Impact Report

Issued in December 2020

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

Healthcare & Medical Investment Corporation

Representative

Yuji Fujise, Executive Director

Location
Listing date
Listed stock exchange
End of fiscal period

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

[Profile of the Asset Management Company]
Corporate name

Healthcare Asset Management Co., Ltd.

Representative

Seiji Yoshioka, President and Representative Director

Location
Establishment date
CapitalShareholders

Details of businesses

3-3 Kanda-Ogawamachi, Chiyoda-ku, Tokyo
November 28, 2013
150 million yen
SHIP HEALTHCARE HOLDINGS INC. (33.3%)
NEC Capital Solutions Limited (33.3%)
Sumitomo Mitsui Banking Corporation (5.0%)
Sumitomo Mitsui Finance and Leasing Company, Limited (4.8%)
SMBC Nikko Securities Inc. (4.8%)
Yoei Co., Ltd. (4.7%)
Ginsen Co., Ltd. (4.7%)
Kobe Tochi Tatemono Co., Ltd. (4.7%)
Muromachi Building Co., Ltd. (4.7%)
Investment management business

About Impact Report

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

From November 1, 2019 to October 31, 2020
Once a year in principle (every December)

1

Contents
1. Current Status and Issues Surrounding Medical and Nursing Care
Declining birthrate and aging population in Japan and Impact on Medical andNursing Care - Recognition of Issues and Countermeasures -3

Various Issues Derived from Declining Birthrate and Aging Population

4

Actions by the Government and Local Governments

9

Various Issues in Nursing Care

14

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

19

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

20

Relationship Between SDGs and ESG

21

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

22

Change in the Acquisition Amount and Number of Healthcare Facilities in
the J-REIT Market

23

5. Output Indicators (Overview)
Properties acquired during the reporting period (November 1, 2019October 31, 2020)

24

Status of Allocation of Social Loan and Social bond25

Actions to Prevent the Spread of COVID-19

27

Actions Aimed at HAM Executives and Employees

28

Resolution of social issues in an super aged society (S)30

Establishment of governance system (G)37

SDGs Social Finance Framework

39

JCR Social Finance Evaluation

40

List of Borrowings and investment corporation bond (as of the end of the
fiscal period ended July 2020)41

Portfolio Map

42

Summary of Buildings and Their Leasing Status

43

Overview of Facilities and Housing for the Elderly

45

Overview of Medical Service-Related Facilities, etc.

46

Earnings Performance

47

Summary of Appraisal Report

48

Capital Expenditures of Assets Under Management

50

Company Profile of Operators

51

6. Specific Actions

7. Social Finance8. Output Indicators

9. Actions of Each Operator
Feature: Interview

52

Case Example

58

2

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

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

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

According to the “Population Estimation” of the Ministry of Internal Affairs and Communications, thepopulation aged 65 or over in Japan was 35.92 million as of December 2019, accounting for 28.5% of thetotal population (aging rate) and showing the highest aging rate in the world. While the total population isdecreasing and the birthrate is declining, the aging rate will continue to rise due to the increase in the
population aged 65 or over, and the rate is estimated to reach 33.3% in 2036, meaning that a society inwhich one out of three people are 65 years old or over will arrive. In particular, the percentage of those
aged 75 or over continues to increase, and the shortage of laborers due to the declining birthrate and theincrease in needs for medical and nursing care due to the aging of population are starting to have asignificant impact on the medical and nursing care industry.
[Change in Total Population]
1.4bilion people

Actual75 years old or older

45%

Estimate

65-74 years old
1.2bilion people40%

15-64 years old
14 years old or younger

35%

Ratio of 75 years old or olders

1.0bilion people

Ratio of 65 years old or olders

30%

0.8bilion people

25%

0.6bilion people

20%
15%

0.4bilion people

10%0.2bilion people

5%0%0.0bilion people(Source) "Population Estimation" of the Ministry of Internal Affairs and Communications and “Population Projection for Japan(Projection for 2017)” of the National Institute of Population and Social Security Research[Comparison of the Percentage of Elderly Population in Major Countries]
75 years old or older

30%

65-74 years old

25%

Percentage of the population aged 65 or over in the world

20%
15%
10%

9.1%

5%

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

4

China

Korea

U.S.

CanadaU.K

FranceGermany

Italy

Japan

0%

1. Current Status and Issues Surrounding Medical and Nursing Care
Various Issues Derived from Declining Birthrate and Aging Population[Change in Number of Births and Birth Rate]
3.0milion people
2.5milion people

1949
2,696,638 people, the largest
number of birth since 1947

5

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

4.54

2.0milion people4

2019865,239 people, thesmallest number ofbirth since 1947

1.5milion people

32
1.0milion people
1.36

0.5milion people
0.0milion people

19471950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

1

2019

(Source) “Demographic Statistics (2019)” of the Ministry of Health, Labor and Welfare[Change in the Number of People Aged Between 18 and 64 Supporting the People Aged 65 or Over]

2017

2040

2065

2.1 people

1.5 people

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

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

[Future Outlook for Social Security Benefits Towards 2040]

200 trillion yen

Pension

Medical

Nursing careChildcareOther

188.2 ~190.0
9.4
13.1

150 trillion yen

100 trillion yen

140.2 ~140.6
7.7

121.3

10.0

6.7
7.9

15.3
66.7~68.5

10.7

39.2

25.8

47.4~47.8

50 trillion yen

56.7

59.9

73.2

0 trillion yen

Fiscal 2018

Fiscal 2025

Fiscal 2040

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

[Change in the Number of People Eligible to Receive Nursing Care by Degree of Nursing Care Required]

7.0milion people
6.0milion people
5.0milion people

Require assistance
Require assistance level 2
Require nursing care level 1
Require nursing care level 3
Require nursing care level 5
Increased by 2.5 times during theperiod from 2000 to 2018

4.0milion people
3.0milion people

Require assistance level 1
Transitional
Require nursing care level 2
Require nursing care level 4

345

384

409

432

440

453

467

485

506

531

561

584

606

620

632

641

658

298
256

2.0milion people
1.0milion people
0.0milion people

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

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

Annual death toll (thousand people)

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

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

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

Own
house

Nursingcarefacility

Other

Medical institution(Source) KPMG Healthcare Japan Co., Ltd.

7

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

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

FY2017(actual value)

FY2020(estimated value)

FY2025(estimated value)

Long-term care welfare facility for theelderly

590,000 people

650,000 people

730,000 people

Long-term care health facility for theelderly

360,000 people

380,000 people

410,000 people

Long-term care medical facility, etc.

50,000 people

55,000 people

64,000 people

Nursing care facility

990,000 people

1,090,000 people

1,210,000 people

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

230,000 people

280,000 people

320,000 people

Group home for the elderly withdementia

200,000 people

220,000 people

250,000 people

Residential service

430,000 people

500,000 people

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

2040
2035
2030
2025
2018

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

Establishment of Regional Comprehensive Care System

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

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

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

Medical care

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

Hospital visit&
stay

Daily medical care
• Primary care doctor• Regional cooperative
hospital

Outpatient nursing care&admission In-home service

Residence• Regional comprehensive
support center• Care manager

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

Life support & nursing care prevention

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

Source: Website of Ministry of Health, Labor and Welfare

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

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

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

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

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

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

Overemphasison advanced
Select medical
acute stage
function
voluntarily
Financialconcerns

Hospital bed function(July 2015)

Number of Beds to be
Required in 2025

Total 1.331 million beds

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

Advanced acutestage
169,000 beds
(14%)

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

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

Acute stage
401,000 beds
(34%)

Acute stage
593,000 beds
(48%)

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

Recovery stage
129,000 beds
(10%)

Increase byapprox. 3 times

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

Unused, etc.
87,000 beds

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

Recovery stage
375,000 beds
(31%)

Chronic stage
284,000 beds
(24%)

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

10

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

In order to respond to the growing demand for medical and nursing care services, upgradingand expansion of healthcare facilities is required, and policies for such actions are being
promoted. In addition, according to the “Survey on Seismic Retrofit of Hospitals” by the Ministryof Health, Labor and Welfare, the ratio of quake-resistant hospitals in 2019 remained at 76.0%.
Since hospitals are used by an unspecified large number of people everyday and can be aregional base in the event of a disaster, investments in reconstruction, etc. are urgently required
to respond to earthquake resistance.
In the “Japan Revitalization Strategy-JAPAN is BACK-” dated June 14, 2013, the government
announced its policy to “enact a guideline concerning acquisition and management of housing
for the elderly, etc. for the utilization of healthcare REITs with an aim to utilize private fund” aspart of urban development to enable the elderly, etc. to walk and live safely.
Following this policy, the Ministry of Land, Infrastructure, Transport and Tourism enacted the“Guideline related to the utilization of healthcare REITs targeting housing for the elderly, etc.” onJune 27, 2014, and the “Guideline related to REITs targeting hospital real estate” on June 26,
2015, and guidelines for utilizing healthcare REITs were established.
As a measure to spread healthcare REITs, seminars targeting related business operators jointly
held by the Financial Services Agency, the Ministry of Land, Infrastructure, Transport andTourism, the Tokyo Stock Exchange, and the Association For Real Estate Securitization havebeen held several times a year, and efforts by the public and private sectors are being made.

11

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

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

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

Improvement oftreatment of nursing care
staff

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

○ Support through loan of educational funds for care
workers and money for preparation for reemployment○ Integrated support from holding of introductory training forinexperienced caregivers such as the middle-aged andthe elderly to matching after attending training◎ Holding seminars to promote the entry of healthy elderly
people into the nursing care field◎ Promoting Employment Activities in the Nursing Care Field
Using Volunteer Points

Prevention of job
separation
Promotion of job
retention
Improvement of
productivity○ Promotion of utilization of nursing care robots and ICT○ Support of establishment and operation of nursing carefacilities and childcare facilities inside offices○ Support of the reduction of burden in attending training
courses for career advancement and securement ofalternative staff◎ Improvement of practical skills through development of leading carestaff and team care
◎ Accelerating the use of nursing care robots and ICT◎ Dissemination of productivity improvement guidelines◎ Establishment of counseling desks and promotion of exchange
among young employees

Improvement of theattractiveness of thenursing care
profession○ Promotion of understanding of nursing care work forstudents, their parents, career guidance staff, etc.
〇 Holding experience-based events to learn about nursingcare◎ Transmission of the attractiveness of nursing care staff toyoung people, people have finished rearing children andactive seniors

Securement and trainingof various personnel

Environmental
improvement for
accepting foreign
personnel〇 Support of international students, etc. aiming to becomecare workers (promotion of loan of educational funds forcare workers, consultation and support in daily life, etc.)◎ Environmental improvement for accepting foreign nursing
care personnel with "specific skills," etc. (PR of nursing carein Japan through on-site briefings, group training for
improving nursing skills, support for learning Japanese innursing care, consultation and support of nursing carebusiness, etc., patrol and visits, etc.)(Source) “Securement of Nursing Care Personnel and Innovation of Nursing Care Site <Reference Material>” of the
Health and Welfare Bureau for the Elderly, Ministry of Health, Labor and Welfare121. Current Status and Issues Surrounding Medical and Nursing Care
Actions by the Government and Local Governments


Actions for Preventing Abuse of the Elderly

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

Consultation and report

Acceptance ofconsultation
and report

Understanding ofactual situation
Watching

Understandingof actualsituation

Connection toservices,
systems andinstitutions

Support plan

Monitoring

Social welfare
council
Welfare commissioner
Nursing care counselor

Residents'
association

Family association

Connection to services, systems and institutions

Monitoring

NPO volunteer

Advice and support

Consultation
and report

Early detection andwatching Network

Advocacy group

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

Nursing home for the elderly
Intensive care home
for the elderly

Care manager

Family court

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

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

Healthcare Facilities Requiring the Promotion of Supply
The number of facilities and housing for the elderly is increasing every year, but with thegrowing demand for medical and nursing care services due to the increase in the population of
the elderly, the government has set a goal to increase in-home and facility services, which
responds to the increasing needs for nursing care, for 500,000 people (compared with fiscal
2015) by the early 2020s in the “Japan 100 Million Total Active Plan,” which was approved at
the Cabinet meeting in 2016, and further expansion of nursing care facilities, etc. is in progress.
[Capacity and Number of Users of Facilities and Housing for the Elderly](Unit: units, people)
700,000

Long-term care welfare facility for the elderly(special nursing facility)
Paid nursing homeLong-term care health facility for the elderly(health facility for the eldely)

600,000

Serviced housing for the elderly
Communal daily long-term nursing care for a dementia patient(group home)
Low-cost paid nursing home

610,000people
552,350people

Nursing home for the elderly
500,000

Long-term care medical facility

400,000

363,600people

300,000

225,374people
200,000

205,000people

94,456people

100,000

63,777people
43,900people
0

2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
(Source) Prepared by the Asset Management Company based on the “Statistics on the Actual Status of Nursing Care Benefits, etc.” and“Survey on Social Welfare Facilities, etc.” of the Ministry of Health, Labor and Welfare, “Information Provision System ofResidences for Elderly People with Service” on the website of the Senior Housing Association.
(Note) The number of users is shown for long-term care welfare facility for the elderly, long-term care health facility for the elderly,
long-term care medical facility and communal daily long-term nursing care for a dementia patient (group homes).

14

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

Personnel Shortage in the Nursing Care Industry

In fiscal 2019, the jobs-to-applicants ratio for nursing care-related occupations was 4.20 times,
which is higher than that for all occupations, and the gap has been increasing in recent years.
According to a survey by the Care Work Foundation, the percentage of offices feeling a shortage ofnursing care personnel rose to 65.3% in 2019.
It is expected that approximately 2.16 million nursing care personnel will be required at the end of
fiscal 2020 and approximately 2.45 million at the end of fiscal 2025 according to the estimation by
the prefectural government based on the expected amount of nursing care services in the nursing
care insurance business plan for the 7th fiscal period, and nursing care personnel needs to be
secured urgently.
[Jobs-to-Applicants Ratio (All Industries and Nursing Care-Related Occupations) and Unemployment Rate]
Jobs-to-applicants ratio(all industries)
Jobs-to-applicants ratio(nursing care-related jobs)

6×

6.0%

Unemployment rate
5×

4.20×

4.0%

4×
3×

2.4%

3.0%
2.0%

2×
1.45×

1×
0×

5.0%

FiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscal

1.0%
0.0%

2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
(Source) “Securement of Nursing Care Personnel and Innovation of Nursing Care Site (Reference Material)” of the Health and Welfare
Bureau for the Elderly, Ministry of Health, Labor and Welfare[Needs for Nursing Care Personnel Towards 2025]
2.5
250万人
million people

Number of nursing care personnel required

2.16
million people

2.45
million people

Shortage:
Approx. 550,000 people

Shortage:
Approx. 260,000 people

2.0

200万人
millionpeople1.90
million people

1.5
million people

150万人

Fiscal 2016

Fiscal 2020

Fiscal 2025

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

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

Issue of Job Separation Due to Nursing Care

In Japan, lifetime non-marriage rate and the percentage of double-income households are
increasing, and such numbers are expected to continue increasing in the future. Such change inthe family structure is believed to lead to an increase in the number of people engaged innursing care while working.
Under such circumstances, the number of people who left their jobs to be engaged in nursing
care or nursing was approximately 100,000 people in 2019. Furthermore, according to a survey
targeting those who had left their jobs during the nursing care period, more than half of themhad the intention to continue working, indicating that they were forced to leave their jobs (Note1).
The issue of job separation due to nursing care is further exacerbating the issue of labor
shortage in Japan where the population continues to decline, and there is a concern that it will
adversely affect the economy. According to the Ministry of Economy, Trade and Industry, theloss of added value in the entire economy associated with job separation due to nursing care isestimated to be approximately 650 billion yen per year (Note 2). In addition, approximately
80% of those leaving their jobs due to nursing care are women, and such trend has become amajor barrier in promoting the social advancement of women.
[Number of People Leaving Jobs for Nursing Care and Nursing]
120,000people

Women

Men

Ratio of women

100,000people

100%
80%

80,000people

60%

60,000people
40%

40,000people

20%

20,000people
0people2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

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

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

Abuse of the Elderly in Nursing Care

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

20,000cases
15,000cases
10,000cases
5,000cases
0cases12,569 13,273

14,889 15,615

16,668 16,599

10,000cases

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

16,384 17,078 17,249

7,500cases
5,000cases

54

62

70

76

96

151

155

221

300

408

452

510

621

FiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscal

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2,500cases
0cases(Source) “Survey Results on the Status of Response Based on the “Act on the Prevention of Elder Abuse, Support for Caregivers ofElderly Persons and Other Related Matters” in Fiscal 2018” of the Ministry of Health, Labor and Welfare171. Current Status and Issues Surrounding Medical and Nursing Care
Various Issues in Nursing Care
[Factors of Abuse by Family Members, Etc. (Family Members, Etc.)]

Nursing care fatigue and stress
Disability and illness of family members, etc.
Human relations up to the abuse(Words and actions based on) the character and personality…
Lack of knowledge and information by family members, etc.
Mental state of family members, etc.
Impact of alcohol drinking by family members, etc.
Decline and lack of nursing care ability
Lack and decline of understanding by family members, etc.
Isolation of family members, etc., absence of supportive…
Resistance to the use of external services
Gambling addiction by family members, etc.
Other
0%

5%

10%

15%

20%

25%

30%

[Factors of Abuse at Nursing Care Facilities]
Issues regarding education, knowledge, nursing care skills, etc.
Issues on stress and emotional control of staff
Lack of ethics and philosophy
Issues on personnel shortage and staffing and busyness
related to such issues
Organizational climate fostering abuse and bad relationshipamong staff
Issues regarding education, knowledge, nursing care skills, etc.
Other

0%

10%

20%

30%

40%

50%

60%

(Source) "Survey Results on the Status of Response Based on the “Act on the Prevention of Elder Abuse, Support for Caregivers ofElderly Persons and Other Related Matters" in Fiscal 2018" of the Ministry of Health, Labor and Welfare

18

70%

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

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

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

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

19

3. Policy on Actions for SDGs
What Are SDGs (Sustainable Development Goals)?
Sustainable Development Goals (SDGs) are international goals from 2016 to 2030 stated in the“2030 Agenda for Sustainable Development” adopted at the United Nations Summit in
September 2015 as a successor to the Millennium Development Goals (MDGs) established in
2001. It consists of 17 goals and 169 targets for realizing a sustainable world, and pledges toleave no one behind. SDGs are universal efforts for developed countries and developing
countries, Japan is proactively working on it.

20

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

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

Issues that need to be solved

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

Social(Society)

Governance(Governance)

・Elimination of the shortage of supply of housing forthe elderly against the elderly population
・Prevention of job separation due to nursing carethrough the promotion of supply of nursing carefacilities
・Improvement of business efficiency and reduction ofwork burden for nursing care staff
・Prevention of abuse of residents and harassment offacility staff
・Response to the deterioration of hospitals andpromotion of earthquake resistance・Work-life balance

・Transparency in decision making
・Fair transaction (prevention of conflicts of interest)
・Management of various risks (including elimination ofantisocial forces)

21

Highly relevant SDGs

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

Status of Supply of Healthcare Facilities

Although the supply of facilities and housing for the elderly is increasing every year in responseto the growing demand for medical and nursing care, the supply rate of paid nursing homes
against the elderly population was 1.54% in 2018 and that of serviced housing for the elderly
was only 0.67% in 2018.
[Supply Rate of Facilities and Housing for the Elderly Against the Elderly Population (Aged 65 Years or Older)]
1.6%

Paid nursing homeServiced housing for the elderly

1.4%
1.2%

1.02%

1.10%

1.40%
1.18%

1.48%

1.54%

1.25%

1.0%
0.8%
0.6%

0.46%

0.54%

0.63%

0.63%

0.66%

0.73%
0.42%

0.61%

0.64%

0.67%

2016

2017

2018

0.29%

0.4%
0.2%
0.0%

0.50%

0.57%

0.01%
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

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

224. Outcome Indicators
Change in the Acquisition Amount and Number of Healthcare Facilities in
the J-REIT Market
As of the end of October 2020, the total acquisition amount of healthcare facilities was 254,495
million yen and the cumulative number of properties was 140 in the J-REIT market. Of these,
the cumulative acquisition amount for HCM was 66,337 million yen (26.1%) and the cumulative
number of properties for HCM was 36 (25.7%).
(Unit: million yen, property)

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

Number of healthcare facilities

HCM

Entire J-REIT market

Cumulative
Cumulative
Acquisitionacquisitionacquisition
price
price
price

Number ofproperties
acquired

HCM

Cumulative
number ofproperties

Number ofproperties
acquired

Cumulative
number ofproperties

2001

0

0

0

0

0

0

0

0

2002

0

0

0

0

0

0

0

0

2003

0

0

0

0

0

0

0

0

2004

0

0

0

0

0

0

0

0

2005

0

0

0

0

0

0

0

0

2006

2,865

2,865

0

0

4

4

0

0

2007

5,600

8,465

0

0

4

8

0

0

2008

0

8,465

0

0

0

8

0

0

2009

0

8,465

0

0

0

8

0

0

2010

0

8,465

0

0

0

8

0

0

2011

0

8,465

0

0

0

8

0

0

2012

2,510

10,975

0

0

2

10

0

0

0

2

12

0

0

0

20

32

0

0

2013

1,980

12,9550

2014

28,782

41,7370

2015

63,411

105,148

23,683

23,683

40

72

16

16

2016

6,278

111,426

1,338

25,021

5

77

2

18

2017

18,417

129,843

15,48340,504

10

87

7

25

2018

21,675

151,518

1,686

42,190

11

98

2

27

2019年

38,900190,418

22,69164,881

13

111

8

35

January 2020

0190,418064,881

0

111

0

35

February 2020

0190,418064,881

0

111

0

35

March 2020

0190,418064,881

0

111

0

35

April 2020

62,659253,077

38

64,91928

139（Note）035

64,919

0

139

0

35

May 20200

253,0770June 2020

1,418

254,495

1,418

66,337

1

140

1

36

July 2020

0254,495

066,337

0

140

0

36

August 2020

0254,495

066,337

0

140

0

36

September 2020

0254,495

066,337

0

140

0

36

October 2020

0254,495

066,337

0

140

0

36

(Source) Prepared by the Asset Management Company based on ARES J-REIT Databook (October 2020)(Note)Verde Hotaka (land) is not included in the number of properties acquired as it is based on the properties already owned.

23

5. Output Indicators (Overview)
Properties Acquired During the Reporting Period(November 1, 2019-October 31, 2020)
In April 2020, we acquired Verde Hotaka (Part of the land) (acquisition price:38 million
yen) and Sunny Life Kamakura (acquisition price: 1,418 million yen) in June 2020.
Acquisition date

Property nameAcquisition price(million yen)

Main use

April 1,2020

Verde Hotaka(Part of the land)

Paid nursing home38

June 29,2020

Sunny Life Kamakura

Paid nursing home

1,418

Total

1,456

[Change in Portfolio Status]
Comparison withEnd of fiscal
period ended July
2019 (9th FP)

End of fiscal period ended July 2020
(11th FP)End of fiscal period ended July 2019 (9th FP)
Number of properties

35

Number of properties

36+1

Total acquisition price64.8 billion yen

Total acquisition price66.3 billion yen+1.4 billion yen

Total appraisal value

70.4 billion yen

Total appraisal value

71.8 billion yen+1.4 billion yen

5.6%

±0%

2 property±0 property

12

±0

100%

+0.1%

13.8 years-0.8 years

5.6%

Average appraisal NOI yield

2 property

Hospital real estate

12

Number of operators

99.9%

Operational rate
Average remaining leaseterm

14.6 years

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

Paid nursing home

24

Name

Sunny Life Kamakura

Location

Kamakura-shi, Kanagawa

Operator

Kawashima Corporation

Appraisal value

1,550 million yen

Acquisition price

1,418 million yen

Appraisal NOI yield

5.3%

Number ofrooms/Resident
capacity

128 rooms, 128 people

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

Status of Use and Procurement of Funds（From November 1, 2019 to October 31,2020）
Use of funds

Fund procurement

Acquisition of healthcare
facilities

1.45 billion yen

Public offering

6.4 billion yen

Refinancing

7.7 billion yen

Social loan

2.0 billion yen

Expenses, etc. (Note)

0.15 billion yen

Own funds

9.0 billion yen

Total

9.3 billion yen

Total

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



List of Social Loans

HCM procured 2.0 billion yen of social bond on January 30, 2020, 5.7 billion yen of social loan
on January 31, 2020, and allocated the entire amount as funds for refinancing of borrowings
associated with the acquisition of trust beneficiary rights for healthcare facilities. In addition,
HCM procured 700 million yen of social loan on June 29, 2020, and allocated the entire amountas funds for acquisition of trust beneficiary rights for healthcare facilities.
[List of Social Loans]
LenderBorrowingamountDrawdown
dateInterest rate

Loan syndicate with 1.25 billion yen
Fixed interest rate
Sumitomo Mitsui
January 31,
Banking Corporation
2020
4.45 billion yen 1-month TIBOR+0.45%
as an arranger
Sumitomo Mitsui
Banking Corporation

0.7billion yen 1-month TIBOR+0.25%

June 29,
2020

Repayment
date
January 31,
2023
January 31,
2025
June 29,
2021

Repayment
Security
methodLump-sum
repayment on
Unsecuredprincipal
Unguaranteed
repayment
date
Lump-sum
repayment on
Unsecuredprincipal
Unguaranteed
repayment
date[List of Social Bonds]
Name
Healthcare & Medical
Investment Corporation 1st
Series Unsecured
Investment Corporation
Bonds (with pari passu
conditions among thespecified investment
corporation bonds) (Social
Bond) (a.k.a.: HCM
Social Bond)

Total issue
amountInterest rate

Payment date

Redemption
date

Credit rating

Security

2.0 billion yen

0.780％

January 30,
2020

January 30,
2030

A
(JCR)

Unsecured
Unguaranteed25

5. Output Indicators (Overview)
Status of Allocation of Social Loan
[Status of Use and Allocation of Funds]
Use of funds

Allocation ratio

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

8.3%

Funds for refinancing

91.7%

Unallocated amount
None[Borrowings for Refinancing]
LenderBalance

Drawdown date

Sumitomo Mitsui
Banking Corporation

1.0 billion yen

October 1, 2019

3.7 billion yen

February 1, 2017

3.0 billion yen

March 21, 2017

Loan syndicate with
Sumitomo Mitsui
Banking Corporation
as an arranger

Refinancing date

January 31, 2020

Initial use of funds
・Acquisition funds for Bonsejour Yotsugi, Medical Home Bonsejour Itami
・Acquisition funds for Kobe Gakuentoshi Building(Hapine Kobe Gakuentoshi), GreenLife Moriguchi, Hapine Kobe
Uozaki Nibankan and Granda Tsuruma-Yamato
・Acquisition funds for Bonsejour Chitose-funabashi, Bonsejour Hino, Bonsejour Musashi-shinjo, Medical
Rehabilitation Home Bonsejour Hadanoshibusawa, Medical Rehabilitation Home Bonsejour Komaki, AQUAMARINE
Nishinomiyahama, ASHEIM Hikarigaoka, ASHEIM Bunkyohakusan, SOMPO CARE La vie Re Machidaonoji, SOMPOCARE La vie Re Azamino, GOOD TIME HOME Fudo-mae, SAWAYAKA Tachibanakan, SAWAYAKA Mekarikan,
SAWAYAKA Tagawakan, SOMPO CARE Sompo no ie S Awajiekimae, SOMPO CARE Sompo no ie S Kobekamisawa

26

6. Specific Actions (HAM)
Actions to Prevent the Spread of COVID-19
HAM has implemented the following as measures to prevent the spread of COVID-19.
・ Introduction of laptops for remote work and implementation of remote work rules
We have introduced laptops and formulated remote work rules to establish an environmentthat enables all executives and employees (including temporary staff) to work from home.
・ Promotion of staggered commuting times
We are promoting staggered commuting times with a view to preventing infection among
employees who cannot avoid commuting to work and adopting more flexible work styles inline with work-style reforms.
・ Distribution of masks and installation of disinfectant dispensers and acrylic partitions
・ Rigorous implementation of temperature measurements and physical condition checks for
executives and employees
・ Rigorous disinfection and ventilation of company premises on a regular basis
・ Introduction of teleconferencing system
・ Installation of Airness low-concentration ozone generators
We are striving to prevent infection of employees and visitors by installing Airness lowconcentration ozone generators sold by Ship Healthcare Pharmacy East Co., Ltd., aconsolidated subsidiary of sponsor company Ship Healthcare Holdings Inc., at the company.
Findings from research by universities and specialized institutions have been publishedindicating that the low-concentration ozone generated by this device is effective ininactivating the COVID-19 coronavirus, and an increasing number of medical corporations andnursing care providers are using subsidies and the like to introduce it as a COVID-19
countermeasure.
[Use of Airness at HAM]

27

6. Specific Actions (HAM)
Actions Aimed at HAM Executives and Employees

Career Development Initiatives
In order for employees to improve their professional skills, HAM recommends the acquisitionof qualifications that are closely related to our business, such as a Real Estate Notary licenseor ARES Certified Master license.
The number of employees holding specialized qualifications (including employees on
temporary assignment from sponsors, etc.) is shown below.

Number of Employees Holding Qualifications as of the End of
October 2020Real Estate Notary

9 people

ARES Certified Master10 people

Chartered Member of the Securities Analysts Association ofJapan

2 people

Certified Building Administrator

1 personFramework for Ensuring Executives and Employees Are Suitably Motivated
In order to foster and improve self-directed compliance awareness, we hold monthly
compliance workshops and rigorously implement customer-oriented business operations(fiduciary duty) for all executives and employees.

Number of
Events2016 Compliance Workshops

33

2017 Compliance Workshops

252018 Compliance Workshops

25

2019 Compliance Workshops

222020 Compliance Workshops

10** The figure for 2020 Compliance Workshops is based on the number of meetings held from April 2020 to
October 2020.

28

6. Specific Actions (HAM)
Actions Aimed at HAM Executives and Employees

Actions Aimed at Securing Human Resources
At HAM, we continue to consider new hires for the purpose of ensuring we have sufficienthuman resources and to promote the development of an employee-friendly working
environment, such as actively encouraging employees to take paid leave (paid leave usage rate
in FY2019: 71.1%), with the aim of improving the motivation of employees and executives andretaining them on a long-term basis.
In addition, as part of our human resources strategy, we are working to enhance our asset
management operations by accepting highly specialized employees with diverse backgrounds
from sponsor companies.
The number of employees temporarily assigned from sponsors as of the end of October 2020
was as follows.
・ Ship Healthcare Holdings Inc. (33.3% stake) - 1 person
・ NEC Capital Solutions Limited (33.3% stake) - 2 people
・ Sumitomo Mitsui Banking Corporation (5.0% stake) - 3 people
・ SMBC Nikko Securities Inc. (4.8% stake) - 1 person
・ Ginsen Co., Ltd. (4.7% stake) - 1 person



FY2017FY2018FY2019Total number of
executives andemployees

14 people

15 people

16 people(Number of directly hired
executives andemployees)

7 people

8 people

9 people(Paid leave usage rate)

43.0%

55.9%

71.1%

(Number of temporarily
assigned employees)

7 people

7 people

6 people

Number of new hires

2 people2 people2 people

Number of employees
leaving the company

0 people

1 person1 personAnnual turnover rate

0%

6.3%

5.9%

Introduction of Cumulative Investment System
We have introduced a cumulative investment system that allows directly hired executives andemployees to purchase HCM investment units.
It is expected that the introduction of this system will assist executives and employees withasset-building and make them more conscious of improving business performance, which we
believe will contribute to the continuous growth of HCM and improved unitholder value.
At present, 7 people are making ongoing investments using this system.

29

6. Specific Actions
Resolution of Social Issues in an Aged Society (S)Acquisition of Healthcare Facilities [Investment amount: 1,456 million yen]In the year from November 1, 2019 to October 31, 2020, HCM acquired 2 paid nursing homes
with care service (including the land of existing property) and now owns 36 healthcare facilities.
The borrowed portion of the funds for acquisition was procured as social loan based on the
SDGs Social Finance Framework established by HCM in January 2019.
[Actual Results on Acquisition of Healthcare Facilities]
Paid nursing home

Paid nursing home

Sunny Life Kamakura

Verde Hotaka(land)(billion yen)
100.0

(Number of properties)
40

64.8

70.0

70.0

66.3

Asset size

35

<Target>35

Number of properties
30

38.4

40.5

40.5

2

25

25
23.6

23.6

16

16

25.0

25.0

20
15

64.8

24

36

35

42.1

100.0
(Note)

60.0
60.0
50.0
50.0
40.0
40.0

2

Pipeline

30.0
30.0
20.0
20.0

18

18

10.0

1st FP 2nd FP 3rd FP 4th FP 5th FP 6th FP 7th FP 8th FP 9th FP 10th FP 11th FP
Ended

Ended

Ended

Ended

Ended

Ended

Ended

Ended

Ended

Ended

Jul.

Jan.

Jul.

Jan.

Jul.

Jan.

Jul.

Jan.

Jul.

Jan.

Jul.

2015

2016

2016

2017

2017

2018

2018

2019

2019

2020

2020

Ended

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

30

10.0

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

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

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

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

Nursing home

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

Residents

Operator
REIT (Investment Corporation)

Capital investment

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

Rent (leveling of
payment of
introduction cost)

Nursing home

31

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

System of EGAO Link

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

SensorC Sleep SCAN

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

Monitoring of sleep,
arousal, bed leaving
and respiratory
condition

Content of call
Automaticrecording

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

AiphoneCall signal

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

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

Sumitomo Densetsu Co., Ltd.

Sharing of recorded
information

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



Effect of Introduction of EGAO Link

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

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

32

6. Specific Actions (HCM)
Addressing Social Issues Relating to the Super Aged of Society (S)Effect of Introducing EGAO Link at ASHEIM Bunkyohakusan(July 2019 - September 2020)■ Reduction of care staff
As of the end of September 2020, the number of persons had been
reduced by 3.5 people/month and working hours had been reduced by
616 hours/month.
July 31, 2019

Sept. 30, 202048 people

43 people-5 people

1.78:1

1.84:1-0.06

Full-time employees

14.5 people

12.5 people-2 people

Contract employees

2 people2 people0 people

Part-time employees

5.6 people

6.9 people+1.3 people

Temporary workers

2 people0 people-2 people

Nursing staff

2.8 people

2.0 people-0.8 people

Staff per month

26.9 people

23.4 people-3.5 people

Total working hours

4,734 hours

4,118 hours-616 hours

Number of residents
Ratio of staff toresidents

Difference■Reducing burden of night-shift work for care staff
1. On September 30, 2019, we switched from a system with two night-shiftstaff and one semi-night-shift staff to a system with two night-shift by
reducing the semi-night shift, and as of September 30, 2020, we weremaintaining the new system.
2. As of September 30, 2020, following the reducing of the semi-night
shift, night-shift workers were still able to take two hours of breaks
every day.
3. Regular night inspections were terminated on October 1, 2019, and as of
September 30, 2020, we had received no comments about it from
customers or the regulatory authority.
Number of night
shiftsTotal working
hours/month
Regular rounds

July 31, 2019

Sept. 30, 2020

2.5 people

2 people-0.5 people

40 hours

32 hours-8 hours

4 times(approx. 4 hours)

0 times-4 times(-4 hours)

33

Difference6. Specific Actions (HCM)
Addressing Social Issues Relating to the Super Aged of Society (S)Effect of Introducing EGAO Link at ASHEIM Bunkyohakusan(July 2019 - September 2020)■Improving quality of nursing care services
The number of life rehabilitation sessions (a method for maintaining andimproving activities of daily living for the purpose of using residents’
residual functions) that was provided increased by 1,214 sessions.
In addition, we are working to improve operations with the goal of
obtaining two hours per day, or 60 hours per month, to provide individual
activities (activities aimed at revitalizing each resident mentally andphysically). When EGAO Link was first introduced, individual activities wereused 20 hours a month, but as of September 30, 2020, it had increased
by 34 hours.

Life rehabilitation
Individual activities

July 31, 2019

Sept. 30, 2020

Difference

608 sessions

1,822 sessions+1,214 sessions

20 hours

54 hours+34 hours■ Summary and future actions
We are making good progress in reducing the number of employees andthe burden of night-shift work. In terms of future actions, we will improvepolypharmacy (improving the harmful effects of medication by using
multiple drugs in combination) by utilizing electronic medical record data,
sleep data, etc. in nursing care records.

34

6. Specific Actions (HCM)
Addressing Social Issues Relating to the Super Aged of Society (S)Effect of Introducing EGAO Link at ASHEIM Hikarigaoka(July 2019 - September 2020)■ Reduction of care staff
As of the end of September 2020, the number of persons had been
reduced by 1.9 people/month and working hours had been reducedby 334 hours/month.
July 31, 2019

Sept. 30, 2020

83 people

84 people+1 person

2.04:1

2.17:1-0.13

Full-time employees

23.5 people

20.5 people-3 people

Contract employees

0 people

1 person+1 people

Part-time employees

11.6 people

13.7 people+2.1 people

Temporary workers

1 person

0 people-1 person

Nursing staff

4.4 people

3.4 people-1 person

Staff per month40.5 people

38.6 people-1.9 people

Total working hours

7,128 hours

6,794 hours-334 hours

Number of residents
Ratio of staff toresidents

Difference■Reducing burden of night-shift work for care staff
1. On September 30, 2020, we reduced the semi-night shift from thesystem of three night-shift and one semi-night-shift staff that was
introduced on July 31, 2019.
2. Following the reduction of the semi-night shift, night-shift workers arestill able to take two hours of breaks every day.
3. Regular night inspections were terminated on October 1, 2019, and as of
September 30, 2020, we had received no comments about it from
customers or the regulatory authority.

Number of night
shiftsTotal working
hours/month
Regular rounds

July 31, 2019

Sept. 30, 2020

3.5 people

3 people-0.5 people

56 hours

48 hours-8 hours

4(approx. 4 hours)

0-4(-4 hours)

35

Difference6. Specific Actions (HCM)
Addressing Social Issues Relating to the Super Aged of Society (S)Effect of Introducing EGAO Link at ASHEIM Hikarigaoka(July 2019 - September 2020)■Improving quality of nursing care services
The number of life rehabilitation sessions (a method for maintaining andimproving activities of daily living for the purpose of using residents’
residual functions) that was provided decreased by 376 sessions.
In addition, we are working to improve operations with the goal of
obtaining two hours per day, or 60 hours per month, to provide individual
activities (activities aimed at revitalizing each resident mentally andphysically). When EGAO Link was first introduced, individual activities wereused 56 hours a month, but as of September 30, 2020, it had increasedslightly to 63 hours.

Life rehabilitation
Individual activities

July 31, 2019

Sept. 30, 2020

Difference

1,287 sessions

911 sessions-376 sessions

56 hours

63 hours+7 hours

Question from HAM:
Why did the number of life rehabilitation sessions decrease?
Answer:Previously, even activities that residents were able to perform
naturally were recognized as life rehabilitation if they werefunctional training that was useful for maintaining activities ofdaily living, but starting from this year, emphasis has beenplaced on improving activities of daily living, and activities that
repeated what residents were already capable of doing are nolonger recognized as life rehabilitation. The internal standards
for recognizing activities as life rehabilitation therefore differ
from the previous year. The change in the standards wasapplied starting this year, and since we were consideringfunctional training methods while taking into account what is
possible for individual residents, the response varied dependingon each facility.
■ Summary and future actions
We are making good progress in reducing the number of employees andthe burden of night-shift work. In terms of future actions, we will improvepolypharmacy (improving the harmful effects of medication by using
multiple drugs in combination) by utilizing electronic medical record data,
sleep data, etc. in nursing care records.

36

6. Specific Actions
Establishment of Governance System (G)Elimination of concurrent positions of HCM Executive Director and HAM President andRepresentative Director

Effective November 1, 2020, HAM's representative director was no longer an executive officer of
HCM. This will contribute to the prevention of conflicts of interest and the strengthening ofcorporate governance.
Establishment of Management System

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

Decision-Making Flow Concerning
Acquisition of Assets Under Management
Proposal of acquisition plan by the Investment Department(Property due diligence by the Investment Department)
When the candidate
asset undermanagement to beacquired is a healthcare
facility or hospital realestateGeneral Meeting of
Shareholders

Preparation of evaluation reports andsubmission to the Investment Departmentby the Asset Management Department orby external experts (if necessary)

Audit & Supervisory
Board Member

Approval by Compliance Officer
Confirmation of existence or non-existence of issues on legal
compliance and other compliance (hereinafter, "legal complianceissues")Board of Directors

Management
Committee

Compliance
Committee

When the transaction
falls under the
category of relatedparty transactions, or if
the Compliance Officer
judges that it isnecessary to consider
the legal complianceissues concerning the
proposed income plan.

Representative
Director

Internal Audit Office

When thecandidate asset
undermanagement tobe acquired is aproperty otherthan healthcare
facility or
hospital realestateCompliance Office
Deliberation and resolution of the existenceor non-existence of legal compliance issues
by the Compliance Committee

Investment
Department

Asset Management
Department

Financial &Administration
Department

Instructions
forcancellationor change ofcontent

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

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

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

37

Instructions forcancellation orchange ofcontent

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

HAM has adopted the “Principles concerning Customer-Oriented Business Conduct” published by
the Financial Services Agency of Japan on March 30, 2017, established the “Basic Policy on
Customer-Oriented Business Operations”.
HAM has a basic management policy to practice customer-oriented business operation andstrengthen autonomous compliance system. These are not contradictory but are truly
integrated, and HAM believes that customer-oriented business operation can be realized byachieving both of them.

HAM is promoting customer-oriented business operations byadopting the “Principles on Customer-Oriented Business
Operations '' announced by the Financial Services Agency on
March 30, 2017 and establishing the “Basic Policy on CustomerHAM intends to maximize unitholder value over the medium to long term by seeking to realize a
Oriented
Operations."
society whereBusiness
all people canlive vibrantly and with peace of mind as well as secure stable
income and achieve steady growth of the portfolio, and strives to ensure that such operation
will be established as a corporate culture.
HAM website/Basic policy on customer-oriented business operations
http://www.hcam.co.jp/policy/index.html
Activities of the Customer-Oriented Committee

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

Relevant
departments

Case example

Appropriate management of conflicts ofinterest

Investment
Department

Effort to establish warehousing rules to further
strengthen appropriate management system ofconflicts of interest

Provision of easy-to-understand important
information

Financial &Administration
Department

Enhancement of disclosure of materials in English
Proactive dissemination of information on ESG/SDGs

Provision of appropriate services tocustomers

AssetManagement
Department

Monitoring the effectiveness of ICT investments(EGAO link) contributing to the reduction of theburden of nursing care staff at facilities by HCM

Appropriate motivation framework for
employees

The committee(All departments)

Summarized the discussions held at the committee
and established the "Basic Policy on ESG"38

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

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

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

39

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

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

Acquisition of First Social Finance Evaluation by a J-REIT

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

ResultSocial Finance Framework Evaluation

Social1 (F)Social loan evaluation

Social1

JCR website
https://www.jcr.co.jp/
First issuance of social bond of HCM
When the refinancing in January 2020 , HCM issued the Social Bond for the first time with an
aim to expand fund procurement methods by the expansion of its investor base which isproactively conducting ESG investment, as well as to improve unitholder value over the medium
to long term by contribution to the realization of a sustainable society set in the SDGs.
Actions

Targets of SDGs

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

Continuous investment inhealthcare facilities and stableasset management

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

・ Reduction of work burden of nursing care staff through ICT
system investments in nursing care facilities40

7. Social Finance
List of Borrowings (as of the end of the fiscal period ended July 2020)
Socialfinance

Lender-Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank
Nippon Life Insurance
Resona Bank
Shinkin Central Bank
Nishi-Nippon City Bank
Bank of Fukuoka
Mie Bank
77 BankDai-ichi Life Insurance
Hiroshima Bank-

Sumitomo Mitsui Banking
Corporation

-

-

-

○

○

○

○

○

○

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

Balance (million
yen)Interest rate (%)

Fixed/
Variable

Drawdown date

Repayment deadline

Security

2,000

0.77853

Fixed

March 3, 2017

January 31, 2022

Unsecured andunguaranteed

1,000

0.89375(Note)

Fixed

March 3, 2017

January 31, 2024

Unsecured andunguaranteed

3,000

0.78178

Fixed

March 21, 2017

January 31, 2022

Unsecured andunguaranteed

3,000

0.50090

Fixed

March 20, 2018

January 31, 2021

Unsecured andunguaranteed

4,000

0.57650(Note)

Fixed

March 20, 2018

January 31, 2023

Unsecured andunguaranteed

2,000

0.45353

Fixed

February 1, 2019

January 31, 2022

Unsecured andunguaranteed

4,000

0.41988(Note)

Fixed

February 1, 2019

January 31, 2023

Unsecured andunguaranteed

5,750

0.53900(Note)

Fixed

February 1, 2019

January 31, 2024

Unsecured andunguaranteed

1,250

0.42571

Fixed

January 31, 2020

January 31, 2023

Unsecured andunguaranteed

4,450

0.54(
Note)

Fixed

January 31, 2020

January 31, 2025

Unsecured andunguaranteed

700

1-monthTIBOR+0.25

Fixed

June 29, 2020

June 29, 2021

Unsecured andunguaranteed

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

List of investment corporation bond (as of the end of the fiscal period
ended July 2020)
Social finance

Name

○

Healthcare & Medical Investment
Corporation 1st Series Unsecured
Investment Corporation Bonds (with paripassu conditions among the specified
investment corporation bonds) (Social
Bond) (a.k.a.: HCM Social Bond)

Balance(million
yen)

2,000

Interest rate
(%)

0.780

41

Payment date

Redemption date

CreditratingSecurity

January 30, 2020

January 30,2030.

A
（JCR）

Unsecured andunguaranteed8. Output Indicators
Portfolio Map

Paid nursing home
1

AQUAMARINE Nishinomiyahama

2

Bonsejour Chitose-funabashi

3

Bonsejour Hino

4

Bonsejour Musashi-shinjo

56

Medical Rehabilitation Home
Bonsejour Hadanoshibusawa
Medical Rehabilitation Home
Bonsejour Komaki

7

ASHEIM Hikarigaoka

8

ASHEIM Bunkyohakusan

9

SOMPO CARE La vie Re Machidaonoji

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

Serviced housing for the elderly

26 Hanakotoba Shin-Yokohama

1

SOMPO CARE Sompo no ie S Awajiekimae

27 Hanakotoba Shin-Yokohama II

2

SOMPO CARE Sompo no ie S Kobekamisawa

28 Hanakotoba Odawara

Medical service-related facilities, etc.
130 Verde Hotaka

Niigata Rehabilitation Hospital
Paid nursing home, medical service-related facilities, etc.

129 Verde Minowa
31 Sunny Life Kita-Shinagawa
32 Sunny Life Kamakura

SHIP SENRI BUILDING(Note) As for the output indicators in this report, the data announced as of the end of the fiscal period ended July 2020 (11th fiscal
period) is indicated unless otherwise specified.

42

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

Property name

No. ofleased area
Occupancy
tenants(m2)
rate (%)(companies)(Note 4)(Note 6)(Note 5)Structure/
Number of floor(Note 1)

Construction
completion (Note 2)

RC/5F

May 18, 2007

5,274.54

5,274.542

100.0

RC/B1 6F

March 8, 1988

2,342.17

2,342.171

100.0

leasable area(m2)
(Note 3)

Paid nursing
home-1

AQUAMARINE Nishinomiyahama

Paid nursing
home-2

Bonsejour Chitose-funabashi

Paid nursing
home-3

Bonsejour Hino

RC/3F

May 2, 1990

1,984.17

1,984.171

100.0

Paid nursing
home-4

Bonsejour Musashi-shinjo

RC/4F

February 21, 1985

1,710.43

1,710.431

100.0

Paid nursing
home-5

Medical Rehabilitation Home
Bonsejour Hadanoshibusawa

RC/5F

July 17, 1991

3,435.79

3,435.791

100.0

Paid nursing
home-6

Medical Rehabilitation Home
Bonsejour Komaki

SRC RC S/10F

March 13, 1991

8,858.49

8,858.49

1

100.0

Paid nursing
home-7ASHEIM Hikarigaoka

RC/3F

March 6, 2006

3,628.60

3,628.60

1

100.0

Paid nursing
home-8ASHEIM Bunkyohakusan

RC/8F

February 27, 2007

2,507.25

2,507.252

100.0

Paid nursing
home-9SOMPO CARE La vie Re Machidaonoji

RC/B1 6F

October 29, 2007

7,720.17

7,720.171

100.0

Paid nursing
home-10

SOMPO CARE La vie Re Azamino

RC/B1 5F

March 1, 2004

5,789.25

5,789.25

1

100.0

Paid nursing
home-11SAWAYAKA Tachibanakan

RC/B1 6F

October 31, 2005

5,652.94

5,652.94

1

100.0

Paid nursing
home-12SAWAYAKA Mekarikan

RC/4F

November 15, 2005

4,720.46

4,720.46

1

100.0

Paid nursing
home-13SAWAYAKA Tagawakan

RC/3F

January 20, 2006

2,366.20

2,366.20

1

100.0

Paid nursing
home-14

GOOD TIME HOME Fudo-mae

RC/B1 5F

Mar. 18, 1992

3,400.20

3,400.20

1

100.0

Paid nursing
home-15

Bonsejour Yotsugi

RC/5F

Mar. 28, 1989

1,962.89

1,962.891

100.0

SRC/11F (exclusivelyowned portion)

Mar. 3, 1989

2,129.87

2,129.87

1

100.0

Kobe Gakuentoshi Building(Hapine Kobe Gakuentoshi)

RC/B1 9F

Jan. 7, 2009

12,636.48

12,636.48

1

100.0

Paid nursing
home-18

GreenLife Moriguchi

S RC/9F

Sep. 6, 2006

8,356.85

8,356.851

100.0

Paid nursing
home-19

Hapine Kobe Uozaki Nibankan

S/B1 4Mar. 31, 2010

1,772.89

1,772.89

1

100.0

Paid nursing
home-20

Granda Tsuruma-Yamato

RC S/5F

Mar. 6, 1998

3,427.08

3,427.08

1

100.0

Paid nursing
home-21

Smiling Home Medice Adachi

RC/4F

Nov. 16, 2005

3,870.98

3,870.982

100.0

Paid nursing
home-22

AIKOEN ICHIBANKAN Building

S/5F

Feb. 4, 2010

4,311.20

4,311.20

4

100.0

Paid nursing
home-23

Hanakotoba Minami

RC/7F

Feb. 24, 2010

1,710.68

1,710.681

100.0

Paid nursing
home-24

Hanakotoba Miura

RC/4F

Jun. 27, 2007

1,959.64

1,959.641

100.0

Paid nursing
home-25

SOMPO CARE La vie Re
Hama-Kawasaki

RC/4F (exclusivelyowned portion)

Mar. 8, 2007

4,060.21

4,060.215

100.0

Paid nursing
home-26

Hanakotoba Shin-Yokohama

RC/9F

Mar. 15, 2004

5,230.23

5,230.23

1

100.0

Paid nursing
home-27

Hanakotoba Shin-Yokohama II

RC/B1 7F

Apr. 25, 2007

1,837.29

1,837.29

1

100.0

Paid nursing
home-28

Hanakotoba Odawara

RC/4F

Sep. 16, 2009

2,203.42

2,203.42

1

100.0

11,098.17

11,098.17

1

100.0

6,352.86

6,352.86

1

100.0

Paid nursing
home-16

Medical Home Bonsejour Itami

Paid nursing
home-17

Paid nursing
home-29

Verde Minowa①S/5F ②S RC/8F(1) Nov. 20, 2003
(2) Feb. 28, 1974

Paid nursing
home-30

Verde Hotaka①S SRC/5F ②S/2F(1) Sep. 29, 1982
(2) Jul. 1, 1989

43

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

Paid nursing
home-31
Paid nursing
home-32
Servicedhousing forthe elderly-1
Servicedhousing forthe elderly-2
Medicalservicerelated
facilities,
etc.-1
Complex of
paid nursing
homes,
medicalservicerelated
facilities,
etc.-1

No. ofleased area
Occupancy
tenants(m2)
rate (%)(companies)(Note 4)(Note 6)(Note 5)Structure/
Number of floor(Note 1)

Construction
completion (Note 2)

Sunny Life Kita-Shinagawa

S/3F

Sep. 30, 2018

2,135.54

2,135.54

1

100.0

Sunny Life Kamakura

S/5F

Sep. 19, 2014

3,817.91

3,817.91

1

100.0

SOMPO CARE Sompo no ie S
Awajiekimae

RC/12F

Jun. 12, 2009

5,745.15

5,745.15

1

100.0

SOMPO CARE Sompo no ie S
Kobekamisawa

S/9F

Jun. 11, 2009

4,058.35

4,058.35

1

100.0

Niigata Rehabilitation Hospital①RC/3F ②S/5F(1) Apr. 20, 1990
(2) Feb. 28, 2001

13,476.55

13,476.55

1

100.0

SHIP SENRI BUILDING

RC/B1 11F

Sep. 5, 2008

24,813.85

24,813.85

1

100.0

Total

-

-

186,358.75

186,358.75

46

100.0

Property nameleasable area(m2)
(Note 3)(Note 1) ”Structure/ No. of floors” indicates information provided in the real estate registry of the building of each owned asset. “S” refers tosteel structure, “RC” refers to reinforced concrete structure, “SRC” refers to steel-reinforced concrete structure, “B” refers tobasement floor and “F” refers to floors above ground.
(Note 2) ”Construction completion” indicates date of new construction provided in the real estate registry of the building of each owned asset.
(Note 3) “leasable area” indicates the areas based on the lease agreement of each building.
(Note 4) “leased area” indicates the areas, out of the total leasable area, for which actual lease agreements have been concluded and areleased.
(Note 5) ”No. of tenants” indicates the number of tenants of each building based on the lease agreements. For the section of healthcare
facilities in which the trustee of each owned asset and HCM conclude a lease agreement (master lease agreement) with an aim tohave HCM sublease to the master lease company (section of paid nursing home with nursing care for “Smiling Home Medice Adachi”),
the master lease company is counted as a tenant, and accordingly indicated as the number of tenants, while the total number of end
tenants is indicated for properties subject to pass-through type master lease agreements, in which HCM receives rents paid by end
tenants without any change in principle. However, for the sections that are not subject to the lease agreement (master leaseagreement) between the trustee and HCM, the number of lessees leasing a building from the trustee is counted as the number oftenants and indicated accordingly.
(Note 6) ”Occupancy rate” indicates the total leased area as a percentage of the total leasable area of each owned asset as of July 31, 2020,
and is rounded to one decimal place.

448. Output Indicators
Overview of Facilities and Housing for the Elderly
Property No.
Paid nursing
home-1
Paid nursing
home-2
Paid nursing
home-3
Paid nursing
home-4
Paid nursing
home-5
Paid nursing
home-6
Paid nursing
home-7
Paid nursing
home-8Paid nursing
home-9Paid nursing
home-10
Paid nursing
home-11
Paid nursing
home-12Paid nursing
home-13
Paid nursing
home-14
Paid nursing
home-15
Paid nursing
home-16
Paid nursing
home-17
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
Paid nursing
home-32
Servicedhousing for theelderly-1
Servicedhousing for theelderly-2
Complex of paid
nursing homes,
medical servicerelated facilities,
etc.-1(Note 1)

(Note 4)

No. ofresidents(persons)(Note 1)

Preparation date ofOccupancy Property
DisclosurerateStatement of(%)
Important
Matters(Note 2)
(Note 3)

Type of facility

Operator

AQUAMARINE
Nishinomiyahama
Bonsejour Chitosefunabashi

Paid nursing home

GREEN LIFE Co., Ltd.

90

100

100

100.0

July 1, 2020

Paid nursing home

Benesse Style Care Co., Ltd.

42

47

41

87.2

May 1, 2020

Bonsejour Hino

Paid nursing home

Benesse Style Care Co., Ltd.

56

58

56

96.6

May 1, 2020

Bonsejour Musashi-shinjo Paid nursing home

Benesse Style Care Co., Ltd.

46

49

45

91.8

May 1, 2020

Medical Rehabilitation
Home Bonsejour
Paid nursing home
Hadanoshibusawa
Medical Rehabilitation
Residential type paid
Home Bonsejour Komaki nursing home

Benesse Style Care Co., Ltd.

100

101

95

94.1

July 1, 2020

Benesse Style Care Co., Ltd.

124

165

126

76.4

May 1, 2020

ASHEIM Hikarigaoka

AS PARTNERS Co., Ltd.

83

89

79

88.8

July 1, 2020

52

44

84.6

July 1, 2020

Paid nursing home

ASHEIM Bunkyohakusan

Paid nursing home

AS PARTNERS Co., Ltd.

50

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

Paid nursing home

Sompo Care Inc.

163

169

118

69.8

April 1, 2020

Paid nursing home

Sompo Care Inc.

145

145

122

84.1

July 1, 2020

Paid nursing home

Sawayaka Club Co., Ltd.

104

104

101

97.1

July 1, 2020

SAWAYAKA Mekarikan

Paid nursing home

Sawayaka Club Co., Ltd.

95

95

93

97.9

July 1, 2020

SAWAYAKA Tagawakan

Paid nursing home

Sawayaka Club Co., Ltd.

60

60

59

98.3

June 1, 2020

GOOD TIME HOME Fudo- Paid nursing homemaeJAPAN LIFEDESIGN Inc.

61

67

58

86.6

April 27, 2020

Bonsejour Yotsugi

Paid nursing home

Benesse Style Care Co., Ltd.

61

65

58

89.2

April 1, 2020

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

Residential type paid
nursing home

Benesse Style Care Co., Ltd.

62

64

61

95.3

May 1, 2020

Paid nursing home

GREEN LIFE Co., Ltd.

131

138

137

99.3

July 1, 2020

189

189

100.0

July 1, 2020
July 1, 2020

GreenLife Moriguchi

Paid nursing home

GREEN LIFE Co., Ltd.

155

Hapine Kobe Uozaki
Nibankan

Paid nursing home

GREEN LIFE Co., Ltd.

47

47

47

100.0

Granda Tsuruma-Yamato Paid nursing home

Benesse Style Care Co., Ltd.

73

90

73

81.1

May 1, 2020

Smiling Home Medice
AdachiAIKOEN ICHIBANKAN
Building

Paid nursing home

GREEN LIFE HIGASHI NIHON
Co., Ltd.

82

82

79

96.3

June 1, 2020

Paid nursing home

Medical Corporation AIKOKAI

90

90

90

100.0

July 1, 2020

Hanakotoba Minami

Paid nursing home

Proud Life Inc.

51

51

50

98.0

July 1, 2020

Hanakotoba Miura

Paid nursing home

Proud Life Inc.

53

54

54

100.0

July 1, 2020

Paid nursing home

Sompo Care Inc.

58

58

51

87.9

July 1, 2020

Paid nursing home

Proud Life Inc.

136

136

129

94.9

July 1, 2020

Paid nursing home

Proud Life Inc.

29

30

28

93.3

July 1, 2020

65

64

98.5

July 17, 2020

SOMPO CARE
La vie Re HamaKawasaki
Hanakotoba ShinYokohama
Hanakotoba ShinYokohama II
Hanakotoba Odawara

Paid nursing home

Proud Life Inc.

60

Verde Minowa

Paid nursing home

Verde Corporation

174

206

191

92.7

July 1, 2020

Verde Hotaka

Paid nursing home

Verde Corporation

121

174

172

98.9

July 1, 2020

Sunny Life KitaShinagawa

Paid nursing home

Kawashima Corporation

66

66

58

87.9 October 1, 2019

Kawashima Corporation

Sunny Life Kamakura

Paid nursing home

128

128

126

98.4

October 1,2019

SOMPO CARE Sompo noie S AwajiekimaeServiced housing for the Sompo Care Inc.
elderly

137

137

132

96.4

June 1, 2020

SOMPO CARE Sompo noie S Kobekamisawa

Serviced housing for the Sompo Care Inc.
elderly

85

85

75

88.2

June 1, 2020

SHIP SENRI BUILDING(Note 4)

Hospital
Paid nursing home

181

200

200

100.0

July 1, 2020

3,199

3,456

3,201

92.6

-

Total

(Note 2)
(Note 3)

No. ofCapacity
rooms(rooms) (persons)(Note 1) (Note 1)

Property name-GREEN LIFE Co., Ltd.
-

”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”Occupancy rate” indicates the rate obtained by dividing the number of residents by capacity, rounded to one decimal place.
”Preparation date of Property Disclosure Statement of Important Matters” indicates the date of application, reference date or
preparation date stated on the document.
“SHIP SENRI BUILDING” has a hospital and a paid nursing home, and the overview of the facility concerning the paid nursing home isindicated in the above table.

45

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

Medical service-related facilities, etc.-1

Property name

Niigata Rehabilitation Hospital

Operator

Medical Corporation AIKOKAI

Type of facility

Hospital

Subject of
medicaltreatment

Rehabilitation, orthopedic surgery, internal
medicine, neurology, dental & dental andoral surgery

Main facility
criteria

External
evaluation

Hospitaliz 2nd floor (48 beds)
ation fee 3rd floor (60 beds)
4th floor (60 beds)

June 1990(Established as Oyama Hospital, the precursor)
Authorized number of
168 beds (general bed: 108 beds/
beds
convalescent-stage beds: 60 beds)
Training facility certified by the Japanese Associationof Rehabilitation Medicine
Facility certification
Training facility certified by Japan Society of
Ultrasonics in Medicine specialists
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
Date of establishment

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

Property No.

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

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

Operator
Type of facility

Kyowakai Medical Corporation

Date of establishment

October 2008

Hospital

Authorized number ofbeds

400 beds (400 general beds)

Facility certification

Training facility certified by the Japanese Associationof Rehabilitation Medicine

West 6th floor (25 beds) Hospaitalization fee of
hospital ward for palliative careWest 5th floor (50 beds) Facilities for the disabled,
etc. 2 10:1 Basic hospitalization fee
Hospitalization West 4th floor (50 beds) Facilities for the disabled,fee
etc. 2 10:1 Basic hospitalization fee
West 3rd floor (50 beds) Facilities for the disabled,
etc. 2 10:1 Basic hospitalization fee
West 2nd floor (50 beds) Hospitalization fee of
hospital ward for rehabilitation at recovery stage1

East 6th floor (25 beds) Facilities for the disabled,
etc. 2 10:1 Basic hospitalization fee
East 5th floor (50 beds) Facilities for the disabled,
etc. 2 10:1 Basic hospitalization fee
East 4th floor (50 beds) Facilities for the disabled,
etc. 2 10:1 Basic hospitalization fee
East 3rd floor (50 beds) Hospitalization fee of
hospital ward for rehabilitation at recovery stage1

Rehabilitation, orthopedic surgery, cranial
Subject of medical
nerve surgery, surgery, internal medicine
treatment
and neurology

Main facility
criteria

External
evaluation-(Note) “SHIP SENRI BUILDING” has a hospital and a paid nursing home, and the overview of the facility concerning the hospital is indicated in
the above table.

46

8. Output Indicators
Earnings Performance
Property name
AQUAMARINE
Nishinomiyahama
Bonsejour
Chitose-funabashi

Unit: thousands of yen

Real estate lease business revenue
Rent
Other
revenuerevenue

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

From February 1, 2020 to July 31, 2020
Real estate lease business expenses
Property Outsourcin
RepairInsurancetax
g expenses expenses
expenses

Depreciation

Other

NOI
(Note 3)23,803

4,264

2,100

1,220

200

15,616400

59,156

5,575

1,794

224

-

101

3,048

404

21,448

5,062

1,240

214

-

77

3,130

400

19,520400

16,224

4,096

1,012

167

-

68

2,447

8,391

1,820

213

-

139

5,817

400

21,164

14,115

4,565

201

-

321

8,627

400

39,7559,467

400

39,789ASHEIM Hikarigaoka

15,614

3,825

381

1,392

147

ASHEIM Bunkyohakusan

12,145

2,621

381

-

115

8,626

400

38,668400

96,505

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

45,723

5,905

780

1,062

347

37,22932,672

4,742

780

142

252

26,355400

78,882400

47,33826,429

2,655

1,140

-

320

21,913SAWAYAKA Mekarikan

25,778

2,970

1,140

-

229

21,039400

43,494SAWAYAKA Tagawakan

8,385

400

12,933

GOOD TIME HOME
Fudo-mae

101

5,635

14,469

3,099

600

778

161

9,429

400

45,960

Bonsejour Yotsugi

4,947

970

223

-

66

3,286

400

20,761400

14,020

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

Not disclosed(Note 2)

Hapine Kobe Uozaki
Nibankan
Smiling Home Medice
AdachiAIKOEN ICHIBANKAN
Building

1,140

-

6,509

1,377

371

-

101

4,260

51,138

9,577

900

-

523

39,737400

114,098

35,285

6,937

1,363

2,088

343

24,152400

108,866

81

6,464

400

24,417400

27,1569,546Granda Tsuruma-Yamato

1,108

1,400

1,200

-

7,285

1,938

618

-

137

4,191

14,608

3,229

540

260

160

10,019400

60,618400

21,918

9,372

2,560

780

900

102

4,630

Hanakotoba Minami

6,727

1,541

600

120

71

3,994

400

27,866

Hanakotoba Miura

6,772

1,541

600

-

81

4,150

400

17,777

18,662

3,416

2,770

680

186

11,207400

44,904

16,049

4,388

900

1,717

225

8,418

400

54,281

1,853

400

11,230

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

5,436

2,499

600

-

83

Hanakotoba Odawara

8,054

1,356

600

325

89

5,282

400

24,851

Verde Minowa

25,481

460

18,025400

56,452

Verde Hotaka

23,954563

45,894

Sunny Life
Kita-Shinagawa

225

19,743

10,318

2,944

600

-

108

6,265

400

45,446

Sunny Life Kamakura

3,113

-

128

-

29

2,883

72

7,406

27,014

4,921

510

-

248

20,934400

58,37817,545

2,908

510

955

163

12,608400

35,353

26,829

9,849

1,030

-

350

15,099500

78,149

1,069
7,495

45,286400
14,341

341,595

SOMPO CARE
Sompo no ie S
Awajiekimae
SOMPO CARE
Sompo no ie S
Kobekamisawa
Niigata Rehabilitation
Hospital

75,492

SHIP SENRI BUILDING
Total(Note 1)
(Note 2)
(Note 3)

2,023,819

2,015,035

8,783

652,411

5,256
2,222

27,236
139,701

1,020
1,020

1,500
27,850319
18012,141450,881

1,822,288

All figures indicated are rounded down to thousand yen.
”Real estate lease business revenue,” “rent revenue” and “other revenue” of each property are not disclosed as consent for disclosure has notbeen obtained from tenants. The total is the sum of amounts received as rent for the fiscal period under review based on the lease agreements.
“NOI”=Real estate lease business revenue – Real estate lease business expenses + depreciation and amortization47

8. Output Indicators
Summary of Appraisal Report

Property
No.

Property namePaid nursing
home-1

AQUAMARINE
Nishinomiyahama

Paid nursing
home-2

Bonsejour Chitosefunabashi

Paid nursing
home-3

Bonsejour Hino

Paid nursing
home-4

Bonsejour Musashishinjo

Paid nursing
home-5

Medical Rehabilitation
Home Bonsejour
Hadanoshibusawa
Medical Rehabilitation
Home Bonsejour
KomakiAppraisalcompany

Summary of Appraisal Report (Note 1)
Direct capitalization
Appraisal
DCF method
methodvalue
Indicated
Indicated Discount(millions
Terminal
Capitalization
value
value
rate
of yen)capitalization
rate(%)(millions of(millions ofrate (%)(%)(Note 2)yen)
yen)Appraisal
NOI(millionsof yen)(Note 3)

Appraisal
NOI yield(%)(Note 4)ASHEIM Hikarigaoka

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

1,570

1,580

4.8

1,560

4.6

5.0

76

5.5

Paid nursing
home-8ASHEIM
Bunkyohakusan

Japan Real Estate
Institute

1,650

1,660

4.4

1,630

4.2

4.6

74

5.1

Paid nursing
home-9SOMPO CARE
Japan Real Estate
La vie Re Machidaonoji Institute

3,780

3,820

4.9

3,740

4.7

5.1

193

5.3

Paid nursing
home-10

SOMPO CARE
La vie Re Azamino

Japan Real Estate
Institute

3,230

3,270

4.6

3,190

4.4

4.8

156

5.1

Paid nursing
home-11SAWAYAKA
Tachibanakan

Japan Real Estate
Institute

1,530

1,540

5.6

1,510

5.4

5.8

93

6.1

Paid nursing
home-12SAWAYAKA Mekarikan

Japan Real Estate
Institute

1,400

1,410

5.7

1,390

5.5

5.9

85

6.2

Paid nursing
home-13

Real Estate
SAWAYAKA Tagawakan Japan
Institute

380

382

5.8

377

5.6

6.0

25

6.4

Paid nursing
home-14

GOOD TIME HOME
Fudo-mae

1,950

1,970

4.4

1,920

4.2

4.6

91

5.2

Paid nursing
home-15

Bonsejour Yotsugi

886

902

4.7

879

4.8

4.9

48

5.8

Paid nursing
home-16

Medical Home
Bonsejour Itami

557

566

5.1

553

5.2

5.3

36

7.1

Paid nursing
home-17

Kobe Gakuentoshi
Building(Hapine Kobe
Gakuentoshi)

Daiwa Real EstateAppraisal Co., Ltd.

4,420

4,470

4.7

4,400

4.5

4.9

225

5.2

Daiwa Real EstateAppraisal Co., Ltd.

4,400

4,460

4.6

4,380

4.4

4.8

220

5.3

995

1,010

4.6

989

4.4

4.8

48

5.2

1,060

1,070

4.7

1,050

4.8

4.9

53

5.3

2,460

2,490

4.7

2,450

4.8

4.9

120

5.3

865

866

5.2

864

5.3

5.4

45

5.9

1,190

1,200

4.6

1,170

4.4

4.8

56

5.2

665

671

4.9

662

5.0

5.1

35

5.7

1,820

1,850

4.6

1,780

4.4

4.8

90

5.2

2,230

2,260

4.5

2,200

4.3

4.7

109

5.2

401

403

4.8

399

4.6

5.0

22

5.8

943 4.8～5.0

5.1

49

5.6

Paid nursing
home-6
Paid nursing
home-7

Paid nursing
home-18
Paid nursing
home-19

GreenLife Moriguchi

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

2,160

5.3

2,130

5.0

5.5

119

6.1

974

993

4.4

966

4.5

4.6

49

5.9

818

832

4.8

812

4.9

5.0

43

6.0

643

653

5.1

638

5.2

5.3

36

6.2

850

864

5.0

844

5.1

5.2

47

6.4

1,450

1,460

5.5

1,440

5.6

5.7

92

7.3

Paid nursing
home-25

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

Paid nursing
home-26

Hanakotoba ShinYokohama

Japan Real Estate
Institute

Paid nursing
home-27

Hanakotoba ShinYokohama II

Paid nursing
home-28

Hanakotoba Odawara

948

960

4.9

Paid nursing
home-29

Verde Minowa

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

1,700

1,710

5.0

1,690

4.8

5.2

109

6.7

Verde Hotaka

Daiwa Real EstateAppraisal Co., Ltd.

1,430

1,440

5.4

1,420

5.2

5.6

91

6.9

Paid nursing
home-20
Paid nursing
home-21
Paid nursing
home-22
Paid nursing
home-23
Paid nursing
home-24

Paid nursing
home-30

Hapine Kobe Uozaki
Nibankan

2,140

48

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

Property No.

Property nameAppraisalcompany

Appraisalvalue(millionsof yen)Direct capitalization
methodDCF method

Indicatedvalue(millions ofyen)

Capitalization
rate
(%)

Indicated Discount
value
rate
(millions of(%)yen)(Note 2)

Terminal
capitalization
rate (%)

Appraisal
NOI(millionsof yen)(Note 3)

Appraisal
NOI yield(%)(Note 4)

Paid nursing
home-31

Sunny Life KitaShinagawa

Daiwa Real
Estate Appraisal
Co., Ltd.

1,950

1,980

4.5

1,930

4.3

4.7

90

4.9

Paid nursing
home-32

Sunny Life Kamakura

The Tanizawa
Sogo Appraisal
Co., Ltd.

1,550

1,560

4.6

1,540

4.7

4.8

76

5.3

Serviced housing
for the elderly-1

SOMPO CARE Sompo
no ie S Awajiekimae

Japan Real Estate
Institute

2,170

2,190

5.2

2,150

5.0

5.4

116

6.0

Serviced housing
for the elderly-2

SOMPO CARE Sompo
no ie S Kobekamisawa

Japan Real Estate
Institute

1,340

1,350

5.2

1,320

5.0

5.4

72

6.0

Medical servicerelated facilities,
etc.-1

Niigata Rehabilitation
Hospital

Japan Real Estate
Institute

2,260

2,270

6.6

2,250

6.4

6.8

152

7.4

Complex of paid
nursing homes,
medical servicerelated facilities,
etc.-1SHIP SENRI BUILDINGThe Tanizawa
Sogo Appraisal
Co., Ltd.

14,20014,4004.5

14,1004.5～4.6

4.7

680

5.2

71,862

72,672―

71,266

―

―

3,736

5.6

Total

(Note 1) Figures are based on appraisal reports with appraisal date of July 31, 2020.
(Note 2) “Discount rate” represents a yield used to discount net cash flow during an analysis period and terminal value at the end of ananalysis period back to present value, and figures used by the respective appraisal organization are shown.
For "Hanakotoba Odawara," 4.8% for the first to third fiscal years and 5.0% from the fourth fiscal year, and for “SHIP SENRI
BUILDING," 4.5% for the first to third fiscal years and 4.6% from the fourth fiscal year.
(Note 3) ”Appraisal NOI” indicates net operating income obtained by direct capitalization method stated in real estate appraisal reportwith July 31, 2020 as appraisal date, and is rounded down to the nearest million yen. NOI refers to the net operating income
before deducting depreciation, and thus, differs from NCF (Net Cash Flow) which is calculated by adding the profit from theinvestment of tenant deposits, etc. to and deducting capital expenditures from NOI. The same shall apply hereinafter in thisdocument.
(Note 4) "Appraisal NOI yield" is calculated by the formula below and rounded down to the first decimal place. In the column of total
appraisal NOI yield, the average appraisal NOI yield is shown which is calculated by dividing the total appraisal NOI of therespective asset in trust by the total acquisition price, and rounded down to the first decimal place. Appraisal NOI yield =Appraisal NOI of the respective asset in trust/Acquisition price of respective asset in trust.

49

8. Output Indicators
Capital Expenditures of Assets Under Management

10th FP (Ended January 2020) Actual
Name of real estate, etc.

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

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

Construction costs(thousands of yen)

PeriodFrom: September 2019
To: November 2019

31,000Work on nurse call systems andother equipment

From: June 2019
To: August 201925,632

Renewal of air conditioners incommon areas

From: September 2019
To: October 201919,182-

112,300

Other real estate, etc.

-

188,115Total



11th FP (Ended July 2020) Actual
Name of real estate, etc.

PurposeConstruction costs(thousands of yen)

PeriodNiigata Rehabilitation Hospital(Niigata-shi, Niigata)Renovation of exterior walls

From: April 2020
To: July 2020

22,000SHIP Senri Building(Toyonaka-shi, Osaka)Renewal of storage batteries

From: June 2020
To: June 2020

10,316SAWAYAKA Mekarikan(Kitakyushu-shi, Fukuoka)

Renewal of air conditioners incommon areas

From: June 2020
To: June 2020

7,945

-

42,280

Other real estate, etc.

-

82,542Total

12th FP (Ended January 2021) Plan

Name of real estate, etc.

PurposeScheduled period

SHIP Senri Building(Toyonaka-shi, Osaka)Renewal of security
systems

From: April 2020
To: August 2020

Kobe Gakuentoshi Building(Kobe-shi, Hyogo)

Renewal of LED lighting

Hanakotoba Shin-Yokohama

Renovation of exterior
walls

50

Estimated construction costs(thousands of yen)
Total
Payment
Total
amountduringamountalready
11th FP
paid
36,000--

From: November 2020
To: December 2020

30,000--

From: November 2020
To: December 2020

25,000--8. Output Indicators
Company Profile of Operators
Capital stockor total
assets(millions ofyen)(Note 1)

Headquarters location(Note 1)

Representative(Note 1)

Founded(Note 1)

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

Representative
Director
Ken Endo

May
1997

3,925

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

2-3-1, Nishi-Shinjuku,
Shinjuku-ku, Tokyo

Representative
Director
Shinya Takiyama

September
1995

100

Consolidated subsidiary ofBenesse Holdings, Inc., which
is listed on the TSE First
Section

3-20-8 Kasuga, Suitashi, Osaka

Representative
Director
Koichi Okimoto

May
1994

50

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

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

Representative
Director
Koichi Okimoto

July
2003

50

Consolidated subsidiary of Ship
Healthcare Holdings Inc. which
is listed on the TSE First
Section200

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

Operator name

Sompo Care Inc.

Benesse Style Care Co., Ltd.

GREEN LIFE Co., Ltd.

Attribute

Sawayaka Club Co., Ltd.

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

AS PARTNERS Co., Ltd.

2-2, Kanda-surugadai,
Chiyoda-ku, Tokyo

Representative
DirectorTakeshi Uemura

November
2004

40

Unlisted company

1-7-1, Akasaka,
Minato-ku, Tokyo

Representative
Director
Shosetsu Ito

April
2004

340

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

Medical Corporation AIKOKAI

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

Director
Hiromu Ikeda

November
1993

1,053

Proud Life Inc.

2-8-4, Kitasaiwai,
Nishi-ku, Yokohamashi, Kanagawa

Representative
Director
Hiroshi Sonoda

July
2006

3

Kyowakai Medical Corporation

16-5, Chuocho,
Kawanishi-shi, Hyogo

Director
Toru Kitagawa

August1982

3,496

248-2, Higashiinohara,
Kimitsu-shi, Chiba

Representative
Director
Teruo Kawashima

September
1990

50

Unlisted company

839-4, Kamishiba,
Misatomachi, Takasakishi, Gunma

Representative
Director
Tomoyuki Higuchi

June
1970

30

Unlisted company

JAPAN LIFE DESIGN Inc.

Kawashima Corporation

Verde Corporation(Note 1)
(Note 2)

Representative
DecemberDirector
2004
Fumiharu Uchiyama

A medical corporation which
belongs to NSG Group withsales of over 100 billion yen(Note 2)
Consolidated subsidiary ofSony Life Care Corporation, aholding company overseeing
the nursing care business ofSony Financial Group.
-"Headquarters location," "Representative," "Founded" and "Capital stock or total assets" are based on the information in theregistry as of July 1, 2020.
Only one person is described in the "Representative," "Capital stock or total assets" is rounded off to the nearest million yen.
Indicates the actual figures in fiscal 2018 based on NSG Group’s website.

51

9. Actions of Each Operator
Feature: Interview
HCM has posted featured articles on interviews with operators in its Investment Management
Report, which it issues targeting investors, every fiscal period. HCM offered information on aregular basis with the aim to further popularize and expand the healthcare asset market bymaking features of respective operators and facilities as well as their various efforts widely
known to many people.
Interviews posted
1st FP

GREEN LIFE Co., Ltd.
Ms. Kumi Kashiwagi, Facility Manager of AQUAMARINE Nishinomiyahama

2nd FP

Sawayaka Club Co., Ltd.
Mr. Hidekazu Tanaka, Fukuoka District Area Manager of Operation Department
Mr. Kazuya Yamaguchi, Deputy Facility Manager of SAWAYAKA Tachibanakan

3rd FP

Sompo Care Message Co., Ltd.
Mr. Keijiro Ishibe, General Manager of Corporate Management and Planning
Department
Mr. Akira Sakurai, Manager of Sompo no ie S Awajiekimae

4th FP

Benesse Style Care Co., Ltd.
Mr. Kazuhiro Takanawa, General Manager of Living Facilities Department
Mr. Takayoshi Hasegawa, Home Chief of Granda Tsuruma-Yamato

5th FP

6th FP

7th FP
8th FP
9th FP

10th FP

11th FPAS PARTNERS Co., Ltd.
Mr. Koji Yamamoto, Director, Executive Officer and General Manager of Senior
Home Operation Department
Mr. Masataka Kitamura, Home Chief of ASHEIM Hikarigaoka
Sompo Care Inc.
Sompo Care Next Inc.
Mr. Isao Yamakawa, Executive Officer
Ms. Terumi Ogata, Home Chief of SOMPO CARE La vie Re Machidaonoji
AS PARTNERS Co., Ltd.
MR. Takeshi Uemura, Representative Director, President and CEO
Mr. Ryosuke Nakamoto, General Manager of Senior Home Management
Department and Group Leader of Operation Management GroupKyowakai Medical Corporation
Mr. Toru Kitagawa, Director
Proud Life Inc.
Mr. Masaki Kon, Executive Officer and General Manager of Business Department
Mr. Nagahito Konno, Head of Hanakotoba Shin-Yokohama
Verde Corporation
Mr. Tomoyuki Higuchi, CEO
Mr. Kenji Okubo, Director and General manage
Mr. Fumiharu Uchiyama, President and CEO, Uchiyama Holdings Co., Ltd. andPresident and CEO, Sawayaka Club Co., Ltd.
Mr. Takehiro Yamamoto, Representative Director and Senior Managing Director,
Corporate Planning Office, Uchiyama Holdings Co., Ltd., andManaging Director, Sawayaka Club Co., Ltd.
Mr. Masahiro Ishimoto, Director and General Manager, Sawayaka Club Co., Ltd.

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

52

9. Actions of Each Operator
Feature: Interview
Verde Hotaka (Verde Corporation)

We must always maintain a sense of gratitude and find reward in our work while contributing to thehappiness of our customers and employees, the prosperity of our company and business partners, and thewelfare of local communities by striving to improve our services on a daily basis with the attitude of“taking two steps forward for every step back.” (from the 10th Investment Management Report)
Interview:

Mr. Tomoyuki Higuchi, CEO, Verde Corporation
Mr. Kenji Okubo, Director and General Manager, Verde Corporation■ Management that respects the uniqueness of each facility while maintaining a sense of gratitude―― Could you give us an overview of Verde Corporation?
Mr. Higuchi
Originally, it was an electrical systems company established by my late father in 1970. The nursing care business started
with Verde Hotaka, which was established by renovating a former nurses’ dormitory of a hospital that was operated by thecompany in 1982, and today we operate five paid nursing home facilities in Gunma Prefecture (Takasaki City, Shibukawa
City, and Tone District). In November of this year, we’re also planning to open a new facility, Grand Home Shibukawa. The
manager of each facility is given discretion to make decisions on day-to-day operations and sales activities, so each facility
may be said to strongly reflect the character of its manager.
Mr. Okubo
As a matter of routine, opportunities are provided for facility managers to make timely reports to the head office and toshare and exchange opinions with both each other and the president about issues and problems, but fundamentally, eachfacility makes its own decisions about various activities and events, and they feel both the responsibility and satisfaction of
being entrusted with facility management every day.
―― What about the group as a whole, which operates the largest nursing care and welfare business in Gunma Prefecture?
Mr. Higuchi
The group consists of the Verde Group, the Hotakakai Group run by my younger brother, and the Takumi Group run by myolder sister. While we pursue horizontal cooperation with respect to basic systems, training, and so forth, which are sharedacross the group, each group operates independently with respect to other areas. Driven by the launch of the paid nursing
home business after my father and uncle established Hotaka Hospital (now the affiliated PAZ Group) in Kawaba Village in
1978, the group has steadily expanded. Nowadays, the strength of our group is that we have the internal capacity toprovide various solutions that are necessary for the business in which we’re engaged. In order to pursue our business, thefact that we have ties with organizations such as medical institutions and universities is also extremely important.
■ The secret to high occupancy rates and a unique approach to attracting customers―― Verde Hotaka and Minowa, which are owned by the REIT, are large facilities with a capacity of 200 people. What is
the secret to maintaining high occupancy rates in such facilities, which are difficult to fill even in the Tokyo
metropolitan area?
Mr. Higuchi
The five facilities we operate have a total capacity of 538 people (including short-term residents). Residents from Niigata
actually account for about 40% of that. To give you a little background, I was originally affiliated with a hospital in Niigata,and while investigating the state of medical and welfare services around Tokamachi City, Uonuma City, and MinamiUonuma District, which are areas with a lot of snow, I discovered that bed management was not being handled effectively.
The underlying reason for this was that there were almost no nursing care facilities in these areas. However, there werevarious obstacles to bringing people from Niigata into Gunma facilities, but we devised sales activities that resolved them.
The people who moved into our facilities had a notably favorable response, and thanks to the spread of word-of-mouth, wearrived at the current situation. The fact that we have established a community of Niigata residents even though we’relocated in Gunma is a strength of our facility.
Mr. Okubo
When potential residents come to visit our facility, the fact that there are people they know or recognize from theirneighborhood gives them peace of mind, and I think this is one reason why the number of people from Niigata has
increased. Compared with other facilities operated by Verde, there are many residents from Niigata at Verde Hotaka andMinowa in particular.
―― What about initiatives to secure human resources?
Mr. Higuchi
Securing human resources is one of the major issues in the nursing care industry, and we intend to steadily increase ourfacilities by drawing on overseas talent in the form of technical interns. Last year, we accepted 10 Chinese technicalinterns. Bringing in these interns is not straightforward in terms of education and so forth, but I believe it is necessary
from the perspective of securing long-term labor, and for our existing staff, it’s a very rewarding experience through which
they learn a lot. Compared with people from other countries, a notable characteristic of Chinese people is their superior
ability to recognize the kanji required for office work.

53

9. Actions of Each Operator■ Aiming to coexist and prosper with the community and to leverage teamwork at facilities―― Could you describe the characteristics of Verde Hotaka?
Mr. Okubo
It has a capacity of 174 people and 121 rooms, which makes it a large-scale facility within Gunma Prefecture. Currently, it
is almost full, maintaining an occupancy rate of 98%. There is abundant greenery near the facility, and given that cars are
the main form of transportation in the community, it occupies a favorable location just a 5-minute drive from the nearest
highway interchange. Residents’ daily life is comfortable, including spacious private rooms as well as shared living rooms
and communal facilities and equipment. A characteristic initiative at the facility is our senior care learning events for local
junior high school students, which we’ve been running for about 10 years. We’re delighted to have junior high school
students interact with residents at the facility every year and discover what senior care really is, and we hope that some ofthem will come to work for us in the near future. Of course, we actively provide residents with various recreational
activities at the facility, such as tea ceremonies and calligraphy.
―― What is the appeal for residents and their families?
Mr. OkuboFirst of all, we are affiliated with a medical institution called Gunma PAZ Hospital (formerly known as Hotaka Hospital), andif anything happens, a nurse will accompany the resident there, and depending on the situation, make a thorough reportto the family, which provides peace of mind from a care perspective. The sight of our residents enjoying a fun, active
lifestyle through various recreational activities also likely leads to peace of mind for families, including with regards toreceiving value for their money.
―― Finally, do you have a message for investors?
Mr. Higuchi
Fundamentally, our first priority is to provide people with good food and a comfortable residence, and we operate acommunity-based facility where residents believe that Verde will fully take care of their needs, including end-of-life care. In
order to continue operating the business in the long term, we also believe that securing labor and customers is essential,
and we will therefore continue to pursue initiatives that leverage Verde’s distinguishing features.
Mr. Okubo
We will continue to pursue sound management, as we have done up to now, and work to provide investors with peace ofmind.

Verde Hotaka

54

9. Actions of Each Operator
Feature: Interview
Sawayaka Club Co., Ltd.

The core of all our business is "creating happiness for people” (from the 11th Investment Management
Report)Interview:

Mr. Fumiharu Uchiyama, President and CEO, Uchiyama Holdings Co., Ltd. andPresident and CEO, Sawayaka Club Co., Ltd.
Mr. Takehiro Yamamoto, Representative Director and Senior Managing Director, Corporate
Planning Office, Uchiyama Holdings Co., Ltd., andManaging Director, Sawayaka Club Co., Ltd.
Mr. Masahiro Ishimoto, Director and General Manager, Sawayaka Club Co., Ltd.

■ Giving joy in daily life: a nursing-care business that leverages expertise in hospitality and operations―― Could you give us an overview of the Uchiyama Group, which will celebrate its 50th anniversary in 2021?
Mr. Uchiyama
The company was founded in 1961, when I inherited my family’s rice shop business. In 1971, we established a real estatecompany, then after the collapse of the bubble economy in 1991, we opened karaoke parlors in buildings, then expanded,predominantly in the Kyushu area, by opening restaurants when the karaoke parlors became vacant. After that, we started
a nursing care business in 2003, which was listed on the JASDAQ in April 2012 and on the First Section of the Tokyo Stock
Exchange in September 2014. In line with the idea of "creating happiness for people," we’re aiming to achieve further
growth based on nationwide expansion and greater cross-business synergy, with the nursing care and karaoke
parlor/restaurant businesses as our core pillars, by further enhancing the expertise in hospitality and operations that wehave developed.
―― What prompted you to start the nursing care business in 2003, and what is the synergistic effect with your otherbusinesses?
Mr. Uchiyama
When I was a child, I wanted to make a difference to the world by becoming a doctor, but I gave up on that idea when I
took over the family business. After that, the business performed well, and when I thought about my childhood dreamagain, I realized that providing care for the elderly was something that I could do to make a difference, and I entered thenursing care business in earnest. It’s rewarding to operate a nursing care business that is appreciated by residents, theirfamilies, and people in the local community. In the real estate business, we made full use of our expertise to develop threecore businesses, which led to securing properties in good locations. We then developed our own paid nursing homes and,once the business was on track, actively pursued off-balance activities as well.
Mr. Ishimoto
In terms of synergistic effects, with the spread of the COVID-19 pandemic, I have been reminded of the advantages ofoperating restaurants and karaoke parlors in our group. While going out and meeting others in person has become difficult,eating and singing karaoke have a role to play in giving joy to people in their daily lives, and these are services that we’reable to offer in-house. The tuna-carving demonstrations and catering that we offer at our facilities are especially popular.
■Returning acquired knowledge to the community with the aim of fostering connections between children, youth, andseniors―― You are actively engaged in activities that contribute to society (CSR). Could you tell us about those?
Mr. Uchiyama
Our group's slogan is "Connecting children, youth, and seniors.” We’re pursuing various initiatives aimed at creating acommunity where children, youth, and seniors can enjoy spending time together.
Mr. Ishimoto
Specifically, starting with the 2005 Fukuoka earthquake, we have been accepting elderly people affected by natural
disasters and so forth at our facilities free of charge. When the Kumamoto earthquake occurred, we accepted more than
30 people impacted by it. Also, in addition to developing an after-school daycare service to support children withdisabilities, we have opened two Kodomo Shokudo cafeterias, where children who have to eat alone because both theirparents are working can gather and enjoy dining in a lively atmosphere.
■Helping to give residents a purpose in life through the facility’s own recreational activities and cutting-edge initiatives
based on collaboration with industry, academia, and government―― Could you give us an overview of Sawayaka Club Co., Ltd.?
Mr. Ishimoto
We currently operate 185 offices and 74 paid nursing homes nationwide and maintain a high average occupancy rate of
94.4%. The reasons for choosing Sawayaka Club include its system that facilitates moving in and out, based on reasonable
monthly usage fees with no initial fee, and the fact that we help to give residents a sense of purpose, for example byhaving them play a leading role in recreational activities at the facility.
Mr. Uchiyama
The basic principles of our nursing care business are being compassionate, preserving residents’ dignity, and putting thecustomer first. We’re also pursuing development based on highly efficient operations, centering on our paid nursing
homes, and our winning rate in public tenders by local governments nationwide is high, with new facilities being opened in
Higashikagura Town and Muroran City in Hokkaido at the request of the government.

55

9. Actions of Each Operator―― Could you describe your initiatives at the three facilities owned by HCM (Tachibanakan, Mekarikan, and Tagawakan)?
Mr. Ishimoto
Trips to a hot spring in Beppu Onsen are popular. Participants stay at a hotel attached to a paid nursing home operated byour group. Residents and the family members who accompany them are able to have fun while enjoying peace of mind. I
feel that seeing residents’ actual circumstances helps family members to understand the daily nursing care situation, which
also provides them with peace of mind.
―― Could you also tell us about your initiatives involving collaboration with industry, academia, and government?
Mr. Yamamoto
We are pursuing cutting-edge initiatives with various universities. Based on the idea of creating a sense of purpose for
elderly people, we worked with Kyushu University to jointly develop an analysis tool called a Life Map, which visualizes
residents’ present thoughts and future desires, and we are implementing actions with residents’ goals in mind. We’re very
happy that this tool has also allowed family members to discover a side of residents that they didn’t know.
Mr. Ishimoto
With Kyushu Dental University, we’re promoting initiatives aimed at reducing aspiration pneumonia by enhancing oral care,which is important in nursing care. We have established a new in-house qualification, Certified Sawayaka Oral Care
Specialist, and about 1,300 people with the necessary technical background have successfully applied for it. In
collaboration with the Kyushu Institute of Technology, we’re working on developing a nursing care record app, which is
aimed at significantly improving operational efficiency. Reducing the time spent on keeping records is significant because it
will allow staff to devote more time to improving the quality of nursing care for residents.
―― Finally, do you have a message for investors?
Mr. Uchiyama
It is the generation of elderly people who came before us that made Japan the wonderful place it is today. We remain
grateful to them and our goal is to provide them with warm-hearted nursing care support that will fill their lives with joy
and purpose.

Sawayaka Tachibanakan

Sawayaka Mekarikan

Sawayaka Tagawakan

56

9. Actions of Each Operator
Case Examples
HAM treat the operators with respect and curiosity, collecting informationon also the actions of each company through communication and hearing indaily business. Here, we introduce some of the information, mainly on what
each company has disclosed.


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

Actions in the Event of Disaster〔Sawayaka Club Co., Ltd.〕Free Acceptance of Victims of Heavy Rainfall in Southern Kumamoto
http://www.sawayakaclub.jp/advert/20200706.pdf〔AS PARTNERS Co., Ltd.〕
Introduction of evacuation equipment "S-CAPE" at all business sites
https://as-heim.com/lp/s-cape/579. Actions of Each Operator
Case Examples
Actions to Tackle Shortage of Human Resources in Nursing Care (Improvement ofTreatment)

It is said that a low salary level is one of the causes of the shortage of nursing care workers, but the
government and each company are trying to cope with it. HAM confirmed that each company isworking on improving treatment through the status of acquisition of “nursing care staff treatment
improvement addition” and “nursing care staff, etc. specific treatment improvement addition” statedin the property disclosure statement of important matters, interviews and press releases.
[Sompo Care Inc.]
Improved treatment of nursing care staff- Becoming a more comfortable and rewarding workplace from October 2019 https://www.sompocare.com/attachment/topic/596/shogukaizen_20190826.pdf[Benesse Style Care Co., Ltd.]
Improved treatment of nursing care staff and revised personnel system
For full-time certified care workers who have been with the company for more than 10 years(nationwide), 84% of those in leader positions earn 5 million yen or more annually, 97% of modelcases of those in positions other than leader positions earn 4.4 million yen or more annually
https://kaigo.benesse-style-care.co.jp/saved_data/pdf/topic/155/file_20190910112225573143.pdf［Verde Corporation］
September, 2019 Specific treatment improvement addition
http://e-verde.co.jp/wordpress/wp-content/uploads/2019/09/ベルジ株式会社-特定処遇改善加算.pdf

Actions to Tackle Shortage of Human Resources in Nursing Care (Acceptance ofForeign Technical Interns)[SHIP HEALTHCARE HOLDINGS, INC. (GREEN LIFE Co., Ltd.)]
Actively recruit foreign technical interns
https://www.shiphd.co.jp/blog/irs/d20a343b36704984cececddc588fc7b5f3409101.pdf[UCHIYAMA HOLDINGS Co., Ltd. (Sawayaka Club Co., Ltd.)]
Opening of vocational school with establishment of joint venture in Indonesia
http://www.uchiyama-gr.jp/ir/upload_file/tdnrelease/6059_20180219474383_P01_.pdf[ Verde Corporation］
Accepting 5 Chinese Interns at Verde Minowa
http://e-verde.co.jp/wordpress/wp-content/uploads/2020/01/みのわだより ２０２０年1月.pdf
Actions Related to Dementia and Cognitive Decline[Sompo Care Inc.]
Published “Ninchisho Naruhodo! Book” to deepen understanding of dementia
https://www.sompocare.com/attachment/topic/604/naruhodobook_2019_0912.pdf[Medical Corporation AIKOKAI (Niigata Rehabilitation Hospital)]
Simple cognitive function test “Atama no Kenko Check®” started in November, the first time in
Niigata Prefecture
http://www.niigata-reha.jp/news/info/201910152253/

58

9. Actions of Each Operator
Case Examples
Actions to Prevent the Spread of COVID-19 Infection

HAM regularly conducts interviews with operators to verify their infectious
disease control measures. We have also established relationships that enable
us to receive reports on the status of COVID-19 infection at the facilities weown.
[Sompo Care Inc.]
Response to COVID-19
https://www.sompocare.com/common/pdf/web_news_0930.pdf[Green Life Co., Ltd./Green Life Higashi Nihon Co., Ltd.]
Notice on Lifting of Restrictions on Receiving Visitors and Going Out
http://www.greenlife-inc.co.jp/wpcontent/uploads/2020/07/ecedd41463bc7027e71022bbbb976a7a.pdf[Ship Healthcare Holdings Inc.]
Rapid Increase in Demand Due to Ozone-Based COVID-19 Countermeasures
Airness Low-Concentration Ozone Generators Sold in New Lineup
https://www.shiphd.co.jp/blog/d5b41794422a41d951e6b54907ca11f27726b360.pdf[Benesse Style Care Co., Ltd.]COVID-19 Countermeasures: Notice of Partial Change to Restrictions on Receiving Visitors
https://kaigo.benesse-stylecare.co.jp/saved_data/pdf/topic/255/file_20201026132711095534.pdf[Proud Life Inc.]
Prevention of COVID-19 Infection
https://hanakotoba.co.jp/assets/news20201001.pdf[Sawayaka Club Co., Ltd.]
Prevention of COVID-19 Infection
http://www.sawayakaclub.jp/advert/20200227.pdf[Medical Corporation AIKOKAI]
Information on COVID-19 Countermeasures
https://aiko.or.jp/新型コロナウイルス対策に関するご案内/[As Partners Co., Ltd.]
Response to COVID-19
https://www.as-partners.co.jp/company/20200713.pdf

59

9. Actions of Each Operator
Case Examples[Green Life Co., Ltd./Green Life Higashi Nihon Co., Ltd.]Installation of Airness low-concentration ozone generators
Airness low-concentration ozone generators sold by Ship Healthcare Pharmacy East Co.,
Ltd., a consolidated subsidiary of Ship Healthcare Holdings Inc., which is one of HCM’s
sponsor companies, have been installed at all facilities.
[HCM-Owned Facility with Airness Installed]
・ Aquamarine Nishinomiyahama

・ Kobe Gakuentoshi Building(Hapine Kobe Gakuentoshi)

・ GreenLife Moriguchi

・ Hapine Kobe Uozaki Nibankan

・ Smiling Home Medice Adachi

・ SHIP Senri Building(Welhouse Senri Chuo)

Ozone, which has a strong oxidizing capacity, is used for deodorization andsterilization. In the medical and nursing care fields, it is used as a solution to
improve air quality (e.g., odors) out of concern for user habitability and comfort
and the occupational safety and health of employees.
Ongoing findings from research by universities and specialized institutions havebeen published indicating that the ozone generated by this device is effective ininactivating the COVID-19 coronavirus.

[Example of Installing Airness at HCM-Owned Facilities]

Smiling Home Medice Adachi

Aquamarine Nishinomiyahama

60

9. Actions of Each Operator
Case Examples


Efforts to Appoint Female Facility Managers

The government has set a goal of having 30% of leadership positions be filled by women as soon as
possible in the 2020s. However, the percentage of women in managerial positions at the section chieflevel or higher at companies and businesses nationwide is 9.5%, which is still far below thegovernment’s target. The ratio of female full-time/regular employees in the medical and welfare
industries in FY2019 was 68.8%, but in order to address the shortage of human resources, it isnecessary to establish a more women-friendly work environment. The percentage of female facility
managers at HCM-owned properties reached 32.4% in FY2019, and women are being actively
promoted to managerial positions.

[Proportion of Female Full-Time/Regular Employees]
Medical/welfare industry (%) (Note 1)
70 65.0

All industries (%) (Note 1)

68.8

64.7

66.0

24.3

25.5

25.4

FY2017FY2018FY2019

60
50
40
30

24.0

20
10
0

FY2016[Proportion of Female Facility Managers at Properties Owned by HCM]

Proportion of female facility managers at HCM-owned properties (%) (Note 2)

50

Proportion of female managers (%) (Note 3)
41.7

42.3

40
32.4

30

20

10

0

8.9

FY20178.7

9.5

FY2018FY2019Source: Ministry of Health, Labor, and Welfare, "Basic Survey of Equal Employment in 2019" and "Survey of Nursing Care Labor
Conditions" (2019)
Note 1: Percentage of female full-time/regular employees at companies with 30 or more employees
Note 2: Created based on the disclosure statement of important matters for each facility obtained by the asset management company
every fiscal year
Note 3: Percentage of women in positions at the section chief level or higher at companies with 30 or more employees

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

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

62