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

(REIT) Financial Report for Fiscal Period Ended July 2019

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

Representative:

Seiji Yoshioka, Executive Director

REIT Securities Issuer

September 13, 2019

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

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

October 30, 2019
October 18, 2019

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

Operating revenue
million yen
%
2,008
54.4
1,301
2.7

Operating income
million yen
%
1,189
83.9
647
3.5

Net income per unit

Return on equity

yen
3,372
2,794

Ended Jul. 2019
Ended Jan. 2019

%
3.9
2.7

Ordinary income
million yen
%
1,047
93.7
540
3.6
Ratio of ordinary income
to total assets
%
1.9
1.2

Net income
million yen
1,046
539

%
93.8
3.6

Ratio of ordinary income
to operating revenue
%
52.1
41.5

(2) Distributions Status
Distribution
per unit

Distribution
per unit

Total
Total
Distribution
Total
Distribution Ratio of
distributions
distributions
in excess of
distributions
payout distributions(including(excluding(including(excluding
earnings perin excess of
distribution in distribution in excess
distribution in
distribution inratio to net assets
unit
earnings
excess of earnings)
of earnings)
excess of earnings) excess of earnings)
yen
3,643
3,120

yen
3,325
2,661

Ended Jul. 2019
Ended Jan. 2019

yen
318
459

million yen
1,132
602

million yen
1,034
513

million yen
98
88

%
98.9
95.2

%
3.1
2.5

(Note 1) Total distributions in excess of earnings of 98 million yen (318 yen per unit) for the fiscal period ended July 2019 is comprised of (1) total distribution
amount from reserve for temporary difference adjustment of 11 million yen (38 yen per unit ) due to the occurrence of deferred losses on hedges of
12 million yen recorded as net asset deduction items for the current fiscal period and (2) total distribution amount of 87 million yen (280 yen per unit)
from distribution reducing unitholders’ capital for tax purposes.
Total distributions in excess of earnings of 88 million yen (459 yen per unit) for the fiscal period ended January 2019 is comprised of (1) total distribution
amount from reserve for temporary difference adjustment of 25 million yen (133 yen per unit) due to the occurrence of deferred losses on hedges of
25 million yen recorded as net asset deduction items and (2) total distribution amount of 62 million yen (326 yen per unit) from distribution reducing
unitholders’ capital for tax purposes.
(Note 2) The ratio of decreasing surplus due to execution of distribution in excess of earnings (return of capital) is 0.003 for the fiscal period ended July 2019 and0.002 for the fiscal period ended January 2019. The ratio of decreasing surplus is calculated based on Article 23, Paragraph 1, Item (v) of the Order for
Enforcement of the Corporation Tax Act.
(Note 3) Payout ratio for the fiscal period ended July 2019 is calculated using the following formula since issuance of new investment units was executed.
Payout ratio = Total distributions (excluding distribution in excess of earnings) / Net income x 100(3) Financial Position
Fiscal period
Ended Jul. 2019
Ended Jan. 2019

Total assets
million yen
68,32544,327

Net assets
million yen
33,426
20,314- 1 -Equity ratio
%
48.9
45.8

Net assets per unit
yen
107,479
105,198

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

Ended Jul. 2019
Ended Jan. 2019

Net cashprovided by (used in) operating
activities
million yen
1,476
930

Net cashprovided by (used in) investing
activities
million yen(22,728)(1,788)Net cashCash and cash equivalents at end
provided by (used in) financingof period
activities
million yen
million yen
21,812
1,962
1,196
1,401

2. Earnings Forecast for Fiscal Period Ending January 2020 (from August 1, 2019 to January 31, 2020) andEarnings Forecast for Fiscal Period Ending July 2020 (from February 1, 2020 to July 31, 2020)(% figures are the rate of period-on-period increase (decrease))

Fiscal periodEnding Jan. 2020
Ending Jul. 2020

Operating revenue

million yen
2,012
2,012

Operating income% million yen
0.2
1,101
0.0
1,046

Ordinary income% million yen
(7.4)
940
(5.0)
891

Net income% million yen(10.2)
939
(5.2)
890

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

Distribution perDistribution inunit (excludingexcess of
distribution inearnings per
excess ofunit
earnings)%(10.2)
(5.2)

yen
3,020
2,864

yen
284
286

Distribution
per unit(including
distribution
in excess ofearnings)
yen
3,304
3,150

3,020 yen
2,864 yen

* Other(1) Changes in Accounting Policies, Changes in Accounting Estimates, and Retrospective Restatement① Changes in accounting policies accompanying amendments to accounting standards, etc.: No② Changes in accounting policies other than ①:No③ Changes in accounting estimates:
No④ Retrospective restatement:No(2) Total Number of Investment Units Issued and Outstanding① Total number of investment units issued and outstanding (including own investment units) at end of period
311,001 units
193,107 units
Fiscal period ended July 2019
Fiscal period ended January 2019
② Number of own investment units at end of period
Fiscal period ended July 2019
- units
Fiscal period ended January 2019
- units(Note) For the number of investment units serving as the basis for calculation of net income per unit, please see “Notes
on Per Unit Information” on page 29.
* Financial reports are exempt from the audit by a certified public accountant or an auditing firm.
* Special note
The forecast is a future prospect judged by HCM based on information currently available and includes many uncertain factors.
Actual operating revenue, operating income, ordinary income, net income, distribution per unit (excluding distribution in excess ofearnings), distribution in excess of earnings per unit and distribution per unit (including distribution in excess of earnings) are subject
to change due to changes in circumstances. In addition, the forecast is not a guarantee of the amount of distribution and distribution
in excess of earnings. For the assumptions underlying the above forecast, please see “Assumptions Underlying Earnings Forecast for
Fiscal Period Ending January 2020 and Fiscal Period Ending July 2020” on pages 9 and 10.

- 2 -This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
Table of Contents
1. Management Status ................................................................................................................................................................ 4(1) Management Status ........................................................................................................................................................ 4
2. Financial Statements ............................................................................................................................................................. 11(1) Balance Sheet ................................................................................................................................................................ 11(2) Statement of Income ..................................................................................................................................................... 13(3) Statement of Unitholders’ Equity .................................................................................................................................. 14(4) Statement of Cash Distributions .................................................................................................................................... 16(5) Statement of Cash Flows ............................................................................................................................................... 18(6) Notes on the Going Concern Assumption...................................................................................................................... 19(7) Notes on Matters Concerning Significant Accounting Policies ....................................................................................... 19(8) Notes on Financial Statements ...................................................................................................................................... 20(9) Changes in Total Number of Investment Units Issued and Outstanding ........................................................................ 30
3. Reference Information .......................................................................................................................................................... 31(1) Investment Status .......................................................................................................................................................... 31(2) Investment Real Estate Properties ................................................................................................................................. 32- 3 -This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.

1.

Management Status(1) Management Status① Overview of the Current Fiscal Period(a) Brief History of HCM
Healthcare & Medical Investment Corporation (hereinafter, “HCM”) was established under the Act on Investment Trusts
and Investment Corporations (Act No. 198 of 1951, as amended; hereinafter, the “Investment Trusts Act”) with Healthcare
Asset Management Co., Ltd. (hereinafter, the “Asset Management Company” or “HAM”) as the organizer on December 9,
2014. HCM was listed on the Real Estate Investment Trust Securities Market of Tokyo Stock Exchange, Inc. (hereinafter, the“Tokyo Stock Exchange”) on March 19, 2015 (securities code: 3455).
During the fiscal period ended July 2019 (February 1, 2019 to July 31, 2019) (hereinafter, the “9th fiscal period” or the“current fiscal period”), HCM implemented public offering (117,894 units, including third-party allotment in line with thesecondary offering by over-allotment). As a result, the total number of investment units issued and outstanding stands at
311,001 units as of the end of the current fiscal period.
(b) Investment Environment and Performancea. Investment Environment
HCM was established on the background of the social situation in which expansion and enhancement of nursing careservices and medical services by healthcare facilities has become an urgent issue, at the time when the population whichbears nursing care continues to shrink while aging advances the fastest in developed nations and the number andpercentage of the elderly among the total population is expected to remain on the rise for the time being.
The government has also set a target in “Housing Life Basic Plan (nationwide plan)” to increase the ratio of housing supply
for the elderly to 4% in 2025 from 2.1% in 2014.
HCM seeks to realize a society where all people can live vibrantly and with peace of mind as well as to secure stable income
and to achieve steady growth of the portfolio. HCM will make a stable investment in healthcare facilities, for which social
demand is growing, to promote appropriate maintenance/management and new supply.
b. Performance
During the current fiscal period, HCM acquired 8 properties (SOMPO CARE La vie Re Hama-Kawasaki, Hanakotoba ShinYokohama, Hanakotoba Shin-Yokohama II, Hanakotoba Odawara, Verde Minowa, Verde Hotaka, Sunny Life Kita-Shinagawa,
SHIP Senri Building) on February 1, 2019 with a total acquisition price of 22,691 million yen.
As a result, HCM owns 35 properties with a total leasable area of 182,540.84 m2, and the occupancy rate stands at 99.9%
at the end of the current fiscal period.
(c) Overview of Financing
HCM upholds stable financial management as its basic policy for securing stable income and maintaining and enhancing
asset value over the medium to long term.
In the current fiscal period, in line with the acquisition of the above 8 properties, HCM implemented issuance of new
investment units through public offering (112,280 units) with February 1, 2019, as the payment date, and issuance of new
investment units through third-party allotment (5,614 units) on February 27, 2019, in line with the public offering.
In addition, HCM borrowed 11,750 million yen on February 1, 2019, to cover part of the acquisition and costs for the above
8 properties, as well as to carry out early repayment of existing loans. Furthermore, HCM conducted early repayment of
1,750 million yen of existing loans on February 1, 2019.
As a result, unitholders’ capital (net) (Note) at the end of the current fiscal period stands at 32,417 million yen, the total
number of investment units issued and outstanding at 311,001 units, and the total interest-bearing liabilities at 32,450
million yen.

- 4 -This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
(Note) The amount obtained by subtracting deduction from unitholders’ capital from unitholders’ capital is shown. The amount does not take
into account the change in unitholders’ capital in line with the implementation of distributions in excess of earnings of reserve fortemporary difference adjustments.

As of the end of the current fiscal period, the ratio of interest-bearing liabilities (loan amount) to total assets (hereinafter,“LTV”) is 47.5%.
HCM’s rating as of July 31, 2019 is as follows.
Rating Agency

Rating category

RatingOutlookJapan Credit Rating
Agency, Ltd. (JCR)

Long-term issuer rating

A (single-A)

StableHCM submitted a shelf registration statement of investment corporation bonds (excluding short-term investment
corporation bonds) to the commissioner of the Kanto Local Finance Bureau on December 21, 2017. The following is theoutline of the statement.
Planned amount of issuance

100 billion yen or less

Planned period of issuance

From December 29, 2017 to December 28, 2019
Acquisition of specified assets (as defined in Article 2, Paragraph 1 of the Investment

Use of fund

Trusts Act), repayment of borrowings, redemption of investment corporation bonds(including short-term investment corporation bonds), return of tenant leasehold andsecurity deposits, payment for repair expenses, etc., operating fund, etc.

(d) Overview of Business Performance and Distributions
As a result of the management described above, for the current fiscal period, operating revenue stood at 2,008 million yen,operating income at 1,189 million yen, ordinary income at 1,047 million yen and net income at 1,046 million yen.
With respect to cash distributions, in accordance with the cash distribution policy described in Article 36, Paragraph 1 of
its Articles of Incorporation, HCM determines that the amount of distribution shall exceed the amount equivalent to 90%
of its distributable profit as stipulated in Article 67-15 of the Act on Special Measures Concerning Taxation, and shall be up
to its profits as defined in Article 136, Paragraph 1 of the Investment Trusts Act. Following this policy, HCM has decided
that, of profits as defined in Article 136, Paragraph 1 of the Investment Trusts Act, it shall distribute 1,034,078,325 yen,which is the maximum integral multiple to the 311,001 units issued and outstanding as distribution of earnings. Accordingly,
distribution of earning per unit was 3,325 yen.
In addition, HCM is to make distribution in excess of earnings, of which the amount is to be determined by HCM as an
amount equivalent to net asset deduction items (as defined in Article 2, Paragraph 2, Item (30) (b) of the Ordinance on
Accountings of Investment Corporations), considering the impact of net asset deduction items on distribution, pursuant
to the policy for cash distribution in excess of earnings provided in Article 36, Paragraph 2 of its Articles of Incorporation.
In the current fiscal period, since the change in the current fiscal period in deferred losses on hedges of 12 million yen wasrecorded as net asset deduction items, HCM decided to make distribution of reserve for temporary difference adjustmentsin the amount of 11,818,038 yen. As a result, distribution in excess of earnings per unit (of reserve for temporary difference
adjustments) came to 38 yen.
Furthermore, in accordance with the policy for cash distribution in excess of earnings provided in Article 36, Paragraph 2 of
its Articles of Incorporation, HCM is to conduct distribution in excess of earnings (return of capital that falls under the categoryof distribution reducing unitholders’ capital for tax purposes) in each period on a continuous basis. In the current fiscal period,
HCM has decided to distribute 87,080,280 yen, an amount roughly equivalent to 20% of depreciation recorded in the current
fiscal period, as distribution in excess of earnings. As a result, distribution in excess of earnings per unit (of other distribution
in excess of earnings) came to 280 yen.
As a result, distribution per unit came to 3,643 yen.

- 5 -This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
(Note 1) Distribution in excess of earnings is distributed up to the amount equivalent to 20/100 of the depreciation recordedin the accounting period immediately before the accounting period when HCM will pay the said distribution,
sufficiently taking into consideration the amount of capital expenditure necessary for maintaining and improving
the competitiveness of HCM’s Assets Under Management, the financial position of HCM and other factors.
However, distribution in excess of earnings may be conducted up to an amount lower than the above amount or
may not be conducted when the implementation of distribution in excess of earnings up to the said amount isjudged to be inappropriate based on the economic environment surrounding HCM, trends of the real estate market
and leasing market, status of HCM’s Assets Under Management and financial conditions.
(Note 2) Under the rules of The Investment Trusts Association, Japan (hereinafter, “The Investment Trusts Association”),
closed-end type investment corporations are allowed to conduct distribution in excess of earnings up to an amountequivalent to 60/100 of the depreciation recorded on the last day of the accounting period.
② Outlook for the Next Fiscal Period(a) Investment Environment
In Japan, while the number of elderly households is increasing, the population which bears nursing care is on the decline,
providing of nursing care services and medical services for a certain percentage of elderly households is inevitably needed.
The expansion of the supply of healthcare facilities especially facilities and housing for the elderly is required in responseto the expanding demand for nursing care and medical services.
While nursing care in the same household is forecasted to be difficult due to aging and change of family structure, newdevelopment and expansion of healthcare facilities is required to respond to the growing demand for nursing care andmedical services, and measures to achieve them are being promoted.
The Headquarters for Japan's Economic Revitalization announced a policy to “enact a guideline concerning acquisition andmanagement of housing for the elderly, etc. for the utilization of healthcare REITs with an aim to utilize private fund” aspart of urban development to enable the elderly, etc. to walk and live safely in the “Japan Revitalization Strategy -JAPAN is
BACK-“ as of June 14, 2013.
Following this policy, the Ministry of Land, Infrastructure, Transport and Tourism announced the “Guideline related to theutilization of healthcare REITs targeting housing for the elderly, etc.” on June 27, 2014 and the “Guideline related to REITs
targeting hospital real estate” on June 26, 2015, as well as indicated the points to be noted in transactions of healthcare
facilities such as the positioning of key executive with certain experience. With the enactment of these guidelines, it isconsidered that the opportunity for the operator to utilize healthcare REITs will increase.
In addition, “Housing Life Basic Plan (nationwide plan)” that was decided by the cabinet as of March 18, 2016 states aperformance indicator of increasing the ratio of housing for the elderly to the elderly population to 4% in 2025 from 2.1%
in 2014 based on the goal to “realize a housing life where the elderly can live independently.”
As for the environment surrounding medical service-related facilities, etc., the government of Japan has promoted a“regional comprehensive care system,” a future vision concerning the reorganization of medical service and nursing carefunctions for providing more effective and efficient medical and nursing care services through subdividing roles of thefunctions of hospitals and hospital beds for the needs of patients and enhancing cooperation in medical service and nursing
care conceived in accordance with the increase of the elderly population in Japan. The government has further divided thefunctions of beds in medical institutions in line with the conditions of patients, aiming to provide appropriate medical
service to all patients at an appropriate location in order to effectively utilize limited medical resources, and establishedguidelines (March 2015) for planning a community healthcare vision in prefectures. Prefectures have established a vision
for community healthcare to adequately promote well-balanced, specialized medical functions and cooperation to suit thecommunity, and will promote subdividing medical functions in accordance with medical needs by newly including such
vision in medical planning.

- 6 -This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
Furthermore, it is said that there are approximately 8,400 hospitals (referring to “a facility for the hospitalization of notless than 20 patients, where physicians or dentists carry out medical practices or dental practices for the public or otherspecific groups of people” as defined in Article 1-5, Paragraph 1 of the Medical Care Act) in Japan but the ratio ofearthquake-resistant hospitals in Japan remains at 74.5% according to a survey conducted in fiscal 2018. Hospitals are usedby an unspecified large number of people every day and can also be used as a community base in case of a disaster.
Earthquake resistance is an urgent issue even from the viewpoint of strengthening the country's infrastructure.
Therefore, hospitals have capital investment needs, such as newly building hospital wards to meet the division of functions
and changing current wards to meet other needs, making buildings earthquake-resistant and reconstructing buildings, andcapital needs surrounding hospitals are projected to increase going forward.
Therefore, the market for healthcare facilities with a particular emphasis on the keywords “nursing care,” “medical service”
and “health,” which HCM sets as acquisition targets, is believed to further expand in the future.
(b) Future Management Policy and Challenges to Address
With recognition of the above investment environment, HCM aims to secure stable revenue and steady growth of theportfolio while seeking to realize a society where all people can live vibrantly and with peace of mind, and manages assets
based on the following policies.
a. Asset management policy for properties owned
Healthcare facilities possess a unique property feature in which not only location or specifications of buildings, but also
the operational capability of the operator and management stability have a large impact on their value as real estate.
When HCM acquires a healthcare facility, we aim to secure stable revenue for the medium to long term by, in principle,
concluding a long-term lease agreement with fixed rent with the operator that operates the healthcare facility.
HCM conducts due diligence on the business feasibility of facilities, including analyzing the management and financial
conditions of operators, along with real estate due diligence, in order to secure stable revenue over the medium to longterm; and also implements continuous monitoring even after the acquisition.
b. Property acquisition policy
HCM may utilize the comprehensive capabilities of its sponsors including professional know-how and customer base, firstrefusal rights provided in the support agreements, based on the support agreements which the Asset Management
Company has concluded with sponsor companies and such.
Furthermore, the Asset Management Company may, for the purpose of making flexible property acquisition, request
sponsors to temporarily own a property (warehousing) on the premise it be transferred to HCM.
HCM aims to maximize unitholder value over the medium to long term by best utilizing the extensive network andwarehousing function of the sponsors and works for sustainable growth of the asset size as mentioned above.
c. Financing policy
HCM intends to build a stable financial base, to consider market condition upon financing, with aim to secure stablerevenue over the medium to long term and maximize unitholder value.
With stable growth of HCM over the long term in mind, equity financing will be carried out flexibly, taking into
consideration a multitude of factors including the timing of the acquisition of newly-acquired real estate-related assets
and the possibility of utilizing the sponsor’s warehousing capabilities, LTV, the timing for the repayment of interest-bearing
liabilities and the period remaining until repayment, as well as market conditions, while also considering the dilution of
the rights of existing unitholders and the resulting decline, etc. in the trading price of investment units.
As to debt financing, stable and flexible leverage control will be implemented by diversifying repayment due dates andsetting upper limit of LTV at 65% (may, however, exceed 65% temporarily). In addition, stable bank formation will beestablished by receiving financial advice from Sumitomo Mitsui Banking Corporation, one of the sponsors, based on thesponsor support agreement concluded between the bank and the Asset Management Company.
- 7 -This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
(c) Significant Subsequent Events
Not applicable.
(d) Earnings Forecast Outlook
The following earnings forecast is expected for the fiscal period ending January 2020 (from August 1, 2019 to January 31,2020) and the fiscal period ending July 2020 (from February 1, 2020 to July 31, 2020). For the assumptions underlying thisoutlook, please see “Assumptions Underlying Earnings Forecast for Fiscal Period Ending January 2020 and Fiscal PeriodEnding July 2020” below.
For the fiscal period ending January 2020 (from August 1, 2019 to January 31, 2020) and the fiscal period ending July 2020
(from February 1, 2020 to July 31, 2020), it is assumed that there is no change in the fair value of interest rate swaps, andof distribution in excess of earnings, that from reserve for temporary difference adjustments is not expected.
Fiscal period ending January 2020 (from August 1, 2019 to January 31, 2020)
Operating revenue
2,012 million yen
Operating income
Ordinary income

1,101 million yen
940 million yen

Net income
Distribution per unit

939 million yen
3,020 yen(excluding distribution in excess ofearnings)
Distribution in excess of earnings per unit
Distribution per unit

284 yen3,304 yen(including distribution in excess of earnings)
Fiscal period ending July 2020 (from February 1, 2020 to July 31, 2020)
Operating revenue
2,012 million yen
Operating income
Ordinary income

1,046 million yen
891 million yen

Net income
Distribution per unit

890 million yen
2,864 yen(excluding distribution in excess ofearnings)
Distribution in excess of earnings per unit
Distribution per unit

286 yen3,150 yen(including distribution in excess of earnings)(Note) Please note that actual operating revenue, operating income, ordinary income, net income, distribution per unit (excluding
distribution in excess of earnings), distribution in excess of earnings per unit and distribution per unit (including distribution inexcess of earnings) may differ from the forecast figures above as a result of discrepancies from assumptions arising due toadditional real estate acquisition or sale in the future, trends in the real estate market, fluctuation of interest rates and changes inother situations surrounding HCM, among other factors. In addition, the forecast is not a guarantee of the amount of distribution
or distribution in excess of earnings.

- 8 -This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
Assumptions Underlying Earnings Forecast for Fiscal Period Ending January 2020 and Fiscal Period Ending July 2020
Item
Assumptions
・Fiscal period ending January 2020 (10th fiscal period): from August 1, 2019 to January 31, 2020 (184 days)
Accounting period・Fiscal period ending July 2020 (11th fiscal period): from February 1, 2020 to July 31, 2020 (182 days)
・It is assumed that there will be no changes (acquisition of new properties, sale of the assets undermanagement, etc.) in the trust beneficiary interests in real estate (35 properties in total) owned by HCM
Assets under
as of the date of this document (hereinafter, the “Assets Under Management”) through to the end ofmanagement
the fiscal period ending July 2020.
・There may actually be changes due to acquisition of new properties, or sale of the Assets Under
Management, etc. in the future.
・Lease business revenue from the Assets Under Management is calculated by considering and analyzing
Operatingthe lease agreement of each Asset Under Management effective as of the date of this document, tenants
and market condition, etc.
revenue・For operating revenue, it is assumed that there will be no default or non-payment of rents by tenants.
・The main breakdown of rental business expenses, the major component of operating expense, is as follows.
Fiscal period ending
Fiscal period ending
January 2020
July 2020
Property tax
90 million yen
139 million yen
Repair expenses
19 million yen
22 million yen
Depreciation
442 million yen
445 million yen
Other expenses related
49 million yen
51 million yen
to rent business・ Out of rental business expenses, the major component of operating expense, expenses other thandepreciation is calculated based on the past figures reflecting factors for change in expenses.
・In purchasing and selling real estate in general, real property tax and urban planning tax are calculated byperiod distribution with previous owners and settled at the time of acquisition, but as HCM includes thisOperatingsettlement money in acquisition cost, they are not recoded as expenses in the year of acquisition.
expenses
Accordingly, real property tax and urban planning tax of the assets acquired in the fiscal period ended
July 2019 will not be recorded as expenses in the fiscal period ending January 2020, and such for fiscal
2020 will be recorded as expenses from the fiscal period ending July 2020.
・For repair expenses, the Asset Management Company records the expenses ,it deems necessary for each
property in each period. However, as repair expenses may increase or additional repair may be required
due to unpredictable factors, actual expanses may differ significantly from the forecast.
・Depreciation is calculated by using the straight-line method including ancillary expenses.
・The asset management fee paid to the Asset Management Company is assumed to be 200 million yen
for the fiscal period ending January 2020 and 198 million yen for the fiscal period ending July 2020.
・Impact of the consumption tax hike scheduled in October 2019 is expected. (The amount of impact is 4
million yen for the fiscal period ending January 2020 and 6 million yen for the fiscal period ending July
2020.)
・Investment unit issuance expenses accompanying the issuance of new investment units are
depreciated evenly over 3 years and are assumed to be 11 million yen for the fiscal period ending
Non-operating
January 2020 and 6 million yen for the fiscal period ending July 2020.
expenses・Interest expenses and other borrowing related expenses are assumed to be 149 million yen for the
fiscal period ending January 2020 and 147 million yen for the fiscal period ending July 2020.
・As of the date of the document, HCM has a balance of loans outstanding of 32,450 million yen. It is
assumed that there will be no change in the balance of loans outstanding at the end of the fiscal periodLoans
ending January 2020 and the fiscal period ending July 2020 after the refinancing of 7,700 million yen ofloans due for repayment on January 31, 2020.
・The assumption is the total number of investment units issued and outstanding as of the date of thisdocument, which is 311,001 units. And the assumption is that there will be no change in the number ofinvestment units due to issuance of new investment units, etc. through to the end of the fiscal period
Investment units
ending July 2020.
・Distribution per unit is calculated based on the forecasted number of units issued and outstanding at
the end of period of 311,001 units for the fiscal period ending January 2020 and for the fiscal period
ending July 2020, respectfully.
・Distribution per unit (excluding distribution in excess of earnings) is calculated with the assumption being
Distribution per unit
the cash distribution policy provided in the Articles of Incorporation of HCM.
(excluding distribution ・Distribution per unit (excluding distribution in excess of earnings) may vary due to various factors,
in excess of earnings)
including fluctuation in rent revenue accompanying change in Assets Under Management, change intenants, etc. or incurrence of unexpected repairs.

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

Assumptions
・Distribution in excess of earnings per unit is calculated pursuant to the policies provided in the Articles
of Incorporation of HCM, policies provided below, other applicable laws and regulations, rules of selfregulatory organizations, etc. The total amount of distribution in excess of earnings is assumed to be 88
million yen for the fiscal period ending January 2020 and the fiscal period ending July 2020, respectively.
・The total amount of distribution in excess of earnings is distributed up to the amount equivalent to
20/100 of the depreciation recorded in the accounting period immediately before the accounting period
when HCM will pay the said distribution, sufficiently taking into consideration the amount of capital
expenditure necessary for maintaining and improving the competitiveness of HCM’s Assets Under
Distribution in excess ofManagement and the financial position of HCM.
earnings per unit
・However, distribution in excess of earnings may be conducted up to an amount lower than the above
amount or may not be conducted when the implementation of distribution in excess of earnings up to
the said amount is judged to be inappropriate based on the economic environment surrounding HCM,
trends of the real estate market and leasing market, status of HCM’s Assets Under Management andfinancial conditions.
・For the fiscal period ending January 2020 and the fiscal period ending July 2020, the assumption is that
there is no loss in the fair value of interest rate swaps, and of distribution in excess of earnings, that fromreserve for temporary difference adjustments is not currently expected.
・ The assumption is that there will be no revision of laws and regulations, tax systems, accounting
standards, securities listing regulations set forth by the Tokyo Stock Exchange, rules of The Investment
Other
Trusts Association, Japan, etc. that will impact the forecast figures above.
・The assumption is that there will be no unforeseen serious change in general economic trends, realestate market conditions, etc.

- 10 -

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

2.

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

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

1,318,873
108,051－
73,355－1,500,281

1,897,300
142,524
16
110,615
179,416
2,329,873*1 23,545,014*1 31,929,620

－
3,465
3,465

38,2402,356
40,596

10,00089,22016
99,23742,817,455

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

9,964
9,964
44,327,701

37,103
37,10368,325,557(1,960,490)
21,584,524
76,898(5,927)70,97013,456(2,010)11,446
40,623(6,577)34,04621,009,170
4,594
42,714,752- 11 -

Current fiscal period(As of Jul. 31, 2019)(2,391,245)
29,538,375
83,849(7,147)76,701
13,456(2,683)
10,773
68,856(10,462)
58,39336,044,949－
65,729,194

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
(Unit: thousands of yen)Previous fiscal period(As of Jan. 31, 2019)
Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable
Current portion of long-term loans payable
Accounts payable - otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Deposits received
Total current liabilities
Non-current liabilities
Long-term loans payable
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Derivatives liabilities
Other
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Deduction from unitholders' capital
Reserve for temporary difference adjustments
Other deduction from unitholders' capital
Total deduction from unitholders' capital
Unitholders' capital, net
Surplus
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders’ equity
Valuation and translation adjustments
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets- 12 -

Current fiscal period(As of Jul. 31, 2019)40,8682,750,000
6,700,000
88,452
145,439
950
5,243
211,457283
9,942,694

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

13,000,000
1,009,999
34,60425,769－14,070,373
24,013,068

24,750,000
1,734,009
86,76637,784520
26,609,080
34,899,262

19,800,696

32,480,785－－－*3 (25,683)

19,800,696

32,392,149

539,706
539,706
20,340,403

1,071,929
1,071,929
33,464,079(25,769)(25,769)*2 20,314,633
44,327,701(37,784)(37,784)*2 33,426,294
68,325,557(62,952)(88,636)This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
(2) Statement of Income(Unit: thousands of yen)Previous fiscal period
From: Aug. 1, 2018
To: Jan. 31, 2019
Operating revenue
Lease business revenue
Other lease business revenue
Total operating revenue
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee
Administrative service fees
Directors’ compensations
Property tax
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Insurance income
Reversal of distribution payable
Total non-operating income
Non-operating expenses
Interest expenses
Investment unit issuance expenses
Borrowing expenses
Total non-operating expenses
Ordinary income
Extraordinary income
Subsidy income
Total extraordinary income
Extraordinary losses
Loss on tax purpose reduction entry of non-current assets
Total extraordinary losses
Income before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)*1 1,294,178*1 2,000,800

1,301,210

2,008,674*1 448,967*1 586,721

3
－
533
537

5
15,0001,608
16,61465,046
4,982
36,885
106,914
540,625

90,543
11,40657,359159,310
1,047,048*2 6,489－－*1 7,031

122,274
2,164
15,4823,000
16,88645,433654,208
647,0026,489*3 6,489

6,489
540,625950(4)
946
539,67827
539,706- 13 -

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

*1 7,874

144,071
3,207
19,4163,000
17,68544,829818,931
1,189,743－－
1,047,048
968
(0)
967
1,046,080
25,8481,071,929

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
(3) Statement of Unitholders’ Equity
Previous fiscal period (from August 1, 2018 to January 31, 2019)(Unit: thousands of yen)
Valuation and translation
adjustments

Unitholders’ equity
Surplus

Balance at beginning ofcurrent period
Changes of items during
periodUnappropriatedUnitholders’retained
capitalearnings(undisposed
loss)

521,223 20,321,920

Dividends of surplus(521,195)(521,195)(521,195)(521,195)

Net income

539,678

539,678

539,678

539,678*1

19,800,696

312

312

Total
net assets

521,223

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

19,800,696

Total
surplus

Total
Deferred gains Total valuation
unitholders’ or losses on and translation
hedgesequityadjustments

20,322,232(26,081)(26,081)(26,081)

18,48318,48318,483(26,081)(26,081)(7,598)539,706

539,706 20,340,403(25,769)(25,769)

20,314,633- 14 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
Current fiscal period (from February 1, 2019 to July 31, 2019)(Unit: thousands of yen)
Unitholders’ equity
Unitholders’ capital

Surplus

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

19,800,696

Reserve fortemporarydifference
adjustments

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

Unappropriatedretainedearnings(undisposed
loss)

－

－

－

19,800,696

539,706

12,680,089(25,683)(62,952)(513,857)(513,857)(25,683)(25,683)(25,683)(62,952)(62,952)(62,952)
1,046,080

1,046,080

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

12,591,453

532,222532,222

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

32,392,149

1,071,929

1,071,929

33,464,079

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

Total
net assets

20,314,633

12,680,089

Dividends of surplus(513,857)

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

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

20,340,403

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

Balance at beginning ofcurrent period
Changes of items during
periodIssuance of new
investment units

Total
unitholders’equity12,680,089(513,857)

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

539,706

12,680,089

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

Total
surplus(12,014)(12,014)(12,014)(12,014)(12,014)

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

33,426,294- 15 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
(4) Statement of Cash Distributions(Unit: yen)Previous fiscal period
From: Aug. 1, 2018
To: Jan. 31, 2019

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

Unappropriated retained earnings

539,706,448

1,071,929,408

II. Distribution in excess of earnings

88,636,113

98,898,318

25,683,231

11,818,038

62,952,882

87,080,280

III. Amount of distributions

602,493,840

1,132,976,643[distributions per unit][3,120][3,643]513,857,727

1,034,078,325[2,661][3,325]25,683,231

11,818,038

[133]

[38]

62,952,882

87,080,280

[326]

[280]

25,848,721

37,851,083

I.

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

Method of calculation of amount of distributions

In accordance with the cash
distribution policy described in
Article 36, Paragraph 1 of its Articles
of Incorporation, HCM determinesthat the amount of distribution shallexceed the amount equivalent to
90% of its distributable profit as
stipulated in Article 67-15 of the Act
on Special Measures Concerning
Taxation, and shall be up to its profits
as the maximum amount. Following
this policy, HCM has decided to
distribute 513,857,727yen, which is
the maximum integral multiple to193,107 units issued and outstanding
as the distribution of earnings, notexceeding the amount obtained after
deducting the reversal of reserve fortemporary difference adjustments(as defined in Article 2, Paragraph 2,
Item (30) of the Ordinance on
Accountings of Investment
Corporations) from unappropriatedretained earnings. Accordingly,
distribution per unit for the period
was 2,661 yen.
In addition, HCM is to make
distribution in excess of earnings, ofwhich amount is to be determined by- 16 -In accordance with the cash
distribution policy described in
Article 36, Paragraph 1 of its Articles
of Incorporation, HCM determinesthat the amount of distribution shallexceed the amount equivalent to
90% of its distributable profit as
stipulated in Article 67-15 of the Act
on Special Measures Concerning
Taxation, and shall be up to its profits
as defined in Article 136, Paragraph 1of the Investment Trusts Act.
Following this policy, HCM has
decided that, of profits as defined in
Article 136, Paragraph 1 of theInvestment Trusts Act, it shall
distribute 1,034,078,325 yen, whichis the maximum integral multiple to311,001 units issued and outstanding
as the distribution of earnings.
Accordingly, distribution of earning
per unit was 3,325 yen.
In addition, HCM is to make
distribution in excess of earnings, ofwhich amount is to be determined by
HCM as an amount equivalent to net
asset deduction items (as defined in
Article 2, Paragraph 2, Item (30) (b) of
the Ordinance on Accountings ofThis translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.

Method of calculation of amount of distributions

Previous fiscal period
From: Aug. 1, 2018
To: Jan. 31, 2019

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

HCM as an amount equivalent to net
asset deduction items (as defined in
Article 2, Paragraph 2, Item (30) (b) of
the Ordinance on Accountings ofInvestment Corporations),
considering the impact of net asset
deduction items on distribution,
pursuant to the policy for cash
distribution in excess of earnings
provided in Article 36, Paragraph 2 of
its Articles of Incorporation. During
the current fiscal period, sincedeferred losses on hedges of 25
million yen was recorded as net asset
deduction items, HCM decided tomake distribution of reserve fortemporary difference adjustments inthe amount of 25,683,231 yen. As aresult, distribution in excess ofearnings per unit (of reserve fortemporary difference adjustments)
came to 133 yen.
Furthermore, in accordance with thepolicy for cash distribution in excess ofearnings provided in Article 36,
Paragraph 2 of its Articles ofIncorporation, HCM is to conduct
distribution in excess of earnings(return of capital that falls under the
category of distribution reducing
unitholders’ capital for tax purpose) in
each period on a continuous basis.
During the current fiscal period, HCM
has decided to distribute 62,952,882
yen, an amount roughly equivalent to
20% of depreciation recorded in thecurrent fiscal period, as distribution inexcess of earnings. As a result,distribution in excess of earnings perunit (of other distribution in excess ofearnings) came to 326 yen.

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

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

- 17 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
(5) Statement of Cash Flows(Unit: thousands of yen)Previous fiscal period
From: Aug. 1, 2018
To: Jan. 31, 2019
Cash flows from operating activities
Income before income taxes
Depreciation
Loss on tax purpose reduction entry of non-current assets
Borrowing expenses
Investment unit issuance expenses
Interest income
Interest expenses
Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes refund receivable
Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable - other
Increase (decrease) in accrued consumption taxes
Increase (decrease) in accrued expenses
Increase (decrease) in advances received
Decrease (increase) in long-term prepaid expenses
Increase (decrease) in deposits received
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment in trust
Purchase of intangible assets in trust
Proceeds from tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits in trust
Net cash provided by (used in) investing activities
Cash flows from financing activities
Payments for restricted deposits in trust
Proceeds from short-term loans payable
Repayments of short-term loans payable
Proceeds from long-term loans payable
Borrowing expenses
Proceeds from issuance of investment units
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period- 18 -

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

540,625
316,547
6,489
36,8854,982(3)65,046－－
3,660
22,310(5,844)(4,554)
3,260
6,503
－
210
(533)
995,5853(64,718)(857)
930,013

1,047,048
437,642－
57,35911,406(5)
90,543(16)(179,416)(9,950)(29,151)
2,555(5,243)29,059117,733(303)(210)(1,088)1,567,962
5(90,652)(951)
1,476,365(1,813,752)－－
25,500(1,788,252)(23,466,154)(38,240)
724,010
52,162(22,728,221)(25,500)
2,750,000(1,000,000)－(6,730)－(520,961)
1,196,808
338,568
1,062,856*1 1,401,425(52,162)－(1,750,000)
11,750,000(173,917)
12,641,544(602,871)
21,812,593
560,736
1,401,425*1 1,962,162

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
(6) Notes on the Going Concern Assumption
Not applicable.
(7) Notes on Matters Concerning Significant Accounting Policies
1. Method of depreciation of (1) Property, plant and equipment
non-current assets
The straight-line method is adopted.
The useful life of principal property, plant and equipment is as follows:
Buildings in trust
5-69 years
Structures in trust
10-53 years
Machine and device in trust
10 years
Tools, furniture and fixtures in trust 6-15 years(2) Intangible assets
The straight-line method is adopted.
2. Accounting for deferred
Investment unit issuance expenses
assetsDepreciated evenly over 3 years.
3. Standards for
Accounting for fixed asset tax, etc.
revenue and expense
For fixed asset tax, city planning tax, depreciable asset tax, etc. on real estate, etc.
recognition
owned, the accounting is that, of the tax amount assessed and determined, the amountcorresponding to the concerned accounting period is expensed as expenses related torent business.
In connection with the acquisition of real estate including trust beneficiary interests inreal estate, the amount equivalent to real property tax, etc. for the initial fiscal year,
which was settled with the seller, is not recorded as expenses but included in the costof acquisition of the concerned real estate, etc. The amount equivalent to real property
tax, etc. included in the cost of acquisition of real estate, etc. was 1,558 thousand yen
for the previous fiscal period and 89,199 thousand yen for the current fiscal period.
4. Method of Hedge(1) Hedge accounting approach
Accounting
Deferred hedge accounting. Special treatment is applied for interest rate swap
transactions that satisfy the requirements for special treatment.
(2) Hedging instruments and hedge items
Hedging instruments: Interest rate swap transaction
Hedge items: Interest on loans(3) Hedging policy
HCM conducts interest rate swap transactions for hedging risks provided in the
Articles of Incorporation of HCM, pursuant to the risk management basic policy.
(4) Method of assessing hedge effectivenessHedge effectiveness is assessed by comparing the cumulative fluctuation of cash
flows for hedging instruments and the cumulative fluctuation of cash flows forhedge items and confirming the ratio of both fluctuations. However, the assessmentof hedge effectiveness for interest rate swap transactions that satisfy therequirements for special treatment is omitted.
5. Cash and cash equivalents Cash and cash equivalents in the statement of cash flows comprise cash on hand andas stated in the statement cash in trust, demand deposits and deposits in trust, and short-term investments withof cash flows
a maturity of three months or less from the date of acquisition that are readily
convertible to cash and that are subject to an insignificant risk of changes in value.
6.

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

- 19 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
[Additional Information][Notes on Reserve and Reversal of Reserve for Temporary Difference Adjustments]
Previous fiscal period (from August 1, 2018 to January 31, 2019)
1. Reasons, related assets and amounts of reserve
Due to arising of deferred losses on hedges (net asset deduction items) at the end of the fiscal year under review from assessmentof fair value of interest rate swap transactions to which hedge accounting is applied, 25,683 thousand yen of reserve for temporary
difference adjustments is recorded.
2. Method of reversal
In accordance with elimination of deferred losses on hedges (net asset deduction items) by period-end reassessment of saidinterest rate swap transactions in the next period onward, a corresponding amount of reserve for temporary difference
adjustments will be reversed
Current fiscal period (from February 1, 2019 to July 31, 2019)
1. Reasons, related assets and amounts of reserve
Due to arising of deferred losses on hedges (net asset deduction items) at the end of the fiscal year under review from assessmentof fair value of interest rate swap transactions to which hedge accounting is applied, 11,818 thousand yen of reserve for temporary
difference adjustments is recorded.
2. Method of reversal
In accordance with elimination of deferred losses on hedges (net asset deduction items) by period-end reassessment of saidinterest rate swap transactions in the next period onward, a corresponding amount of reserve for temporary difference
adjustments will be reversed(8) Notes on Financial Statements[Notes on Balance Sheet]*1 Reduction entry amount of property, plant and equipment received as governmental subsidy, etc.
(Unit: thousands of yen)Previous fiscal period(As of Jan. 31, 2019)

Current fiscal period(As of Jul. 31, 2019)

6,489

6,489

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

Current fiscal period(As of Jul. 31, 2019)50,00050,000*3 Reserve for temporary difference adjustments
Previous fiscal period (from August 1, 2018 to January 31, 2019)
Not applicable.
Current fiscal period (from February 1, 2019 to July 31, 2019)
1. Reasons, related assets and amounts of reserve

Related assets, etc.

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

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

25,683―25,683―25,683―25,683―25,683―25,683―- 20 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
2. Method of reversal(1) Deferred gains or losses on hedges
Reversal is planned to be made in accordance with the change in fair value of derivative transactions, which are hedge
instruments.
[Notes on Statement of Income]*1 Breakdown of operating income (loss) from real estate leasing(Unit: thousands of yen)Previous fiscal period
From: Aug. 1, 2018
To: Jan. 31, 2019

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

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

1,294,178

Other revenue related to rent business
Other revenue
Total operating revenue from real estate leasing

2,000,800

7,031

7,874

1,301,210

2,008,674

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

87,21388,986

Outsourcing expenses
Repair expenses

18,35013,757

27,761
12,018Insurance expenses
Depreciation

3,565
315,438

6,847
436,533

10,643

14,574

Total operating expenses from real estate leasing

Other expenses related to rent business

448,967

586,721

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

852,2421,421,953*2 Breakdown of Subsidy income
Previous fiscal period (from August 1, 2018 to January 31, 2019)
Subsidy income is from Subsidies for countermeasures to control carbon dioxide emissions project etc. in FY2018.
Current fiscal period (from February 1, 2019 to July 31, 2019)
Not applicable.
*3 Loss on reduction of non-current assets is the value directly deducted from acquired value, due to the acceptance of subsidies.
The breakdown is as follows.
Previous fiscal period
From: Aug. 1, 2018
To: Jan. 31, 2019
Buildings in trust

6,489(Unit: thousands of yen)
Current fiscal period
From: Feb. 1, 2019
To: Jul. 31, 2019-

[Notes on Statement of Unitholders’ Equity]*1 Total number of investment units authorized and total number of investment units issued and outstanding
Previous fiscal period
Current fiscal period
From: Aug. 1, 2018
From: Feb. 1, 2019
To: Jan. 31, 2019
To: Jul. 31, 2019
Total number of investment units authorized
Total number of investment units issued and outstanding- 21 -

10,000,000 units

10,000,000 units

193,107 units

311,001 units

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
[Notes on Statement of Cash Flows]*1 Reconciliation of cash and cash equivalents at end of period to the amount of balance sheet items(Unit: thousands of yen)

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

Previous fiscal period
From: Aug. 1, 2018
To: Jan. 31, 2019

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

1,318,873

1,897,300

108,051(25,500)

142,524(77,662)

1,401,425

1,962,162(Note) Restricted deposits in trust refer to deposits in trust reserved for refund of leasehold received from tenants, etc.
[Notes on Operating Leases Transactions]Non-cancellable operating leases (as lessor)(Unit: thousands of yen)Previous fiscal period
As of Jan. 31, 2019

Current fiscal period
As of Jul. 31, 2019

Not later than 1 year

2,242,742

3,416,066

Later than 1 year

13,499,806

16,229,131

Total

15,742,548

19,645,197[Notes on Financial Instruments]
1. Matters concerning status of financial instruments(1) Policy for handling financial instruments
Pursuant to the policy of conducting stable and sound financial management, HCM raises funds for asset acquisition,
repayment of loans, etc. by means of loans from banks or issuance of new investment units, etc. As to finance by loans,
HCM pays attention to extending loan periods, fixing interest rates, diversifying repayment dates and such to secure
financial stability and avoid a risk of interest rate rise in the future.
Derivative transactions shall be limited to those invested for the purpose of hedging the risk of fluctuations in interest
rates on loans, etc. and other risks.
(2) Description of financial instruments and associated risks, and risk management system
Loans are used primarily for acquisition of trust beneficiary interests in real estate.
Although loans are exposed to liquidity risks on the repayment date, impact of the market interest rate rise on the
management of HCM is limited by appropriately managing the ratio of interest-bearing liabilities, and such risks arecontrolled by diversifying repayment dates.
Although loans with floating interest rates are exposed to interest rate fluctuation risks, the ratios of loan balances withfloating rates and fixed rates against the entire loans are adjusted according to the financing environment. Furthermore,derivative transactions (interest rate swap transactions) have been used for part of loans with floating rates to avoid
interest fluctuation risks and to fix interest payment. Execution/management of derivative transactions carried out forthe purpose of hedging interest rate fluctuation risks is conducted pursuant to provisions that stipulate the basic policyof risk management.
Although tenant leasehold and security deposits as well as leasehold and security deposits in trust are deposits fromtenants and are exposed to liquidity risks at the time of refunding upon tenants’ move-outs, HCM controls liquidity risks
by maintaining liquidity at hand, etc.
For deposits, such risks are controlled by setting lower limit to the credit rating of financial institutions at which deposits
are made (excluding deposits for settlement), etc.
(3) Supplementary explanation to matters concerning fair value, etc. of financial instruments
The fair value of financial instruments, aside from values based on market price, includes values based on reasonablecalculation when no market price is available. Certain assumptions are adopted in the calculation of the concernedvalues. Accordingly, there may be cases where the concerned values will differ when different assumptions are adopted.

- 22 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
2.

Matters concerning fair value, etc. of financial instruments
Carrying amount, fair value and difference between the two were as follows. The financial instruments whose fair values are
deemed extremely difficult to determine are excluded from the table below. (Please refer to (Note 2).)Previous fiscal period (from August 1, 2018 to January 31, 2019)(Unit: thousands of yen)
Carrying amount(1) Cash and deposits

1,318,873(2) Cash and deposits in trust

Amount ofdifference

Fair value
1,318,873-

108,051

108,051-

1,426,925

1,426,925-(3) Short-term loans payable

2,750,000

2,750,000-(4) Current portion of long-term loans payable

6,700,000

6,698,637(1,362)(5) Long-term loans payable

13,000,000

12,999,936(63)

22,450,000

22,448,573(1,426)(25,769)(25,769)

Total assets

Total liabilities(6) Derivatives transaction-

Current fiscal period (from February 1, 2019 to July 31, 2019)(Unit: thousands of yen)
Carrying amount(1) Cash and deposits(2) Cash and deposits in trust
Total assets

Fair value

Amount ofdifference

1,897,300

1,897,300―

142,524

142,524―

2,039,824

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

1,000,000

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

6,700,000

6,701,552

1,552(5) Long-term loans payable

24,750,000

24,755,105

5,105

32,450,000

32,456,657

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

Total liabilities(6) Derivatives transaction―(Note 1) Method of calculation of the fair value of financial instruments and matters concerning derivative transactions(1) Cash and deposits; (2) Cash and deposits in trust; (3) Short-term loans payable
Because these are settled in a short period of time, the fair value is approximately the same as the book value and thus stated at that bookvalue.
(4) Current portion of long-term loans payable; (5) Long-term loans payable
For those with floating interest rates that reflect market interest rates within a short period of time, the book value is deemed a reasonableapproximation of the fair value as there are no significant changes in HCM’s credit standing after borrowing; therefore, the book value isused as the fair value equivalent. Those with fixed interest rates are calculated by discounting the sum of principal and interest (*) at areasonable rate estimated for a similar loan that is made corresponding to the remaining period.
(*) For long-term loans with floating interest rate to which special treatment for interest rate swaps is applied (please refer to “Derivative
Transactions” below), the sum of principal and interest under the interest rates after the interest rate swaps are indicated.
(6) Derivative transactions
Please refer to “Notes on Derivative Transactions” below.
(Note 2) Financial instruments for which estimation of fair value is recognized to be difficult.
(Unit: thousands of yen)Previous fiscal period(As of Jan. 31, 2019)
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust

Current fiscal period(As of Jul. 31, 2019)

1,009,999

1,734,009

34,60486,766

Tenant leasehold and security deposits and Tenant leasehold and security deposits in trust are not subject to valuation at fair value, because areasonable estimation of cash flows is recognized to be extremely difficult due to there being no market price and difficulty of calculating the actual
deposit period from when lessees move in to when they move out.

- 23 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
(Note 3) Amount of redemption of monetary claims scheduled to be due after the account closing datePrevious fiscal period (As of January 31, 2019)(Unit: thousands of yen)
Not later than 1 year
Cash and deposits

1,318,873

Cash and deposits in trust

108,051

Total

1,426,925

Current fiscal period (As of July 31, 2019)(Unit: thousands of yen)
Not later than 1 year
Cash and deposits

1,897,300

Cash and deposits in trust

142,524

Total

2,039,824(Note 4) Amount of repayment of loans scheduled to be due after the account closing datePrevious fiscal period (As of January 31, 2019)(Unit: thousands of yen)
Later than 4 years
and not
Later than 5 years
later than 5 years

Not later than 1 year

Later than 1 year
and not
later than 2 years

Later than 2 years
and not
later than 3 years

Later than 3 years
and not
later than 4 years

Short-termloans payable

2,750,000

-

-

-

-

Long-termloans payable

6,700,000

3,000,000

5,000,000

4,000,000

1,000,000

Total

9,450,000

3,000,000

5,000,000

4,000,000

1,000,000

Not later than 1 year

Later than 1 year
and not
later than 2 years

Later than 2 years
and not
later than 3 years

Later than 3 years
and not
later than 4 years

Short-termloans payable

1,000,000

―

―

―

―

―

Long-termloans payable

6,700,000

3,000,000

7,000,000

8,000,000

6,750,000

―

Total

7,700,000

3,000,000

7,000,000

8,000,000

6,750,000―-

Current fiscal period (As of July 31, 2019)[Notes on Securities]
Previous fiscal period (As of January 31, 2019)
Not applicable.
Current fiscal period (As of July 31, 2019)
Not applicable.
[Notes on Derivative Transactions]
1. Derivative transactions to which hedge accounting is not applied
Previous fiscal period (As of January 31, 2019)
Not applicable.
Current fiscal period (As of July 31, 2019)
Not applicable.

- 24 -(Unit: thousands of yen)
Later than 4 years
and not
Later than 5 years
later than 5 years

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
2.

Derivative transactions to which hedge accounting is applied
Previous fiscal period (As of January 31, 2019)
Hedge
accounting
approachPrinciple
accounting
methodSpecialtreatment forinterest rate
swaps
(Note 1)
(Note 2)

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

Main hedged
item

Contract amount, etc.
Due after one year

(Unit: thousands of yen)

Fair value

Calculation
method for thefair value

Long-term loans
payable13,750,000

13,750,000(25,769)(Note 1)

Based on the pricepresented bycorrespondent
financial
institutions

Long-term loans
payable1,000,000

1,000,000(Note 2)-

14,750,000
14,750,000(25,769)
The figure includes the fair value of the interest rate swap contracts concluded on January 30, 2019 (total principal: 9,750,000
thousand yen, contract term: from February 1, 2019 to the repayment date of loans).
Since those with special treatment of interest rate swaps are treated integrally with hedged long-term loans payable, the market
values of such are shown as included in the market value in “(5) Long-term loans payable” in “[Notes on Financial Instruments], 2.
Matters concerning fair value, etc. of financial instruments” above.

Current fiscal period (As of July 31, 2019)
Hedge
accounting
approachPrinciple
accounting
methodSpecialtreatment forinterest rate
swaps
(Note)

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

Main hedged
item

Contract amount, etc.
Due after one year

(Unit: thousands of yen)

Fair value

Calculation
method for thefair value

Long-term loans
payable13,750,000

13,750,000(37,784)

Based on the pricepresented bycorrespondent
financial
institutions

Long-term loans
payable1,000,000

1,000,000(Note)-

14,750,000
14,750,000(37,784)
Since those with special treatment of interest rate swaps are treated integrally with hedged long-term loans payable, the market valuesof such are shown as included in the market value in “(5) Long-term loans payable” in “[Notes on Financial Instruments], 2. Mattersconcerning fair value, etc. of financial instruments” above.

[Notes on Retirement Benefits]
Previous fiscal period (As of January 31, 2019)
Not applicable.
Current fiscal period (As of July 31, 2019)
Not applicable.
[Notes on Tax-Effect Accounting]
1. Breakdown of main causes for occurrence of deferred tax assets and deferred tax liabilities(Unit: thousands of yen)Previous fiscal period
As of Jan. 31, 2019

Current fiscal period
As of Jul. 31, 2019

Deferred tax assets
Non-deductible accrued enterprise tax

16

17

Deferred gains or losses on hedges

8,119

11,905

Subtotal deferred tax assets

8,136

11,923

Valuation allowance(8,119)(11,905)

16
16

17
17

Total deferred tax assets
Net deferred tax assets- 25 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
2.

Breakdown of major components that caused any significant differences between the statutory tax rate and the effective
income tax rate after application of tax-effect accounting(Unit: %)Previous fiscal period
As of Jan. 31, 2019
Statutory tax rate
[Adjustments]
Deductible distributions payable
Other
Effective income tax rate
after application of tax-effect accounting[Notes on Share of Profit (Loss) of Entities Accounted for Using Equity Method, etc.]
Previous fiscal period (As of January 31, 2019)
Not applicable.
Current fiscal period (As of July 31, 2019)
Not applicable.
[Notes on Related-Party Transactions]
1. Parent company, major corporate unitholder, etc.
Previous fiscal period (from August 1, 2018 to January 31, 2019)
Not applicable.
Current fiscal period (from February 1, 2019 to July 31, 2019)
Not applicable.
2.

Affiliated company, etc.
Previous fiscal period (from August 1, 2018 to January 31, 2019)
Not applicable.
Current fiscal period (from February 1, 2019 to July 31, 2019)
Not applicable.

3.

Fellow subsidiary, etc.
Previous fiscal period (from August 1, 2018 to January 31, 2019)
Not applicable.
Current fiscal period (from February 1, 2019 to July 31, 2019)
Not applicable.

- 26 -

Current fiscal period
As of Jul. 31, 2019

31.51

31.51

(31.45)0.12(31.48)
0.06

0.18

0.09

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
4.

Director, major individual unitholder, etc.
Previous fiscal period (from August 1, 2018 to January 31, 2019)

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

Director, or
close
relative of
director

Seiji
Yoshioka--

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

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

130,704(Note 1)
(Note 2)

Balance at
end ofAccount
perioditem(thousandyen)

Accruedexpenses

132,056

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

(Note 1) The transaction amount for the payment of asset management fee to the Asset Management Company under “Description of transaction”
includes the property acquisition incentive portion included in the book value of individual real estate, etc. in the amount of 8,430 thousand yen.
(Note 2) Terms and conditions of transactions and decision-making approach to such, etc.
1. Terms and conditions of transactions are decided taking into account the actual market value.
2. The transaction is one that was conducted by Seiji Yoshioka as President and CEO of a third party (Healthcare Asset Management Co., Ltd.),
and the amount of the asset management fee is based on the terms and conditions provided in the Articles of Incorporation of HCM.

Current fiscal period (from February 1, 2019 to July 31, 2019)

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

Director, or
close
relative of
director

Seiji
Yoshioka--

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

0.0

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

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

257,526(Note 1)
(Note 2)

Account
item

Balance at
end ofperiod(thousandyen)

Accruedexpenses

155,596(Note 1) The transaction amount for the payment of asset management fee to the Asset Management Company under “Description of transaction” includes
the property acquisition incentive portion included in the book value of individual real estate, etc. in the amount of 113,455 thousand yen.
(Note 2) Terms and conditions of transactions and decision-making approach to such, etc.
1. Terms and conditions of transactions are decided taking into account the actual market value.
2. The transaction is one that was conducted by Seiji Yoshioka as President and CEO of a third party (Healthcare Asset Management Co., Ltd.),
and the amount of the asset management fee is based on the terms and conditions provided in the Articles of Incorporation of HCM.

- 27 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
[Notes on Asset Retirement Obligations]
Previous fiscal period (as of January 31, 2019)
Not applicable.
Current fiscal period (as of July 31, 2019)
Not applicable.
[Notes on Investment and Rental Properties]
HCM owns healthcare facilities (35 properties in total) primarily in the Three Major Metropolitan Areas and Core Cities. The
carrying amount, amount of increase (decrease) during the period and fair value of these investment and rental properties are as
follows:(Unit: thousands of yen)Previous fiscal period
From: Aug. 1, 2018
To: Jan. 31, 2019

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

Carrying amount
Balance at beginning of period

41,149,494

42,710,158

Amount of increase (decrease) during period

1,560,663

23,057,275

Balance at end of period

42,710,158

65,767,434

45,792,000

70,479,000

Fair value at end of period(Note 1) “Carrying amount” is the amount of the cost of acquisition, less accumulated depreciation.
(Note 2) Out of the amount of increase (decrease) during the previous fiscal period, the amount of increase is mainly attributable to the acquisitionof 2 properties (1,766,255 thousand yen) and the amount of decrease is mainly attributable to depreciation (315,438 thousand yen). Outof the amount of increase (decrease) during the current fiscal period, the amount of increase is mainly attributable to the acquisition of 8
properties (23,379,171 thousand yen) and the amount of decrease is mainly attributable to depreciation (436,533 thousand yen).
(Note 3) “Fair value at end of period” is the appraisal value or investigation value by an outside real estate appraiser.

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

Related information
Previous fiscal period (from August 1, 2018 to January 31, 2019)(1) Information about products and services
Information about products and services is omitted because net sales to external customers for a single products andservices category are in excess of 90% of operating revenue on the statement of income.
(2) Information about geographic areas➀ Net sales
Information about net sales is omitted because net sales to external customers in Japan are in excess of 90% of operating
revenue on the statement of income.
➁ Property, plant and equipment
Information about property, plant and equipment is omitted because the amount of property, plant and equipment
located in Japan is in excess of 90% of the amount of property, plant and equipment on the balance sheet.
(3) Information about major customers
Information on net sales to a single external customer is omitted because consent has not been obtained from thetenant.

- 28 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
Current fiscal period (from February 1, 2019 to July 31, 2019)(1) Information about products and services
Information about products and services is omitted because net sales to external customers for a single products andservices category are in excess of 90% of operating revenue on the statement of income.
(2) Information about geographic areas➀ Net sales
Information about net sales is omitted because net sales to external customers in Japan are in excess of 90% of operating
revenue on the statement of income.
➁ Property, plant and equipment
Information about property, plant and equipment is omitted because the amount of property, plant and equipment
located in Japan is in excess of 90% of the amount of property, plant and equipment on the balance sheet.
(3) Information about major customers
Information on net sales to a single external customer is omitted because consent has not been obtained from thetenant.
[Notes on Per Unit Information]
Previous fiscal period
From: Aug. 1, 2018
To: Jan. 31, 2019

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

Net assets per unit

105,198 yen

107,479 yen

Net income per unit

2,794 yen

3,372 yen

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

Previous fiscal period
From: Aug. 1, 2018
To: Jan. 31, 2019

Current fiscal period
From: Feb. 1, 2019
To: Jul. 31, 2019539,678

1,046,080-―

Net income attributable to common investment units(thousands of yen)

539,678

1,046,080

Average number of investment units during period (units)

193,107

310,194

Net income (thousands of yen)Amount not attributable to common unitholders (thousands of yen)

[Notes on Significant Subsequent Events]
Not applicable.

- 29 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
(9) Changes in Total Number of Investment Units Issued and Outstanding
The following are changes in total number of investment units issued and outstanding and unitholders’ capital over the mostrecent five years up to the end of the current fiscal period.

Date

December 9, 2014
March 18, 2015
April 21, 2015
February 1, 2017
March 1, 2017
February 1, 2019
February 27, 2019
April 19, 2019

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

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

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

ChangeChangeBalance

Remarks

Balance

2,000

2,000

200

200

200

200

(Note 2)

106,500

108,500

11,246

11,446

11,246

11,446(Note 3)

12,000120,500

1,267

12,713

1,267

12,713(Note 4)

69,150189,650

6,749

19,463

6,749

19,463(Note 5)

3,457

193,107337

19,800337

19,800(Note 6)112,280

305,387

12,07631,876

12,07631,876(Note 7)5,614

311,001603

32,480603

32,480(Note 8)－311,001－

32,480(62)

32,417(Note 9)(Note 1) The amount obtained by subtracting deduction from unitholders’ capital from unitholders’ capital is shown. The amount does not take into
account the change in unitholders’ capital in line with the implementation of distributions in excess of earnings of reserve for temporary
difference adjustments.
(Note 2) HCM was established with paid-in amount of 100,000 yen per unit.
(Note 3) New investment units were issued through public offering with issue price of 110,000 yen (paid-in amount of 105,600 yen) per unit.
(Note 4) New investment units were issued through third-party allotment in line with public offering, with paid-in amount of 105,600 yen per unit.
(Note 5) New investment units were issued through public offering with issue price of 101,244 yen (paid-in amount of 97,609 yen) per unit.
(Note 6) New investment units were issued through third-party allotment in line with public offering, with paid-in amount of 97,609 yen per unit.
(Note 7) New investment units were issued through public offering with issue price of 111,442 yen (paid-in amount of 107,555 yen) per unit.
(Note 8) New investment units were issued through third-party allotment in line with public offering, with paid-in amount of 107,555 yen per unit.
(Note 9) HCM resolved at the board of directors’ meeting held on March 15, 2019, to set cash distribution in excess of earnings (return of capital that
falls under the category of distribution reducing unitholders’ capital for tax purposes) at 326 yen per unit as cash distribution for the 8th fiscal
period (fiscal period ended January 2019), and started the payout on April 19, 2019.

- 30 -

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

3.

Reference Information(1) Investment Status
Current fiscal period (as of July 31, 2019)
Asset type

Trust beneficiaryinterests in realestateTotal amount owned(millions of yen)
(Note 1)

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

40,462

59.2

Core Cities (Note 4)

5,284

7.7

Other area (Note 5)

1,751

2.6

Three Major
Metropolitan Areas(Note 3)

3,138

4.6

Core Cities (Note 4)－－

Asset use
Homes andfacilities forthe elderly

Area

Paid
nursinghomeServicedhousing forthe elderly

Three Major
Metropolitan Areas(Note 3)

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

Other facilities for the elderly－－

50,636

74.1

Three Major
Metropolitan Areas(Note 3)－－

Core Cities (Note 4)

2,041

3.0

Other area (Note 5)－－

Subtotal

2,041

3.0

Three Major
Metropolitan Areas(Note 3)13,09019.2

Core Cities (Note 4)－－

Other area (Note 5)－－

13,09019.2－－

65,76796.3

Deposits and other assets

2,558

3.7

Total amount of assets

68,325100.0

Subtotal
Medical service-related
facilities, etc.

Multi-use
facility

Paid nursing
home,medicalservicerelated
facilities, etc.

Subtotal
Other
Total

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

- 31 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
(2) Investment Real Estate Properties① Acquisition prices, etc. and shares of investment
Overview of trust beneficiary interests in real estate that HCM owns as of July 31, 2019 is as follows.
Type ofspecified
asset

Area

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

Property name

Bonsejour Chitose-funabashi

824

1.3

825

974

Bonsejour Hino

724

1.1

725

818

Bonsejour Musashi-shinjo

582

0.9

583

643

Medical Rehabilitation Home
Bonsejour Hadanoshibusawa

728

1.1

723

850

ASHEIM Hikarigaoka

1,385

2.1

1,397

1,570

ASHEIM Bunkyohakusan

1,430

2.2

1,444

1,650

3,580

5.5

3,522

3,790

3,050

4.7

3,092

3,230

1,740

2.7

1,831

1,950

824

1.3

832

886

1,000

1.5

1,057

1,060

SOMPO CARE La vie Re
Machidaonoji
SOMPO CARE La vie Re
AzaminoGOOD TIME HOME Fudo-mae
Tokyo
Bonsejour Yotsugi
Metropolitan area
Granda Tsuruma-Yamato
Smiling Home Medice Adachi

2,253

3.5

2,315

2,440

Hanakotoba Minami

1,071

1.7

1,105

1,190

Hanakotoba Miura

615

0.9

649

664

SOMPO CARE La vie Re HamaKawasaki

1,710

2.6

1,756

1,820

Hanakotoba Shin-Yokohama

2,071

3.2

2,143

2,230

Hanakotoba Shin-Yokohama II

375

0.6

388

401

Hanakotoba Odawara

880

1.4

916

948

1,825

2.8

1,886

1,970

26,66741.1

27,19729,084

1,950

3.0

1,960

2,140

1,930

3.0

1,932

2,170

1,200

1.8

1,205

1,340

Sunny Life Kita-Shinagawa

Trustbeneficiaryinterests inreal estate

Subtotal
AQUAMARINE
Nishinomiyahama
SOMPO CARE Sompo no ie S
Awajiekimae
SOMPO CARE Sompo no ie S
Kobekamisawa
Kinki area

Medical Home Bonsejour Itami

514

0.8

518

557

Kobe Gakuentoshi Building(Hapine Kobe Gakuentoshi)

4,320

6.7

4,342

4,410

GreenLife Moriguchi

4,150

6.4

4,224

4,400

930

1.4

950

995

SHIP Senri Building

12,92019.9

13,09014,300Subtotal

27,91443.0

28,22430,312

Medical Rehabilitation Home
Bonsejour Komaki

1,270

2.0

1,268

1,450

Hapine Kobe Uozaki Nibankan

Chubu area

Core cities

1,270

2.0

1,268

1,450

SAWAYAKA Tachibanakan

Subtotal

1,520

2.3

1,449

1,590

SAWAYAKA Mekarikan

1,380

2.1

1,326

1,450

770

1.2

790

862

1,620

2.5

1,718

1,700

AIKOEN ICHIBANKAN Building
Verde Minowa
Niigata Rehabilitation Hospital

2,060

3.2

2,041

2,260

Subtotal

7,350

11.3

7,325

7,862

390

0.6

386

411

SAWAYAKA Tagawakan
Other area

Current fiscal period(as of Jul. 31, 2019)
Carrying amount
Period-end(millions of yen)
appraisal value(millions of yen)
(Note 3)(Note 4)

Verde Hotaka
Subtotal

Total (35 properties)

1,290

2.0

1,365

1,360

1,680

2.6

1,751

1,771

64,881

100.0

65,76770,479(Note 1) “Acquisition price” does not include acquisition-related expenses, property tax, urban planning tax, consumption tax and local
consumption tax.

- 32 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
(Note 2) “Share of investment” refers to the acquisition price of each property as a percentage of the total acquisition price, and the figures arerounded to one decimal place.
(Note 3) “Carrying amount” indicates book value after depreciation and amortization as of July 31, 2019.
(Note 4) “Period-end appraisal value” indicates amounts stated in the appraisal report with appraisal date of July 31, 2019, prepared by real estateappraisers of Japan Real Estate Institute, the Tanizawa Sogo Appraisal Co., Ltd., Rich Appraisal Institute Co., Ltd., Daiwa Real EstateAppraisal Co., Ltd. and JLL Morii Valuation & Advisory K.K., based on the Articles of Incorporation of HCM and the rules set by theInvestment Trusts Association, Japan.

- 33 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
② Buildings and leasing status
Annual rent of each property is not disclosed as consent from the tenants have not been obtained. The total annual rent fromreal estate in trust owned by HCM as of July 31, 2019 is 4,080 million yen (Note).
(Note) The amount is obtained by multiplying total of monthly rent in lease agreements effective as of July 31, 2019 by 12 (including tax, etc.), and isrounded down to the nearest million yen.
Total leasable
Total leased area No. of tenantsarea
Occupancy rate(companies)
(m2)
(m2)
(%) (Note 6)(Note 5)(Note 4)(Note 3)

Property number

Property name

Structure/ No. offloors(Note 1)

Construction
completion(Note 2)

Paid nursing

AQUAMARINE
Nishinomiyahama

RC/5F

May 18, 2007

5,274.54

5,274.542

100.0

Bonsejour Chitosefunabashi

RC/B1 6F

Mar. 8, 1988

2,342.17

2,342.171

100.0

Bonsejour Hino

RC/3F

May 2, 1990

1,984.17

1,984.171

100.0

Feb. 21, 1985

1,710.43

1,710.431

100.0

Jul. 17, 1991

3,435.79

3,435.791

100.0

Mar. 13, 1991

8,858.49

8,858.491

100.0

Mar. 6, 2006

3,628.60

3,628.60

1

100.0

Feb. 27, 2007

2,507.25

2,507.252

100.0

Oct. 29, 2007

7,720.17

7,720.171

100.0Mar. 1, 2004

5,789.25

5,789.25

1

100.0

Oct. 31, 2005

5,652.94

5,652.94

1

100.0

Nov. 15, 2005

4,720.46

4,720.461

100.0

Jan. 20, 2006

2,366.20

2,366.201

100.0

Mar. 18, 1992

3,400.20

3,400.201

100.0

Mar. 28, 1989

1,962.89

1,962.89

1

100.0

Mar. 3, 1989

2,129.87

2,129.87

1

100.0

Jan. 7, 2009

12,636.48

12,636.48

1

100.0

Sept. 6, 2006

8,356.85

8,356.851

100.0Mar. 31, 2010

1,772.89

1,772.89

1

100.0

Mar. 6, 1998

3,427.08

3,427.08

1

100.0

Nov. 16, 2005

3,870.98

3,870.982

100.0

Feb. 4, 2010

4,311.20

4,311.20

4

100.0

Feb. 24, 2010

1,710.68

1,710.68

1

100.0

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

Bonsejour
RC/4F
Musashi-shinjo
MedicalRehabilitation
RC/5F
Home Bonsejour
Hadanoshibusawa
MedicalRehabilitation
SRC/10F
Home Bonsejour
KomakiASHEIM
RC/3F
Hikarigaoka
ASHEIM
RC/8F
Bunkyohakusan
SOMPO CARE La
vie ReRC/B1 6F
Machidaonoji
SOMPO CARE La
RC/B1 5F
vie Re Azamino
SAWAYAKA
RC/B1 6F
Tachibanakan
SAWAYAKA
RC/4F
Mekarikan
SAWAYAKA
RC/3F
Tagawakan
GOOD TIME HOME RC (partly S)/B1
Fudo-mae
5F
Bonsejour Yotsugi

RC/5F

Medical Home
SRC/11F
Bonsejour Itami
Kobe Gakuentoshi
Building (Hapine
RC/B1 9F
Kobe Gakuentoshi)
GreenLife
SRC/9F
Moriguchi
Hapine Kobe
S/B1 4F
Uozaki Nibankan
Granda TsurumaRC (partly S)/5F
YamatoSmiling Home
RC/4F
Medice Adachi
AIKOENICHIBANKAN
S/5F
Building
Hanakotoba
RC/7F
Minami
Hanakotoba Miura

RC/4F

Jun. 27, 2007

1,959.64

1,959.64

1

100.0

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

Mar. 8, 2007

4,060.21

3,921.67

4

96.6

RC/9F

Mar. 15, 2004

5,230.23

5,230.23

1

100.0

RC/B1 7F

Apr. 25, 2007

1,837.29

1,837.29

1

100.0

RC/4F

Sep. 16, 2009

2,203.42

2,203.42

1

100.0- 34 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
Property number
Paid nursing
home-29
Paid nursing
home-30
Paid nursing
home-31

Property name
Verde Minowa
Verde Hotaka

Structure/ No. offloors(Note 1)
①S/5F
②S RC/8F①S SRC/5F②S/2F

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

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

Construction
completion(Note 2)
①Nov. 20, 2003
②Feb. 28, 1974
①Sept. 29, 1982
②Jul. 1, 1989

Total leasable
Total leased area No. of tenantsarea
Occupancy rate(companies)
(m2)
2
(m )
(%) (Note 6)(Note 5)(Note 4)(Note 3)
11,098.17

11,098.17

1

100.0

6,352.86

6,352.861

100.0

Sept. 20, 218

2,135.54

2,135.541

100.0

Jun. 12, 2009

5,745.15

5,745.15

1

100.0

Jun. 11, 2009

4,058.35

4,058.35

1100.0①Apr. 20, 1990
②Feb. 28, 2001

13,476.55

13,476.55

1

100.0

Sept. 5, 2008

24,813.85

24,813.85

1

100.0

―

182,540.84

182,402.30

44

99.9

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

- 35 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
③ Overview of Homes and Facilities for the Elderly
Property
number

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

Property name

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

Type of facility

Operator

Paid nursing home

GREEN LIFE Co., Ltd.

Paid nursing home
Paid nursing home
Paid nursing home

Occupancy
rate (%)(Note 2)

90

100

100

100.0

42

47

45

95.7

56

58

54

93.1

46

49

44

89.8

Benesse Style Care
Co., Ltd.

100

101

94

93.1

October 1,
2018

Residential typepaid nursing home

Benesse Style Care
Co., Ltd.

124

165

123

74.5

April 1,
2019

AS PARTNERS Co., Ltd.

83

89

81

91.0

Paid nursing home

AS PARTNERS Co., Ltd.

50

52

49

94.2

Paid nursing home

Sompo Care Inc.

163

169

115

68.0

Paid nursing home

Sompo Care Inc.

145

145

98

67.6

104

104

104

100.0

95

95

93

97.9

60

60

59

98.3

61

67

58

86.6

61

65

59

90.8

62

64

62

96.9

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

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

Bonsejour Yotsugi

Paid nursing home

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

Residential typepaid nursing home

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

Paid nursing home

GREEN LIFE Co., Ltd.

131

138

129

93.5

GreenLife Moriguchi Paid nursing home

GREEN LIFE Co., Ltd.

155

189

189

100.0

GREEN LIFE Co., Ltd.

47

47

47

100.0

73

90

72

80.0

82

82

72

87.8

Medical Corporation
AIKOEN

90

90

90

100.0

Hanakotoba Minami Paid nursing home

Proud Life Inc.

51

51

48

94.1

Hanakotoba Miura

Paid nursing home

Proud Life Inc.

53

54

53

98.1

Paid nursing home

Sompo Care Inc.

58

58

44

75.9

Paid nursing home

Proud Life Inc.

136

136

130

95.6

Paid nursing home

Proud Life Inc.

29

30

22

73.3

Paid nursing home

Proud Life Inc.

60

65

61

93.8

Verde Minowa

Paid nursing home

Verde Corporation

174

206

201

97.6

Verde Hotaka

Paid nursing home

Verde Corporation

121

174

172

98.9

Sunny Life KitaShinagawa

Paid nursing home

Kawashima
Corporation

66

66

60

90.9

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

SOMPO CARE La vie
Re Hama-Kawasaki
Hanakotoba ShinYokohama
Hanakotoba ShinYokohama II
Hanakotoba
OdawaraPreparation
date of Property
DisclosureStatement ofimportantmatters(Note 3)
July 1,
2019
October 1,
2018
October 1,
2018
October 1,
2018

Paid nursing home

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

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

Capacity(persons)(Note 1)

No. ofresidents(persons)(Note 1)

No. ofrooms(rooms)(Note 1)

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

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

- 36 -

May 1,
2019
Dec. 1,2019
Apr. 1,
2019
July 1,
2019
July 1,
2019
July 1,
2019
July 1,
2019
July 1,
2019
October 1,
2018
October 1,
2018
July 1,
2019
July 1,
2019
July 1,
2019
October 1,
2018
July 1,
2019
July 1,
2019
July 1,
2019
July 1,
2019
July 1,
2019
July 1,
2019
July 1,
2019
July 1,
2019
July 1,
2019
July 1,
2019
November 1,
2018This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.

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

Property name

SOMPO CARE
Sompo no ie S
Awajiekimae
SOMPO CARE
Sompo no ie S
Kobekamisawa
SHIP Senri Building(Note 5)
Total

Type of facility

Operator

No. ofrooms(rooms)(Note 1)

Capacity(persons)(Note 1)Serviced housing
for the elderly

Sompo Care Inc.

137
(Note 4)137
(Note 4)Serviced housing
for the elderly

Sompo Care Inc.

85

85

Hospital, paid
nursing home-

Preparation
date of Property
No. ofOccupancy
Disclosure
residents
rate (%)
Statement of(persons)(Note 2)
important(Note 1)
matters(Note 3)
July 1,
136
99.3
2019
84

98.8

July 1,
2019
July 1,
2019

GREEN LIFE Co., Ltd.

181

200

200

100.0

-

3,071

3,328

3,048

91.6

-

(Note 1) “No. of rooms,” “Capacity” and “No. of residents” indicate figures based on figures stated in Property Disclosure Statement of Important
Matters (hereinafter the “Property Disclosure Statement of Important Matters”) of the paid nursing home provided by the operators (however,for Hanakotoba Shin-Yokohama II, figures as of July 31, 2019; and for Sunny Life Kita-Shinagawa, figures as of June 30, 2019, based on interviews
with operators).
(Note 2) “Occupancy rate” indicates the occupancy rate obtained by dividing the number of residents by capacity, rounded to one decimal place.
(Note 3) “Preparation date of Property Disclosure Statement of Important Matters” indicates the date of application, reference date or preparation datestated on the document.
(Note 4) Actual number of rooms and capacity for serviced housing for the elderly are 136 rooms and 136 persons, respectively.
(Note 5) SHIP Senri Building is a property with a hospital and paid nursing home, and the above table indicates figures for the paid nursing home.

- 37 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
④ Overview of Medical Service-Related Facilities, etc.
Property
Medical service-related facilities, etc.-1
number
Property
Niigata Rehabilitation Hospital
nameDate ofJune 1990
Operator
Medical Corporation AIKOKAI
establishment(established as Oyama Hospital, the precursor)
Type of
Authorized
168 beds (general beds: 108 beds/convalescentHospital
facility
number of beds
stage beds: 60 beds)
Training facility certified by the Japanese Association
Subject of Rehabilitation, orthopedic surgery, internal
Facilityof Rehabilitation Medicine
medicalmedicine, neurology, dental & dental andcertification
Training facility certified by Japan Society oftreatment oral surgery
Ultrasonics in Medicine specialists

Main facility
criteria

External
evaluation

Hospitalizationfee

Hospital ward on 2nd floor (48 beds)
Hospital ward on 3rd floor (60 beds)
Hospital ward on 4th floor (60 beds)

Hospitalization fee of hospital ward for comprehensive community care 1· Basic hospitalization fee for general hospital ward (local general
hospitalization fee 1)· Medical management fee for comprehensive community care 1
Hospitalization fee of hospital ward for rehabilitation at recovery stage 1

Emergency medical care management addition, specimen examination management addition I, fee forcoordinated guidance on cancer treatment, rehabilitation fee for cerebrovascular disease, etc. I,
Othersrehabilitation 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 number
Property nameComplex of paid nursing homes, medical service-related facilities, etc.-1
SHIP Senri Building (Senri-Chuo Hospital) (Note)
Date of
Operator
Medical Corporation Kyowakai
October 2008
establishment
Authorized number
400Type of facility
Hospitalof beds(general beds: 350/convalescent-sage beds: 50)
Subject ofRehabilitation, orthopedic surgey,
Training facilities certified by the Japanese
medicalneurosurgery, surgery, internal medicine Facility certification
Association of Rehabilitation Medicine
treatment
and neurology
Recuperation ward basic hospitalization fee 1
Facilities for the disabled, etc. 2
10:1 Basic hospitalization fee
Recovery phase rehabilitation ward hospitalization fee 1
Palliative care hospital ward hospitalization fee 2(Addition items)
Special disease hospitalization facility management
Recuperation environment
Hospitali Recuperation ward recuperation environment 1
zation Regionally coordinated admission of emergency patient transport
Generic drugs use system 1
fee
Data submission 2 (a)Medical record management system 1
Dementia care 1
Main facility
Discharge support 1
criteria
Medical safety measures 2
Regionally coordinated medical safety measures 2
Infection control measures 2
Cancer pain palliative guidance management fee; Cancer patient guidance management fee (c); Home-visit
nursing and guidance fee for patients at home and home-visit nursing and guidance fee for residents in thesame building; Drug management guidance fee; Sample testing management (II); Regionally coordinatedclinical planning; Neurologic examination; CT imaging (16-row multi-slice type); Sterile preparation andOther treatment fee; Anticancer drug prescription management; Outpatient chemotherapy 1; Cerebrovasculardisease, etc. rehabilitation fee (I) early addition; Musculoskeletal rehabilitation fee (I) early addition; Disuse
syndrome rehabilitation fee (I) early addition; Pacemaker implantation and replacement; Surgery listed in
General Rules 5 (including General Rule 4 of the Dental Fee Points List, Chapter 2, Part 9) and 6 of the Medical
Fee Points List, Chapter 2, Part 10.
External―
evaluation(Note) SHIP Senri Building is a property with a hospital and paid nursing home, and the above table describes facility overview for
the hospital.
- 38 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
⑤ Earnings Performance

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

Current fiscal period (from February 1, 2019 to July 31, 2019)
Real estate lease business revenue
Real estate lease business expenses
Rent
revenue

Property Outsourcing Insurance Repair
Depreciation Othertax
expenses expenses expenses

Otherrevenue
23,183Not disclosed(Note 2)

(Unit: thousands of yen)

3,004

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

39,516

12,893

3,687

388

1,006

138

7,272

400

38,17810,556

2,502

388

－

103

7,161

400

36,73044,301

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

47,41025,635

2,978

1,140

－

167

20,949400

43,597

8,320

1,122

1,140

－

79

5,578

400

12,951

12,609

3,092

600

282

144

8,089

400

46,479

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

6,648

1,545

600

47

64

3,991

400

27,943

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

2,929

－

600

－

78

1,853

396

13,737

6,341

－

600

－

84

5,260

396

26,531

19,941
22,376

－
－

1,020
1,020

196
549

433
212

17,894
19,701396
892

61,92947,435

7,362

－

600

－

99

6,265

396

48,40327,311

4,931

510

300

234

20,934400

58,081- 39 -

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

Property nameRent
revenue

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

2,000,800

Property Outsourcing Insurance Repair
Depreciation Othertax
expenses expenses expenses

Otherrevenue

Not disclosed(Note 2)2,008,674

Current fiscal period (from February 1, 2019 to July 31, 2019)
Real estate lease business expenses

7,874

NOI
(Note 3)

17,144

2,912

510

566

147

12,608400

35,754

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(Note 1) All figures indicated are rounded down to thousand yen.
(Note 2) “Real estate lease business revenue,” “rent revenue” and “other revenue” of each property are not disclosed as consent for disclosure has notbeen obtained from tenants. The total is the sum of amounts received as rent for the current fiscal period based on the lease agreements.
(Note 3) “NOI” = Real estate lease business revenue – Real estate lease business expenses + depreciation and amortization⑥ Diversification by type
Brand
Paid nursing homes

Number ofproperties

Acquisition price(millions of yen)

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

Share (%)
(Note 2)

31

46,77150,409

72.1

2

3,130

3,510

4.8

1

2,060

2,260

3.2

1

12,92014,30019.9

3564,88170,479100.0Serviced housing for theelderly
Medical service-related
facilities, etc.
Complex of paid nursing
homes, medical servicerelated facilities, etc.
Total

(Note 1) “Period-end appraisal value” indicates amounts stated in the appraisal report with appraisal date of July 31, 2019, prepared by real estateappraisers of Japan Real Estate Institute, the Tanizawa Sogo Appraisal Co., Ltd., Rich Appraisal Institute Co., Ltd., Daiwa Real EstateAppraisal Co., Ltd. and JLL Morii Valuation & Advisory K.K., based on the Articles of Incorporation of HCM and the rules set by theInvestment Trusts Association, Japan. The same shall apply hereinafter.
(Note 2) “Share” refers to the percentage of the total acquisition price, and the figures are rounded to one decimal place. The same shall apply
hereinafter.

⑦ Diversification by area
Classification/region
Three Major Metropolitan

Number ofproperties

Acquisition price(millions of yen)

Period-end
appraisal value(millions of yen)

Share (%)

28

55,85160,846

86.1

Tokyo Metropolitan
Area

19

26,66729,084

41.1

Kinki Area

8

27,91430,31243.0

Chubu Area

1

1,270

1,450

2.0

Core Cities

5

7,350

7,862

11.3

Other Areas

2

1,680

1,771

2.6

35

64,88170,479

100.0

Areas

Total

- 40 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
⑧ Diversification by the number of rooms
The table below shows diversification in accordance with the number of rooms at homes and facilities for the elderly
concerning assets which fall under the category of homes and facilities for the elderly (excluding medical service-related
facilities, etc.) among assets held.
Number of rooms

Number ofproperties

Acquisition price(millions of yen)

Period-end
appraisal value(millions of yen)

Share (%)

11

25,52927,18051.2

1821,661

23,726

43.4

Less than 50 rooms

4

2,711

3,013

5.4

Total

33

49,901

53,919100.0

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

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

- 41 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
⑨ Summary of Appraisal Report

Property
number

Paid nursing
home-1

Paid nursing
home-2

Paid nursing
home-3

Paid nursing
home-4

Paid nursing
home-5

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

Paid nursing
home-16

Paid nursing
home-17
Paid nursing
home-18

Property nameAppraisalcompanyRich
AQUAMARINE
Appraisal
Nishinomiyahama Institute Co.,Ltd.
The
Tanizawa
BonsejourSogo
Chitose-funabashi
Appraisal
Co., Ltd.
The
Tanizawa
Sogo
Bonsejour Hino
Appraisal
Co., Ltd.
The
Tanizawa
Bonsejour
Sogo
Musashi-shinjo
Appraisal
Co., Ltd.
The
MedicalTanizawa
Rehabilitation
Sogo
Home Bonsejour
Appraisal
Hadanoshibusawa
Co., Ltd.
The
MedicalTanizawa
Rehabilitation
Sogo
Home Bonsejour
Appraisal
KomakiCo., Ltd.
Japan RealASHEIM
EstateHikarigaoka
InstituteJapan RealASHEIM
EstateBunkyohakusan
Institute
SOMPO CARE La Japan Realvie ReEstateMachidaonoji
InstituteJapan RealSOMPO CARE La
Estatevie Re Azamino
InstituteJapan RealSAWAYAKA
EstateTachibanakan
InstituteJapan RealSAWAYAKA
EstateMekarikan
InstituteJapan RealSAWAYAKA
EstateTagawakan
InstituteJapan RealGOOD TIME
EstateHOME Fudo-mae
Institute
The
Tanizawa
Bonsejour Yotsugi Sogo
Appraisal
Co., Ltd.
The
Tanizawa
Medical Home
Sogo
Bonsejour Itami
Appraisal
Co., Ltd.
Kobe Gakuentoshi Daiwa Real
Building
Estate(Hapine Kobe
Appraisal
Gakuentoshi)Co., Ltd.
Daiwa RealGreenLife
EstateMoriguchi
Appraisal
Co., Ltd.

Appraisalvalue(millions ofyen)

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

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

Appraisal
NOI yield(%)(Note 4)

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

1,650

1,670

4.4

1,630

4.2

4.6

1,610

74

5.1

3,790

3,830

4.9

3,740

4.7

5.1

3,000

193

5.3

3,230

3,270

4.6

3,190

4.4

4.8

2,250

156

5.1

1,590

1,600

5.6

1,570

5.4

5.8

1,130

95

6.3

1,450

1,460

5.7

1,440

5.5

5.9

855

87

6.3

411

414

5.8

408

5.6

6.0

348

26

6.6

1,950

1,970

4.4

1,920

4.2

4.6

1,920

92

5.2

886

902

4.7

879

4.8

4.9

806

48

5.8

557

566

5.1

553

5.2

5.3

484

36

7.1

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

- 42 -

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

Property
number

Property nameAppraisalcompany

Appraisalvalue(millions ofyen)

Direct capitalization
methodDCF method

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

Daiwa Real
Estate
995
1,010
4.6
Appraisal
Co., Ltd.
The
Tanizawa
Paid nursing Granda TsurumaSogo
1,060
1,070
4.7
home-20
YamatoAppraisal
Co., Ltd.
The
Tanizawa
Paid nursing Smiling Home
Sogo
2,440
2,470
4.7
home-21
Medice Adachi
Appraisal
Co., Ltd.
The
Tanizawa
AIKOEN
Paid nursing
Sogo
ICHIBANKAN
862
866
5.2
home-22
Appraisal
Building
Co., Ltd.
Japan Real
Paid nursing Hanakotoba
Estate
1,190
1,200
4.6
home-23
Minami
Institute
The
Tanizawa
Paid nursing Hanakotoba
Sogo
664
671
4.9
home-24
Miura
Appraisal
Co., Ltd.
Paid nursing SOMPO CARE La JLL Morii
home-25
vie Re HamaValuation &
1,820
1,850
4.6
KawasakiAdvisory K.K.
Japan Real
Paid nursing Hanakotoba ShinEstate
2,230
2,260
4.5
home-26
Yokohama
InstituteJapan Real
Paid nursing Hanakotoba ShinEstate
401
403
4.8
home-27
Yokohama II
Institute
The
Tanizawa
Paid nursing Hanakotoba
Sogo
948
960
4.9
home-28
OdawaraAppraisal
Co., Ltd.
Daiwa Real
Paid nursing
EstateVerde Minowa
1,700
1,710
5.0
home-29
Appraisal
Co., Ltd.
Daiwa Real
Paid nursing
EstateVerde Hotaka
1,360
1,370
5.6
home-30
Appraisal
Co., Ltd.
Daiwa Real
Paid nursing Sunny Life KitaEstate
1,970
2,000
4.5
home-31
ShinagawaAppraisal
Co., Ltd.
Serviced
SOMPO CARE
Japan Realhousing for the Sompo no ie S
Estate
2,170
2,190
5.2
elderly-1
Awajiekimae
Institute
Serviced
SOMPO CARE
Japan Realhousing for the Sompo no ie S
Estate
1,340
1,350
5.2
elderly-2
Kobekamisawa
Institute
MedicalNiigata
Japan Realservice-related Rehabilitation
Estate
2,260
2,270
6.6
facilities, etc.-1 Hospital
InstituteComplex ofThe
paid nursing
Tanizawa
homes, medical SHIP Senri Building Sogo
14,30014,400
4.5
Appraisal
service-related
facilities, etc.-1
Co., Ltd.
Total
70,47971,204―(Note 1) Figures are based on appraisal reports with appraisal date of July 31, 2019.
Paid nursing
home-19

Summary of Appraisal Report (Note 1)

Hapine Kobe
Uozaki Nibankan- 43 -

Appraisal
NOI yield(%)(Note 4)

988

4.4

4.8

667

48

5.2

1,050

4.8

4.9

984

53

5.3

2,430

4.8

4.9

2,420

119

5.3

860

5.3

5.4

840

45

5.9

1,170

4.4

4.8

692

56

5.2

661

5.0

5.1

581

35

5.7

1,790

4.4

4.8

1,010

89

5.2

2,200

4.3

4.7

1,700

109

5.2

398

4.6

5.0

410

22

5.8

943

4.8～
5.0

5.1

888

49

5.6

1,690

4.8

5.2

1,240

109

6.7

1,350

5.4

5.8

398

90

7.0

1,950

4.3

4.7

1,900

91

4.9

2,140

5.0

5.4

1,620

116

6.0

1,320

5.0

5.4

994

72

6.0

2,250

6.4

6.8

1,060

152

7.4

14,200

4.5～
4.6

4.7

16,300680

5.2

69,870――59,8263,665

5.6

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
(Note 2) “Discount rate” represents a yield used to discount net cash flow during an analysis period and terminal value at the end of an analysis period back topresent value, and figures used by the respective appraisal organization are shown. For Hanakotoba Odawara, the rate is 4.8% for fiscal 2019 to fiscal
2022 and 5.0% for fiscal 2023 and onward; and for SHIP Senri Building, the rate is 4.5% for fiscal 2019 to fiscal 2022 and 4.6% for fiscal 2023 and onward.
(Note 3) “Appraisal NOI” indicates net operating income obtained by direct capitalization method stated in real estate appraisal report with July 31, 2019 asappraisal date, and is rounded down to the nearest million yen. In addition, NOI is revenue before deducting depreciation and differs from NCF (netcash flow), which is the amount calculated by adding the gain on investment from security deposits, etc. to NOI and deducting capital expenditures. The
same shall apply hereinafter in this document.
(Note 4) “Appraisal NOI yield” is calculated by the formula below and rounded down to one decimal place. In the column of total appraisal NOI yield, the averageappraisal NOI yield, which is calculated by dividing the total appraisal NOI of the respective real estate in trust by the total acquisition price, is shown(rounded down to one decimal place).
Appraisal NOI yield = Appraisal NOI of the respective real estate in trust / Acquisition price of the respective real estate in trust⑩ Capital Expenditures of Assets under Managementa. Schedule of Capital Expenditures
Of capital expenditures associated with repair work, etc. currently planned for assets owned by HCM as of July 31,
2019, the following are the major estimated amounts. The estimated construction costs include the portion
separately charged to expenses in accounting.
Estimated construction costs(thousands of yen)
Name of real estate, etc.

Niigata Rehabilitation Hospital(Niigata-shi, Niigata)PurposeRooftop waterproofing

ASHEIM Hikarigaoka(Nerima-ku, Tokyo)

Work on nurse call systems andGOOD TIME HOME Fudo-mae(Shinagawa-ku, Tokyo)

Renewal of air conditioners inb.

other equipment
common areas (2nd phase)

Scheduled period

TotalamountPayment
duringperiodTotalamountalready paid

From: September 2019
To: November 2019

31,100--

From: July 2019
To: August 201923,734--

From: October 2019
To: November 2019

19,000--Capital Expenditures During Period
Of construction work falling under the category of capital expenditures conducted in the current fiscal period for
assets owned by HCM as of July 31, 2019, the following are the major amounts. The capital expenditures in thecurrent fiscal period amounted to 114,638 thousand yen and repair expenses separately charged to expenses
amounted to 12,018 thousand yen for a combined total of 126,656 thousand yen of construction work
implemented.
Name of real estate, etc.

Construction costs(thousands of yen)

Purpose

PeriodGranda Tsuruma-Yamato(Yamato-shi, Kanagawa)Exterior wall painting andrenewal of rooftop 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 andother equipment

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- 44 -

This translation of the original Japanese financial report (kessan tanshin) is provided solely for information purposes.
Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.
⑪ Information of Major Tenants“Major tenants” refers to tenants whose leased areas occupy 10% or more of total leased area of the entire portfolio at theend of the current fiscal period (on July 31, 2019). The annual rent and tenant leasehold and security deposits of each
property are not disclosed as consent from the tenants has not been obtained.
Property nameLeasedarea (m2)(Note 1)

Share(%)
(Note 2)AQUAMARINE Nishinomiyahama

5,189.42

2.8

May 31, 2037

Kobe Gakuentoshi Building(Hapine Kobe Gakuentoshi)

12,636.48

6.9

March 28, 2041

GreenLife Moriguchi

8,356.85

4.6

October 19,
2039

Hapine Kobe Uozaki Nibankan

1,772.89

1.0

March 28, 2041

27,955.64

15.3-

Tenant nameGREEN LIFE Co.,
Ltd.

Total

Sompo Care Inc.

Benesse Style Care
Co., Ltd.

SOMPO CARE La vie Re
Machidaonoji

7,720.17

4.2

October 31,
2027

SOMPO CARE La vie Re Azamino

5,789.25

3.2

June 27, 2027

SOMPO CARE La vie Re HamaKawasaki

2,535.29

1.4

December 31,
2027

5,745.15

3.1

July 31, 2034

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

4,058.35

2.2

July 31, 2034

25,848.21

14.2-

Bonsejour Chitose-funabashi

2,342.17

1.3

May 24, 2026

Bonsejour Hino

1,984.17

1.1

May 24, 2026

Bonsejour Musashi-shinjo

1,710.43

0.9

November 23,
2026

Medical Rehabilitation Home
Bonsejour Hadanoshibusawa

3,435.79

1.9

May 21, 2027

Medical Rehabilitation Home
Bonsejour Komaki

8,858.49

4.9

May 21, 2027

Bonsejour Yotsugi

1,962.89

1.1

January 5, 2026

Medical Home Bonsejour Itami

2,129.87

1.2

May 21, 2027

Granda Tsuruma-Yamato

3,427.08

1.9

March 31, 2022

25,850.89

14.2

Total
Ship Healthcare
Estate Inc.

Contract
expiration date
(Note 3)

SHIP Senri Building

24,813.85

13.6

Total

24,813.85

13.6

October 27,
2038-

Contract renewal method, etc.
(Note 4)
Cancellation not allowed
through to the end of thecontract
Midterm cancellation notallowed for 9 years from thestart date of leasing.
Cancellation allowed if
requested 6 months prior or
earlier.
Midterm cancellation notallowed for 9 years from thestart date of leasing.
Midterm cancellation notallowed for 15 years from thestart date of leasing.
Midterm cancellation notallowed for 15 years from thestart date of leasing.
Midterm cancellation notallowed for 15 years from thestart date of leasing.
Cancellation allowed if
requested 1 year prior or earlier.
Cancellation allowed if
requested 1 year prior or earlier.
Cancellation not allowed
through to the end of thecontract
Cancellation not allowed
through to the end of thecontract
Cancellation not allowed
through to the end of thecontract
Cancellation not allowed
through to the end of thecontract
Cancellation not allowed
through to the end of thecontract
Cancellation not allowed
through to the end of thecontract
Cancellation not allowed
through to the end of thecontract
Cancellation allowed if
requested 6 months prior or
earlier.
Midterm cancellation notallowed for 15 years from thestart date of leasing.
-(Note 1) “Leased area” indicates the area stated in lease agreements concluded with each tenant as of July 31, 2019. When a master leaseagreement has been concluded, the area for which a lease agreement has been concluded with end tenants and actually leased is shownfor properties for which a pass-through master lease agreement under which rent from end tenants is received as is, in principle, isconcluded.
(Note 2) “Share” indicates the area of each property leased to its major tenants as a percentage of the total leased area of the properties owned
by HCM as of July 31, 2019, and is rounded to one decimal place.
(Note 3) “Contract expiration date” indicates the contract expiration date stated in the lease agreement.
(Note 4) “Contract renewal method, etc.” indicates the details of contract renewal method, etc. stated in the lease agreement.

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

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