This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.

REIT Financial Report for the 3rd Fiscal Period
December 18, 2015
REIT Issuer:
Nippon Healthcare Investment Corporation
Securities Code: 3308
Representative: Hiroshi Fujioka, Executive Director
Asset Manager:
Representative:
Inquiries to:

Stock Exchange Listing: TSE
URL: http://www.nippon-healthcare.co.jp/

Daiwa Real Estate Asset Management Co. Ltd.
Akira Yamanouchi, President and Representative Director
Yuji Shinotsuka, Vice President and Representative Director

TEL: +81-3-6757-9600

Scheduled date of submission of periodic securities report (yuka shoken hokokusho):Scheduled date of start of distribution payments:
Preparing presentation material:
Holding financial brief meeting:January 20, 2016
January 21, 2016

Yes
Yes (for institutional investors and analysts)[Amounts are rounded down to the nearest million yen, except for per unit figures]
1. Status of Management and Assets for the 3rd Fiscal Period
3rd Fiscal Period: Fiscal period ended October 2015 (from May 1, 2015 to October 31, 2015)(1) Management[% figures show the period-on-period increase (decrease)]
FiscalperiodOperating revenue

Operating income

Ordinary income

Net income

million yen%

million yen%

million yen%

million yen

%

3rd
2nd

555
507

9.4
43.2

224
245

(8.6)
45.0

201
162

23.9
24.4

200
161

24.0
24.8

FiscalperiodNet income
per unit

3rd
2nd

Net income tounitholders’ equity

Ordinary income tototal assets

Ordinary income tooperating revenue

yen

%

%

%

3,299
2,705

2.5
3.2

1.2
1.4

36.3
32.0

(2) Distributions

Fiscalperiod3rd
2nd

Distribution
amountper unit(including
distribution
amountin excess ofearnings)
yenDistribution
amountper unit(excluding
distribution
amountin excess ofearnings)
yen

4,067
3,471

3,299
2,661

yen

Total
distribution
amount(including
distribution
amountin excess ofearnings)
million yen

Total
distribution
amount(excluding
distribution
amountin excess ofearnings)
million yen

768
810

247
211

200
161

Distribution
amountin excess ofearnings
per unit

Total
distribution
amountin excess ofearnings

Dividend
payoutDistribution
amount to
net assets

million yen

%

%

46
49

100.0
100.0

2.5
2.2

(Note 1) The rate of decrease in surplus, etc. from implementing cash distributions in excess of earnings (reimbursement ofinvestments in capital which falls under the category of distribution reducing unitholders’ capital for tax purpose) in the 3rd
Fiscal Period and the 2nd Fiscal Period is 0.005 and 0.007, respectively. Furthermore, calculation of the rate of decrease insurplus, etc. is pursuant to Article 23, Paragraph 1, Item 4 of the Order for Enforcement of the Corporation Tax Act(Cabinet Order No. 97 of 1965; including amendments thereto).
(Note 2) Dividend payout for the 2nd Fiscal Period is calculated by the following formula since issuance of new investment units
was implemented.
Dividend payout = [Total distribution amount (excluding distribution amount in excess of earnings) ÷ Net income] × 100(Note 3) Dividend payout and distribution amount to net assets are calculated based on figures excluding distribution amount inexcess of earnings.

(3) Financial Position
FiscalTotal assets
periodUnitholders’ equity tototal assets

Net assets

Net assets
per unit

million yen

million yen%

yen

17,66615,134

8,035
8,045

45.5
53.2

132,160
132,332

Net cashprovided by (used in)operating activities

Net cashprovided by (used in)investing activities

Net cashprovided by (used in)financing activities

million yen

million yen

million yen

million yen

395
363

(2,941)(6,230)

2,189
6,282

965
1,321

3rd
2nd
(4) Cash Flows
Fiscalperiod3rd
2nd

Cash andcash equivalents
at end of period

2. Management Status Forecasts for the 4th Fiscal Period and the 5th Fiscal Period
4th Fiscal Period: Fiscal period ending April 2016 (from November 1, 2015 to April 30, 2016)
5th Fiscal Period: Fiscal period ending October 2016 (from May 1, 2016 to October 31, 2016)[% figures show the period-on-period increase (decrease)]
Fiscalperiod4th
5th

Fiscalperiod4th
5th

Operating revenue

Operating income

Ordinary income

Net income

million yen%

million yen%

million yen%

million yen

%

667
676

20.1
1.4

278
274

23.8
(1.4)

244
244

21.2
0.0

243
243

21.3
0.0

Distribution amount per unit
(including distribution amountin excess of earnings)

Distribution amount per unit
(excluding distribution amountin excess of earnings)

Distribution amountin excess of earnings
per unit

yen

yen

yen

4,060
4,060

3,260
3,260

800
800

(Reference) Estimated net income per unit for the 4th Fiscal Period: 3,326 yen; 5th Fiscal Period: 3,260 yen* Other(1) Changes in Accounting Policies, Changes in Accounting Estimates and Retrospective Restatement(i) Changes in accounting policies due to amended accounting standards, etc.: None(ii) Changes in accounting policies other than (i):None(iii) Changes in accounting estimates:None(iv) Retrospective restatement:
None(2) Total Number of Investment Units Issued and Outstanding(i) Total number of investment units issued and outstanding(including own investment units) at end of period:(ii) Number of own investment units at end of period:(Note)

3rd Fiscal Period
2nd Fiscal Period
3rd Fiscal Period
2nd Fiscal Period

60,800 units
60,800 units– units– units

Please refer to “Notes to Per Unit Information” on page 28 for the number of investment units used as the basis forcalculating the net income per unit.

* Presentation of the status of implementation of audit proceduresThis financial report (kessan tanshin) is exempt from the audit procedures pursuant to the Financial Instruments and Exchange
Act (Act No. 25 of 1948; including amendments thereto) (hereinafter referred to as the “Financial Instruments and ExchangeAct”) and, at the time of disclosure of this financial report (kessan tanshin), the audit procedures pursuant to the Financial
Instruments and Exchange Act have not been completed.
* Explanation of the appropriate use of the management status forecasts, and other matters of special note
The forecast figures are forward-looking statements based on information currently available to Nippon Healthcare Investment
Corporation and involve uncertainties. Accordingly, the actual operating revenue, operating income, ordinary income, net income
and distribution amount per unit may vary due to changes in the status. In addition, the forecast is not a guarantee of the
distribution amount. For details on the assumptions underlying the forecast figures above, please refer to “Assumptions for theManagement Status Forecasts for the 4th Fiscal Period (from November 1, 2015 to April 30, 2016) and the 5th Fiscal Period (fromMay 1, 2016 to October 31, 2016)” on page 11.

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
1. Affiliated Juridical Persons of the Investment Corporation
1.1. Structure of NHIManagement backup contractors have been added, as shown below, to the “Structure of Investment
Corporation” set out in the most recent periodic securities report (yuka shoken hokokusho) (submitted on
July 27, 2015). Among the management backup contractors, Sompo Care Next Inc. is the new name for
Watami No Kaigo Co., Ltd. after the business name change on December 1, 2015.

Asset Custodian(2)

Investment Corporation

Mizuho Trust & Banking
Co., Ltd.

Nippon Healthcare Investment
Corporation

Management Back-up
Contractors

General Meeting ofUnitholders

Sawayaka Club Co., Ltd.
Cedar Co., Ltd.
Super Court Co., Ltd.
Charm Care Corporation
Nichii Gakkan Company
Nihon Kaigo Iryo Center Co.,Ltd.
SOMPO Care Next Inc.
Wisnet Co., Ltd.
Silver Heights Sapporo Co.,Ltd.
Anabuki Medical Care Inc.

Board of Directors

Specially Related Company(Parent Company of theAsset Management
Company) / Sponsor
Daiwa Securities Group Inc.

(5)

(3)

Administrator of Unitholders’Register
Sumitomo Mitsui Trust Bank,
Ltd.

(4)

General Administrator(Accounting, etc.)
Heiseikaikeisha Tax
Corporation

Executive Director:
Hiroshi Fujioka
Supervisory Director:
Tomohiko Shimizu
Supervisory Director:
Chizuko Nakata

Accounting Auditor
KPMG AZSA LLC(1)Asset management company /General administration(Operation of Administration
Organization)(6)(7)
Daiwa Real Estate AssetManagement Co. Ltd.

Adviser
AIP Healthcare Japan GK(1) Asset management agreement/General administration affairs agreement related to operation(2) Asset custodian agreement(3) General administrator of unitholders’ registry agreement(4) General administrator of accounting agreement(5) Management back-up agreement(6) Sponsor support agreement(7) Advisory agreement(Note) Specially Related Company (as defined in Article 12 Paragraph 3 of the Cabinet Office Ordinance on
Disclosure of Information, etc. on Specified Securities (Ordinance of the Ministry of Finance No. 22 of
1993, including subsequent amendments)) of NHI is Daiwa Securities Group Inc. Daiwa Securities
Group Inc. is a parent company (as defined in Article 8, Paragraph 3 of the Ordinance for theTerminology, Forms and Preparation Methods of Financial Statements, etc. (Ordinance of the Ministryof Finance No. 59 of 1963)) of the Asset Management Company.

-1-

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
1.2. Functions, Names and Details of Work of NHI and NHI’s Affiliated Juridical Persons
Function
Investment Corporation

Company name
Nippon Healthcare Investment
Corporation

Asset managementcompany / Generaladministration affairs
agreement related tooperation

Daiwa Real Estate AssetManagement Co., Ltd.

Asset Custodian

Mizuho Trust & Banking Co., Ltd.

General administrator of
calculation, preparationof accounting record andtax payment

Heiseikaikeisha Tax Corporation

General administrator ofunitholders’ register

Sumitomo Mitsui Trust Bank, Ltd.

Special Related Company(Parent Company of the

Daiwa Securities Group Inc.

-2-

Details of work
Pursuant to the Articles of Incorporation, NHI shallmanage capital and such paid in by unitholders throughmaking investments primarily in real estate and otherassets.
The company concluded an asset management agreementwith NHI on January 7, 2014.
As an asset management company defined in the Act on
Investment Trusts and Investment Corporations (Article
198, Paragraph 1), the company shall, based on theagreement, manage assets in accordance with theinvestment target and policies stipulated in the Articles ofIncorporation of NHI.
The following are work entrusted to the asset managementcompany.
(1) Work related to management of NHI’s assets (2) Workrelated to fund procurement for NHI (3) Reporting to NHI(4) Other work related or incidental to the above (1) - (3),which NHI entrusts as needed (including participating in
NHI’s Board of Directors and making reports.)
Moreover, the asset management company concluded ageneral administration affairs agreement related tooperation with NHI on January 7, 2014.
As a general administrator defined in the Act on
Investment Trusts and Investment Corporations (Article
117, Paragraph 4), the company shall, based on theagreement, conduct administrative work of operation ofadministration organization (excluding dispatching
documents related to the General Meeting of Unitholders,receiving voting forms, work related to tallying.)
The company concluded an asset custodian agreementwith NHI on January 7, 2014.
As an asset custodian defined in the Act on Investment
Trusts and Investment Corporations (Article 208,
Paragraph 1), the company shall, based on the agreement,
conduct work related to custody of assets held by NHI. The
asset custodian shall also conduct the following work
associated with asset custody. (1) Making payments usingbank accounts under the name of NHI, (2) Opening/closingof bank accounts under the name of NHI, and (3) Other
work corresponding to (1) and (2) ．
The company concluded a general administrator of
accounting agreement with NHI on January 7, 2014.
As a general administrator defined in the Investment Trust
Law (Article 117, Paragraphs 5 and 6), the company shall,
based on the agreement, conduct the following. (1) Workrelated to calculation, (2) Work related to preparation of
accounting record, (3) Work related to tax payment, and (4)Work related or incidental to the above work.
The company concluded a general administrator ofunitholders’ registry agreement with NHI on December 25,
2013. (The asset management company, the organizer of
NHI, concluded the agreement on December 25, 2013, and
NHI succeeded the contractual status from the asset
management company on January 7, 2014.)
As a general administrator defined in the Act on
Investment Trusts and Investment Corporations (Article
117, Paragraphs 2, 3 and 6), the company shall, based on
the agreement, conduct the following. (1) Work related topreparing, administrating and keeping unitholders’ register(2) Work related to issuance of investment securities (3)Work related to conducting the General Meeting ofUnitholders (4) Work related to payment of distributions or
refunding to unitholders, and (5) Work related toresponding to requests from unitholders regarding
execution of rights and such.
The company is the parent company of the asset
management company, which owns 100% of the total

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
Asset Management
Company) / Sponsor

Advisor of AssetManagement Company

AIP Healthcare Japan GK

Management Back-up
Contractor

Sawayaka Club Co., Ltd.
Cedar Co., Ltd.
Super Court Co., Ltd.
Charm Care Corporation
Nichii Gakkan Company
Nihon Kaigo Iryo Center Co., Ltd.
SOMPO Care Next Inc.
Wisnet Co., Ltd.
Silver Heights Sapporo Co., Ltd.
Anabuki Medical Care Inc.

number of outstanding shares of the asset managementcompany.
The company concluded a sponsor support agreementwith the asset management company on June 17, 2009.
With the aim for NHI’s sustainable and stable growth, thecompany shall provide, on as-needed basis, the information
which Daiwa Securities Group Inc. judges to be beneficial
to the asset management company or NHI, among
information on properties, etc. for the asset managementcompany and other information related to the operation of
the asset management company, as well as cooperating insecuring personnel at the asset management company.
The company concluded an advisory agreement with theasset management company on December 27, 2013.
With the aim for NHI’s sustainable and stable growththrough expanding investment opportunities of NHI andenhancing the quality of real estate management by theasset management company, the company shall provide
information on management/operation of healthcare
facilities with the asset management company, conduct
advisory work such as assisting and supportingnegotiations with operators, and advise on market
research/analysis concerning assets under investment
target.
Each of the companies has concluded a management backup agreement with NHI.
In case a lease agreement related to healthcare facilities
owned by NHI is terminated or expected to be terminated
due to cancellation, dissolution or other reason, when NHI
requests a management back-up contractor to operate therelevant facility upon concluding a new lease agreement for
the facility, the relevant management back-up contractor
shall sincerely discuss the request with NHI.

2. Management Policy and Management Status
2.1. Management Policy
Disclosure is omitted because there are no significant changes from the “Investment Policy,” “Investment
Target” and “Distribution Policy” set out in the most recent periodic securities report (yuka shoken hokokusho)(submitted on July 27, 2015) as of the date of this document.
2.2. Management Status(1) Overview of the Fiscal Period under Review
A. Brief History of the Investment Corporation
Nippon Healthcare Investment Corporation (hereinafter referred to as “NHI”) was established on January 7,
2014 in accordance with 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 theorganizer. After its establishment, NHI implemented an additional issuance of investment units throughprivate placement (18,800 units) on April 3, 2014. NHI commenced actual management with the acquisitionof eight properties on March 28, 2014 by using the proceeds from the concerned capital increase throughprivate placement and loans.
After having built a track record of approximately seven months since commencement of management,
NHI implemented an additional issuance of investment units through a public offering (39,000 units) on
November 4, 2014. On the following day, NHI listed on the Tokyo Stock Exchange, Inc. (hereinafter referred
to as “Tokyo Stock Exchange”) Real Estate Investment Trust Securities Market (securities code: 3308),
along with additionally acquiring six properties. In the fiscal period under review (3rd Fiscal Period: fiscal
period ended October 2015 (from May 1, 2015 to October 31, 2015)), NHI additionally acquired threeproperties with borrowings and cash on hand.
As the first Japanese REIT specializing in healthcare facilities in that it invests solely in properties ofwhich the principal use is healthcare facilities, NHI effectively utilizes investor capital to initiate expansionof supply of high-quality healthcare facilities that provide users with high-standard services, while at thesame time produce ample and dependable returns to investors for further capital circulation. In this way,
NHI aims at creating a new value cycle for healthcare facilities and the services provided, together with-3-

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
investors. Through these efforts, NHI would like to contribute to the realization of Japan’s major policy toimprove the residential environment for the elderly by effectively utilizing private sector funds.
B. Investment Environment and Management Performancea. Investment Environment (from May 1, 2015 to October 31, 2015)
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 one-quarter of the total population as of June 1, 2015
(according to the Ministry of Internal Affairs and Communications’ “Population Estimates”), and the
population of the elderly is forecast to continue to account for 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 the elderly with nursing care services, etc. thatare designed for the elderly to reside (referring to “silver housing” (public housing for the elderly), “goodrental housing for the elderly,” “elderly housing with supportive services,” “fee-based homes for theelderly” 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 range between 3% and 5% in 2020. In order toaccomplish this policy target, new supply of housing for the elderly for between approximately 430,000
people and approximately 1,150,000 people is required by 2020.
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
and thereby seize opportunities to earn cash flows arising from the mounting social demand.
b. Management Performance
In the 3rd Fiscal Period, NHI acquired a total of three properties (sum total of acquisition price: 2,778
million yen); two properties on June 1, 2015 (Minna-no-ie Omiya Yoshinocho and Minna-no-ie Chuo-ku
En’nami; total acquisition price: 1,578 million yen) and one property on October 15, 2015 (Silver
Heights Hitsujigaoka No. 3; acquisition price: 1,200 million yen).
Concerning the properties held as of the end of the 3rd Fiscal Period (October 31, 2015), the leasable
floor area was 57,173.22m2 and the occupancy rate was 100.0%.
C. Overview of Capital Procurementa. Procurement of Capital for New Property Acquisitions
In the 3rd Fiscal Period, NHI conducted the following borrowing of funds for use as funds foracquisition, etc. of new properties.
・NHI conducted borrowing of funds on June 1, 2015 from Mizuho Bank, Ltd., Mizuho Trust & Banking
Co., Ltd. and The Musashino Bank, Ltd. totaling 1,500 million yen to be used as funds for acquisition,etc. of new properties that were acquired on the same day (Minna-no-ie Omiya Yoshinocho andMinna-no-ie Chuo-ku En’nami).
・NHI conducted borrowing of funds on October 15, 2015 from Resona Bank and Shinkin Central Bank
totaling 900 million yen to be used as funds for acquisition, etc. of new property that was acquired on
the same day (Silver Heights Hitsujigaoka No. 3).
b. Status of Interest-Bearing Liabilities at End of the Fiscal Period under Review
As a result of the above, the balance of interest-bearing liabilities outstanding at the end of the 3rd
Fiscal Period (as of October 31, 2015) totaled 8,800 million yen (all long-term loans payable). None are
due for repayment within one year of the end of the 3rd Fiscal Period.
Having borrowed long-term loans with periods ranging between 3 years and 5 years during the 3rd
Fiscal Period, the average remaining period at the end of the 3rd Fiscal Period was 3.51 years.
In addition, NHI concluded an interest rate swap agreement for converting future interest rate payable
into a fixed rate for a total of 2,400 million yen which was borrowed in the 3rd Fiscal Period, for the
purpose of hedging the risk of interest rate fluctuations.

-4-Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
List of Borrowings in the 3rd Fiscal Period
Loan amount
Lender(million yen)Mizuho Bank, Ltd.
500
Mizuho Trust & Banking Co., Ltd.
500
The Musashino Bank, Ltd.
500
Resona Bank, Limited
500
Shinkin Central Bank
400

Drawdown dateJune 1, 2015
June 1, 2015
June 1, 2015
October 15, 2015
October 15, 2015

Repayment
deadline
May 29, 2020
May 29, 2020
May 29, 2020
October 30, 2020
October 31, 2018

Balance of Borrowings from Each Financial Institution (as of October 31, 2015)
End of the 3rd Fiscal Period
Lender(million yen)

Loan period(years)
5.0
5.0
5.0
5.0
3.0

Share
(Note)

Mizuho Bank, Ltd.

2,300

26.14%

Resona Bank, Limited

1,700

19.32%

Sumitomo Mitsui Trust Bank, Limited

1,200

13.64%

Mizuho Trust & Banking Co., Ltd.

1,200

13.64%The Musashino Bank, Ltd.

1,000

11.36%

Shinkin Central Bank

900

10.23%The Dai-ichi Life Insurance Company, Limited

500

5.68%

Total

8,800

100.00%(Note) Share is rounded to two decimal places.

D. Overview of Financial Performance and Distributions
As a result of the management described above, NHI posted financial performance for the 3rd Fiscal
Period of 555 million yen in operating revenue, 224 million yen in operating income, 201 million yen in
ordinary income and 200 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 perunit of 3,299 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 46,694,400 yen, which is the amountroughly equivalent to 31% of the 151 million yen in depreciation for the 3rd Fiscal Period, as reimbursementof investments in capital which falls under the category of distribution reducing unitholders’ capital for tax
purpose. Accordingly, NHI declared a distribution amount in excess of earnings per unit of 768 yen.
(Note) NHI adopts a policy of implementing uninterrupted cash distributions in excess of earnings(reimbursement of investments in capital which falls under the category of distribution reducing unitholders’capital for tax purpose) in an amount not to exceed 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 not affect long-term repair plans in light of the capital expenditures for each accounting
period assumed based on the long-term repair plans and to meet needs 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 as of the end of the 3rd
Fiscal Period (17 properties) is 24 million yen.

-5-

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period(2) Outlook for the Next Fiscal Period
A. Investment Environment
Japan has the population of the elderly accounting for approximately one-quarter of the total population,and the population of the elderly is expected to continue to account for an increasingly greater proportion andthe population of the elderly living alone is expected to continue to grow. With the development of medical
technology, among other factors, record-highs were set in terms of the average life expectancy at birth forJapanese people at 80.50 years for males and 86.83 years for females according to the Ministry of Health,Labour and Welfare’s “Abridged Life Tables for Japan 2013,” and in terms of the population aged 65 years
or over at 33 million people and the proportion of the elderly population at 26.5% of the total population of
126 million as of June 1, 2015 according to the Ministry of Internal Affairs and Communications’“Population Estimates.”
According to the National Institute of Population and Social Security Research’s “Population Projections
for Japan (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 86 million people, theelderly population will reach 34 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 range between 3% and 5% by 2020. In order to accomplish this policy target, new supply of
housing for the elderly for between approximately 430,000 people and approximately 1,150,000 people isrequired by 2020.
In such an environment, there is recognized to be sufficient potential for greater development of housing
for the elderly with nursing care services, etc. that are designed for the elderly to reside through effective
utilization of private sector funds.
B. Future 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.
(i) Stabilization of earnings
In principle, NHI shall invest in properties with the actual remaining lease contract period at thetime of acquisition of 10 years of more, taking into account also the possibility of contract renewal.
In view of 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.
(ii) 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
value of healthcare facilities.
(iii) 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 withalso the operators of healthcare facilities to be acquired in the future. Such relationship by agreementwith operators is referred to as “Backup Operator Membership.”-6-

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Periodb. Strategy for New Property Investments
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 incollaboration with the sponsor group and the adviser.
(i) 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(business companies, financial institutions, major real estate brokerage companies and real estate
brokerage parties, etc.) accumulated through asset management of Daiwa Office Investment
Corporation (balance of assets for which management is entrusted as of the end of November 2015:
approximately 445.7 billion yen) and Daiwa Residential Private Investment Corporation (balance ofassets for which management is entrusted as of the end of November 2015: approximately 78.2
billion yen). In addition, in order to expand and boost opportunities to acquire healthcare facilities inwhich NHI invests, the Asset Management Company has installed an investment team specializing in
healthcare facilities and is promoting also the building of relationships with new suppliers andsources of property information (healthcare facility operators, developers, etc.) other than existing
property sourcing channels to collect property information.
(ii) 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,
commissioning of facility operation, etc., and thinks that expansion of property acquisition
opportunities can thus be expected.
(iii) 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
in private 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
Asset Management Company believes that this would contribute to realization of stable performancein the medium to long term of NHI.
In the 3rd Fiscal Period (the fiscal period ended October 2015), NHI acquired a total of three properties(sum total of acquisition price: 2,778 million yen); two properties on June 1, 2015 (Minna-no-ie Omiya
Yoshinocho and Minna-no-ie Chuo-ku En’nami; total acquisition price: 1,578 million yen) and one
property on October 15, 2015 (Silver Heights Hitsujigaoka No. 3; acquisition price: 1,200 million yen).
In addition, in the 4th Fiscal Period (fiscal period ending April 2016), NHI has acquired a total of four
properties (Alpha Living Okayama Nishigawa Ryokudokoen, Alpha Living Okayama Korakuen, Alpha
Living Takamatsu Ekimae and Alpha Living Takamatsu Hyakkenmachi) for a total acquisition price of
2,550 million yen on November 24, 2015, as stated later in this document in “C. Significant Subsequent
Events.”-7-

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Periodc. 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.
(i) 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.
(ii) 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 overborrowing costs, loan 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 interest rate trends, market level, financial agility and security, the balance oflender composition and other factors.
In order to reduce the risk of interest rate increases 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.
(iii)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,
the amount remaining after setting aside cash and deposits shall be allocated to implement cash
distributions in excess of earnings to unitholders uninterruptedly every fiscal period in an amount not
to exceed 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
and financial status of NHI and other factors.
There may be cases where surplus funds will be invested into securities and monetary claims thatare highly secure and liquid.
Derivative transactions (Article 2, Paragraph 6 of the Investment Trusts Act) shall be limited tothose managed for the purpose of hedging the risk of fluctuations in interest rates on the liabilities of
NHI.

-8-

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
C. Significant Subsequent Events
a. Issuance of Investment Units
NHI resolved issuance of investment units at its Board of Directors Meeting held on October 29,
2015 and November 10, 2015 as follows. Payments are completed on November 17, 2015 andDecember 16, 2015 respectively.
(i) Issuance of new investment units through public offering (primary offering)・Number of investment units offered:
12,130 units
・Paid-in amount (issue amount):
189,440 yen per unit
・Total paid-in amount (issue amount):
2,297,907,200 yen
・Payment date:November 17, 2015
・Use of procured funds:
Acquisitions of specified assets described in b. below
and expenses related to the acquisitions(ii) Issuance of new investment units through third-party allotment
・Number of investment units offered: 1,702 units
・Paid-in amount (issue amount):
189,440 yen per unit
・Total paid-in amount (issue amount): 322,426,880 yen
・Allotee and the number of investment
units allotted:
Daiwa Securities Co., Ltd. 1,702 units
・Payment date:
December 16, 2015
・Use of procured funds:
To be deposited at financial institutions as cash on hand
until expenditure, and to be used as part of acquisition
funds of specified assets or of repayment of interestbearing liabilities in the future.
b. Acquisition of Assets
NHI conducted the following acquisition of real estate trust beneficiary interests in two properties (sumtotal of acquisition price: 2,550 million yen) on November 24, 2015.
Summary of Assets Acquired
Alpha Living
Okayama
Property nameNishigawa
Ryokudokoen
Type of asset
Type of facility

Location (indication ofresidential address)

Acquisition price

Alpha Living
Okayama
Korakuen

Alpha Living
Takamatsu Ekimae

Alpha Living
Takamatsu
Hyakkenmachi

Trust beneficiary interests in real estateFee-based
Residential-type
home for theelderlyFee-based
Residential-type
home for theelderly
1-11-4 Hama,
6-2 Chuo-cho, KitaNaka-ku,
ku, Okayama-shi,
Okayama-shi,
OkayamaOkayama
730 million yen
610 million yen

605 million yen

8-11
Hyakkenmachi,
Takamatsu-shi,
Kagawa605 million yen(excluding acquisition
costs and consumption
tax, etc.)(excluding acquisition
costs and consumption
tax, etc.)(excluding acquisition
costs and consumption
tax, etc.)(excluding acquisition
costs and consumption
tax, etc.)

Date of delivery

Fee-based
Residential-type
home for theelderly
1-6 Nishiuchi-cho,Takamatsu-shi,
KagawaNovember 24, 2015

Seller

GK DA Healthcare AlphaOperator nameAnabuki Medical Care Inc.

-9-

Elderly housingwith supportive
serviceNippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Periodc. Borrowing of Funds
NHI concluded a commitment-type term loan contract on October 29, 2015 and executed borrowing offunds on November 24, 2015 as follows. The borrowed funds were used for the new acquisitions ofassets described in the above b. Acquisition of Assets and for expenses incidental to the acquisitions.

LenderLoan amount(million yen)Interest rate

Repayment
deadline

Borrowing/
Repayment
methodJBA 1-month JPY
Secured /TIBOR + 0.30%
May 24, 2016 Lump-sum(Note)
repaymentInterest payment dates shall be the last day of each month and the maturity date (however, if the concerned
date is not a business day, then it shall be the next business day; if that next business day falls into the next
calendar month, then it shall be the business day immediately preceding the concerned date). The base rateapplicable to the calculation period for the interest payable on an interest payment date shall be the Japanese
Bankers Association (JBA) 1-month Japanese Yen TIBOR two business days prior to the date ofcommencement of the interest calculation period.

Mizuho Bank, Ltd.
(Note)

Drawdown
date
November 24,
2015

900

D. Outlook for Management Status
NHI forecasts the following management status for the 4th Fiscal Period (from November 1, 2015 to April
30, 2016) and the 5th Fiscal Period (from May 1, 2016 to October 31, 2016). For the assumptions underlying
the management status forecasts, please refer to the “Assumptions for the Management Status Forecasts forthe 4th Fiscal Period (from November 1, 2015 to April 30, 2016) and the 5th Fiscal Period (from May 1,2016 to October 31, 2016)” on page 11.
4th Fiscal Period (from November 1, 2015 to April 30, 2016)
Operating revenue
667 million yen
Operating income
278 million yen
Ordinary income
244 million yen
Net income
243 million yen
Distribution amount per unit
3,260 yen(excluding distribution amount in excess of earnings)
Distribution amount in excess of earnings per unit
800 yenDistribution amount per unit
4,060 yen(including distribution amount in excess of earnings)
5th Fiscal Period (from May 1, 2016 to October 31, 2016)
Operating revenue
Operating income
Ordinary income
Net income
Distribution amount per unit
(excluding distribution amount in excess of earnings)
Distribution amount in excess of earnings per unit
Distribution amount per unit
(including distribution amount in excess of earnings)

676 million yen
274 million yen
244 million yen
243 million yen
3,260 yen
800 yen4,060 yen

(Note) Discrepancies between the forecast figures above and the assumptions may arise due to future additional
acquisition or sale of real estate, etc., real estate market and other developments, fluctuation in interest rates,change in other circumstances surrounding NHI and other factors. Accordingly, the actual operating
revenue, operating income, ordinary income, net income, distribution amount per unit and distribution
amount in excess of earnings per unit may vary as a result. In addition, the forecast is not a guarantee ofthe distribution amount and distribution amount in excess of earnings.

- 10 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
Assumptions for the Management Status Forecasts for the 4th Fiscal Period (from November 1, 2015 toApril 30, 2016) and the 5th Fiscal Period (from May 1, 2016 to October 31, 2016)
Item
Calculation
periodAssetsundermanagement

Operatingrevenue

OperatingexpensesNon-operating
expenses

Interest-bearing
liabilities

Assumption
・4th Fiscal Period
Fiscal period ending April 2016: from November 1, 2015 to April 30, 2016 (182 days)
・5th Fiscal Period
Fiscal period ending October 2016: from May 1, 2016 to October 31, 2016 (184 days)
・4th Fiscal Period and 5th Fiscal Period: The assumption is that the 17 properties held as of
October 31, 2015, plus real estate trust beneficiary interests of the four properties acquiredon November 24, 2015 (Alpha Living Okayama Nishigawa Ryokudokoen, Alpha Living
Okayama Korakuen, Alpha Living Takamatsu Ekimae and Alpha Living Takamatsu
Hyakkenmachi), to total 21 properties will continue to be held and there will be no otheracquisition of new property through to the end of the 5th Fiscal Period.
・The actual number of properties may vary due to acquisition of new property, or dispositionof portfolio property, etc.
・Real estate rent revenue of acquired assets is calculated on the basis of the rent stated inlease agreements that have been concluded. Furthermore, the period-end occupancy rate
for each property is expected to be 100.0% at the end of the 4th Fiscal Period and 100.0%
at the end of the 5th Fiscal Period.
・The assumption is that there will be no gain (loss) on sales of real estate properties.
・Expenses related to rent business, which constitute a major component of operating
expenses, are calculated on the basis of historical data and by taking into consideration thefactors causing fluctuation in expenses.
・Operating income from property leasing (excluding gain on sales of real estate properties)
after deduction of expenses related to rent business (including depreciation) is assumed to
be 407 million yen in the 4th Fiscal Period and 412 million yen in the 5th Fiscal Period.
・Consignment expenses are assumed to be 12 million yen in the 4th Fiscal Period and 12
million yen in the 5th Fiscal Period.
・Taxes and dues (fixed property tax, city planning tax, etc.) are assumed to be 37 million yen
in the 4th Fiscal Period and 47 million yen in the 5th Fiscal Period.
・In general, fixed property tax, city planning tax, etc. upon transactions of real estate, etc. are
calculated on a pro rata basis and reimbursed at the time of acquisition with the current
owner, but the amount equivalent to the reimbursement is included in the cost of acquisition
and thus not recognized as expenses at the time of acquisition of the property at NHI.
Accordingly, in the case of the assets acquired in fiscal 2015, fiscal 2016 fixed property tax,
city planning tax, etc. are recognized as expenses starting from the 4th Fiscal Period (fiscal
period ending April 2016).
・Depreciation, which is calculated using the straight-line method, is assumed to be 186
million yen in the 4th Fiscal Period and 186 million yen in the 5th Fiscal Period.
・Repair expenses for buildings are assumed based on medium- to long-term repair plans
formulated by the Asset Management Company to be 19 million yen in the 4th Fiscal
Period and 13 million yen in the 5th Fiscal Period. However, repair expenses possibly
increasing in amount or additionally arising from unforeseeable causes may result in repair
expenses differing materially from the forecast amount.
・34 million yen is assumed for the 4th Fiscal Period, out of which 300,000 yen is assumed asinterest expenses and other borrowing related expenses.
・300,000 yen is assumed as interest expenses and other borrowing related expenses for the
5th Fiscal Period.
・The assumption is that total interest-bearing liabilities will be 9,300 million yen at the endof the 4th Fiscal Period and at the end of the 5th Fiscal Period.
・In the 4th Fiscal Period, NHI made new borrowings in November 2015 for use as the funds
for acquisition of the four properties acquired on November 24, 2015. All amount except
for 500 million yen out of the new borrowings is assumed to be repaid in the 4th Fiscal
Period.
・The assumption is that there will be no change in loan balance other than the above throughto October 31, 2016.

- 11 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
Item

Total number ofinvestment units
issued andoutstanding

Distribution
amountper unit(excluding
distribution
amountin excess ofearnings)

Distribution
amountin excess ofearnings
per unit

Other

Assumption
・For the 4th Fiscal Period and the 5th Fiscal Period, 74,632 units are assumed; which is a
total of 60,800 units (the total number of investment units issued and outstanding as of
October 31, 2015), and 12,130 units and 1,702 units (new investments units issued throughpublic offering and through third-party allotment, respectively, which were resolved at
NHI’s Board of Directors Meeting held on October 29, 2015).
・It is assumed that there will be no change to the number of investment units due to issuanceof new investment units, etc. in addition to the above, through to the end of the 5th Fiscal
Period.
・Distribution amount per unit (excluding distribution amount in excess of earnings) is
calculated based on the assumption that the entire amount of earnings will be distributed inaccordance with the cash distribution policy set forth in the articles of incorporation of
NHI.
・Distribution amount per unit (excluding distribution amount in excess of earnings) may
vary due to various factors, including fluctuation in real estate rent revenue accompanying
change in assets under management, change in tenants, etc., or incurrence of unexpected
repairs.
・Distribution amount in excess of earnings per unit is calculated in accordance with the cash
distribution policy set forth in the articles of incorporation of NHI. The total distribution
amount in excess of earnings is assumed to be 59 million yen in the 4th Fiscal Period and5th Fiscal Period. The concerned total distribution amount in excess of earnings isrespectively the amount equivalent to 32.0 and 32.0% of the depreciation that is expected toarise in the concerned calculation period.
・NHI adopts a policy of implementing uninterrupted cash distributions in excess of earnings(reimbursement of investments in capital which falls under the category of distribution
reducing unitholders’ capital for tax purpose) in an amount not to exceed 40% ofdepreciation 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., inorder to not affect long-term repair plans in light of the capital expenditures for eachaccounting period assumed based on the long-term repair plans and to meet needs for funds(new acquisition of investment assets, repairs and capital expenditures required to maintainand enhance portfolio assets, NHI’s working capital, repayment of obligations, payout of
distributions, etc.).
・However, regardless of the policy described above, distributions in excess of earnings
mentioned above may vary in amount or may not be implemented at all in light of theeconomic environment, real estate market trends, status of portfolio assets and financial
status. In addition, accompanied by decrease in cash on hand, the implementation of
distributions in excess of earnings mentioned above may cause a shortage of cash on handin the event that need arises for capital expenditures, etc. beyond that assumed by NHI due
to sudden events, etc. or may cause financial constraints in agile property acquisition.
・The assumption is that there will be no revision of laws and regulations, tax systems,
accounting standards, listing regulations, rules of The Investment Trusts Association,
Japan, etc. that will impact the forecast figures above.
・The assumption is that there will be no unforeseen serious change in general economic
trends and real estate market conditions, etc.

2.3. Investment Risks
Disclosure is omitted because there are no significant changes from “Part II: Reference Information; Section
2: Supplementary Information to Reference Documents; 6. Investment Risks” set out in the most recent
periodic securities report (yuka shoken hokokusho) (submitted on October 29, 2015).

- 12 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
3. Financial Statements
3.1. Balance Sheets(Unit: thousand yen)

AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Prepaid expenses
Deferred tax assets
Consumption taxes receivable
Other
Total current assets
Non-current assets
Property, plant and equipment
Construction in progress
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Equipment in trust
Accumulated depreciation
Equipment in trust, net
Land in trust
Total property, plant and equipment
Intangible assets
Leasehold rights in trust
Trademark right
SoftwareTotal intangible assets
Investments and other assets
Lease and guarantee deposits
Long-term prepaid expenses
Total investments and other assets
Total non-current assets
Total assets

2nd Fiscal Period(As of Apr. 30, 2015)

3rd Fiscal Period(As of Oct. 31, 2015)

964,474
357,044
11,27613
3,141–
1,335,951

550,649
414,549
19,141
14
2,068
873
987,297

*1

*1

*1

*1

*1

1,674
8,632,809(229,105)
8,403,703
133,949(2,746)131,202–––5,185,156
13,721,736
40,886198
3,319
44,40410,00022,761
32,761
13,798,902
15,134,854- 13 -

*1

*1

*1

*1
*1

*1

1,909
10,291,446(379,019)
9,912,426
182,611(4,576)
178,034
1,324
(32)
1,291
6,504,957
16,598,619
40,886
187
2,952
44,026
10,00026,63536,635
16,679,282
17,666,579

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period(Unit: thousand yen)

Liabilities
Current liabilities
Operating accounts payable
Accounts payable – other
Advances received
Deposits received
Income taxes payable
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Tenant leasehold and security deposits
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Deduction from unitholders’ equity
Unitholders’ capital, net
Surplus
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders’ equity
Total net assets
Total liabilities and net assets- 14 -

2nd Fiscal Period(As of Apr. 30, 2015)

3rd Fiscal Period(As of Oct. 31, 2015)

9,573
44,91054,035512900–
109,931

16,385
98,115
69,127597
896
869
185,990*1*36,400,000
579,123
6,979,123
7,089,055*1

8,800,000
645,2319,445,231
9,631,222

7,884,000–
7,884,000

7,884,000(49,248)
7,834,752

161,798
161,798
8,045,798
8,045,798
15,134,854

200,605
200,605
8,035,357
8,035,357
17,666,579*3

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
3.2. Statements of Income(Unit: thousand yen)
2nd Fiscal Period(From: Nov. 1, 2014
To: Apr. 30, 2015)
Operating revenue
Rent revenue – real estate
Total operating revenue
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee
Administrative service fees
Trust fee
Directors’ compensations
Audit fee
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing expenses
Investment unit issuance expenses
Other
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)*1*1

507,642
507,642
166,035
40,652
545
5,550
4,367
3,600
3,000
37,900261,652
245,989*1*1555,588555,588
208,265
49,037
554
8,162
4,908
3,600
4,400
51,729330,657
224,931

40
8
48

26
4
30

14,43526,56942,34018,0125,391－
61
23,465
201,496
201,496901(0)901
200,595
10
200,605－

83,345
162,693
162,693908
5
914
161,779
19
161,798- 15 -

3rd Fiscal Period(From: May 1, 2015
To: Oct. 31, 2015)

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
3.3. Statements of Unitholders’ Equity
2nd Fiscal Period (from November 1, 2014 to April 30, 2015)(Unit: thousand yen)
Unitholders’ equity
Unitholders’ capital

Balance at
beginning ofcurrent period
Changes of items
during period
Issuance of new
investment units
Dividends ofsurplus
Net income
Total changes of
items during
periodBalance at end ofcurrent period

Unitholders’capitalDeduction
fromunitholders’equityUnitholders’capital, net

1,980,000－

1,980,000

Surplus
Unappropriatedretained
Total
earnings
surplus(undisposed
loss)
129,630

129,630

5,904,000

Total
unitholders’equityTotal
net assets

2,109,630

2,109,630

5,904,000

5,904,000(129,610)(129,610)(129,610)(129,610)

161,779

161,779

161,779

161,779

5,904,000－

32,16832,1685,936,168

5,936,168

7,884,000－

161,798

161,798

8,045,798

8,045,798

3rd Fiscal Period (from May 1, 2015 to October 31, 2015)(Unit: thousand yen)
Unitholders’ equity
Unitholders’ capital
Unitholders’capitalBalance at
beginning ofcurrent period
Changes of
items during
periodDistribution inexcess of
earnings
Dividends ofsurplus
Net income
Total changes of
items during
periodBalance at endof current
periodDeduction
fromunitholders’equity7,884,000

Unitholders’capital, net

Surplus
Unappropriatedretained
Total
earnings
surplus(undisposed
loss)

7,884,000(49,248)

161,798

161,798(49,248)

Total
unitholders’equityTotal
net assets

8,045,798

8,045,798(49,248)(49,248)(161,788)(161,788)(161,788)(161,788)

200,595

200,595

200,595

200,595－(49,248)(49,248)

38,80638,806(10,441)(10,441)7,884,000(49,248)

7,834,752

200,605

200,605

8,035,357

8,035,357- 16 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
3.4. Statements of Cash Distributions
Item

I.

2nd Fiscal Period(From: Nov. 1, 2014
To: Apr. 30, 2015)

3rd Fiscal Period(From: May 1, 2015
To: Oct. 31, 2015)

Amount (yen)Amount (yen)Unappropriated retained earnings

161,798,905

200,605,559

49,248,000

46,694,400

211,036,800

247,273,600[3,471][4,067]

161,788,800

200,579,200

II. Addition of distribution amount in excess of earnings
Deduction from unitholders’ capital
III. Distribution amount[Distribution amount per unit]
Of which,
Distribution amount from earnings[Distribution amount from earnings per unit]
Distribution amount in excess of earnings[Distribution amount in excess of earnings per unit]
IV. Retained earnings carried forward
Method of calculating distribution amount(Note)[2,661][3,299]49,248,000

46,694,400

[810]

[768]

10,105
In accordance with the policy that
“NHI shall distribute an amount inexcess of the amount equivalent to
90% of its distributable earnings as
defined in Article 67-15 of the Act
on Special Measures Concerning
Taxation” but no more than theamount of earnings pursuant to the
cash distribution policy set forth in
Article 33, Paragraph 1, Item 1 of its
articles of incorporation, NHI
decided the distributions from
earnings that it shall pay out shall be
the maximum value of the integral
multiple of the total number ofinvestment units issued andoutstanding (60,800 units) in an
amount that is not in excess ofunappropriated retained earnings.
Accordingly, NHI declared a
distribution amount of 161,788,800
yen.
Furthermore, NHI shall
implement cash distributions inexcess of earnings (reimbursementof investments in capital)
uninterruptedly every fiscal period
pursuant to the cash distribution
policy set forth in Article 33,
Paragraph 1, Item 2 of its articles ofincorporation.
Based on this policy, NHI decided
to distribute 49,248,000 yen, whichis the amount roughly equivalent to
36% of the 137,640,283 yen in
depreciation for the 2nd Fiscal
Period, as cash distributions inexcess of earnings (reimbursementof investments in capital).

26,359In accordance with the policy that
“NHI shall distribute an amount inexcess of the amount equivalent to
90% of its distributable earnings as
defined in Article 67-15 of the Act
on Special Measures Concerning
Taxation” but no more than theamount of earnings pursuant to the
cash distribution policy set forth in
Article 33, Paragraph 1, Item 1 of its
articles of incorporation, NHI
decided the distributions from
earnings that it shall pay out shall be
the maximum value of the integral
multiple of the total number ofinvestment units issued andoutstanding (60,800 units) in an
amount that is not in excess ofunappropriated retained earnings.
Accordingly, NHI declared a
distribution amount of 161,788,800
yen.
Furthermore, NHI shall
implement cash distributions inexcess of earnings (reimbursementof investments in capital which falls
under the category of distribution
reducing unitholders’ capital for tax
purpose) uninterruptedly every fiscal
period pursuant to the cash
distribution policy set forth in
Article 33, Paragraph 1, Item 2 of its
articles of incorporation.
Based on this policy, NHI decided
to distribute 46,694,400 yen, whichis the amount roughly equivalent to
31% of the 151,776,702 yen in
depreciation for the 3rd Fiscal
Period, as cash distributions inexcess of earnings (reimbursementof investments in capital).
NHI adopts a policy of implementing uninterrupted distributions in excess of earnings (reimbursement of investments incapital) in an amount not to exceed 40% of depreciation in every accounting period within the scope that would not haveadverse 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 not affect long-term repair plans in light of thecapital expenditures for each accounting period assumed based on the long-term repair plans and to meet needs 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.).

- 17 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period

3.5. Statements of Cash Flows(Unit: thousand yen)

Cash flows from operating activities
Income before income taxes
Depreciation
Investment unit issuance expenses
Interest income
Interest expenses
Decrease (increase) in consumption taxes refund receivable
Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable – other
Increase (decrease) in advances received
Decrease (increase) in long-term prepaid expenses
Increase (decrease) in deposits received
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Purchase of intangible assets
Proceeds from tenant leasehold and security deposits
Net cash provided by (used in) investing activities
Cash flows from financing activities
Increase in short-term loans payable
Decrease in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of investment units
Earnings dividends paid
Distribution in excess of earnings paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period- 18 -

2nd Fiscal Period(From: Nov. 1, 2014
To: Apr. 30, 2015)

3rd Fiscal Period(From: May 1, 2015
To: Oct. 31, 2015)

162,693138,00342,340(40)
14,435414(4,601)
1,469
9,492
16,071(20,540)
294
19,335379,36540(14,435)(1,124)363,846

201,496
152,154－(26)
18,012
1,072(7,865)
6,662
30,59315,092(3,874)84836
414,23926(17,902)(905)
395,458(5,562)(6,382,199)(3,671)
160,798(6,230,635)(1,909)(3,005,699)－
66,108(2,941,501)

300,000(300,000)
6,400,000(5,850,000)
5,861,659(129,610)－
6,282,048
415,260
906,259
1,321,519－－
2,400,000－－(161,239)(49,038)
2,189,722(356,320)
1,321,519
965,198*1*1

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
3.6. Notes to the Going Concern
Not applicable.
3.7. Notes to Significant Accounting Policies
1. Depreciation method for(1) Property, plant and equipment (including assets in trust)
non-current assets
The straight-line method is adopted.
The useful life of principal property, plant and equipment is as follows:
Buildings
4~56 years
Structures
41~47 years
Equipment
6 years(2) Intangible assets
The straight-line method is adopted.
(3) Long-term prepaid expenses
The straight-line method is adopted.
2. Accounting forInvestment unit issuance expenses
deferred assets
The entire amount is expensed as incurred.
3. Standards for
Accounting for fixed property tax, etc.
revenue and expense
Concerning fixed property tax, city planning tax, depreciated asset tax,
recognition
etc. on owned real estate or trust beneficiary interests that have real estate
as assets in trust, of the tax amount assessed and determined, the methodof accounting for the amount corresponding to the concerned fiscal period
as expenses related to rent business is adopted.
Concerning the amount equivalent to fixed property tax, etc. in the initialfiscal year that shall be borne by NHI in correlation with acquisitions ofreal estate or trust beneficiary interests that have real estate as assets intrust, the amount is not expensed but is rather included in the cost of
acquisition of the concerned real estate property. The amount equivalent
to fixed property tax, etc. that was included in the cost of acquisition ofreal estate properties in the 2nd Fiscal Period is 3,564 thousand yen and3rd Fiscal Period is 6,876 thousand yen.
4. Hedge accounting(1) Hedge accounting approach
Deferral hedge accounting is applied.
However, special accounting is applied to interest rate swaps that meet thecriteria for special accounting.
(2) Hedging instruments and hedged items
Hedging instruments:
Interest rate swap transactions
Hedged items:
Interest on loans(3) Hedging policy
NHI conducts derivative transactions for the purpose of hedging the risks
set forth in its articles of incorporation based on its risk management
policy.
(4) Method for assessing the effectiveness of hedging
The effectiveness of hedging is assessed by comparing the accumulated
cash-flow changes of hedged items with that of hedging instruments andverifying the ratio of both amounts of changes.
However, interest rate swaps that meet the criteria for special accounting
are omitted from assessment of the effectiveness.
5. Scope of funds in the
The funds (cash and cash equivalents) in the statements of cash flows consist
statements of cash flows
of cash on hand and cash in trust; deposits that can be withdrawn at any timeand deposits in trust; and short-term investments with a maturity of 3 months
or less from the date of acquisition, which are readily convertible to cash andbear only an insignificant risk of price fluctuation.

- 19 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period

6.

Other significant mattersserving as basis for
preparation offinancial statements(1) Accounting method for trust beneficiary interests in real estate properties
Concerning owned trust beneficiary interests that have real estate
properties as assets in trust, all accounts of assets and liabilities within
assets in trust, as well as all accounts of revenue generated and expenses
incurred from assets in trust, are recorded in the relevant account item of
the balance sheets and statements of income.
The following material items of the assets in trust recorded in the relevant
account item are separately listed on the balance sheets.
(i) Cash and deposits in trust(ii) Buildings in trust, structures in trust, and land in trust(iii) Leasehold rights in trust(2) Accounting method for consumption taxes
Consumption tax and local consumption tax are accounted for by
excluding from transaction amounts.
Non-deductible consumption taxes on acquisition of assets are included in
the cost of acquisition of the relevant asset.

- 20 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
3.8. Notes to Financial Statements[Omission of Disclosure]
Concerning notes to lease transactions, securities, retirement benefits, tax-effect accounting and asset retirement
obligations, disclosure is omitted because there is thought to be no substantial need for such disclosure in thefinancial report (kessan tanshin).
[Notes to Balance Sheets]*1. Assets pledged as collateral and secured liabilities
The following are the assets pledged as collateral.

Cash and deposits in trust
Buildings in trust
Structures in trust
Equipment in trust
Land in trust
Leasehold rights in trust
Total

2nd Fiscal Period(As of Apr. 30, 2015)
357,044
8,403,703
131,202－5,185,156
40,886
14,117,993(Unit: thousand yen)
3rd Fiscal Period(As of Oct. 31, 2015)
414,549
9,912,426
178,034
1,291
6,504,957
40,886
17,052,145

2nd Fiscal Period(As of Apr. 30, 2015)(Unit: thousand yen)
3rd Fiscal Period(As of Oct. 31, 2015)

The following are the secured liabilities.

Long-term loans payable

6,400,000
6,400,000

Total

8,800,000
8,800,000*2. In the 3rd Fiscal Period, NHI concluded a commitment-type term loan contract with one of its banks.
Furthermore, there is no outstanding borrowings at the end of the 3rd Fiscal Period.
(Unit: thousand yen)
2nd Fiscal Period
3rd Fiscal Period(As of Apr. 30, 2015) (As of Oct. 31, 2015)
Total amount of commitment-type term loan
Outstanding borrowings
Balance－－－1,200,000－
1,200,000*3. Minimum net assets as provided in Article 67, Paragraph 4 of the Act on Investment Trusts and Investment
Corporations(Unit: thousand yen)
2nd Fiscal Period
3rd Fiscal Period(As of Apr. 30, 2015) (As of Oct. 31, 2015)
50,00050,000- 21 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period[Notes to Statements of Income]*1. Breakdown of property-related operating income (loss)(Unit: thousand yen)

A. Property-related operating revenue
Rent revenue – real estate
Total property-related operating revenue
B. Property-related operating expenses
Consignment expenses
Taxes and dues
Non-life insurance expenses
Repair expenses
Depreciation
Leasehold and office rents
Other lease business expenses
Total property-related operating expenses
C. Property-related operating income (loss) [A − B]

2nd Fiscal Period(From: Nov. 1, 2014
To: Apr. 30, 2015)

3rd Fiscal Period(From: May 1, 2015
To: Oct. 31, 2015)

507,642555,588
507,642

8,877
9,520
1,539
7,082
137,640
1,200
174

555,588
9,821
30,607
1,184
13,675
151,776
1,200－

166,035
341,606

208,265
347,323

2nd Fiscal Period(From: Nov. 1, 2014
To: Apr. 30, 2015)

3rd Fiscal Period(From: May 1, 2015
To: Oct. 31, 2015)

10,000,000 units
60,800 units

10,000,000 units
60,800 units[Notes to Statements of Unitholders’ Equity]

1. Total number of investment units authorized andtotal number of investment units issued and outstanding
Total number of investment units authorized
Total number of investment units issued and outstanding[Notes to Statements of Cash Flows]*1. Reconciliation of balance sheet items to cash and cash equivalents at end of period in the statements of cash flows(Unit: thousand yen)
2nd Fiscal Period
3rd Fiscal Period(From: Nov. 1, 2014
(From: May 1, 2015
To: Apr. 30, 2015)
To: Oct. 31, 2015)
Cash and deposits
Cash and deposits in trust
Cash and cash equivalents

964,474
357,044
1,321,519

550,649
414,549
965,198[Notes to Financial Instruments](1) Matters concerning status of financial instruments(a) Policy for financial instruments
NHI procures funds through borrowing from financial institutions, issuance of new investment units, etc.
for asset acquisitions, repairs and maintenance, distribution payouts, loan repayments, etc. In debt financing,
NHI takes heed of extending loan periods, converting interest rates to fixed rates, staggering repayment dates,etc. in order to secure financial stability and hedge future interest rate fluctuation risk.
NHI manages surplus funds through deposits, safe and liquid monetary claims and securities, etc. (inprinciple, deposits).
Derivative transactions are limited to those that are for the purpose of hedging the risk of fluctuations ininterest rates on the liabilities of NHI.
(b) Contents and risks of financial instruments and related risk management system
The funds from debt financing are used mainly for acquisition of assets (such as real estate trust beneficiaryinterests). These are exposed to liquidity risk upon repayment, but the risk is managed by maintaining LTV at
low levels, staggering repayment dates, maintaining the ratio of long-term interest-bearing liabilities to total- 22 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Periodinterest-bearing liabilities at high levels, and diversifying lenders centering on domestic financial institutions.
Loans with floating interest rates are exposed to the risk of fluctuations in the interest rate payable, butderivative transactions (interest rate swap transactions) are used as a hedging instrument for hedging the riskof fluctuations in the interest rate payable and converting interest expenses to fixed rates for all or some ofthose floating-rate loans of which are long-term loans. In addition, NHI uses a commitment-type term loan toreduce fund procurement risks at the time of property acquisition due to forward commitment, etc.
The effectiveness of hedging is assessed by comparing the accumulated cash-flow changes of hedged itemswith that of hedging instruments and verifying the ratio of both amounts of changes. However, interest rate
swaps that meet the criteria for special accounting are omitted from assessment of the effectiveness.
Execution and management of derivative transactions are carried out based on the regulations defining thebasic policy of risk management.
Tenant leasehold and security deposits and tenant leasehold and security deposits in trust are deposits
received from tenants and are exposed to liquidity risk at the time that the deposits are to be returned to tenants
when they vacate the property, but the risk is limited by retaining a certain percentage of that amount.
Deposits are used for investing NHI’s surplus funds and are exposed to credit risk, such as bankruptcy ofthe depository financial institutions, but the risk is managed by restricting the tenor of the deposit relatively
short, setting a minimum credit rating requirement for the depository financial institutions (excluding
checkable deposits), etc.
(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 isno quoted 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, for example, different assumptions are used.
Also, the contract amount, etc. of derivative transactions do not itself represent the market risk involved inthese derivative transactions.
(2) Matters concerning fair value, etc. of financial instruments
The following is the carrying amount, fair value and difference between the two. The financial instruments
for which fair value is extremely difficult to estimate are excluded from the following tables (please refer to(Note 2)).
2nd Fiscal Period (as of April 30, 2015)(1) Cash and deposits(2) Cash and deposits in trust
Total assets(3) Long-term loans payable
Total liabilities
Derivative transactions

Carrying amount
964,474
357,044
1,321,519
6,400,000
6,400,000–

Fair value
964,474
357,044
1,321,519
6,375,873
6,375,873–(Unit: thousand yen)
Difference–––(24,126)(24,126)–

Carrying amount
550,649
414,549
965,198
8,800,000
8,800,000–

Fair value
550,649
414,549
965,198
8,789,863
8,789,863–(Unit: thousand yen)
Difference–––(10,136)(10,136)–

3rd Fiscal Period (as of October 31, 2015)(1) Cash and deposits(2) Cash and deposits in trust
Total assets(3) Long-term loans payable
Total liabilities
Derivative transactions(Note 1) Methods to estimate fair value of financial instruments and matters concerning derivative transactions
Assets(1) Cash and deposits; (2) Cash and deposits in trust
As these instruments are settled in a short period of time, their fair value and book value are nearly
identical. Therefore, for these items, their book value is assumed as their fair value.
Liabilities(3) Long-term loans payable- 23 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
As those with floating interest rates reflect market interest rates in a short period of time and there areno significant changes in NHI’s credit risk after borrowing, their fair value and book value are nearly
identical. Therefore, for these items, their book value is assumed as their fair value. For those with
fixed interest rates, their fair value is based on the sum total amount of principle and interest (*)
discounted at the interest rate reasonably estimated to be applied if similar new borrowing is enteredinto.
(*) For those long-term loans payable qualifying for special accounting of interest rate swaps (pleaserefer to “Derivative transactions” below), the sum total amount of principle and interest by the rateof the interest rate swap
Derivative transactions
Please refer to “Notes to Derivative Transactions” later in this document.
(Note 2) Financial instruments for which fair value is extremely difficult to estimate(Unit: thousand yen)
2nd Fiscal Period
3rd Fiscal Period(As of Apr. 30, 2015) (As of Oct. 31, 2015)
Tenant leasehold and security deposits
579,123645,231
Total
579,123645,231
Tenant leasehold and security deposits that have been deposited from tenants of rental properties are notsubject to disclosure of market price, because these are not marketable and the actual deposit period fromwhen tenants move in to when tenants move out cannot be reliably determined, thus making it impossible toreasonably estimate their future cash flows, and therefore, it is considered to be extremely difficult to estimate
their fair value.
(Note 3) Redemption schedule for monetary claims due after the settlement of accounts
2nd Fiscal Period (as of April 30, 2015)
Due within
1 yearCash and deposits
Cash and deposits in trust
Total

964,474
357,044
1,321,519

Due after
1 year,but within
2 years–––

Due after
2 years,
but within
3 years–––

Due after
3 years,
but within
4 years–––(Unit: thousand yen)
Due after
4 years,
Due after
but within
5 years
5 years
–
–
–
–
–
–

Due after
1 year,but within
2 years–––

Due after
2 years,
but within
3 years–––

Due after
3 years,
but within
4 years–––(Unit: thousand yen)
Due after
4 years,
Due after
but within
5 years
5 years
–
–
–
–
–
–

3rd Fiscal Period (as of October 31, 2015)
Due within
1 yearCash and deposits
Cash and deposits in trust
Total

550,649
414,549
965,198(Note 4) Repayment schedule for long-term loans payable due after the settlement of accounts
2nd Fiscal Period (as of April 30, 2015)
Due within
1 yearLong-term loans payable
Total

–
–

Due after
1 year,but within
2 years––- 24 -

Due after
2 years,
but within
3 years
1,800,000
1,800,000

Due after
3 years,
but within
4 years
1,700,000
1,700,000(Unit: thousand yen)
Due after
4 years,
Due after
but within
5 years
5 years
2,900,000–
2,900,000–

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
3rd Fiscal Period (as of October 31, 2015)
Due within
1 yearLong-term loans payable
Total

–
–

Due after
1 year,but within
2 years
1,800,000
1,800,000

Due after
2 years,
but within
3 years
2,100,000
2,100,000

Due after
3 years,
but within
4 years
2,900,000
2,900,000(Unit: thousand yen)
Due after
4 years,
Due after
but within
5 years
5 years
2,000,000–
2,000,000–[Notes to Derivative Transactions](1) Derivative transactions to which hedge accounting is not applied
2nd Fiscal Period (as of April 30, 2015)
Not applicable.
3rd Fiscal Period (as of October 31, 2015)
Not applicable.
(2) Derivative transactions to which hedge accounting is applied
2nd Fiscal Period (as of April 30, 2015)
The following is the contract amount, amount equivalent to the principal provided in the contract, etc. as ofthe settlement of accounts for each hedge accounting approach for derivative transactions to which hedge
accounting is applied.
(Unit: thousand yen)
Hedge accounting
approach

Type, etc. of
derivative transactionMainhedged item

Contract amount, etc.
Of which,due after
1 yearSpecial accounting
for interest rate swaps

Interest rate swap transactions
Receive floating and pay fixedLong-termloans payable

5,400,000

5,400,000

Fair value

Method ofestimation ofthat fair value(*)–(*) The fair value of derivative transactions qualifying for special accounting of interest rate swaps is included inthat of related long-term loans payable. This is because such interest rate swaps are handled together withhedged long-term loans payable. (Please refer to “Notes to Financial Instruments; (2) Matters concerning fairvalue, etc. of financial instruments (Note 1); Liabilities (3)” earlier in this document.)
3rd Fiscal Period (as of October 31, 2015)
The following is the contract amount, amount equivalent to the principal provided in the contract, etc. as ofthe settlement of accounts for each hedge accounting approach for derivative transactions to which hedge
accounting is applied.
(Unit: thousand yen)
Hedge accounting
approach

Type, etc. of
derivative transactionMainhedged item

Contract amount, etc.
Of which,due after
1 yearSpecial accounting
for interest rate swaps

Interest rate swap transactions
Receive floating and pay fixedLong-termloans payable

7,800,000

7,800,000

Fair value

Method ofestimation ofthat fair value(*)–(*) The fair value of derivative transactions qualifying for special accounting of interest rate swaps is included inthat of related long-term loans payable. This is because such interest rate swaps are handled together withhedged long-term loans payable. (Please refer to “Notes to Financial Instruments; (2) Matters concerning fairvalue, etc. of financial instruments (Note 1); Liabilities (3)” earlier in this document.)- 25 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period[Notes to Transactions with Related Parties]
2nd Fiscal Period (from April 30, 2015)
Classification

Name ofcompany,etc.

Location

Major
unitholder,interested
party

Daiwa
Securities
Group
Inc.

Chiyodaku,
Tokyo

Capitalstock orinvestments
in capital

247.3
billion yen

Business
description

Holdingcompany

Percentage
of votingrights, etc.
held by/in
NHI
10.00%
directly
held in NHI
1.65%
indirectly
held in NHINature oftransaction

Amount oftransaction

Account

Balance at
end of period

Subscriptio
n ofinvestment
units(Note)

912,000
thousandyen––

Of the amounts above, consumption taxes are not included in transaction amounts.
(Note) Subscription to NHI’s capital increase through public offering at 150,000 yen per unit.
3rd Fiscal Period (from October 31, 2015)
Not applicable.

- 26 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period[Notes to Investment and Rental Properties]
NHI owns fee-based homes for the elderly, etc. (including land) in the three major metropolitan areas and corecities. The carrying amount, net change in the carrying amount during period and fair value of the investment andrental properties are as follows:(Unit: thousand yen)
2nd Fiscal Period
3rd Fiscal Period(From: Nov. 1, 2014
(From: May 1, 2015
To: Apr. 30, 2015)
To: Oct. 31, 2015)
Carrying amount
Balance at beginning of period
7,517,513
13,760,948
Net change during period
6,243,435
2,876,647
Balance at end of period
13,760,948
16,637,595
Fair value at end of period
16,462,000
20,410,000(Note 1) The carrying amount is the amount after accumulated depreciation is deducted from the cost of
acquisition.
(Note 2) Significant changes during period
For the 2nd Fiscal Period, the major reason of increase is acquisition of six properties (6,015,000
thousand yen). The major reason of decrease is depreciation (137,640 thousand yen).
For the 3rd Fiscal Period, the major reason of increase is acquisition of three properties (2,778,000
thousand yen). The major reason of decrease is depreciation (151,776 thousand yen).
(Note 3) The fair value at end of period represents the sum of appraisal values estimated by external real estateappraisers.
Income and loss from investment and rental properties are disclosed in “Notes to Statements of Income.”[Segment Information, etc.](1) Segment information
Segment information is omitted because NHI has no segment except the property leasing business.
(2) Related information
2nd Fiscal Period (from November 1, 2014 to April 30, 2015)① Information about products and services
Information about products and services is omitted because net sales to external customers for a single
product and service category are in excess of 90% of the operating revenue on the statements of income.
② Information about geographic areas
A. Net sales
Information about net sales is omitted because net sales to external customers in Japan are in excessof 90% of the operating revenue on statements of income.
B. Property, plant and equipment
Information about property, plant and equipment is omitted because the amount of property, plantand equipment located in Japan is in excess of 90% of the amount of property, plant and equipment on
the balance sheets.
③ Information about major customers
Information about major customers is omitted because consent for information about net sales to asingle external customer has not been obtained from tenants.
3rd Fiscal Period (from May 1, 2015 to October 31, 2015)① Information about products and services
Information about products and services is omitted because net sales to external customers for a single
product and service category are in excess of 90% of the operating revenue on the statements of income.
② Information about geographic areas
A. Net sales
Information about net sales is omitted because net sales to external customers in Japan are in excessof 90% of the operating revenue on statements of income.
B. Property, plant and equipment
Information about property, plant and equipment is omitted because the amount of property, plantand equipment located in Japan is in excess of 90% of the amount of property, plant and equipment on
the balance sheets.
③ Information about major customers- 27 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
Information about major customers is omitted because consent for information about net sales to asingle external customer has not been obtained from tenants.
[Notes to Per Unit Information]
2nd Fiscal Period(From: Nov. 1, 2014
To: Apr. 30, 2015)

3rd Fiscal Period(From: May 1, 2015
To: Oct. 31, 2015)
132,160 yen
Net assets per unit
132,332 yen
3,299 yen
Net income per unit
2,705 yen
(Note 1) Net income per unit is calculated by dividing the net income by the daily weighted average number ofinvestment units.
The diluted net income per unit is not stated as there are no diluted investment units.
(Note 2) The basis for calculating the net income per unit is as follows:

Net income (thousand yen)Amount not attributable to common unitholders (thousand yen)
Net income attributable to common investment units (thousand yen)
Average number of investment units during period

2nd Fiscal Period(From: Nov. 1, 2014
To: Apr. 30, 2015)

3rd Fiscal Period(From: May 1, 2015
To: Oct. 31, 2015)

161,779–
161,779
59,800200,595－
200,595
60,800[Notes to Significant Subsequent Events](1) Issuance of investment units
NHI resolved issuance of investment units at its Board of Directors Meeting held on October 29,
2015 and November 10, 2015 as follows. Payments are completed on November 17, 2015 andDecember 16, 2015 respectively.
① Issuance of new investment units through public offering (primary offering)(i) Number of investment units offered:
12,130 units(ii) Paid-in amount (issue amount):
189,440 yen per unit(iii) Total paid-in amount (issue amount): 2,297,907,200 yen(iv) Payment date:November 17, 2015(v) Use of procured funds:
Acquisitions of specified assets described in (2) below
and expenses related to the acquisitions② Issuance of new investment units through third-party allotment(i) Number of investment units offered: 1,702 units(ii) Paid-in amount (issue amount):
189,440 yen per unit(iii) Total paid-in amount (issue amount): 322,426,880 yen(iv) Allotee and the number ofinvestment units allotted:
Daiwa Securities Co., Ltd. 1,702 units(v) Payment date:
December 16, 2015(vi) Use of procured funds:
To be deposited at financial institutions as cash on hand
until expenditure, and to be used as part of acquisition
funds of specified assets or of repayment of interestbearing liabilities in the future.

- 28 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period(2) Acquisition of assets
NHI conducted the following acquisition of real estate trust beneficiary interests in four properties (sumtotal of acquisition price: 2,550 million yen) on November 24, 2015.
Summary of Assets Acquired
Alpha Living
Alpha Living
Alpha Living
OkayamaAlpha Living
Property nameOkayamaTakamatsu
NishigawaTakamatsu Ekimae
Korakuen
Hyakkenmachi
Ryokudokoen
Type of asset
Location (indication ofresidential address)

Acquisition price

Trust beneficiary interests in real estate
1-11-4 Hama,
6-2 Chuo-cho, KitaNaka-ku,
ku, Okayama-shi,
Okayama-shi,
OkayamaOkayama
730 million yen
610 million yen

605 million yen

8-11
Hyakkenmachi,
Takamatsu-shi,
Kagawa605 million yen(excluding acquisition
costs and consumption
tax, etc.)(excluding acquisition
costs and consumption
tax, etc.)(excluding acquisition
costs and consumption
tax, etc.)

Date of delivery(excluding acquisition
costs and consumption
tax, etc.)

1-6 Nishiuchi-cho,Takamatsu-shi,
KagawaNovember 24, 2015

Seller

GK DA Healthcare Alpha(3) Borrowing of funds
NHI concluded a commitment-type term loan contract on October 29, 2015 and executed borrowing offunds on November 24, 2015 as follows. The borrowed funds were used for the new acquisitions ofassets described in the above (2) Acquisition of assets and for expenses incidental to the acquisitions.
Borrowing/
Repayment
methodJBA
1-monthJPY
Secured/November 24,
Mizuho Bank, Ltd.
900
TIBOR
+
0.30%
May
29,
2016
Lump-sum
2015(Note)
repayment(Note) Interest payment dates shall be the last day of each month and the maturity date (however, if the concerned dateis not a business day, then it shall be the next business day; if that next business day falls into the next calendar
month, then it shall be the business day immediately preceding the concerned date). The base rate applicable tothe calculation period for the interest payable on an interest payment date shall be the Japanese Bankers
Association (JBA) 1-month Japanese Yen TIBOR two business days prior to the date of commencement of theinterest calculation period.
LenderDrawdown
date

Loan amount(million yen)

- 29 -

Interest rate

Repayment
deadlineNippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
3.9. Increase (Decrease) in Total Number of Investment Units Issued and Outstanding
The following is the increase (decrease) in the total number of investment units issued and outstanding andunitholders’ capital since the establishment of NHI through to the end of the 3rd Fiscal Period.
Total number ofinvestment units
Unitholders’ capitalissued and outstanding(million yen) (Note 1)
Payment date
Description
Remarks(units)Increase
Increase
Balance
Balance(Decrease)(Decrease)
Jan. 7, 2014

Establishment throughprivate placement

1,000

1,000

100

100

(Note 2)

Apr. 3, 2014

Capital increase throughprivate placement

18,80019,800

1,880

1,980

(Note 3)

Nov. 4, 2014

Capital increase throughpublic offering

39,00058,800

5,616

7,596

(Note 4)

Dec. 3, 2014

Capital increase by way ofthird-party allotment

2,000

60,800288

7,884(Note 5)

July 17, 2015

Cash distributions in excess ofearnings (reimbursement ofinvestments in capital which falls
under the category of distribution
reducing unitholders’ capital fortax purpose)–

60,800

(49)

7,834

(Note 6)(Note 1) Figures indicate amounts obtained by subtracting deduction from unitholders’ equity from unitholders’capital.
(Note 2) NHI was established at an issue price of 100,000 yen per unit. The subscriber for underwriting of investment
units at establishment was Daiwa Real Estate Asset Management Co. Ltd.
(Note 3) Investment units were additionally issued to JHC-LPS and ASIA CUATRO-LPS at an issue price of 100,000
yen per unit for the purpose of procuring funds for acquisition of acquisition properties and other funds.
(Note 4) New investment units were issued through public offering at an issue price of 150,000 yen (issue amount of
144,000 yen) per unit for the purpose of procuring funds for acquisition of acquisition properties and otherfunds.
(Note 5) New investment units were issued by way of third-party allotment at an issue amount of 144,000 yen per unit
for the purpose of procuring funds for acquisition of acquisition properties and other funds.
(Note 6) NHI resolved cash distributions in excess of earnings (reimbursement of investments in capital which falls
under the category of distribution reducing unitholders’ capital for tax purpose) in amount of 810 yen per unit
at its Board of Directors Meeting held on June 19, 2015 as cash distribution for the 2nd fiscal period (fiscal
period ended April 2015), and started the payout from July 17, 2015.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
4. Changes in Directors
4.1. Changes in Directors at the Investment Corporation
Not applicable.
4.2 Changes in Directors at the Asset Management Company
Not applicable.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
5. Reference Information
5.1. Investment Status
3rd Fiscal Period(as of October 31, 2015)

Type ofasset
Real estate
trust
beneficiaryinterests

Use

RegionTotal amount held(million yen)
(Note 1)

As a percentage of
total assets(%) (Note 2)

11,452

64.8

5,185

29.3

Other
(Note 5)––Elderly housing withsupportive services––

Other private nursing homes andother facilities for the elderly––

16,63794.2

Medical facilities

–

–

Other

–

–

16,637

94.2

1,028

5.8

17,666100.0[16,637][94.2]

Privatenursing homes
and other
facilities forthe elderly

Fee-based
homes forthe elderly

Three major
metropolitan areas(Note 3)
Core city areas(Note 4)

Subtotal

Total
Deposits and other assets

Total assets (Note 6)(Note 1) “Total amount held” is the carrying amount (book value after deducting depreciation in the case of realestate trust beneficiary interests).
(Note 2) “(Total amount held) As a percentage of total assets” is rounded to one decimal place.
(Note 3) “Three major metropolitan areas” refers to the greater Tokyo area (Tokyo, Kanagawa, Chiba andSaitama prefectures), the Chukyo area (Aichi, Mie and Gifu prefectures) and the Kinki area (Osaka,
Kyoto, Hyogo, Nara and Shiga prefectures). The same shall apply hereinafter.
(Note 4) “Core city areas” refers to cities (outside the three major metropolitan areas) with populations of
200,000 or more. The same shall apply hereinafter.
(Note 5) “Other” refers to cities (outside the three major metropolitan areas and the core city areas) withpopulations under 200,000. The same shall apply hereinafter.
(Note 6) The figure in brackets [ ] under “Total assets” is the portion of the applicable assets that, in effect,
corresponds to the holding of real estate properties. The amount of construction in progress (including
construction in progress in trust) is not included in the amount of real estate trust beneficiary interests.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
5.2. Investment Real Estate Properties
5.2.1. Price and Investment Ratio of Investment Real Estate Properties
The following is an overview of the real estate in trust of trust beneficiary interests held as of October 31,
2015 by NHI.
Type ofspecified
asset

RegionAcquisition price(million yen)
(Note 1)

Carrying amount(million yen)
(Note 2)

Opinion of value
at end of period(million yen)
(Note 3)

Investment
ratio
(%)
(Note 4)

1,170

1,186

1,720

7.3

1,950

1,973

3,030

12.1

750

764

1,210

4.7

950

962

1,570

5.9

Rest Villa
Kinugasayama Koen

1,839

1,911

1,990

11.5

La’nassica Arakogawa

1,279

1,321

1,380

8.0

1,569

1,633

1,690

9.8

740

796

770

4.6

838

902

882

5.2

11,085

11,452

14,242

69.0

265

269

349

1.7

960

977

1,220

6.0

630

642

886

3.9

590

602

802

3.7

773

797

923

4.8

266

279

318

1.7

289

304

350

1.8

1,200

1,312

1,320

7.5

4,973

5,185

6,168

31.0

16,058

16,637

20,410100.0

Property nameRest Villa
Sagamihara Chuo
Charm Suite
Ryokuchi Koen
Sawayaka
Heart Life Nishikyogoku
Verger Hirakata

Three major
metropolitan
areasSuper Court
JR Nara-Ekimae
Mina-no-ie Omiya
Yoshinocho
Mina-no-ie Chuo-ku
En’namiReal estate
trust
beneficiaryinterests

SubtotalCore city
areas

Nichii Care Center
Fukushima Omori
Rest Villa
Hiroshima Hikarigaoka
Sawayaka
Kaikyokan
Sawayaka
Meisuikan
Sawayaka
Hinodekan
Sawayaka
Riverside Kurinoki
Sawayaka
Obatake Sanbankan
Silver Heights
Hitsujigaoka No. 3
Subtotal

Total (17 properties)(Note 1) “Acquisition price” is excluding acquisition costs, fixed property tax, city planning tax, consumption tax
and local consumption tax.
(Note 2) “Carrying amount” is the book value after deducting depreciation as of October 31, 2015.
(Note 3) “Opinion of value at end of period” is the value with April 30, 2015 as the date of value stated in theappraisal report prepared by Japan Real Estate Institute, Daiwa Real Estate Appraisal Co., Ltd. or The
Tanizawa Sōgō Appraisal Co., Ltd. in accordance with the articles of incorporation of NHI and the rulesof The Investment Trusts Association, Japan.
(Note 4) “Investment ratio” is the respective property acquisition price expressed as a percentage of the total
amount of the acquisition prices, rounded to one decimal place.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
5.2.2. Summary of Building and Leasing of Investment Real Estate
The respective property annual rent is not disclosed because consent for disclosure has not been obtained
from tenants. Annual rent of real estate in trust held as of October 31, 2015 by NHI totaled 1,202 million yen(Note).
(Note) The amount obtained by adding up the monthly rent in the respective lease agreement valid as of
October 31, 2015 in the annualized amount calculated by multiplying by 12, rounded down to thenearest million yen.
RegionProperty nameRest Villa
Sagamihara Chuo
Charm Suite
Ryokuchi Koen
Sawayaka
Heart Life
Nishikyogoku
Verger Hirakata

Three major
metropolitan
areas

Rest Villa
Kinugasayama
Koen
La’nassica
ArakogawaSuper Court
JR Nara-Ekimae
Mina-no-ie Omiya
Yoshinocho
Mina-no-ie Chuoku En’nami

Total
Total
Structure / Constructionleasable area leased area
Floorscompletion
(m2)
(m2)
(Note 1)
(Note 2)
(Note 3)(Note 4)RC /Mar. 31,3,732.95
3,732.95
5F
2008
RC /
Sept. 20,
5,329.73
5,329.73
B1/5F
2006

Core cityareas

Occupancy Appraisal
rate
NOI
(%)
(million yen)
(Note 6)(Note 7)

1

100.0

88

1

100.0

143

RC /
6F

Aug. 6,2007

2,459.19

2,459.19

1

100.0

60

RC /
5F

Feb. 26,2007

2,925.25

2,925.25

1

100.0

85

RC /
B1/5F

Mar. 3,2011

4,265.88

4,265.88

1

100.0

100

S/
4F
RC /
7F
RC /
4F
RC /
3F

Apr. 17,2008
June 17,2009
April 3,2012
Feb. 27,2014

3,590.40

3,590.40

1

100.0

74

5,057.07

5,057.07

1

100.0

91

1,800.03

1,800.03

1

100.0

40

1,963.03

1,963.03

1

100.0

44

31,123.53

31,123.53

9

100.0

730

Subtotal
Nichii Care Center
Fukushima Omori
Rest Villa
Hiroshima
Hikarigaoka
Sawayaka
Kaikyokan
Sawayaka
Meisuikan
Sawayaka
Hinodekan
Sawayaka
Riverside Kurinoki
Sawayaka
Obatake Sanbankan
Silver Heights
Hitsujigaoka No. 3

Total
number oftenants(Note 5)S/
3F

Mar. 30,
2007

1,964.68

1,964.68

1

100.0

22

RC /
7F

Dec. 15,
2005

4,133.82

4,133.82

1

100.0

69

RC /
6F
RC /
B1/6F
S/
3F
S/
4F
S/
3F
RC/
3F

Oct. 23,
2003
Mar. 25,
2005
July 11,2007
Oct. 20,2009
Sept. 13,2011
April 18,
2003

2,694.42

2,694.42

1

100.0

50

4,553.67

4,553.67

1

100.0

47

2,674.37

2,674.37

1

100.0

47

1,349.39

1,349.39

1

100.0

17

1,411.78

1,411.78

1

100.0

18

7,267.56

7,267.56

1

100.0

70

Subtotal

26,049.69

26,049.69

8

100.0

344

Total (17 properties)

57,173.22

57,173.22

17

100.0

1,075

(Note 1) “Structure / Floors” is the entry in the real estate registry of the building of the respective property. “S”
refers to steel-framed structure, “RC” refers to reinforced concrete structure, “B” refers to floors below
ground and “F” refers to floors above ground.
(Note 2) “Construction completion” is the entry in the real estate registry of the building of the respective
property.
(Note 3) “Total leasable area,” which is the floor area available for leasing of the building of the respective
property, is the area indicated in the lease contract, etc. (including store compartments and officecompartments), excluding the total leasable area of land (including level parking space).
(Note 4) “Total leased area” is the sum total of the area that is actually leased based on a lease agreement
concluded with end-tenants as of October 31, 2015.
(Note 5) “Total number of tenants” is the number of end-tenants. When there is a tenant occupying multiple
buildings, the concerned tenant is counted and stated for each individual building.

- 34 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period(Note 6) “Occupancy rate” is the figure obtained by dividing total leased area by leasable area, rounded down to
one decimal place.
(Note 7) “Appraisal NOI” is the net operating income obtained by subtracting operating expenses from operating
revenue appraised by real estate appraisers as stated in the appraisal report. The appraisal NOI above is
the NOI derived by the direct capitalization method. “Appraisal NOI” is rounded down to the nearest
million yen.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
5.2.3. Summary of Appraisal Report
Summary of appraisal report
Direct capitalization
DCF
methodmethodIndicated
Indicated
Discount Terminalvalue
Cap rate
value
rate
cap rate(million(%)(million
(%)
(%)
yen)
yen)

Property nameAppraisal firm

Appraisalvalue(millionyen)

Nichii Care Center
Fukushima Omori
Rest Villa
Hiroshima
Hikarigaoka
Rest Villa
Sagamihara Chuo

Japan Real Estate
Institute

349

352

5.8

345

5.6

6.0

22

Japan Real Estate
Institute

1,220

1,230

5.3

1,200

5.1

5.5

69

Daiwa Real EstateAppraisal Co., Ltd.

1,720

1,740

5.0

1,710

4.8

5.2

88

Charm Suite
Ryokuchi Koen

Daiwa Real EstateAppraisal Co., Ltd.

3,030

3,070

4.7

3,010

4.5

4.9

143

Sawayaka
Kaikyokan

Japan Real Estate
Institute

886

894

5.4

877

5.2

5.6

50

Sawayaka
Meisuikan
Sawayaka
Heart Life
Nishikyogoku

Japan Real Estate
Institute

802

808

5.4

795

5.2

5.6

47

Daiwa Real EstateAppraisal Co., Ltd.

1,210

1,220

4.9

1,200

4.7

5.1

60

Daiwa Real EstateAppraisal Co., Ltd.

1,570

1,580

5.3

1,560

5.1

5.5

85

The Tanizawa Sōgō
Appraisal Co., Ltd.

1,990

2,000

5.0

1,980

5.1

5.2

100

The Tanizawa Sōgō
Appraisal Co., Ltd.

1,380

1,390

5.3

1,380

5.4

5.5

74

Daiwa Real EstateAppraisal Co., Ltd.

923

935

5.0

918

4.8

5.2

47

Sawayaka
Riverside Kurinoki

Daiwa Real EstateAppraisal Co., Ltd.

318

324

5.1

316

4.9

5.3

17

Sawayaka
Obatake Sanbankan
Super Court
JR Nara-Ekimae(Note 4)Mina-no-ie Omiya
Yoshinocho

Daiwa Real EstateAppraisal Co., Ltd.

350

355

5.2

348

5.0

5.4

18

The Tanizawa Sōgō
Appraisal Co., Ltd.

1,690

1,700

5.2

1,680

5.3

5.4

91

The Tanizawa Sōgō
Appraisal Co., Ltd.

770

778

5.1

766

5.2

5.3

40

Mina-no-ie Chuoku En’nami

Japan Real Estate
Institute

882

891

5.0

872

4.8

5.2

44

Silver Heights
Hitsujigaoka No. 3

Daiwa Real EstateAppraisal Co., Ltd.

1,320

1,330

5.0

1,310

4.8

5.2

70

20,41020,597－

20,267

－

－

1,075

Verger Hirakata
Rest Villa
Kinugasayama Koen
(Note 2)
La’nassica
Arakogawa(Note 3)
Sawayaka
Hinodekan

Total

Appraisal
NOI(millionyen)(Note 1) The summary is based on the appraisal report with October 31, 2015 as the date of value.
(Note 2) The discount rate for Rest Villa Kinugasayama Koen is the discount rate for the 11th and subsequentfiscal years (discount rate up to the 10th fiscal year: 5.0%).
(Note 3) The discount rate for La’nassica Arakogawa is the discount rate for the 11th and subsequent fiscal years(discount rate up to the 10th fiscal year: 5.3%).
(Note 4) The discount rate for Super Court JR Nara-Ekimae is the discount rate for the 10th and subsequent fiscal
years (discount rate up to the 9th fiscal year: 5.2%).

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
5.2.4. Capital Expenditures for Assets under Management
A. Schedule of Capital Expenditures
Not applicable.
B. Capital Expenditures during the 3rd Fiscal Period
The following summarizes the main construction work that constitutes capital expenditures conductedduring the 3rd Fiscal Period. Capital expenditures for the 2nd Fiscal Period amounted to 2,078 thousand yen
and, when combined with the 13,675 thousand yen in repair expenses charged to 3rd Fiscal Period expenses,
totaled 15,753 thousand yen in construction work implemented.
Name ofreal estate property(Location)
Rest Villa Hiroshima
Hikarigaoka(Hiroshima-shi,
Hiroshima)
Rest Villa Hiroshima
Hikarigaoka(Hiroshima-shi,
Hiroshima)
Rest Villa Sagamihara
Chuo(Sagamihara-shi,
Kanagawa)

Purpose

PeriodReplacement of water heater

Replacement of electrical water heater

Replacement of air-conditioning substrate,compressor, etc.

Other
Total

Construction
amount(thousand yen)

From: August 2015
To: September 2015744

From: October 2015
To: October 2015

450

From: July 2015
To: August 2015434

From: May 2015
To: October 2015

449
2,078

C. Reserve Amount for Long-Term Repair Plans (Reserve for Repairs)
NHI sets aside the following reserve for repairs from cash flows during the fiscal period for future
payment of large-scale repairs and other funds.
(Unit: million yen)
1st Fiscal Period
2nd Fiscal Period
3rd Fiscal Period
Fiscal period(From: Jan. 7, 2014
(From: Nov. 1, 2014
(From: May 1, 2015
To: Oct. 31, 2014)
To: Apr. 30, 2015)
To: Oct. 31, 2015)
47
Balance of reserve at beginning of period–
19
15
Provision of reserve during period
19
28
Reversal of reserve during period–––
63
Reserve carried forward
19
47(Note) In principle, NHI adopts a policy of implementing cash distributions in excess of earnings(reimbursement of investments in capital which falls under the category of distribution reducing
unitholders’ capital for tax purpose) uninterruptedly every fiscal period. Upon deciding on theimplementation and amount of such, NHI shall give due consideration to the amount of capital
expenditures required to maintain and enhance the competitiveness of portfolio assets.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
5.2.5. Status of Pledged Collateral
The following outlines the collateral on acquired assets as of October 31, 2015.
Property name
Nichii Care Center Fukushima Omori
Rest Villa Hiroshima Hikarigaoka
Rest Villa Sagamihara Chuo
Charm Suite Ryokuchi Koen
Sawayaka Kaikyokan
Sawayaka Meisuikan
Sawayaka Heart Life Nishikyogoku
Verger Hirakata
Rest Villa Kinugasayama Koen
La’nassica Arakogawa
Sawayaka Hinodekan
Sawayaka Riverside Kurinoki
Sawayaka Obatake Sanbankan
Super Court JR Nara-Ekimae
Mina-no-ie Omiya Yoshinocho
Mina-no-ie Chuo-ku En’nami
Silver Heights Hitsujigaoka No. 3

Status ofcollateral

Pledged ascollateral(jointcollateral)

Type ofcollateralAppraisal value(million yen)

Security interests holder

20,410Mizuho Bank, Ltd.
Resona Bank, Limited
Sumitomo Mitsui Trust Bank, Limited
Mizuho Trust & Banking Co., Ltd.
The Musashino Bank, Ltd.
Shinkin Central BankThe Dai-ichi Life Insurance Company, Limited

Revolvingpledge5.2.6. Matters Concerning Entire Portfolio (Status of Leasing)
A. Diversification by Rent-Paying Capacity
Rent-paying capacity
Annual rent
Share
(Note 1)(million yen) (Note 2)(%) (Note 3)
More than 2.0x
197
19.3
More than 1.5x, but 2.0x or less571
55.8
More than 1.2x, but 1.5x or less157
15.4
1.2x or less
96
9.5
Total
1,022
100.0
(Note 1) “Rent-paying capacity” refers to the multiple obtained by dividing the respective real estate in trust’s
most recent EBITDAR by rent (monthly rent in the respective lease agreement with operators in theannualized amount calculated by multiplying by 12; the same shall apply hereinafter).
“EBITDAR” refers to the respective real estate in trust’s operating income, plus depreciation and rent.
However, in the case of operators adopting the method of accounting as a finance lease, the amountequivalent to lease payments is taken into consideration.
Furthermore, operating income and depreciation are based on information on business income andexpenditures from October 2014 to September 2015 disclosed by the respective operator. Exceptions are
Nichii Care Center Fukushima Omori, in which case these are based on information on business income
and expenditures from July 2014 to June 2015, La’nassica Arakogawa, in which case these are based on
information on business income and expenditures from April 2014 to March 2015 and Silver Heights
Hitsujigaoka No.3, in which case these are based on information on business income and expendituresfrom February 2014 to January 2015. The same shall apply hereinafter in this “A. Diversification by
Rent-Paying Capacity.”(Note 2) “Annual rent” is the amount obtained by adding up the monthly rent in the respective lease agreementwith operators per rent-paying capacity in the annualized amount calculated by multiplying by 12,
rounded down to the nearest million yen.
(Note 3) “Share” is the sum total of annual rent per rent-paying capacity expressed as a percentage of the total ofannual rents for real estate in trust, rounded to one decimal place.

(Note)

Average rent-paying capacity(Note)
1.5x“Average rent-paying capacity” is the multiple obtained by dividing the total of EBITDAR by the totalof rents for real estate in trust, rounded to one decimal place.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
B. Diversification by Appraisal Rent-Paying Capacity
Appraisal Rent-paying capacity
Annual rent
Share
(Note 1)(million yen) (Note 2)(%) (Note 3)
More than 2.0x492
41.2
More than 1.5x, but 2.0x or less646
54.1
More than 1.2x, but 1.5x or less57
4.8
1.2x or less
–
–
Total
1,196
100.0
(Note 1) “Appraisal Rent-paying capacity” refers to the multiple obtained by dividing the respective acquired
asset’s assumed EBITDAR (figures that are calculated based on information on business income andexpenditure provided by the respective operator, under the same conditions for EBITDAR calculation
standards described in A above), which is calculated by Japan Real Estate Institute, Daiwa Real EstateAppraisal Co., Ltd. and The Tanizawa Sōgō Appraisal Co., Ltd., by rent.
(Note 2) “Annual rent” is the amount obtained by adding up the monthly rent in the respective lease agreementwith operators per rent-paying capacity in the annualized amount calculated by multiplying by 12,
rounded down to the nearest million yen.
(Note 3) “Share” is the sum total of annual rent per rent-paying capacity expressed as a percentage of the total ofannual rents for real estate in trust, rounded to one decimal place.

(Note)

Average Appraisal rent-paying capacity(Note)
1.7x“Average Appraisal rent-paying capacity” is the multiple obtained by dividing the total of EBITDAR by
the total of rents for real estate in trust, rounded to one decimal place.

C. Diversification by Proportion of Long-Term Care Fee
Proportion of long-term care fee
Annual rent
Share
(Note 1)(million yen) (Note 2)(%) (Note 3)
50% or less492
41.2
More than 50%, but 60% or less646
54.1
More than 60%, but 70% or less57
4.8
More than 70%
–
–
Total
1,196
100.0
(Note 1) “Proportion of long-term care fee” refers to the proportion of the respective real estate in trust’s net
sales that is accounted for by long-term care fee (including residents’ co-payment portion).
Furthermore, net sales and long-term care fee are based on information on business income andexpenditures from October 2014 to September 2015 disclosed by the respective operator. Exceptions are
Nichii Care Center Fukushima Omori, in which case these are based on information on business income
and expenditures from July 2014 to June 2015, La’nassica Arakogawa, in which case these are based on
information on business income and expenditures from April 2014 to March 2015 and Silver Heights
Hitsujigaoka No.3, in which case these are based on information on business income and expendituresfrom February 2014 to January 2015. The same shall apply hereinafter in this “C. Diversification by
Proportion of Long-Term Care Fee.”(Note 2) “Annual rent” is the amount obtained by adding up the monthly rent in the respective lease agreement
per proportion of long-term care fee in the annualized amount calculated by multiplying by 12, rounded
down to the nearest million yen.
(Note 3) “Share” is the sum total of annual rent per proportion of long-term care fee expressed as a percentage ofthe total of annual rents for real estate in trust, rounded to one decimal place.

(Note)

Average proportion of long-term care fee(Note )
52.0%
“Average proportion of long-term care fee” is the proportion of the total of net sales that is accounted
for by long-term care fee (including residents’ co-payment portion) for real estate in trust, rounded to
one decimal place.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
D. Diversification by Proportion of One-Time Entrance Fee Amortization Income
Proportion of one-time entrance fee amortization income
Annual rent
Share
(Note 1)(million yen) (Note 2)(%) (Note 3)
5% or less762
63.8
More than 5%, but 15% or less237
19.9
More than 15%, but 25% or less195
16.4
More than 25%
–
–
Total
1,196
100.0
(Note 1) “Proportion of one-time entrance fee amortization income” refers to the proportion of the real estate intrust’s net sales that is accounted for by one-time entrance fee amortization income.
Furthermore, net sales and one-time entrance fee amortization income are based on information on
business income and expenditures from October 2014 to September 2015 disclosed by the respective
operator. Exceptions are Nichii Care Center Fukushima Omori, in which case these are based on
information on business income and expenditures from July 2014 to June 2015, La’nassica Arakogawa,in which case these are based on information on business income and expenditures from April 2014 toMarch 2015 and Silver Heights Hitsujigaoka No.3, in which case these are based on information on
business income and expenditures from February 2014 to January 2015. The same shall apply
hereinafter in this “D. Diversification by Proportion of One-Time Entrance Fee Amortization Income.”(Note 2) “Annual rent” is the amount obtained by adding up the monthly rent in the respective lease agreement
per proportion of one-time entrance fee amortization income in the annualized amount calculated bymultiplying by 12, rounded down to the nearest million yen.
(Note 3) “Share” is the sum total of annual rent per proportion of one-time entrance fee amortization income
expressed as a percentage of the total of annual rents for real estate in trust, rounded to one decimal
place.
Average proportion of one-time entrance fee amortization income(Note)
5.8%(Note) “Average proportion of one-time entrance fee amortization income” is the proportion of the total of net
sales that is accounted for by one-time entrance fee amortization income for real estate in trust, rounded
to one decimal place.
5.2.7. Information about Major Assets“Major assets” refers to those assets of which the concerned asset’s total rent income accounts for 10% ormore of the entire portfolio’s total rent income as at the end of the 3rd Fiscal Period (October 31, 2015). Thisis the following for the portfolio of 17 investment real estate properties. Annual rent is not disclosed because
consent for disclosure has not been obtained from tenants.
Total
Occupancy
Appraisal
Total
Number ofleased area
rate
Property nameNOI
leasable area
tenants(m2)(%)(million yen)(m2)Charm Suite Ryokuchi Koen
1
143
5,329.73
5,329.73
100.0- 40 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 3rd Fiscal Period
5.2.8. Information about Major Tenants“Major tenants” refers to those tenants of which the area leased to the concerned tenant accounts for 10% ormore of the entire portfolio’s total leased area as at the end of the 3rd Fiscal Period (October 31, 2015). Thisis the following for the portfolio of 17 investment real estate properties. Annual rent and lease and guarantee
deposits are not disclosed because consent for disclosure has not been obtained from tenants.
Name of major tenant

Property nameDate ofcontract expiration

Share
(%)
(Note 1)

Appraisal
NOI(million yen)

Totalleased area
(m2)

243

15,142.82

26.5

258

12,132.65

21.2

70

7,267.56

12.7

Sawayaka
Kaikyokan
Sawayaka
Meisuikan

Sawayaka Club Co., Ltd.

March 27, 2034

Sawayaka
Heart Life Nishikyogoku
Sawayaka
Hinodekan
Sawayaka
Riverside Kurinoki

November 30, 2034

Sawayaka
Obatake Sanbankan
Rest Villa
Hiroshima Hikarigaoka
SOMPO Care Next Inc.
(Note 2)

Silver Heights SapporoCo., Ltd.

Rest Villa
Sagamihara Chuo

March 28, 2034

Rest Villa
Kinugasayama Koen

September 11, 2034

Silver Heights
Hitsujigaoka No.3

November 30, 2035

(Note 1) “Share” is the area leased to major tenants expressed as a percentage of the total leased area, rounded to
one decimal place.
(Note 2) The business name was changed from Watami No Kaigo Co., Ltd. to Sompo Care Next Inc. on
December 1, 2015.

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