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 Fiscal Period Ended January 2020

Securities Code:Healthcare & Medical Investment
Corporation (HCM)
3455

Representative:

Seiji Yoshioka, Executive Director

REIT Securities Issuer

March 17, 2020

Stock Exchange Listing: Tokyo Stock Exchange
URL: http://www.hcm3455.co.jp/en

Asset Management Company: Healthcare Asset Management Co., Ltd.
Representative:
Seiji Yoshioka, President & CEO
Contact:
Hidenori Kimura, Head of Financial Management Division
TEL: +81-3-5282-2922
Scheduled date of submission of securities report:
Scheduled date of commencement of distribution payment:

April 28, 2020
April 21, 2020

Preparation of supplementary financial results briefing materials: Yes
Holding of financial results briefing session:
Yes (for institutional investors and analysts)(Amounts are rounded down to the nearest million yen)
1. Status of Management and Assets for Fiscal Period Ended January 2020 (from August 1, 2019 to January 31, 2020)(1) Management Status(% figures are the rate of period-on-period increase (decrease))
Fiscal period
Ended Jan. 2020
Ended Jul. 2019
Fiscal period

Operating revenue
million yen
%
2,013
0.2
2,008
54.4

Operating income
million yen
%
1,103
(7.3)
1,189
83.9

Net income per unit

Return on equity

yen
3,034
3,372

Ended Jan. 2020
Ended Jul. 2019

%
2.8
3.9

Ordinary income
million yen
%
944
(9.8)
1,047
93.7
Ratio of ordinary income
to total assets
%
1.4
1.9

Net income
million yen
943
1,046

%
(9.8)
93.8

Ratio of ordinary income
to operating revenue
%
46.9
52.1

(2) Distributions Status
Distribution
per unit

Distribution
per unit

Total
Total
Distribution
Total
Distribution Ratio of
distributions
distributions
in excess of
distributions
payout distributions(including(excluding(including(excluding
earnings perin excess of
distribution in distribution in excess
distribution in
distribution in
ratio
to net assets
unit
earnings
excess of earnings)
of earnings)
excess of earnings) excess of earnings)
yen
3,320
3,643

yen
3,027
3,325

Ended Jan. 2020
Ended Jul. 2019

yen
293
318

million yen
1,032
1,132

million yen
941
1,034

million yen
91
98

%
99.8
98.9

%
2.8
3.1

(Note 1) Total distributions in excess of earnings of 91 million yen (293 yen per unit) for the fiscal period ended January 2020 is comprised of (1) total
distribution amount from reserve for temporary difference adjustment of 2 million yen (8 yen per unit ) due to the occurrence of deferred losses onhedges of 2 million yen recorded as net asset deduction items for the current fiscal period and (2) total distribution amount of 88 million yen (285 yen
per unit) from distribution reducing unitholders’ capital for tax purposes.
Total distributions in excess of earnings of 98 million yen (318 yen per unit) for the fiscal period ended July 2019 is comprised of (1) total distribution
amount from reserve for temporary difference adjustment of 11 million yen (38 yen per unit ) due to the occurrence of deferred losses on hedges of 12
million yen recorded as net asset deduction items for the current fiscal period and (2) total distribution amount of 87 million yen (280 yen per unit)
from distribution reducing unitholders’ capital for tax purposes.
(Note 2) The ratio of decreasing surplus due to execution of distribution in excess of earnings (return of capital) is 0.003 for the fiscal period ended January 2020
and 0.003 for the fiscal period ended July 2019. The ratio of decreasing surplus is calculated based on Article 23, Paragraph 1, Item (v) of the Order for
Enforcement of the Corporation Tax Act.
(Note 3) Payout ratio for the fiscal period ended July 2019 is calculated using the following formula since issuance of new investment units was executed.
Payout ratio = Total distributions (excluding distribution in excess of earnings) / Net income x 100(3) Financial Position
Fiscal period
Ended Jan. 2020
Ended Jul. 2019

Total assets
million yen
68,22368,325

Net assets
million yen
33,23433,426- 1 -Equity ratio
%
48.7
48.9

Net assets per unit
yen
106,863
107,479

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.
(4) Status of Cash Flows
Fiscal period

Ended Jan. 2020
Ended Jul. 2019

Net cashprovided by (used in) operating
activities
million yen
1,767
1,476

Net cashprovided by (used in) investing
activities
million yen(231)(22,728)

Net cashCash and cash equivalents at end
provided by (used in) financingof period
activities
million yen
million yen(1,237)2,260
21,8121,962

2. Earnings Forecast for Fiscal Period Ending July 2020 (from February 1, 2020 to July 31, 2020) andEarnings Forecast for Fiscal Period Ending January 2021 (from August 1, 2020 to January 31, 2021)(% figures are the rate of period-on-period increase (decrease))

Fiscal periodEnding Jul. 2020
Ending Jan. 2021

Operating revenue

million yen
2,015
2,015

Operating income% million yen
0.1
1,047
0.0
1,039

Ordinary income% million yen
(5.1)
891
(0.8)
882

Net income% million yen
(5.6)
890
(1.0)
881

(Reference) Forecast net income per unit (fiscal period ending July 2020)
Forecast net income per unit (fiscal period ending January 2021)

Distribution perDistribution inunit (excludingexcess of
distribution inearnings per
excess ofunit
earnings)
%
(5.6)
(1.0)

yen
2,864
2,835

yen
286
290

Distribution
per unit(including
distribution
in excess ofearnings)
yen
3,150
3,125

2,864 yen
2,835 yen

* Other(1) Changes in Accounting Policies, Changes in Accounting Estimates, and Retrospective Restatement① Changes in accounting policies accompanying amendments to accounting standards, etc.: No② Changes in accounting policies other than ①:No③ Changes in accounting estimates:
No④ Retrospective restatement:No(2) Total Number of Investment Units Issued and Outstanding① Total number of investment units issued and outstanding (including own investment units) at end of period
311,001 units
Fiscal period ended January 2020 311,001 units
Fiscal period ended July 2019
② Number of own investment units at end of period
Fiscal period ended January 2020
- units
Fiscal period ended July 2019
- units(Note) For the number of investment units serving as the basis for calculation of net income per unit, please see “Notes
on Per Unit Information” on page 29.
* Financial reports are exempt from the audit by a certified public accountant or an auditing firm.
* Special note
The forecast is a future prospect judged by HCM based on information currently available and includes many uncertain factors.
Actual operating revenue, operating income, ordinary income, net income, distribution per unit (excluding distribution in excess ofearnings), distribution in excess of earnings per unit and distribution per unit (including distribution in excess of earnings) are subject
to change due to changes in circumstances. In addition, the forecast is not a guarantee of the amount of distribution and distribution
in excess of earnings. For the assumptions underlying the above forecast, please see “Assumptions Underlying Earnings Forecast for
Fiscal Period Ending July 2020 and Fiscal Period Ending January 2021” on pages 9 and 10.

- 2 -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.
Table of Contents
1. Management Status ................................................................................................................................................................ 4(1) Management Status ........................................................................................................................................................ 4
2. Financial Statements ............................................................................................................................................................. 11(1) Balance Sheet ................................................................................................................................................................ 11(2) Statement of Income ..................................................................................................................................................... 13(3) Statement of Unitholders’ Equity .................................................................................................................................. 14(4) Statement of Cash Distributions .................................................................................................................................... 16(5) Statement of Cash Flows ............................................................................................................................................... 18(6) Notes on the Going Concern Assumption...................................................................................................................... 19(7) Notes on Matters Concerning Significant Accounting Policies ....................................................................................... 19(8) Notes on Financial Statements ...................................................................................................................................... 20(9) Changes in Total Number of Investment Units Issued and Outstanding ........................................................................ 30
3. Reference Information .......................................................................................................................................................... 31(1) Information on Prices of Assets under Management, etc. ............................................................................................ 31(2) Status of Capital Expenditures ....................................................................................................................................... 46- 3 -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.

1.

Management Status(1) Management Status① Overview of the Current Fiscal Period(a) Brief History of HCM
Healthcare & Medical Investment Corporation (hereinafter, “HCM”) was established under the Act on Investment Trusts
and Investment Corporations (Act No. 198 of 1951, as amended; hereinafter, the “Investment Trusts Act”) with Healthcare
Asset Management Co., Ltd. (hereinafter, the “Asset Management Company” or “HAM”) as the organizer on December 9,
2014. HCM was listed on the Real Estate Investment Trust Securities Market of Tokyo Stock Exchange, Inc. (hereinafter, the“Tokyo Stock Exchange”) (securities code: 3455) on March 19, 2015.
The total number of investment units issued and outstanding as of the end of the fiscal period ended January 2020 (August
1, 2019 to January 31, 2020) (hereinafter, the “10th fiscal period” or the “current fiscal period”) stands at 311,001 units.
(b) Investment Environment and Performancea. Investment Environment
HCM was established on the background of the social situation in which expansion and enhancement of nursing careservices and medical services by healthcare facilities has become an urgent issue, at the time when the population whichbears nursing care continues to shrink while aging advances the fastest in developed nations and the number andpercentage of the elderly among the total population is expected to remain on the rise for the time being.
The government has also set a target in “Housing Life Basic Plan (nationwide plan)” to increase the ratio of housing supply
for the elderly to 4% in 2025 from 2.1% in 2014.
HCM seeks to realize a society where all people can live vibrantly and with peace of mind as well as to secure stable income
and to achieve steady growth of the portfolio. HCM will make a stable investment in healthcare facilities, for which social
demand is growing, to promote appropriate maintenance/management and new supply.
b. Performance
During the current fiscal period, HCM made no acquisition or transfer.
As of the end of the current fiscal period, HCM owns 35 properties with a total leasable area of 182,540.84 m2, and theoccupancy rate stands at 100.0%.
(c) Overview of Financing
HCM upholds stable financial management as its basic policy for securing stable income and maintaining and enhancing
asset value over the medium to long term.
For the 7,700 million yen of loans due for repayment on January 31, 2020, HCM refinanced 5,700 million yen and issued
investment corporation bonds of 2,000 million yen.
As a result, unitholders’ capital (net) (Note) at the end of the current fiscal period stands at 32,330 million yen, the total
number of investment units issued and outstanding at 311,001 units, and the total interest-bearing liabilities at 32,450
million yen.
(Note) The amount obtained by subtracting deduction from unitholders’ capital from unitholders’ capital is shown. The amount does not take
into account the change in unitholders’ capital in line with the implementation of distributions in excess of earnings of reserve fortemporary difference adjustments.

As of the end of the current fiscal period, the ratio of interest-bearing liabilities (loan amount) to total assets (hereinafter,“LTV”) is 47.6%.

- 4 -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.
HCM’s rating as of January 31, 2020 is as follows.
Rating Agency

Rating category

RatingOutlookJapan Credit Rating
Agency, Ltd. (JCR)

Long-term issuer rating

A (single-A)

Stable(d) Overview of Business Performance and Distributions
As a result of the management described above, for the current fiscal period, operating revenue stood at 2,013 million yen,operating income at 1,103 million yen, ordinary income at 944 million yen and net income at 943 million yen.
In accordance with the cash distribution policy described in Article 36, Paragraph 1 of its Articles of Incorporation, HCM
determined that the amount of distribution shall exceed the amount equivalent to 90% of its distributable profit as
stipulated in Article 67-15 of the Act on Special Measures Concerning Taxation, and shall be up to its profits as defined in
Article 136, Paragraph 1 of the Investment Trusts Act. Following this policy, HCM has decided that, of profits as defined in
Article 136, Paragraph 1 of the Investment Trusts Act, it shall distribute 941,400,027 yen, which is the maximum integral
multiple to the 311,001 units issued and outstanding as distribution of earnings. Accordingly, distribution of earning perunit was 3,027 yen.
In addition, HCM is to make distribution in excess of earnings, of which the amount is to be determined by HCM as an
amount equivalent to net asset deduction items (as defined in Article 2, Paragraph 2, Item (30) (b) of the Ordinance on
Accountings of Investment Corporations), considering the impact of net asset deduction items on distribution, pursuant
to the policy for cash distribution in excess of earnings provided in Article 36, Paragraph 2 of its Articles of Incorporation.
In the current fiscal period, since the change in the current fiscal period in deferred losses on hedges of 2 million yen wasrecorded as net asset deduction items, HCM decided to make distribution of reserve for temporary difference adjustmentsin the amount of 2,488,008 yen. As a result, distribution in excess of earnings per unit (of reserve for temporary difference
adjustments) came to 8 yen.
Furthermore, in accordance with the policy for cash distribution in excess of earnings provided in Article 36, Paragraph 2 of
its Articles of Incorporation, HCM is to conduct distribution in excess of earnings (return of capital that falls under the categoryof distribution reducing unitholders’ capital for tax purpose) in each period on a continuous basis. During the current fiscal
period, HCM has decided to distribute 88,635,285 yen, an amount roughly equivalent to 20% of depreciation recorded in thecurrent fiscal period, as distribution in excess of earnings. As a result, distribution in excess of earnings per unit (of other
distribution in excess of earnings) came to 285 yen.
As a result, distribution per unit came to 3,320 yen.
(Note 1) Distribution in excess of earnings is distributed up to the amount equivalent to 20/100 of the depreciation recordedin the accounting period immediately before the accounting period when HCM will pay the said distribution,
sufficiently taking into consideration the amount of capital expenditure necessary for maintaining and improving
the competitiveness of HCM’s Assets Under Management, the financial position of HCM and other factors.
However, distribution in excess of earnings may be conducted up to an amount lower than the above amount or
may not be conducted when the implementation of distribution in excess of earnings up to the said amount isjudged to be inappropriate based on the economic environment surrounding HCM, trends of the real estate market
and leasing market, status of HCM’s Assets Under Management and financial conditions.
(Note 2) Under the rules of The Investment Trusts Association, Japan (hereinafter, “The Investment Trusts Association”),
closed-end type investment corporations are allowed to conduct distribution in excess of earnings up to an amountequivalent to 60/100 of the depreciation recorded on the last day of the accounting period.
② Outlook for the Next Fiscal Period(a) Investment Environment
In Japan, while the number of elderly households is increasing, the population which bears nursing care is on the decline,
providing of nursing care services and medical services for a certain percentage of elderly households is inevitably needed.
The expansion of the supply of healthcare facilities especially facilities and housing for the elderly is required in responseto the expanding demand for nursing care and medical services.
While nursing care in the same household is forecasted to be difficult due to aging and change of family structure, newdevelopment and expansion of healthcare facilities is required to respond to the growing demand for nursing care andmedical services, and measures to achieve them are being promoted.
- 5 -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.
The Headquarters for Japan's Economic Revitalization announced a policy to “enact a guideline concerning acquisition andmanagement of housing for the elderly, etc. for the utilization of healthcare REITs with an aim to utilize private fund” aspart of urban development to enable the elderly, etc. to walk and live safely in the “Japan Revitalization Strategy -JAPAN is
BACK-“ as of June 14, 2013.
Following this policy, the Ministry of Land, Infrastructure, Transport and Tourism announced the “Guideline related to theutilization of healthcare REITs targeting housing for the elderly, etc.” on June 27, 2014 and the “Guideline related to REITs
targeting hospital real estate” on June 26, 2015, as well as indicated the points to be noted in transactions of healthcare
facilities such as the positioning of key executive with certain experience. With the enactment of these guidelines, it isconsidered that the opportunity for the operator to utilize healthcare REITs will increase.
In addition, “Housing Life Basic Plan (nationwide plan)” that was decided by the cabinet as of March 18, 2016 states aperformance indicator of increasing the ratio of housing for the elderly to the elderly population to 4% in 2025 from 2.1%
in 2014 based on the goal to “realize a housing life where the elderly can live independently.”
As for the environment surrounding medical service-related facilities, etc., the government of Japan has promoted a“regional comprehensive care system,” a future vision concerning the reorganization of medical service and nursing carefunctions for providing more effective and efficient medical and nursing care services through subdividing roles of thefunctions of hospitals and hospital beds for the needs of patients and enhancing cooperation in medical service and nursing
care conceived in accordance with the increase of the elderly population in Japan. The government has further divided thefunctions of beds in medical institutions in line with the conditions of patients, aiming to provide appropriate medical
service to all patients at an appropriate location in order to effectively utilize limited medical resources, and establishedguidelines (March 2015) for planning a community healthcare vision in prefectures. Prefectures have established a vision
for community healthcare to adequately promote well-balanced, specialized medical functions and cooperation to suit thecommunity, and will promote subdividing medical functions in accordance with medical needs by newly including such
vision in medical planning.
Furthermore, it is said that there are approximately 8,400 hospitals (referring to “a facility for the hospitalization of notless than 20 patients, where physicians or dentists carry out medical practices or dental practices for the public or otherspecific groups of people” as defined in Article 1-5, Paragraph 1 of the Medical Care Act) in Japan but the ratio ofearthquake-resistant hospitals in Japan remains at 74.5% according to a survey conducted in fiscal 2018. Hospitals are usedby an unspecified large number of people every day and can also be used as a community base in case of a disaster.
Earthquake resistance is an urgent issue even from the viewpoint of strengthening the country's infrastructure.
Therefore, hospitals have capital investment needs, such as newly building hospital wards to meet the division of functions
and changing current wards to meet other needs, making buildings earthquake-resistant and reconstructing buildings, andcapital needs surrounding hospitals are projected to increase going forward.
Therefore, the market for healthcare facilities with a particular emphasis on the keywords “nursing care,” “medical service”
and “health,” which HCM sets as acquisition targets, is believed to further expand in the future.
(b) Future Management Policy and Challenges to Address
With recognition of the above investment environment, HCM aims to secure stable revenue and steady growth of theportfolio while seeking to realize a society where all people can live vibrantly and with peace of mind, and manages assets
based on the following policies.
a. Asset management policy for properties owned
Healthcare facilities possess a unique property feature in which not only location or specifications of buildings, but also
the operational capability of the operator and management stability have a large impact on their value as real estate.
When HCM acquires a healthcare facility, we aim to secure stable revenue for the medium to long term by, in principle,
concluding a long-term lease agreement with fixed rent with the operator that operates the healthcare facility.

- 6 -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.
HCM conducts due diligence on the business feasibility of facilities, including analyzing the management and financial
conditions of operators, along with real estate due diligence, in order to secure stable revenue over the medium to longterm; and also implements continuous monitoring even after the acquisition.
b. Property acquisition policy
HCM may utilize the comprehensive capabilities of its sponsors including professional know-how and customer base, firstrefusal rights provided in the support agreements, based on the support agreements which the Asset Management
Company has concluded with sponsor companies and such.
Furthermore, the Asset Management Company may, for the purpose of making flexible property acquisition, request
sponsors to temporarily own a property (warehousing) on the premise it be transferred to HCM.
HCM aims to maximize unitholder value over the medium to long term by best utilizing the extensive network andwarehousing function of the sponsors and works for sustainable growth of the asset size as mentioned above.
c. Financing policy
HCM intends to build a stable financial base, to consider market condition upon financing, with aim to secure stablerevenue over the medium to long term and maximize unitholder value.
With stable growth of HCM over the long term in mind, equity financing will be carried out flexibly, taking into
consideration a multitude of factors including the timing of the acquisition of newly-acquired real estate-related assets
and the possibility of utilizing the sponsor’s warehousing capabilities, LTV, the timing for the repayment of interest-bearing
liabilities and the period remaining until repayment, as well as market conditions, while also considering the dilution of
the rights of existing unitholders and the resulting decline, etc. in the trading price of investment units.
As to debt financing, stable and flexible leverage control will be implemented by diversifying repayment due dates andsetting upper limit of LTV at 65% (may, however, exceed 65% temporarily). In addition, stable bank formation will beestablished by receiving financial advice from Sumitomo Mitsui Banking Corporation, one of the sponsors, based on thesponsor support agreement concluded between the bank and the Asset Management Company.
(c) Significant Subsequent Events
Not applicable.
(d) Earnings Forecast Outlook
The following earnings forecast is expected for the fiscal period ending July 2020 (from February 1, 2020 to July 31, 2020)
and the fiscal period ending January 2021 (from August 1, 2020 to January 31, 2021). For the assumptions underlying thisoutlook, please see “Assumptions Underlying Earnings Forecast for Fiscal Period Ending July 2020 and Fiscal Period Ending
January 2021” below.
For the fiscal period ending July 2020 (from February 1, 2020 to July 31, 2020) and the fiscal period ending January 2021
(from August 1, 2020 to January 31, 2021), it is assumed that there is no change in the fair value of interest rate swaps,
and of distribution in excess of earnings, that from reserve for temporary difference adjustments is not expected.
Fiscal period ending July 2020 (from February 1, 2020 to July 31, 2020)
Operating revenue
Operating income

2,015 million yen
1,047 million yen

Ordinary income
Net income

891 million yen
890 million yen

Distribution per unit
(excluding distribution in excess of earnings)

2,864 yen

Distribution in excess of earnings per unit
Distribution per unit

286 yen3,150 yen(including distribution in excess of earnings)
Fiscal period ending January 2021 (from August 1, 2020 to January 31, 2021)
Operating revenue

2,015 million yen- 7 -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.
Operating income

1,039 million yen

Ordinary income
Net income

882 million yen
881 million yen

Distribution per unit
(excluding distribution in excess of

2,835 yenearnings)
Distribution in excess of earnings per unit
Distribution per unit
(including distribution in excess of earnings)

290 yen
3,125 yen

(Note) Please note that actual operating revenue, operating income, ordinary income, net income, distribution per unit (excluding
distribution in excess of earnings), distribution in excess of earnings per unit and distribution per unit (including distribution inexcess of earnings) may differ from the forecast figures above as a result of discrepancies from assumptions arising due toadditional real estate acquisition or sale in the future, trends in the real estate market, fluctuation of interest rates and changes inother situations surrounding HCM, among other factors. In addition, the forecast is not a guarantee of the amount of distribution
or distribution in excess of earnings.

- 8 -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.
Assumptions Underlying Earnings Forecast for Fiscal Period Ending July 2020 and Fiscal Period Ending January 2021
Item
Assumptions
・Fiscal period ending July 2020 (11th fiscal period): from February 1, 2020 to July 31, 2020 (182 days)
Accounting period・Fiscal period ending January 2021 (12th fiscal period): from August 1, 2020 to January 31, 2021 (184 days)
・It is assumed that, in addition to the trust beneficiary interests in real estate (35 properties in total)
owned by HCM as of the date of this document (hereinafter, the “Assets Under Management”), the trust
beneficiary interest in real estate to be acquired (hereinafter, the “Asset to be Acquired”) will be acquiredon April 1, 2020.
(The Asset to be Acquired is the land ownership of leased portion of Verde Hotaka owned by HCM, andAssets underthus HCM will, after the acquisition, have the entire ownership of the existing property which was on
management
leasehold in part.) Since the planned acquisition price is 38 million yen, disclosure is not required by thelisting regulations of the Tokyo Stock Exchange, and the impact on HCM’s earnings forecast is minimal.
For these reasons, HCM does not plan to make timely disclosure regarding this transaction.
・There may actually be changes due to acquisition of new properties, or sale of the Assets Under
Management, etc. in the future.
・Lease business revenue from the Assets Under Management is calculated by considering and analyzing
Operatingthe lease agreement of each Asset Under Management effective as of the date of this document, tenant
and market condition, etc.
revenue・For operating revenue, it is assumed that there will be no default or non-payment of rents by tenants.
・The main breakdown of rental business expenses, the major component of operating expense, is asfollows.
Fiscal period ending
Fiscal period ending
July 2020
January 2021
Property tax
139 million yen
139 million yen
Repair expenses
23 million yen
24 million yen
Depreciation
448 million yen
453 million yen
Other expenses related to rent business50 million yen
50 million yen
・Out of rental business expenses, the major component of operating expense, expenses other thandepreciation is calculated based on the past figures reflecting factors for change in expenses.
・In purchasing and selling real estate in general, real property tax and urban planning tax are calculated
Operatingby period distribution with previous owners and settled at the time of acquisition, but as HCM includes
expenses
this settlement money in acquisition cost, they are not recoded as expenses in the year of acquisition.
Accordingly, real property tax and urban planning tax of the assets to be acquired in the fiscal period
ending July 2020 will not be recorded as expenses in the fiscal period ending July 2020 or in the fiscal
period ending January 2021, and such for fiscal 2021 will be recorded as expenses from the fiscal period
ending July 2021.
・For repair expenses, the Asset Management Company records the expenses it deems necessary for each
property in each period. However, as repair expenses may increase or additional repair may be required
due to unpredictable factors, actual expanses may differ significantly from the forecast.
・Depreciation is calculated by using the straight-line method including ancillary expenses.
・The asset management fee paid to the Asset Management Company is assumed to be 195 million yen
for the fiscal period ending July 2020 and 196 million yen for the fiscal period ending January 2021.
・Investment unit issuance expenses accompanying the issuance of new investment units are
depreciated evenly over 3 years and are assumed to be 6 million yen for the fiscal period ending July
2020 and 6 million yen for the fiscal period ending January 2021.
・Investment corporation bond issuance costs associated with the issuance of investment corporation
Non-operating
bonds are depreciated using the straight-line method over the period up to redemption, and are
expensesassumed to be 1 million yen in the fiscal period ending July 2020 and 1 million yen in the fiscal period
ending January 2021.
・Interest expenses, interest expenses on investment corporation bonds and other borrowing-related
expenses are assumed to be 148 million yen for the fiscal period ending July 2020 and 149 million yen
for the fiscal period ending January 2021.
・As of the date of the document, HCM has a balance of interest-bearing liabilities of 32,450 million yen.
It is assumed that there will be no change in the balance of interest-bearing liabilities at the end of theInterest-bearing
fiscal period ending July 2020 and the fiscal period ending January 2021, with an assumption that 3,000
liabilities
million yen of loans due for repayment in the fiscal period ending January 2021 (repayment date: January
31, 2021) will be refinanced for the same amount.
・The assumption is the total number of investment units issued and outstanding as of the date of thisdocument, which is 311,001 units. And the assumption is that there will be no change in the number ofinvestment units due to issuance of new investment units, etc. through to the end of the fiscal period
Investment units
ending January 2021.
・Distribution per unit is calculated based on the forecasted number of units issued and outstanding at
the end of period of 311,001 units for the fiscal period ending July 2020 and for the fiscal period ending
January 2021, respectfully.
- 9 -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.
Item

Assumptions
・Distribution per unit (excluding distribution in excess of earnings) is calculated with the assumption being
Distribution per unit
the cash distribution policy provided in the Articles of Incorporation of HCM.
(excluding distribution ・Distribution per unit (excluding distribution in excess of earnings) may vary due to various factors,
in excess of earnings)
including fluctuation in rent revenue accompanying change in Assets Under Management, change intenants, etc. or incurrence of unexpected repairs.
・Distribution in excess of earnings per unit is calculated pursuant to the policies provided in the Articles
of Incorporation of HCM, policies provided below, other applicable laws and regulations, rules of selfregulatory organizations, etc. The total amount of distribution in excess of earnings is assumed to be 88
million yen for the fiscal period ending July 2020 and 90 million yen for the fiscal period ending January
2021.
・The total amount of distribution in excess of earnings is distributed up to the amount equivalent to
20/100 of the depreciation recorded in the accounting period immediately before the accounting period
when HCM will pay the said distribution, sufficiently taking into consideration the amount of capital
expenditure necessary for maintaining and improving the competitiveness of HCM’s Assets Under
Distribution in excess ofearnings per unit
Management and the financial position of HCM.
・However, distribution in excess of earnings may be conducted up to an amount lower than the above
amount or may not be conducted when the implementation of distribution in excess of earnings up to
the said amount is judged to be inappropriate based on the economic environment surrounding HCM,
trends of the real estate market and leasing market, status of HCM’s Assets Under Management and thefinancial conditions.
・For the fiscal period ending July 2020 and the fiscal period ending January 2021, the assumption is that
there is no loss in the fair value of interest rate swaps, and of distribution in excess of earnings, that fromreserve for temporary difference adjustments is not currently expected.
・ The assumption is that there will be no revision of laws and regulations, tax systems, accounting
standards, securities listing regulations set forth by the Tokyo Stock Exchange, rules of The Investment
Other
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, realestate market conditions, etc.

- 10 -

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.

2.

Financial Statements(1) Balance Sheet(Unit: thousands of yen)Previous fiscal period(As of Jul. 31, 2019)

AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machine and device in trust
Accumulated depreciation
Machine and device in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Total property, plant and equipment
Intangible assets
Land leasehold interests in trust
SoftwareTotal intangible assets
Investments and other assets
Security deposits
Long-term prepaid expenses
Deferred tax assets
Total investments and other assets
Total non-current assets
Deferred assets
Investment unit issuance expenses
Investment corporation bond issuance costs
Total deferred assets
Total assets

1,897,300
142,524
16
110,615
179,416－
2,329,873

2,160,660
177,603－110,995－766
2,450,025*1 31,929,620*1 32,069,742

38,2402,356
40,59638,2401,247
39,487

10,000178,77217
188,790
65,958,581

10,000204,11910
214,12965,726,997

37,103－
37,10368,325,557

25,696
20,81546,511
68,223,535(2,391,245)
29,538,375
83,849(7,147)76,701
13,456(2,683)
10,773
68,856(10,462)
58,39336,044,949
65,729,194- 11 -

Current fiscal period(As of Jan. 31, 2020)(2,824,464)
29,245,277
83,849(8,368)75,481
16,793(3,411)
13,381
113,513(19,224)
94,28936,044,949
65,473,380

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.
(Unit: thousands of yen)Previous fiscal period(As of Jul. 31, 2019)
Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable
Current portion of long-term loans payable
Accounts payable - otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Deposits received
Total current liabilities
Non-current liabilities
Investment corporation bonds
Long-term loans payable
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Derivatives liabilities
Other
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Deduction from unitholders' capital
Reserve for temporary difference adjustments
Other deduction from unitholders' capital
Total deduction from unitholders' capital

11,7161,000,000
6,700,000
73,843
174,390967－
329,19172
8,290,182

40,298－3,000,000
41,888239,697812
25,721
329,04772
3,677,538－
24,750,000
1,734,009
86,76637,784520
26,609,080
34,899,262

2,000,000
27,450,000
1,734,009
86,76640,097362
31,311,236
34,988,775

32,480,785

32,480,785*3Unitholders' capital, net
Surplus
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders’ equity
Valuation and translation adjustments
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets- 12 -

Current fiscal period(As of Jan. 31, 2020)(25,683)(62,952)(88,636)*3(37,501)(150,033)(187,534)

32,392,149

32,293,251

1,071,929
1,071,929
33,464,079

981,606
981,606
33,274,857(37,784)(37,784)*2 33,426,294
68,325,557(40,097)(40,097)*2 33,234,759
68,223,535

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.
(2) Statement of Income(Unit: thousands of yen)Previous fiscal period
From: Feb. 1, 2019
To: Jul. 31, 2019
Operating revenue
Lease business revenue
Other lease business revenue
Total operating revenue
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee
Administrative service fees
Directors’ compensations
Property tax
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Insurance income
Interest on refund of consumption taxes
Refund of fixed asset taxes
Reversal of distribution payable
Other
Total non-operating income
Non-operating expenses
Interest expenses
Interest expenses on investment corporation bonds
Investment unit issuance expenses
Borrowing expenses
Total non-operating expenses
Ordinary income
Extraordinary income
Subsidy income
Total extraordinary income
Extraordinary losses
Loss on tax purpose reduction entry of non-current assets
Total extraordinary losses
Income before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)

Current fiscal period
From: Aug. 1, 2019
To: Jan. 31, 2020

*1 2,000,800*1 2,004,334

2,008,674

2,013,274*1 586,721*1 601,131

5
15,000－－1,608－
16,614

7
－
358
766
651
2
1,786

90,543－
11,40657,359159,310
1,047,048

91,75142
11,40657,421
160,622944,576－－*2 3,552－－
1,047,048
968
(0)
967
1,046,080
25,8481,071,929*3 3,552*1 7,874

144,071
3,207
19,4163,000
17,68544,829818,931
1,189,743- 13 -*1 8,939

200,660
3,407
22,6793,000
25,52153,459909,860
1,103,413

3,552

3,552
944,576813
7
821
943,755
37,851
981,606

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.
(3) Statement of Unitholders’ Equity
Previous fiscal period (from February 1, 2019 to July 31, 2019)(Unit: thousands of yen)
Unitholders’ equity
Unitholders’ capital

Surplus

Deduction from unitholders' capital
Unitholders’capitalBalance at beginning ofcurrent period
Changes of items during
periodIssuance of new
investment units

19,800,696

Reserve fortemporarydifference
adjustments

Other
deduction
fromunitholders'
capitalTotal
deduction
fromunitholders'
capitalUnitholders'
capital, net

Unappropriatedretainedearnings(undisposed
loss)

Total
surplus－－－19,800,696

539,706

539,706

12,680,089

12,680,089

Dividends of surplus(25,683)(62,952)(25,683)(25,683)(62,952)(62,952)(62,952)
1,046,080

1,046,080

1,046,080(25,683)(62,952)(88,636)

12,591,453

532,222532,222

13,123,676*1 32,480,785(25,683)(62,952)(88,636)

32,392,149

1,071,929

1,071,929

33,464,079

Deferred gains Total valuation
or losses on and translation
hedgesadjustments(25,769)(25,769)

Total
net assets

20,314,633

12,680,089

Dividends of surplus(513,857)

Distribution in excess ofearnings from reserve
for temporary
difference adjustments
Other distribution inexcess of earnings(25,683)(62,952)
1,046,080

Net income
Changes of items otherthan unitholders’ equity
during the period, net
Total changes of items
during the period
Balance at the end ofcurrent period(513,857)

12,680,089(Unit: thousands of yen)
Valuation and translation
adjustments

Balance at beginning ofcurrent period
Changes of items during
periodIssuance of new
investment units(513,857)(25,683)

Net income
Changes of items otherthan unitholders’ equity
during the period, net
Total changes of items
during the period
Balance at the end ofcurrent period

20,340,403

12,680,089(513,857)

Distribution in excess ofearnings from reserve
for temporary
difference adjustments
Other distribution inexcess of earnings

Total
unitholders’equity(12,014)(12,014)(12,014)(12,014)(12,014)

13,111,661(37,784)(37,784)

33,426,294- 14 -

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.
Current fiscal period (from August 1, 2019 to January 31, 2020)(Unit: thousands of yen)

Unitholders’ equity
Unitholders’ capital
Deduction from unitholders' capital
Unitholders’capitalBalance at beginning ofcurrent period
Changes of items during
periodReserve fortemporarydifference
adjustments

Other
deduction
fromunitholders'
capitalTotal
deduction
fromunitholders'
capitalUnitholders'
capital, net(25,683)(62,952)(88,636)

32,392,149(11,818)(11,818)(87,080)(87,080)(87,080)

32,480,785

Dividends of surplus
Distribution in excess ofearnings from reserve
for temporary
difference adjustments
Other distribution inexcess of earnings(11,818)

Net income
Changes of items otherthan unitholders’ equity
during the period, net
Total changes of items
during the period
Balance at the end ofcurrent period－(11,818)(87,080)(98,898)(98,898)*1 32,480,785(37,501)(150,033)(187,534)

32,293,251(Unit: thousands of yen)
Valuation and translation
adjustments

Unitholders’ equity
Surplus

Balance at beginning ofcurrent period
Changes of items during
periodDividends of surplus

Unappropriatedretainedearnings(undisposed
loss)

Changes of items otherthan unitholders’ equity
during the period, net
Total changes of items
during the period
Balance at the end ofcurrent period

Total
net assets

Total
surplus1,071,929

1,071,929

33,464,079(1,034,078)(1,034,078)(1,034,078)(1,034,078)(11,818)(11,818)(87,080)(87,080)

943,755

943,755

Distribution in excess ofearnings from reserve
for temporary
difference adjustments
Other distribution inexcess of earnings
Net income

Deferred gains Total valuation
or losses on and translation
hedgesadjustments

Totalunitholders’equity943,755

943,755(37,784)(37,784)

33,426,294(2,313)(2,313)(2,313)(90,323)(90,323)(189,221)(2,313)(2,313)(191,535)

981,606

981,606

33,274,857(40,097)(40,097)

33,234,759- 15 -

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.
(4) Statement of Cash Distributions(Unit: yen)Previous fiscal period
From: Feb. 1, 2019
To: Jul. 31, 2019

Current fiscal period
From: Aug. 1, 2019
To: Jan. 31, 2020

Unappropriated retained earnings

1,071,929,408

981,606,180

II. Distribution in excess of earnings

98,898,318

91,123,293

11,818,038

2,488,008

87,080,280

88,635,285

III. Amount of distributions

1,132,976,643

1,032,523,320[distributions per unit][3,643][3,320]1,034,078,325

941,400,027[3,325][3,027]

11,818,038

2,488,008

[38]

[8]

87,080,280

88,635,285

[280]

[285]

37,851,083

40,206,153

I.

Of which, reserve for temporary difference
adjustments
Of which, other deduction from unitholders’capitalOf which, distributions of earnings(Of which, distributions of earnings per unit)
Of which, reserve for temporary difference
adjustments(Of which, distributions in excess of earnings
per unit (of reserve for temporary difference
adjustments))
Of which, other distributions in excess ofearnings(Of which, distributions in excess of earnings
per units (of other distributions in excess ofearnings))
IV. Retained earnings carried forward

Method of calculation of amount of distributions

In accordance with the cash
distribution policy described in Article
36, Paragraph 1 of its Articles ofIncorporation, HCM determines thatthe amount of distribution shallexceed the amount equivalent to 90%
of its distributable profit as stipulated
in Article 67-15 of the Act on Special
Measures Concerning Taxation, andshall be up to its profits as defined in
Article 136, Paragraph 1 of theInvestment Trusts Act. Following thispolicy, HCM has decided that, of
profits as defined in Article 136,
Paragraph 1 of the Investment Trusts
Act, it shall distribute 1,034,078,325
yen, which is the maximum integral
multiple to 311,001 units issued andoutstanding as the distribution of
earnings. Accordingly, distribution of
earning per unit was 3,325 yen.
In addition, HCM is to make
distribution in excess of earnings, ofwhich amount is to be determined by
HCM as an amount equivalent to net
asset deduction items (as defined in
Article 2, Paragraph 2, Item (30) (b) of
the Ordinance on Accountings ofInvestment Corporations), considering- 16 -In accordance with the cash
distribution policy described in Article
36, Paragraph 1 of its Articles ofIncorporation, HCM determines thatthe amount of distribution shallexceed the amount equivalent to 90%
of its distributable profit as stipulated
in Article 67-15 of the Act on Special
Measures Concerning Taxation, andshall be up to its profits as defined in
Article 136, Paragraph 1 of theInvestment Trusts Act. Following thispolicy, HCM has decided that, of
profits as defined in Article 136,
Paragraph 1 of the Investment Trusts
Act, it shall distribute 941,400,027
yen, which is the maximum integral
multiple to 311,001 units issued andoutstanding as the distribution of
earnings. Accordingly, distribution of
earning per unit was 3,027 yen.
In addition, HCM is to make
distribution in excess of earnings, ofwhich amount is to be determined by
HCM as an amount equivalent to net
asset deduction items (as defined in
Article 2, Paragraph 2, Item (30) (b) of
the Ordinance on Accountings ofInvestment Corporations), considering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.

Method of calculation of amount of distributions

Previous fiscal period
From: Feb. 1, 2019
To: Jul. 31, 2019

Current fiscal period
From: Aug. 1, 2019
To: Jan. 31, 2020

the impact of net asset deduction
items on distribution, pursuant to thepolicy for cash distribution in excess ofearnings provided in Article 36,
Paragraph 2 of its Articles ofIncorporation. During the current fiscal
period, since deferred losses onhedges of 12 million yen was recorded
as net asset deduction items, HCM
decided to make distribution ofreserve for temporary difference
adjustments in the amount of
11,818,038 yen. As a result,distribution in excess of earnings perunit (of reserve for temporary
difference adjustments) came to 38
yen.
Furthermore, in accordance with thepolicy for cash distribution in excess ofearnings provided in Article 36,
Paragraph 2 of its Articles ofIncorporation, HCM is to conduct
distribution in excess of earnings(return of capital that falls under the
category of distribution reducing
unitholders’ capital for tax purpose) in
each period on a continuous basis.
During the current fiscal period, HCM
has decided to distribute 87,080,280
yen, an amount roughly equivalent to
20% of depreciation recorded in thecurrent fiscal period, as distribution inexcess of earnings. As a result,distribution in excess of earnings perunit (of other distribution in excess ofearnings) came to 280 yen.
As a result, distribution per unit came
to 3,643 yen.

the impact of net asset deduction
items on distribution, pursuant to thepolicy for cash distribution in excess ofearnings provided in Article 36,
Paragraph 2 of its Articles ofIncorporation. During the current fiscal
period, since deferred losses onhedges of 2 million yen was recorded
as net asset deduction items, HCM
decided to make distribution ofreserve for temporary difference
adjustments in the amount of
2,488,008 yen. As a result, distribution
in excess of earnings per unit (ofreserve for temporary difference
adjustments) came to 8 yen.
Furthermore, in accordance with thepolicy for cash distribution in excess ofearnings provided in Article 36,
Paragraph 2 of its Articles ofIncorporation, HCM is to conduct
distribution in excess of earnings(return of capital that falls under the
category of distribution reducing
unitholders’ capital for tax purpose) in
each period on a continuous basis.
During the current fiscal period, HCM
has decided to distribute 88,635,285
yen, an amount roughly equivalent to
20% of depreciation recorded in thecurrent fiscal period, as distribution inexcess of earnings. As a result,distribution in excess of earnings perunit (of other distribution in excess ofearnings) came to 285 yen.
As a result, distribution per unit came
to 3,320 yen.

(Note 1) Distribution in excess of earnings is distributed up to the amount equivalent to 20/100 of the depreciation recordedin the accounting period immediately before the period when HCM will pay this distribution, sufficiently taking into
consideration the amount of capital expenditure necessary for maintaining and improving the competitiveness of
HCM’s Assets Under Management and the financial position of HCM.
However, distribution in excess of earnings may be conducted up to an amount lower than the above amount or may
not be conducted when the implementation of distribution in excess of earnings up to this amount is judged to beinappropriate based on the economic environment surrounding HCM, trends of the real estate market and leasing
market, status of HCM’s Assets Under Management and financial conditions.
(Note 2) Under the rules of The Investment Trusts Association, closed-end investment corporations are allowed to conduct
distribution in excess of earnings up to an amount equivalent to 60/100 of the depreciation recorded on the last dayof the accounting period.

- 17 -

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.
(5) Statement of Cash Flows(Unit: thousands of yen)Previous fiscal period
From: Feb. 1, 2019
To: Jul. 31, 2019
Cash flows from operating activities
Income before income taxes
Depreciation
Loss on tax purpose reduction entry of non-current assets
Borrowing expenses
Investment unit issuance expenses
Interest income
Interest on tax refund
Interest expenses
Decrease (increase) in operating accounts receivable
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 accrued consumption taxes
Increase (decrease) in accrued expenses
Increase (decrease) in advances received
Decrease (increase) in long-term prepaid expenses
Increase (decrease) in deposits received
Other, net
SubtotalInterest income received
Interest on tax refund 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 in trust
Purchase of intangible assets in trust
Proceeds from tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits in trust
Net cash provided by (used in) investing activities
Cash flows from financing activities
Payments for restricted deposits in trust
Repayments of short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Borrowing expenses
Proceeds from issuance of investment corporation bonds
Proceeds from issuance of investment units
Dividends 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 -

Current fiscal period
From: Aug. 1, 2019
To: Jan. 31, 2020

1,047,048
437,642－
57,35911,406(5)－
90,543(16)(179,416)(9,950)(29,151)
2,555(5,243)29,059117,733(303)(210)(1,088)1,567,962
5－(90,652)(951)
1,476,365

944,576445,039
3,552
57,421
11,406(7)(358)
91,79416
179,416
9,026
28,58189
25,72165,448(144)
121－(1,575)
1,860,125
7
358(91,934)(968)
1,767,588(23,466,154)(38,240)
724,010
52,162(22,728,221)(231,418)－－－(231,418)(52,162)(1,750,000)
11,750,000－(173,917)－
12,641,544(602,871)
21,812,593
560,736
1,401,425*1 1,962,162－(1,000,000)
5,700,000(6,700,000)(92,296)
1,985,443－(1,130,878)(1,237,730)
298,439
1,962,162*1 2,260,601

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.
(6) Notes on the Going Concern Assumption
Not applicable.
(7) Notes on Matters Concerning Significant Accounting Policies
1. Method of depreciation of (1) Property, plant and equipment
non-current assets
The straight-line method is adopted.
The useful life of principal property, plant and equipment is as follows:
Buildings in trust
5-69 years
Structures in trust
10-53 years
Machine and device in trust
10 years
Tools, furniture and fixtures in trust 6-15 years(2) Intangible assets
The straight-line method is adopted.
2. Accounting for deferred(1) Investment unit issuance expenses
assetsDepreciated evenly over 3 years.
(2) Investment corporation bond issuance costs
Amortized using the straight-line method over the period up to redemption.
3. Standards for
Accounting for fixed asset tax, etc.
revenue and expense
For fixed asset tax, city planning tax, depreciable asset tax, etc. on real estate, etc.
recognition
owned, the accounting is that, of the tax amount assessed and determined, the amountcorresponding to the concerned accounting period is expensed as expenses related torent business.
In connection with the acquisition of real estate including trust beneficiary interests inreal estate, the amount equivalent to real property tax, etc. for the initial fiscal year,
which was settled with the seller, is not recorded as expenses but included in the costof acquisition of the concerned real estate, etc. The amount equivalent to real property
tax, etc. included in the cost of acquisition of real estate, etc. was 89,199 thousand yen
for the previous fiscal period and none for the current fiscal period.
4. Method of Hedge(1) Hedge accounting approach
Accounting
Deferred hedge accounting. Special treatment is applied for interest rate swap
transactions that satisfy the requirements for special treatment.
(2) Hedging instruments and hedge items
Hedging instruments: Interest rate swap transaction
Hedge items: Interest on loans(3) Hedging policy
HCM conducts interest rate swap transactions for hedging risks provided in the
Articles of Incorporation of HCM, pursuant to the risk management basic policy.
(4) Method of assessing hedge effectivenessHedge effectiveness is assessed by comparing the cumulative fluctuation of cash
flows for hedging instruments and the cumulative fluctuation of cash flows forhedge items and confirming the ratio of both fluctuations. However, theassessment of hedge effectiveness for interest rate swap transactions that satisfy
the requirements for special treatment is omitted.
5. Cash and cash equivalents Cash and cash equivalents in the statement of cash flows comprise cash on hand andas stated in the statement cash in trust, demand deposits and deposits in trust, and short-term investments withof cash flows
a maturity of three months or less from the date of acquisition that are readily
convertible to cash and that are subject to an insignificant risk of changes in value.
6.

Other significant mattersserving as the basis for
preparation offinancial statements(1) Accounting for trust beneficiary interests in real estate, etc.
Concerning trust beneficiary interests in real estate, etc. owned, all accounts ofassets and liabilities within trust assets as well as all accounts of revenue andexpenses from the trust assets are recognized in the relevant account item of thebalance sheet and the statement of income.
The following material items of the trust assets recognized in the relevant accountitem are separately listed on the balance sheet.
① Cash and deposits in trust② Buildings in trust; structures in trust; machine and device in trust; tools,
furniture and fixtures in trust; land in trust; land leasehold interests in trust③ Leasehold and guarantee deposits received in trust(2) Accounting for consumption tax, etc.
Consumption tax and local consumption tax are excluded from transaction
amounts.
Non-deductible consumption taxes on acquisition of assets is included in the costof acquisition of each asset.
- 19 -

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.
[Additional Information][Notes on Reserve and Reversal of Reserve for Temporary Difference Adjustments]
Previous fiscal period (from February 1, 2019 to July 31, 2019)
1. Reasons, related assets and amounts of reserve
Due to arising of deferred losses on hedges (net asset deduction items) at the end of the fiscal year under review fromassessment of fair value of interest rate swap transactions to which hedge accounting is applied, 11,818 thousand yen of reserve
for temporary difference adjustments is recorded.
2. Method of reversal
In accordance with elimination of deferred losses on hedges (net asset deduction items) by period-end reassessment of saidinterest rate swap transactions in the next period onward, a corresponding amount of reserve for temporary difference
adjustments will be reversed
Current fiscal period (from August 1, 2019 to January 31, 2020)
1. Reasons, related assets and amounts of reserve
Due to arising of deferred losses on hedges (net asset deduction items) at the end of the fiscal year under review fromassessment of fair value of interest rate swap transactions to which hedge accounting is applied, 2,488 thousand yen of reserve
for temporary difference adjustments is recorded.
2. Method of reversal
In accordance with elimination of deferred losses on hedges (net asset deduction items) by period-end reassessment of saidinterest rate swap transactions in the next period onward, a corresponding amount of reserve for temporary difference
adjustments will be reversed(8) Notes on Financial Statements[Notes on Balance Sheet]*1 Reduction entry amount of property, plant and equipment received as governmental subsidy, etc.
(Unit: thousands of yen)Previous fiscal period(As of Jul. 31, 2019)

Current fiscal period(As of Jan. 31, 2020)

6,489

10,041

Buildings in trust*2 Minimum net assets as provided in Article 67, Paragraph 4 of the Act on Investment Trusts and Investment Corporations(Unit: thousands of yen)Previous fiscal period(As of Jul. 31, 2019)

Current fiscal period(As of Jan. 31, 2020)

50,00050,000*3 Reserve for temporary difference adjustments
Previous fiscal period (from February 1, 2019 to July 31, 2019)
1. Reasons, related assets and amounts of reserve

Related assets, etc.

ReasonDeferred gains or losses Valuation loss on
on hedges
interest rate swap
Total

Initialamount(Unit: thousands of yen)
Balance at Reserved Reversed Balance at
Reason for
beginning amount in amount in
end ofreversalof 9th FP
9th FP
9th FP
9th FP

25,683―25,683―25,683―25,683―25,683―25,683―

2. Method of reversal(1) Deferred gains or losses on hedges
Reversal is planned to be made in accordance with the change in fair value of derivative transactions, which are hedge
instruments.
- 20 -

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.
Current fiscal period (from August 1, 2019 to January 31, 2020)
1. Reasons, related assets and amounts of reserve

Related assets, etc.

ReasonInitialamountDeferred gains or losses Valuation loss on
on hedges
interest rate swap
Total

(Unit: thousands of yen)
Balance at Reserved Reversed Balance at
Reason for
beginning amount in amount in
end ofreversalof 10th FP
10 FP
10 FP
10 FP

25,68325,683

11,818―37,501―

25,68325,683

11,818―37,501―

2. Method of reversal(1) Deferred gains or losses on hedges
Reversal is planned to be made in accordance with the change in fair value of derivative transactions, which are hedge
instruments.
[Notes on Statement of Income]*1 Breakdown of operating income (loss) from real estate leasing(Unit: thousands of yen)Previous fiscal period
From: Feb. 1, 2019
To: Jul. 31, 2019

Current fiscal period
From: Aug. 1, 2019
To: Jan. 31, 2020

A. Operating revenue from real estate leasing
Revenue related to rent business
Rent revenue
Other revenue related to rent business

2,000,800

Other revenue

2,004,334

7,874

8,939

2,008,674

2,013,274

88,986

90,736

Outsourcing expenses
Repair expenses

27,761
12,01828,112
16,244

Insurance expenses
Depreciation

6,847
436,533

7,500
443,930

Other expenses related to rent business

14,574

14,607

Total operating revenue from real estate leasing
B. Operating expenses from real estate leasing
Expenses related to rent business
Property tax

Total operating expenses from real estate leasing
C. Operating income (loss) from real estate leasing [A-B]

586,721

601,131

1,421,953

1,412,142*2 Breakdown of Subsidy income
Previous fiscal period (from February 1, 2019 to July 31, 2019)
Not applicable.
Current fiscal period (from August 1, 2019 to January 31, 2020)
Subsidy income is from Subsidies for countermeasures to control carbon dioxide emissions project etc. in FY2019.
*3 Loss on reduction of non-current assets is the value directly deducted from acquired value, due to the acceptance of subsidies.
The breakdown is as follows.
(Unit: thousands of yen)
Current fiscal period
From: Aug. 1, 2019
To: Jan. 31, 2020

Previous fiscal period
From: Feb. 1, 2019
To: Jul. 31, 2019
Buildings in trust-- 21 -

3,552

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.
[Notes on Statement of Unitholders’ Equity]*1 Total number of investment units authorized and total number of investment units issued and outstanding
Previous fiscal period
Current fiscal period
From: Feb. 1, 2019
From: Aug. 1, 2019
To: Jul. 31, 2019
To: Jan. 31, 2020
Total number of investment units authorized
Total number of investment units issued and outstanding

10,000,000 units

10,000,000 units

311,001 units

311,001 units[Notes on Statement of Cash Flows]*1 Reconciliation of cash and cash equivalents at end of period to the amount of balance sheet items(Unit: thousands of yen)

Cash and deposits
Cash and deposits in trust
Restricted deposits in trust (Note)
Cash and cash equivalents

Previous fiscal period
From: Feb. 1, 2019
To: Jul. 31, 2019

Current fiscal period
From: Aug. 1, 2019
To: Jan. 31, 2020

1,897,300
142,524

2,160,660
177,603(77,662)(77,662)

1,962,162

2,260,601(Note) Restricted deposits in trust refer to deposits in trust reserved for refund of leasehold received from tenants, etc.
[Notes on Operating Leases Transactions]Non-cancellable operating leases (as lessor)(Unit: thousands of yen)Previous fiscal period
As of Jul. 31, 2019

Current fiscal period
As of Jan. 31, 2019

Not later than 1 year

3,416,066

3,264,668

Later than 1 year

16,229,131

14,886,618

Total

19,645,197

18,151,286[Notes on Financial Instruments]
1. Matters concerning status of financial instruments(1) Policy for handling financial instruments
Pursuant to the policy of conducting stable and sound financial management, HCM raises funds for asset acquisition,
repayment of loans, etc. by means of loans from banks, issuance of investment corporation bonds or issuance of new
investment units, etc. As to finance by loans and issuance on investment corporation bonds, HCM pays attention toextending periods, fixing interest rates, diversifying repayment dates and such to secure financial stability and avoid therisk of rise in interest rates in the future.
Derivative transactions shall be limited to those invested for the purpose of hedging the risk of fluctuations in interest
rates on loans, etc. and other risks.
(2) Description of financial instruments and associated risks, and risk management system
Loans and proceeds from issuance of investment corporation bonds are used primarily for acquisition of trust
beneficiary interests in real estate and repayment of debts.
Although loans and investment corporation bonds are exposed to liquidity risks on the repayment or redemption date,the impact of rise in the market interest rate on the management of HCM is limited through appropriate managementof the ratio of interest-bearing liabilities, and such risks are controlled through diversification of repayment andredemption dates.
Although loans with floating interest rates are exposed to interest rate fluctuation risks, the ratios of loan balances withfloating rates and fixed rates against the entire loans are adjusted according to the financing environment. Furthermore,derivative transactions (interest rate swap transactions) have been used for part of loans with floating rates to avoid
interest fluctuation risks and to fix interest payment. Execution/management of derivative transactions carried out forthe purpose of hedging interest rate fluctuation risks is conducted pursuant to provisions that stipulate the basic policyof risk management.

- 22 -

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.
Although tenant leasehold and security deposits as well as leasehold and security deposits in trust are deposits fromtenants and are exposed to liquidity risks at the time of refunding upon tenants’ move-outs, HCM controls liquidity risks
by maintaining liquidity at hand, etc.
For deposits, such risks are controlled by setting lower limit to the credit rating of financial institutions at which deposits
are made (excluding deposits for settlement), etc.
(3) Supplementary explanation to matters concerning fair value, etc. of financial instruments
The fair value of financial instruments, aside from values based on market price, includes values based on reasonablecalculation when no market price is available. Certain assumptions are adopted in the calculation of the concernedvalues. Accordingly, there may be cases where the concerned values will differ when different assumptions are adopted.
2.

Matters concerning fair value, etc. of financial instruments
Carrying amount, fair value and difference between the two were as follows. The financial instruments whose fair values are
deemed extremely difficult to determine are excluded from the table below. (Please refer to (Note 2).)Previous fiscal period (from February 1, 2019 to July 31, 2019)(Unit: thousands of yen)
Carrying amount(1) Cash and deposits(2) Cash and deposits in trust
Total assets

Amount ofdifference

Fair value

1,897,300

1,897,300―

142,524

142,524―

2,039,824

2,039,824―(3) Short-term loans payable

1,000,000

1,000,000―(4) Current portion of long-term loans payable

6,700,000

6,701,552

1,552(6) Long-term loans payable

24,750,000

24,755,105

5,105

32,450,000

32,456,657

6,657(37,784)(37,784)

Total liabilities(7) Derivatives transaction―

Current fiscal period (from August 1, 2019 to January 31, 2020)(Unit: thousands of yen)
Carrying amount(1) Cash and deposits

2,160,660(2) Cash and deposits in trust

Fair value

Amount ofdifference

2,160,660―

177,603

177,603―2,338,264

2,338,264―(4) Current portion of long-term loans payable

3,000,000

2,999,749(250)(5) Investment corporation bonds

2,000,000

2,007,000

7,000(6) Long-term loans payable

27,450,000

27,460,717

10,71732,450,000

32,467,467

17,467(40,097)(40,097)―

Total assets

Total liabilities(7) Derivatives transaction(Note 1) Method of calculation of the fair value of financial instruments and matters concerning derivative transactions(1) Cash and deposits; (2) Cash and deposits in trust; (3) Short-term loans payable
Because these are settled in a short period of time, the fair value is approximately the same as the book value and thus stated at that bookvalue.
(4) Current portion of long-term loans payable; (6) Long-term loans payable
For those with floating interest rates that reflect market interest rates within a short period of time, the book value is deemed a reasonableapproximation of the fair value as there are no significant changes in HCM’s credit standing after borrowing; therefore, the book value isused as the fair value equivalent. Those with fixed interest rates are calculated by discounting the sum of principal and interest (*) at areasonable rate estimated for a similar loan that is made corresponding to the remaining period.
(*) For long-term loans with floating interest rate to which special treatment for interest rate swaps is applied (please refer to “Derivative
Transactions” below), the sum of principal and interest under the interest rates after the interest rate swaps are indicated.
(5) Investment corporation bonds
Figures are calculated based on the reference statistics of transactions provided by Japan Securities Dealers Association- 23 -

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.
(7) Derivative transactions
Please refer to “Notes on Derivative Transactions” below.
(Note 2) Financial instruments for which estimation of fair value is recognized to be difficult.
(Unit: thousands of yen)
Current fiscal period(As of Jan. 31, 2020)

Previous fiscal period(As of Jul. 31, 2019)
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust

1,734,009

1,734,009

86,766

86,766

Tenant leasehold and security deposits and Tenant leasehold and security deposits in trust are not subject to valuation at fair value, because areasonable estimation of cash flows is recognized to be extremely difficult due to there being no market price and difficulty of calculating the actual
deposit period from when lessees move in to when they move out.
(Note 3) Amount of redemption of monetary claims scheduled to be due after the account closing datePrevious fiscal period (As of July 31, 2019)(Unit: thousands of yen)
Not later than 1 year
Cash and deposits

1,897,300

Cash and deposits in trust

142,524

Total

2,039,824

Current fiscal period (As of January 31, 2020)(Unit: thousands of yen)
Not later than 1 year
Cash and deposits

2,160,660

Cash and deposits in trust

177,603

Total

2,338,264(Note 4) Amount of repayment of loans and other interest-bearing liabilities scheduled to be due after the account closing datePrevious fiscal period (As of July 31, 2019)(Unit: thousands of yen)
Later than 4 years
and not
Later than 5 years
later than 5 years

Not later than 1 year

Later than 1 year
and not
later than 2 years

Later than 2 years
and not
later than 3 years

Later than 3 years
and not
later than 4 years

Short-termloans payable

1,000,000

―

―

―

―

―

Long-termloans payable

6,700,000

3,000,000

7,000,000

8,000,000

6,750,000

―

Total

7,700,000

3,000,000

7,000,000

8,000,000

6,750,000―

Not later than 1 year

Later than 1 year
and not
later than 2 years

Later than 2 years
and not
later than 3 years

Later than 3 years
and not
later than 4 years

―

―

―

―

―

2,000,000

Long-termloans payable

3,000,000

7,000,000

9,250,000

6,750,000

4,450,000

―

Total

3,000,000

7,000,000

9,250,000

6,750,000

4,450,000

2,000,000

Current fiscal period (As of January 31, 2020)

Investment
corporation
bonds[Notes on Securities]
Previous fiscal period (As of July 31, 2019)
Not applicable.
Current fiscal period (As of January 31, 2020)
Not applicable.
[Notes on Derivative Transactions]
1. Derivative transactions to which hedge accounting is not applied- 24 -(Unit: thousands of yen)
Later than 4 years
and not
Later than 5 years
later than 5 years

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.
Previous fiscal period (As of July 31, 2019)
Not applicable.
Current fiscal period (As of January 31, 2020)
Not applicable.
2.

Derivative transactions to which hedge accounting is applied
Previous fiscal period (As of July 31, 2019)
Hedge
accounting
approachPrinciple
accounting
methodSpecialtreatment forinterest rate
swaps
(Note 1)

Type, etc. of
derivativetransaction
Interest rate swap
transaction
Floating receivable;
fixed payable
Interest rate swap
transaction
Floating receivable;
fixed payable
Total

Main hedged
item

Contract amount, etc.
Due after one year

(Unit: thousands of yen)

Fair value

Calculation
method for thefair value

Long-term loans
payable13,750,000

13,750,000(37,784)

Based on the pricepresented bycorrespondent
financial
institutions

Long-term loans
payable1,000,000

1,000,000(Note)-

14,750,000
14,750,000(37,784)
Since those with special treatment of interest rate swaps are treated integrally with hedged long-term loans payable, the market
values of such are shown as included in the market value in “(6) Long-term loans payable” in “[Notes on Financial Instruments], 2.
Matters concerning fair value, etc. of financial instruments” above.

Current fiscal period (As of January 31, 2020)
Hedge
accounting
approachPrinciple
accounting
methodSpecialtreatment forinterest rate
swaps
(Note)

Type, etc. of
derivativetransaction
Interest rate swap
transaction
Floating receivable;
fixed payable
Interest rate swap
transaction
Floating receivable;
fixed payable
Total

Main hedged
item

Contract amount, etc.
Due after one year

(Unit: thousands of yen)

Fair value

Calculation
method for thefair value

Long-term loans
payable18,200,000

18,200,000(40,097)

Based on the pricepresented bycorrespondent
financial
institutions

Long-term loans
payable1,000,000

1,000,000(Note)-

19,200,000
19,200,000(40,097)
Since those with special treatment of interest rate swaps are treated integrally with hedged long-term loans payable, the market valuesof such are shown as included in the market value in “(6) Long-term loans payable” in “[Notes on Financial Instruments], 2. Mattersconcerning fair value, etc. of financial instruments” above.

[Notes on Retirement Benefits]
Previous fiscal period (As of July 31, 2019)
Not applicable.
Current fiscal period (As of January 31, 2020)
Not applicable.

- 25 -

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.
[Notes on Tax-Effect Accounting]
1. Breakdown of main causes for occurrence of deferred tax assets and deferred tax liabilities(Unit: thousands of yen)Previous fiscal period
As of Jul. 31, 2019

Current fiscal period
As of Jan. 31, 2020

Deferred tax assets
Non-deductible accrued enterprise tax
Deferred gains or losses on hedges

17

10

11,905

12,614

Subtotal deferred tax assets

11,923

12,624

Valuation allowance(11,905)(12,614)

17
17

10
10

Total deferred tax assets
Net deferred tax assets
2.

Breakdown of major components that caused any significant differences between the statutory tax rate and the effective
income tax rate after application of tax-effect accounting(Unit: %)Previous fiscal period
As of Jul. 31, 2019
Statutory tax rate
[Adjustments]
Deductible distributions payable
Other
Effective income tax rate
after application of tax-effect accounting[Notes on Share of Profit (Loss) of Entities Accounted for Using Equity Method, etc.]
Previous fiscal period (As of July 31, 2019)
Not applicable.
Current fiscal period (As of January 31, 2020)
Not applicable.
[Notes on Related-Party Transactions]
1. Parent company, major corporate unitholder, etc.
Previous fiscal period (from February 1, 2019 to July 31, 2019)
Not applicable.
Current fiscal period (from August 1, 2019 to January 31, 2020)
Not applicable.
2.

Affiliated company, etc.
Previous fiscal period (from February 1, 2019 to July 31, 2019)
Not applicable.
Current fiscal period (from August 1, 2019 to January 31, 2020)
Not applicable.

3.

Fellow subsidiary, etc.
Previous fiscal period (from February 1, 2019 to July 31, 2019)
Not applicable.
Current fiscal period (from August 1, 2019 to January 31, 2020)
Not applicable.

- 26 -

Current fiscal period
As of Jan. 31, 2020

31.51

31.51

(31.48)0.06(31.49)
0.07

0.09

0.09

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.
4.

Director, major individual unitholder, etc.
Previous fiscal period (from February 1, 2019 to July 31, 2019)

Capital stock
Relationship
Percentage
Transaction
Name ofor
Description of of voting
Concurrent
amountcompany,
investments
Description ofrights, etc. holding ofbusiness orClassification
Address
Business(thousandetc. orin capitaltransaction
held by (in) director’s relationshipoccupation
yen)
person(thousand
HCM (%) position, etc.
yen)

Director, or
close
relative of
director

Seiji
Yoshioka--

Executive
Director of
HCM andPresident &CEO of the
Asset
Management
Company

0.0

Payment of
asset
Executive Director of HCM
management
and President & CEO of
fee to thethe Asset Management
Asset
Company
Management
Company

257,526(Note 1)
(Note 2)

Balance at
end ofAccount
perioditem(thousandyen)

Accruedexpenses

155,596

Of the amounts above, the transaction amount does not include consumption tax.

(Note 1) The transaction amount for the payment of asset management fee to the Asset Management Company under “Description of transaction”
includes the property acquisition incentive portion included in the book value of individual real estate, etc. in the amount of 113,455 thousandyen.
(Note 2) Terms and conditions of transactions and decision-making approach to such, etc.
1. Terms and conditions of transactions are decided taking into account the actual market value.
2. The transaction is one that was conducted by Seiji Yoshioka as President and CEO of a third party (Healthcare Asset Management Co., Ltd.),
and the amount of the asset management fee is based on the terms and conditions provided in the Articles of Incorporation of HCM.

Current fiscal period (from August 1, 2019 to January 31, 2020)

Capital stock
Relationship
Percentage
Transaction
Name ofor
Description of of voting
Concurrent
amountcompany,
investments
Description ofrights, etc. holding ofbusiness orClassification
Address
Business(thousandetc. orin capitaltransaction
held by (in) director’s relationshipoccupation
yen)
person(thousand
HCM (%) position, etc.
yen)

Director, or
close
relative of
director

Seiji
Yoshioka--

Executive
Director of
HCM andPresident &CEO of the
Asset
Management
Company

0.0

Payment of
asset
Executive Director of HCM
management
and President & CEO of
fee to thethe Asset Management
Asset
Company
Management
Company

Of the amounts above, the transaction amount does not include consumption tax.

(Note)

200,660(Note)

Balance at
end ofAccount
perioditem(thousandyen)

Accruedexpenses

219,585

Terms and conditions of transactions and decision-making approach to such, etc.
1. Terms and conditions of transactions are decided taking into account the actual market value.
2. The transaction is one that was conducted by Seiji Yoshioka as President and CEO of a third party (Healthcare Asset Management Co., Ltd.),
and the amount of the asset management fee is based on the terms and conditions provided in the Articles of Incorporation of HCM.

[Notes on Asset Retirement Obligations]
Previous fiscal period (as of July 31, 2019)
Not applicable.
Current fiscal period (as of January 31, 2020)
Not applicable.

- 27 -

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.
[Notes on Investment and Rental Properties]
HCM owns healthcare facilities (35 properties in total) primarily in the Three Major Metropolitan Areas and Core Cities. The
carrying amount, amount of increase (decrease) during the period and fair value of these investment and rental properties are as
follows:(Unit: thousands of yen)Previous fiscal period
From: Feb. 1, 2019
To: Jul. 31, 2019

Current fiscal period
From: Aug. 1, 2019
To: Jan. 31, 2020

Carrying amount
Balance at beginning of period

42,710,158

65,767,434

Amount of increase (decrease) during period

23,057,275(255,814)

Balance at end of period

65,767,434

65,511,620

70,479,000

70,413,000

Fair value at end of period(Note 1) “Carrying amount” is the amount of the cost of acquisition, less accumulated depreciation.
(Note 2) Out of the amount of increase (decrease) during the previous fiscal period, the amount of increase is mainly attributable to the acquisitionof 8 properties (23,379,171 thousand yen) and the amount of decrease is mainly attributable to depreciation (436,533 thousand yen). Outof the amount of increase (decrease) during the current fiscal period, the amount of decrease is mainly attributable to depreciation (443,930
thousand yen).
(Note 3) “Fair value at end of period” is the appraisal value or investigation value by an outside real estate appraiser.

The income (loss) concerning investment and rental properties is as stated in “Notes on Statement of Income” earlier in thisdocument.
[Notes on Segment Information]
1. Segment information
Segment information is omitted because HCM operates a single segment, which is the real estate leasing business.
2.

Related information
Previous fiscal period (from February 1, 2019 to July 31, 2019)(1) Information about products and services
Information about products and services is omitted because net sales to external customers for a single products andservices category are in excess of 90% of operating revenue on the statement of income.
(2) Information about geographic areas① Net sales
Information about net sales is omitted because net sales to external customers in Japan are in excess of 90% of
operating revenue on the statement of income.
② Property, plant and equipment
Information about property, plant and equipment is omitted because the amount of property, plant and equipment
located in Japan is in excess of 90% of the amount of property, plant and equipment on the balance sheet.
(3) Information about major customers
Information on net sales to a single external customer is omitted because consent has not been obtained from thetenant.
Current fiscal period (from August 1, 2019 to January 31, 2020)(1) Information about products and services
Information about products and services is omitted because net sales to external customers for a single products andservices category are in excess of 90% of operating revenue on the statement of income.
(2) Information about geographic areas① Net sales
Information about net sales is omitted because net sales to external customers in Japan are in excess of 90% of
operating revenue on the statement of income.

- 28 -

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.
② Property, plant and equipment
Information about property, plant and equipment is omitted because the amount of property, plant and equipment
located in Japan is in excess of 90% of the amount of property, plant and equipment on the balance sheet.
(3) Information about major customers
Information on net sales to a single external customer is omitted because consent has not been obtained from thetenant.
[Notes on Per Unit Information]
Previous fiscal period
From: Feb. 1, 2019
To: Jul. 31, 2019

Current fiscal period
From: Aug. 1, 2019
To: Jan. 31, 2020

Net assets per unit

107,479 yen

106,863 yen

Net income per unit

3,372 yen

3,034 yen

(Note 1) Net income per unit is calculated by dividing net income by the average number of investment units during the period (the daily weighted
average number of investment units). In addition, diluted net income per unit is not stated because there are no diluted investment units.
(Note 2) The following is the basis for calculation of net income per unit.

Net income (thousands of yen)Amount not attributable to common unitholders (thousands of yen)
Net income attributable to common investment units(thousands of yen)
Average number of investment units during period (units)[Notes on Significant Subsequent Events]
Not applicable.

- 29 -

Previous fiscal period
From: Feb. 1, 2019
To: Jul. 31, 2019

Current fiscal period
From: Aug. 1, 2019
To: Jan. 31, 2020

1,046,080

943,755――

1,046,080

943,755

310,194

311,001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.
(9) Changes in Total Number of Investment Units Issued and Outstanding
The following are changes in total number of investment units issued and outstanding and unitholders’ capital over the mostrecent five years up to the end of the current fiscal period.

Date

March 18, 2015
April 21, 2015
February 1, 2017
March 1, 2017
February 1, 2019
February 27, 2019
April 19, 2019
October 18, 2019

Description
Capital increase
through public
offering
Capital increase
through third-party
allotment
Capital increase
through public
offering
Capital increase
through third-party
allotment
Capital increase
through public
offering
Capital increase
through third-party
allotment
Distribution inexcess of earnings
Distribution inexcess of earnings

Total number ofinvestment units
issued and outstanding(units)ChangeBalanceUnitholders’ capital(millions of yen)

Unitholders’ capital (net)(millions of yen) (Note 1)

ChangeChangeBalance

Remarks

Balance

106,500

108,500

11,246

11,446

11,246

11,446(Note 2)

12,000120,500

1,267

12,713

1,267

12,713(Note 3)

69,150189,650

6,749

19,463

6,749

19,463(Note 4)

3,457

193,107337

19,800337

19,800(Note 5)112,280

305,387

12,07631,876

12,07631,876(Note 6)

5,614

311,001603

32,480603

32,480(Note 7)－

311,001－

32,480(62)

32,417(Note 8)－311,001－

32,480(87)

32,330(Note 9)(Note 1) The amount obtained by subtracting deduction from unitholders’ capital from unitholders’ capital is shown. The amount does not take into
account the change in unitholders’ capital in line with the implementation of distributions in excess of earnings of reserve for temporary
difference adjustments.
(Note 2) New investment units were issued through public offering with issue price of 110,000 yen (paid-in amount of 105,600 yen) per unit.
(Note 3) New investment units were issued through third-party allotment in line with public offering, with paid-in amount of 105,600 yen per unit.
(Note 4) New investment units were issued through public offering with issue price of 101,244 yen (paid-in amount of 97,609 yen) per unit.
(Note 5) New investment units were issued through third-party allotment in line with public offering, with paid-in amount of 97,609 yen per unit.
(Note 6) New investment units were issued through public offering with issue price of 111,442 yen (paid-in amount of 107,555 yen) per unit.
(Note 7) New investment units were issued through third-party allotment in line with public offering, with paid-in amount of 107,555 yen per unit.
(Note 8) HCM resolved at the board of directors’ meeting held on March 15, 2019, to set cash distribution in excess of earnings (return of capital that
falls under the category of distribution reducing unitholders’ capital for tax purposes) at 326 yen per unit as cash distribution for the 8th fiscal
period (fiscal period ended January 2019), and started the payout on April 19, 2019.
(Note 9) HCM resolved at the board of directors’ meeting held on September 13, 2019, to set cash distribution in excess of earnings (return of capitalthat falls under the category of distribution reducing unitholders’ capital for tax purposes) at 280 yen per unit as cash distribution for the 9th
fiscal period (fiscal period ended July 2019), and started the payout on October 18, 2019.

- 30 -

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.

3.

Reference Information(1) Information on Prices of Assets under Management, etc.
① Investment Status
Current fiscal period (as of January 31, 2020)
Asset type
Trust beneficiaryinterests in realestateTotal amount owned(millions of yen)
(Note 1)

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

40,341

59.1

Core Cities (Note 4)

5,227

7.7

Other area (Note 5)

1,730

2.5

Three Major
Metropolitan Areas(Note 3)

3,104

4.6

Core Cities (Note 4)－－

Asset use
Homes andfacilities forthe elderly

Area

Paid
nursinghomeServicedhousing forthe elderly

Three Major
Metropolitan Areas(Note 3)

Other area (Note 5)－－Group homes for the elderly withdementia－－

Other facilities for the elderly－－

50,40473.9

Three Major
Metropolitan Areas(Note 3)－－

Core Cities (Note 4)

2,062

3.0

Other area (Note 5)－－

Subtotal

2,062

3.0

Three Major
Metropolitan Areas(Note 3)

13,045

19.1

Core Cities (Note 4)－－

Other area (Note 5)－－

13,04519.1－－

65,511

96.0

Deposits and other assets

2,711

4.0

Total assets

68,223100.0

Total debt

34,988

51.3

Total net assets

33,234

48.7

Subtotal
Medical service-related
facilities, etc.

Multi-use
facility

Paid nursing
home,medicalservicerelated
facilities, etc.

Subtotal
Other
Total

(Note 1) “Total amount owned” is the carrying amount (in the case of trust beneficiary interests in real estate, the book value after depreciation andamortization).
(Note 2) Figures in “As a percentage of total assets” are rounded to one decimal place.
(Note 3) “Three Major Metropolitan Areas” refers to Tokyo Metropolitan Area (Tokyo, Kanagawa, Saitama, Chiba Prefectures), Kinki Areas (Osaka, Kyoto,
Hyogo Prefectures) and Chubu Area (Aichi Prefecture).
(Note 4) “Core Cities” refers to designated cities, prefectural capitals and regional core cities other than Three Metropolitan Areas. Regional core cities
refer to cities with a population of 200,000 or more.
(Note 5) “Other area” refers to areas other than Three Metropolitan Areas and Core Cities.

- 31 -

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.
② Investment Assets(a) Major Investment Securities
Not applicable.
(b) Investment Real Estate Properties
Not applicable.
(c) Other Major Investment Assets
a. Overview of Real Estate in Trust
Overview of trust beneficiary interests in real estate (hereinafter, “real estate in trust”) that HCM owns as of January 31,
2020, is as follows.
(i) Acquisition prices, etc. and shares of investment
Overview of trust beneficiary interests in real estate that HCM owns as of January 31, 2020, is as follows.
Type ofspecified
asset

Area

Acquisition price
Share of investment(millions of yen)(%) (Note 2)(Note 1)

Property name

Bonsejour Chitose-funabashi

824

1.3

822

974

Bonsejour Hino

724

1.1

722

818

Bonsejour Musashi-shinjo

582

0.9

581

643

Medical Rehabilitation Home
Bonsejour Hadanoshibusawa

728

1.1

717

850

ASHEIM Hikarigaoka

1,385

2.1

1,413

1,580

ASHEIM Bunkyohakusan

1,430

2.2

1,435

1,660

3,580

5.5

3,505

3,790

3,050

4.7

3,078

3,230

1,740

2.7

1,849

1,950

824

1.3

829

886

1,000

1.5

1,053

1,060

SOMPO CARE La vie Re
Machidaonoji
SOMPO CARE La vie Re
AzaminoTokyo
Metropolitan
area

Trust
beneficiaryinterests inreal estate

GOOD TIME HOME Fudo-mae
Bonsejour Yotsugi
Granda Tsuruma-Yamato
Smiling Home Medice Adachi

2,253

3.5

2,328

2,460

Hanakotoba Minami

1,071

1.7

1,101

1,190

Hanakotoba Miura

615

0.9

649

665

SOMPO CARE La vie Re HamaKawasaki

1,710

2.6

1,749

1,820

Hanakotoba Shin-Yokohama

2,071

3.2

2,135

2,240

Hanakotoba Shin-Yokohama II

375

0.6

386

401

Hanakotoba Odawara

880

1.4

911

948

1,825

2.8

1,879

1,970

26,66741.1

27,15029,135

1,950

3.0

1,952

2,140

1,930

3.0

1,911

2,170

1,200

1.8

1,192

1,340

Sunny Life Kita-Shinagawa
Subtotal
AQUAMARINE
Nishinomiyahama
SOMPO CARE Sompo no ie
Awajiekimae
SOMPO CARE Sompo no ie
Kobekamisawa
Kinki area

Medical Home Bonsejour Itami

514

0.8

513

557

Kobe Gakuentoshi Building(Hapine Kobe Gakuentoshi)

4,320

6.7

4,311

4,420

GreenLife Moriguchi

4,150

6.4

4,208

4,400

930

1.4

944

995

SHIP Senri Building

12,92019.9

13,045

14,300

Hapine Kobe Uozaki Nibankan

Chubu area

Current fiscal period(as of January 31, 2020)
Carrying amount
Period-end(millions of yen)
appraisal value(millions of yen)
(Note 3)(Note 4)

Subtotal

27,91443.0

28,08030,322

Medical Rehabilitation Home
Bonsejour Komaki

1,270

2.0

1,260

1,450

Subtotal

1,270

2.0

1,260

1,450

- 32 -

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.

Core cities

SAWAYAKA Tachibanakan

1,520

2.3

1,432

1,530

SAWAYAKA Mekarikan

1,380

2.1

1,305

1,410

770

1.2

785

865

Verde Minowa

1,620

2.5

1,702

1,700

Niigata Rehabilitation Hospital

2,060

3.2

2,062

2,260

Subtotal

7,350

11.3

7,289

7,765

AIKOEN ICHIBANKAN Building

SAWAYAKA Tagawakan
Other area

Verde Hotaka
Subtotal

Total (35 properties)

390

0.6

385

381

1,290

2.0

1,345

1,360

1,680

2.6

1,730

1,741

64,881

100.0

65,51170,413(Note 1) “Acquisition price” does not include acquisition-related expenses, property tax, urban planning tax, consumption tax and local
consumption tax.
(Note 2) “Share of investment” refers to the acquisition price of each property as a percentage of the total acquisition price, and the figures arerounded to one decimal place.
(Note 3) “Carrying amount” indicates book value after depreciation and amortization as of January 31, 2020.
(Note 4) “Period-end appraisal value” indicates amounts stated in the appraisal report with appraisal date of January 31, 2020, prepared by realestate appraisers of Japan Real Estate Institute, the Tanizawa Sogo Appraisal Co., Ltd., Rich Appraisal Institute Co., Ltd., Daiwa Real EstateAppraisal Co., Ltd. and JLL Morii Valuation & Advisory K.K., based on the Articles of Incorporation of HCM and the rules set by theInvestment Trusts Association, Japan.

- 33 -

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.
(ii) Buildings and leasing status
The annual rent and tenant leasehold/security deposits of each property are not disclosed as consent from the tenants
has not been obtained. The total annual rent from real estate in trust owned by HCM as of January 31, 2020, is 4,102
million yen (Note).
(Note) The amount is obtained by multiplying total of monthly rent in lease agreements effective as of January 31,
2020, by 12 (including tax, etc.), and is rounded down to the nearest million yen.
Property number

Property name

Structure/ No. offloors(Note 1)

Construction
completion(Note 2)

Leasable area(m2)
(Note 3)

Leased area(m2)
(Note 4)

Paid nursing

AQUAMARINE
Nishinomiyahama

RC/5F

May 18, 2007

5,274.54

5,274.542

100.0

Bonsejour Chitosefunabashi

RC/B1 6F

Mar. 8, 1988

2,342.17

2,342.171

100.0

Bonsejour Hino

RC/3F

May 2, 1990

1,984.17

1,984.17

1

100.0

RC/4F

Feb. 21, 1985

1,710.43

1,710.43

1

100.0

RC/5F

Jul. 17, 1991

3,435.79

3,435.79

1

100.0

SRC RC S/10F

Mar. 13, 1991

8,858.49

8,858.49

1

100.0

RC/3F

Mar. 6, 2006

3,628.60

3,628.60

1

100.0

RC/8F

Feb. 27, 2007

2,507.25

2,507.25

2

100.0

RC/B1 6F

Oct. 29, 2007

7,720.17

7,720.171

100.0

RC/B1 5F

Mar. 1, 2004

5,789.25

5,789.25

1

100.0

RC/B1 6F

Oct. 31, 2005

5,652.94

5,652.94

1

100.0

RC/4F

Nov. 15, 2005

4,720.46

4,720.46

1

100.0

RC/3F

Jan. 20, 2006

2,366.20

2,366.201

100.0

RC/B1 5F

Mar. 18, 1992

3,400.20

3,400.20

1

100.0

Bonsejour Yotsugi

RC/5F

Mar. 28, 1989

1,962.89

1,962.89

1

100.0

Medical Home
Bonsejour Itami

SRC/11F(exclusively
owned portion)

Mar. 3, 1989

2,129.87

2,129.87

1

100.0

RC/B1 9F

Jan. 7, 2009

12,636.48

12,636.48

1

100.0

S RC/9F

Sept. 6, 2006

8,356.85

8,356.85

1

100.0

S/B1 4F

Mar. 31, 2010

1,772.89

1,772.89

1

100.0

RC S/5F

Mar. 6, 1998

3,427.08

3,427.08

1

100.0

RC/4F

Nov. 16, 2005

3,870.98

3,870.98

2

100.0

S/5F

Feb. 4, 2010

4,311.20

4,311.20

4

100.0

RC/7F

Feb. 24, 2010

1,710.68

1,710.68

1

100.0

Hanakotoba Miura

RC/4F

Jun. 27, 2007

1,959.64

1,959.64

1

100.0

SOMPO CARE La
vie Re HamaKawasaki
Hanakotoba ShinYokohama
Hanakotoba ShinYokohama II
Hanakotoba
OdawaraRC/4F(exclusively
owned portion)

Mar. 8, 2007

4,060.21

4,060.21

5

100.0

RC/9F

Mar. 15, 2004

5,230.23

5,230.23

1

100.0

RC/B1 7F

Apr. 25, 2007

1,837.29

1,837.29

1

100.0

RC/4F

Sep. 16, 2009

2,203.42

2,203.42

1

100.0

①S/5F
②S RC/8F①Nov. 20, 2003
②Feb. 28, 1974

11,098.17

11,098.17

1

100.0

home-1
Paid nursing
home-2
Paid nursing
home-3
Paid nursing
home-4
Paid nursing
home-5
Paid nursing
home-6
Paid nursing
home-7
Paid nursing
home-8Paid nursing
home-9Paid nursing
home-10
Paid nursing
home-11
Paid nursing
home-12Paid nursing
home-13
Paid nursing
home-14
Paid nursing
home-15
Paid nursing
home-16
Paid nursing
home-17
Paid nursing
home-18
Paid nursing
home-19
Paid nursing
home-20
Paid nursing
home-21
Paid nursing
home-22
Paid nursing
home-23
Paid nursing
home-24
Paid nursing
home-25
Paid nursing
home-26
Paid nursing
home-27
Paid nursing
home-28
Paid nursing
home-29

BonsejourMusashi-shinjo
MedicalRehabilitation
Home Bonsejour
Hadanoshibusawa
MedicalRehabilitation
Home Bonsejour
KomakiASHEIM
Hikarigaoka
ASHEIM
Bunkyohakusan
SOMPO CARE La
vie ReMachidaonoji
SOMPO CARE La
vie Re Azamino
SAWAYAKA
Tachibanakan
SAWAYAKA
Mekarikan
SAWAYAKA
Tagawakan
GOOD TIME HOME
Fudo-mae

Kobe Gakuentoshi
Building (Hapine
Kobe Gakuentoshi)
GreenLife
Moriguchi
Hapine Kobe
Uozaki Nibankan
Granda TsurumaYamato
Smiling Home
Medice Adachi
AIKOENICHIBANKAN
Building
Hanakotoba
Minami

Verde Minowa- 34 -

No. of tenants
Occupancy rate(companies)(%) (Note 6)(Note 5)

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.
Property number
Paid nursing
home-30
Paid nursing
home-31

Property name
Verde Hotaka

Structure/ No. ofConstruction
floorscompletion(Note 1)
(Note 2)
①S SRC/5F①Sept. 29, 1982
②S/2F
②Jul. 1, 1989

Sunny Life KitaS/3F
Shinagawa
SOMPO CARE
Serviced housing
Sompo no ie
RC/12Ffor the elderly-1
Awajiekimae
SOMPO CARE
Serviced housing
Sompo no ie
S/9F
for the elderly-2
Kobekamisawa
Medical service- Niigata①RC/3F
related facilities, Rehabilitation②S/5F
etc.-1
HospitalComplex of paid
nursing homes,
medical service- SHIP Senri Building
RC/B1 11F
related facilities,
etc.-1
Total―(Note 1)

(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)

Leasable area(m2)
(Note 3)

Leased area(m2)
(Note 4)

No. of tenants
Occupancy rate(companies)(%) (Note 6)(Note 5)

6,352.86

6,352.861

100.0

Sept. 20, 218

2,135.54

2,135.541

100.0

Jun. 12, 2009

5,745.15

5,745.15

1

100.0

Jun. 11, 2009

4,058.35

4,058.35

1100.0①Apr. 20, 1990
②Feb. 28, 2001

13,476.55

13,476.55

1

100.0

Sept. 5, 2008

24,813.85

24,813.85

1

100.0

―

182,540.84

182,540.84

45

100.0

“Structure/ No. of floors” indicates information provided in the real estate registry of the building of each owned asset. “S” refers
to steel structure, “RC” refers to reinforced concrete structure, “SRC” refers to steel-reinforced concrete structure, “B” refers tobasement floor and “F” refers to floors above ground.
“Construction completion” indicates date of new construction provided in the real estate registry of the building of each owned
asset.
“Leasable area” indicates figures based on the lease agreement of each building.
“Leased area” indicates the areas out of the leasable area for which actual lease agreements have been concluded and are leased.
“No. of tenants” indicates the number of tenants of each building based on the lease agreements. For the section of healthcare
facilities in which the trustee of each owned asset and HCM conclude a lease agreement (master lease agreement) with an aim
to have HCM sublease to the master lease company (section of paid nursing home with nursing care for Smiling Home Medice
Adachi), the master lease company (operator) is counted as a tenant, and accordingly indicated as the number of tenants; while
for the properties subject to pass-through-type master lease agreement where rents from end tenants are received intact, inprinciple, the total number of end tenants is indicated as the number of tenants. However, for the sections that are not subject
to the lease agreement (master lease agreement) between the trustee and HCM, the number of lessees leasing a building fromthe trustee is counted as the number of tenants and indicated accordingly.
”Occupancy rate” indicates the leased area as a percentage of the leasable area of each owned asset as of January 31, 2020, andis rounded to one decimal place.

- 35 -

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.
(iii) Overview of Homes and Facilities for the Elderly
Property
number

Paid nursing
home-1
Paid nursing
home-2
Paid nursing
home-3
Paid nursing
home-4
Paid nursing
home-5
Paid nursing
home-6
Paid nursing
home-7
Paid nursing
home-8Paid nursing
home-9Paid nursing
home-10
Paid nursing
home-11
Paid nursing
home-12Paid nursing
home-13
Paid nursing
home-14
Paid nursing
home-15
Paid nursing
home-16
Paid nursing
home-17
Paid nursing
home-18
Paid nursing
home-19
Paid nursing
home-20
Paid nursing
home-21
Paid nursing
home-22
Paid nursing
home-23
Paid nursing
home-24
Paid nursing
home-25
Paid nursing
home-26
Paid nursing
home-27
Paid nursing
home-28
Paid nursing
home-29
Paid nursing
home-30
Paid nursing
home-31

Property name

AQUAMARINE
Nishinomiyahama
Bonsejour Chitosefunabashi
Bonsejour Hino
Bonsejour Musashishinjo
MedicalRehabilitation Home
Bonsejour
Hadanoshibusawa
MedicalRehabilitation Home
Bonsejour Komaki

Type of facility

Operator

Paid nursing home

GREEN LIFE Co., Ltd.

Paid nursing home
Paid nursing home
Paid nursing home

Occupancy
rate (%)(Note 2)

90

100

100

100.0

42

47

41

87.2

56

58

57

98.3

46

49

47

95.9

Benesse Style Care
Co., Ltd.

100

101

96

95.0

October 1,
2019

Residential typepaid nursing home

Benesse Style Care
Co., Ltd.

124

165

126

76.4

October 1,
2019

AS PARTNERS Co., Ltd.

83

89

81

91.0

Paid nursing home

AS PARTNERS Co., Ltd.

50

52

48

92.3

Paid nursing home

Sompo Care Inc.

163

169

118

69.8

Paid nursing home

Sompo Care Inc.

145

145

98

67.6

104

104

104

100.0

95

95

87

91.6

60

60

60

100.0

61

67

58

86.6

61

65

60

92.3

62

64

60

93.8

Paid nursing home
Paid nursing home
Paid nursing home
Paid nursing home

Sawayaka Club Co.,Ltd.
Sawayaka Club Co.,Ltd.
Sawayaka Club Co.,
Ltd.
JAPAN LIFEDESIGN Inc.

Bonsejour Yotsugi

Paid nursing home

Medical Home
Bonsejour Itami
Kobe Gakuentoshi
Building(Hapine Kobe
Gakuentoshi)

Residential typepaid nursing home

Benesse Style Care
Co., Ltd.
Benesse Style Care
Co., Ltd.

Paid nursing home

GREEN LIFE Co., Ltd.

131

138

129

93.5

GreenLife Moriguchi Paid nursing home

GREEN LIFE Co., Ltd.

155

189

189

100.0

GREEN LIFE Co., Ltd.

47

47

47

100.0

73

90

78

86.7

82

82

69

84.1

Medical Corporation
AIKOEN

90

90

90

100.0

Hanakotoba Minami Paid nursing home

Proud Life Inc.

51

51

45

88.2

Hanakotoba Miura

Paid nursing home

Proud Life Inc.

53

54

50

92.6

Paid nursing home

Sompo Care Inc.

58

58

44

75.9

Paid nursing home

Proud Life Inc.

136

136

132

97.1

Paid nursing home

Proud Life Inc.

29

30

29

96.7

Paid nursing home

Proud Life Inc.

60

65

64

98.5

Verde Minowa

Paid nursing home

Verde Corporation

174

206

194

94.2

Verde Hotaka

Paid nursing home

Verde Corporation

121

174

172

98.9

Sunny Life KitaShinagawa

Paid nursing home

Kawashima
Corporation

66

66

58

87.9

Hapine Kobe Uozaki
Nibankan
Granda TsurumaYamato
Smiling Home
Medice Adachi
AIKOENICHIBANKAN
Building

SOMPO CARE La vie
Re Hama-Kawasaki
Hanakotoba ShinYokohama
Hanakotoba ShinYokohama II
Hanakotoba
OdawaraPreparation
date of Property
DisclosureStatement ofimportantmatters(Note 3)
July 1,
2019
October 1,
2019
November 1,
2019
October 1,
2019

Paid nursing home

ASHEIM Hikarigaoka Paid nursing home
ASHEIM
Bunkyohakusan
SOMPO CARE La vie
Re Machidaonoji
SOMPO CARE La vie
Re Azamino
SAWAYAKA
Tachibanakan
SAWAYAKA
Mekarikan
SAWAYAKA
Tagawakan
GOOD TIME HOME
Fudo-mae

Benesse Style Care
Co., Ltd.
Benesse Style Care
Co., Ltd.
Benesse Style Care
Co., Ltd.

Capacity(persons)(Note 1)

No. ofresidents(persons)(Note 1)

No. ofrooms(rooms)(Note 1)

Paid nursing home
Paid nursing home
Paid nursing home
Paid nursing home

Benesse Style Care
Co., Ltd.
GREEN LIFE HIGASHINIHON Co., Ltd.

- 36 -

October 1,
2019
October 1,
2019
October 1,
2019
October 1,
2019
October 1,
2019
October 1,
2019
October 1,
2019
November 1,
2019
October 1,
2019
November 1,
2019
July 1,
2019
October 1,
2019
July 1,
2019
November 1,
2019
October 1,
2019
November 1,
2019
November 1,
2019
November 1,
2019
July 1,
2019
November 1,
2019
November 1,
2019
November 1,
2019
July 1,
2019
July 1,
2019
October 1,
2019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.

Property
numberServicedhousing forthe elderly-1
Servicedhousing forthe elderly-2
Complex of
paid nursing
homes,
medicalservice-related
facilities, etc.-1

Property name

SOMPO CARE
Sompo no ie
Awajiekimae
SOMPO CARE
Sompo no ie
Kobekamisawa
SHIP Senri Building(Note 4)Total

Type of facility

Operator

No. ofrooms(rooms)(Note 1)

Capacity(persons)(Note 1)

No. ofresidents(persons)(Note 1)

Occupancy
rate (%)(Note 2)

Preparation
date of Property
DisclosureStatement ofimportantmatters(Note 3)Serviced housing
for the elderly

Sompo Care Inc.

137

137

135

98.5

November 1,
2019

Serviced housing
for the elderly

Sompo Care Inc.

85

85

79

92.9

November 1,
2019

Hospital, paid
nursing home-

July 1,
2019
GREEN LIFE Co., Ltd.

181

200

200

100.0

-

3,071

3,328

3,045

91.5

-

(Note 1) “No. of rooms,” “Capacity” and “No. of residents” indicate figures based on figures stated in Property Disclosure Statement of Important Matters(hereinafter the “Property Disclosure Statement of Important Matters”) of the paid nursing home provided by the operators.
(Note 2) “Occupancy rate” indicates the occupancy rate obtained by dividing the number of residents by capacity, rounded to one decimal place.
(Note 3) “Preparation date of Property Disclosure Statement of Important Matters” indicates the date of application, reference date or preparation datestated on the document.
(Note 4) SHIP Senri Building is a property with a hospital and paid nursing home, and the above table indicates figures for the paid nursing home.

- 37 -

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.
(iv) Overview of Medical Service-Related Facilities, etc.
Property
Medical service-related facilities, etc.-1
number
Property name

Niigata Rehabilitation Hospital

Operator

Medical Corporation AIKOKAI

Date ofestablishment

Type of facility

Hospital

Authorized
number of beds

Subject of
medicaltreatment

Rehabilitation, orthopedic surgery,internal medicine, neurology, dental &dental and oral surgery

June 1990(established as Oyama Hospital, the precursor)

168 beds (general beds: 108 beds/convalescentstage beds: 60 beds)
Training facility certified by the Japanese
Association of Rehabilitation Medicine
Facility certification
Training facility certified by Japan Society of
Ultrasonics in Medicine specialists

2nd floor (48 beds) Hospitalization fee of hospital ward for comprehensive community care 1
3rd floor (60 beds) Basic hospitalization fee for general hospital ward (local general hospitalization fee 1)(Hospitalization fee)
Medical management fee for comprehensive community care 1
4th floor (60 beds) Hospitalization fee of hospital ward for rehabilitation at recovery stage 1
Facility criteria

External
evaluation

Hospital certified by Japan Council for Quality Health Care. (Certification number: JC1424-3) 3rdG:Ver.1.1
Added function Rehabilitation function (Certification number: JC1424-R2) Ver.3.0

Property
numberComplex of paid nursing homes, medical service-related facilities, etc.-1

Property nameSHIP Senri Building (Senri-Chuo Hospital) (Note)

Operator

Medical Corporation Kyowakai

Date ofestablishment

October 2008

Type of facility

Hospital

Authorized
number of beds

400
(general beds: 350/convalescent-sage beds: 50)

Subject of
medicaltreatment

Facility criteria

Rehabilitation, orthopedics,
Training facilities certified by the Japaneseneurosurgery, surgery, internal medicine Facility certification
Association of Rehabilitation Medicine
and neurology
West 6th floor (25 beds) Palliative care hospital ward
East 6th floor (25 beds) Facilities for the disabled,
hospitalization fee 2
etc. 2 10:1 Basic hospitalization fee
West 5th floor (50 beds) Facilities for the disabled,
etc. 2 10:1 Basic hospitalization fee

East 5th floor (50 beds) Recuperation ward basic
hospitalization fee 1

West 4th floor (50 beds) Facilities for the disabled,
10:1 Basic hospitalization fee

East 4th floor (50 beds) Facilities for the disabled,
etc. 2 10:1 Basic hospitalization fee

West 3rd floor (50 beds) Facilities for the disabled,
etc. 2 10:1 Basic hospitalization fee

East 3rd floor (50 beds) Recovery phaserehabilitation ward hospitalization fee 1(Hospitalization fee) etc. 2

West 2nd floor (50 beds) Recovery phase rehabilitation
ward hospitalization fee 1
External
evaluation―(Note) SHIP Senri Building is a property with a hospital and paid nursing home, and the above table describes facility overview for the hospital.

- 38 -

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.
(v) Earnings Performance

Property name
AQUAMARINE
Nishinomiyahama
Bonsejour
Chitose-funabashi
Bonsejour Hino
BonsejourMusashi-shinjo
MedicalRehabilitation
Home Bonsejour
Hadanoshibusawa
MedicalRehabilitation
Home Bonsejour
KomakiASHEIM
Hikarigaoka
ASHEIM
Bunkyohakusan
SOMPO CARE La
vie ReMachidaonoji
SOMPO CARE La
vie Re Azamino
SAWAYAKA
Tachibanakan
SAWAYAKA
Mekarikan
SAWAYAKA
Tagawakan
GOOD TIMEHOME Fudo-mae
Bonsejour Yotsugi
Medical Home
Bonsejour Itami
Kobe Gakuentoshi
Building(Hapine Kobe
Gakuentoshi)
GreenLife
Moriguchi
Hapine Kobe
Uozaki Nibankan
Granda TsurumaYamato
Smiling Home
Medice Adachi
AIKOENICHIBANKAN
Building
Hanakotoba
Minami
Hanakotoba
Miura
SOMPO CARE La
vie Re HamaKawasaki
Hanakotoba ShinYokohama
Hanakotoba ShinYokohama II
Hanakotoba
OdawaraVerde Minowa
Verde Hotaka
Sunny Life KitaShinagawa
SOMPO CARE
Sompo no ie
Awajiekimae

Current fiscal period (from August 1, 2019 to January 31, 2020)
Real estate lease business revenue
Real estate lease business expenses
Rent
revenue

Not disclosed(Note 2)

(Unit: thousands of yen)

Property Outsourcing Insurance Repair
Depreciation Othertax
expenses expenses expenses

Otherrevenue

NOI(Note 3)

24,792

4,281

2,100

2,598

206

15,205400

57,756

5,577

1,794

224

-

104

3,048

404

21,363

5,064

1,240

213

-

79

3,130

400

19,467

4,097

1,012

167

-

70

2,447

400

16,128

8,398

1,823

213

-

143

5,817

400

21,077

14,125

4,566

201

-

330

8,627

400

39,521

14,066

3,687

384

-

150

9,443

400

41,313

12,025

2,502

384

-

112

8,626

400

38,78844,505

5,974

780

251

334

36,765400

97,25934,262

4,795

780

1,921

244

26,121

400

77,05826,261

2,660

1,140

-

287

21,773400

47,40925,648

2,976

1,140

-

183

20,949400

43,551

8,366

1,120

1,140

-

86

5,620

400

12,94014,750

3,092

600

1,553

157

8,947

400

45,196

4,946

968

223

-

68

3,286

400

20,708

6,512

1,376

371

-

104

4,260

400

13,931

51,681

9,599

900

630

538

39,614400

113,432

38,386

6,956

1,372

5,396

352

23,908400

105,521

9,529

1,401

1,200

-

84

6,444

400

24,414

7,289

1,938

618

-

141

4,191

400

27,072

13,663

3,231

540

40

164

9,287

400

60,672

8,477

2,562

780

-

104

4,630

400

22,813

6,916

1,543

600

310

71

3,991

400

27,675

6,937

1,535

600

282

85

4,034

400

17,50515,152

-

3,147

472

191

10,940400

46,081

10,296

-

900

347

231

8,418

400

60,033

2,939

-

600

-

85

1,853

400

13,726

6,458

-

600

95

92

5,271

400

26,412

20,35821,976

-

1,020
1,020

512
120

473
231

17,953
19,701

400
902

61,52147,831

7,377

-

600

-

110

6,265

400

48,38828,605

4,930

510

1,575

255

20,934400

56,787- 39 -

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.

Property name
SOMPO CARE
Sompo no ie
Kobekamisawa
NiigataRehabilitation
Hospital
SHIP Senri
Building
Total

Current fiscal period (from August 1, 2019 to January 31, 2020)
Real estate lease business revenue
Real estate lease business expenses
Rent
revenue

Not disclosed(Note 2)

2,013,274

2,004,334

Property Outsourcing Insurance Repair
Depreciation Othertax
expenses expenses expenses

Otherrevenue

8,939

NOI(Note 3)

16,730

2,910

510

140

161

12,608400

36,16826,558

9,856

1,030

-

360

14,811500

78,133

48,393

397

1,500

-

1,098

44,997400

368,405

601,131

90,736

28,112

16,2447,500

443,930 14,607

1,856,072(Note 1) All figures indicated are rounded down to the nearest thousand yen.
(Note 2) “Real estate lease business revenue,” “rent revenue” and “other revenue” of each property are not disclosed as consent for disclosure has notbeen obtained from tenants. The total is the sum of amounts received as rent for the current fiscal period based on the lease agreements.
(Note 3) “NOI” = Real estate lease business revenue – Real estate lease business expenses + depreciation and amortization.

- 40 -

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.
(vi) Summary of Appraisal Report
HCM has obtained an appraisal report for each real estate in trust from one of the following: Rich Appraisal Institute Co.,
Ltd., The Tanizawa Sogo Appraisal Co., Ltd., Japan Real Estate Institute, Daiwa Real Estate Appraisal Co., Ltd., JLL Morii
Valuation & Advisory K.K.
The following is a summary of the appraisal report for each real estate in trust acquired by HCM with January 31, 2020, as
the appraisal date. The real estate appraisal report only states judgments and opinions of the appraiser as of a specificpoint in time and does not guarantee the appropriateness, accuracy and feasibility of transactions at the presented
appraisal value. Rich Appraisal Institute Co., Ltd., The Tanizawa Sogo Appraisal Co., Ltd., Japan Real Estate Institute, Daiwa
Real Estate Appraisal Co., Ltd. and JLL Morii Valuation & Advisory K.K., which appraised the properties, have no special
interest in HCM.

Property
number

Paid nursing
home-1

Paid nursing
home-2

Paid nursing
home-3

Paid nursing
home-4

Paid nursing
home-5

Paid nursing
home-6
Paid nursing
home-7
Paid nursing
home-8Paid nursing
home-9Paid nursing
home-10
Paid nursing
home-11
Paid nursing
home-12Paid nursing
home-13
Paid nursing
home-14
Paid nursing
home-15

Property nameAppraisalcompanyRich
AQUAMARINE
Appraisal
Nishinomiyahama Institute Co.,Ltd.
The
Tanizawa
BonsejourSogo
Chitose-funabashi
Appraisal
Co., Ltd.
The
Tanizawa
Sogo
Bonsejour Hino
Appraisal
Co., Ltd.
The
Tanizawa
Bonsejour
Sogo
Musashi-shinjo
Appraisal
Co., Ltd.
The
MedicalTanizawa
Rehabilitation
Sogo
Home Bonsejour
Appraisal
Hadanoshibusawa
Co., Ltd.
The
MedicalTanizawa
Rehabilitation
Sogo
Home Bonsejour
Appraisal
KomakiCo., Ltd.
Japan RealASHEIM
EstateHikarigaoka
InstituteJapan RealASHEIM
EstateBunkyohakusan
Institute
SOMPO CARE La Japan Realvie ReEstateMachidaonoji
InstituteJapan RealSOMPO CARE La
Estatevie Re Azamino
InstituteJapan RealSAWAYAKA
EstateTachibanakan
InstituteJapan RealSAWAYAKA
EstateMekarikan
InstituteJapan RealSAWAYAKA
EstateTagawakan
InstituteJapan RealGOOD TIME
EstateHOME Fudo-mae
Institute
The
Tanizawa
Bonsejour Yotsugi Sogo
Appraisal
Co., Ltd.

Appraisalvalue(millions ofyen)

Direct capitalization
methodSummary of Appraisal Report (Note 1)
DCF method

Appraisal
Appraisal
NOI yield
Indicated
Indicated
Integrated
NOI
Discount Terminal
(%)
value
value
Capitalization value
rate (%) capitalization(millions of(Note 4)(millions of(millions ofrate (%) (millions of(Note 2) rate (%)
yen)
yen)
yen)
yen)
(Note 3)

2,140

2,160

5.3

2,130

5.0

5.5

1,680

119

6.1

974

993

4.4

966

4.5

4.6

888

49

5.9

818

832

4.8

812

4.9

5.0

728

43

6.0

643

653

5.1

638

5.2

5.3

611

36

6.2

850

864

5.0

844

5.1

5.2

736

47

6.4

1,450

1,460

5.5

1,440

5.6

5.7

1,250

92

7.3

1,580

1,580

4.8

1,570

4.6

5.0

1,630

76

5.5

1,660

1,670

4.4

1,640

4.2

4.6

1,660

74

5.1

3,790

3,830

4.9

3,740

4.7

5.1

2,970

193

5.3

3,230

3,270

4.6

3,190

4.4

4.8

2,240

156

5.1

1,530

1,540

5.6

1,510

5.4

5.8

1,300

93

6.1

1,410

1,420

5.7

1,390

5.5

5.9

830

85

6.2

381

383

5.8

378

5.6

6.0

399

25

6.5

1,950

1,970

4.4

1,920

4.2

4.6

1,930

92

5.2

886

902

4.7

879

4.8

4.9

803

48

5.8

- 41 -

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.

Property
number

Property nameAppraisalcompanyThe
Tanizawa
Sogo
Appraisal
Co., Ltd.
Kobe Gakuentoshi Daiwa Real
Paid nursing Building
Estatehome-17(Hapine Kobe
Appraisal
Gakuentoshi)Co., Ltd.
Daiwa Real
Paid nursing GreenLife
Estatehome-18
Moriguchi
Appraisal
Co., Ltd.
Daiwa Real
Paid nursing Hapine Kobe
Estatehome-19
Uozaki Nibankan Appraisal
Co., Ltd.
The
Tanizawa
Paid nursing Granda TsurumaSogo
home-20
YamatoAppraisal
Co., Ltd.
The
Tanizawa
Paid nursing Smiling Home
Sogo
home-21
Medice Adachi
Appraisal
Co., Ltd.
The
AIKOEN
Tanizawa
Paid nursing
ICHIBANKAN
Sogohome-22
Building
Appraisal
Co., Ltd.
Japan Real
Paid nursing Hanakotoba
Estatehome-23
Minami
Institute
The
Tanizawa
Paid nursing Hanakotoba
Sogohome-24
Miura
Appraisal
Co., Ltd.
Paid nursing SOMPO CARE La JLL Morii
home-25
vie Re HamaValuation &KawasakiAdvisory K.K.
Japan Real
Paid nursing Hanakotoba ShinEstatehome-26
Yokohama
InstituteJapan Real
Paid nursing Hanakotoba ShinEstatehome-27
Yokohama II
Institute
The
Tanizawa
Paid nursing Hanakotoba
Sogohome-28
OdawaraAppraisal
Co., Ltd.
Daiwa Real
Paid nursing
EstateVerde Minowa
home-29
Appraisal
Co., Ltd.
Daiwa Real
Paid nursing
EstateVerde Hotaka
home-30
Appraisal
Co., Ltd.
Daiwa Real
Paid nursing Sunny Life KitaEstatehome-31
ShinagawaAppraisal
Co., Ltd.
Serviced
SOMPO CARE
Japan Realhousing for the Sompo no ie
Estateelderly-1
Awajiekimae
Institute
Paid nursing
home-16

Medical Home
Bonsejour Itami

Appraisalvalue(millions ofyen)

Direct capitalization
methodSummary of Appraisal Report (Note 1)
DCF method

Appraisal
Appraisal
NOI yield
Indicated
Indicated
Integrated
NOI
Discount Terminal
(%)
value
value
Capitalization value
rate (%) capitalization(millions of(Note 4)(millions of(millions ofrate (%) (millions of(Note 2) rate (%)
yen)
yen)
yen)
yen)
(Note 3)

557

566

5.1

553

5.2

5.3

487

36

7.1

4,420

4,470

4.7

4,400

4.5

4.9

3,090

225

5.2

4,400

4,460

4.6

4,380

4.4

4.8

3,100

220

5.3

995

1,010

4.6

989

4.4

4.8

648

48

5.2

1,060

1,070

4.7

1,050

4.8

4.9

972

53

5.3

2,460

2,490

4.7

2,450

4.8

4.9

2,420

120

5.3

865

866

5.2

864

5.3

5.4

820

45

5.9

1,190

1,200

4.6

1,170

4.4

4.8

692

56

5.2

665

671

4.9

662

5.0

5.1

559

35

5.7

1,820

1,850

4.6

1,790

4.4

4.8

1,000

90

5.2

2,240

2,260

4.5

2,210

4.3

4.7

1,710

109

5.2

401

403

4.8

399

4.6

5.0

413

22

5.8

948

960

4.9

943

4.8～
5.0

5.1

877

49

5.6

1,700

1,710

5.0

1,690

4.8

5.2

1,200

109

6.7

1,360

1,370

5.6

1,350

5.4

5.8

371

90

7.0

1,970

2,000

4.5

1,960

4.3

4.7

1,930

91

4.9

2,170

2,190

5.2

2,150

5.0

5.4

1,610

116

6.0

- 42 -

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.

Property
number

Property nameAppraisalcompany

Appraisalvalue(millions ofyen)

Direct capitalization
methodSummary of Appraisal Report (Note 1)
DCF method

Appraisal
Appraisal
NOI yield
Indicated
Indicated
Integrated
NOI
Discount Terminal
(%)
value
value
Capitalization value
rate (%) capitalization(millions of(Note 4)(millions of(millions ofrate (%) (millions of(Note 2) rate (%)
yen)
yen)
yen)
yen)
(Note 3)Serviced
SOMPO CARE
Japan Realhousing for the Sompo no ie
Estate
1,340
1,350
5.2
1,320
5.0
5.4
1,030
72
6.0
elderly-2
Kobekamisawa
Institute
MedicalNiigata
Japan Realservice-related Rehabilitation
Estate
2,260
2,270
6.6
2,250
6.4
6.8
1,060
152
7.4
facilities, etc.-1 Hospital
InstituteComplex of paidThenursing homes,
Tanizawa
4.5～
medical service- SHIP Senri Building Sogo
4.7
16,600680
5.2
14,30014,4004.5
14,200
4.6
Appraisal
related facilities,
etc.-1
Co., Ltd.
Total
70,41371,093―69,827――60,2443,661
5.6(Note 1) Figures are based on appraisal reports with appraisal date of January 31, 2020.
(Note 2) “Discount rate” represents a yield used to discount net cash flow during an analysis period and terminal value at the end of an analysis period back topresent value, and figures used by the respective appraisal organization are shown. For Hanakotoba Odawara, the rate is 4.8% for fiscal 2019 to fiscal
2021 and 5.0% for fiscal 2022 onward; and for SHIP Senri Building, the rate is 4.5% for fiscal 2019 to fiscal 2022 and 4.6% for fiscal 2023 onward.
(Note 3) “Appraisal NOI” indicates net operating income obtained by direct capitalization method stated in real estate appraisal report with January 31, 2020,as the appraisal date and is rounded down to the nearest million yen. In addition, NOI is revenue before deducting depreciation and differs from NCF(net cash flow), which is the amount calculated by adding the gain on investment from security deposits, etc. to NOI and deducting capital expenditures.
The same shall apply hereinafter in this document.
(Note 4) “Appraisal NOI yield” is calculated by the formula below and rounded down to one decimal place. In the column of total appraisal NOI yield, theaverage appraisal NOI yield, which is calculated by dividing the total appraisal NOI of the respective real estate in trust by the total acquisition price,
is shown (rounded down to one decimal place).
Appraisal NOI yield = Appraisal NOI of the respective real estate in trust / Acquisition price of the respective real estate in trust- 43 -

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.
(vii) Information of Major Tenants“Major tenants” refers to tenants whose leased areas occupy 10% or more of total leased area of the entire portfolio at theend of the current fiscal period (on January 31, 2020). The annual rent and tenant leasehold and security deposits of each
property are not disclosed as consent from the tenants has not been obtained.
Property nameLeasedarea (m2)(Note 1)

Share(%)
(Note 2)AQUAMARINE Nishinomiyahama

5,189.42

2.8

May 31, 2037

Kobe Gakuentoshi Building(Hapine Kobe Gakuentoshi)

12,636.48

6.9

March 28, 2041

GreenLife Moriguchi

8,356.85

4.6

October 19,
2039

Hapine Kobe Uozaki Nibankan

1,772.89

1.0

March 28, 2041

27,955.64

15.3-

Tenant nameGREEN LIFE Co.,
Ltd.

Total

Sompo Care Inc.

Benesse Style Care
Co., Ltd.

SOMPO CARE La vie Re
Machidaonoji

7,720.17

4.2

October 31,
2027

SOMPO CARE La vie Re Azamino

5,789.25

3.2

June 27, 2027

SOMPO CARE La vie Re HamaKawasaki

2,535.29

1.4

December 31,
2027

5,745.15

3.1

July 31, 2034

SOMPO CARE Sompo no ie
Awajiekimae
SOMPO CARE Sompo no ie
Kobekamisawa
Total

4,058.35

2.2

July 31, 2034

25,848.21

14.2-

Bonsejour Chitose-funabashi

2,342.17

1.3

May 24, 2026

Bonsejour Hino

1,984.17

1.1

May 24, 2026

Bonsejour Musashi-shinjo

1,710.43

0.9

November 23,
2026

Medical Rehabilitation Home
Bonsejour Hadanoshibusawa

3,435.79

1.9

May 21, 2027

Medical Rehabilitation Home
Bonsejour Komaki

8,858.49

4.9

May 21, 2027

Bonsejour Yotsugi

1,962.89

1.1

January 5, 2026

Medical Home Bonsejour Itami

2,129.87

1.2

May 21, 2027

Granda Tsuruma-Yamato

3,427.08

1.9

March 31, 2022

25,850.89

14.2

Total
Ship Healthcare
Estate Inc.

Contract
expiration date
(Note 3)

SHIP Senri Building

24,813.85

13.6

Total

24,813.85

13.6

October 27,
2038-

Contract renewal method, etc.
(Note 4)
Cancellation not allowed
through to the end of thecontract
Midterm cancellation notallowed for 9 years from thestart date of leasing.
Cancellation allowed if
requested 6 months prior or
earlier.
Midterm cancellation notallowed for 9 years from thestart date of leasing.
Midterm cancellation notallowed for 15 years from thestart date of leasing.
Midterm cancellation notallowed for 15 years from thestart date of leasing.
Midterm cancellation notallowed for 15 years from thestart date of leasing.
Cancellation allowed if
requested 1 year prior or earlier.
Cancellation allowed if
requested 1 year prior or earlier.
Cancellation not allowed
through to the end of thecontract
Cancellation not allowed
through to the end of thecontract
Cancellation not allowed
through to the end of thecontract
Cancellation not allowed
through to the end of thecontract
Cancellation not allowed
through to the end of thecontract
Cancellation not allowed
through to the end of thecontract
Cancellation not allowed
through to the end of thecontract
Cancellation allowed if
requested 6 months prior or
earlier.
Midterm cancellation notallowed for 15 years from thestart date of leasing.
-(Note 1) “Leased area” indicates the area stated in lease agreements concluded with each tenant as of January 31, 2020. When a master leaseagreement has been concluded, the area for which a lease agreement has been concluded with end tenants and actually leased is shownfor properties for which a pass-through master lease agreement under which rent from end tenants is received as is, in principle, isconcluded.
(Note 2) “Share” indicates the area of each property leased to its major tenants as a percentage of the total leased area of the properties owned
by HCM as of January 31, 2020, and is rounded to one decimal place.
(Note 3) “Contract expiration date” indicates the contract expiration date stated in the lease agreement.
(Note 4) “Contract renewal method, etc.” indicates the details of contract renewal method, etc. stated in the lease agreement.

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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.
(viii) Portfolio Overview (Portfolio Diversification)(a) By Type

Brand
Paid nursing homes

Number ofproperties

Acquisition price(millions of yen)

Period-end
appraisal value(millions of yen)
(Note 1)

Share (%)
(Note 2)

31

46,771

50,343

72.1

2

3,130

3,510

4.8

1

2,060

2,260

3.2

1

12,92014,30019.9

3564,88170,413100.0

Serviced housing for theelderly
Medical service-related
facilities, etc.
Complex of paid nursing
homes, medical servicerelated facilities, etc.
Total

(Note 1) “Period-end appraisal value” indicates amounts stated in the appraisal report with appraisal date of January 31, 2020, prepared by realestate appraisers of Japan Real Estate Institute, the Tanizawa Sogo Appraisal Co., Ltd., Rich Appraisal Institute Co., Ltd., Daiwa Real EstateAppraisal Co., Ltd. and JLL Morii Valuation & Advisory K.K., based on the Articles of Incorporation of HCM and the rules set by theInvestment Trusts Association, Japan. The same shall apply hereinafter.
(Note 2) “Share” refers to the percentage of the total acquisition price, and the figures are rounded to one decimal place. The same shall apply
hereinafter.

By Area(b)Classification/region
Three Major Metropolitan

Number ofproperties

Acquisition price(millions of yen)

Period-end
appraisal value(millions of yen)

Share (%)

28

55,85160,907

86.1

Tokyo Metropolitan
Area

19

26,667

29,135

41.1

Kinki Area

8

27,91430,32243.0

Chubu Area

1

1,270

1,450

2.0

Core Cities

5

7,350

7,765

11.3

Other Areas

2

1,680

1,741

2.6

35

64,88170,413

100.0

Areas

Total

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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.
(c) By the Number of Rooms
The table below shows diversification in accordance with the number of rooms at homes and facilities for the elderly
concerning assets which fall under the category of homes and facilities for the elderly (excluding medical servicerelated facilities, etc.) among assets held.

11

25,529Period-end
appraisal value(millions of yen)
27,14018

21,661

23,70043.4

Less than 50 rooms

4

2,711

3,013

5.4

Total

33

49,90153,853100.0

Number of rooms

Number ofproperties

100 rooms or more
50 rooms or more, but lessthan 100 rooms(Note)

Acquisition price(millions of yen)

Share (%)
51.2

Well House Senri-Chuo (No. of rooms: 181) operated by GREEN LIFE Co., Ltd., a tenant at SHIP Senri Building (paid nursing home section),
which is a complex of paid nursing home, medical service-related facilities, etc., is not included in the above table since it is difficult to
calculate the acquisition prices and period-end appraisal values separately for the paid nursing home section and the medical servicerelated facilities, etc. section.

(2) Status of Capital Expenditures
a. Schedule of Capital Expenditures
Of capital expenditures associated with repair work, etc. currently planned for assets owned by HCM as of January
31, 2020, the following are the major estimated amounts. The estimated construction costs include the portion
separately charged to expenses in accounting.

Name of real estate, etc.
Kobe Gakuentoshi Building(Hapine Kobe Gakuentoshi)(Kobe-shi, Hyogo)
Niigata Rehabilitation Hospital(Niigata-shi, Niigata)
Hanakotoba Shin-Yokohama(Yokohama-shi, Kanagawa)b.

PurposeRenewal of LED lighting
Renovation of exterior walls
Renovation of rooftop
waterproof

Scheduled period

From: May 2020
To: June 2020
From: April 2020
To: June 2020
From: April 2020
To: June 2020

Estimated construction costs(thousands of yen)
Payment
Total
Total
duringamountamountperiod already paid
30,000--22,000--17,000--Capital Expenditures During Period
Of construction work falling under the category of capital expenditures conducted in the current fiscal period for
assets owned by HCM as of January 31, 2020, the following are the major amounts. The capital expenditures in thecurrent fiscal period amounted to 188,115 thousand yen and repair expenses separately charged to expenses
amounted to 16,244 thousand yen for a combined total of 204,360 thousand yen of construction work
implemented.
Name of real estate, etc.

PurposeNiigata Rehabilitation Hospital(Niigata-shi, Niigata)Renovation of rooftop
waterproof

ASHEIM Hikarigaoka(Nerima-ku, Tokyo)
GOOD TIME HOME Fudo-mae(Shinagawa-ku, Tokyo)

Construction costs(thousands of yen)

From: September 2019
To: November 2019

31,000Work on nurse call systems andother equipment

From: June 2019
To: August 201925,632

Renewal of air conditioners incommon areas

From: September 2019
To: October 201919,182--

112,300

Other real estate, etc.
Total

c.

Period188,115

Cash Reserves for Long-Term Repair Plans
Not applicable.

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