral and the secured liabilities as of October 31, 2016 and April
30, 2016 were as follows:(Thousands of yen)

Assets pledged:
Cash and cash equivalents
Land in trust accounts
Buildings and structures in trust accounts
Tools, furniture and fixtures in trust accounts
Leasehold rights in trust accounts
Total
Secured liabilities:
Short-term debt
Long-term debt due within one year
Long-term debt
Total

As of October 31, 2016

As of April 30, 2016

436,5717,949,066
11,801,118
7,144
40,886
20,234,785

407,627
7,528,825
11,618,751
3,661
40,886
19,599,750

500,000
1,800,000
7,500,000
9,800,000––
9,300,000
9,300,000
VIII. Notes to Financial Statements

25

Note 5 – Financial Instruments(For the six months ended October 31, 2016 and April 30, 2016)(1) Status of Financial Instruments(A) Policy for financial instruments
NHI procures funds through various financing methods (such as borrowings, issuance of investment
units) for acquisition and renovation of investment properties, payments of dividends and reimbursementof bank borrowings.
In financing through interest-bearing debt, to secure stable financing capacity and reduce future risk ofrising interests, NHI secures long-term fixed-rate borrowings with well-diversified maturities.
NHI manages surplus funds with safe and highly liquid money claims and securities (in principle, deposits).
Derivative transactions are conducted only for the purpose of reducing risk of future interest rate fluctuations.
(B) Types and risks of financial instruments and related risk management system
Proceeds from debt financing are used mainly for acquisition of investment properties. While these debts are
exposed to liquidity risk upon repayment, NHI manages the risk by maintaining the LTV ratio at low levels,
diversifying maturities, keeping the ratio of long-term debt to total debt at high levels, and diversifying lenders
with particular focus on domestic financial institutions. Bank borrowings with floating interest rates are exposedto the risk of future interest rate fluctuations and NHI manages that by using derivative transactions such as
interest-rate swap agreements.
NHI evaluates the effectiveness of hedges by comparing the accumulated cash-flow changes of hedged
items and that of hedging items, and then verifies the ratio of both amounts of changes. Furthermore, NHI
omits assessment of hedge effectiveness for the interest-rate swap agreements which meet the criteria ofspecial treatment.
Execution and management of derivative transactions have been carried out based on the regulations
defined in the basic policy of risk management.
Tenant security deposits represent funds deposited by tenants, and NHI is exposed to the risk of refunding
deposits in the event that a tenant terminates the contract. However, such risk is limited by reserving someparts of the funds.
Deposits are used for investing NHI’s surplus funds. These deposits are exposed to credit risks such as
bankruptcy of the depository financial institutions. NHI manages credit risk by restricting the tenor of thedeposit relatively short and setting a minimum credit rating requirement for the depository financial institutions.
(C) Supplementary explanation for fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if applicable. When there is noquoted market price available, fair value is reasonably estimated. As certain assumptions are used for theestimation of fair value, the result of such estimation may differ if different assumptions are used. Also, thecontractual amounts of derivative transactions do not represent the market risk involved in these derivativetransactions.
(2) Estimated Fair Value of Financial Instruments
The book value, fair value and difference between the two as of October 31, 2016 and April 30, 2016 are
as follows. The financial instruments whose fair value is extremely difficult to estimate are excluded fromthe following table.
(As of October 31, 2016)
Cash and cash equivalents
Total
Short-term debt
Long-term debt due within one year
Long-term debt
Total
Derivative transactions

26(Thousands of yen)Book Value
1,466,184
1,466,184
500,000
1,800,000
7,500,000
9,800,000–

Fair Value
1,466,184
1,466,184
500,000
1,799,476
7,528,469
9,827,945–

Difference
–
–
–
(524)
28,46927,945–(As of April 30, 2016)(Thousands of yen)Book Value
1,601,495
1,601,495
9,300,000
9,300,000–

Cash and cash equivalents
Total
Long-term debt
Total
Derivative transactions

Fair Value
1,601,495
1,601,495
9,363,560
9,363,560–

Difference––
63,56063,560–Notes:
1. Methods to estimate fair value of financial instruments and derivative transactions
Assets(1) Cash and cash equivalents
As these instruments are settled in short period of time, their fair value and book value are nearly identical.
Therefore, for these items, the book value is assumed as the fair value.
Liabilities(1) Short-term debt, long-term debt due within one year and long-term debt
For short-term debt, long-term debt due within one year and long-term debt with floating interest rates, theirfair value and book value are nearly identical and there are no significant changes in NHI’s credit risk after
borrowing. Therefore, for these items, their book value is assumed as their fair value. For short-term debt, longterm debt due within one year and long-term debt with fixed interest rates, their fair value is based on thepresent value of principle and interest cash flows discounted at the current interest rate estimated to be applied
if similar new debt is entered into. However, the fair value of certain floating-rate long-term debt due within one
year and long term debt that qualifies for the special treatment of interest-rate swaps is determined bydiscounting the sum of its principal and interest payments net of any cash flows from the interest-rate swaps.
Derivative Transactions(1) Derivatives to which hedge accounting is applied(As of October 31, 2016)
Method of Hedge
Accounting
Special treatment
for interest rate swap
transactions(Thousands of yen)Type of Derivative
Transactions
Interest rate swap
transactions
Receive floating andpay fixed

Hedged Items

Contract Amount(Due after one year)

Long-term
debt due within
one year andlong-term debt

8,300,000(7,000,000)–(**)

8,300,000(7,000,000)

–

Total
(As of April 30, 2016)
Method of Hedge
Accounting
Special treatment
for interest rate swap
transactions

Fair Value(*)(Thousands of yen)Type of Derivative
Transactions
Interest rate swap
transactions
Receive floating andpay fixed

Hedged Items

Contract Amount(Due after one year)

Long-term
debt due within
one year andlong-term debt

7,800,000(7,800,000)–(**)

7,800,000(7,800,000)

–

Total

Fair Value(*)*The fair value is provided by the financial institution.
**The values of derivatives qualifying for special treatment of interest rate swap transactions are included in that of related long-term debt. This isbecause such swaps are handled together with hedged long-term debt.

2. Financial instruments whose fair value is extremely difficult to estimate
Tenant security deposits including trust accounts (with the book value of 730,216 thousand yen as of October
31, 2016 and 719,884 thousand yen as of April 30, 2016) that have been deposited from tenants are notmarketable and the actual deposit period cannot be reliably determined, thus making it impossible to reasonably
estimate their future cash flows, and therefore, it is considered to be extremely difficult to estimate their fair value.
VIII. Notes to Financial Statements27

3. Redemption schedule for money claims(As of October 31, 2016)(Thousands of yen)

Due within Due after
Due after
Due after
Due after
1 year1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years
1,466,184––––
1,466,184––––

Cash and cash equivalents
Total(As of April 30, 2016)

Due after
5 years––(Thousands of yen)

Due within Due after
Due after
Due after
Due after
1 year1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years
1,601,495––––
1,601,495––––

Cash and cash equivalents
Total

Due after
5 years––

4. Redemption schedule for long-term debt
(As of October 31, 2016)(Thousands of yen)

Due within Due after
Due after
Due after
Due after
1 year1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years
Short-term debt
Long-term debt due within one
year
Long-term debt
Total

Due after
5 years

500,000

–

–

–

–

–

1,800,000

–

–

–

–

–

–
2,300,000

2,100,000
2,100,000

2,900,000
2,900,000

2,500,000
2,500,000

–
–

–
–

(As of April 30, 2016)(Thousands of yen)

Due within Due after
Due after
Due after
Due after
1 year1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years– 1,800,000 2,100,000 3,400,000 2,000,000– 1,800,000 2,100,000 3,400,000 2,000,000

Long-term debt
Total

Due after
5 years––

Note 6 – Schedule of Tangible Fixed Assets of Investment Properties
Investment properties as of October 31, 2016 and April 30, 2016 consisted of the following:(Thousands of yen)

As of October 31, 2016
Acquisition
AccumulatedBook value
costs
depreciation

As of April 30, 2016
Acquisition
AccumulatedBook value
costs
depreciation

Land in trust
accounts

7,949,066–

7,949,066

7,528,825–

7,528,825

Buildings andstructuresin trust accounts

12,559,576(758,458)

11,801,118

12,189,211(570,460)

11,618,751

7,811

(667)

7,144

3,915

(254)

3,661

20,516,453(759,125)

19,757,328

19,721,951(570,714)

19,151,237

Tools, furnitureand fixtures intrust accounts
Total

28

Note 7 – Investment and Rental Properties
NHI owns fee-based homes for the elderly, etc. (including land) in the three major metropolitan areas and core cities.
The book value, net change in the book value and the fair value of the investment and rental properties are as follows:(For the six months ended October 31, 2016)
Book Value
As of
ChangeApril 30, 2016
during the period(*1)
19,192,123
606,091(For the six months ended April 30, 2016)
Book Value
As of
ChangeOctober 31, 2015
during the period(*2)
16,637,596
2,554,527(Thousands of yen)

As of
October 31, 2016
19,798,214

Fair value as of
October 31, 201624,251,000(Thousands of yen)

As ofApril 30, 201619,192,123

Fair value as ofApril 30, 2016
23,215,000(Note 1) The book value represents the acquisition costs less accumulated depreciation.
(Note 2) Significant changes(*1) For the six months ended October 31, 2016, the major reason of increase is acquisition of one property (710,000 thousand yen). The
major reason of decrease is depreciation (188,410 thousand yen).
(*2) For the six months ended April 30, 2016, the major reason of increase is acquisition of four properties (2,550,000 thousand yen). The
major reason of decrease is depreciation (187,085 thousand yen).
(Note 3) The fair values as of October 31, 2016 and April 30, 2016 represent the sum of appraisal values estimated by external real estate appraisers.

Income and loss from investment and rental properties for the six months ended October 31, 2016 and April 30,
2016 are disclosed in Note 8.

Note 8 – Rental Revenues and Expenses
Rental revenues and expenses for the periods ended October 31, 2016 and April 30, 2016 were as follows:(Thousands of yen)

A Revenues from property leasing
Rental revenues
Total revenues from property leasing
B. Property-related expenses
Consignment expenses
Taxes and dues
Non-life insurance expenses
Repair expenses
Depreciation
Leasehold fees
Other property-related expenses
Total property-related expenses
C. Operating income from property leasing [A – B]

For the six months ended
October 31, 2016

For the six months endedApril 30, 2016

679,473
679,473

667,161
667,161

11,56047,1301,506
22,274
188,4101,200
136
272,216
407,257

11,57536,901
1,484
19,494
187,0851,200
346
258,085
409,076

Note 9 – Net Assets
NHI issues only non-par value units in accordance with the Investment Trust Act and all of the issue prices of newunits are designated as stated capital. NHI maintains at least 50,000 thousand yen as the minimum amount of net
assets, as required by the Investment Trust Act.

Note 10 – Short-term debt, long-term debt due within one year and long-term debt
Short-term debt, long-term debt due within one year and long-term debt as of October 31, 2016 and April 30, 2016
consisted of the following:(Thousands of yen)

Secured loans due 2017 to 2020, principally frombanks and insurance companies with interest rates
mainly ranging from 0.3% to 0.5%
Total

As of October 31, 2016

As of April 30, 2016

9,800,000

9,300,000

9,800,000

9,300,000[Note] The interest rate presented is the spot rate as of October 31, 2016. As for long-term debts due within one year and long-term debts which were
hedged by interest-rate swaps for the purpose of avoiding interest rate fluctuation risk, the swapped interest rates are used.
VIII. Notes to Financial Statements

29

The annual maturities of short-term debt, long-term debt due within one year andlong-term debt as of October 31, 2016 were as follows:(Thousands of yen)

Due within one year
Due after one to two years
Due after two to three years
Due after three to four years
Due after four to five years
Due after five years

2,300,000
2,100,000
2,900,000
2,500,000––

Note 11 – Leases
As Lessor
The future minimum rental revenues under existing non-cancelable operating leases as of October 31, 2016 andApril 30, 2016 were as follows:(Thousands of yen)

Due within one year
Due after one year
Total

As of October 31, 2016
1,256,418
11,934,196
13,190,614

As of April 30, 2016
1,256,418
12,572,103
13,828,521

Note 12 – Income Taxes
NHI is subject to income taxes in Japan. The effective tax rate on NHI’s income based on applicable Japanese
tax law was estimated as 0.35% for the six months ended October 31, 2016 and for the six months ended April
30, 2016. The following table summarizes the significant differences between the statutory tax rates and NHI’s
effective tax rates for financial statement purposes.
For the six months ended
For the six months ended
October 31, 2016
April 30, 2016
Statutory tax rate
31.74%
32.31%
Deductible dividends(31.63)(32.19)Others0.24
0.23
Effective tax rate
0.35%
0.35%
NHI was established as an investment corporation under the Investment Trust Act, and as long as aninvestment corporation distributes to its unitholders at least 90% of earnings available for dividends for a period
and other requirements prescribed in the Special Taxation Measures Law of Japan are met, the investment
corporation is allowed to deduct the total amount of dividends, excluding distribution in excess of earnings, incalculating its taxable income under Japanese tax regulations.
The significant components of deferred tax assets and liabilities as of October 31, 2016 and April 30, 2016
were as follows:(Thousands of yen)

Deferred tax assets:
Accrued enterprise tax
Total deferred tax assets
Net deferred tax assets

30

As of October 31, 2016

As of April 30, 2016
13
13
13

15
15
15

Note 13 – Per Unit Information
Information about net assets per unit and net income per unit as of October 31, 2016 and April 30, 2016 andfor the periods then ended were as follows. The computation of net income per unit is based on the daily
weighted average number of units outstanding during the period. The computation of net assets per unit isbased on the number of units outstanding at each period end.

Net assets at period end per unit
Net income per unit

For the six months ended
October 31, 2016
141,969 yen
3,305 yen

For the six months endedApril 30, 2016
142,958 yen
3,566 yen

Net income per unit is calculated by dividing the net income by the daily weighted average number ofinvestment units issued and outstanding. The diluted net income per unit is not stated as there are no diluted
investment units.
(Note) The basis for calculating the net income per unit is as follows.

For the six months ended
October 31, 2016
246,700

For the six months endedApril 30, 2016
260,882––

Net income available to ordinary unitholders

246,700

260,882

Average number of units during the period (units)

74,632

73,144

Net income (thousands of yen)Amount not available to ordinary unitholders(thousands of yen)(thousands of yen)

Note 14 – Distribution
In accordance with the cash distribution policy described in Article 33-1-1 of the Articles of Incorporation of
NHI, NHI determines that the amount of distribution shall exceed the amount equivalent to 90% of its
distributable profit as stipulated in Article 67-15 of the Special Taxation Measures Law, and shall be up to its
earnings as the maximum amount. Following this policy, NHI has decided that it shall distribute 246,733,392 yen
for the fiscal period ended October 31 2016, which is the maximum integral multiple to 74,632 units issued andoutstanding as the distribution of earnings, and 260,838,840 yen for the fiscal period ended April 30 2016, whichis the maximum integral multiple to 74,632 units. In addition, NHI will continue to make distributions in excess ofearnings (refund of capital contribution to unitholders) every period in accordance with the cash distribution
policy described in Article 33-1-2 of the Articles of Incorporation of NHI. Based on the policy, NHI has decided
that it shall distribute 59,705,600 yen, which is calculated as the approximate equivalent of 32% of 188,410,440
yen of the depreciation amount posted for the fiscal period ended October 31 2016, as distributions in excess ofearnings (refund of capital contribution to unitholders) and 59,705,600 yen for the fiscal period ended April 30
2016, which is calculated as the approximate equivalent of 32% of 187,085,173 yen of the depreciation amountposted for the fiscal period ended April 30 2016.
(Yen)

Unappropriated retained earnings
Distributions in excess of retained earnings
Deduction from unit holders’ capital
Distributions
Distributions of retained earnings
Distributions in excess of retained earnings
Total distributions
Retained earnings brought forward

For the six months ended
October 31, 2016
Total
Per unit
246,769,756

For the six months endedApril 30, 2016
Total
Per unit
260,908,644

59,705,600

59,705,600

246,733,392
59,705,600
306,438,992
36,364

3,306
800
4,106

260,838,840
59,705,600
320,544,440
69,804

3,495
800
4,295

VIII. Notes to Financial Statements

31

Note 15 – Transactions with Related Parties(For the six months ended October 31, 2016)
Classification
Name of company, etc.
Location
Capital stock (Thousands of yen)
Business description
Percentage of voting rights, etc. held byrelated party (Held in NHI)
Relation to the related party

Subsidiary of major unitholder
DA Healthcare Alpha LLC
Minato-ku, Tokyo
300
Real estate business–

Interested party
Acquisition of trust beneficiary interests in real estate (Notes
Nature of transaction
1, 2 and 3)
Amount of transaction (Thousands of yen)
2,550,000
Account–
Balance at end of period (Thousands of yen)–Consumption taxes are not included in transaction amounts.

(Note 1) Acquisition of trust beneficiary interests in real estate mentioned above is for Alpha Living Okayama Nishigawa Ryokudokoen, Alpha Living
Okayama Korakuen, Alpha Living Takamatsu Ekimae and Alpha Living Takamatsu Hyakkenmachi, and the amount of transaction indicates theamount (purchasing amount for real estate, etc. indicated in the sales contract for trust beneficiary interests) that does not include expenses(taxes and dues, etc.) required for the acquisitions of the real estate, etc.
(Note 2) Terms of transaction with interested party are decided based on rules against conflict of interest, which are internal rules of the AssetManagement Company.
(Note 3) Terms of transaction are determined based on market prices.

Note 16 – Segment Information
For the six months ended October 31, 2016 and April 30, 2016
Segment Information
Segment information has been omitted as NHI has only one segment, which is the property leasing business.
Related Information
Information about Products and Services
Disclosure of this information has been omitted as operating revenues to external customers for a single
product/service category account for more than 90% of the operating revenues on the statements ofincome and retained earnings.
Information about Geographic Areas(1) Operating revenues
Disclosure of this information has been omitted as domestic operating revenues account for morethan 90% of total operating revenues.
(2) Investment properties
Disclosure of this information has been omitted as domestic investment properties account for morethan 90% of the book value of the total investment properties.
Information about Major Tenants
Disclosure of this information has been omitted as there is no tenant that accounts for 10% or more of
the operating revenues recorded in the statements of income and retained earnings.

Note 17 – Significant Subsequent Events
None applicable.

32

IX. Independent Auditor’s Report

IX. Independent Auditor’s Report33Feature

Introduction of Operators

Super Court’s Firm Track Record:Fee-based homes for the elderly with nursing care

Super Court Koriyama Tsutsui
Location

856-2 Tsutsui-cho, Yamato Koriyama-shi, Nara

Nearest station

Approximately 6-minute walk from Tsutsui
Station on Kintetsu Kashihara Line

Structure, size

RC/3F

Number of rooms

68

Opening date

April 1, 2010

Kawanishi-shi
Kawanishi-shi

2

Minoo-shi Minoo-shi
Ib

1
2

Hyogo
Hyogo

1
2
3

3

6

6

Suita

7

7

8

98

Toyonaka-shi
Toyonaka-shi

4
5

1

4

5

Amagasaki-shi
Amagasaki-shi

10

10

12
Fee-based homes for the elderly with nursing care

Super Court Kawanishi Kamo
Location

2-6-23 Kamo, Kawanishi-shi, Hyogo

Nearest station

Approximately 13-minute walk from Kawanishi
Ikeda Station on JR Fukuchiyama Line

Structure, size

RC/4F

Number of rooms

55

Opening date

May 1, 2012

Osaka-shi Osaka-s

13

151
17
18

Mat

30
30
28 29 28 2931

Sakai-shi Sakai-shi

32

Osaka Area

Fee-based homes for the elderly

Super Court Suita Yamate
Location

4-31-21 Yamate-cho, Suita-shi, Osaka

Nearest station

Approximately 5-minute walk from Hankyu
Bus stop Asahigaokacho meishin-shita

Structure, size

S/4F

Number of rooms

60

Opening date

April 1, 2013

1 Super Court Minoo Onohara

Super Court Co., Ltd.

3 Super Court Ibaraki Sakura-dori

7 Super Court Toyonaka Momoyamadai 8 Super Court Toyonaka Ryokuchikoen

9 Super Court Suita Yamate

13 Super Court Imazato

14 Seiryo Tatsumikita

15 Super Court Higashi Sumiyoshi 1-gokan

19 Seiryo Hirano Kire

20 Super Court Hirano

21 Super Court Kadoma

25 Super Court Higashi Osaka Mito

26 Super Court Yao

27 Super Court Matsubara

31 Super Court Sakai Shirasagi

32 Super Court Takaishi Hagoromo

Hyogo Area

1 Super Court Minami Hanayashiki 2 Super Court Kawanishi Kamo

3 Super Court Kawanishi

Kyoto Area

1 Super Court Kyo Shijo Omiya

2 Super Court Kyo Nishikyogoku

3 Super Court Kyo Katsura

Nara Area

1 Super Court Ayameike

2 Super Court JR Nara-Ekimae

3 Super Court Koriyama Tsutsui*Properties shown above with photos are not currently owned by NHI nor planned to be owned in the future.

7

2 Super Court Ibaraki Saito

32

Takaishi-shi
Takaishi-shi

3

Operating 46 Facilities in the Kansai Area
(as of January 2017)

1
2
3

1
2

3

Kyoto-shi Kyoto-shi

4

4

5

5
Fee-based homes for the elderly with nursing careUji-shi

6

2

Uji-shi

6

Takatsuki-shi
Takatsuki-shi

2

5

baraki-shiIbaraki-shi

4

5

4

1

a-shi Suita-shi
3

Super Court Higashi Yodogawa
Location

1-6-28 Daidominami, Higashi Yodogawa-ku, Osaka-shi, Osaka

Nearest station

Approximately 6-minute walk from Daido
Toyosato Station on Subway Imazatosuji Line

Structure, size

S/4F

Number of rooms

60

Opening date

May 1, 2013

O s aOsaka
ka

3

9
11

11 21

K yot
Kyot
o o

21

Kadoma-shi
Kadoma-shi
Daito-shi Daito-shi

2

12

22
23

shi

3 14 13 14

16

24

25

15 16
26
19
19
17

26

20

1

23

1

2

24

Nara-shi Nara-shi

Yamato Koriyama-shi
Yamato Koriyama-shi
Yao-shiYao-shi320

3Fee-based homes for the elderly with nursing care

Super Court Kyo Rokujizo

Location

312 Oshima, Momoyama-cho, Fushimi-ku, Kyoto-shi, Kyoto

Nearest station

Approximately 5-minute walk from Rokujizo
Station on Keihan Uji Line

Structure, size

R/4F

Number of rooms

59

Opening date

December 1, 2014

N ara
N ar atsubara-shi
Matsubara-shi

27

2

Higashi Osaka-shi
Higashi Osaka-shi

25

18

22

27

31

4 Super Court Takatsuki Jonai

5 Super Court Takatsuki

6 Super Court Senri Chuo

10 Super Court Mikuni

11 Super Court Higashi Yodogawa

12 Super Court Osakajokoen

16 Super Court Higashi Sumiyoshi 2-gokan 17 Super Court Nagaikoen Front

18 Seiryo Higashi Sumiyoshi

22 Super Court Daito

23 Super Court Higashi Osaka Takaida

24 Super Court Higashi Osaka Shin Ishikiri

28 Super Court Sakai Kamiishi

29 Super Court Sakai Kamiishi 2-gokan

30 Super Court Sakai

4 Super Court Inadera

5 Super Court Mukonoso

4 Super Court Kyo Fujimori

5 Super Court Kyo Rokujizo

6 Super Court Uji Okubo

Fee-based homes for the elderly with nursing care

Super Court Takatsuki Jonai
Location

1-24 Jonai-cho, Takatsuki-shi, Osaka

Nearest station

Approximately 9-minute walk from Takatsukishi
Station on the Hankyu Kyoto Line

Structure, size

S/3F

Number of rooms

60

Opening date

May 1, 2015

Super Court Co., Ltd.

6

Feature

Introduction of Operators

Efforts by and Features
Natural Hot Springs – Natural Healing Power –Natural hot spring water is brought to Super Court facilities from its groupcompany, Super Hotel Osaka Natural Hot Springs.*2
The natural hot spring has positive effects of enhancing blood circulation
through the whole body and relaxing both body and mind, not justbecause the substances contained in the water and hyperthermic action,
but the mechanical action of water pressure and buoyancy in the large bath.
With better flow of blood and lymph fluid, supply of nutritious substancesand excretion of waste are enhanced (decreasing active oxygen andincreasing antioxidant capacity), and metabolism of tissues and repair
mechanism become activated (improving immune strength), thus
generating stronger natural healing power.
By transporting the hot spring water, we provide residents with the joy ofa natural hot spring right at facilities.

Operation with Advanced IT
Super Court believes that proactive use of information systems as one of
the means for communication between family members and as a tool toimprove work efficiency will contribute to improving service quality forcustomers. The information system is developed and operated according
to the four policies of “providing information to family members,”“assisting attracting customers,” “improving work efficiency” and“sharing information among employees for value creation.” Furthermore,
Super Court works with its IT strategy office and highly-expertizedbusiness partners to strengthen/improve security against external threats
focusing on hardware and networks while raising awareness of
information security among all employees.

For-Elderly Training SC-Fit
SC-Fit is a training method uniquely developed by Super Court thatincorporates Comprehensive Geriatric Training (CGT)*3 and chair rhythm(exercise using chairs and towels).
One characteristic of SC-Fit training is that it is provided mainly bycare-prevention exercise instructors.
The purpose of the training is not to “maintain” the physical strength ofthe elderly but to go a step further to “enhance” it. SC-Fit
comprehensively trains various elements of physical strength such asbalance and flexibility on top of strengthening muscles.

SC-Fit*1 “Strength” of the strength model refers to strength both in the person and the environment, which will be the key point when preparing care plans. The intention is to focus on the strength originally existent in the person andto draw it out for further enhancement.
*2 Excluding Super Court Hirano Kire, hot spring water transported to Super Court facilities comes from Hananoi, a natural hot spring in Osaka, which is a genuine natural hot spring. It was the first hot spring in Osaka to be
granted the use of nationally standardized signboard indicating it to be an authorized natural hot spring, based on the evaluation by a fair screening organization, “Japan Natural Hot Spring Inspection Authority.”*3 CGT refers to Comprehensive Geriatric Training, which is a training targeting the elderly for the purpose of improving motor functions by conducting functional training for muscles and balance about twice a week to verify its
effectiveness. The program is based on scientific evidence and its safety and effectiveness have been proved, and it has been put into practice in various municipalities across the nation. Furthermore, the CGT program isrecommended by the Japanese government as a function-enhancing program.

5

Super Court Co., Ltd.

of Super Court
Hospitality Fostered through Hotel Operation“Hospitality” is welcoming and treating people with goodwill.
Having hotel business as the parent organization, we will provide warm
services that only Super Court can offer.
We always keep in mind to smile and greet cheerfully at all times and topay delicate attention and show care on a day-to-day basis.
We aim to offer not ordinary care but the finest care incorporating
hospitality acquired at hotels.
What we offer with hospitality is emotionally moving experiences in dailylife.
We will provide sincere services to assure residents of peaceful andpleasant life at Super Court.

Efforts on Dementia Care
We provide dementia care with focus on what the person “wants todo,” “likes to do” and “can do.” At Super Court, the resident’s “strong
points” and “motivation” are identified through regular casediscussions to enable preparation of care plans and provision ofservices that are suitable for his/her conditions and behaviors. We
emphasize trust relationships with residents by understanding theresidents’ past living environment and individual characteristics, andput forth efforts to help them with realizing their dreams and goals aswell as leading active daily lives.
・Care plans that draw out strong points (Strength Model*1)
・Recollection therapy that encourages recovery of memories andactivation of the brain through looking at old photos and items
・Dementia care case discussion

Types of Strength
Ability

can do ...

Confidence

have confidence in doing ...

Motivation

want to do ...

Likinglike to do ...

Recollection room

Strength Model
Care that values the ability and characteristics essentiallypossessed by the residents
Creating an atmosphere where the residents can say
what they like and can do.
“Strength” in “strength model” means “strong points.” While drawing
out residents’ motivation, ability, liking, ambition, confidence and such,
we provide care that adds strength to the residents by having themfeel that they have someone to care for them in their surroundings.

Surroundings have someone to do it with ...

Super Court Co., Ltd.

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Feature

Introduction of Operators

Aiming for facility operationthat can assure local residents of“worry-free golden years with Super Court”
Super Court decided to enter the elderly care business with hopes to contribute to society
while assisting the forthcoming aging society, and opened Super Court Higashi Sumiyoshi
1-gokan in June 2000. Currently (as of January 2017), we operate fee-based homes forthe elderly in 46 locations, limiting the area to Kansai.
Our mission is to create services that will make local residents feel that “their golden
years are worry-free because there are Super Courts,” through cultivating autonomous,
emotionally-sensitive personnel. To that end, we have pursued to offer meticulous
high-quality services thoroughly focusing on providing “safe, clean and lively daily lives”
and “thoughtful care” that are expected from the residents and their families.
Representative Director

Akiyoshi Yamamoto

We will continue to aim for creating care facilities that will please local residents.
We appreciate your continuous support and guidance.

Received the Kansai
Management Quality Award (Gold)*Kansai Quality Award is an award in which Kansai Productivity Center recognizes organizations that have shown outstanding
business results, for the purpose of producing world class companies and organizations from the Kansai area through “good management.”

Reasons for Recognition
Development of strategy and enhancement of on-site capabilities through cultivation of autonomous emotionally-sensitive persons
By discussing strategic themes regularly from a broad range of perspectives at “management quality meetings” and “ISO quality meetings,”
enhancement of organizational capabilities to improve/reform management issues is achieved.
These activities support creating a corporate culture that nurtures “autonomous emotionally-sensitive persons” who are able to think forthemselves and act, and also to appreciate others and be impressed.

Highly unique facility operation focusing on dementia care and improvement of physical functions
Under the policy to always provide safe, clean and lively daily lives, unique facility operation is conducted centering on dementia care.
Residents’ physical functions are enhanced through exercises, and mental states/conditions are kept stable/improved by installing a section
recreating scenes from the Showa Era.
Monthly goals set and achievements are reported to families with photos and letters, valuing connection with families.

Improving operational efficiency and establishing comprehensive medical/care service infrastructure utilizing IT
In order to improve operational efficiency and establish comprehensive medical/care service infrastructure, Super Court succeeded incomputerization of a memory system utilizing IT. Introduction of this system was carefully carried out with repeated exchanges with thejurisdictional administration, being the industry’s first to attempt such.
In addition, detailed educational training on IT tools was provided across the company for on-site staff who were unfamiliar with the operationof tablets.

3

Super Court Co., Ltd.

Fou n d a ti o n S p ir it s
Mutual trust and desire to take1. on new challenges

Wanting to create a company with excellent management that continues to challenge and istrusted by customers, local people, business partners and employees.

2. Foresight and creativity

Wanting to create “care services with a bright future” that take in the trends of the future andspread them to the community.

3. Tenacious pursuit

Wanting to create care facilities that pursue safe, clean, lively and “meaningful lives of residents.”

4. Hospitality

Wanting to provide genuine services that offer emotionally moving experiences in daily lives.

Respect for human beings and5. love of family

Wanting to bring happiness to employees and their families by having them grow into
autonomous emotionally-sensitive persons based on human power and sensitivity.

Mana g e m e n t P h ilo s o p h y● We will offer thoughtful care by putting ourselves in the position of families while always providing safe, clean and lively daily lives.
● With a devoted hands-on approach, we will change ourselves to meet customer needs wholeheartedly with an aim to satisfy.
We seek to become a creative company that takes in the trends of the future by establishing unique, high-quality services with the gatheredefforts of the entire group.

Com p a n y Ov er v i e w

Change in Number of Facilities Operated

Company nameSuper Court Co., Ltd.

(Number)50

Established

1995

Representative
director

Akiyoshi Yamamoto

Business activities

Operation and management of fee-based homes for theelderly/elderly housing
Operation and management of buildings and apartments(track record of over 6,000 rooms)
Planning, designing and construction of rental apartments(track record of over 300 buildings)

Paid-in capital

50 million yen

Net sales

12.5 billion yen (fiscal period ended March 2016)

Settlement period

MarchHead office

CE Nishihonmachi Building, 1-7-7 Nishihonmachi, Nishi-ku,
Osaka-shi, Osaka

Number of
employees

1,397 (as of March 2016) *including part-time
employees/excluding temporary employees

Main financing banks

Resona Bank, Ltd., The Bank of Tokyo-Mitsubishi UFJ, Ltd.

No. of building lots and buildings
transaction business license

License No. (4) 5548 issued by the Minister of Land,
Infrastructure, Transportation and Tourism

42

44

46

40

34
30

23
20

17
11

10

0

1

2

3

5

26

19

13

7

1997 2000 2002 2003 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (Year)

Super Court Co., Ltd.

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Feature Vol. 4

Introduction of Operators
Super Court Co., Ltd.