As of June 22, 2016

Hopeful future
for Japan
Nippon Healthcare
Investment Corporation
Presentation Material for the
4th Fiscal Period Ended June 2016

Contents
Disclaimer

Section 4

Characteristics of Nippon Healthcare
Investment Corporation

Portfolio Analysis
3

Section 1
Topics and Highlights
Topics and Highlights

5

Section 2

Portfolio List (as of April 30, 2016)

19

Status of Portfolio (as of April 30, 2016)20

Portfolio Resident Attributes(as of April 30, 2016)21

Market Size by Segment

22

Section 5

Financial Results for the 4th Fiscal Period

Financial Status

Operating Results for 4th Fiscal Period

7

Forecast of Operating Results for 5th Fiscal Period and6th Fiscal Period

8

Section 3External Growth
Change in Asset Size

11

Properties Acquired in 4th FP (ending April 2016)12

Sourcing Route14

Portfolio Map (as of April 30, 2016)15

Introduction of Operators

16

Development of Quality Portfolio through Careful Selection
and Continuous Evaluation of Operators

17

Status of Interest-Bearing Liabilities((as of April 30, 2016))

24

Policy on Distributions in Excess of Earnings /Index including NHI

25

Overview of the Unitholder Benefits Program・・・・・・・・・・・・

26

Appendix

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

1Disclaimer

This material is solely for the purpose of providing information and is not intended for the purpose of offering or soliciting
investment, or as a recommendation to purchase or sell any specific product. Please refer any inquiries on potential
purchases of the investment units of Nippon Healthcare Investment Corporation to a securities dealer.
This document is not intended to provide information to meet the requirements of Japan’s new Financial Instruments andExchange Act or Act on Investment Trusts and Investment Corporations, or any associated cabinet orders, cabinet officeordinances, rules, or any rules governing companies listed on the Tokyo Stock Exchange, or any other applicable rules,
nor is it a disclosure document or statement of financial performance prepared in accordance with the provisions of anyof the foregoing.
This document contains forward-looking statements. However, these forward-looking statements are based on certain
assumptions and judgments made using currently available information, and there are a number of known and unknown
risks and uncertainties. These forward-looking statements are not a guarantee of future performance or management
results of Nippon Healthcare Investment Corporation, and actual results may materially differ from any explicit or implicit
forecasts contained herein.
Although the information contained in this document is the best available at the time of publication, no assurances can begiven regarding the accuracy and certainty of this information. The content of this document may be modified orwithdrawn without prior notice.
Reproduction or use of the contents included in this document without prior approval is prohibited.

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

22

Characteristics of Nippon Healthcare Investment Corporation
1 Investment in social infrastructure to contribute to society

Nippon Healthcare Investment Corporation (NHI) will contribute to society by specializing in investment in healthcare facilities,
which are part of the social infrastructure.

2 Growth through investment in the growing senior market
Social demand for healthcare facilities is expected to grow in the medium to long term through further aging of the population.



NHI aims to expand assets under management in the medium to long term using our expertise on healthcare, extensive networkand fund raising capabilities.

3 Stable cash flowTo stabilize cash flow, NHI will sign long-term fixed-rent lease agreements with operators of healthcare facilities.

To stabilize management, NHI will consider business collaborations and mutual management backup with carefully selected
operators.

4 Unitholder return policy utilizing asset characteristics


NHI will implement unitholder returns through distributions in excess of earnings (refund of investment) utilizing the asset
characteristic of a high rate of depreciation.



NHI will consider unitholder benefits utilizing the characteristics of healthcare facilities.

5 Substantial support system and strong independence

NHI will develop the support system that brings together the comprehensive strengths of Daiwa Securities Group Inc. (sponsor),an expert finance company, and AIP Healthcare Japan GK (advisor), an expert healthcare company.



NHI’s asset management company is able to establish cooperative relations with a wide range of operators as it is very
independent with no participation of operator group.

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

3Section 1

Topics and Highlights

Topics and Highlights█ Property Acquisition for the 4th Fiscal Period Ended June 2016
Acquisition of four properties, Alpha Living Okayama Nishigawa Ryokudokoen, Alpha Living Okayama Korakuen,
Alpha Living Takamatsu Ekimae and Alpha Living Takamatsu Hyakkenmachi for a total of 2,550 million yen
through public offering in November 2015.

<Alpha Living
OkayamaNishigawa
Ryokudokoen>
Acquisition price:
730 million yen<Alpha Living
Okayama Korakuen>
Acquisition price:
610 million yen<Alpha Living
Takamatsu
Ekimae>Acquisition price:
605 million yen<Alpha Living
Takamatsu
Hyakkenmachi>
Acquisition price:
605 million yen█ Financial Situation
LTV (based on total assets): 44.6% (end of 3rd FP: 49.8%)



Average remaining debt years at the end of the Fiscal Period: 3.1 years (end of 3rd FP: 3.5 years)

Ratio of fixed interest: 94.6% (end of 3rd FP: 100%)

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

5Section 2

Financial Results
for the 4th Fiscal Period

Operating Results for 4th Fiscal Period
Actual results for 4th Fiscal Period(unit: million yen)
4th FP
3rd FP(ended Oct. 2015) (ended Apr. 2016) Difference(results)(results)
17
21
4
555
667
111
330
377
46

Number of properties ow ned at end of the fiscal period
Operating revenue
Operating expenses
Property-related expense(excluding depreciation)
Depreciation
Operating income
Non-operating revenue
Non-operating expense
Interest expense
Ordinary income
Net income
Number of investment units issued and outstandingat the end of the fiscal period (units)
Distribution per unit (yen)(including distribution in excess of earnings)
Distribution per unit (excluding distribution in excess of earnings)
Distribution per unit in excess of earnings(Reference)
Depreciation per unit (yen)Ratio of distribution in excess of earnings to depreciation per unit

56

70

14

151
224
0
23
18
201
200

187
289
0
27
21
261
260

35
64
0
4
3
60
60

60,80074,632

13,832

4,067

4,295

228

3,299
768

3,495
800

196
32

2,496
30.8%

2,506
31.9%

Increase factor
Revenue (rents and common area fees) from 4 properties
acquired during the fiscal period（+65 million yen）
Full-year contribution of revenue (rents and common areafees) from 3 properties acquired during the previous fiscal
period（+46 million yen）

Increase factor
Depreciation(+35 million yen)
Asset management fees(+ 9 million yen)Tax and public dues (property-related expense)(+ 6 million yen)Repair cost(+ 5 million yen)
Decrease factor
Other commission fees
Advertising expense(- 8 million yen)(- 7 million yen

Comparison of forecast and actual results for 4th Fiscal Period(unit: million yen)
4th FP(ended Apr. 2016)(forecast)(Disclosed in Dec 2015)

4th FP(ended Apr. 2016)(forecast)(Disclosed in Mar 2016)

4th FP(ended Apr. 2016)(results)

Difference

21

21

21

-

Operating revenue

667

667

667

0

Operating expenses

388

381

377

-11

Net income

243

256

260

17

Number of properties ow ned at end of the fiscal period

Distribution per unit (yen)(including distribution in excess of earnings)
Distribution per unit
(excluding distribution in excess of earnings)

4,060

4,230

4,295

235

3,260

3,430

3,495

235

Distribution per unit (in excess of earnings)

800

800

800

-

Decrease factor
Other commission fees(- 3 million yen)
Asset custodian and administrative agency compensation(- 2 million yen)Tax and public dues (general and administrative expense)(- 2 million yen)This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

7Forecast of Operating Results for 5th Fiscal Period and 6th Fiscal Period
Forecast of the 5th fiscal period(unit: million yen)
5th FP(ending Oct. 2016)(forecast)Difference fromthe 4th FP

21-

Operating revenue

676

9Operating expenses

404

27

Property-related expenses (excluding depreciation)

81

10

Depreciation

187

0

Operating income

271

-17

Non-operating revenue--0

Non-operating expense

27-0Interest expense

21-0

Ordinary income

244

-17

Net income

243

-17

Number of properties ow ned at end of the fiscal period

Increase factor
Full-year contribution of revenue (rents and common area fees) from4 properties acquired during the previous fiscal period(+ 9 million yen)
Increase factor
Tax and public dues (property-related expense)
Asset custodian and administrative agency compensation
Asset management fees(+10 million yen)(+ 8 million yen)(+ 3 million yen)

5th FP (ending Oct. 2016)(forecast)
Number of investment units issued and outstandingat the end of the fiscal period (units)
Distribution per unit (yen)(including distribution in excess of earnings)
Distribution per unit (excluding distribution in excess ofearnings)

Difference fromthe 4th FP

74,632

-

4,060

-235

3,260

-235

800

-

Distribution per unit in excess of earnings(Reference)

Forecast of the 6th fiscal period(unit: million yen)

6th FP(ending Apr. 2017)(forecast)Difference fromthe 5th FP-

Operating revenue

676

0Operating expenses

405

0

Property-related expenses (excluding depreciation)

87

5

Depreciation

188

1

Operating income

271

-0

Non-operating revenue--

Non-operating expense

27-0Interest expense

20

-0

244

0

Ordinary income

2,516

Ratio of distribution in excess of earnings to depreciation
per unit

31.8%

Increase factor
Repair cost

21

Number of properties ow ned at end of the fiscal period

Depreciation per unit (yen)(+ 5 million yen )Decrease factor
Asset custodian and administrative agency compensation(- 6 million yen)

6th FP (ending Apr. 2017)(forecast)
Number of investment units issued and outstandingat the end of the fiscal period (units)
Distribution per unit (yen)(including distribution in excess of earnings)
Distribution per unit (excluding distribution in excess ofearnings)

Distribution per unit in excess of earnings

Difference fromthe 5th FP

74,632

-

4,060

-

3,260

-

800

-

(Reference)

per unit (yen)2,530
Net income
243Instruments and Exchange
0 Act or anyDepreciationThis
document is not material disclosed in compliance with the Financial
regulation of similar nature, nor is it intended for the purposes of solicitation.
Ratio of distribution in excess of earnings to depreciation
NHI advises readers to make investment decisions at their own judgment.
31.6%
per unit8

Memorandum

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

9Section 3External GrowthChange in Asset Size
Continuous external growth through acquisition of carefully selected properties
Aim for further
expansion of
the asset size

(million yen)

25,000+2,550 million yen
20,00015,000+2,778 million yen
Acquisition of 18,608
4 properties
Acquisition of
3 properties

16,058

40.1% increase

13,28010,000Total of14 properties

Total of17 properties

Total of21 properties

5,000

0
Listing

End of the 3rd FP(ended October 2015)

As
of of
November24, 2015
End
the 4th FP(ended April 2016)

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

11

Properties Acquired in 4th FP (ended April 2016)*”Relatively new” buildings refer to buildings completed within the past 5 years

Alpha Living Okayama Nishigawa Ryokudokoen

Alpha Living Okayama Korakuen

Acquisition price: 730 million yen (Acquisition date: November 24, 2015)
Operator: Anabuki Medical Care Inc.
Relatively
new
Facility type: Residential type fee-based homes for the elderly

Acquisition price: 610 million yen (Acquisition date: November 24, 2015)
Operator: Anabuki Medical Care Inc.
Facility type: Residential type fee-based homes for the elderly
Alpha Living
Okayama Korakuen

Alpha Living
Okayama Korakuen

Alpha Living Okayama
Nishigawa Ryokudokoen

Location

6-2 Chuo-cho, Kita-ku,
Okayama-shi, Okayama

Area
Structure/
Floors533.05 m
RC/7F

2

Alpha Living Okayama
Nishigawa Ryokudokoen

Appraisal value

760 million yen

Total floor area

2,124.16 m

2Construction
completion

August 2014
(Note) As of July 31, 2015



Site Features

The Property is located close to Okayama Station and the prefectural
government’s office of Okayama, which are in the center of Okayama City.
Trees are planted effectively along the nearby Nishigawa River, creating atasteful community environment with a park on the north side of the Property.



Locational Features

Within 3km of the Property (Kita-ku, Naka-ku), the population of the elderly
people aged 75 years or over is 50.2 thousand accounting for 11.5% of thetotal population. In Okayama City, the number of the elderly people aged 75
years or over is expected to be 117.4 thousand in year 2035 from the 81.2
thousand in 2015.
Property Features

Location

1-11-4, Hama, Naka-ku,
Okayama-shi, Okayama

Appraisal valueArea

2,095.80 m2

Total floor area

(1) 1,988.80 m2(2) 131.64 m2

Structure/
Floors(1) RC/4F with tile roofing(2) Steel-framed with galvanizedalloy steel sheet roofing/1F

Construction
completion(1) May 1988
(2) December 2014

(Note)The Property completed in year 2014 is relatively new and provides privaterooms of around 18 m2 which is a standard room size for facilities withnursing care. The rooms are equipped with sink and toilet.

646 million yen(Note)(Note) As of July 31, 2015

 Site Features
The Property is closely located to the east side of Asahigawa River, which runs north tosouth in Okayama City. On its south, across an arterial road, is Korakuen, which is oneof the three great gardens of Japan and Okayama castle; and quiet residential areas
spread on the west and southwest sides.
 Locational Features
Within 3km of the Property (Kita-ku, Naka-ku), the population of the elderly people
aged 75 years or over is 50.2 thousand accounting for 11.5% of the total population. In
Okayama City, the number of the elderly people aged 75 years or over is expected tobe 117.4 thousand in year 2035 from the 81.2 thousand in 2015.
 Property Features
The Property which opened in 2015 was converted from a recreation property owned
by a local major company in Okayama City. It presents an image of high-quality fromthe traditional Japanese-style garden with a pond within the premises, etc. The
Property provides private rooms of around 18 m2 to 25 m2 which is a standard room
size for facilities with nursing care. The rooms are equipped with sink and toilet.

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

12

Properties Acquired in 4th FP (ended April 2016)
Alpha Living Takamatsu Ekimae
Acquisition price: 605 million yen (Acquisition date: November 24, 2015)
Operator: Anabuki Medical Care Inc.
Relatively
new
Facility type: Residential type fee-based homes for the elderly

Alpha Living Takamatsu Hyakkenmachi
Acquisition price: 605 million (Acquisition date: November 24, 2015)
Operator: Anabuki Medical Care Inc.
Facility type: Elderly housing with supportive services

Alpha Living
Takamatsu Ekimae

Alpha Living
Takamatsu Ekimae

Alpha Living Takamatsu
Hyakkenmachi

Alpha Living Takamatsu
Hyakkenmachi

Location

1-6, Nishiuchi-machi,
Takamatsu-shi, Kagawa

Appraisal value

622 million yen (Note)

Location

8-11, Hyakken-machi,
Takamatsu-shi, Kagawa

Appraisal value

609 million yen (Note)Area

502.63 m2

Total floor area

1,848.06 m2

Area

466.58 m2

Total floor area

1,922.18 m2

Structure/Floors

RC/6F

Construction
completion

June 2014

Structure/Floors

RC/10F

Construction
completion

June 2010



Site Features(Note) As of July 31, 2015

The Property is located a five-minute walk from Takamatsu Statin on the JR
Yosan Line, enjoying the transport convenience. The area is also close to acommercial district with local shopping streets, offering daily convenience.


Locational Features
In Takamatsu City where the Property is located, the population of the elderly
people aged 75 years or over is 52 thousand and accounting for 12.1% of thetotal population. The number of the elderly people aged 75 years or over is
expected to be 77.1 thousand in year 2035.

Property Features
The residential-type Property for the elderly completed in year 2014 isrelatively new and provides private rooms of around 18 m2 which is astandard room size for facilities with nursing care. The rooms are equippedwith sink and toilet. There is also a dental clinic on the first floor.

 Site Features(Note) As of July 31, 2015

The Property is located a four-minute walk to Kataharamachi Station on Kotohira Lineof Takamatsu-Kotohira Electric Railroad and is also within walking distance toTakamatsu Station on the JR Yosan Line. It is fairly close to an area where
Takamatsu Mitsukoshi department store and other brand shops are located. There isalso a shopping arcade on the west side, boasting excellent living convenience.
 Locational Features

In Takamatsu City where the Property is located, the population of the elderly people
aged 75 years or over is 52 thousand and accounting for 12.1% of the total
population. The number of the elderly people aged 75 years or over is expected to be
77.1 thousand in year 2035.
 Property Features

The Property which is an elderly housing with supportive services provides privaterooms of around 27 m2 which is larger than the standard size for rooms designed forindependent elderly people. The rooms are equipped with mini-kitchen, bathroom,
sink and toilet.

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

13

Sourcing Route
Status of property acquisition by sourcing route
Properties acquired
before listing
14 properties/
13,280 million yen

AssetManagement
Company’s
uniquenetwork

Properties acquired in the 4th FP
4 properties/2,550 million yen
Alpha Living Okayama
Nishigawa Ryokudokoen
Acquisition price:
730 million yen

Silver Heights
Hitsujigaoka No.3
Acquisition price:
1,200 million yen

・ M&A cases for business succession
・ Needs for securing liquidity on hand

Sale & lease backOff-balancing in linewith M&A

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

Alpha Living Okayama
Korakuen
Acquisition price:
610 million yen
Alpha Living Takamatsu
EkimaeAcquisition price:
605 million yen

5 properties/
3,750
million yen

Alpha Living Takamatsu
Hyakkenmachi
Acquisition price:
605 million yen

Change of owners

・ Sales cases by developer groups whichhave operators as affiliates
・ Needs to focus entirely on facility
operations

Sponsorgroup

Advisor14 properties/
13,280 million yen

Minna-no-ie Omiya
Yoshinocho
Acquisition price: 740
million yen
Minna-no-ie Chuo-ku
En'namiAcquisition price: 838
million yen
・ Properties introduced by the sponsor
group
・ Needs for asset management fromowners2 properties/
1,578
million yen

14 properties/
13,280
million yen

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

14

Portfolio Map (as of April 30, 2016)
Owned properties are diversified over
13 prefectures
RegionTargetIncorporation
incorporation
ratio
ratio

Definition

Tokyo area: Tokyo, Kanagawa, Chiba,
Three major Saitama
metropolitan The Chukyo area: Aichi, Mie, Gifu
The Kinki area: Osaka, Kyoto, Hyogo,
areasNara, Shiga

50% or
more

59.6%

Core
citiesCore City Areas with populations of
200,000 or more. (excluding Three major
metropolitan areas)

50% or
less

40.4%

Other

Core City Areas with populations under
200,000 (excluding Three major
metropolitan areas and Core cities)

10% orless

0.0%

17 Silver Heights Hitsujigaoka No.3

9 Sawayaka Hinodekan
10

Sawayaka Riverside
Kurinoki

8 Sawayaka Heart Life Nishikyogoku
12 Nichii Care Center Fukushima Omori

14 Verger Hirakata
19 Alpha Living Okayama Korakuen
18

Alpha Living Okayama Nishigawa Ryokudokoen

15 Minna-no-ie Omiya Yoshinocho
16 Minna-no-ie Chuo-ku En’nami

11 Sawayaka Obatake Sanbankan
6 Sawayaka Kaikyokan

5 Sompo Care LAVIERE Kinugasayama Koen

7 Sawayaka Meisuikan

4

Sompo Care LAVIERE Sagamihara Chuo

13 La’nassica Arakogawa
2 Super Court JR Nara-Ekimae
1 Charm Sweet Ryokuchi Koen
21 Alpha Living Takamatsu Hyakkenmachi
3 Sompo Care LAVIERE Hiroshima Hikarigaoka

20 Alpha Living Takamatsu Ekimae(Note) Red numbers refer to Three major metropolitan areas
and blue numbers to Core cities.
Facility names with orange background are fee-based
homes for the elderly with nursing care, those withblue background are residential-type fee-based homes
for the elderly, and those with yellow-green are elderly
housing with supportive services.

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

15

Introduction of Operators(*) Operators are listed in order ofthe number of facilities they manage

Highly reliable operators

Operator

Nichii Gakkan

Wisnet(Note 2)

Sompo Care Next

Sawayaka ClubSuper Court

Number ofmanagedfacilities (Note 1)

Number ofoperatingrooms (Note 1)

Established408

12,873

August1973

Listed on the first section of the Tokyo
Stock Exchange

3,504January
1998

Subsidiary of Sohgo Security Service Co,.
Ltd., a company listed on the first section of
the Tokyo Stock Exchange

November
1992

Subsidiary of Sompo Japan Nipponkoa
Holdings, Inc., a company listed on the firstsection of the Tokyo Stock Exchange
Subsidiary of Uchiyama Holdings Co., Ltd.,a company listed on the first section of theTokyo Stock Exchange

124

116

8,743

Attributes

Diversification of Operators

66

4,042

December
2004

45

3,019

May
1995

－
Listed on JASDAQ Standard on the Tokyo
Stock Exchange

Cedar

39

2,042

April
1981

Charm Care
Corporation

30

2,092

August1984

Listed on JASDAQ Standard on the Tokyo
Stock Exchange
Subsidiary of Anabuki Kosan Inc., acompany listed on the first section of theTokyo Stock Exchange

Anabuki Medical
Care

25

1,099

June
2009

Nihon Kaigo Iryo
Center22

941

October
1997

－

321

December
1961－

Silver Heights
Sapporo3(*) Operators in order of percentage

Nichii Gakkan 1.4%
Nihon Kaigo Iryo Center 5.1%
Silver Heights Sapporo
6.4%
Cedar 6.9%

Sompo Care
Next 21.3%

Super Court 8.4%
Wisnet 8.5%
Charm Care
Corporation 10.5%

Sawayaka
Club 17.7%

AnabukiMedical Care 13.7%

Asset size in which lease agreement
is concluded with a single operator

40% or less
(Note) The total acquisition price by operator as apercentage of the total acquisition price isindicated, rounded to one decimal place.

(Note 1) Number of managed facilities and Number of operating rooms indicate the number of facilities and the number of rooms for fee-based homes for the elderly, group homes and elderly
housing with supportive services based on operators’ websites and interviews with them (as of April 30, 2016).
(Note 2) Wisnet Co., Ltd. transferred 69.54% of its issued shares to Sohgo Security Service Co., Ltd. on May 6, 2016.
This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

16

Development of Quality Portfolio through Careful Selection
and Continuous Evaluation of Operators
At the time of new acquisition

At the time of continuous evaluation

Careful selection of operators

Continuous evaluation

Conducting due diligence utilizing the screening know-how of financial institutions

Conducting the same evaluation as at the time of acquisition even after acquisition

 Conduct due diligence utilizing the screening know-how held by the sponsor group,
which is a financial institution, in order to confirm continuity and superiority ofoperators’ operations

 Six members are placed in the Healthcare Management Team (including
pluralists).
 Regularly conduct the same evaluation as at the time of property
acquisition.
 In addition, visit facilities, etc. and conduct facility monitoring, interviews,
etc. including the following.

(Note)

NHI’s Board of Directors

Asset Management
Company’s Board of Directors

Compliance Committee

Investment Committee

Compliance Officer

Acquisition Department*Flow of decision-making through to property acquisition(Note) Approval by NHI’s Board of Directors is required for transactions with interested parties.

◎Monitoring (Twice or more/year)
・The Asset Management Company and PM companies visit operators’
facilities and conduct examination every fiscal period.
◎Interviewing (Once or more/year)
・Confirming the following items with directors and care providers at
facilities(1) Responses to residents(2) Employees training program(3) Status of governance (including items to check for prevention ofresident mistreatment)

Common items for evaluation at the time of new acquisition and continuous evaluation
 Quality and variety of services that the operator provides
 Credibility and operational skills of the operator
Quantitative perspective
・Stability, profitability, growth potential and productivity of the operator’s
finances
・Stability, profitability, growth potential of the operator’s healthcare business・The company’s history and the number of years in business(The items are confirmed on the basis that such financial data, etc. beprovided by the operator.)

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

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

17Section 4

Portfolio Analysis

Portfolio List (as of April 30, 2016)
Acquisition price(Note 2)

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

No.
(Note 1)

Acquisition
period11

1st Fiscal Period

Charm Sweet Ryokuchi Koen

Fee-based homes for the elderly with nursing care

Charm Care
Corporation

Toyonaka City, Osaka

1,950

10.5

3,030

128

22

2nd Fiscal Period

Super Court JR Nara-Ekimae

Residential-type fee-based homes for the elderly

Super Court

Nara City, Nara

1,569

8.4

1,690

155

33

1st Fiscal Period

Sompo Care LAVIERE Hiroshima
Hikarigaoka

Fee-based homes for the elderly with nursing care

960

5.2

1,220

80

44

1st Fiscal Period

Sompo Care LAVIERE
Sagamihara Chuo

Fee-based homes for the elderly with nursing care

Sagamihara City,
Kanagawa

1,170

6.3

1,720

80

55

2nd Fiscal Period

Sompo Care LAVIERE
Kinugasayama Koen

Fee-based homes for the elderly with nursing care

Yokosuka City, Kanagawa

1,839

9.9

1,990

104

66
77
88
99
10
10
11
11
12
12
13
13

1st Fiscal Period

Sawayaka Kaikyokan

Fee-based homes for the elderly with nursing care

Kitakyushu City, Fukuoka

630

3.4

886

65

1st Fiscal Period

Sawayaka Meisuikan

Fee-based homes for the elderly with nursing care

Kitakyushu City, Fukuoka

590

3.2

802

87

1st Fiscal Period

Sawayaka Heart Life Nishikyogoku

Residential-type fee-based homes for the elderly

Kyoto City, Kyoto

750

4.0

1,210

84

2nd Fiscal Period

Sawayaka Hinodekan

Fee-based homes for the elderly with nursing care

Niigata City, Niigata

773

4.2

923

50

2nd Fiscal Period

Sawayaka Riverside Kurinoki

Residential-type fee-based homes for the elderly

Niigata City, Niigata

266

1.4

318

33

2nd Fiscal Period

Sawayaka Obatake Sanbankan

Residential-type fee-based homes for the elderly

Kitakyushu City, Fukuoka

289

1.6

350

50

1st Fiscal Period

Nichii Care Center Fukushima Omori

Fee-based homes for the elderly with nursing care

Nichii Gakkan

Fukushima City, Fukushima

265

1.4

349

52

2nd Fiscal Period

La’nassica Arakogawa

Fee-based homes for the elderly with nursing care

Cedar

Nagoya City, Aichi

1,279

6.9

1,380

100

14
14

1st Fiscal Period

Verger Hirakata

Residential-type fee-based homes for the elderly

Nihon Kaigo
Iryo Center

Hirakata City, Osaka

950

5.1

1,570

104

Saitama City, Saitama

740

4.0

770

33

Saitama City, Saitama

838

4.5

882

51

Sapporo City, Hokkaido

1,200

6.4

1,320

109

Okayama City, Okayama

730

3.9

760

53

Okayama City, Okayama

610

3.3

646

45

Takamatsu City, Kagawa

605

3.3

622

43

Takamatsu City, Kagawa

605

3.3

609

50

18,608100.0

23,047

1,556

Property nameFacility type15
15

3rd Fiscal Period

Minna-no-ie Omiya Yoshinocho

Fee-based homes for the elderly with nursing care

16
16

3rd Fiscal Period

Minna-no-ie Chuo-ku En’nami

Fee-based homes for the elderly with nursing care

1717

3rd Fiscal Period

Silver Heights Hitsujigaoka No.3

Fee-based homes for the elderly with nursing care

18
18

4th Fiscal Period

Alpha Living Okayama Nishigawa
Ryokudokoen

Residential-type fee-based homes for the elderly

19
19
20
20

4th Fiscal Period

Alpha Living Okayama Korakuen

Residential-type fee-based homes for the elderly

4th Fiscal Period

Alpha Living Takamatsu Ekimae

Residential-type fee-based homes for the elderly

4th Fiscal Period

Alpha Living Takamatsu
Hyakkenmachi

Elderly housing with supportive services

21
21

Operator

LocationPrice(millionyen)

Hiroshima City, Hiroshima
Sompo
Care Next

Sawayaka Club

WisnetSilver Heights
SapporoAnabuki Medical
Care

10 operators 21 properties Total(Note 1) Red numbers refer to Three major metropolitan areas and blue numbers to Core cities. The background colors for Property nameand Facility type columns indicate types of facilities; orange for fee-based homes for the elderly with nursing care, blue forresidential-type fee-based homes for the elderly and yellow-green for elderly housing with supportive services.
(Note 2) “Acquisition price” is excluding consumption tax, local consumption tax and the various expenses required for the acquisition.
“Share of portfolio” is the respective acquisition price expressed as a percentage of the total of the acquisition prices, rounded to
one decimal place. Therefore the total of “Share of portfolio” may be different from the figure indicated in “Total.”(Note 3) “Appraisal value” is as of April 30, 2016 for other properties.
(Note 4) “Number of rooms” is the figure indicated in the written explanation of important matters pertaining to the fee-based home for theelderly provided by the operator.

<Diversification of facilities>

Elderly housing withsupportive services
3.3%
Residential-type
31.0%
With nursing care
65.7%
Fee-based homes

for the elderly 96.7%

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
(Note) Total acquisition price by type as a percentage of the total acquisition price is indicated.
NHI advises readers to make investment decisions at their own judgment.

19

Status of Portfolio (as of April 30, 2016)
Rent-Paying Capacity

More than 2.0x
14.6%

1.2x or less27.2%
Rent-Paying
Capacity (Note 1)
Average 1.4x

(On appraisal basis:
Average 1.7x)More than 1.2x, but
1.5x or less
20.6%

More than 1.5x, but
2.0x or less
37.5%

(Note 1) “Rent-paying capacity” refers to themultiple obtained by dividing therespective acquired asset’s mostrecent EBITDAR by rent.
* EBITDAR＝asset’s operating
income+ depreciation + rent

Proportion of Nursing Care Fee

More than 60%,
but 70% or less
4.2%

Proportion of
Nursing
Care Fee(Note 2)
Average 50.1%

Proportion of One-Time
Entrance Fee Amortization Income

More than 15%,
but 20% or less
14.5%

50% or less
47.7%

More than
5%, but 15%
or less
26.1%

Proportion of
One-Time
Entrance Fee
Amortization
Income(Note 3)
Average 5.3%

5% or less
59.4%

More than 50%,
but 60% or less
48.1%

(Note 2) “Proportion of nursing care fee”
refers to the proportion of theacquired asset’s net sales that isaccounted for by nursing care fee(including residents’ co-payment
portion).

(Note 3) “Proportion of one-time entrance fee
amortization income” refers to the
proportion of the acquired asset’s net
sales that is accounted for by onetime entrance fee amortization
income.

(*) Data are based on information on business income and expenditures from April 2015 to March 2016 disclosed by the respective operator. However,data for Nichii Care Center Fukushima Omori are based on information on business income and expenditures from January 2015 to December
2015 and for Silver Heights Hitsujigaoka No.3 from March 2015 to February 2016.

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

20

Portfolio Resident Attributes (as of April 30, 2016)
Gender(Note1)

Age Group(Note2)

Level of Requiring Nursing Care or Support(Note 3)

Under 65
years

Other

0.1%

3.2%

Male
27.5%
Female72.5%

65 yearsor over,but under
75 years

Requiring
nursingcare level 5

Requiring
nursingcare level 4

7.7%
75 yearsor over,but under
85 years

29.0%

Independent

9.1%

1.4%

Requiringsupport level 1

5.4%
Requiring support
level 2

5.6%

Averagerequiredlevel ofnursing care
Requiring
2.3
15.6%

85 yearsor over

60.0%

nursingcare level 3

18.6%

Requiring nursing
care level 1

22.8%

Requiring nursing
care level 2

21.3%(Note 1) The graph indicates the ratio of thenumber of residents per gender
expressed as a percentage of the total
number of residents.

(Note 2) The graph indicates the ratio of thenumber of residents per age groupexpressed as a percentage of the total
number of residents (except for residents
at Sompo Care LAVIERE Sagamihara
Chuo and Sompo Care LAVIERE
Kinugasayama Koen as there is no suchinformation stated in the written
explanation of important matters).

(Note3) The graph indicates the ratio of the number ofresidents per level of requiring nursing care or
support expressed as a percentage of the total
number of residents.
“Average level of nursing care” indicates thefigure obtained by multiplying the respective
number of residents categorized as
independent, requiring support level 1,
requiring support level 2, requiring nursing
care levels 1-5 and other by 0, 0.375, 1, 1-5
and 1 respectively, and dividing the sum total
by the number of residents.

(*) Data are based on figures stated in the written explanation of important matters (April 2016) provided by each operator.
All percentage figures are rounded to one decimal place.

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

21

Management Improvement Case of the Portfolio
La’nassica Arakogawa (Acquisition price: 1,279 million yen)
Operator

Total Floor Area

3,596.40㎡

Care System

Care staff + Nursing staff : user = 1:3

Structure / floors

S / 4F

24 hour nurse resident facility

Condition of Rights

Rights to use method

Cooperative Medical
Organization

Nagoyaekisaikai hospital / Medical cooperation
Keiseikai Tikusasan Clinic / Medical cooperation
Jyunseikai Toyo hospital, others

Number of Rooms

100 rooms

Entering Requirement

Nursing care

Rooms (all private)

Room Size：18.00〜19.65㎡

Takagi-cho, Minato-ku, Nagoya-shi, Aichi

Function TrainingRoom

La’nassica Arakogawa Change in occupancy rates

Cafeteria





12/4

13/4

14/4 14/12 15/3

15/6

Opening Date

Karaoke-room

June 1, 2008

Theater room

As a result of proposal / consultation on management and operation methods bymonitoring, management improvedUpon acquisition
November 2014

11/4

1,829.55㎡

Nagoya-shi designated specific facility
resident home for care

Location

100%
95%
90%
85%
80%
75%
70%
65%
60%

Site Area

Nursing Insurance Type

Nursing System

MockupCedar Co., Ltd.

Condition at the time of acquisition
・Lack of care staff and difficulty of recruitment influenced the acceptance of new residents.
Stability of care staff and solution to lack of staffs
・Newly allocated two move-in consultants and executed individual interview of all personnel
with the director.
・Siphon improvement tasks of daily work and executed communication enhancement witheach personnel.
・Improved personnel satisfaction and realized favorable facility management environment.
Improvement in occupancy rates
・The director and the move-in staffs personally deployed active marketing to hospitals,
medical facilities, in-home long-term care support offices, health and welfare for the elderlyand expanded range of marketing and practiced reinforcement of marketing.

15/9 15/12 16/3

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

22Section 5

Financial Status

Status of Interest-Bearing Liabilities (end of 4th Fiscal Period)
Status of interest-bearing liabilities (as of April 30, 2016)
Term

Balance
Interest(million yen) rate type

LenderMizuho Bank (**)

Drawdown
date

800

0.344%

October 31, 2017

1,000

0.532%

October 31, 2019

1,200

0.532%

October 31, 2019

Sumitomo Mitsui Trust Bank (**)

1,200

0.431% November 5,
2014
0.532%

October 31, 2018

(**)

700

(**) (***)

500

Mizuho Trust & Banking
The Musashino Bank

October 31, 20170.355%

October 31, 2017

500

0.431%

October 31, 2018

500

0.524%

May 29, 2020

500

0.524% June 1, 2015

May 29, 2020

The Musashino Bank (**)

500

0.524%

May 29, 2020

Resona Bank (**)

500

0.474%

October 30, 2020

Shinkin Central Bank400

0.293%

Sumitomo Mitsui Trust Bank

500 Floating

500

The Dai-ichi Life Insurance
Mizuho Bank (**)
Mizuho Trust & Banking

(**)

Total

Ratio of long-term loans
and short-term loans

9,300

Fixed

-

October 15,
2015

T+0.225% April 28, 2016
-

44.6%

October 31, 2019

0.329%

Shinkin Central BankLTV(Note)

Repayment
deadline(**)

Resona Bank

Long-term

Interestrate(*)

Averageremaining period(Note)

3.1 years(Note) Average remaining period and LTV are calculated based on
figures as of April 30, 2016 and are rounded to one decimal place.
Furthermore, LTV is calculated based on total assets.

October 31, 2018
April 30, 2020--

Ratio of fixed rates andvariable rates

Repayment schedule(million yen)

Ratio offloating rate
5.4%
Long-term
loans
100%

3,500
3,000
2,500

Ratio offixed rate
94.6%

2,000
1,500
1,000
500

(*)
(**)

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

0

Oct. Apr. Oct. Apr. Oct. Apr.
2016 2017 2017 2018 2018 2019

Oct. Apr. Oct.
2019 2020 2020

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

24

Policy on Distributions in Excess of Earnings /Index including NHI
Implementation of distributions in excess of earnings
taking advantage of features of healthcare assets

Implement distributions in excess ofearnings every accounting period with

High depreciation ratio

an upper limit of 40% ofRegarding facilities owned by NHI, the ratio ofbuildings to the entire asset is high, at nearly 70%.
 The ratio of depreciation without cash payout is high.


depreciation
Rental business
expenseand
SG&A expenseLow burden of construction expenses

Repairs to be borne by NHI are limited to building
frames and main structural sections
 Expenses required for update of equipment tend tobe low

RentalincomeDepreciation

Minimizing impact on finance byconducting distributions in excess ofearnings with upper limit of 40% ofdepreciation for each period

Distributions inexcess of earnings



Incomebefore taxes

Distributions(income)Distributions
tounitholders

Index including NHIMonth / year

Name of index

September 2015

Thomson Reuters GPR / APREA Investable REIT 100 Index

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

25

Overview of Unitholder Benefits Program
With the cooperation of operators who are the tenants, the unitholder benefits program will be offered to unitholders as of the end of fiscal period ended April 2016.

Charm Care
Corporation
Discount coupon for
entrance fee

Free voucher for an
overnight trial stay(with meals)

Discount
coupon for
entrance fee

Nichii Gakkan
Company
Free Enrollment anddiscount from Tuitionof COCO Juku, etc.

Discount voucher forhomemaking, childcare andnursing-care at his/her own
expense services

Free service foran overnight trial
stay (with meals)

Free visiting massage
service

Free visiting
beautyparlor/barber
service

Gift voucher for trips
with nursing care

Discount onroom fee

Free voucher for an
overnight trial stay(with meals)

Free voucher for a
one-day facility tour
(with lunch provided)

SilverHeights
SapporoDiscount
voucher for
entrance
fee

Free voucher fora one-day facility
tour (with lunch
provided)

Cedar Co., Ltd.

Wisnet Co., Ltd.
Welfare equipment
presented toresidents

Sawayaka
Club Co., Ltd.

Sompo Care
Next Inc.(Note)Free
voucher foranovernight
trial stay(withmeals)

Free voucher fora one-dayfacility tour (withlunch provided)

Free voucher foran overnight trial
stay(with meals)

Discount onroom fee

Free voucher fora one-day facility
tour (with lunch
provided)

Nihon Kaigo Iryo
Center Co., Ltd.
Free voucher for an overnight
trial stay (with meals)

Anabuki Medical
Care Inc.
Furniture presented to new residents ofAnabuki Medical Care’s facilities thatare owned by NHISuper Court
Co., Ltd.
Free
voucher foran overnight
trial stay(with meals)

Free voucher
for a one-day
facility tour
(with lunch
provided)This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

Cash backfor themonthly
payment for
the new
resident

26

Memorandum

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

27

Appendix

Surrounding Status of Healthcare Facilities 1: Progress of aging society
Domestic demographics by age

Population(10 thousand)

14,00012,00010,000
8,000

2,979

3,012

2,843

2,553

2,515

2,722

2,751

2,001
2,603 2,249（％）

Estimatedfigures

Actual figures

1,847 1,752 1,680 1,611 1,457 1,324
26.7

29.1 30.3

23.0

20.2

36.1
1,2041,129
31.6 33.4

1,073

39.9
37.7 38.8 39.4

939

861

30.0
791

Changes and ratio of elderly population living alone

Population(10 thousand)
800

700

17.9

600

6.1
229.0

31.0

340.5

174.2
46.0

74.2

男性
Male

105.1

138.6

2010年

94.8
23.3

2000年

131.3

68.8
19.3

281.4

2005年

5.2

1995年

4.6

1990年

4.3

9.7

Female
女性

411.9

188.9

2015年

8.0

11.1

Male
男性

15.0
10.0
5.0
0.0

2060年

2055年

2050年

2045年

2040年

2035年

2030年

2025年

23.1

14.6

15.4

13.9
450.6

217.3

471.0

229.6

2025年

12.9

1985年

0

22.6

2020年

12.9
11.2

1980年

100

21.3

14.7

300
200

20.3

21.9 （％）

16.2

500
400

19.0

20.0

Population aging rate (rate of population 65 years or older)
高齢化率（65歳以上人口割合）

Estimatedfigures

Actual figures

25.0

Female
女性

486.5

243.3

23.4

16.3
501.4

260.8

（％）
26
24
22
20
18
16
14
12
10
8
6
4
2
0

2035年

0-14
0～14歳
years old

2020年

2015年

2010年

2005年

15-64
15～64歳
years old

2030年

65-74
65～74歳
years old

2000年

1995年

1990年

1985年

1980年

1975年

1970年

1965年

1960年

1955年

1950年

75 years
75歳以上
or older

40.0
35.0

1,012

7,084 6,773
17.4
6,343 5,7875,353 5,001 4,706 4,418
7,708 7,341
14.6
8,251
7,883
8,409 8,103
7,581
8,622
10.3 12.1
4,000
6,047 6,744 7,212
9.1
5,517
8,716
5,017
7.1 7.9
6.3
8,590
1,407 1,495 1,645 1,600 1,383 1,225 1,128
1,752 1,733 1,479
4.9 5.3 5.7
2,000
1,407 1,517
1,301
1,109
2,179 2,278 2,245 2,223 2,257 2,385 2,401 2,336
338 376 434 516 602 699 776 892
309
1,160 1,407 1,641 1,879
0 107 139 164 189 224 284 366 471 597 717 900
6,000

45.0

(Source) Cabinet Office “White Paper on Aging Society 2016”

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

29Surrounding Status of Healthcare Facilities 2: Supply necessity of housing for elderly

Fill-Rate of Housing for Elderly to Elderly Population Target Rate for 2025
Based on the government policy target indicated in “Basic plans for housing forpeople (nationwide plans)” approved by the cabinet on March 18, 2016.
Fill-rate of housing for elderly toelderly population

Capacity of housing for elderly

1.6(million)
1.463
Fill-rate of housing for elderly to elderly population

Housing for elderly for approximately
770,000 is needed

Policy target by the
Ministry of Land,
Infrastructure,
Transportation andTourism

1.2

Approx. 0.77

(2014)(2025)
Urgent need of for widespread availabilityof housing for elderly

0.8

0.651

0.693

0.4

0.571

0.120

0.137

0.153

0.173

0.199

0.228

0.263

0.299

0.332

0.357

0.383

0.441

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014（出所）内閣府、厚生労働省、総務省、国立社会保障・人口問題研究所等(Source)Cabinet office, Ministry of Health, Labor and Welfare, Ministry of International Affairs and Communications,
National Institute of Population and Social Security Research, etc.

0.0
2025

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

30

Market Size by Segment
Market size of fee-based homes for the elderly requiring nursing care is large, therefore there is much room for NHI to expand
Market size by price (Fee-based homes for the elderly requiring
nursing care/who are independent)

Market size by type of private-sector profit-making facilityGroup homes
Market size: 756.8 billion yen
No. of facilities: 12,643(192,024 rooms)

Fee-based homes for the elderly(for those requiring nursing care)
Market size:
1,333.6 billion yen
No. of facilities: 9,889(340,734 rooms)

High76.2 billion yen(163 facilities, 8,824 rooms)

600 thousand
yen/month

500 thousand yen/month

Total
52.0%
2,565.5 billion yen

27.5 billion yen(46 facilities, 4,963 rooms)

Price (assumed monthly fees)

29.5%

10.3 billion yen(8 facilities, 1,023 rooms)

130.9 billion yen(377 facilities, 20,473 rooms)
400 thousand
yen/month

350 thousand yen/month

327.7 billion yen(1,284 facilities, 69,380 rooms)
200 thousand
yen/month

87.9 billion yen(248 facilities, 23,056 rooms)
200 thousand
yen/month

13.1%
5.4%

Rental housing exclusively for theelderly/ Elderly housing withsupportive services
Market size:
336.1 billion yen
No. of facilities: 4,579(144,434 rooms)

Zone of owned
properties

Fee-based homes for the elderly(for those who are independent)
Market size:
139.0 billion yen
No. of facilities: 476(35,760 rooms)

798.8 billion yen(8,065 facilities, 242,057 rooms)

13.5 billion yen(174 facilities, 6,718 rooms)

Low

Requiring nursing care/requiring support
Source: KPMG Healthcare Japan Co., Ltd.

Independent

Required level of nursing care/support

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

31

Framework of stable cash flow

Operator’s Income

REIT’sIncomeDistribution
to Investors

Fixed rent

Dividends

Advance fees
Residents
Monthly charges,etc.

Municipalities, etc.

Nursing care service
operators

Long-term leaseagreements

Nippon Healthcare
Investment
Corporation

Investors
投資主
Investment

Nursing care fees

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

32

Remaining Lease Contract Period of Each Property
Contract expiry date

Remaining lease
contract period

Minna-no-ie Chuo-ku En’nami

March 31, 2044

27.9 years

Minna-no-ie Omiya Yoshinocho

February 28, 2037

20.8 years

Super Court

Super Court JR Nara-Ekimae

July 14, 2039

23.2 years

Charm Care Corporation

Charm Sweet Ryokuchi Koen

August 28, 2038

22.3 years

Silver Heights Sapporo

Silver Heights Hitsujigaoka No.3

November 30, 2035

19.6 years

June 30, 2035

19.2 years

September 11, 2034

18.4 years

March 28, 2034

17.9 years

November 30, 2034

18.6 years

March 27, 2034

17.9 years

Nichii Care Center Fukushima Omori

March 31, 2034

17.9 years

Verger Hirakata

March 28, 2034

17.9 years

La’nassica Arakogawa

March 31, 2028

11.9 years

Operator

Property name

WisnetAlpha Living Okayama Nishigawa
Ryokudokoen
Anabuki Medical Care

Alpha Living Okayama Korakuen
Alpha Living Takamatsu Ekimae
Alpha Living Takamatsu Hyakkenmachi
Rest Villa Kinugasayama Koen

Sompo Care Next

Rest Villa Hiroshima Hikarigaoka
Rest Villa Sagamihara Chuo
Sawayaka Hinodekan
Sawayaka Riverside Kurinoki
Sawayaka Obatake Sanbankan

Sawayaka Club

Sawayaka Kaikyokan
Sawayaka Meisuikan
Sawayaka Heart Life Nishikyogoku

Nichii Gakkan
Nihon Kaigo Iryo Center
Cedar

Average remaining period

19.4 years(Note) “Remaining Lease Contract Period” indicates period remaining as of April 30, 2016. “Average remaining period” is a weighted average with acquisition prices,rounded to one decimal place.

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

33

(Reference) History of Revisions to Nursing Care Fees
Time of revision

Main points of revision

FY2003 revision

・・

FY2005 revision(Enforced in
October 2005)

FY2006 revision

FY2009 revisionEnhancement of appropriateness of facility services, etc.
 Improvement in service quality and appropriateness
Adjusting service fees by taking into account the difference in income and expenditure of facilities Assessment of at-home services for encouraging self-support
Enhancing livelihood support of home-visit nursing care, additional payment for rehabilitation
implemented individually, etc.

 Improvement in working conditions of care providers
 Securement of care providers / improvement of working conditions of care providers
・Additional payment in accordance with care providers’ expertise, career, etc.

FY2012 revision-2.3%[At-home：＋0.1%][Facility：-4.0%]

Securement of fairness between at-home care and facility services, etc.
 Review of nursing care fees related to living costs and meal costs

 Promotion of encouraging self-support and at-home nursing care
 Promotion of nursing care prevention and rehabilitation
・ Changing prevention benefits provision from piecework payment to comprehension
payment by monthReinforcement of support for those requiring medium- to high- levels of nursing care・ Additional payment for home-visit long-term care and home-visit nursing care provided tothose requiring high level of cares, etc.

Rate of revision-0.5%【-2.4%】[At-home：-0.1%]【-1.0%】[Facility：±0.0%] 【-4.0%】【】: Rate of revision including
revision in FY2005+3.0%[At-home：＋1.7%][Facility：＋1.3%]

Securement of improved working conditions for care staff and promotion of community
comprehensive care
 Foundation of additional payment for improving working conditions
 Establishment of new services such as around-the-clock periodical door-to-door service+1.2%

Response to increased burden due to the consumption tax hike

+ 0.63%

FY2014 revision

FY2015 revision

 Initiatives for building a “community comprehensive care system”
 Further reinforcement of care for those requiring medium- to high- levels of nursing care and thosewith dementia
 Promotion of securing care staff
 Enhancement of appropriateness of service assessment and establishment of efficient system forproviding services[At-home：＋1.0%][Facility：＋0.2%]-2.27%[At-home：-1.42%][Facility：-0.85%]

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

34

Introduction of Operators

Company nameHead office

Nichii Gakkan Company

Company name

Sawayaka Club Co., Ltd.

2-9 Kanda-Surugadai, Chiyoda-ku, Tokyo

Head office

2-10-10 Kumamoto, Kokura-kita-ku, Kitakyushu-shi, Fukuoka

Representative director Representative director, Fumiharu Uchiyama

Representative director Chairman, President and CEO, Akihiko Terada
Established

August 2, 1973

Capital11,933 million yen

Attributes(listed market)

Listed company(First Section of the Tokyo Stock Exchange, Securities code: 9792)

Principal businesses

Medical Support Business, Nursing Care and Health Care Business, Education
Business and Child-care Business

Established

December 1, 2004

Capital

200 million yen

Attributes(listed market)

Consolidated subsidiary of Uchiyama Holdings Co., Ltd.
(First Section of the Tokyo Stock Exchange, Securities code: 6059)

Principal businesses

Operation of fee-based homes for the elderly, elderly housing with supportive
services, group homes, short-stay facilities, helper stations, care plan centers,
nursing care day service centers and multifunctional nursing care in a small
group home setting

Parent company

Uchiyama Holdings Co., Ltd.

Nichii Care Center Fukushima Omori
Sawayaka Hinodekan
Company name

Sompo Care Next Inc.

Head office

4-12-8 Higashi Shinagawa, Shinagawa-ku, Tokyo

Sawayaka Obatake Sanbankan Sawayaka Meisuikan

Sawayaka Kaikyokan

シダー

Representative director Representative director, Ken Endo

Company name

Cedar Co., Ltd.

Established

November 11, 1992

Head office

1-7-19 Obatake, Kokura-kita-ku, Kitakyushu-shi, Fukuoka

Capital

5,095 million yen

Representative director Representative directorr, Yoshitada Yamasaki

Attributes(listed market)

Consolidated subsidiary of Sompo Japan Nipponkoa Holdings, Inc. (First
Section of the Tokyo Stock Exchange, Securities code: 8630)

Established

April 25, 1981
432 million yen

Attributes(listed market)

Listed company(JASDAQ of the Tokyo Stock Exchange, Securities code: 2435)
Operation of fee-based homes for the elderly, elderly housing with supportive
services, group homes, short-stay facilities, helper stations, care plan centers,
nursing care day service centers and multifunctional nursing care in a small
group home setting

Principal businesses

Fee-based nursing homes for the elderly, fee-based assisted-living homes forthe elderly, outpatient day long-term care (day service) business, home-visit
long-term care (home help service) business, home-visit nursing business, inhome long-term care support business

CapitalParent company

Sompo Japan Nipponkoa Holdings, Inc.

Principal businesses

Sompo Care LAVIERE
Kinugasayama Koen

Sompo Care LAVIERE
Hiroshima Hikarigaoka

Sompo Care LAVIERE
Sagamihara Chuo

La’nassica Arakogawa

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

35

Introduction of Operators
Company nameCharm Care Corporation

Company nameNihon Kaigo Iryo Center Co., Ltd.

Head office

3-6-32 Nakanoshima, Kita-ku, Osaka-shi, Osaka

Head office2-4-1 Hannancho, Abeno-ku, Osaka-shi, Osaka

Representative director Representative director Takahiko Shimomura
Established

August 22, 1984

Capital

192 million yen

Attributes(listed market)

Listed company(JASDAQ of the Tokyo Stock Exchange , Securities code: 6062)
Operation of fee-based nursing homes for the elderly with care and fee-based
assisted-living homes for the elderly

Principal businesses

Representative director Representative director Yusuke Taniguchi
Established

October 7, 1997

Capital50 million yen

Attributes(listed market)

Unlisted company

Principal businesses

In-home nursing care support business, home-visit nursing care business,
operation of rental housing for the elderly, selling and rental of equipment
covered by public aid, care worker training business, real estate business

Charm Sweet Ryokuchi Koen

Verger Hirakata

Company nameSuper Court Co., Ltd.

Head office

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

Representative director Representative director Akiyoshi Yamamoto

Company name

Wisnet Co., Ltd.

EstablishedMay 19, 1995

Head office2-795 Mihashi, Omiya-ku, Saitama-shi, Saitama

Capital50 million yen

Representative director Representative director Yukinori Takahashi

Attributes(listed market)

Unlisted company

Established

January 1998

Capital

347 million yen

Principal businesses

Operation/management of fee-based homes for the elderly and housing for the
Attributes
elderly, ” operation/management of buildings and condominiums,(listed market)
planning/design/construction of rental apartments, a nursing care worker
nurturing and training business, etc.

Parent company

Super Holdings Co., Ltd.

Super Court JR Nara-Ekimae

Principal businessSubsidiary of Sohgo Security Service CO,. LTD., (First Section of the Tokyo
Stock Exchange, Securities code: 2331)
Operation and management of group home for dementia, fee-based homes forthe elderly with nursing care, elderly housing with supportive services, helper
station, day service center, small scale multi-function home care, home care
support office, visiting nursing staion

Minna-no-ie Omiya Yoshinocho

Minna-no-ie Chuo-ku En’namiThis document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

36

Introduction of Operators
Backup operator for Silver Heights Hitsujigaoka No.3
Company nameSilver Heights Sapporo Co., Ltd.

Head office

3-41, Fukuzumisanjou, Toyohira-ku, Sapporo-shi, Hokkaido

Representative
director

Representative director, Hirofumi Kaneko

Established

December 1961

Capital50 million yen

Attributes(listed market)

Unlisted company

Living Platform, Ltd. agreed with Silver Heights Sapporo Co., Ltd. tomutually complement each other managerially and financially, andconcluded, on September 7, 2015, a business partnership agreement which
confirms development of management system together as groupcompanies.

Operation of fee-based homes for the elderly, homecare service specified in
the Long-Term Care Insurance Act, homecare support specified in the
Principal businesses
Long-Term Care Insurance Act, purchase/sales, arrangement, lease andmanagement of real estate, etc.

Company name

Living Platform, Ltd.

Head office

20-291, Minami Nijo-nishi, Chuo-ku, Sapporo-shi, Hokkaido

Representative
director

Representative director, Hirofumi Kaneko

Established

June 2011

Capital79 million yen

Attributes(listed market)

Unlisted company

Principal businesses

Operation of nursing care-related business, childcare-related business andbusiness related to services for the disabled.

Silver Heights Hitsujigaoka No.3

Company nameAnabuki Medical Care Inc.

Head office2-8, Togiyamachi, Takamatsu, Kagawa

Representative
director

Representative director, Yoshihisa Otani

Established

June 2009

Capital

80 million yen

Attributes(listed market)

Consolidated subsidiary of Anabuki Kosan Inc. (First Section of the Tokyo
Stock Exchange, Securities code: 8928)

Principal businesses

Nursing care-related business (nursing care business, operation of feebased homes for the elderly, etc.), real estate management, advertising, etc.

Alpha Living
OkayamaNishigawa
Ryokudokoen

Alpha Living Okayama
Korakuen

Alpha Living
Takamatsu Ekimae

Alpha Living
Takamatsu
Hyakkenmachi

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

37

Management Back-up Agreement

Hokkaido Area
No. of Operators: 4
Asset
Management

NHI
Ownership

Healthcare
facility

Healthcare
facility

Healthcare
facility

A

B

C

Operator

Operator

Operator

A

B

C

Management Back-up Contractors

Asset Management
Company
Each Operator has
concluded amanagement
back-upagreement with
NHI.

Chubu Area
No. of Operators: 4
Chugoku Area
No. of Operators: 4
Tohoku Area
No. of Operators: 3

Discuss handoverof operation toother operators incase ofcontingency

Kanto Area
No. of Operators: 6

Kinki Area
No. of Operators: 8
Shikoku Area
No. of Operators: 4
Kyushu Area
No. of Operators: 4This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

38

Appraisal Value at End of Fiscal Period (as of April 30, 2016)
End of 3rdFP

End of 4nd FP

Difference(End of 4th
FP - End of
3rd FP)

Overview of appraisal report
Property nameAppraiser

Appraisalvalue

Direct capitalization method
Price(million yen) (million yen)

DCF Method

Cap rate

Price

Discount rate Terminal cap(%)(million yen)rate (%)(%)

Appraisal
NOI(million yen)Appraisalvalue(million yen) (million yen)Japan Real Estate Institute

349

352

5.8

345

5.6

6.0

22

349

0

Japan Real Estate Institute

1,220

1,230

5.3

1,200

5.1

5.5

69

1,220

0

Daiwa Real Estate Appraisal Co., Ltd.

1,720

1,740

5.0

1,710

4.8

5.2

88

1,720

0

Daiwa Real Estate Appraisal Co., Ltd.

3,030

3,070

4.7

3,010

4.5

4.9

143

3,030

0

Saw ayaka Kaikyokan

Japan Real Estate Institute

886

894

5.4

877

5.2

5.6

50

886

0

Saw ayaka Meisuikan

Japan Real Estate Institute

802

808

5.4

795

5.2

5.6

47

802

0

Saw ayaka Heart Life Nishikyogoku

Daiwa Real Estate Appraisal Co., Ltd.

1,210

1,220

4.9

1,210

4.7

5.1

60

1,210

0

Verger Hirakata

Daiwa Real Estate Appraisal Co., Ltd.

1,570

1,580

5.3

1,560

5.1

5.5

85

1,570

0

The Tanizawa Sōgō Appraisal Co., Ltd.

2,030

2,050

4.9

2,020

5.0

5.1

100

1,990

40

The Tanizawa Sōgō Appraisal Co., Ltd.

1,410

1,420

5.2

1,400

5.3

5.4

74

1,380

30

Saw ayaka Hinodekan

Daiwa Real Estate Appraisal Co., Ltd.

924

935

5.0

919

4.8

5.2

47

923

1

Saw ayaka Riverside Kurinoki

Daiwa Real Estate Appraisal Co., Ltd.

319

325

5.1

316

4.9

5.3

17

318

1

Saw ayaka Obatake Sanbankan

Daiwa Real Estate Appraisal Co., Ltd.

350

355

5.2

348

5.0

5.4

18

350

0

Super Court JR Nara-Ekimae

The Tanizawa Sōgō Appraisal Co., Ltd.

1,720

1,740

5.1

1,710

5.2

5.3

91

1,690

30

Minna-no-ie Omiya Yoshinocho

The Tanizawa Sōgō Appraisal Co., Ltd.

785

794

5.0

781

5.1

5.2

40

770

15

Minna-no-ie Chuo-ku En’nami

Japan Real Estate Institute

885

894

5.0

875

4.8

5.2

45

882

3

Silver Heights Hitsujigaoka No.3

Daiwa Real Estate Appraisal Co., Ltd.

1,320

1,330

5.0

1,310

4.8

5.2

70

1,320

0

Alpha Liv ing Okay ama Nishigawa Ry okudokoen

Daiwa Real Estate Appraisal Co., Ltd.

776

791

4.6

770

4.4

4.8

37

-

-

Alpha Living Okayama Korakuen

Daiwa Real Estate Appraisal Co., Ltd.

661

672

4.7

656

4.5

4.9

32

-

-

Alpha Living Takamatsu Ekimae

Daiwa Real Estate Appraisal Co., Ltd.

631

642

4.7

626

4.5

4.9

30

-

-

Alpha Living Takamatsu Hyakkenmachi

Daiwa Real Estate Appraisal Co., Ltd.

617

625

4.8

614

4.6

5.0

31

-

-

23,21523,467-

23,052

-

-

1,207

20,410120

Nichii Care Center Fukushima Omori
Sompo Care LAVIERE
Hiroshima Hikarigaoka
Sompo Care LAVIERE
Sagamihara Chuo
Charm Sw eet Ryokuchi Koen

Sompo Care LAVIERE
Kinugasayama Koen
La'nassica Arakogaw a

Total(Note) Difference of appraisal value does not include properties acquired in the 4th FP.
This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

39

Portfolio List (1)Property nameLocation(residential address)

AccessNichii Care Center
Fukushima Omori

Sompo Care LAVIERE
Hiroshima Hikarigaoka

Sompo Care LAVIERE
Sagamihara Chuo

Charm Sweet
Ryokuchi Koen

21-3 Omori Ojibouchi,
Fukushima-shi, Fukushima

2-40 Hikarigaoka,
Higashi-ku, Hiroshima-shi,
Hiroshima

Approximately 2.2km from
Fukushima Station on the
JR Tohoku Main Line

Approximately 1.1km fromApproximately 1.2km from
Hiroshima Station on the JR Sagamihara Station on the
Sanyo Main Line
JR Yokohama Line

Sawayaka Kaikyokan

3-6-3 Chuo, Chuo-ku,
3-2-21 Nishiizumigaoka,
Sagamihara-shi, Kanagawa Toyonaka-shi, Osaka

1-11-13 Hama-machi,
Wakamatsu-ku,
Kitakyushu-shi, Fukuoka

Approximately 1.4km from
Ryokuchi-koen Station on
the Kita-Osaka Kyuko
Railway Namboku Line

Approximately 1.1km from
Wakamatsu Station on the
JR Chikuhō Main Line

Acquisition price(million yen)

265

960

1,170

1,950

630

Real estateappraisal value(million yen) (Note 1)

349

1,220

1,720

3,030

886

NOI yield (%) (Note 2)

8.6

7.2

7.6

7.4

8.0

Depreciation(million yen) (Note 3)

4

9

9

15

7

Structure / floors (Note 4)

S/3F

RC/7F

RC/5F

RC/6F

RC/B1・5F

Leasable area (m2)

1,964.68

4,133.82

3,732.95

5,329.73

2,694.42

Total leased area (m2)

1,964.68

4,133.82

3,732.95

5,329.73

2,694.42

Number of rooms (rooms)

52

80

80

128

65

Occupancy rate (%) (Note 5)

100.0

90.0

58.7

98.4

100.0

Charm Care Corporation

Sawayaka Club Co., Ltd.

22.3

17.9

Operator
Remaining lease contract
period (year) (Note 6)(Note 1)
(Note 2)
(Note 3)(Note 4)

Nichii Gakkan Company

Sompo Care Next Inc.

17.9

Appraisal values are as of April 30, 2016.
NOI yields are calculated by dividing the appraisal NOI by the acquisition price.
Figures for depreciation are actual figures of the 4th FP.
For description of structure, “S” refers to steel-framed structure and “RC” refers to
reinforced concrete structure.

17.9

Sompo Care Next Inc.
17.9

(Note 5) Occupancy rates are obtained by dividing the number of residents indicated in the written
explanation of important matter by the number of rooms, rounded to one decimal place.
(Note 6) Remaining lease contract periods are as of April 30, 2016.

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

40

Portfolio List (2)Sawayaka Meisuikan

Sawayaka Heart Life
Nishikyogoku

Location(residential address)

5-7-6 Higashinarumizu,
Yahatanishi-ku,
Kitakyushu-shi, Fukuoka

8 Tsutsumishita-cho,Nishikyogoku, Ukyo-ku,
Kyoto-shi, Kyoto

AccessApproximately 2km from
Kurosaki Station on the JR
Kagoshima Main Line

Approximately 1.2km fromApproximately 3.5km from
Nishikyogoku Station on the Kuzuha Station on the
Hankyu Kyoto Line
Keihan Main Line

Property name

Sompo Care LAVIERE
Kinugasayama Koen

Verger Hirakata

2-20-4 Koyamichi,
Hirakata-shi, Osaka

La’nassica Arakogawa

4-8-15 Koyabe,
Yokosuka-shi, Kanagawa

4-34-1 Takagi-cho,Minato-ku, Nagoya-shi, Aichi

Approximately 1.2km from
Kinugasa Station on the JR
Yokosuka Line

Approximately 1.4km from
Arakogawa-koen Station on
the Nagoya Rinkai-kosoku
Railway Aonami Line

Acquisition price(million yen)

590

750

950

1,839

1,279

Real estateappraisal value(million yen) (Note 1)

802

1,210

1,570

2,030

1,410

NOI yield (%) (Note 2)

8.1

8.1

9.0

5.5

5.8

Depreciation(million yen) (Note 3)

7

6

9

16

17

Structure / floors (Note 4)

RC/6F

RC/B1・6F

RC/5F

S/4F

RC/B1・5F

Leasable area (m2)

4,553.67

2,459.19

2,925.25

4,265.88

3,590.40

Total leased area (m2)

4,553.67

2,459.19

2,925.25

4,265.88

3,590.40

Number of rooms (rooms)

87

84

104

104

100

Occupancy rate (%) (Note 5)

95.4

94.0

71.9

94.2

97.0

Sawayaka Club Co., Ltd.

Sawayaka Club Co., Ltd.

17.9

17.9

Operator
Remaining lease contract
period (year) (Note 6)(Note 1)
(Note 2)
(Note 3)(Note 4)

Appraisal values are as of April 30, 2016.
NOI yields are calculated by dividing the appraisal NOI by the acquisition price.
Figures for depreciation are actual figures of the 4th FP.
For description of structure, “S” refers to steel-framed structure and “RC” refers to
reinforced concrete structure.

Nihon Kaigo
Iryo Center Co., Ltd.
17.9

Sompo Care Next Inc.

Cedar Co., Ltd.

18.4

11.9

(Note 5) Occupancy rates are obtained by dividing the number of residents indicated in the written
explanation of important matter by the number of rooms, rounded to one decimal place.
(Note 6) Remaining lease contract periods are as of April 30, 2016.

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

41

Portfolio List (3)Property nameLocation(residential address)
Access

Sawayaka
Hinodekan

Sawayaka
Riverside Kurinoki

2-2-33 Hinode, Chuo-ku,
Niigata-shi, Niigata

Sawayaka Obatake Sanbankan

2-2-43 Hinode, Chuo-ku,
Niigata-shi, Niigata

Super Court
JR Nara-Ekimae

Minna-no-ie
Omiya Yoshinocho

1-6-37 Obatake, Kokurakita-ku, 1-5-35 Omiyacho,
Kitakyushu-shi, Fukuoka
Nara-shi, Nara

Approximately 1.7km fromApproximately 1.65km from Approximately 2.5km from
Niigata Station on the JR
Niigata Station on the JR
Kokura Station on the JR
Joetsu Shinkansen Shinetsu Joetsu Shinkansen Shinetsu Kagoshima Main Line
Main Line
Main Line

2-214-3 Yoshinocho, Kita-ku,
Saitama-shi, Saitama

Approximately 280m from Approximately 2.5km fromNara Station on the JR
Miyahara Station on the JR
Kansai Main Line
Takasaki Line

Acquisition price(million yen)

773

266

289

1,569

740

Real estateappraisal value(million yen) (Note 1)

924

319

350

1,720

785

NOI yield (%) (Note 2)

6.2

6.4

6.5

5.8

5.5

Depreciation(million yen) (Note 3)

8

3

4

17

6

Structure / floors (Note 4)

S/3F

S/4F

S/3F

RC/7F

RC/4F

Leasable area (m2)

2,674.37

1,349.39

1,411.78

5,057.07

1,800.03

Total leased area (m2)

2,674.37

1,349.39

1,411.78

5,057.07

1,800.03

Number of rooms (rooms)

50

33

50

155

33

Occupancy rate (%) (Note 5)

100.0

82.0

98.0

86.4

81.8

Sawayaka Club Co., Ltd.

Sawayaka Club Co., Ltd.

Sawayaka Club Co., Ltd.

Super Court Co., Ltd

Wisnet Co., Ltd.

18.6

18.6

18.6

23.2

20.8

Operator
Remaining lease contract
period (year) (Note 6)(Note 1)
(Note 2)
(Note 3)(Note 4)

Appraisal values are as of April 30, 2016.
NOI yields are calculated by dividing the appraisal NOI by the acquisition price.
Figures for depreciation are actual figures of the 4th FP.
For description of structure, “S” refers to steel-framed structure and “RC” refers to
reinforced concrete structure.

(Note 5) Occupancy rates are obtained by dividing the number of residents indicated in the written
explanation of important matter by the number of rooms, rounded to one decimal place.
(Note 6) Remaining lease contract periods are as of April 30, 2016.

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

42

Portfolio List (4)Alpha Living Okayama
Nishigawa
Ryokudokoen

Alpha Living
Okayama Korakuen

Alpha Living
Takamatsu
Hyakkenmachi

Alpha Living
Takamatsu Ekimae

Minna-no-ie
Chuo-ku En’nami

Silver Heights
Hitsujigaoka No.3

Location(residential address)

5-5-17 En'nami,
Chuo-ku,
Saitama-shi, Saitama

15-4-38, Tsukisamu
Higashi Shijo,
Toyohira-ku,
Sapporo-shi, Hokkaido

6-2 Chuo-cho, Kita-ku, 1-11-4, Hama, Naka-ku, 1-6, Nishiuchi-machi,
Okayama-shi,
Okayama-shi,
Takamatsu-shi,
OkayamaOkayama
Kagawa8-11, Hyakken-machi,
Takamatsu-shi,
KagawaAccessApproximately 2.4km
from Kitayono Stationon the JR Saikyo Line

Approximately 1.2km
from Nango Juhatchome
Station on the Tozai Lineof the Sapporo Municipal
SubwayApproximately 1.5km Approximately 1.9km
from Okayama Station from Okayama Stationon the JR Sanyo Main on the JR Sanyo Main
Line
Line

Approximately a fiveminute walk from
Takamatsu Station on
the JR Yosan Line

Approximately 1.1km
from Takamatsu Stationon the JR Yosan Line

Acquisition price(million yen)

838

1,200

730

610

605

605

Real estateappraisal value(million yen) (Note 1)

885

1,320

776

661

631

617

NOI yield (%) (Note 2)

5.4

5.9

5.1

5.3

5.1

5.2

Depreciation(million yen) (Note 3)

8

8

7

4

6

6

Property name

Structure / floors (Note 4)

RC/3F

RC/3F

RC/7F

RC/4F

RC/6F

RC/10F

Leasable area (m2)

1,963.03

7,267.56

2,124.16

2,128.44

1,848.06

1,929.16

Total leased area (m2)

1,963.03

7,267.56

2,124.16

2,128.44

1,848.06

1,929.16

Number of rooms (rooms)

51

109

53

45

43

50

Occupancy rate (%) (Note 5)

68.6

91.8

60.0

60.4

97.7

100.0

Operator
Remaining lease contract
period (year) (Note 6)

Wisnet Co., Ltd.
27.9

Silver Heights
Sapporo Co., Ltd.
19.6

Anabuki Medical
Care Inc.
19.2

Anabuki Medical
Care Inc.
19.2

Anabuki Medical
Care Inc.
19.2

Anabuki Medical
Care Inc.
19.2(Note 1) Appraisal values are as of April 30, 2016.
(Note 5) Occupancy rates are obtained by dividing the number of residents indicated in the written(Note 2) NOI yields are calculated by dividing the appraisal NOI by the acquisition price.
explanation of important matter by the number of rooms, rounded to one decimal place.
(Note 3) Figures for depreciation are actual figures of the 4th FP.
(Note 6) Remaining lease contract periods are as of April 30, 2016.
(Note4) For descriptionof structure,“S”inrefers
to steel-framed
structure Instruments
and “RC” refers
This document
is not material
disclosed
compliancewith the Financial
andto
Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
reinforced concrete structure.
NHI advises readers to make investment decisions at their own judgment.

43

Status of Portfolio
Name of facility

Occupancy rate (%)

One-time entrance fee(thousand yen)Monthly rent (yen)Date of acquiring the written
explanation of important matters98.4

2,400～4,800

157,800～203,800

April 1, 2016

Charm Sweet Ryokuchi Koen
Super Court JR Nara-Ekimae

86.4

150,080

April 1, 2016

Sompo Care LAVIERE Hiroshima Hikarigaoka

90.0

4,500～6,800

186,690

April 1, 2016

Sompo Care LAVIERE Sagamihara Chuo

58.7

6,600～7,800

196,214

April 1, 2016

Sompo Care LAVIERE Kinugasayama Koen

94.2

3,800～7,800

199,071

April 1, 2016

Sawayaka Kaikyokan

100.0

142,600～145,600

April 1, 2016

Sawayaka Meisuikan

95.4

103,440～138,440

April 1, 2016

Sawayaka Heart Life Nishikyogoku

94.0

161,600～181,600

March 1, 2016

Sawayaka Hinodekan

100.0

196,820

April 16, 2016

Sawayaka Riverside Kurinoki

82.0

157,762

April 16, 2016

Sawayaka Obatake Sanbankan

98.0

122,300

April 1, 2016

Nichii Care Center Fukushima Omori

100.0

162,743

April 1, 2016

La’nassica Arakogawa

97.0

154,340

April 1, 2016

Verger Hirakata

71.9

135,000

April 1, 2016

1,260～2,100

Minna-no-ie Omiya Yoshinocho

81.8

163,207

April 1, 2016

Minna-no-ie Chuo-ku En’nami

68.6

168,800

April 1, 2016

Silver Heights Hitsujigaoka No.3

91.8

2,000～4,000

162,540

April 1, 2016

Alpha Living Okayama Nishigawa Ryokudokoen

60.0

1,380～2,760

161,000～180,000

April 1, 2016

Alpha Living Okayama Korakuen

60.4

1,620～3,000

175,000～197,000

April 1, 2016

Alpha Living Takamatsu Ekimae

97.7

1,200～2,400

151,000～187,000

April 1, 2016

Alpha Living Takamatsu Hyakkenmachi

100.0

960～1,920

152,000～222,000

April 1, 2016

(Note) One-time entrance fee and monthly rent for facilities with one-time entrance fee are indicated on a one-time entrance fee basis (one-time entrance fee and monthly fee are indicated separately)
whereas those for facilities without one-time entrance fee are indicated on a monthly payment basis. Occupancy rates are obtained by dividing the number of residents indicated in the written
explanation of important matter by resident capacity, rounded down to one decimal place.

Change in occupancy rates (overall)
92.0%

Occupancy rate (left axis)

Number of
facilities

Nuber of facilities (right axis)

25

90.0%

20

88.0%

15

86.0%

10

84.0%

5

82.0%

0

This document
material ’15/1
disclosed ’15/2
in compliancewith theFinancial’15/5
Instruments
and Exchangeor any regulation
similar nature,nor is’15/12
it intended’16/1
for the purposessolicitation.’16/4’14/11is not’14/12
’15/3
’15/4
’15/6
’15/7 Act’15/8’15/9 of’15/10’15/11’16/2 of ’16/3
NHI
advisesreadersrates
to makeat theirownofjudgment.
(Note)
Occupancy
are investment
obtained bydecisions
dividing thenumberresidents based on interviews with all facilities, by resident capacity.

44Balance Sheets for 3rd Fiscal Period Ended April 2016

The 4th FP
ActualThe 3rd FP
ActualAmount(million yen)
Current Assets

987

5.6%

Amount(million yen)Amount(million yen)

Ratio

1,619

Current Liabilities

7.8%

The 4th FP
ActualRatio

185

Amount(million yen)

1.1%

Ratio

158

550

1,193

Operating account payables

16

23

Cash and deposits in trust

414

407

Account payables – other

98

57

Other current assets

22

17

Advances received

69

74

Other current liabilities

2

2

Tangible fixed assets
Buildings and others(including trust property)
Land and others(including trust property)

Other tangible fixed assets
Intangible fixed assets

16,67994.4%

19,22892.2%

16,59894.0%

19,151

91.9%

10,091

11,622

6,504

7,528

1

-

44

0.2%

43

Liabilities

Cash and deposits

Fixed Assets

Fixed Liabilities
Long-term loans payable
Tenant leasehold and security
deposits
Tenant leasehold and security
deposits in trust

0.2%

Total Liabilities

9,445

53.5%

10,019

8,800

9,300

645

719

-

-

9,631

54.5%

0.8%

48.1%

10,178

48.8%
49.9%

Leasehold rights and leasehold
rights in trust

40

40

Unitholders’ equity (net)

7,834

10,408Other intangible fixedassets

3

2Unitholders’ equity

7,884

10,504

Investments and other assets

36

Deduction from unitholders’ equity

-49

-95

Unappropriated retained earnings

200

260

1.3%

Valuation, translation adjustments andothers---

10,66951.2%

Leasehold and security
deposits paid in trust

Long-term prepaid
expenses

Other investments and otherassetsTotal Assets

0.2%

33

10

10

26

23

-

-

17,666 100.0%

0.2%

20,847 100.0%

Net Assets

AssetsRatio

The 3rd FP
ActualTotal Net Assets
Total Liabilities and Net Assets

8,035

45.5%

17,666 100.0%

20,847 100.0%

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

45

Status of Unitholders as of the end of April 2016
Major unitholders (top 10)

Ownership ratio of investment units by category
Category of unitholders

Number ofunits atthe end of
3rd FP

Number ofunits atthe end of
4th FP

Increase/decr
ease from theprevious FP

Ratio at theend of
4th FP*

No.

Name

Number ofunits held at
the end of
3rd FP

Number ofunits held at
the end of
4th FP

Increase/decr
ease from theprevious FP

Ratio at theend of
4th FP*

Individuals/others

16,31938,066

21,74751.00%

1

Daiwa Securities Group Inc.

6,080

1,520

7,600

10.18%

Financial institutions

16,195

19,8373,642

26.58%

2

The Master Trust Bank of Japan,
Ltd.(Investment Trust Account)

5,192

99

5,291

7.09%

Major city banks

0

0

0

0.00%

3

Japan Trustee Services Bank Ltd.
(Trust Investment Trust Account)

4,018

811

4,829

6.47%

Regional banks

1,878

1,595

-283

2.14%

4

Trust & Custody Services Bank Ltd.
(Trust Investment Trust Account)

1,905

1,064

2,969

3.98%

Trust banks

12,787

14,9752,188

20.07%

5

The Nomura Trust and Banking Co.,
Ltd. (Investment Trust Account)

1,189

227

1,416

1.90%

Life insurancecompanies

286

286

0

0.38%

6

Daiwa Real Estate AssetManagement Co. Ltd.

1,000

0

1,000

1.34%

Non-life insurancecompanies

0

0

0

0.00%

7

State Street Bank and Trust
Company 505001

0

900

900

1.21%

1,244

2,981

1,737

3.99%

8

YONEZAWA SHINKIN BANK

0

700

700

0.94%

26,976

12,015-14,961

16.10%

9

Mellon Bank. N.A. as Agent for its
Client Mellon Omnibus US Pension

0

700

700

0.94%

Foreigners

764

3,710

2,946

4.97%

10

Chugoku Bank, Ltd.

667

0

667

0.89%

Securities companies

546

1,004

458

1.35%

20,051

6,021

26,07234.93%

60,80074,632

13,832Other financial
institutions

Other domestic companies

Total

Total

100.00% *Rounded to two decimal places.

*Rounded to two decimal places.

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

46

Introduction of Asset Management Company
Position of the Asset Management Company in Daiwa Securities Group

Daiwa Securities Group
Retail Division

Wholesale Division
Global Markets

Global Investment Banking

Daiwa Securities Co., Ltd.

Asset Management
Division

Investment
Division

Daiwa
Asset Management
Co., Ltd.

Daiwa
Corporate Investment
Co., Ltd.

Daiwa
PI Partners Co. Ltd.
Daiwa Next Bank, Ltd.

IR activities in Japan and abroad
Daiwa Real Estate
Asset Management
Co. Ltd.

Collaboration

Introducing
Properties/
FinanceDaiwa Institute of
Research Ltd.
Daiwa Institute of ResearchBusiness Innovation Ltd.

Daiwa SB
Investments Ltd.

WealthManagement
Department

Other

Whollyowned

Daiwa Securities
SMBC Principal
Investments Co. Ltd.

Daiwa Securities
Business Center Co.,Ltd.
Daiwa Property Co.,Ltd.

Branch Office

Real Estate Agency Business

Real Estate Brokerage Business
Introducing Properties

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

47

Support and Independence<Same boat investment in NHI by the
Daiwa Securities Group Inc.>
Holding 10.2% (after PO) of NHI’s
investment units issued

Operator

Investment Corporation<Conclusion of sponsor support agreement>

AssetManagement

Cooperation in securement of personnel
Provision of information on properties, etc.

Asset Management Company

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

<Conclusion of advisory agreement>
Provision of information on
management/operation of healthcare facilities
Provision of advisory work such as assisting andsupporting negotiations with operators
Provision of advice on market research/analysis
concerning assets under investment target<Invested 100% by Daiwa Securities Group Inc.>

SponsorAdvisorSupport48
This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

48

Overview of Asset Management Company (1)Directors

Corporate Profile
As of June 1, 2016
Corporate name
Address

Daiwa Real Estate Asset Management Co. Ltd.
6-2-1 Ginza, Chuo-ku, Tokyo

As of June 1, 2016
President and Representative
Director

Akira Yamanouchi

Vice President andRepresentative Director

Yuji Shinotsuka

Vice President andRepresentative Director

Yoshiki Nishigaki

Established

October 21, 2004

Director

Naoyuki Owa

Paid-in capital

200 million yen

Director (non-executive)

Mikita Komatsu

Director (non-executive)

Akihiko Ogino

Representative Director

Akira Yamanouchi
AuditorTamaki Shibayama

Board of Directors

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

Auditor (non-executive)

Morimasa Matsuda

Auditor (non-executive)

Shinji Kiso

No. of Employees

66 (excluding dispatched employees)

Registered financial
instruments firm

Registration No. 355 (Financial Instruments),
Director-General, Kanto Local Finance Bureau (Kinsho)

Building lots andbuildings transaction
business license

License No. (3) 83920, Governor of Tokyo

Discretionary agent forreal estate transaction
approval

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

Association membership

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

REITs which entrust the asset management to
the Asset Management Company
As of June 1, 2016
Daiwa Office Investment
Corporation

Listed REIT focusing on office buildings
Asset size: approximately 464.7 billion yen(51 properties)

Daiwa Residential Private
Investment Corporation

Unlisted REIT focusing on residential properties
Asset size: approximately 84.5 billion yen(51 properties)

Nippon Healthcare Investment
Corporation

Japan’s first listed REIT focusing on healthcare
facilities
Asset size: approximately 18.6 billion yen(21 properties)

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

49

Overview of Asset Management Company (2)Organization of Asset Management Company
Shareholders’ Meeting
Corporate Auditors
Board of Directors
Compliance Committee
Investment Committee (*)* Set up separately for each
investment corporation

Compliance Officer
President andRepresentative Director
Internal Control OfficeAcquisition
Department

Origination
Department

Asset
Management
Department

Private FundManagement
Department

Customer
Relations
Department

Finance
Department

Office Investment Team

Office Management
Team

Finance Team

Residential Investment
Team

Residential
Management Team

Accounting Team

Healthcare
Investment Team

Healthcare
Management TeamManagement Team

Infrastructurel Investment
Team

Investment PlanningTeam

Administration
Department

Corporate
Planning
Department

Construction
Management Team

This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

50This document is not material disclosed in compliance with the Financial Instruments and Exchange Act or any regulation of similar nature, nor is it intended for the purposes of solicitation.
NHI advises readers to make investment decisions at their own judgment.

51
51
51