Impact Report

Issued in December 2019

Introduction
About the Investment Corporation and the Asset Management Company
Healthcare & Medical Investment Corporation (hereinafter, “HCM”) is a J-REIT specializing in
healthcare facilities listed in March 2015. It is operated by Healthcare Asset Management Co.,
Ltd. (hereinafter “HAM”), its asset management company invested in by Ship Healthcare
Holdings, Inc., NEC Capital Solutions Co., Ltd. and Sumitomo Mitsui Banking Corporation as
main sponsors.
HCM seeks to realize a society where all people can live vibrantly and with peace of mind bycontinuously investing in and stably owning over the long term healthcare facilities, including
facilities and housing for the elderly and medical service-related facilities, etc., which must be
enhanced and expanded to address the aging of society.
[Profile of the Investment Corporation]
Corporate name

Healthcare & Medical Investment Corporation

Representative

Seiji Yoshioka, Executive Director

Location
Listing date
Listed stock exchange
End of fiscal period

3-3 Kanda-Ogawamachi, Chiyoda-ku, Tokyo
March 19, 2015
Tokyo Stock Exchange Real Estate Investment Trust Securities Market(Securities Code: 3455)
January, July

[Profile of the Asset Management Company]
Corporate name

Healthcare Asset Management Co., Ltd.

Representative

Seiji Yoshioka, President and Representative Director

Location
Establishment date
CapitalShareholders

Details of businesses

3-3 Kanda-Ogawamachi, Chiyoda-ku, Tokyo
November 28, 2013
150 million yen
SHIP HEALTHCARE HOLDINGS INC. (33.3%)
NEC Capital Solutions Limited (33.3%)
Sumitomo Mitsui Banking Corporation (5.0%)
Sumitomo Mitsui Finance and Leasing Company, Limited (4.8%)
SMBC Nikko Securities Inc. (4.8%)
Yoei Co., Ltd. (4.6%)
Ginsen Co., Ltd. (4.6%)
Kobe Tochi Tatemono Co., Ltd. (4.6%)
Muromachi Building Co., Ltd. (4.6%)
Investment management business

About the Report

In recent years, companies are required to independently solve social and environmental issues,
and movements to evaluate the medium- to long-term growth potential of companies based on
non-financial information in addition to the conventional evaluation indicators such as
performance and financial information are spreading.
HCM also decided to issue this report once a year, in principle, as the first J-REIT to raise funds
through social finance in February 2019. This report shows the status of allocation of the funds
and the actions by HCM and HAM, the Asset Management Company, to solve social issues.
Reporting period
Issue period

From November 1, 2018 to October 31, 2019
Once a year in principle (every December)

1

Contents
1. Current Status and Issues Surrounding Medical and Nursing Care
Recognition of Issues in Japan and Impact on Medical and Nursing Care
- Recognition of Issues and Countermeasures Various Issues Derived from Declining Birthrate and Aging
Population

3
4

Actions by the Government and Local Governments

9

Various Issues in Nursing Care

14

2. Investment Philosophy and Impact (Qualitative Targets)
Investment Philosophy and Impact (Qualitative Targets)

19

3. Policy on Actions for SDGs
What are SDGs (Sustainable Development Goals)?

20

Relationship Between SDGs and ESG

21

4. Outcome Indicators
Ratio of Housing for the Elderly as a Percentage of the Elderly
Population
Change in the Acquisition Amount and Number of Healthcare
Facilities in the J-REIT Market

22
23

5. Output Indicators (Overview)
Properties acquired during the reporting period (November 1,
2018-October 31, 2019)24

Status of Allocation of Social Loan

27

Reduction of environmental burden (E)28Resolution of social issues in an aged society (S)29

Establishment of governance system (G)34

SDGs Social Finance Framework

36

JCR Social Finance Evaluation

37

List of Borrowings (as of the end of the fiscal period ended July
2019)

38

6. Specific Actions

7. Social Finance8. Output Indicators
Portfolio Map

39

Summary of Buildings and Their Leasing Status

40

Overview of Facilities and Housing for the Elderly

42

Overview of Medical Service-Related Facilities, etc.

43

Earnings Performance

44

Summary of Appraisal Report

45

Capital Expenditures of Assets Under Management

47

Company Profile of Operators

48

9. Actions of Each Operator
Feature: Interview

49

Case Example

55

2

1. Current Status and Issues Surrounding Medical and Nursing Care
Recognition of Issues in Japan and Impact on Medical and Nursing Care
- Recognition of Issues and Countermeasures Issue of "Declining Birthrate and Aging Population" in JapanOne of the major issues in Japan is the "declining birthrate and aging population," and the labor
shortage caused by "declining birthrate" is starting to have a significant impact on various
industries. On the other hand, “aging population” has already had a significant impact on
medical and nursing care, and the Ministry of Health, Labor and Welfare, which is the regulatory
agency, is implementing various measures.
In addition, in various materials disclosed by the Ministry of Health, Labor and Welfare, thekeyword "ensuring sustainability of the medical insurance system and nursing care insurance
system" which is the basis of universal health insurance is often seen and this is believed toindicate the pressure on Japan's financial aspects caused by the “declining birthrate and aging
population."Impact on Medical and Nursing Care and Various Measures

Medical and nursing care are controlled by the Ministry of Health, Labor and Welfare, and arepromoted together by local governments, medical corporations and nursing care business
operators (including social welfare corporations) through the medical insurance system andnursing care insurance system.
Among various measures, the major ones are (1) promotion of “Regional Comprehensive Care
System” (promotion of medical and nursing care coordination, realization of a regional symbiotic
society) and (2) realization of “Regional Healthcare Vision."
Hereafter, a number of issues arising from the “declining birthrate and aging population” andmeasures taken by the government and local governments to address these issues as well as
specific actions by medical corporations and nursing care business operators (including social
welfare corporations) that operate medical and nursing care facilities will be explained.

31. Current Status and Issues Surrounding Medical and Nursing Care
Various Issues Derived from Declining Birthrate and Aging Population
Further Progress in Population Decline and Aging

According to the “Population Estimation” of the Ministry of Internal Affairs and Communications, thepopulation aged 65 or over in Japan was 35.58 million as of October 2018, accounting for 28.1% of thetotal population (aging rate) and showing the highest aging rate in the world. While the total population isdecreasing and the birthrate is declining, the aging rate will continue to rise due to the increase in the
population aged 65 or over, and the rate is estimated to reach 33.3% in 2036, meaning that a society inwhich one out of three people are 65 years old or over will arrive. In particular, the percentage of those
aged 75 or over continues to increase, and the shortage of laborers due to the declining birthrate and theincrease in needs for medical and nursing care due to the aging of population are starting to have asignificant impact on the medical and nursing care industry.
[Change in Total Population]
75 years old or older
65-74 years old
15-64 years old
14 years old or younger
Ratio of 75 years old or older
Ratio of 65 years old or older

140.0
1.4億人
millionpeople120.0
1.2億人
millionpeopleActual45%

Estimate

40%
35%

100.0
1.0億人
million people

30%

80.0
0.8億人
millionpeople

25%
20%

60.0
0.6億人
million people

15%

40.0

0.4億人
millionpeople

10%
20.0
0.2億人
million people

0.0
0.0億人
millionpeople5%19501955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2016 2017 2018 2019 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065

0%(Source) "Population Estimation" of the Ministry of Internal Affairs and Communications and “Population Projection for Japan(Projection for 2017)” of the National Institute of Population and Social Security Research[Comparison of the Percentage of Elderly Population in Major Countries]
75 years old or older
65-74 years old
Percentage of the population aged 65 or over in the world

30%
25%
20%
15%
10%

8.9%

(Source) Website of the Statistics Bureau, Ministry of Internal Affairs and Communications

4

China

Korea

U.S.

CanadaU.K.

FranceGermany

Italy

0%

Japan

5%

1. Current Status and Issues Surrounding Medical and Nursing Care
Various Issues Derived from Declining Birthrate and Aging Population[Change in Number of Births and Birth Rate]
3.0
millionpeople300万人

1949
2,696,638 people,
the largest numberof birth since 1947

4.54

2.5

250万人
millionpeople5

Number of births (left axis)
Total fertility rate (right axis)

42018
918,400 people, thesmallest number ofbirth since 1947

2.0
200万人
millionpeople

3

1.5
150万人
millionpeople

2

1.0
100万人
millionpeople

1.42

0.5
50万人
millionpeople0
million0万人
people19471950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

(Source) “Demographic Statistics (2018)” of the Ministry of Health, Labor and Welfare[Change in the Number of People Aged Between 18 and 64 Supporting the People Aged 65 or Over]

2017

2040

2065

2.1 people

1.5 people

1.3 people(Source) "Structural Change of Economic Society Until 2050 and Policy Issues" of the Ministry of Economy, Trade and Industry

5

2018

1

0

1. Current Status and Issues Surrounding Medical and Nursing Care
Various Issues Derived from Declining Birthrate and Aging Population
Further Increase in Social Security Benefits (Medical and Nursing Care)With the progress in aging population and declining birthrate, social security benefits in Japanare forecasted to increase significantly, which is a major issue.

[Future Outlook for Social Security Benefits Towards 2040]

200 trillion yen

Pension

Medical

Nursing careChildcareOther

188.2 ~190.0
9.4
13.1

150 trillion yen

100 trillion yen

140.2 ~140.6
7.7

121.3

10.0

6.7
7.9

15.3
66.7~68.5

10.7

39.2

25.8

47.4~47.8

50 trillion yen

56.7

59.9

73.2

0 trillion yen

Fiscal 2018

Fiscal 2025

Fiscal 2040

(based on plan)(based on plan)(Source) “Future Outlook for Social Security Towards 2040” of the Cabinet Secretariat, Cabinet Office, Ministry of
Finance, Ministry of Health, Labor and Welfare61. Current Status and Issues Surrounding Medical and Nursing Care
Various Issues Derived from Declining Birthrate and Aging Population
Growing Demand for Nursing Care Services and Change in Medical Services
With the aging of the population, it is forecast that the number of people eligible to receive
nursing care will continue to increase and that it will become more difficult to take care ofmembers in the same household due to the declining birthrate and change in family structure.
In order to respond to the increasing needs for nursing care, it is necessary to secure caregivers
and promote the supply of healthcare facilities. It is expected that the number of deaths due toaging will increase and the number of people who spend their final days at homes and facilities
for the elderly other than medical institutions will increase rapidly. In the future, demand forfacilities for the elderly, etc. by caregivers will increase, and cooperation between medical
services (in-home medical care) at homes and facilities for the elderly by medical institutions
and institutions related to medical service and nursing care will be required.

[Change in the Number of People Eligible to Receive Nursing Care by Degree of Nursing Care Required]
7.0
700万人
millionpeopleRequire assistance
Require assistance level 2
Require nursing care level 1
Require nursing care level 3
Require nursing care level 5

6.0

600万人
millionpeopleRequire assistance level 1
Transitional
Require nursing care level 2
Require nursing care level 4

Increased by 2.5 times during the
500万人 5.0
million people
period from 2000 to 2017
400万人 4.0
million people
300万人 3.0
million people

345
256

384

409

432

440

2005

2006

453

467

2007

2008

485

506

531

561

584

606

620

632

641

2016

2017

298

2.0
200万人
millionpeople1.0
100万人
millionpeople00万人
millionpeople

2000

2001

2002

2003

2004

2009

2010

2011

2012

2013

2014

(Source) “Nursing Care Insurance Business Status Report” of the Ministry of Health, Labor and Welfare

2015

Annual death toll (thousand people)

Annual Death Toll and Place of Death
Death toll 1.26 million people in total (2012)

Death toll 1.61 million people intotal (2030)(CAGR from 2012 to 2030 + 1.4%)

Caregiving at own
houses, facilities forthe elderly, housing,
etc. is rapidly
increasing

Own
house

Nursingcarefacility

Other(Source) KPMG Healthcare Japan Co., Ltd.

Medical institution

7

1. Current Status and Issues Surrounding Medical and Nursing Care
Various Issues Derived from Declining Birthrate and Aging Population
Growing Demand for Nursing Care Services

Demand for nursing care services is also expected to increase with the decrease in populationand the increase in aging rate. From 2017 to 2025, the number of users of each nursing careservice is estimated to increase by 22% at nursing care facilities and by 34% for residential
services.
Looking at the rate of increase in the number of users of nursing care services by region, it isexpected that the number will continue to increase until 2040 in many areas mainly in urban
areas. Furthermore, when looking at the rate of increase in the number of users of nursing careservices, it is increasing mainly in the Tokyo metropolitan area, Kinki area and Chubu area.
[Change in the Amount of Nursing Care Services]
Facility

FY2017(actual value)

FY2020(estimated value)

FY2025(estimated value)

Long-term care welfare facility for theelderly

590,000 people

650,000 people

730,000 people

Long-term care health facility for theelderly

360,000 people

380,000 people

410,000 people

Long-term care medical facility, etc.

50,000 people

55,000 people

64,000 people

Nursing care facility

990,000 people

1,090,000 people

1,210,000 people

Daily life long-term nursing care forthose admitted to a specified facility

230,000 people

280,000 people

320,000 people

Group home for the elderly withdementia

200,000 people

220,000 people

250,000 people

Residential service

430,000 people

500,000 people

570,000 people(Source) “Nursing Care Service Platform and Housing for the Elderly <Reference Material>” of the Health and Welfare Bureau
for the Elderly, Ministry of Health, Labor and Welfare[Years with the Largest Number of Users of Nursing
Care Services Until 2040][Increase Rate of Users in the Year with the Largest Number ofUsers of Nursing Care Services Until 2040]

2040
2035
2030
2025
2018

(Source) “Nursing Care Service Platform and Housing for the Elderly <Reference Material>” of the Health and Welfare Bureau for the
Elderly, Ministry of Health, Labor and Welfare81. Current Status and Issues Surrounding Medical and Nursing Care
Actions by the Government and Local Governments


Establishment of Regional Comprehensive Care System

With the further increase in demand for medical and nursing care after 2025 when the baby boomers willbe 75 or older, the Ministry of Health, Labor and Welfare is promoting the construction of a regional
comprehensive care system that integrally provides housing, medical service, nursing care, prevention andlife support to enable the elderly to continue living in familiar areas until the end of their lives to the
maximum extent possible with an aim to maintain the dignity of the elderly and support independent life.
It is believed that the extension of healthy life expectancy and a society that supports the elderly byutilizing not only public services but also the power of the community can be realized with the regional
comprehensive care system in accordance with the actual circumstances of each region, leading to thesecurement of the sustainability of the social security system.

Regional Comprehensive Care System⃝ We will establish a regional comprehensive care system that provides residences, medical care, nursing care,preventative medicine and life support in an integrated manner to offer an environment where the elderly can continue
living in an area they are used to, even after they come to require nursing care, in around 2025 when the baby-boomer
generation will be 75 or older.
⃝ Establishment of a regional comprehensive care system is necessary to support the lives in regions where elderly with dementia
live as the number of elderly with dementia is expected to increase in the future.
⃝ There is a large regional difference concerning the progress of aging. There are, for example, large cities with the overall
population remaining flat but the population of people aged 75 years old or older increasing rapidly and rural areas with the
population of people aged 75 years old or older increasing slightly although the overall population decreasing.
It is necessary for municipalities and prefectural governments, which are the insurer, to create a regional comprehensive
care system based on autonomy and independence and in accordance with regional characteristics.

Image of Regional Comprehensive Care System
When you get sickWhen you need nursing care
Nursing care

Medical care

• Acute care hospital• Subacute stage, recovery
stage Rehabilitation
hospital

Hospital visit&
stay

Daily medical care
• Primary care doctor• Regional cooperative
hospital

Outpatient nursing care&admission In-home service

Residence• Regional comprehensive
support center• Care manager

We coordinate
consultation businessand services• House• Serviced housing for theelderly, etc.
To live a healthy life forever Nursing care prevention service

Life support & nursing care prevention

Golden age club, local government, volunteer, NPO, etc.

Source: Website of Ministry of Health, Labor and Welfare

9 Facility and home
service
Facilities covered bypublic aid providing
long-term care to theelderlyLong-term carehealth facility
Communal daily longterm nursing care fora dementia patient
Daily life long-term
nursing care for thoseadmitted to a
specified facility, etc.

• Long-term home-visit nursing care,•home-visit nursing, outpatient day
long-term nursing care
• Multifunctional long-term nursing carein a small group home•
• Short-term admission for daily life
long-term nursing care•
• 24-hour home-visit service
Patients
with dementia •Combined service(Multifunctional long-term nursing care •in a small group home + home-visit
nursing), etc.

* Regional comprehensive care systems are
expected to be established for each areain the sphere of everyday life (specificallyjunior high school districts) where
necessary services are provided within
about 30 minutes

1. Current Status and Issues Surrounding Medical and Nursing Care
Actions by the Government and Local Governments


Establishment of Regional Healthcare Vision and Promotion of Differentiation and
Coordination of Medical Functions

There is a need to respond to the increasing and diversifying demand for medical and nursing
care services within limited medical resources as well as establish a system that effectively andefficiently provides high-quality and appropriate medical care. The “Regional Healthcare Vision”
has been institutionalized by the “Act for Securing Comprehensive Medical and Long-term Carein the Community” aiming to establish a medical care provision system that can even withstandthe super-aged society (Note 1).
Regional Healthcare Vision is an action to realize an efficient medical care provision system by
estimating the number of beds required in 2025 for each of the four medical functions based on
the future population projections and promoting functional differentiation of hospital bed andcoordination of hospitals through consultation with local medical staff.
Medical institution(Hospital Ward A)
Advanced acute stage
function

Overemphasison advanced
Select medical
acute stage
function
voluntarily
Financialconcerns

Hospital bed function(July 2015)

Number of Beds to be
Required in 2025

Total 1.331 million beds

Total 1.191 million beds (Note 2)
Advanced acutestage
131,000 beds
(11%)

Advanced acutestage
169,000 beds
(14%)

(Hospital Ward B)
Acute stage
function(Hospital Ward C)
Recovery stage
function

Decrease byapprox. 30%(Hospital Ward D)
Chronic stage
function

Acute stage
401,000 beds
(34%)

Acute stage
593,000 beds
(48%)

Current status of medical
functions
Report future direction
Prefectural government
Establish “Regional Healthcare Vision” by utilizing
reports, etc.
Promote further functional differentiation

Recovery stage
129,000 beds
(10%)

Increase byapprox. 3 times

Decrease byapprox. 20%
Chronic stage
354,000 beds
(28%)

Unused, etc.
87,000 beds

Shift to nursing
care facilities,
in-homemedical care,etc.

Recovery stage
375,000 beds
(31%)

Chronic stage
284,000 beds
(24%)

Nursing carefacilities, inhome medicalcare, etc.
Approx.
300,000 people(Source) “Regional Healthcare Vision” and “Initiatives for Medical/Nursing Care Reform” (June 22, 2017) of the Ministry of
Health, Labor and Welfare(Note 1) “Super-aged society” refers to a society in which the population of the elderly aged 65 or over accounts for 21% ormore of the total population (aging rate).
(Note 2) Total of Cabinet Secretariat’s estimates (June 2015). Within the range of 1.148 million beds to 1.191 million beds.

10

1. Current Status and Issues Surrounding Medical and Nursing Care
Actions by the Government and Local GovernmentsEnvironmental Improvement for Upgrading and Expanding Healthcare Facilities

In order to respond to the growing demand for medical and nursing care services, upgradingand expansion of healthcare facilities is required, and policies for such actions are being
promoted. In addition, according to the “Survey on Seismic Retrofit of Hospitals” by the Ministryof Health, Labor and Welfare, the ratio of quake-resistant hospitals in 2018 remained at 74.5%.
Since hospitals are used by an unspecified large number of people everyday and can be aregional base in the event of a disaster, investments in reconstruction, etc. are urgently required
to respond to earthquake resistance.
In the “Japan Revitalization Strategy-JAPAN is BACK-” dated June 14, 2013, the government
announced its policy to “enact a guideline concerning acquisition and management 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.
Following this policy, the Ministry of Land, Infrastructure, Transport and Tourism enacted the“Guideline related to the utilization of healthcare REITs targeting housing for the elderly, etc.” onJune 27, 2014, and the “Guideline related to REITs targeting hospital real estate” on June 26,
2015, and guidelines for utilizing healthcare REITs were established.
As a measure to spread healthcare REITs, seminars targeting related business operators jointly
held by the Financial Services Agency, the Ministry of Land, Infrastructure, Transport andTourism, the Tokyo Stock Exchange, and the Association For Real Estate Securitization havebeen held several times a year, and efforts by the public and private sectors are being made.

11

1. Current Status and Issues Surrounding Medical and Nursing Care
Actions by the Government and Local GovernmentsEnvironmental Improvement for Securing Nursing Care Personnel

In order to respond to the increasing demand for nursing care services, securement ofcaregivers is also a major issue. While there were approximately 1.9 million nursing carepersonnel in fiscal 2016, it is expected that approximately 550,000 nursing care personnel will
be newly required by fiscal 2025.
In order to respond to the needs for nursing care personnel which are expected to continue
increasing in the future, the government will implement measures such as the “improvement of
the treatment of nursing care staff,” “securement and training of various personnel,” “preventionof job separation, promotion of job retention and improvement of productivity,” “enhancementof the attractiveness of the nursing care profession” and “environmental improvement for
accepting foreign personnel.” The improvement of the treatment of nursing care personnel andimprovement of productivity at nursing care sites were also stated in “Japan 100 Million Total
Active Plan.”

Comprehensive measures to secure nursing care personnel (main actions)
Main measures taken until now

Improvement oftreatment of nursing
care staff

Main measures to be taken in the future(Actual result) Average monthly amount improved by 57,000 yen
Average monthly amount improved by 14,000 yen(from FY2017)
Average monthly amount improved by 13,000 yen(from FY2015)
Average monthly amount improved by 6,000 yen(from FY2012)
Average monthly amount improved by 24,000 yen(from FY2009)◎ Further improved treatment from October 2019 while
focusing on nursing care staff with experience and skills
with an aim to achieve a wage level comparable to thoseof other industries for leader-level nursing care staff.

○ Support through loan of educational funds for care
workers and money for preparation for reemployment○ Integrated support from holding of introductory
training for inexperienced caregivers such as the
middle-aged and the elderly to matching after
attending training◎ Further step-up support for people attending introductory
training (support for experiencing work related to nursing
care)

Prevention of job
separation
Promotion of job
retention
Improvement of
productivity○ Promotion of utilization of nursing care robots and
ICT○ Support of establishment and operation of nursing
care facilities and childcare facilities inside offices○ Support of the reduction of burden in attending
training courses for career advancement andsecurement of alternative staff◎ Promotion of differentiation of nursing care functions and multioccupational team care, etc.
◎ Acceleration of the promotion of utilization of nursing carerobots and ICT◎ Establishment and spread of productivity improvement guideline◎ Establishment and spread of certification evaluation system
guideline

Improvement of theattractiveness of thenursing care
profession○ Promotion of understanding of nursing care work forstudents, their parents, career guidance staff, etc.
〇 Holding experience-based events to learn about
nursing care

◎ Transmission of the attractiveness of nursing care staff toyoung people, people rearing children and active seniors

Environmental
improvement for
accepting foreign
personnel〇 Support of international students, etc. aiming tobecome care workers (promotion of loan ofeducational funds for care workers, consultation andsupport in daily life, etc.)◎ Environmental improvement for accepting foreign
nursing care personnel with "specific skills," etc. (grouptraining for improving nursing skills, support for learning
Japanese in nursing care, consultation and support ofnursing care business, etc., patrol and visits, etc.)

Securement andtraining of various
personnel(Source) “Securement of Nursing Care Personnel and Innovation of Nursing Care Site <Reference Material>” of the
Health and Welfare Bureau for the Elderly, Ministry of Health, Labor and Welfare121. Current Status and Issues Surrounding Medical and Nursing Care
Actions by the Government and Local Governments


Actions for Preventing Abuse of the Elderly

The government and local governments are taking various actions to prevent the abuse of theelderly.
・Construction of network to prevent elderly abuse
・Conducting survey based on the "Act on the Prevention of Elder Abuse, Support for Caregiversof Elderly Persons and Other Related Matters" every year
・Formulation of manual to respond to abuse
・Development of a cooperative system with related institutions and private organizations
・Publicizing of information on support desk and name of cooperators responding to elderly
abuse, etc.
Example of construction of network
for preventing abuse of the elderly
Municipality(partially entrusted to the Regional Comprehensive Support Center)
Coordination of consultation desk and each network

Consultation and report

Acceptance ofconsultation
and report

Understanding ofactual situation
Watching

Understandingof actualsituation

Connection toservices,
systems andinstitutions

Support plan

Monitoring

Social welfare
council
Welfare commissioner
Nursing care counselor

Residents'
association

Family association

Connection to services, systems and institutions

Monitoring

NPO volunteer

Advice and support

Consultation
and report

Early detection andwatching Network

Advocacy group

Home-visit nursing
Home-visit long-term
nursing care
Short-term admission

Nursing home for the elderly
Intensive care home
for the elderly

Care manager

Family court

PoliceConsumer center
Medical institution(including psychiatry)Intervention by related specialized institution
Support network

Insurance medical welfare services
Intervention network(Source) “Basics of Preventing Elderly Abuse” of the Ministry of Health, Labor and Welfare131. Current Status and Issues Surrounding Medical and Nursing Care
Various Issues in Nursing Care

Healthcare Facilities Requiring the Promotion of Supply
The supply of facilities and housing for the elderly is increasing every year, but with the growing
demand for medical and nursing care services due to the increase in the population of theelderly, the government has set a goal to increase in-home and facility services, which responds
to the increasing needs for nursing care, for 500,000 people (compared with fiscal 2015) by theearly 2020s in the “Japan 100 Million Total Active Plan,” which was approved at the Cabinet
meeting in 2016, and further expansion of nursing care facilities, etc. is in progress.
[Capacity and Number of Users of Facilities and Housing for the Elderly](Unit: units, people)
Long-term care welfare facility for the elderly (special nursing facility)
Paid nursing homeLong-term care health facility for the elderly (health facility for the elderly)Serviced housing for the elderly
Communal daily long-term nursing care for a dementia patient (group home)
Low-cost paid nursing home
Nursing home for the elderly
Long-term care medical facility

600,000

500,000

593,200 people

518,507 people

400,000
363,600 people

300,000

225,374 units

200,000
199,700 people

94,474 people

100,000

64,084 people
51,600 people

0

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

(Source) Prepared by the Asset Management Company based on the “Statistics on the Actual Status of Nursing Care Benefits, etc.” and“Survey on Social Welfare Facilities, etc.” of the Ministry of Health, Labor and Welfare, “Information Provision System ofResidences for Elderly People with Service” on the website of the Senior Housing Association.
(Note) The number of users is shown for long-term care welfare facility for the elderly, long-term care health facility for the elderly,
long-term care medical facility and communal daily long-term nursing care for a dementia patient (group homes).

14

1. Current Status and Issues Surrounding Medical and Nursing Care
Various Issues in Nursing Care

Personnel Shortage in the Nursing Care Industry

In fiscal 2018, the jobs-to-applicants ratio for nursing care-related occupations was 3.95 times,
which is higher than that for all occupations, and the gap has been increasing in recent years.
According to a survey by the Care Work Foundation, the percentage of offices feeling a shortage ofnursing care personnel rose to 67.2% in 2018, showing an increase for five consecutive years.
It is expected that approximately 2.16 million nursing care personnel will be required at the end of
fiscal 2020 and approximately 2.45 million at the end of fiscal 2025 according to the estimation by
the prefectural government based on the expected amount of nursing care services in the nursing
care insurance business plan for the 7th fiscal period, and nursing care personnel needs to be
secured urgently.
[Jobs-to-Applicants Ratio (All Industries and Nursing Care-Related Occupations) and Unemployment Rate]
Jobs-to-applicants ratio (all industries)
Jobs-to-applicants ratio (nursing care-related jobs)
Unemployment rate

6x

6.0%

5x

3.95x

4x

2.4％

3x
2x

1.46x

1x
0x

5.0%
4.0%
3.0%
2.0%
1.0%

FiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscal

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

0.0%

(Source) “Securement of Nursing Care Personnel and Innovation of Nursing Care Site (Reference Material)” of the Health and Welfare
Bureau for the Elderly, Ministry of Health, Labor and Welfare[Needs for Nursing Care Personnel Towards 2025]
2.5
250万人
million people

Number of nursing care personnel required

2.16
million people

2.45
million people

Shortage:
Approx. 550,000 people

Shortage:
Approx. 260,000 people

2.0

200万人
millionpeople1.90
million people

1.5
million people

150万人

Fiscal 2016

Fiscal 2020

Fiscal 2025

(Source) “Securement of Nursing Care Personnel and Innovation of Nursing Care Site (Reference Material)” of the Health and Welfare
Bureau for the Elderly, Ministry of Health, Labor and Welfare15

1. Current Status and Issues Surrounding Medical and Nursing Care
Various Issues in Nursing Care

Issue of Job Separation Due to Nursing Care

In Japan, lifetime non-marriage rate and the percentage of double-income households are
increasing, and such numbers are expected to continue increasing in the future. Such change inthe family structure is believed to lead to an increase in the number of people engaged innursing care while working.
Under such circumstances, the number of people who left their jobs to be engaged in nursing
care or nursing was approximately 100,000 people in 2018. Furthermore, according to a survey
targeting those who had left their jobs during the nursing care period, more than half of themhad the intention to continue working, indicating that they were forced to leave their jobs (Note1).
The issue of job separation due to nursing care is further exacerbating the issue of labor
shortage in Japan where the population continues to decline, and there is a concern that it will
adversely affect the economy. According to the Ministry of Economy, Trade and Industry, theloss of added value in the entire economy associated with job separation due to nursing care isestimated to be approximately 650 billion yen per year (Note 2). In addition, approximately
80% of those leaving their jobs due to nursing care are women, and such trend has become amajor barrier in promoting the social advancement of women.
[Number of People Leaving Jobs for Nursing Care and Nursing]
120,000 people

Women

Men

Ratio of women

100,000 people

100%
80%

80,000 people

60%

60,000 people
40%

40,000 people

20%

20,000 people
0 people2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

(Source) “Survey on Employment Trends” of the Ministry of Health, Labor and Welfare(Note 1) "Research Report for Understanding the Actual Situation of Balancing Work and Nursing Care in Fiscal 2012
(Survey Entrusted by the Ministry of Health, Labor and Welfare in Fiscal 2012)”
of Mitsubishi UFJ Research and Consulting Co., Ltd.
(Note 2) "Structural Change of Economic Society Until 2050 and Policy Issues" of the Ministry of Economy, Trade andIndustry

160%1. Current Status and Issues Surrounding Medical and Nursing Care
Various Issues in Nursing Care

Abuse of the Elderly in Nursing Care

Abuse of the elderly in nursing care is also a major issue. There are various reasons for abuse,and there are many cases in which abuse is caused by the heavy burden of nursing care, andthe reduction of the burden of caregivers is required.
According to a survey by the Ministry of Health, Labor and Welfare, the most common cause ofabuse by family members and relatives is "nursing care fatigue and nursing care stress," andthere is a need to expand nursing care services responding to the needs for such nursing care.
In addition, "issues concerning knowledge and nursing skills" and "shortage of personnel andbusyness of work" are cited as factors of abuse by workers at nursing care facilities. There is aneed to improve the workplace environment including the securement of sufficient nursing carepersonnel, improvement of business efficiency, improvement of the knowledge on abuse andnursing care skills of workers at nursing care facilities and in-house training such as anger
management.
In response to these circumstances, many nursing care business operators are taking actions
such as holding trainings and preparing manuals with an aim to prevent abuse and inappropriate
care.
[Change in the Number of Cases of Elderly Abuse]
Caused by family members, relatives, people living together with such elderly, etc. (left axis)
Caused by workers at nursing care facilities (right axis)

20,000 cases
15,000 cases
10,000 cases

12,569 13,273

14,889 15,615

5,000 cases
0 cases

16,668 16,599

10,000 cases

15,202 15,731 15,739 15,976

16,384 17,078

7,500 cases
5,000 cases

54

62

70

76

96

151

155

221

300

408

452

510

Fiscal
2006

Fiscal
2007

Fiscal
2008

Fiscal
2009

Fiscal
2010

Fiscal
2011

Fiscal
2012

Fiscal
2013

Fiscal
2014

Fiscal2015

Fiscal2016

Fiscal2017

2,500 cases
0 cases(Source) “Survey Results on the Status of Response Based on the “Act on the Prevention of Elder Abuse, Support for Caregivers ofElderly Persons and Other Related Matters” in Fiscal 2017” of the Ministry of Health, Labor and Welfare171. Current Status and Issues Surrounding Medical and Nursing Care
Various Issues in Nursing Care
[Factors of Abuse by Family Members, Etc. (Family Members, Etc.)]
Nursing care fatigue and stress
Disability and illness of family members, etc.
(Words and actions based on) the character and personality offamily members, etc.
Lack of knowledge and information by family members, etc.
Impact of alcohol drinking by family members, etc.
Lack and decline of understanding by family members, etc.
Mental state of family members, etc.
Decline and lack of nursing care ability
Isolation of family members, etc., absence of supportive
caregivers, etc.
Resistance to the use of external services
Gambling addiction by family members, etc.
Other

0%

5%

10%

15%

20%

25%

30%

60%

70%

[Factors of Abuse at Nursing Care Facilities]

Issues regarding education, knowledge, nursing care skills, etc.
Issues on stress and emotional control of staff
Lack of ethics and philosophy
Issues on personnel shortage and staffing and busyness related
to such issues
Organizational climate fostering abuse and bad relationshipamong staff
Issues on character and nature of staff abusing the elderly
Other

0%

10%

20%

30%

40%

50%

(Source) "Survey Results on the Status of Response Based on the “Act on the Prevention of Elder Abuse, Support for Caregivers ofElderly Persons and Other Related Matters" in Fiscal 2017" of the Ministry of Health, Labor and Welfare18

2. Investment Philosophy and Impact (Qualitative Targets)
Investment Philosophy and Impact (Qualitative Targets)

Realization of a Society Where All People Can Live Vibrantly and with Peace of Mind

HCM aims to serve as a conduit between the nursing care and medical service industries inwhich social needs are expected to increase and the capital markets, based on theenvironmental awareness that upgrading and expansion of healthcare facilities is further
required in order to respond to the growing demand for medical and nursing care services. In
other words, HCM aims to realize a society where all people can live vibrantly and with peace ofmind as well as secure stable revenue and achieve steady growth of assets under management
by promoting appropriate maintenance and management and new supply of healthcare facilities
through stable investment and ownership of healthcare facilities with the keywords of “nursing
care," “medical service” and “health."Serve as a conduit between the nursing
care and medical service industries andthe capital markets
Develop a portfolio
specialized inhealthcare facilities,
for which demand is
expected to growPromote the supply
of healthcare
facilities as social
infrastructure

Realization of a society where all
people can live vibrantly and withpeace of mind

19

3. Policy on Actions for SDGs
What Are SDGs (Sustainable Development Goals)?
Sustainable Development Goals (SDGs) are international goals from 2016 to 2030 stated in the“2030 Agenda for Sustainable Development” adopted at the United Nations Summit in
September 2015 as a successor to the Millennium Development Goals (MDGs) established in
2001. It consists of 17 goals and 169 targets for realizing a sustainable world, and pledges toleave no one behind. SDGs are universal efforts not only for developing countries but also fordeveloped countries, and are international goals which were adopted at the United Nations andwhich Japan is proactively working on.

20

3. Policy on Actions for SDGs
Relationship Between SDGs and ESGEnactment of the "Basic Policy on ESG" incorporating the concept of SDGs

HAM enacted the “Basic Policy on ESG” in September 2018 in order to practice asset
management in consideration of Environment, Social and Governance. Upon the enactment of
the basic policy, HAM has incorporated the concept of SDGs based on the investment philosophyof HCM.
"Basic Policy on ESG / 1. Basic Philosophy"
In order to realize a “society where all people can live vibrantly and with peace of mind," whichis the investment philosophy of HCM, HAM aims to contribute to the aged society and maximize
unitholder value over the medium to long term through the promotion of provision of healthcare
facilities as social infrastructure and construction of a portfolio specializing in healthcare facilities.
HAM will collaborate with various in-house/outside stakeholders including operators, hospital
personnel, sponsors and executives and employees of HAM in order to practice asset
management in consideration of ESG including the reduction of environmental burden, efforts
toward resolution of social issues in an aged society and establishment of governance system.
HAM Website / Basic Policy on ESG
http://www.hcam.co.jp/pdf/esg.pdf

Issues that need to be solved

Environment
・Energy conservation and reduction of CO2 emissions(Environment)

Social(Society)

Governance(Governance)

・Elimination of the shortage of supply of housing forthe elderly against the elderly population
・Prevention of job separation due to nursing carethrough the promotion of supply of nursing carefacilities (especially women)
・Improvement of business efficiency and reduction ofwork burden for nursing care staff
・Prevention of abuse of residents and harassment offacility staff
・Response to the deterioration of hospitals andpromotion of earthquake resistance・Promotion of the shift of hospital functions to realize
a sustainable society
・Strengthening of governance・Transparency in decision making
・Fair transaction (prevention of conflicts of interest)
・Management of various risks (including elimination ofantisocial forces)
・Work-life balance21

Highly relevant SDGs

4. Outcome Indicators
Ratio of Housing for the Elderly as a Percentage of the Elderly Population

Status of Supply of Healthcare Facilities

Although the supply of facilities and housing for the elderly is increasing every year in responseto the growing demand for medical and nursing care, the supply rate of paid nursing homes
against the elderly population was 1.48% in 2017 and that of serviced housing for the elderly
was only 0.67% in 2018.
[Supply Rate of Facilities and Housing for the Elderly Against the Elderly Population (Aged 65 Years or Older)]
1.6%

Paid nursing home

1.4%

1.40%

Serviced housing for the elderly

1.2%

1.02%

1.10%

1.18%

1.48%

1.25%

1.0%
0.8%
0.6%

0.46%

0.54%

0.63%

0.63%

0.66%

0.73%
0.42%

0.61%

0.64%

0.67%

2016

2017

2018

0.29%

0.4%
0.2%
0.0%

0.50%

0.57%

0.01%
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

(Source) Prepared by the Asset Management Company based on the “Overview of Survey on Social Welfare Facilities, etc.” of the
Ministry of Health, Labor and Welfare, “Information Provision System of Residences for Elderly People with Service” on thewebsite of the Senior Housing Association, and “Population Estimation” of the Ministry of Internal Affairs and Communications.

224. Outcome Indicators
Change in the Acquisition Amount and Number of Healthcare Facilities in
the J-REIT Market
As of the end of October 2019, the total acquisition amount of healthcare facilities was 190,418
million yen and the cumulative number of properties was 111 in the J-REIT market. Of these,
the cumulative acquisition amount for HCM was 64,881 million yen (34.1%) and the cumulative
number of properties for HCM was 35 (31.5%).
(Unit: million yen, property)

Acquisition amount of healthcare facilities
Entire J-REIT market
Acquisition
price

Number of healthcare facilities

HCM

Entire J-REIT market

Cumulative
Cumulative
Acquisitionacquisitionacquisition
price
price
price

Number ofproperties
acquired

HCM

Cumulative
number ofproperties

Number ofproperties
acquired

Cumulative
number ofproperties

2001

0

0

0

0

0

0

0

0

2002

0

0

0

0

0

0

0

0

2003

0

0

0

0

0

0

0

0

2004

0

0

0

0

0

0

0

0

2005

0

0

0

0

0

0

0

0

2006

2,865

2,865

0

0

4

4

0

0

2007

5,600

8,465

0

0

4

8

0

0

2008

0

8,465

0

0

0

8

0

0

2009

0

8,465

0

0

0

8

0

0

2010

0

8,465

0

0

0

8

0

0

2011

0

8,465

0

0

0

8

0

0

2012

2,510

10,975

0

0

2

10

0

0

0

2

12

0

0

0

20

32

0

0

2013

1,980

12,9550

2014

28,782

41,7370

2015

63,411

105,148

23,683

23,683

40

72

16

16

2016

6,278

111,426

1,338

25,021

5

77

2

18

2017

18,417

129,843

15,48340,504

10

87

7

25

2018

21,675

151,518

1,686

42,190

11

98

2

27

January 20190

151,518

042,190

0

98

0

27

February 2019

22,691

174,20922,69164,881

8

106

8

35

March 2019

6,935

181,144064,881

1

107

0

35

April 20190

181,144064,881

0

107

0

35

May 2019

0

181,144064,881

0

107

0

35

64,881

2

109

0

35

June 2019

2,751

183,895

0July 2019

0

183,895

064,881

0

109

0

35

August 2019
September 2019
October 2019

0

183,895

064,881

0

109

0

35

6,523

190,418064,881

2

111

0

35

0

190,418064,881

0

111

0

35

(Source) Prepared by the Asset Management Company based on ARES J-REIT Databook (October 2019)23

5. Output Indicators (Overview)
Properties Acquired During the Reporting Period(November 1, 2018-October 31, 2019)

Newly Acquired Eight Properties (acquisition price: 22.6 billion yen) in February 2019.
Acquisition date

Property nameMain use

Acquisition price(million yen)

SHIP SENRI BUILDING

Hospital, paid nursing
home

12,920Sunny Life Kita-Shinagawa

Paid nursing home

1,825

SOMPO CARE La vie Re HamaKawasaki

Paid nursing home

1,710

Paid nursing home880

Hanakotoba Shin-Yokohama

Paid nursing home

2,071

Hanakotoba Shin-Yokohama II

Paid nursing home

375

Verde Minowa

Paid nursing home

1,620

February 1, 2019 Hanakotoba Odawara

Verde Hotaka

1,290

Paid nursing home
Total

22,691[Change in Portfolio Status]
End of fiscal period ended January 2019 (8th FP)
Number of properties

27

Total acquisition price42.1 billion yen

Total appraisal value

45.7 billion yen

Average appraisal NOI yield
Hospital real estate
Number of operators
Operational rate
Average remaining lease
term

5.7%
1 property
9100%
14.2 years

Comparison withprevious fiscal
periodEnd of fiscal period ended July 2019
(9th FP)
Number of properties

35+8

Total acquisition price64.8 billion yen +22.7 billion yen

Total appraisal value

70.4 billion yen +24.6 billion yen

Average appraisal NOI
yield

5.6%

-0.1%

Hospital real estate2+1

Number of operators

12

+3

99.9%

-0.1%

14.6 years+0.4 years

Operational rate
Average remaining lease
term

24

5. Output Indicators (Overview)
Properties Acquired During the Reporting Period(November 1, 2018-October 31, 2019)
Paid nursing home

Paid nursing home

Hospital

SHIP SENRI BUILDING

Name(Senri-Chuo Hospital, Well House Senri-Chuo)

to be developed

Name

Sunny Life Kita-Shinagawa

Location

Toyonaka-shi, Osaka

Location

Shinagawa-ku, Tokyo

Operator

Kyowakai Medical Corporation,
GREENLIFE Co., Ltd.

Operator

Kawashima Corporation

Appraisal value

14,300 million yen

Appraisal value

1,970 million yen

Acquisition price

12,920 million yen

Acquisition price

1,825 million yen

Appraisal NOI yield

5.2%

Appraisal NOI yield

4.9%

Number of beds
Number ofrooms/Resident
capacity

Hospital: 400 beds
Paid nursing home: 181 rooms, 200
peopleNumber ofrooms/Resident
capacity

66 rooms, 66 people

Paid nursing home

Paid nursing home

Name

SOMPO CARE La vie Re HamaKawasaki

Name

Hanakotoba Odawara

Location

Kawasaki-shi, Kanagawa

Location

Odawara-shi, Kanagawa

Operator

Sompo Care Inc.

Operator

Proud Life Inc.

Appraisal value

1,820 million yen

Appraisal value

948 million yen

Acquisition price

1,710 million yen

Acquisition price

880 million yen

Appraisal NOI yield

5.2%

Appraisal NOI yield

5.6%

Number ofrooms/Resident
capacity

58 rooms, 58 people

Number ofrooms/Resident
capacity

60 rooms, 65 people25

5. Output Indicators (Overview)
Properties Acquired During the Reporting Period(November 1, 2018-October 31, 2019)
Paid nursing home

Paid nursing home
Paid nursing home
to be developed

Name

Hanakotoba Shin-Yokohama

Name

Hanakotoba Shin-Yokohama II

Location

Yokohama-shi, Kanagawa

Location

Yokohama-shi, Kanagawa

Operator

Proud Life Inc.

Operator

Proud Life Inc.

Appraisal value

2,230 million yen

Appraisal value

401 million yen

Acquisition price

2,071 million yen

Acquisition price375 million yen

Appraisal NOI yield

5.2%

Appraisal NOI yield

5.8%

Number ofrooms/Resident
capacity

136 rooms, 136 people

Number ofrooms/Resident
capacity

29 rooms, 30 people

Paid nursing home

Paid nursing home

Name

Verde Minowa

Name

Verde Hotaka

LocationTakasaki-shi, Gunma

Location

Kawaba-mura, Tone-gun, Gunma

Operator

Verde Corporation

Operator

Verde Corporation

Appraisal value

1,700 million yen

Appraisal value

1,360 million yen

Acquisition price

1,620 million yen

Acquisition price

1,290 million yen

Appraisal NOI yield

6.7%

Appraisal NOI yield

7.0%

Number ofrooms/Resident
capacity

174 rooms, 206 people

Number ofrooms/Resident
capacity

121 rooms, 174 people26

5. Output Indicators (Overview)
Status of Allocation of Social Loan


Status of Use and Procurement of Funds
Use of funds

Fund procurement

Acquisition of healthcare
facilities

22.69 billion yen

Public offering

12.67 billion yen

Refinancing

1.75 billion yen

Social loan

11.75 billion yen

Expenses, etc. (Note)

1.07 billion yen

Own funds

1.09 billion yen

Total

25.51 billion yen

Total

25.51 billion yen(Note) Expenses include research expenses, investment unit issuance expenses, loan fees, etc. associated withproperty acquisition.



List of Social Loans

HCM procured 11.75 billion yen of social loan on February 1, 2019, and allocated the entire
amount as funds for acquisition of trust beneficiary rights for 8 healthcare facilities and funds forrefinancing of borrowings associated with the acquisition of trust beneficiary rights for 2
healthcare facilities.
[List of Social Loans]
LenderLoan syndicate with
Sumitomo Mitsui
Banking Corporation
as an arranger

BorrowingamountInterest rate

Drawdowndate

2 billion yen

Fixed interest rate

February 1,
4 billion yen 1-month TIBOR+0.35%
2019
5.75 billion yen 1-month TIBOR+0.45%

Repayment
date
January 31,
2022
January 31,
2023
January 31,
2024

Repayment
methodLump-sum
repayment on
Unsecuredprincipal
Unguaranteed
repayment
date[Status of Use and Allocation of Funds]
Use of funds

Allocation ratio

Funds for acquisition of healthcare facilities(including trust beneficiary rights)

85.1%

Funds for refinancing

14.9%

Unallocated amount
None[Borrowings for Refinancing]
LenderBalance

Drawdown dateRefinancing date

Sumitomo Mitsui
Banking Corporation

1.75 billion yen

October 1, 2018

February 1, 2019

Initial use of funds
Acquisition funds and acquisition-related expenses for healthcare facilities(Hanakotoba Minami, Hanatokoba Miura)

27

Security6. Specific Actions
Reduction of Environmental Burden (E)Renovation Work on Air Conditioner at GreenLife Moriguchi[Investment amount: 13.5 million yen (including subsidy of 6.4 million yen)]
Introduction of energy-saving equipment using subsidies (Note)••

Replacement of control board and compressor of outdoor air conditioner unit in common
areas with those with high energy-saving performance
Introduction of high-performance air conditioner management unit (collective
management of air conditioner inside the building, schedule operation setting)Expected reduction of energy consumption of air conditioner
Approx. -13% (compared with the amount before introduction)

Control board

New
compressor(Note) As for the Ministry of the Environment's subsidies for countermeasures to control carbon dioxide emissions project etc.
(support of renovation for improving the efficiency of equipment), government subsidies will be granted to projects supporting
part of the expenses necessary for replacement and addition for those directly linked to significant improvement of energy
efficiency and CO2 reduction through replacement and addition among the parts and materials of equipment used at local
governments and the residential and commercial sector. The subsidy rate in the total project cost (excluding tax) of theconstruction is approximately 48%.

28

6. Specific Actions
Resolution of Social Issues in an Aged Society (S)Acquisition of Healthcare Facilities, Medical Service-Related Facilities, Etc.
[Investment amount: 22,691 million yen]In the year from November 1, 2018 to October 31, 2019, HCM acquired 7 paid nursing homes
with care service (including one development project) and a Complex comprising a hospital anda paid nursing home, and now owns 35 healthcare facilities. This was the second acquisition of
hospital real estate by a J-REIT following the first acquisition by HCM in November 2017.
The borrowed portion of the funds for acquisition was procured as social loan based on the
SDGs Social Finance Framework established by HCM in January 2019.
[Actual Results on Acquisition of Healthcare Facilities](billion yen)
100.0
<Target>(Number of properties)
Asset size

(Note)(Note)

Number of properties

70.0
60.0

Pipeline

50.0
40.0

Plot area

30.0
20.0
10.0

1st FP2015
Fiscal period
ended
July

2nd FP2016
Fiscal period
ended
January

3rd FP2016
Fiscal period
ended
July

4th FP2017
Fiscal period
ended
January

5th FP2017
Fiscal period
ended
July

6th FP2018
Fiscal period
ended
January

7th FP2018
Fiscal period
ended
July

8th FP2019
Fiscal period
ended
January

February 2019
After public offering(Note) The target may not be achieved due to future events, market environment and other factors.

29

6. Specific Actions
Resolution of Social Issues in an Aged Society (S)

System Investment Utilizing ICT [Investment amount: 46.5 million yen for 2
properties in total]

・ System utilizing ICT (EGAO link) was introduced at 2 properties owned by HCM.
・ HCM paid 44.6 million yen, the initial cost of capital investment, in a lump sum, while theoperator paid for the amount of increase in rent, thereby leveling the payment of introduction
cost and realizing early introduction.
・ Targeted facilities and amount of capital investment
ASHEIM Bunkyohakusan (completed introduction in July 2019, 20.9 million yen)
ASHEIM Hikarigaoka (completed introduction in August 2019, 25.6 million yen)

<Issues surrounding healthcare facilities>○ Duplicated work, long working hours○ Difficulty in securing personnel⇒Deterioration of service quality

Nursing home

<Contribution by REITs in the utilization of technology>○ Improvement of operational efficiency○ Reduction of working hours⇒ Expecting a ripple effect in the industry by disclosing the
introduction effect through materials of REITs

Residents

Operator
REIT (Investment Corporation)

Capital investment

・ Intend to improve
operational efficiency andservice quality byintroducing ICT devices.
・ Difficult to introduce them
immediately as capital
investment is a heavy
burden.

Rent (leveling of
payment of
introduction cost)

Nursing home30

Improvementof service
quality6. Specific Actions
Resolution of Social Issues in an Aged Society (S)

System of EGAO Link

A system enabling understanding of situation, record input and response to calls withsmartphones possessed by the staff by linking sleep sensor, nurse call and electronic medical
chart with nurse call gateway
System ofNurse Call

SensorC Sleep SCAN

Call notification• 24-hour monitoring of
respiratory condition• Capable of sleep assessment• Capable of individual setting of call notificationin the phase of sleep → arousal → uprise → bed
leaving
PARAMOUNT BED

Monitoring of sleep,
arousal, bed leaving
and respiratory
condition

Content of call
Automaticrecording

B Vi-nurse•A wide range ofcompatibility withvarious sensors,
cameras, recording
systems andsmartphones

AiphoneCall signal

Care Karte System
A CARECARTE•A system specializing inrecording from an on-site
perspective. Having highcustomization strength
for corporations. Responding
also to video andimage recording.
FUJI DATA SYSTEM

D Nurse Call Gateway•Established a network system linking
nurse calls with smartphones atmedical care facilities
Making nurse calls by switching to signals
for smartphones
Smartphone

Sumitomo Densetsu Co., Ltd.

Sharing of recorded
information

Capable of understanding the condition,
inputting record and answering calls with asingle smartphone(Source) AS PARTNERS Co., Ltd.



Effect of Introduction of EGAO Link

The quality of nursing care services is expected to improve through the improvement ofbusiness efficiency of nursing care staff and the reduction of work burden through ICT
investments.

Reducing night-time regular inspection by using
watching sensors
Significantly reducing the time for preparing
nursing care records through smartphone input
Reducing the number of nurse calls throughmonitoring using smartphones31

6. Specific Actions
Resolution of Social Issues in an Aged Society (S)Effect of Introduction of EGAO Link at ASHEIM Bunkyohakusan(July 2019-October 2019)
Living together■ Reduction of the burden of night shift work for care staff
1. Reduced 1 semi-night shift worker from the personnel structure
consisting of 2 night shift workers and 1 semi-night shift worker.
This is a reduction of 8 hours per day and 240 hours per monthwhen converted into working hours.
2. Even after the reduction of semi-night shift, night shift workers still takea 2-hour break every day. Furthermore, such workers can have a 2-hour
waiting time.
⒊ Night-time regular inspection ended on October 1, and the operator
was able to switch to individual support utilizing real-time monitor using
Sleep SCAN.
Number of night
shift workers
Total working
hours/day
Regular inspection

July 31,2019

October
31, 2019

Difference

2.5 people

2 people-0.5%

40 hours

32 hours-8 hours

4 times(approx. 4 hours)

0 times-4 times(-4 hours)

The status of sleep, arousal, bed
leaving, respiratory rate, andheart rate of residents canalwaysbecheckedwithsmartphones and PCs. It has
become unnecessary to wake up
residents with the cancellationofthenight-time
regularinspection that was conducteduntil now.
(Question from HAM) ASHEIM Bunkyohakusan has 8 floors above
ground and each floor area is small. What are the merits of theintroduction compared with other low-rise homes?
(Answer) Especially at night, it has become possible to check thearousal state of residents with smartphones by utilizing the realtime monitor of Sleep SCAN, and it has become unnecessary forcare staff to move up and down. At Bunkyohakusan, many
movements between floors were seen and inefficient movements
occurred frequently compared with the other 18 homes. However,such inefficient situation has improved as the condition ofresidents on the bed has become clear.

32

6. Specific Actions
Resolution of Social Issues in an Aged Society (S)Effect of Introduction of EGAO Link at ASHEIM Bunkyohakusan(July 2019-October 2019)■ Improvement of quality of nursing care service
The number of provision of life rehabilitation (maintenance/improvement
methods for daily life movements aiming to utilize the remaining
functions of residents) increased by 707 times.
July 31, 2019

Life rehabilitation

608 times

October 31, 2019

1,315 times

Difference+707 times(Question from HAM)
Please tell us the main factors for achieving the increase in thenumber of provision of life rehabilitation.
(Answer)
The increase in the number of life rehabilitation was largely due to theincrease in the efficiency of record input work resulting from theintroduction of care karte.
Even in the time study data that was used at homes where EGAO linkhas been introduced, recording work has been reduced to less than
one-tenth by digitizing the records.
Also at ASHEIM Bunkyohakusan(1) Real-time input of record using smartphones(2) Reduction of transcription work by customizing care karte
These two points are the main points in the reduction.
■ Summary and future actions
Reduction of work burden at night and other times is progressing
smoothly. As future actions, the operator will improve operation toensure that residents can stably be engaged in individual activities(activity aiming to revitalize the mind and body) for 2 hours a day.

33

6. Specific Actions
Establishment of Governance System (G)

Establishment of Management System

HCM’s asset management is entrusted to its asset management company HAM. HAM is engaged
in business under the following management system based on the asset managementagreement concluded with HCM. For details, please refer to the “Securities Report for the 9th
Fiscal Period”
HCM Website / IR Library
http://www.hcm3455.co.jp/ja/ir/library.html
Organizational Structure (Outline)

General Meeting of
Shareholders
Audit & Supervisory Board
MemberBoard of Directors

Management Committee

Compliance Committee
Representative Director

Internal Audit OfficeCompliance Office

Asset Management
Department

Investment Department

Financial & Administration
Department

Decision-Making Flow Concerning Acquisition of Assets Under Management
Proposal of acquisition plan by the Investment Department(Property due diligence by the Investment Department)
When the candidate asset
under management to beacquired is a healthcare
facility or hospital realestateWhen the candidate
asset undermanagement to beacquired is a property
other than healthcare
facility or hospital realestatePreparation of evaluation reports and submission to theInvestment Department by the Asset Management
Department or by external experts (if necessary)

Approval by Compliance Officer
Confirmation of existence or non-existence of issues on legal compliance and othercompliance (hereinafter, "legal compliance issues")
When the transaction falls
under the category of relatedparty transactions, or if theCompliance Officer judgesthat it is necessary to consider
the legal compliance issues
concerning the proposedincome plan.
Deliberation and resolution of the existence or nonexistence of legal compliance issues by the Compliance
Committee

Instructions forcancellation orchange ofcontent

The Investment Department presents the proposed acquisition plan to the Management
Committee

Deliberation and resolution at the Management Committee(The Compliance Officer may order the suspension of deliberation and resolution by the Management
Committee when it is judged that there are issues such as legal violation in the procedures ofproceedings and the content of deliberation.)

Reporting to the Board of Directors and HCM(However, if the proposed acquisition plan falls under the category of transaction withinterested party, etc. that requires approval of HCM's Board of Directors based on theInvestment Trust Act, prior approval of the HCM's Board of Directors shall be obtained.)

34

Instructions forcancellation orchange of content

6. Specific Actions
Establishment of Governance System (G)Basic Policy on Customer-Oriented Business Operations

HAM has adopted the “Principles concerning Customer-Oriented Business Conduct” published by
the Financial Services Agency of Japan on March 30, 2017, established the “Basic Policy on
Customer-Oriented Business Operations,” and promotes customer-oriented business operations.

HAM is promoting customer-oriented business operations byadopting
the “Principles on Customer-Oriented Business
HAM has a basic management policy to practice customer-oriented business operation andstrengthen autonomouscompliance system.
are not Services
contradictory Agency
but are truly
Operations'' announced
by theThese
Financialon
integrated, and HAM believes that customer-oriented business operation can be realized byachieving boththem. and establishing the “Basic Policy on CustomerMarch30,of2017
Oriented
Business
Operations."
HAM intends tomaximize unitholder
value over the medium to long term by seeking to realize asociety where all people can live vibrantly and with peace of mind as well as secure stable
income and achieve steady growth of the portfolio, and strives to ensure that such operation
will be established as a corporate culture.
HAM website/Basic policy on customer-oriented business operations
http://www.hcam.co.jp/policy/index.html
Activities of the Customer-Oriented Committee

In April 2018, HAM established the “Customer-Oriented Committee” as a self-operation
organization to promote business operations based on the above basic policy. The committee iscomposed of HAM's directors and representative members of each department, and is held oncea month in principle. The minutes are shared by all officers and employees.
HAM defines "customers," which are the target in the basic policy, not only as unitholders but
also as "stakeholders" including facility operators and residents. HAM has four departments,
namely the Investment Department, Asset Management Department, Financial & Administration
Department and Compliance Office, and each department considers what kind of actions willlead to customer-oriented business operations.
The committee shares the status of efforts at each department and discusses the transmissionof information on the company’s activities and the provision of appropriate services tocustomers. Discussions at the committee are returned to each department by the representative
members of each department, and such effort is an ongoing and cross-organizational approach.
In addition, there have been cases in which they were realized as measures of the company
based on the discussions at the committee.
Case Examples of “Customer-Oriented Business Operation” in Each Department
Items in the basic policy

Relevant
departments

Case example

Appropriate management of conflicts ofinterest

Investment
Department

Established warehousing rules to further strengthen
appropriate management system of conflicts of interest

Provision of easy-to-understand important
information

Financial &Administration
Department

Enhancement of disclosure of materials in English
Holding of briefings for individual unitholders

Provision of appropriate services tocustomers

AssetManagement
Department

Implementation of ICT investments (EGAO link)contributing to the reduction of the burden of nursing
care staff at facilities by HCM

Appropriate motivation framework for
employees

The committee(All departments)

Summarized the discussions held at the committee
and established the "Basic Policy on ESG"

35

7. Social Finance
SDGs Social Finance FrameworkWhat Is Social Finance?

Social Finance refers to finance with bonds and loans “that raise funds for new and existing
projects with positive social outcomes." Specifically, it is a financing approach where (i) The useof funds is limited to projects with a high degree of contribution to society, (ii) The funds arereliably tracked and managed, and (iii) Transparency is secured through reporting after thefund-raising.
ESG financing is showing signs of spreading to various financing tools rather than just bonds inrecent years. There is already encouragement being explicitly made for investment in various
financial instruments, such as the “Green Loan Principles” published by the Loan Market
Association for green projects.
In the “Recommendation from the High Level Meeting on ESG Finance - Toward becoming a big
power in ESG finance-” announced by the Ministry of the Environment on July 27, 2018,
promotion of ESG financing that have ESG and SDG contributions as the use of proceeds has
been incorporated as follows:“We understand that a strategic shift toward a decarbonized, sustainable society is exactly thesource of Japan’s competitiveness and “new growth,” as both the Paris Agreement andSustainable Development Goals (SDGs) pursue such a society. Against this backdrop, we haveconfirmed that it is essential to develop ESG investments, which are being accelerated ahead in
direct finance, into those with a larger social impact, and to realize ESG financing in indirect
finance as well through collaborations between regional financial institutions and local
governments, etc. with financial institutions’ responses to the global trend in mind… Given
Japan’s financial structure centered on indirect finance, encouraging considerations to ESG inloan will also be a key to expansion of sustainable and inclusive ESG finance.”Establishment of SDGs Social Finance Framework

HAM established the SDGs Social Finance Framework limiting the use of funds to investmentswith a high degree of social contribution when HCM raises funds through borrowings or bonds associal finance as well as defining the confirmation and management system of the status ofallocation of procured funds and reporting system of the effect of social contribution, etc.
The framework limits the use of funds procured from social financing to new investments inhealthcare facilities and refinancing. In addition, it also defines the criteria and process of project
selection, fund management method, status of allocation of funds and reporting on social
outcome.

36

7. Social Finance
JCR Social Finance Evaluation
What Is JCR Social Finance Evaluation?

JCR Social Finance Evaluation is an evaluation performed by Japan Credit Rating Agency, Ltd.
(hereinafter, “JCR”) by confirming that the use of funds are in alignment with the Social Financecomponents of the principles published by the International Capital Market Association (ICMA)and consistent with the SDGs. In the confirmation and evaluation, the "Social Bond Principles"and "Mapping of SDGs and Social Project Categories" published by ICMA are used as referenceindicators in the evaluation, and such include the "Social Finance Framework Evaluation," anevaluation for the framework of fund procurement, “Social Loan Evaluation," an evaluation forborrowings, and “Social Bond Evaluation," an evaluation for bonds.


Acquisition of First Social Finance Evaluation by a J-REIT

HCM was the first J-REIT to acquire social finance evaluation by JCR for the social financeframework and the social loans through which funds were procured in February 2019 (total of
11.75 billion yen). The impact of HCM’s businesses on the society, the management method of
the procured funds, the information disclosure system, etc. were highly evaluated, and HCM
received the highest evaluation for each item. For details, please refer to the evaluation reporton JCR’s website.
Evaluation item

ResultSocial Finance Framework Evaluation

Social1 (F)Social loan evaluation

Social1

JCR website
https://www.jcr.co.jp/
Actions

Targets of SDGs

Expected effects of social contribution
・ Elimination of the shortage of housing for the elderly against
the elderly population
・ Promotion of earthquake resistance at hospitals
・ Promotion of the shift of hospital functions to realize asustainable society

Continuous investment inhealthcare facilities and stableasset management

・ Promotion of social advancement of women who were forced toleave their jobs to be engaged in nursing care by promoting the
supply of nursing care facilities

・ Reduction of work burden of nursing care staff through ICT
system investments in nursing care facilities

37

7. Social Finance
List of Borrowings (as of the end of the fiscal period ended July 2019)Socialfinance

-

-

-

-

-

-

-

-

○

○

○

LenderSumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank
Nippon Life Insurance
Resona Bank
Shinkin Central Bank
Nishi-Nippon City Bank
Bank of Fukuoka
Mie Bank
77 BankDai-ichi Life Insurance
Hiroshima Bank
Sumitomo Mitsui Banking
Corporation
Nippon Life Insurance
Resona Bank
Shinkin Central Bank
Nishi-Nippon City Bank
Higashi-Nippon Bank
Bank of Fukuoka
Mie Bank
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank
Nippon Life Insurance
Resona Bank
Shinkin Central Bank
Nishi-Nippon City Bank
Bank of Fukuoka
Mie Bank
77 BankDai-ichi Life Insurance
Hiroshima Bank
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Banking
Corporation
Nippon Life Insurance
Resona Bank
Shinkin Central Bank
Nishi-Nippon City Bank
Higashi-Nippon Bank
Bank of Fukuoka
Mie Bank
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank
Nippon Life Insurance
Dai-ichi Life Insurance
Hiroshima Bank
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank
Resona Bank
77 Bank
Nippon Life Insurance
Hiroshima Bank
Dai-ichi Life Insurance
Sumitomo Mitsui Trust Bank
Sumitomo Mitsui Banking
Corporation
Resona Bank
Nishi-Nippon City Bank
Shinkin Central Bank
Bank of Fukuoka
The Gunma Bank
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank
Resona Bank
Nishi-Nippon City Bank
Shinkin Central Bank
Bank of Fukuoka
The Gunma Bank
77 Bank

Balance
Interest rate (%)(million yen)Fixed/
Variable

Drawdown date

Repayment
deadline

Security

3,700

0.54565

Fixed

February 1, 2017 January 31, 2020

Unsecured andunguaranteed

3,000

0.53520

Fixed

March 21, 2017 January 31, 2020

Unsecured andunguaranteed

1,000

1-month TIBOR+0.25

Variable

January 31, 2019 January 31, 2020

Unsecured andunguaranteed

2,000

0.77853

Fixed

March 3, 2017

January 31, 2022

Unsecured andunguaranteed

1,000

0.89375(Note)

Fixed

March 3, 2017

January 31, 2024

Unsecured andunguaranteed

3,000

0.78178

Fixed

March 21, 2017 January 31, 2022

Unsecured andunguaranteed

3,000

0.50090

Fixed

March 20, 2018 January 31, 2021

Unsecured andunguaranteed

4,000

0.57650(Note)

Fixed

March 20, 2018 January 31, 2023

Unsecured andunguaranteed

2,000

0.45353

Fixed

February 1, 2019 January 31, 2022

Unsecured andunguaranteed

4,000

0.41988(Note)

Fixed

February 1, 2019 January 31, 2023

Unsecured andunguaranteed

5,750

0.53900(Note)

Fixed

February 1, 2019 January 31, 2024

Unsecured andunguaranteed(Note) As for borrowings with variable interest rates, interest rate swap transactions are conducted with an aim to hedge the risk ofinterest rate increase. Therefore, the interest rate after the interest rate swap (fixing of interest rate) is shown.

38

8. Output Indicators
Portfolio Map

Paid nursing home
1

AQUAMARINE Nishinomiyahama

2

Bonsejour Chitose-funabashi

3

Bonsejour Hino

4

Bonsejour Musashi-shinjo

56

Medical Rehabilitation Home
Bonsejour Hadanoshibusawa
Medical Rehabilitation Home
Bonsejour Komaki

7

ASHEIM Hikarigaoka

8

ASHEIM Bunkyohakusan

9

SOMPO CARE La vie Re Machidaonoji

10 SOMPO CARE La vie Re Azamino
11
12 SAWAYAKA Tachibanakan
12 SAWAYAKA Mekarikan
13 SAWAYAKA Tagawakan
14 GOOD TIME HOME Fudo-mae
15 Bonsejour Yotsugi
16 Medical Home Bonsejour Itami
17 Kobe Gakuentoshi Building (Hapine
Kobe Gakuentoshi)
18 GreenLife Moriguchi
19 Hapine Kobe Uozaki Nibankan
20 Granda Tsuruma-Yamato
21 Smiling Home Medice Adachi
Aikoen Ichibankan Building (Aikoen
22 Ichibankan)
23 Hanakotoba Minami
24 Hanakotoba Miura

Serviced housing for the elderly

25 SOMPO CARE La vie Re Hama-Kawasaki

1

SOMPO CARE Sompo no ie S Awajiekimae

26 Hanakotoba Shin-Yokohama

2

SOMPO CARE Sompo no ie S Kobekamisawa

27 Hanakotoba Shin-Yokohama II

1

Niigata Rehabilitation Hospital

Medical service-related facilities, etc.

29 Verde Minowa

Paid nursing home, medical service-related facilities, etc.
1

28 Hanakotoba Odawara

SHIP SENRI BUILDING

30 Verde Hotaka
31 Sunny Life Kita-Shinagawa(Note) As for the output indicators in this report, the data announced as of the end of the fiscal period ended July 2019 (9th fiscal
period) is indicated unless otherwise specified.

39

8. Output Indicators
Summary of Buildings and Their Leasing Status
Property
number

Property name

No. ofTotal leased
Occupancy
tenantsarea
rate (%)
2(companies)(m )(Note 6)(Note 4)(Note 5)Structure/
Number of floor(Note 1)

Construction
completion (Note 2)

RC, 5FMay 18, 2007

5,274.54

5,274.542

100.0

RC, B1/6F

March 8, 1988

2,342.17

2,342.17

1

100.0

Total leasablearea (m2)(Note 3)

Paid nursing
home-1

AQUAMARINE Nishinomiyahama

Paid nursing
home-2

Bonsejour Chitose-funabashi

Paid nursing
home-3

Bonsejour Hino

RC, 3FMay 2, 1990

1,984.17

1,984.171

100.0

Paid nursing
home-4

Bonsejour Musashi-shinjo

RC, 4F

February 21, 1985

1,710.43

1,710.431

100.0

Paid nursing
home-5

Medical Rehabilitation Home
Bonsejour Hadanoshibusawa

RC, 5F

July 17, 1991

3,435.79

3,435.791

100.0

Paid nursing
home-6

Medical Rehabilitation Home
Bonsejour Komaki

SRC, 10F

March 13, 1991

8,858.49

8,858.49

1

100.0

Paid nursing
home-7ASHEIM Hikarigaoka

RC, 3F

March 6, 2006

3,628.60

3,628.60

1

100.0

Paid nursing
home-8ASHEIM Bunkyohakusan

RC, 8F

February 27, 2007

2,507.25

2,507.252

100.0

Paid nursing
home-9SOMPO CARE La vie Re Machidaonoji

RC, B1/6F

October 29, 2007

7,720.17

7,720.171

100.0

Paid nursing
home-10

SOMPO CARE La vie Re Azamino

RC, B1/5F

March 1, 2004

5,789.25

5,789.25

1

100.0

Paid nursing
home-11SAWAYAKA Tachibanakan

RC, B1/6F

October 31, 2005

5,652.94

5,652.94

1

100.0

Paid nursing
home-12SAWAYAKA Mekarikan

RC, 4F

November 15, 2005

4,720.46

4,720.46

1

100.0

Paid nursing
home-13SAWAYAKA Tagawakan

RC, 3F

January 20, 2006

2,366.20

2,366.20

1

100.0

Paid nursing
home-14

GOOD TIME HOME Fudo-mae

RC (S in part), B1F/5F

Mar. 18, 1992

3,400.20

3,400.20

1

100.0

Paid nursing
home-15

Bonsejour Yotsugi

RC, 5F

Mar. 28, 1989

1,962.89

1,962.89

1

100.0

Paid nursing
home-16

Medical Home Bonsejour Itami

SRC, 11F

Mar. 3, 1989

2,129.87

2,129.87

1

100.0

Paid nursing
home-17

Kobe Gakuentoshi Building(Hapine Kobe Gakuentoshi)

RC, B1F/9F

Jan. 7, 2009

12,636.48

12,636.48

1

100.0

Paid nursing
home-18

GreenLife Moriguchi

SRC, 9F

Sep. 6, 2006

8,356.85

8,356.851

100.0

Paid nursing
home-19

Hapine Kobe Uozaki Nibankan

S, B1/4F

Mar. 31, 2010

1,772.89

1,772.89

1

100.0

Paid nursing
home-20

Granda Tsuruma-Yamato

RC (S in part), 5F

Mar. 6, 1998

3,427.08

3,427.08

1

100.0

Paid nursing
home-21

Smiling Home Medice AdachiRC, 4F

Nov. 16, 2005

3,870.98

3,870.982

100.0

Paid nursing
home-22

AIKOEN ICHIBANKAN Building

S, 5F

Feb. 4, 2010

4,311.20

4,311.20

4

100.0

Paid nursing
home-23

Hanakotoba Minami

RC, 7F

Feb. 24, 2010

1,710.68

1,710.681

100.0

Paid nursing
home-24

Hanakotoba MiuraRC, 4F

Jun. 27, 2007

1,959.64

1,959.641

100.0

Paid nursing
home-25

SOMPO CARE La vie Re
Hama-Kawasaki

RC, 4F (Exclusive
portion)Mar. 8, 2007

4,060.21

3,921.67

4

96.6

Paid nursing
home-26

Hanakotoba Shin-Yokohama

RC, 9F

Mar. 15, 2004

5,230.23

5,230.23

1

100.0

Paid nursing
home-27

Hanakotoba Shin-Yokohama II

RC, B1F/7F

Apr. 25, 2007

1,837.29

1,837.29

1

100.0

Paid nursing
home-28

Hanakotoba Odawara

Paid nursing
home-29
Paid nursing
home-30

RC, 4F

Sep. 16, 2009

2,203.42

2,203.421

100.0

Verde Minowa(1) S, 5F(2) S/RC, 8F(1) Nov. 20, 2003
(2) Feb. 28, 1974

11,098.17

11,098.17

1

100.0

Verde Hotaka(1) S/SRC, 5F(2) S, 2F(1) Sep. 29, 1982
(2) Jul. 1, 1989

6,352.86

6,352.86

1

100.0

40

8. Output Indicators
Summary of Buildings and Their Leasing Status
Property No.

Paid nursing
home-31

Construction
completion (Note 2)

S, 3F

Sep. 30, 2018

2,135.54

2,135.541

100.0

RC, 12F

Jun. 12, 2009

5,745.15

5,745.15

1

100.0

SOMPO CARE Sompo no ie S
Kobekamisawa

S, 9F

Jun. 11, 2009

4,058.35

4,058.35

1

100.0

Niigata Rehabilitation Hospital(1) RC, 3F(2) S, 5F(1) Apr. 20, 1990
(2) Feb. 28, 2001

13,476.55 13,476.55

1

100.0

SHIP SENRI BUILDING

RC, B1F/11F

Sep. 5, 2008

24,813.85 24,813.85

1

100.0

-

-

182,540.84 182,402.30

44

99.9

Sunny Life Kita-Shinagawa

Serviced housing SOMPO CARE Sompo no ie S
for the elderly-1 AwajiekimaeServiced housing
for the elderly-2
Medical servicerelated facilities,
etc.-1
Complex of paid
nursing homes,
medical servicerelated facilities,
etc.-1

No. of
Total
Total leasable
Occupancy
tenantsleased area
area (m2)rate (%)
2(companies)(m )(Note 3)(Note 6)(Note 4)(Note 5)Structure/
Number of floor(Note 1)

Property name

Total

(Note 1) ”Structure/ No. of floors” indicates information provided in the real estate registry of the building of each owned asset. “S” refers tosteel 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.
(Note 2) ”Construction completion” indicates date of new construction provided in the real estate registry of the building of each owned asset.
(Note 3) “Total leasable area” indicates the areas based on the lease agreement of each building.
(Note 4) “Total leased area” indicates the areas, out of the total leasable area, for which actual lease agreements have been concluded and areleased.
(Note 5) ”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 tohave HCM sublease to the master lease company (section of paid nursing home with nursing care for “Smiling Home Medice Adachi”),
the master lease company is counted as a tenant, and accordingly indicated as the number of tenants, while the total number of end
tenants is indicated for properties subject to pass-through type master lease agreements, in which HCM receives rents paid by end
tenants without any change in principle. However, for the sections that are not subject to the lease agreement (master leaseagreement) between the trustee and HCM, the number of lessees leasing a building from the trustee is counted as the number oftenants and indicated accordingly.
(Note 6) ”Occupancy rate” indicates the total leased area as a percentage of the total leasable area of each owned asset as of July 31, 2019,and is rounded to one decimal place.

41

8. Output Indicators
Overview of Facilities and Housing for the Elderly
Property No.
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

Operator

No. ofrooms(rooms)(Note 1)

Capacity(persons)(Note 1)

No. ofresidents(persons)(Note 1)

Preparation date
Occupancyof Property
rate
Disclosure(%)
Statement of(Note 2) Important Matters(Note 3)

Property name

Type of facility

AQUAMARINE
Nishinomiyahama
Bonsejour Chitosefunabashi

Paid nursing home

GREEN LIFE Co., Ltd.

90

100

100

100.0

Paid nursing home

42

47

45

95.7 October 1, 2018

56

58

54

93.1 October 1, 2018

46

49

44

89.8 October 1, 2018

July 1, 2019

Bonsejour Hino

Paid nursing home

Bonsejour Musashishinjo
Medical Rehabilitation
Home Bonsejour
Hadanoshibusawa
Medical Rehabilitation
Home Bonsejour
Komaki

Paid nursing home

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

Paid nursing home

Benesse Style Care Co.,
Ltd.

100

101

94

93.1 October 1, 2018

Residential type paid
nursing home

Benesse Style Care Co.,
Ltd.

124

165

123

74.5

ASHEIM Hikarigaoka

April 1, 2019

Paid nursing home

AS PARTNERS Co., Ltd.

83

89

81

91.0

May 1, 2019ASHEIM Bunkyohakusan Paid nursing home

AS PARTNERS Co., Ltd.

50

52

49

94.2

SOMPO CARE
La vie Re Machidaonoji
SOMPO CARE
La vie Re Azamino
SAWAYAKA
Tachibanakan

December 1,
2018

Paid nursing home

Sompo Care Inc.

163

169

115

68.0

April 1, 2019

Paid nursing home

Sompo Care Inc.

145

145

98

67.6

July 1, 2019

Paid nursing home

Sawayaka Club Co., Ltd.

104

104

104

100.0

July 1, 2019

SAWAYAKA Mekarikan

Paid nursing home

Sawayaka Club Co., Ltd.

95

95

93

97.9

July 1, 2019

SAWAYAKA Tagawakan Paid nursing home

Sawayaka Club Co., Ltd.

60

60

59

98.3

July 1, 2019

GOOD TIME HOME
Fudo-mae

Paid nursing homeJAPAN LIFEDESIGN Inc.

61

67

58

86.6

July 1, 2019

Bonsejour Yotsugi

Paid nursing home655990.8 October 1, 2018

Residential type paid
nursing home

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

61

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

62

64

62

96.9 October 1, 2018

Paid nursing home

GREEN LIFE Co., Ltd.

131

138

129

93.5

July 1, 2019

GREEN LIFE Co., Ltd.

155

189

189

100.0

July 1, 2019
July 1, 2019

Paid nursing
home-18
Paid nursing
home-19
Paid nursing
home-20

GreenLife Moriguchi

Paid nursing home

Hapine Kobe Uozaki
Nibankan
Granda TsurumaYamato

Paid nursing home

GREEN LIFE Co., Ltd.

47

47

47

100.0

Paid nursing home

73

90

72

80.0 October 1, 2018

Paid nursing
home-21

Smiling Home Medice
Adachi

Paid nursing home

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

82

82

72

87.8

Paid nursing
home-22
Paid nursing
home-23
Paid nursing
home-24

AIKOEN ICHIBANKAN
Building

Paid nursing home

Medical Corporation
AIKOKAI

90

90

90

100.0

July 1, 2019

Hanakotoba Minami

Paid nursing home

Proud Life Inc.

51

51

48

94.1

July 1, 2019

Hanakotoba Miura

Paid nursing home

Proud Life Inc.

53

54

53

98.1

July 1, 2019

Paid nursing home

Sompo Care Inc.

58

58

44

75.9

July 1, 2019

Proud Life Inc.

136

136

130

95.6

July 1, 2019

Proud Life Inc.

29

30

22

73.3

July 1, 2019

Paid nursing
home-25

SOMPO CARE
La vie Re HamaKawasaki
Hanakotoba ShinYokohama
Hanakotoba ShinYokohama II

Paid nursing
Paid nursing home
home-26
Paid nursing
Paidnursing home
home-27
Paid nursing
Hanakotoba Odawara
Paid nursing home
home-28
Paid nursing
Verde
MinowaPaidnursing home
home-29
Paid nursing
Verde
HotakaPaidnursinghomehome-30
Paid nursing
Sunny Life KitaPaidnursinghomehome-31
ShinagawaServiced
SOMPO CARE Sompo no Serviced housing for
housing for
ie S Awajiekimae
the elderly
the elderly-1
Serviced
SOMPO
CARE
Sompo
no
Servicedhousing for
housing for
ie S Kobekamisawa
the elderly
the elderly-2
Complex of
paid nursing
SENRI BUILDING Hospital
homes, medical SHIP
Paid nursing home
service-related (Note 5)
facilities, etc.-1
Total-(Note 1)

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

July 1, 2019

Proud Life Inc.

60

65

61

93.8

July 1, 2019

Verde Corporation

174

206

201

97.6

July 1, 2019

Verde Corporation

121

174

172

98.9

July 1, 2019

Kawashima Corporation

66

66

60

90.9

November 1,
2018

Sompo Care Inc.

137
(Note 4)137
(Note 4)

136

99.3

July 1, 2019

Sompo Care Inc.

85

85

84

98.8

July 1, 2019

GREEN LIFE Co., Ltd.

181

200

200

100.0

July 1, 2019

3,071

3,328

3,048

91.6

-

-

”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(however, the figure for Hanakotoba Shin-Yokohama II is the figure as of the end of July 2019 and that of Sunny Life Kita Shinagawa isthe figure as of the end of June 2019, both based on the interviews with the operators).
”Occupancy rate” indicates the rate obtained by dividing the number of residents by capacity, rounded to one decimal place.
”Preparation date of Property Disclosure Statement of Important Matters” indicates the date of application, reference date or
preparation date stated on the document.
Actual number of rooms and capacity for serviced housing for the elderly are 136 rooms and 136 persons, respectively.
“SHIP SENRI BUILDING” has a hospital and a paid nursing home, and the overview of the facility concerning the paid nursing home isindicated in the above table.

428. Output Indicators
Overview of Medical Service-Related Facilities, Etc.
Property No.

Medical service-related facilities, etc.-1

Property name

Niigata Rehabilitation Hospital

Operator
Type of facility
Subject of
medicaltreatment

Main facility
criteria

June 1990(Established as Oyama Hospital, the precursor)
Authorized number of
168 beds (general bed: 108 beds/
Hospitalbeds
convalescent-stage beds: 60 beds)
Training facility certified by the Japanese Association
Rehabilitation, orthopedic surgery, internalof Rehabilitation Medicine
medicine, neurology, dental & dental andFacility certification
Training facility certified by Japan Society oforal surgery
Ultrasonics in Medicine specialists
Hospitaliz Hospital ward on 2nd floor (48 beds)
Hospitalization fee of hospital ward for regional comprehensive care 1
ation fee Hospital ward on 3rd floor (60 beds)· Basic hospitalization fee for general hospital ward (local general
hospitalization fee 1)· Medical management fee for regional comprehensive care 1
Hospital ward on 4th floor (60 beds)
Hospitalization fee of hospital ward for rehabilitation at recovery
stage 1
Medical Corporation AIKOKAI

OthersExternal
evaluation

Date of establishment

Emergency medical care management addition, specimen examination management addition I, fee forcoordinated guidance on cancer treatment, rehabilitation fee for cerebrovascular disease, etc. I, rehabilitation fee
for locomotor I, rehabilitation fee for respiratory apparatus II, fee for group communication therapy, etc.

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 No.

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

Property nameSHIP SENRI BUILDING (Senri-Chuo Hospital) (Note)

Operator

Kyowakai Medical Corporation

Date of establishment

October 2008

Hospital

Authorized number ofbeds

400 beds (general bed: 350 beds/
convalescent-stage beds: 50 beds)

Facility certification

Training facility certified by the Japanese Associationof Rehabilitation Medicine

Type of facility
Subject of
medicaltreatment

Main facility
criteria

Rehabilitation, orthopedic surgery, cranial
nerve surgery, surgery, internal medicine
and neurology

Basic hospitalization fee for convalescent-stage hospital ward 1
Facilities for the disabled, etc. 2 10:1 Basic hospitalization fee
Hospitalization fee of hospital ward for rehabilitation at recovery stage 1
Hospitalization fee of hospital ward for palliative care 2(Additional fees)
Special disease hospitalization facility management
Recuperation environment
Recuperation ward recuperation environment 1
Hospitalization
Regionally coordinated admission of emergency patient transport
fee
Generic drugs use system 1
Data submission 2 (a)Medical record management system 1
Dementia care 1
Discharge support 1
Medical safety measures 2
Regionally coordinated medical safety measures 2
Infection control measures 2

OthersExternal
evaluation

Cancer pain palliative guidance management fee, cancer patient guidance management fee (c), homevisit nursing and guidance fee for patients at home and home-visit nursing and guidance fee forresidents in the same building, drug management guidance fee, sample testing management (II),regionally coordinated clinical planning, neurologic examination, CT imaging (16-row multi-slice type),
sterile preparation and treatment fee, anticancer drug prescription management, outpatientchemotherapy 1, cerebrovascular disease, etc. rehabilitation fee (I) early addition, musculoskeletal
rehabilitation fee (I) early addition, disuse syndrome rehabilitation fee (I) early addition, pacemaker
implantation and replacement and surgery listed in General Rules 5 and 6 of the Medical Fee Points List,
Chapter 2, Part 10 (including General Rule 4 of the Dental Fee Points List, Chapter 2, Part 9)-(Note) “SHIP SENRI BUILDING” has a hospital and a paid nursing home, and the overview of the facility concerning the hospital is indicated in
the above table.

438. Output Indicators
Earnings Performance

Unit: thousands of yen
From February 1, 2019 to July 31, 2019

Property nameReal estate lease business revenue
Rent
revenue

Real estate lease business expenses

Otherrevenue

AQUAMARINE
Nishinomiyahama
Bonsejour
Chitose-funabashi

Propertytax
23,183

Bonsejour Hino
BonsejourMusashi-shinjo
Medical Rehabilitation
Home Bonsejour
Hadanoshibusawa
Medical Rehabilitation
Home Bonsejour Komaki

3,004

Outsourcin
g expenses

RepairexpensesInsurance
expenses

Depreciation

Other

2,100

2,504

189

14,985400

NOI(Note 3)59,144

5,568

1,794

224

－

95

3,048

404

21,358

5,057

1,240

213

－

73

3,130

400

19,478

4,091

1,012

167

－

64

2,447

400

16,133

8,386

1,824

213

－

131

5,817

400

21,08014,098

4,566

201

－

302

8,627

400

39,516ASHEIM Hikarigaoka

12,893

3,687

388

1,006

138

7,272

400

38,178ASHEIM Bunkyohakusan

10,556

2,502

388

－

103

7,161

400

36,730

SOMPO CARE
La vie Re Machidaonoji
SOMPO CARE
La vie Re Azamino
SAWAYAKA
Tachibanakan

44,301

5,878

780

745

306

36,190400

96,88933,712

4,795

780

1,580

224

25,933400

77,424

26,185

2,660

1,140

－

263

21,721

400

47,41043,597SAWAYAKA Mekarikan

25,635

2,978

1,140

－

167

20,949400

SAWAYAKA Tagawakan

8,320

1,122

1,140

－

79

5,578

400

12,951

GOOD TIME HOME
Fudo-mae

12,609

3,092

600

282

144

8,089

400

46,479Bonsejour Yotsugi
Medical Home Bonsejour
Itami
Kobe Gakuentoshi
Building(Hapine Kobe
Gakuentoshi)

Not disclosed(Note 2)

GreenLife Moriguchi
Hapine Kobe Uozaki
Nibankan
Granda Tsuruma-Yamato
Smiling Home Medice
AdachiAIKOEN ICHIBANKAN
Building

4,942

970

223

－

62

3,286

400

20,712

6,503

1,377

371

－

95

4,260

400

13,93952,163

9,599

900

1,346

490

39,427400

112,763

34,536

6,956

1,388

1,733

321

23,735400

109,199

9,699

1,401

1,200

177

76

6,444

400

24,244

7,143

1,938

618

－

128

4,058

400

27,164

13,316

3,231

540

454

150

8,541

400

59,952

8,559

2,563

780

90

95

4,630

400

22,731

Hanakotoba Minami

6,648

1,545

600

47

64

3,991

400

27,943

Hanakotoba Miura

6,548

1,536

600

80

76

3,855

400

17,70614,152

－

2,770

－

175

10,809396

46,764

10,285

－

900

359

210

8,418

396

60,045

SOMPO CARE
La vie Re HamaKawasaki
Hanakotoba
Shin-Yokohama
Hanakotoba
Shin-Yokohama II
Hanakotoba Odawara

2,929

－

600

－

78

1,853

396

13,737

6,341

－

600

－

84

5,260

396

26,531

Verde Minowa

19,941

－

1,020

196

433

17,894396

61,929

Verde Hotaka

22,376

－

1,020

549

212

19,701892

47,435

7,362

－

600

－

99

6,265

396

48,40327,311

4,931

510

300

234

20,934400

58,081

17,144

2,912

510

566

147

12,608400

35,754

Sunny Life
Kita-Shinagawa
SOMPO CARE
Sompo no ie S
Awajiekimae
SOMPO CARE
Sompo no ie S
Kobekamisawa
Niigata Rehabilitation
Hospital
SHIP SENRI BUILDING
Total(Note 1)
(Note 2)
(Note 3)

2,008,674

2,000,800

7,874

26,323

9,860

1,030

－

328

14,604500

78,16147,889

－

1,500

－

994

44,997396

368,910586,72188,986

27,761

12,0186,847

436,533

14,574

1,858,487

All figures indicated are rounded down to thousand yen.
”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 fiscal period under review based on the lease agreements.
“NOI”=Real estate lease business revenue – Real estate lease business expenses + depreciation and amortization

44

8. Output Indicators
Summary of Appraisal Report

Property
No.

Property namePaid nursing
home-1

AQUAMARINE
Nishinomiyahama

Paid nursing
home-2
Paid nursing
home-3
Paid nursing
home-4
Paid nursing
home-5
Paid nursing
home-6
Paid nursing
home-7

Appraisalcompany

Rich Appraisal
Institute Co., Ltd.
The Tanizawa
Bonsejour ChitoseSogo Appraisal
funabashiCo., Ltd.
The Tanizawa
Bonsejour Hino
Sogo Appraisal
Co., Ltd.
The Tanizawa
Bonsejour MusashiSogo Appraisal
shinjoCo., Ltd.
Medical Rehabilitation The Tanizawa
Home Bonsejour
Sogo Appraisal
Hadanoshibusawa
Co., Ltd.
Medical Rehabilitation The Tanizawa
Home Bonsejour
Sogo Appraisal
KomakiCo., Ltd.
Japan Real Estate
ASHEIM Hikarigaoka Institute

Summary of Appraisal Report (Note 1)
Appraisal
Direct capitalization
Appraisa
DCF method
Appraisal
NOI
methodIntegrated
l value
NOI
yield
value
Indicated
Indicated Discount(millions(millions
Capitalization
Terminal(%)(millions
value
value
rate
of yen)of yen)rate
capitalization(Note 4)of yen)(millions(millions(%)(Note 3)rate (%)(%)
of yen)of yen) (Note 2)
2,140

2,160

5.3

2,130

5.0

5.5

1,700

119

6.1

974

993

4.4

966

4.5

4.6

885

49

5.9

818

832

4.8

812

4.9

5.0

738

43

6.0

643

653

5.1

638

5.2

5.3

616

36

6.2

850

864

5.0

844

5.1

5.2

710

47

6.4

1,450

1,460

5.5

1,440

5.6

5.7

1,290

92

7.3

1,570

1,580

4.8

1,560

4.6

5.0

1,600

76

5.5

Japan Real Estate
Institute

1,650

1,670

4.4

1,630

4.2

4.6

1,610

74

5.1

Japan Real Estate
Institute

3,790

3,830

4.9

3,740

4.7

5.1

3,000

193

5.3

Paid nursing
home-10ASHEIM
Bunkyohakusan
SOMPO CARE
La vie Re
Machidaonoji
SOMPO CARE
La vie Re Azamino

Japan Real Estate
Institute

3,230

3,270

4.6

3,190

4.4

4.8

2,250

156

5.1

Paid nursing
home-11SAWAYAKA
Tachibanakan

Japan Real Estate
Institute

1,590

1,600

5.6

1,570

5.4

5.8

1,130

95

6.3

Paid nursing
home-12

Japan Real Estate
SAWAYAKA Mekarikan Institute

1,450

1,460

5.7

1,440

5.5

5.9

855

87

6.3

Paid nursing
home-13SAWAYAKA
Tagawakan

Japan Real Estate
Institute

411

414

5.8

408

5.6

6.0

348

26

6.6

Paid nursing
home-14

GOOD TIME HOME
Fudo-mae

1,950

1,970

4.4

1,920

4.2

4.6

1,920

92

5.2

Paid nursing
home-15

Bonsejour Yotsugi

886

902

4.7

879

4.8

4.9

806

48

5.8

Paid nursing
home-16

Medical Home
Bonsejour Itami

557

566

5.1

553

5.2

5.3

484

36

7.1

Paid nursing
home-17

Kobe Gakuentoshi
Building(Hapine Kobe
Gakuentoshi)

Japan Real Estate
Institute
The Tanizawa
Sogo Appraisal
Co., Ltd.
The Tanizawa
Sogo Appraisal
Co., Ltd.

4,410

4,470

4.7

4,390

4.5

4.9

3,080

225

5.2

4,400

4,460

4.6

4,370

4.4

4.8

3,100

220

5.3

995

1,010

4.6

988

4.4

4.8

667

48

5.2

1,060

1,070

4.7

1,050

4.8

4.9

984

53

5.3

2,440

2,470

4.7

2,430

4.8

4.9

2,420

119

5.3

862

866

5.2

860

5.3

5.4

840

45

5.9

1,190

1,200

4.6

1,170

4.4

4.8

692

56

5.2

664

671

4.9

661

5.0

5.1

581

35

5.7

1,820

1,850

4.6

1,790

4.4

4.8

1,010

89

5.2

2,230

2,260

4.5

2,200

4.3

4.7

1,700

109

5.2

401

403

4.8

398

4.6

5.0

410

22

5.8

948

960

4.9

943

4.8 5.0

5.1

888

49

5.6

1,700

1,710

5.0

1,690

4.8

5.2

1,240

109

6.7

1,360

1,370

5.6

1,350

5.4

5.8

398

90

7.0

Paid nursing
home-8Paid nursing
home-9Paid 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

Daiwa Real
Estate Appraisal
Co., Ltd.

Daiwa Real
Estate Appraisal
Co., Ltd.
Daiwa RealHapine Kobe Uozaki
Estate Appraisal
NibankanCo., Ltd.
The Tanizawa
Granda TsurumaSogo Appraisal
YamatoCo., Ltd.
Tanizawa
Smiling Home Medice The
Sogo Appraisal
AdachiCo., Ltd.
Tanizawa
AIKOEN ICHIBANKAN The
Sogo Appraisal
Building
Co., Ltd.
Japan Real Estate
Hanakotoba Minami
Institute
The Tanizawa
Hanakotoba Miura
Sogo Appraisal
Co., Ltd.
JLL Morii
SOMPO CARE La vie
Valuation &Re Hama-Kawasaki
Advisory K.K.
Japan Real Estate
Hanakotoba ShinInstituteYokohama
GreenLife Moriguchi

Japan Real Estate
Institute
The Tanizawa
Hanakotoba Odawara Sogo Appraisal
Co., Ltd.
Daiwa Real
Verde Minowa
Estate Appraisal
Co., Ltd.
Daiwa Real
Verde Hotaka
Estate Appraisal
Co., Ltd.
Hanakotoba ShinYokohama II

45

8. Output Indicators
Summary of Appraisal Report
Summary of Appraisal Report (Note 1)

Property No.

Property nameAppraisalcompany

Direct capitalization
methodAppraisalvalue(millions Indicatedvalueof yen)(millionsof yen)

DCF method

Capitalization
rate
(%)

Indicatedvalue(millionsof yen)Discount
Terminal
rate
capitalization(%)
rate (%)(Note 2)Integrated
value(millionsof yen)Appraisal
NOI(millionsof yen)(Note 3)

Appraisal
NOI yield(%)(Note 4)

Paid nursing
home-31

Sunny Life KitaShinagawa

Daiwa Real
Estate Appraisal
Co., Ltd.

1,970

2,000

4.5

1,950

4.3

4.7

1,900

91

4.9

Servicedhousing for theelderly-1

SOMPO CARE Sompo
no ie S Awajiekimae

Japan Real
Estate Institute

2,170

2,190

5.2

2,140

5.0

5.4

1,620

116

6.0

Servicedhousing for theelderly-2

SOMPO CARE Sompo Japan Realno ie S Kobekamisawa Estate Institute

1,340

1,350

5.2

1,320

5.0

5.4

994

72

6.0

Medical serviceNiigata Rehabilitation
related facilities,
Hospitaletc.-1

Japan Real
Estate Institute

2,260

2,270

6.6

2,250

6.4

6.8

1,060

152

7.4

Complex of paid
nursing homes,
SHIP SENRI
medical serviceBUILDING
related facilities,
etc.-1The Tanizawa
Sogo Appraisal
Co., Ltd.

14,30014,4004.5

14,200 4.5 - 4.6

4.7

16,300680

5.2

70,47971,204--

59,826

3,665

5.6

Total

69,870-(Note 1) Figures are based on appraisal reports with appraisal date of July 31, 2019.
(Note 2) “Discount rate” represents a yield used to discount net cash flow during an analysis period and terminal value at the end of ananalysis period back to present value, and figures used by the respective appraisal organization are shown.
For "Hanakotoba Odawara," 4.8% for the first to fourth fiscal years and 5.0% from the fifth fiscal year, and for “SHIP SENRI
BUILDING," 4.5% for the first to fourth fiscal years and 4.6% from the fifth fiscal year.
(Note 3) ”Appraisal NOI” indicates net operating income obtained by direct capitalization method stated in real estate appraisal reportwith July 31, 2019 as appraisal date, and is rounded down to the nearest million yen. NOI refers to the net operating income
before deducting depreciation, and thus, differs from NCF (Net Cash Flow) which is calculated by adding the profit from theinvestment of tenant deposits, etc. to and deducting capital expenditures from NOI. The same shall apply hereinafter in thisdocument.
(Note 4) "Appraisal NOI yield" is calculated by the formula below and rounded down to the first decimal place. In the column of total
appraisal NOI yield, the average appraisal NOI yield is shown which is calculated by dividing the total appraisal NOI of therespective asset in trust by the total acquisition price, and rounded down to the first decimal place. Appraisal NOI yield =Appraisal NOI of the respective asset in trust/Acquisition price of respective asset in trust.

46

8. Output Indicators
Capital Expenditures of Assets Under Management

8th FP (Ended January 2019) Actual
Name of real estate, etc.

Construction costs(thousands of yen)

Purpose

PeriodSOMPO CARE La vie Re Azamino(Yokohama-shi, Kanagawa)Exterior wall renovation (periphery)

From: August 2018
To: December 2018

43,153SAWAYAKA Mekarikan(Kitakyushu-shi, Fukuoka)

Replacement of floor materials(damaged by torrential rain)

From: November 2018
To: January 201914,093

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

Renewal of distribution switchboard
parts for power receiving/transforming equipment

From: October 2018
To: November 2018

8,872

-

-

43,727

Other real estate, etc.
Total



109,846

9th FP (Ended July 2019) Actual
Name of real estate, etc.

Construction costs(thousands of yen)

Purpose

PeriodGranda Tsuruma-Yamato(Yamato-shi, Kanagawa)Exterior wall painting and renewal ofrooftop waterproof

From: January 2019
To: April 201933,372

Smiling Home Medice Adachi(Adachi-ku, Tokyo)

Renewal of air conditioners incommon areas

From: February 2019
To: June 201924,174ASHEIM Bunkyohakusan(Bunkyo-ku, Tokyo)

Work on nurse call systems and otherequipment

From: May 2019
To: July 2019

20,932

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

Renewal of air conditioners incommon areas

From: March 2019
To: April 2019

17,908-18,251Other real estate, etc.

Total



114,638

10th FP (Ended January 2020) Plan

Name of real estate, etc.

Niigata Rehabilitation Hospital(Niigata-shi, Niigata)
ASHEIM Hikarigaoka(Nerima-ku, Tokyo)
GOOD TIME HOME Fudo-mae(Shinagawa-ku, Tokyo)

PurposeScheduled period

Work on rooftop
From: September 2019
waterproof
To: November 2019
Work on nurse call
From: July 2019
systems and other
To: August 2019equipment
Renewal of air conditioners
From: October 2019
in common areas (2nd
To: November 2019phase)

47

Estimated construction costs(thousands of yen)
Total
Payment
Total
amountduringamountalready
9th FP
paid
31,100--23,734--19,000--8. Output Indicators
Company Profile of Operators

Operator name

Headquarters location(Note 1)

Representative(Note 1)

Founded(Note 1)

4-12-8 HigashiShinagawa, Shinagawaku, Tokyo

Representative
Director
Ken Endo

May
1997

Shinjuku Monolith
Building, 2-3-1, NishiShinjuku, Shinjuku-ku,
Tokyo
3-20-8 Kasuga, Suitashi, Osaka

Capital stockor total
assets(millions ofyen)(Note 1)Attribute

3,925

Consolidated subsidiary of
Sompo Holdings, Inc., which islisted on the TSE First Section

Representative
September
Director
1995
Shinya Takiyama

100

Consolidated subsidiary ofBenesse Holdings, Inc., which
is listed on the TSE First
SectionRepresentative
Director
Koichi Okimoto

May
1994

50

Consolidated subsidiary of Ship
Healthcare Holdings Inc. which
is listed on the TSE First
Section

GREEN LIFE HIGASHI NIHON
1-4-16, Yaesu, Chuo-ku,
Co., Ltd.
Tokyo

Representative
Director
Koichi Okimoto

July
2003

90

Consolidated subsidiary of Ship
Healthcare Holdings Inc. which
is listed on the TSE First
Section

Sawayaka Club Co., Ltd.

2-10-10 Kumamoto,
Kokurakita-ku,
Kitakyushu-shi, Fukuoka

Representative
Director
Bunji Uchiyama

December
2004

200

Consolidated subsidiary of
UCHIYAMA HOLDINGS Co.,
Ltd., which is listed on the TSEFirst Section

AS PARTNERS Co., Ltd.

1-5-2, Yurakucho,
Chiyoda-ku, Tokyo

Representative
DirectorTakeshi Uemura

November
2004

40

Unlisted company

1-7-1, Akasaka, Minatoku, Tokyo

Representative
Director
Shosetsu Ito

April
2004

340

Unlisted company
Capital partnership with
Nomura Real Estate Holdings,
Inc.

Medical Corporation AIKOKAI

761 Kizaki, Kita-ku,
Niigata-shi, Niigata

Director
Hiromu Ikeda

November
1993

640

A medical corporation which
belongs to NSG Group withsales of over 80 billion yen(Note 2)

Proud Life Inc.

2-8-4, Kitasaiwai, Nishiku, Yokohama-shi,
Kanagawa

Representative
Director
Hiroshi Sonoda

July
2006

3

Consolidated subsidiary ofSony Financial Holdings Inc,
which is listed on the TSE First
SectionKyowakai Medical Corporation

16-5, Chuocho,
Kawanishi-shi, Hyogo

Director
Toru Kitagawa

August1982

3,378

Sompo Care Inc.

Benesse Style Care Co., Ltd.

GREEN LIFE Co., Ltd.

JAPAN LIFE DESIGN Inc.

Kawashima Corporation

Verde Corporation(Note 1)
(Note 2)-248-2, Higashiinohara,
Kimitsu-shi, Chiba

Representative
September
Director
1990
Teruo Kawashima

50

Unlisted company

839-4, Kamishiba,
Misatomachi, Takasakishi, Gunma

Representative
Director
Tomoyuki Higuchi

99

Unlisted company

June
1970

"Headquarters location," "Representative," "Founded" and "Capital stock or total assets" are based on the information in theregistry as of July 1, 2019.
Only one person is described in the "Representative," "Capital stock or total assets" is rounded off to the nearest million yen.
Indicates the actual figures in fiscal 2017 based on NSG Group’s website.

48

9. Actions of Each Operator
Feature: Interview
HCM has posted featured articles on interviews with operators in its Investment Management
Report, which it issues targeting investors, every fiscal period. HCM offered information on aregular basis with the aim to further popularize and expand the healthcare asset market bymaking features of respective operators and facilities as well as their various efforts widely
known to many people.
Interviews posted

1st FP

2nd FP

3rd FP

4th FP

5th FP

6th FP

7th FP

GREEN LIFE Co., Ltd.
Ms. Kumi Kashiwagi, Facility Manager of AQUAMARINE
Nishinomiyahama
Sawayaka Club Co., Ltd.
Mr. Hidekazu Tanaka, Fukuoka District Area Manager of Operation
Department
Mr. Kazuya Yamaguchi, Deputy Facility Manager of SAWAYAKA
Tachibanakan
Sompo Care Message Co., Ltd.
Mr. Keijiro Ishibe, General Manager of Corporate Management andPlanning Department
Mr. Akira Sakurai, Manager of Sompo no ie S Awajiekimae
Benesse Style Care Co., Ltd.
Mr. Kazuhiro Takanawa, General Manager of Living Facilities
Department
Mr. Takayoshi Hasegawa, Home Chief of Granda Tsuruma-Yamato
AS PARTNERS Co., Ltd.
Mr. Koji Yamamoto, Director, Executive Officer and General Manager
of Senior Home Operation Department
Mr. Masataka Kitamura, Home Chief of ASHEIM Hikarigaoka
Sompo Care Inc.
Sompo Care Next Inc.
Mr. Isao Yamakawa, Executive Officer
Ms. Terumi Ogata, Home Chief of SOMPO CARE La vie Re
Machidaonoji
AS PARTNERS Co., Ltd.
MR. Takeshi Uemura, Representative Director, President and CEO
Mr. Ryosuke Nakamoto, General Manager of Senior Home
Management Department and Group Leader of Operation
Management Group

8th FP

Kyowakai Medical Corporation
Mr. Toru Kitagawa, Director

9th FP

Proud Life Inc.
Mr. Masaki Kon, Executive Officer and General Manager of Business
Department
Mr. Nagahito Konno, Head of Hanakotoba Shin-Yokohama

Japanese version of the past Investment Management Report with interview articles posted canbe viewed on the HCM website. Please note that the company names and titles listed above arethose at the time of the interview.
HCM Website / IR Library
http://www.hcm3455.co.jp/ja/ir/library.html

49

9. Actions of Each Operator
Feature: Interview
SHIP SENRI BUILDING (Main tenant: Kyowakai Medical Corporation)
Contribute to society through high-quality medical and nursing care services under deepened partnership built
by working closely with local communities (posted in the Investment Management Report for the 8th FP)
Interviewee: Mr. Toru Kitagawa, Director of Kyowakai Medical Corporation―― First, please tell us about the history and outline of Kyowakai Medical Corporation.
Kyowakai Medical Corporation is a medical corporation approved based on Kyoritustu Hospital after two years from establishmentof the hospital. Kyoritsu Hospital was established in 1980 in Kawanishi City, Hyogo Prefecture with five doctors from Osaka
University’s Faculty of Medicine playing the central role. Especially, Dr. Kenzo Kiso, who became the first Director, played a key
role. The medical corporation launched hospitals in Kawanishi City, Hokusetsu region of Osaka Prefecture and Nishinomiya City,and expanded its long-term care health facilities business and even home nursing care support business along with such. This has
resulted into us currently operating six hospitals and four long-term care health facilities. The medical corporation now has a little
over 2,000 hospital beds, which adds up to a little over 2,500 beds when the number of beds at long-term care health facilities are
combined, and around 3,000 staff.
―― The Group offers a variety of services. Please tell us about what Kyowakai Group has focused on and the goal.
Regarding the purpose, first of all I believe that the corporate philosophy is important. Providing high quality medical care to thecommunity in close cooperation with the local community. Through such, making contributions to the society as well. Basically,that is the most of it. Kyowakai Medical Corporation has developed its business by not only thinking about the operation of thehospitals, but also having in its mind what kind of life can patients live after they leave the hospital, from the beginning whilepursuing its role. For example, Kyoritsu Onsen Hospital, the second hospital it established, is one of the first hospitals in Hyogo
Prefecture which launched focusing on rehabilitation. The third Kyowakai Hospital was opened as a care-mix type hospital. Timehas changed as the Heisei era started, and the concept of functional differentiation and cooperation with others has been required,and another three hospitals have been established to quickly adopt this concept. These three new hospitals focus on thecharacteristics of a back-up hospital that accepts patients from acute care hospitals, and the most recently established Daini
Kyoritsu Hospital and Senri-Chuo Hospital were launched as hospitals specializing in hospitalized care that basically do not provide
general outpatient care.
As such, the Kyowakai has devoted to develop business that suits each region, by focusing not only on acute care hospitals, butalso having "for patients who left acute care hospitals" in mind. I consider that we have been creating the “community-based
integrated care system,” which comes up in the news in recent years, before such became a popular topic.
Another important point of view as a corporation is that medical care is not what we can push on a community. A community has
its own demands and needs on medical care, and we must have a point of view that we should provide required medical care tothem in a steady manner. Therefore, we are always keeping in mind what kind of medical care is needed and what kind of medicalcare is lacking in each area when moving plans forward. For example, in the Kawanishi region, we are providing nursing care andhome nursing care support, including acute care hospitals. On the other hand, in the Hokusetsu region, there are several largescale acute care hospitals, including university hospitals and national centers. So, we are leaving the acute care to these hospitals,
and focusing on medical care during recovery and chronic periods as a private sector.
In terms of needs from a community, I believe it is important to correctly understand the situation of prefectures andmunicipalities as well as what people require for a private sector to do. In Osaka, we are also engaged in the business of the Osaka
Heavy Ion Therapy Center, the sixth heavy ion radiotherapy facility for cancer in Japan. This is a business that Osaka Prefectural
Hospital Organization held an open call for a private business to be engaged in. Although we, the Kyowakai Medical Corporation,
have won, heavy ion radiotherapy is an advanced medical treatment, and it was not yet approved as a treatment subject toinsurance at that time. As it was just the second facility even in the entire Kansai area, we wondered whether it is fine to behandled by just one medical corporation. After having discussions with Osaka Prefectural Government, we established public
interest incorporated foundation Osaka International Cancer Treatment Foundation, which plays the central role in operating thefacility. For this reason, the Osaka Heavy Ion Therapy Center is not counted as a facility of the Kyowakai, but it is the Kyowakai
that has been entrusted with the business from the Osaka Prefectural Government, and it is a facility which the Kyowakai must
operate with full responsibility.
Lastly, regarding Kawanishi City, Hyogo Prefecture, the Kawanishi City decided to lay out plans for future city-run hospitals in linewith the regional medical care concept while many public hospitals throughout Japan had issues in management regardless of theregions. As a result, the Kyowakai was selected as a designated manager of Kawanishi City Hospital from this April. It has also
been decided that a new hospital (tentative name: Kawanishi City Integrated Medical Care Center, 400 beds) shall be establishedby integrating current Kyoritsu Hospital having 313 beds and Kawanishi City Hospital having 250 beds, aiming to be launched three
years from now, while we operate the Kawanishi City Hospital. We are to be entrusted with the operation continuously as adesignated administrator for the new hospital as well. We think that it is our duty to bear the entire regional medical care while
following instructions of administration.

50

9. Actions of Each Operator―― Next, please tell us about Senri-Chuo Hospital, and outline and characteristics of the hospital.
Senri-Chuo Hospital is the newest hospital of Kyowakai, and I think it stands on a location worthy of attention even in Osaka
Prefecture. The nearest station is the last station at the northern end of the subway Midosuji Line, which runs through the centerof Osaka and has Shin-Osaka Station which Shinkansen bullet train stops . It is also directly connected to Osaka International
Airport (Itami) through the Osaka Monorail. Senri-Chuo is located in the center of Senri New Town, a major commuter town to
Osaka developed along with the Osaka World Expo 1970, and the surrounding area is concentrated with a number of acute care
hospitals including Osaka University Hospital (1,078 beds), the National Cerebral and Cardiovascular Center (612 beds), Minoh City
Hospital (317 beds), Toyonaka Municipal Hospital (613 beds), Suita Municipal Hospital (431 beds), Saiseikai Senri Hospital (343
beds), Saiseikai Suita Hospital (500 beds), and much more. Therefore, Senri-Chuo Hospital opened ten years ago as adifferentiated hospital by function with no general outpatient care and mainly having beds for the recovery and chronic stages.
―― How is a patient hospitalized when there is no outpatient department?
Basically, we accept patients by referrals from other hospitals through the regional medical cooperation office. Acute care hospitals
are required to keep the average length of hospital stay below a certain number of days, and after a certain level of treatment,
they need to have patients leave or transfer to a different hospital. In plain words, when an acute care hospital says to a patient,“it is time for you to transfer to a different hospital,” the patient has the feeling “I’d like to stay in this hospital.” However, as SenriChuo Hospital is a relatively new hospital standing in a good location, many patients choose Senri-Chuo Hospital as theirdestination saying, “If only I can be transferred to Senri-Chuo Hospital.” If it was an old hospital at an inconvenient place that is far
away, I think that patients might be reluctant to transfer. So, concerning such issues, we are running the hospital relatively
smoothly. Another point is that when patients choose an acute care hospital, they place importance on content of treatment
service like “what kind of medical treatment will be provided by a doctor with what kind of personality.” However, when they willbe transferred to, let’s say, a rehabilitation hospital ward for recovery stage, they place importance on “how much rehab
rehabilitation can I obtain.” It is important to fully understand such difference in roles.
―― The hospital being the subject of a recent deal of Healthcare & Medical Investment Corporation has been attracting muchattention even in the REIT industry.
Senri-Chuo Hospital has been operated under the building lease since its opening. Why did you adopt such a method?
There are several reasons. At present, Japan has a greater number of hospital beds per population than countries in Europe or the
U.S. While we have a problem of aging population, such as the 2025 issue, the problem of low birth rate lies at the base anddecrease in population is expected. Therefore, we are not in a situation of increasing the number of beds. As Japan is undernational health insurance system targeting all citizens, basically hospitals can only earn income from medical treatment fees.
However, in the past 30 years, the government has rarely raised the medical treatment fees. On the other hand, I believe prices
have risen by about 20%, so one reason is that hospitals cannot be built at a pace like in the high economic growth period.
If you want to establish a new hospital in such a circumstance, some ingenuity is needed. Of course, a corporation with enoughfunds would be fine ... In such a situation, I understand that REIT will be one of the effective ways to develop a new hospital.
Senri-Chuo Hospital is located in one of the most blessed areas of Osaka, and the land price is what match the location, but it has
become a hospital that attracts a lot of attention from patients beyond such. In other words, I believe it can be said as a hospitalthat is expected to maintain high occupancy rate even when compared with other hospitals with similar medical functions. I thinkthese factors might be easy to explain to investors.
I understand that REIT is a very useful way to launch a new hospital. When you build a new hospital, you make a business plan. It
is only natural that a firm and realistic business plan is required even when you are operating a hospital by leasing the building. If ahospital is a necessary one from viewpoint of anyone and if a business plan that is believed to earn steady income over many years
can be drawn out, those who are willing to offer hands will appear as a matter of course. Without such understandings, no one will
cooperate. Neither the investors nor the municipalities will cooperate. In that sense, Senri-Chuo Hospital was easy to draw out aplan due to its location and surrounding conditions. After all, I think that it is more important than anything else to provide medical
cares required under a solid business plan.

SHIP SENRI BUILDING

51

9. Actions of Each Operator―― So, utilizing a REIT was possible only because your plan can expect a sufficient profit, meaning that investors can feel at ease.
Also, how is Senri-Chuo Hospital and Well House Senri-Chuo, a paid nursing home for the elderly, working together?
With the construction of regional comprehensive care system being progressed, the patients are promoted to return to theirhomes, and hospitals are being asked to help patients return to their community as much as possible. That said, it's not so easy
like if you can bring your parents living apart to your home because they became to need nursing care. It is impossible for me, too,
who live in a two-bedroom apartment. More people are taking care of their parents although they’ve turned old themselves, andthe number of elderly living alone is also increasing. However, under such a situation, some people will no longer be able to returnhome if any physical problems occur and the disability remains. As options for these people, there are intensive care homes for theelderly, which are long-term care health facilities, as well as residential facilities including serviced housings for the elderly, paid
nursing homes and group homes, which are treated as “residing at home” in terms of medical treatment fees. Well House SenriChuo is one of such, so it is possible for Senri-Chuo Hospital to use it in promoting patients to return to their home. Also, as it hasa hospital in the same building, it can be understood as a paid nursing home one can feel secured for those who have concerns inreturning to their home. So, we are working closely with each other and developing under collaboration.
However, suffice it to say that there is a problem in medical treatment fees. As Senri-Chuo Hospital is a hospital with more than
200 beds, it can have hospitalized elderly living in Well House Senri-Chuo under the rules of medical treatment fees, but it isdifficult for doctors of the hospital to visit the facility. Moreover, the hospital is not providing general outpatient care, so it isnecessary to devise what kind of treatments we can provide to the residents of Well House Senri-Chuo on a daily basis. In the caseof Well House Senri-Chuo, another clinic providing home care is located in the same building, and the hospital, clinic and Well
Homeouse Senri-Chuo are providing care under cooperation.
―― Which means that a patient who wish to return to his or her home can be transferred to the paid nursing home smoothly after
he or she finishes his or her medical treatment at the hospital.
Some of those who aim to return to their home will be the target. It is an option for those who have difficulties in returning home.
The key is, we can’t promote every patients to return to their home in a responsible manner unless we have an answer to the
problem what to do with the patients with difficulties. I think it is important to retain a stance of encouraging patients to return totheir homes by reducing their concerns through showing that they have options available when in troubles.
―― Such efforts leads to the keywords even ordinary people have heard of, the “regional comprehensive care system” and the“regional healthcare vision."
I agree. In medical care in Japan today, “establishment of regional comprehensive care system” is one of the keywords, and I thinkother important phrases are such as “along with regional healthcare vision” and “functional differentiation of hospital beds andcooperation."
In addition to the above, one of the goals of the corporation as a whole is “a hospital that does not refuse” and another is“sometimes hospitalized, almost at home.” In the era of Japan‘s rapid economic growth, it was possible to increase gross domestic
product, GDP, by increasing the employment population as this increases the GDP along with it to some extent. I think that making
medical fees free for elderly due to this reason even might have been one of the factors that led to the current women’s
advancement in society as it reduced their needs to provide nursing care at home. I think there is an aspect that Japan has
achieved the rapid growth as a result of this, as it further increased the number of working population. However, I know we are
currently not in such an era of rapid growth, and believe we are not in a financial position capable of such, given the Japanese
government‘s debt balance. In addition to the problem of the aging society, the problem of declining birthrates has also been
added, resulting in decrease in the number of younger people who support the elderly. It is a reality that elderly people withsevere illness are living at home, which had never been thought before. If such severely ill patients are taken care of at their home
all the time, the patients as well as their family will be exhausted. So, hospitalize them sometimes as needed, but do not keepthem at the hospital all the time and make them return to their homes when it gets better. By doing so, they will be enabled tospend more time at a familiar region where they’ve lived in over a long period time, even just for a while. I think this is what“sometimes hospitalized, almost at home,” the phrase we have been saying for past few years, means. I believe that hospitals can
not be operated solidly at a region if they do not cooperate well with facility services and home-visit nursing care and home-visit
nursing under departments that support in-home nursing care.
Lastly, another thing Kyowakai is focusing on is the collaboration with regional university hospitals. For hospitals, it is important tosecure medical staff, including doctors. Cooperation with regional medical institutions is important for this purpose, but it is more
important to maintain close cooperation with university hospitals in the region, especially for acute care hospitals. A new system
for specialty doctors was started last year, and it is important for a hospital to become a hospital where young doctors want totrain at by constantly fulfilling roles as an educational and training facility under collaboration with university hospitals. However, it
is not easy for a single hospital to expand the potential of young doctors and raise them firmly alone. I think it might be importantto establish a system where young doctors can return to university hospitals and grow into even more excellent doctors. By doing
so, I hope the hospital to become a facility that will be eventually selected by young doctors and where university hospitals would
want to send their staff to for the purpose of human resource development. Cooperation with university hospitals is a very
important factor in continuously providing medical care in a community.

52

9. Actions of Each Operator
Feature: Interview
Hanakotoba Shin-Yokohama (Proud Life Inc.)

Aiming to be the nursing care industry’s number one “company where people gather, people grow and people are active”(presented in the 9th Fiscal Period Investment Management Report)
Interviewees:

Mr. Masaki Kon, Executive Officer and General Manager of Business Department, Proud Life Inc.
Mr. Nagahito Konno, Head of Hanakotoba Shin-Yokohama■ Operation aiming for value exceeding price by making full use of dominant strategy―― Please provide an overview of Proud Life, which operates Hanakotoba.
Mr. KonThe predecessor of Proud Life Inc. was Kabushiki Kaisha Yuai, which started operating its first home “Hanakotoba Totsuka”
in 2003, and became a member of the Sony Lifecare Group in 2017. We later changed to the current company name andabout two years have passed since. We currently operate paid nursing homes, etc. in 26 locations nationwide, mainly in
Yokohama City. This December, we plan to open “Hanakotoba Plus Nerima Nakamura,” a paid nursing home with nursing
care, resuming new openings for the first time in about five years.
Since joining the Sony Lifecare Group, we have been focusing on improving the quality of our operation, such as
strengthening our actions in terms of recruitment, education, training and other human resource development, while
improving our internal management systems, including corporate governance. At the field level, too, we engage in daily
operation aiming to provide value exceeding price. In addition, we have many nearby homes in Kanagawa Prefecture,
allowing residents to choose the best home depending on their condition. In this and other ways, we have an advantage
compared with other companies from also a dominant point of view, and are making use of inter-home cooperation among
persons in charge in terms of operation, too.
Mr. Konno
In fact, an area meeting is held once a month in which the persons in charge of homes in the area gather together,achieving sufficient horizontal cooperation, such as communication of information and sharing of cases and know-how.
―― The “Hanakotoba” brand has eight features that vary from home to home. Please tell us about some of the typicalones.
Mr. KonFirst, there is substantial “staff training.” New employees are always provided with training at the time of joining thecompany, in which they are educated on our corporate culture, the Sony Group Code of Conduct, necessary operational
knowledge, etc. In addition, there is a system called order training, in which a training plan is formulated to individual
requests that differ from one home to another made by a site to headquarters, making it also possible to conduct
necessary training from the viewpoint of the site.
Next is the “free plan” to support customers’ wishes. Many people have the image of having to live with patience once
entering a paid nursing home, such as being unable to freely go out or stay out overnight and having to act the same as
everyone because they are living together, but we support and execute our customers’ wishes, such as “what they want todo” and “where they want to go,” from planning to realization.
Mr. KonnoSpecifically, we fulfill customers’ wishes to go on a trip or soak in a hot spring, in the form of a free plan.

Hanakotoba Shin-Yokohama

53

9. Actions of Each Operator■ Here is a place where people can spend time blooming and sparkling in their life ahead―― Please tell us about the features of “Hanakotoba Shin-Yokohama.”
Mr. KonThis home is a 9-story home with 136 rooms, where the 2nd to 8th floors are residents’ dedicated rooms. The customers’condition and level of care required are divided by floor so that customers can spend time with those whose condition isclose to their own. Another feature is the point that this home is the only one in the “Hanakotoba” series to have a systemthat makes nurses available to support the lives of customers 24 hours a day and the capacity to respond to consultations
is thus broad. In addition, there are benefits, such as being able to be treated in the home even for those who are highly
dependent on medical care, from having secured the cooperation of also distinctive medical institutions.
―― Please tell us about the appeal to residents and their families.
Mr. KonWe believe that there is a good balance overall between the cost paid by customers and the rich lineup of services in termsof medical response in that nursing is available 24 hours a day, not to mention the favorable location being near a station,
among other features. Also, many people choose us for the sense of security in the quality of care services in that they can
reside in this home from a relatively healthy stage to the end, regardless of the level of dependence on medical care, andso that is a great forte.
Mr. Konno
In addition, the recreational activities that we proactively offer are also enriching the daily lives of residents. In this home,
the group activities are also of a rich lineup, with ten or so circles at present in which residents can participate as much as
they want according to their circumstances.
Participation is once or twice a week on average. Flower arrangement and everyone singing along to the piano are among
the popular circles. We are also focusing on actions in cooperation with the local community. The most recent include
cherry-blossom viewing in April, going out to a city hotel to enjoy the café and shopping in May, and Bon festival dancing
at Osanbashi Yokohama in June, in which about 100 out of the 130 residents participated in total for the three months.
―― Lastly, please address the unitholders.
Mr. KonWe seek to color the lives of our customers through our business of nursing care and provide places to live where ourcustomers can lead the life they truly desire and live with peace of mind. In addition, by also pursuing the satisfaction of
our employees as well as enhancing the satisfaction of our customers, we will operate our business for the peace of mindof unitholders.
Mr. Konno
We engage in daily operation keeping in mind that our business has a high sense of social contribution.
We believe that such resulting in being regarded necessary by customers and increasing the reputation of our homes leads
to operation of homes for the peace of mind of unitholders.

54

9. Actions of Each Operator
Case Examples
HAM interviews and interacts with operators through daily business
operations, collecting information on also the actions of each company.
Here, we introduce some of the information, mainly on what each company
has disclosed.


Actions for Human Resource Development
HAM confirmed that each company is working on human resource development, including
prevention of abuse and inappropriate care, by preparing many manuals, etc. and throughcompany-wide training conducted by gathering the persons in charge and leaders of eachfacility, training conducted at each facility, etc. Some operators have publicly disclosed theirknow-how.
[Proud Life Inc.]
Conducted practical training for communication care technique “Humanitude®” in-househttps://hanakotoba.co.jp/assets/news20190828.pdf[Benesse Style Care Co., Ltd.]“Benesse Method 01,” clues to creating an environment that is aligned close to that person’s ways
https://www.benesse-style-care.co.jp/method01/
Introduces 65 tips for creating an environment for the elderly to live comfortably, born fromthe practice of operating Benesse’s homes for the elderly for 20 years.
General information site for nursing care staff “Kaigo Antenna”
https://www.kaigo-antenna.jp/
Free disclosure to the public of know-how and knowledge cultivated in the over 20 years ofoperation of homes. From the Benesse method, guidelines, training and development
textbooks, etc., which have been kept for internal use only until now, the contents likely to be
useful to many people have been re-edited and posted as a web version.

Actions in the Event of Disaster[Sawayaka Club Co., Ltd.]
Notice Regarding Free Acceptance of Elderly People Affected by Record Heavy Rain in Northern
Kyushuhttp://www.sawayakaclub.jp/advert/201908.pdf[Kawashima Corporation]
About the Impact of Typhoon No. 15
https://www.sunnylife-group.co.jp/news/8* In addition to this release, we have received reports that they worked to ensure the safety ofresidents by transferring residents from facilities in power outage areas to non-power outage
areas due to the prolonged power outage.

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9. Actions of Each Operator
Case Examples
Actions to Tackle Shortage of Human Resources in Nursing Care (Improvement ofTreatment)

HAM confirmed that each company is working on improving treatment through the status ofacquisition of “nursing care staff treatment improvement addition” and “nursing care staff, etc.
specific treatment improvement addition” stated in the property disclosure statement ofimportant matters, interviews and press releases.
[Sompo Care Inc.]
Improved treatment of nursing care staff- Becoming a more comfortable and rewarding workplace from October 2019 https://www.sompocare.com/attachment/topic/596/shogukaizen_20190826.pdf[Benesse Style Care Co., Ltd.]
Improved treatment of nursing care staff and revised personnel system
For full-time certified care workers who have been with the company for more than 10 years(nationwide), 84% of those in leader positions earn 5 million yen or more annually, 97% ofmodel cases of those in positions other than leader positions earn 4.4 million yen or moreannually
https://kaigo.benesse-style-care.co.jp/saved_data/pdf/topic/155/file_20190910112225573143.pdf

Actions to Tackle Shortage of Human Resources in Nursing Care (Acceptance ofForeign Technical Interns)[SHIP HEALTHCARE HOLDINGS, INC. (GREEN LIFE Co., Ltd.)]
Actively recruit foreign technical interns
https://www.shiphd.co.jp/blog/irs/d20a343b36704984cececddc588fc7b5f3409101.pdf[UCHIYAMA HOLDINGS Co., Ltd. (Sawayaka Club Co., Ltd.)]
Opening of vocational school with establishment of joint venture in Indonesia
http://www.uchiyama-gr.jp/ir/upload_file/tdnrelease/6059_20180219474383_P01_.pdf

Actions Related to Dementia and Cognitive Decline[Sompo Care Inc.]
Published “Ninchisho Naruhodo! Book” to deepen understanding of dementia
https://www.sompocare.com/attachment/topic/604/naruhodobook_2019_0912.pdf[Medical Corporation AIKOKAI (Niigata Rehabilitation Hospital)]
Simple cognitive function test “Atama no Kenko Check®” started in November, the first time in
Niigata Prefecture
http://www.niigata-reha.jp/news/info/201910152253/

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9. Actions of Each Operator
Case Examples
Operation of Type-B Employment Continuation Support Business Establishment at
GreenLife Moriguchi
From August 2019, GREEN LIFE Co., Ltd. has been engaging in a type-B employment
continuation support business that is one of the employment-based welfare services for
persons with disabilities under the Act on the Comprehensive Support for the Daily andSocial Life of Persons with Disabilities by utilizing the closed former in-house nursery center
section in the same building where the paid nursing home “GreenLife Moriguchi” is operated(the section is separate from the nursing home and has an independent entrance).
In a completely enclosed vegetable plant where a constant temperature is maintained
throughout the year, the process of seeds of leafy vegetables sprouting and growing and thecycle allowing one to see the growth to consumption of vegetables can be experienced
through work, making it a rewarding work environment.
Established on the same site as the nursing home, there is also mutual interaction throughrecreational activities and interaction with local people.
Green Farm Moriguchi
https://gl-greenfarm.com/

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Disclaimer
This material contains forward-looking statements including forecasts, outlooks, goals and plans.
These statements are based on the information available as of the date when this material isprepared and incorporate certain subjective assumptions about uncertain factors that may affectfuture results. Accordingly, these statements are inherently not guarantees of future
performance and actual results may differ materially.
The opinions, outlooks and estimates contained in this material reflect our view and judgment
based on information as of the date when this material is prepared and involve risks anduncertainties.
No guarantee is made as to the accuracy, completeness, appropriateness and validity of
information contained in this material. It is not promised that information contained in thismaterial will always be updated.
Contents of this material are subject to change without notice.
This material is not intended as a solicitation for investment. Any investment decision must be
made based on your own judgment and responsibility.

Asset management company: Healthcare Asset Management Co., Ltd.
(Financial service provider registration: Director of Kanto Local
Finance Bureau (Kinsho) No. 2815, member of the Investment
Trusts Association, Japan)

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