Impact Report

Issued in December 2021

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 super-aged 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 & CEO

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, 2020 to October 31, 2021
Once a year in principle (every December)

1

Contents
1. Current Status and Issues Surrounding Medical and Nursing Care
Recognition of Issues in Japan and Impact on Medical and Nursing Care
- Recognition of Issues and Countermeasures -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

Nursing Care Fee Revision19

2. Investment Philosophy and Impact (Qualitative Targets)
Investment Philosophy and Impact (Qualitative Targets)20

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

21

Relationship Between SDGs and ESG

22

4. Outcome Indicators
Ratio of Housing for the Elderly to the Elderly Population

25

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

26

5. Output Indicators (Overview)
Properties Acquired During the Reporting Period (November 1, 2020October 31, 2021)

27

Status of Allocation of Social Loan and Social bond

28

Environmental Initiatives

29

Social Initiatives

32

Governance Initiatives

46

SDGs Social Finance Framework

54

JCR Social Finance Evaluation

55

List of Borrowings and investment corporation bond (as of the end of the
fiscal period ended July 2021)

56

Portfolio Map

57

Summary of Buildings and Their Leasing Status

58

Overview of Facilities and Housing for the Elderly

60

Overview of Medical Service-Related Facilities, etc.

61

Earnings Performance

62

Summary of Appraisal Report

63

Capital Expenditures of Assets Under Management

65

Company Profile of Operators

66

6. Initiatives

7. Social Finance8. Output Indicators

9. Actions of Each Operator
Feature: Interview

67

Case Examples

72

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 (Ministry of Health, Labour and Welfare), whichis the regulatory agency, is implementing various measures.
In addition, in various materials announced by Ministry of Health, Labour 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 Ministry of Health, Labour 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

Japanʼs population of elderly people aged 65 or older is estimated to be 36.4 million (as of September 15,2021), representing 29.1% of the total population, which makes it the most aged society in the world. Dueto the population aged 65 or older growing while the total population is decreasing and the birthrate
declining, the aging rate will continue to increase, with the National Institute of Population and Social
Security Researchʼs “Population Projection for Japan (2017 Projection)” estimating that it will reach 33.3%
in 2036, resulting in a society where one in three citizens are aged 65 years or older. As the proportion ofpeople aged 75 or older in particular continues to rise, the caregiver labor shortage caused by the
declining birthrate and the increase in care needs due to the aging of society are starting to have a major
impact on the medical and care industries.
[Outlook for Change in Total Population and Aging Rate](10 thousand people)
15,00075 years old or older

65-74 years old

Percentage over 75 years old

Percentage over 65 years old

64 years old or younger

40%
ActualEstimate

36.8%
32.8%
30%

30.0%
10,00026.3%
10,161
10,71810,854

0

776
471

1985

1,497

1,522

1,643

12.7%

10.3%
3.9%

21.4%
20%
6,723

17.8%

14.5%

5,000

7,74019.6%

8,577

9,218

20.1%

9.1%

1,734

5.7%
1,109
717

1,160

1,613

2,180

2,260

2,277

1995

2005

2015

2025

2035

2045

1,407

10%

0%

(Source) Created by HAM based on the Ministry of Internal Affairs and Communications Statistics Bureau 2015 Census and the
National Institute of Population and Social Security Researchʼs “Population Projection for Japan (2017 Projection)”[Comparison of the Percentage of Elderly Population in Major Countries (2021)]35%
30%

75 years old or older

29.1%

65-74 years old
Percentage of the population aged 65 or over in the world

25%
20%
15%
10%

9.6%

5%
0%
Japan

Italy

Germany

FranceU.K

Canada

U.S.

Korea

China

(Source) Website of the Ministry of Internal Affairs and Communications Statistics Bureau, Statistics Topics No. 129,
“A Statistical View of Japanʼs Elderly Population: On the Occasion of Respect-for-the-Aged Day”

4

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

3.0 milion people

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

4.54

5

出⽣数(左軸)
Number of births (left axis)
合計特殊出⽣率(右軸)
Total fertility rate (right axis)

2.5 milion people4
2019865,239 people, the smallest
number of births since 1947

2.0 milion people

3

1.5 milion people2
1.0 milion people

0.0 milion people

1

1.36

0.5 milion people

1947 1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

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

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 andIndustry

5

2019

0

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

[Future Outlook for Social Security Benefits Towards 2040]
Pension

Medical

Nursing care

200 trillion yenChildcareOther

188.2 – 190.0
9.4
13.1

150 trillion yen

140.2 – 140.6

25.8

7.7

100 trillion yen

121.3

10.0

6.7
7.9

15.3
66.7 – 68.5

10.7

39.2

47.4 – 47.8

50 trillion yen

73.2
56.7

59.9

Fiscal 2018

Fiscal 2025

Fiscal 2040

(based on plan)(based on plan)0 trillion yen(Source) “Future Outlook for Social Security Towards 2040“ of the Cabinet Secretariat, Cabinet Office, Ministry of
Finance, Ministry of Health, Labour and Welfare

66

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 than ever to take care of members in thesame household due to the declining birthrate and change in family structure. In order to respond to theincreasing needs for nursing care, it is necessary to secure caregivers and promote the supply ofhealthcare facilities. It is expected that the number of deaths due to aging will increase and the number ofpeople who spend their final days at homes and facilities for the elderly other than medical institutions will
increase rapidly. In the future, the role 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 and institutions related to medical service and nursing care will be required.
[Change in the Number of People Eligible to Receive Nursing Care by Degree of Nursing Care Required]

8.0 milion people

Require assistance

Require assistance level 1

Require assistance level 2

Transitional

Require nursing care level 1

Require nursing care level 2

Require nursing care level 3

Require nursing care level 4

Require nursing care level 5

7.0 milion people

Increased by 2.6 times during
the period from 2000 to 2019

6.0 milion people
5.0 milion people
4.0 milion people
3.0 milion people

256

298

345

384 409432 440 453

506 531467 485561

584

606 620669
632 641 658

2.0 milion people
1.0 milion people
0.0 milion people

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
(Source) “Nursing Care Insurance Business Status Report“ of Ministry of Health, Labour and Welfare

Annual Death Toll and Place of Death

Annual death toll (thousand people)

Death toll 1.26 million people in total(2012)

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

Caregiving at own houses,
facilities and housing forthe elderly, etc. is rapidly
increasing█ Own house █ Nursing care facility █ Other █ Medical institution(Source) KPMG Healthcare Japan Co., Ltd.
(Note) CAGR (compound average growth rate) is the annual average growth rate obtained using the geometricmean per year based on the growth rate over multiple years.

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

As the population decreases and the aging rate increases, demand for nursing care services is expected to
grow. From 2020 through 2040, the number of nursing service users is estimated to grow by 30% at
nursing care facilities and 39% for residential services.
Looking at the rate of increase in the number of users of nursing care services by region, as it is expectedthat the number will continue to increase until 2040 in many areas (mainly urban areas), the rate ofincrease in the number of users of nursing care services is increasing mainly in the Tokyo metropolitan,
Kinki and Chubu areas.
[Change in the Number of Nursing Care Service Users]
Facility

FY2020(actual value)

FY2023
FY2025FY2040(estimated value) (estimated value) (estimated value)

Long-term care welfare facility for the elderly

620,000 people

670,000 people

710,000 people

820,000 people

Long-term care health facility for the elderly

350,000 people

370,000 people

390,000 people

440,000 people

Integrated facility for medical and long-term
care

34,000 people

52,000 people

65,000 people

74,000 people

Long-term care medical facility, etc.

17,000 people

10,000 people－－

Nursing care facility

1,030,000 people

1,100,000 people

1,160,000 people

1,330,000 people

Daily life long-term nursing care for thoseadmitted to a specified facility

260,000 people

300,000 people

320,000 people

370,000 people

Group home for the elderly with dementia

210,000 people

230,000 people

240,000 people

280,000 people

Residential service

470,000 people

540,000 people

560,000 people

650,000 people(Source) Ministry of Health, Labour and Welfare, “Aggregate Results for Primary Nursing Care Insurance Fees and Service
Projections during the 8th Nursing Care Insurance Business Plan”[Years with the Largest Number of Users of
Nursing Care Services Until 2040][Increase Rate of Users in the Year with
the Largest Number of Users of Nursing Care Services Until 2040](Source) “Nursing Care Service Platform and Housing for the Elderly <Reference Material>“ of the Health and Welfare Bureau for the
Elderly, Ministry of Health, Labour 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 (Ministry of Health, Labour and Welfare) is promoting the construction of aregional 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, Labour 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 and efficiently provides highquality and appropriate medical care. The “Regional Healthcare Vision“ has been institutionalized by the“Act for Securing Comprehensive Medical and Long-term Care in the Community“ aiming to establish a
medical care provision system that can even withstand the super-aged society (Note ).
Regional Healthcare Vision is an initiative 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 and coordination of hospitals throughconsultation by local medical staff.
(Note) “Super-aged society” refers to a society in which the elderly population aged 65 or older (aging rate) accounts for 21% or more of
the total population

Medical institution(Hospital Ward A)
Advanced acutestage function

Treatment
imbalance andfinancial concerns
due tooveremphasis on
advanced acutestagesVoluntary
selection of
medical carefunctions

Current hospital bed
function(as of 2020)

Number of beds to berequired in 2025

Total 1,209,000 beds

Total 1,191,000 beds
Advanced acute stage
131,000 beds
(11%)

Advanced acute stage
156,000 beds
(13%)

Decrease byapprox. 25%(Hospital Ward B)
Acute stage
function(Hospital Ward C)
Recovery stage
function

Acute stage
547,000 beds
(45%)

(Hospital Ward D)
Chronic stage
function

Prefectural
government

Acute stage
401,000 beds
(34%)

Recovery stage
375,000 beds
(31%)

Increase byapprox. 2 times

Reporting on current
status of medical carefunctions and future
direction

Recovery stage
189,000 beds
(16%)

Decrease byapprox. 10%

Establishing “Regional Healthcare Vision” using reports on medical
functions, etc. and promoting further function differentiation

Chronic stage
317,000 beds
(26%)

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

(Source) Created by HAM based on Ministry of Health, Labour andWelfareʼs “Regional Healthcare Vision” (October 9, 2020).

Chronic stage
284,000 beds
(24%)

Nursing care facilities,
in-home medical care,etc.
Approx. 300,000 people(Source) “Current Hospital Bed Function (as of 2020)” created by
HAM based on a document entitled “About the 2020
Hospital Bed Function Report,” which was created by
Ministry of Health, Labour and Welfare based on a 2020
hospital bed usage report; “Number of Beds to Be
Required in 2025” created by HAM based on Ministry of
Health,Labor
andWelfareʼs“Initiatives
forMedical/Nursing Care Reform” (June 22, 2017).

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 Ministry of
Health, Labour and Welfare, the ratio of quake-resistant hospitals in 2020 remained at 77.3%.
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 of caregivers is also amajor issue. While there were approximately 2.11 million nursing care personnel in fiscal 2019, it isexpected that approximately 0.69 million nursing care personnel will be newly required by fiscal 2040.
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 working conditions fornursing care staff,“ “securement and training of various personnel,“ “prevention of job separation,
promotion of job retention and improvement of productivity,“ “enhancement of the attractiveness of thenursing care profession“ and “environmental improvement for accepting foreign personnel.“ The
improvement of the treatment for nursing care personnel and improvement of productivity at nursing caresites were also stated in “Japan 100 Million Total Active Plan.“

Comprehensive Measures to Secure Nursing Care Personnel(Main Actions)Improvement oftreatment of
nursing care staff○ Further improved treatment since October 2019, focusing on nursing
care staff with experience and skills using a total amount of 200 billion
yen (annual), with the aim of achieving a wage level for leader-levelnursing care staff that is comparable to other industries* In the revision of nursing compensation in 2021, with a view to securing nursing carepersonnel, improving their treatment, etc., the improvement rate was set at 0.70%,
and to further improve treatment, the rules for allocation among nursing personnel
were made more flexible○ Support through loan of educational funds forcare workers and money for preparation for
reemployment
Securement andtraining ofvarious personnel○ Integrated support from holding of introductory
training for inexperienced caregivers such as the
middle-aged and the elderly to matching after
attending training○ Promoting employment activities in the nursing
care field using volunteer points

Prevention of job
separation
Promotion of job
retention
Improvement of
productivity

Improvement of
the attractivenessof the nursing
care profession

Environmental
improvement for
accepting foreign
personnel○ Promoting the use of technologies such as
nursing care robots and ICT○ Support of establishment and operation ofnursing care facilities and childcare facilities
inside offices○ Supporting reduction of the training course loadrequired for career advancement and securing
replacement staff

Appendix 3(Actual result)
Average monthly amount improved by 75,000 yen
Average monthly amount improved by 18,000 yen (from FY2019)
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)○ Promoting entry of workers from other fields through career
consulting, comprehensive vocational training framework for job
seekers, workplace visit/experience initiatives for trainees,
increased budget for external training, and forgivable loans topeople who have completed training to support them while
seeking employment○ Providing new forgivable loans to students attending high schools
focused on welfare-related careers to support their studies○ Developing disaster-prevention leaders at nursing care facilities,etc.

○ Dissemination of productivity improvement guidelines○ Establishment of counseling desks and promotion of exchange
among young employees○ Supporting the introduction of online training adapted to life
during the pandemic and implementing various work model
initiatives, such as nurses who have multiple/secondary jobs

○ Promotion of understanding of nursing care work
for students, their parents, career guidance staff,
etc.

○ Transmission of the attractiveness of nursing care staff to young
people, people who have finished rearing children and active
seniors○ Holding experience-based events to learn about
nursing care

○ Providing information about care contest initiatives for the
purpose of improving and publicizing the quality of nursing careservices○ Support of international students, etc. aiming tobecome care workers (promotion of loan ofeducational funds for care workers, consultationand support in daily life, etc.)○ Environmental improvement for accepting foreign nursing carepersonnel with “specific skills,“ etc. (PR of nursing care in Japanthrough on-site briefings, group training for improving nursing
skills, support for learning Japanese in nursing care, consultationand support of nursing care business, etc., patrol and visits, etc.)○ Providing comprehensive information to countries from which
personnel will be received*Underlined text indicates new initiatives in the 2021 budget(Source) Ministry of Health, Labour and Welfare, “Number of Nursing Care Personnel Required Based on 8th Nursing Care Insurance
Business Plan – Appendix 3: Comprehensive Measures to Secure Nursing Care Personnel (Main Actions)”

12

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

Understandingof actualsituation

Acceptance ofconsultation
and report

Understanding ofactual situation
Watching

Support plan

Connection toservices,
systems andinstitutions

Monitoring

Social welfare
council
Welfare commissioner
Nursing care counselor

Residents'
association

Family association

Connection to services, systems and institutions

Monitoring

Advice and support

NPO volunteer
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 Ministry of Health, Labour 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 the growing demand
for medical and nursing care services due to the increase in the elderly population, in “Japan 100 Million
Total Active Plan” approved by the Cabinet in 2016, the government set a goal of increasing in-home andfacility services in order to provide nursing care for an additional 500,000 people by the start of 2020
(compared with fiscal 2015), and further expansion of nursing care facilities, etc. is being undertaken
through meetings following up on the planʼs implementation.

[Capacity and Number of Users of Facilities and Housing for the Elderly](Unit: units, people)

700,000

Facilities covered by public aid providing long-term care to the elderly(intensive care homes for the elderly)

619,600 people

Long-term care health facilities(nursing and health facilities for the elderly)Long-term care medical facility

600,000

573,541people

Integrated facility for medical and long-term care
Nursing home for the elderly
Low-cost paid nursing home

500,000

Paid nursing homeServiced housing for the elderly

400,000

Long-term daily care for dementia patients in communal living situation

363,400 people(Group homes)

300,000
250,352 people
207,600 people
200,000

94,944 people

100,000

62,912 people
33,300 people
16,200 people

0
2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

(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 Ministry of Health, Labour and Welfare, “Information Provision
System of serviced housing for the elderly “ on the website of the Senior Housing Association.
(Note) The number of users is shown for facilities covered by public aid providing long-term care to the elderly, Long-term carehealth facilities, long-term care medical facility and long-term daily care for dementia patients in communal living situation(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 2020, the jobs-to-applicants ratio for nursing care-related occupations was 3.99 times, which ishigher than that for all occupations, and the gap has been increasing in recent years. According to asurvey by the Care Work Foundation, the percentage of offices feeling a shortage of nursing care humanresources rose to 60.8% in 2020.
Based on information such as the projected volume of nursing care services in the 8th Nursing Care
Insurance Business Plan, the number of required nursing care personnel, as estimated by prefectural
governments, will be approximately 2.33 million in fiscal 2023, 2.43 million in fiscal 2025, and 2.8 million
in fiscal 2040, so there is an urgent need to secure nursing care human resources.

[Jobs-to-Applicants Ratio (All Industries and Nursing Care-Related Occupations) and Unemployment Rate]
有効求⼈倍率(全業種)
Jobs-to-applicantsratio (all industries)6%

有効求⼈倍率(介護関係職種)
Jobs-to-applicantsratio (nursing care-related jobs)
Unemployment
rate
失業率

5%

3.99 x
4%
2.80%

3%
2%

1.08 x1%0%
2005年度2006年度2007年度2008年度2009年度2010年度2011年度2012年度2013年度2014年度2015年度2016年度2017年度2018年度2019年度2020年度
FiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscal
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

(Source) Ministry of Health, Labour and Welfare, “Job Placement Service Statistics,” and Ministry of Internal Affairs and Communications,“Labor Force Survey”[Needs for Nursing Care Human Resources Towards 2040]
3.0 million
people300万⼈

2.80 million
people█ Number of nursing care human resources required

2.5 million
people250万⼈

2.43 million
people2.33 million
people2.11 million
peopleShortage:
Approx. 220,000 people

Shortage:
Approx. 690,000 people

Shortage:
Approx. 320,000 people

2.0 million
people
200万⼈

1.5 million
people150万⼈

Fiscal 2019

Fiscal 2023

Fiscal 2025

Fiscal 2040

(Source) Ministry of Health, Labour and Welfare, “Number of Nursing Care Personnel Required Based on 8th
Nursing Care Insurance Business Plan – Appendix 1”

15

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, the 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 in the family structure isbelieved to lead to an increase in the number of people engaged in nursing care while working.
In a survey of people who have experienced leaving their job to provide nursing care for someone, morethan half of the respondents indicated that care/support provision prompted them to quit their job because
it was difficult to balance their job and care/support provision at their workplace. (Note 1) In relation tothis, although the number decreased from around 100,000 people in 2019, the number of people who left
their jobs for the reason of providing nursing care or assistance was approximately 70,000 in 2020.
The issue of job separation due to nursing care is further exacerbating the labor shortage problem inJapan, where the population continues to decline, and there is concern about the adverse effect on theeconomy. The Ministry of Economy, Trade and Industry estimates the loss of added value to the overall
economy associated with workers leaving their jobs to provide nursing care to be around 650 billion yen
per year. (Note 2) In addition, more than 70% of those leaving their jobs to provide nursing care arefemale, which represents a significant barrier to promoting the social advancement of women.
[Number of People Leaving Jobs for Nursing Care and Nursing]

120,000 people

Women

Men

Ratio of women

100,000 people

100%

80%

80,000 people
60%

60,000 people
40%

40,000 people
20%

20,000 people
0 people0%2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
(Source) “Survey on Employment Trends“ of Ministry of Health, Labour and Welfare(Note 1) NTT Data Institute of Management Consulting, Inc., “Report on Research Study to Understand Current Conditions Relating toBalancing Work and Nursing Care in 2018”(Note 2) “Structural Change of Economic Society Until 2050 and Policy Issues“ of the Ministry of Economy, Trade and Industry

16

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, and the reduction of theburden of caregivers is required.
According to a survey by Ministry of Health, Labour and Welfare, the second-most common cause of abuse
by family members and relatives is “nursing care fatigue and nursing care stress,“ and there is a need to
expand nursing care services responding to the needs for such nursing care. In addition, “organizational
climate, poor relations between staff, management systems, etc. that foster abuse” and “shortage of
personnel and busyness of work“ are cited as factors of abuse by workers at nursing care facilities. Thereis a need to improve the workplace environment including the securement of sufficient nursing care humanresources, improvement of business efficiency, improvement of the knowledge on abuse and nursing careskills 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)

20,000 cases

15,000 cases
14,88910,000 cases

12,56915,615

16,668

16,59915,202

15,731

15,73910,000 cases

15,976

16,384

17,07817,24916,92813,2737,500 cases

5,000 cases

5,000 cases

151

155

221

300

408

452

510

621

644

54

62

70

76

96

FiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscalFiscal

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2,500 cases

0 cases

0 cases(Source) “Survey Results on the Status of Response Based on the “Act on the Prevention of Elder Abuse, Support for Caregivers of Elderly
Persons and Other Related Matters“ in Fiscal 2019“ of Ministry of Health, Labour and Welfare171. Current Status and Issues Surrounding Medical and Nursing Care
Various Issues in Nursing Care

[Factors of Abuse by Family Members, Etc. (multiple responses allowed)]
Nursing care fatigue and stress
Lack of or decline in the abuserʼs capacity to provide nursing care
Isolation/absence of caregivers providing additional support
Stress from people around one saying "family members should be caregivers"
Lack of knowledge and information
Lack of or decline in understanding
Abuserʼs resistance to using external services
Disability/illness
Unstable mental condition
Character/personality (basis of conduct)Social withdrawal
Personal relationship with victim prior to occurrence of abuse
Alcohol consumption
Gambling
Other

0%

20%

40%

60%

20%

40%

60%

[Factors of Abuse at Nursing Care Facilities (multiple responses allowed)]

Issues regarding education, knowledge, nursing care skills, etc
Issues on stress and emotional control of staff
Organizational climate, poor relations between staff, management systems, etc. that foster abuse
Issues on personnel shortage and staffing and busyness related to such issues
Lack of ethics and philosophy
Issues of character or quality of abusing staff
Other

0%

(Source) “Survey Results on the Status of Response Based on the “Act on the Prevention of Elder Abuse, Support for Caregivers of Elderly
Persons and Other Related Matters" in Fiscal 2019" of Ministry of Health, Labour and Welfare18

1. Current Status and Issues Surrounding Medical and Nursing Care
Nursing Care Fee RevisionOverview of Nursing Care Fee Revision in Fiscal 2021

Nursing care fees which are revised every 3 years, were revised in FY 2021. This was the firstrevision of nursing care fees under the COVID-19 pandemic.
Revision rate ︓ +0.70％（0.05% of it is special evaluations for dealing with COVID-19（Until the end of
September 2021））
This is the second consecutive positive revision. Based on the following perspectives, the allocation focus
on independence support and innovation at the nursing care site.



Major viewpoints of the revision

3.Promotion of actions for independence support andprevention of severity

1.Strengthening responsiveness to infectious diseases anddisasters

4.Securing nursing care personnel and innovation nursing
care place

2.Promotion of comprehensive community care system

5.Ensuring the stability and sustainability of the system

Changes Made by Recent Revisions
Revision period(FY)

Major points upon revision
Securement of personnel by nursing care business operators and improvement ofworking conditions
Cooperation with medical services and enhanced care for people with dementia
Provision of efficient services and securement of new services

3.00％

1.20％



Improvement of in-home services and more focused efforts on facilities
Improvement and increased focus of efforts on services to support independent
livingCooperation between medical services and nursing care services, and division offunctions
Securement of nursing personnel and evaluation of service quality

Response to consumption tax hike (8%)

0.63％



Further strengthening of response to people requiring moderate to severe level ofnursing care and the elderly with dementia
Promotion of measures to secure nursing personnel
Improvement in evaluation of services and establishment of efficient service
provision system



2009






2012

2014
（temporary）

2015

2017
（temporary）

2018

2021

Revision
rate






△2.27％



Improvement of working conditions for nursing personnel

1.14％




Promote regional comprehensive care system
Realize high-quality nursing care services that contribute to supporting unassisted
living and preventing of increase in severity
Secure various human resources and improve productivity
Secure stability and sustainability of the system through making nursing careservices more appropriate and Focused

0.54％










Strengthening responsiveness to infectious diseases and disasters
Promotion of comprehensive community care system
Promotion of actions for independence support and prevention of severity
Securing nursing care personnel and innovation nursing care place
Ensuring the stability and sustainability of the system（Note）0.05% of it is special evaluations for dealing with COVID-19（Until the end of September 2021）

19

0.70％
（Note）

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

We seek to realize a society where
all people can live vibrantly andwith peace of mind20

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.

21

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 super-aged society andmaximize unitholder value over the medium to long term through the promotion of provision ofhealthcare facilities as social infrastructure and construction of a portfolio specializing in
healthcare facilities.
HAM will collaborate with various in-house/outside stakeholders including operators and hospital
personnel, the 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 a super-aged society and establishment of governancesystem.
HAM Website / Basic Policy on ESG
http://www.hcam.co.jp/pdf/esg.pdf



ESG Promotion System
HAM designates the chief officer and executive officers on sustainability as follows.
Chief Officer of
Sustainability

President & CEO

The Chief Officer of Sustainability puts in place systems forpromoting sustainability and supervises the proposal andimplementation of various policies, targets and measures

Executive Officer of Head of Asset
Sustainability
Management
Performance
Department

The Executive Officer of Sustainability Performance supervises
the planning and implementation of various measures for thepromotion of sustainability

Executive Officer of Head of Financial
Sustainability& Administration
Department
Management

The Executive Officer of Sustainability Management puts inplace systems, regulations, etc. for promoting sustainability
and supervises the planning and implementation of disclosure
measures

Furthermore, HAM has established an ESG Committee which deliberates and drafts various
policies, targets and measures regarding sustainability.

22

3. Policy on Actions for SDGs
Relationship Between SDGs and ESG
 Organization Chart (as of December 2021)

 ESG Committee
Chairperson

Members

Frequency of
meeting

Either a full-time director or the Executive Officer of Performance,
designated by the Chief Officer(1) Full-time director(2) Executive Officer of Performance(3) Member of Asset Management Department(4) Member of Investment Department(5) Member of Financial & Administration Department(6) Member of Healthcare Business Promotion Department(7) Compliance Officer(8) Other person appointed by the Chairperson
At least once a month in principle

・As a general rule, the committee meets at least once every month.
・The Committee reports to the Chief Officer of Sustainability and Executive Officer of
Sustainability Management with regard to various policies, targets, measures, etc. at least
once every three months.
・The committee reports to the Board of Directors at least once a year on various policies,
targets and measures.

23

3. Policy on Actions for SDGs
Relationship Between SDGs and ESG
 Promotion Image (PDCA Cycle)

Materiality
Issues that need to be solved

Environment

Highly relevant SDGs

・ Energy conservation and reduction of CO2
emissionsSocial・ 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 reductionof work 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, health of staff, etc.

Governance・ Transparency in decision making
・ Fair transaction (Appropriate management ofconflicts of interest)
・ Management of various risks (including eliminationof antisocial forces)244. Outcome Indicators
Ratio of Housing for the Elderly to the Elderly Population

Status of Supply of Healthcare Facilities

Although the supply of facilities and housing for the elderly is increasing every year in response to the growing
demand for medical and nursing care service, the supply rate of paid nursing homes against the elderly
population was 1.61% in 2019 and that of serviced housing for the elderly was only 0.70% in 2019.

[Supply Rate of Facilities and Housing for the Elderly Against the Elderly Population (Aged 65 Years or Older)]
1.8%

Paid nursing home

1.6%

Serviced housing for the elderly

1.40%

1.4%
1.2%

1.02%

1.10%

1.19%

1.48%

1.55%

1.61%

1.25%

1.0%
0.8%
0.6%

0.46%

0.54%

0.63% 0.63% 0.66%

0.73%
0.42%

0.50%

0.70%
0.64% 0.67%
0.57% 0.61%

0.29%

0.4%
0.2%

0.01%

0.0%
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

(Source) Prepared by the Asset Management Company based on the “Overview of Survey on Social Welfare Facilities, etc.” of Ministry of
Health, Labour and Welfare, “Information Provision System of Serviced housing for the elderly” on the website of the Senior
Housing Association, and “Population Estimation” of the Ministry of Internal Affairs and Communications.

25

4. Outcome Indicators
Change in the Acquisition Amount and Number of Healthcare Facilities in
the J-REIT Market
As of the end of October 2021, the total acquisition amount of healthcare facilities was 278,485
million yen and the cumulative number of properties was 153 in the J-REIT market. Of these,
the cumulative acquisition amount for HCM was 67,057 million yen (24.1%) and the cumulative
number of properties for HCM was 37 (24.2%).
(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

0

4

8

0

0

2007

5,600

8,465

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

2013

1,980

12,955

0

0

2

12

0

0

2014

28,782

41,737

0

0

20

32

0

0

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

38,900190,418

22,69164,881

13

111

8

35

72,820263,238

1,456

66,337

33

144（Note）136

0263,238

066,337

0

144

0

36

2020
January 2021
February 2021

0263,238

066,337

0

144

0

36

March 2021

6,769

270,007720

67,057

3

147

1

37

April 20210

270,007

0

67,057

0

147

0

37

May 20210

270,007

0

67,057

0

147

0

37

June 2021

1,720

271,727

0

67,057

1

148

0

37

July 2021

0271,727

0

67,057

0

148

0

37

August 2021

0271,727

0

67,057

0

148

0

37

September 2021

370

272,0970

67,057

1

149

0

37

October 2021

6,388

278,485067,057

4

153

0

37

(Source) Prepared by the Asset Management Company based on ARES J-REIT Databook (October 2021)(Note)Verde Hotaka (land) is not included in the number of properties acquired as it is based on the properties already owned.

26

5. Output Indicators (Overview)
Properties Acquired During the Reporting Period(November 1, 2020-October 31, 2021)
In March 2021, we acquired "Nichii Home Nishikokubunji"(acquisition price:720 million
yen).
Paid nursing home

Name

Nichii Home Nishikokubunji

Location

Kokubunji-shi,Tokyo

Operator

Nichii Carepalace Company

Appraisal value

760 million yen

Acquisition price

720 million yen

Appraisal NOI yield

5.0%

Number ofrooms/Resident
capacity

46 rooms, 46 people

Acquisition date

March 29, 2021

[Change in Portfolio Status]
End of fiscal period ended July 2020
(11th FP)

Comparison withEnd of fiscal
period ended July
2020 (11th FP)

End of fiscal period ended July 2021
(13th FP)

Number of properties

36

Number of properties

37+1

Total acquisition price66.3 billion yen

Total acquisition price67.0 billion yen+7 billion yen

Total appraisal value

71.8 billion yen

Total appraisal value

72.5 billion yen+6 billion yen

5.6%

±0%

2 properties±0 property

13

+1

100%

±0%

12.7 years-1.1 years

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

5.6%
2 properties
12100%
13.8 years

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

27

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

Status of Use and Procurement of Funds（From November 1, 2020 to October 31,2021）
Use of funds

Fund procurement

Acquisition of healthcare
facilities-

Public offering

3.7 billion yen

Refinancing

3.7 billion yen

Social loan-

Expenses, etc. (Note)-

Own funds

-

Total

3.7 billion yen

Total

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



List of Social Loans and Social Bond （From November 1, 2020 to October 31,2021）

HCM procured 3.7 billion yen of social loan on January 29, 2021 and allocated the entire amountas funds for refinancing of borrowings associated with the acquisition of trust beneficiary rights
for healthcare facilities and Pre-deadline payment.
[List of Social Loans]
LenderBorrowingamountInterest rate

Drawdown
date

Repayment
date

Loan syndicate with
Sumitomo Mitsui
Banking Corporation
as an arranger

0.5billion yen

Fixed interest rate

January 29,
2021

January 31,
2024

Loan syndicate with
Sumitomo Mitsui
Banking Corporation
as an arranger

3.2billion yen 1-month TIBOR+0.45%

January 29,
2021

January 31,
2026

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

Allocation ratio

Unallocated amount

100%

None

Funds for refinancing and Pre-deadline payment[Borrowings for Refinancing]
LenderBalance

Drawdown date

Loan syndicate with
Sumitomo Mitsui
Banking Corporation
as an arranger

3.0 billion yen

March 20, 2018

Sumitomo Mitsui
Banking Corporation

0.7 billion yen

Refinancing date

January 29, 2021
June 29, 2020
Initial use of funds

・Acquisition funds for AQUAMARINE Nishinomiyahama, ASHEIM Hikarigaoka, ASHEIM Bunkyohakusan, SOMPO CARE La vie
Re Machidaonoji, SOMPO CARE 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, Bonsejour Yotsugi, Medical Home Bonsejour Itami
・Acquisition funds for Sunny Life Kamakura28

6. Initiatives
Environmental Initiatives


Basic Policy
Reducing the Environmental Burden
HCM strives for energy conservation and reduction of CO2 emissions by improving energy
efficiency at its properties and introducing facilities that contribute to energy saving. Also, HCM
aims for resource conservation and waste reduction with regard to capital expenditure of its
properties and in the formulation and implementation of their repair plans.



Environmental Performance Targets/Results
Basic Targets:
Results
2020(standard
year)

2021
（Note 2）Rate ofchange（Note 2）

To make the total annual energy data capture
rate (%) 100% across HCMʼs real estate portfolio

80.2%

－

－

CO2

To make the total annual GHG emission data
capture rate (%) 100% across HCMʼs real estate
portfolio

80.2%

Water

To make the total annual water consumption
data capture rate (%) 100% across HCMʼs realestate portfolio

74.3%

Item

TargetEnergy－－－－（Note 1）The data capture rate is calculated based on floor area
（Note 2）The results and rate of change in 2021 are not shown as they are unsettled as of the date of this document.

Long-term Targets:
Results
2020(standard
year)

2021
（Note 2）Rate ofchange（Note 2）

31,628,460

－

－

Item

TargetUnit

Consumption(kWh)

EnergyTo achieve a 5% reduction in
total annual energy
consumption on an intensity
basis across HCMʼs real estate
portfolio relative to thebaseline year by the target
year

Intensity(kWh/m2)210

To achieve a 5% reduction in
total GHG emissions generated
by energy consumption on an
intensity basis across HCMʼsreal estate portfolio relative tothe baseline year by the target
year

Emissions(t-CO2e)11,368Intensity(CO2e/m2)

0.076

Not to increase annual water
consumption on an intensity
basis across HCMʼs real estate
portfolio relative to thebaseline year by the target
year

Consumption
(m3)

GHG

Water

Intensity(m3/m2)418,711

3.0

－

－

－

－

－

（Note）The results and rate of change in 2021 are not shown as they are unsettled as of the date of this document.

29

－

－

－

－

－

6. Initiatives
Environmental Initiatives


Examples of Environmental Initiatives
 Green Lease
HCM introduced the green lease agreement with the tenant that rent a whole building of “KobeGakuentoshi Building (Hapine Kobe Gakuentoshi)” (2021).
This is truly a win-win initiative which enables both HCM and the tenant to receive economic
benefits while reducing environmental burden.

LED construction work

Healthcare & Medical
Investment Corporation

Property owner
Advantage︓
Increase of rent income

Part of reduced electricity cost, etc.
Pay in addition to the rent

TenantAdvantage︓
Reduction of electricity cost

Light Bulb
Replacement Cost
23％

Cost reduction for
the tenant due tothe Green Lease
50％

Electricity Cost
77％
69％ Reductionof Electricity Cost

Green Lease Fee(Add to the rent)
26％

Electricity Cost
24％
Before the
Implementation

After theImplementation・Based on the tenantʼs lighting equipment usage conditions, which were obtained through interviews, we
provisionally calculate that electricity consumption relating to lighting equipment will be reduced by about
69% as a result of performing work to convert the common-area lighting to LEDs.
・Among the benefits that the tenant is expected to receive with LED lighting that has a rated life of 40,000
hours, including reduction of lighting equipment-related electricity fees and reduction of bulb replacement
costs, a certain amount will be passed on to HCM in the form of a higher rent in the lease, based on agreen lease fee.
Green lease︓
Win-win action in which property owner and tenant work together to reduce
environmental burdens such as energy saving of real estate and improve theworking environment, and both sides can benefit from cost reductions, etc.

30

6. Initiatives
Environment Initiatives
 Energy Saving Renovation Work
Implemented high-efficiency renovation work for airconditioning equipment at "GreenLife
Moriguchi“ (2018)
 Replace the control board and compressor of the outdoor unit of the common area air
conditioner with ones with high energy-saving performance.
 Introduction of high-performance air conditioning management unit (collective managementof air conditioning in the building, scheduled operation setting) Utilize national subsidy→ Investment amount 13.5 million yen（of which, the subsidy is 6.4 million yen)Control board

New
compressor31

6. Initiatives
Social Initiatives


Basic Policy
Initiatives for Solving the Challenges of an Aged Society
HAM believes that HCMʼs continuous investment in healthcare facilities and its stable
management of assets will help towards solving the social challenges of an aged society.
Therefore, we have cooperated with various internal and external stakeholders including
unitholders, operators and hospital personnel, the sponsors, executives and employees.

32

6. Initiatives
Social Initiatives


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 (2019).
・ 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

33

Improvementof service
quality6. Initiatives
Social Initiatives
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 smartphones34

6. Initiatives
Social Initiatives
Effects of Introducing EGAO Link at ASHEIM Bunkyohakusan(July 2019 – September 2021)■ Reduction of care staff
As of the end September 2021, the number of persons had been reduced
by 3.9 people/month and working hours had been reduced by 686
hours/month.
July 31, 2019

Sept. 30, 2021

48 people

43 people-5 people

1.78:1

1.86:1-0.08

Full-time employees

14.5 people

13.5 people-1 people

Contract employees

2 people1 people-1 people

Part-time employees

5.6 people

6.5 people+0.9 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

23.0 people-3.9 people

Total working hours

4,734 hours

4,048 hours-686 hours

Number of residents
Ratio of staff toresidents

Difference■Reducing burden of night-shift work for care staff
1. We changed from a system with two night-shift positions and one seminight-shift position by eliminating the semi-night shift position, andas of September 30, 2021, we continue to implement this system.
2. As of September 30, 2021, even after eliminating the semi-night shift,night-shift staff were able to take two hours of break time every day.
3. Regular night inspections were terminated on October 1, 2019, but as of
September 30, 2021, we had not received any complaints fromclients or suggestions from the authorities.

Number of night
shiftsTotal working
hours/month
Regular rounds

July 31, 2019

Sept. 30, 2021

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)

35

Difference6. Initiatives
Social Initiatives
Effects of Introducing EGAO Link at ASHEIM Bunkyohakusan(July 2019 – September 2021)■Improving quality of nursing care services

Life rehabilitation
Individual activities
Polypharmacy
Hospitalization rate

July 31, 2019

Sept. 30, 2021

Difference

608 sessions

513 sessions-95 sessions

20 hours

117 hours+97 hours

7.2 medications

6.1 medications-1.1 medications

5.2%

7.8%

+2.6

Life Rehabilitation
The number of sessions offered decreased by 95, but this is due to achange in the criteria for recognizing activities as life rehabilitation. In fiscal
2019, additional hours gained through improving operational efficiency with
EGAO Link were used to provide life rehabilitation in the form of
maintaining residentsʼ residual functions. However, in fiscal 2021, thestandards were changed so that only activities that enable residents toimprove ADL (i.e., enable them to perform activities they cannot currently
perform in daily life) are counted as life rehabilitation.
Thus, while the count itself seems to have decreased, the majority ofresidentsʼ life rehabilitation sessions are continuing even amid the
protracted COVID-19 pandemic.
*Since activities aimed at maintaining use of residual functions, which wereconsidered as life rehabilitation until fiscal 2020, are still being provided but
counted separately, hours saved due to EGAO Link are in fact being used
for life rehabilitation.
Individual Activities
We have worked to improve operations with the goal of obtaining twohours per day, or 60 hours per month, for the provision of individual
activities (activities aimed at revitalizing each resident mentally andphysically). When EGAO Link was introduced, the number of hours was 20
per month, but as of September 30, 2021, it had increased by 97 hours.

36

6. Initiatives
Social Initiatives
Effects of Introducing EGAO Link at ASHEIM Bunkyohakusan(July 2019 – September 2021)
Polypharmacy
We have taken steps to improve polypharmacy (harmful effects due
combining multiple medications) by using sleep sensors and a medical
records software database.
With a target of 6.0 or less for the average number of medications used,
we are promoting optimal use of medications in accordance with residentsʼ
health condition in collaboration with partner medical institutions andpharmacies, based on sleep data and medical records data.
As a result, as of September 30, 2021, we have progressed to within 0.1
medications of the target.
Hospitalization Rate
As an index measuring the results of the initiatives implemented to date,
we have tracked “maintaining and increasing length of stay throughimprovement of the hospitalization rate.”
As of September 30, 2021, the hospitalization rate had increased by 2.6
percentage points, but it was 2.8% in July 2021 and 3.5% in August 2021,
so the figure has been trending downward recently.
*The September 2021 result occurred due to circumstances such as
hospitalized residentsʼ condition suddenly becoming more serious, leading
to their hospital stay being prolonged.
■Summary/Future Initiatives
In terms of future initiatives, while maintaining our current staffing systemand operations, we will strive to deliver science-based care by using datathat may be extracted from EGAO Link.
Based on the accumulated data, we will quantitatively identify issues
relating to residentsʼ meal, sleep, and activities/exercise, then implement
improvements to nursing care services.

37

6. Initiatives
Social Initiatives
Effects of Introducing EGAO Link at ASHEIM Hikarigaoka(July 2019 – September 2021)■ Reduction of care staff
As of the end of September 2021, the number of persons had been
reduced by 1.8 people per month, while working hours had been
reduced by 317 hours per month.
July 31, 2019

Sept. 30, 2021

83 people

79 people-4 person

2.04:1

2.04:1±0

Full-time employees

23.5 people

23.5 people±0 people

Contract employees

0 people0 person±0 people

Part-time employees

11.6 people

12.2 people+0.6 people

1 person

0 people-1 person

Nursing staff

4.4 people

3.0 people-1.4 person

Staff per month40.5 people

38.7 people-1.8 people

Total working hours

7,128 hours

6,811 hours-317 hours

Number of residents
Ratio of staff toresidents

Temporary workers

Difference■Reducing burden of night-shift work for care staff
1. We changed from a system with three night-shift positions and one seminight-shift position by eliminating the semi-night shift position, and asof September 30, 2021, we continue to implement this system.
2. As of September 30, 2021, even after eliminating the semi-night shift,night-shift staff were able to take two hours of break time every day.
3. Regular night inspections were terminated on October 1, 2019, but as of
September 30, 2021, we had not received any complaints from clientsor suggestions from the authorities.

Number of night
shiftsTotal working
hours/month
Regular rounds

July 31, 2019

Sept. 30, 2021

3.5 people

3 people-0.5 people

56 hours

48 hours-8 hours

4 times(approx. 4 hours)

0 times-4 times(-4 hours)

38

Difference6. Initiatives
Social Initiatives
Effects of Introducing EGAO Link at ASHEIM Hikarigaoka(July 2019 – September 2021)■Improving quality of nursing care services

Life rehabilitation
Individual activities
Polypharmacy
Hospitalization rate

July 31, 2019

Sept. 30, 2021

Difference

1,287 sessions

129 sessions-1,158 sessions

56 hours

71 hours+15 hours

7.7 medications

5.7 medications-2.0 medications

7.1%

2.2%

-4.9

Life Rehabilitation
The number of sessions offered decreased by 1,158, but this is due to achange in the criteria for recognizing activities as life rehabilitation. In fiscal
2019, additional hours gained through improving operational efficiency with
EGAO Link were used to provide life rehabilitation in the form of
maintaining residentsʼ residual functions. However, in fiscal 2021, thestandards were changed, so that only activities that enable residents toimprove ADL (i.e., enable them to perform activities they cannot currently
perform in daily life) are counted as life rehabilitation.
Thus, while the count itself seems to have decreased, the majority ofresidentsʼ life rehabilitation sessions are continuing even amid the
protracted COVID-19 pandemic.
*Since activities aimed at maintaining use of residual functions, which wereconsidered as life rehabilitation until fiscal 2020, are still being provided but
counted separately, hours saved due to EGAO Link are in fact being used
for life rehabilitation.
Individual Activities
Our goal is to obtain two hours per day, or 60 hours per month, for theprovision of individual activities (activities aimed at revitalizing eachresident mentally and physically). When EGAO Link was introduced, thenumber of hours was 56 per month, but as of September 30, 2021, it had
increased by 15 hours.

396. Initiatives
Social Initiatives
Effects of Introducing EGAO Link at ASHEIM Hikarigaoka(July 2019 – September 2021)
Polypharmacy
We have taken steps to improve polypharmacy (harmful effects due tocombining multiple medications) by using sleep sensors and a medical
records software database.
With a target of 6.0 or less for the average number of medications used,
we are promoting optimal use of medications in accordance with residentsʼ
health condition in collaboration with partner medical institutions andpharmacies, based on sleep data and medical records data.
When EGAO Link was first introduced, the average number of medications
was more than 1 over the standard, increasing the risk that harmful effects
would occur, but as of September 30, 2021, we have achieved a result of
0.3 below the target of 6.0.
Hospitalization Rate
As an index measuring the results of the initiatives implemented to date,
we have tracked “maintaining and increasing length of stay throughimproving the hospitalization rate.”
As of September 30, 2021, the hospitalization rate had decreased by 4.9
percentage points since the introduction of EGAO Link.
■Summary/Future Initiatives
In terms of future initiatives, while maintaining our current staffing systemand operations, we will strive to deliver science-based care by using datathat may be extracted from EGAO Link.
Based on the accumulated data, we will quantitatively identify issues
relating to residentsʼ meal, sleep, and activities/exercise, then implement
improvements to nursing care services.

40

6. Initiatives
Social Initiatives
Initiatives in Collaboration with the Sponsors

We secure opportunities for acquiring prime properties through a system of gathering quality
deals and information which utilizes the wide-ranging network of operators, developers, etc. anddiversified sponsor support.

Warehousing
functions

Property
information

Sponsor Support Companies
Sumitomo Mitsui
Finance and Leasing

Yoei

GinsenKobe Tochi
TatemonoSponsorsupportagreement

Muromachi
Building

Pipeline
supportagreement

Support Companies

SMBC Trust Bank Ltd. / RISA Partners, Inc.
Max-Realty Inc. / SMFL Mirai Partners Co., Ltd.

Property
information
Developers
Homebuilders

Wide-ranging
networks

Operators

OwnersAsset Management Company

Healthcare
Asset Management
Co., Ltd.

Property
information

Medical corporations(Individuals, business operators, funds, etc.)41

6. Initiatives
Social Initiatives

Actions Aimed at HAM Executives and Employees Career Development Initiatives / Framework for Ensuring that Executives and Employees Are
Suitably Motivated
In order for employees to improve their professional skills, HAM recommends the acquisition ofqualifications that are closely related to our business, such as a Real Estate Notary license or
ARES Certified Master license. The number of employees holding specialized qualifications(including employees on temporary assignment from the sponsors, etc.) is shown below.
Number of Employees Holding Qualifications as of the End of October 2021
Real Estate Notary

14

ARES Certified Master

10First-Class Architect

1

Property Manager

1

Certified Building Administrator

1

Small and Medium Enterprise Management Consultant

1Chartered Member of the Securities Analysts Association of
Japan

2

Medical Management Specialist, Second Grade1

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(Note 1）33

2017 Compliance Workshops

252018 Compliance Workshops

25

2019 Compliance Workshops

222020 Compliance Workshops

222021 Compliance Workshops(Note 2）13

（Note 1）Participation in external training is included in the number of compliance workshops held in 2016.
（Note 2）The figure for 2021 Compliance Workshops is based on the number of meetings held from April 2021 to October 2021.

42

6. Initiatives
Social Initiatives
 Actions Aimed at Securing Human Resources
At HAM, we continue to consider new hires for the purpose of ensuring that 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 FY2020: 53.3%), 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 the sponsor companies.
 Benefits and work-life balance Introduction of Cumulative Investment System
We have introduced a cumulative investment system that allows directly hired executives
and employees to purchase HCM investment units. It is expected that the introduction of thissystem will assist executives and employees with asset-building and make them more
conscious of improving business performance, which we believe will contribute to thecontinuous growth of HCM and improved unitholder value. Moreover, with the aim ofpromoting investment unit acquisition by employees and thereby enhancing the impact of
the system, we began providing financial incentives in April 2021.
 Vacation System
HAM provides a vacation system which includes leave for weddings, funerals, pregnancy,
childbirth, childcare, sick or injured children and family care.
 Health Examinations
Health examinations with items of inspection exceeding the legal requirement are conducted
once every year.

 Arrangement of the Office Environment
HAM implements the following in an effort to establish an environment that is conducive tothe work of employees.
・ Introduction of a system of remote working
・ Lending of laptops, monitors, etc.
・ Installation of multiple low-concentration ozone generators (Airness)
・ Installation of large-scale monitors in meeting rooms43

6. Initiatives
Social Initiatives
 Employee Satisfaction Survey
We conducted a questionnaire survey on employee satisfaction in 2019 through a third-party
investigation agency in order to understand employeeʼs perceptions of work as well as theconditions of the workspace and to realize an office environment that is conducive to work.
Employees were questioned anonymously on items such as resonance with the corporate
philosophy, worthwhileness of work and personal relationship and atmosphere of theworkplace. The results of the survey were shared with all employees. We will continue
introducing measures that will further increase the satisfaction of employees.
 Personnel Data
Fiscal 2018

Fiscal 2019

Fiscal 2020

Number of executives and employees *1

15

16

18

(Number of directly hired
executives and employees)

8

9

10

(Number of assigned
employees)

7

6

8

14/93.3%

15/93.8%

17/94.4%

1/6.7%

1/6.3%

1/5.6%

55

6

5/100%

5/100%

6/100%

Number of women / ratio

0/0%

0/0%

0/0%

Number of external committee members

2

2

2

0/0%

0/0%

0/0%

2/100%

2/100%

2/100%

Number of new hires

2

2

1

Number of employees leaving thecompany110Annual turnover rate *3

6.3%

5.9%

0.0%

Average monthly overtime hours

40.1

27.5

25.6

2 years and 5
months3 years and 0
months3 years and 4
months

11.7/55.9%

16.3/71.1%

10.9/53.3%

100%

100%

100%

Number of men / ratio
Number of women / ratio
Number of managers *2
Number of men / ratio

Number of men / ratio
Number of women / ratio

Average employment
Average paid leave acquired / acquisition
rate
Health examination/screening rate

*1: Numbers of employees are as of the end of each fiscal year (March 31)*2: General manager and above*3: The ratio of employees leaving the company to total employees as of the end of each fiscal period (March 31) are indicated446. Initiatives
Social Initiatives
Contribution to Local Communities
 Employment support for people with disabilities
At “Green Life Moriguchi” and “SHIP Senri Building,” hydroponic cultivation of vegetables iscarried out as a job assistance project for people with disabilities.
GreenLife Moriguchi（GREEN LIFE Co., Ltd.）GREEN FARM Senri Chuo（SHIP HEALTHCARE FOOD Co., Ltd.）45

6. Initiatives
Governance Initiatives


Corporate Governance Corporate Governance
The institutional operation of HCM is conducted by the General Meeting of Unitholders comprisedof HCMʼs unitholders in addition to the Board of Directors comprised of one executive director
and two supervisory directors, as well as the accounting auditor.
Directorsʼ compensations are stipulated by the Articles of Incorporation. The maximum
compensation for the executive director is 500,000 yen per month per person and the monthly
compensation is determined by the Board of Directors. The maximum compensation for thesupervisory directors is 500,000 yen per month per person and the monthly compensation isdetermined by the Board of Directors.
Furthermore, as employment is forbidden to HCM by the Act on Investment Trusts andInvestment Corporations, HCM does not employ any employees but entrusts the managementof its assets to the Asset Management Company.
 Separation of Executive Director of HCM and President & CEO of HAM
From November 1, 2020, the system in which President & CEO of HAM concurrently serves as
executive director of HCM was dissolved.
Asset

Investment corporation

managementcompany

Appropriate
check and balance
Executive Director

President & CEO

Yuji Fujise

Seiji Yoshioka

 Compensation for the Asset Management Company
Total compensation
12th fiscal period(ended Jan. 2021)

13th fiscal period(ended Jul. 2021)

200,051 thousand yen

197,621 thousand yen(Note) Apart from the above, 7,200 thousand yen of asset management fees were generated in the 13th fiscal period (ended Jul.
2021) for property acquisition included in the book value of real estate, etc.

 Compensation for the Auditor
Total compensation
Title

Name

Accounting
auditorPricewaterhouseCoopers
Aarata LLC

12th fiscal period(ended Jan. 2021)
7,500 thousand yen

46

13th fiscal period(ended Jul. 2021)
7,500 thousand yen

6. Initiatives
Governance Initiatives
 Executive Director and Supervisory Directors(Criteria and reasons for appointment)
Candidate directors are selected assuming that they are not disqualified by the stipulations of the Investment Trust Act
and other laws (Articles 98 and Article 100 of the Investment Trust Act and Article 244 of the Regulation for
Enforcement of the Investment Trust Act). The appointment of the following directors was resolved at the General
Meeting of Unitholders as per the following reasons.

Title

Executive
director

Supervisory
director

Supervisory
director

Name

Reason for assignment

Gend
er

Status of Attendance in Boardof Directors Meetings（Note）

Yuji Fujise

With his expertise as a lawyer and ample
hands-on experience and insight in the fieldof finance, Yuji Fujise is believed to be asuitable person to carry out the
management of HCM.

Male

10 times /10 times (100%)

Yasuo Shida

With his ample hands-on experience andinsight in the field of finance as well as trackrecord as a director, etc. in multiple
corporations, Yasuo Shida is believed to be asuitable person to supervise the operation of
the executive director as one with expertisein law and other fields.

Male

10 times /10 times (100%)

Sachihiko
Fujimoto

With his hands-on experience and insight asa certified public accountant and certified tax
accountant, Sachihiko Fujimoto is believed
to be a suitable person to supervise themanagement of the investment corporation
as one with expertise in accounting andtaxation.

Male

10 times /10 times (100%)（Note）Status of Attendance in Board of Directors Meetings are based on the number of Board of Directors Meetings held from
November 2020 to October 2021.

(Compensation of the Executive Director and Supervisory Directors)

Title

Name

Executive
Director

Seiji Yoshioka（Note）

Executive
Director

Yuji Fujise（Note）

Supervisory
Director

Yasuo Shida

Supervisory
Director

Sachihiko
Fujimoto

Total compensation
12th fiscal period (ended Jan. 2021)

13th fiscal period (ended Jul. 2021)－－

900 thousand yen

1,800 thousand yen

3,000 thousand yen

3,000 thousand yen（Note）Seiji Yoshioka stepped down from his position as an executive director of HCM on October 31, 2020.
In addition, Yuji Fujise was appointed as an executive director of HCM on November 1, 2020.

47

6. Initiatives
Governance Initiatives
 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 be acquired is ahealthcare facility or hospital real estate

When the candidate asset
Under management to be acquired isa property other than healthcare facility
orhospital real estatePreparation of evaluation reports andsubmission to the Investment
Department by the Healthcare
Business Promotion Department orby external experts (if necessary)

Instructions
forcancellationor change ofcontent

Approval by Compliance Officer
Confirmation of existence or non-existence of issues on legal
compliance and other compliance(hereinafter, "legal compliance issues")
When the transaction falls under the categoryof related-party transactions, or if
the Compliance Officer judges that itis necessary to consider the legal
compliance issues concerning the proposed income
plan.

Deliberation and resolution of theexistence or non-existence of legal
compliance issues by the Compliance Committee

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
and resolution by the Management Committee when it is judged that
there are issues such as legal violation in the procedures ofproceedings and the content of deliberation.)

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

 Appropriate Management of Conflicts of Interest


Related party is defined in broader terms than interested party, etc. under the Investment
Trust Law, and established a system to carry out transactions after conducting rigorous
examinations.
interested party, etc.
under theInvestment Trust Lawrelated party

Fee for property acquisition from related party or property transfer to related party
Acquisition or transfer price×0.5%（usually 1.0%）is upper limit48

6. Initiatives
Governance Initiatives
 External Members of the Management Committee and Compliance Committee
The members of HAMʼs Management Committee and Compliance Committee arecomprised of outside experts selected by the Board of Directors. Checks for conflicts ofinterest are set in place and the fairness, objectivity and validity of the committeesʼ
decision making are ensured. The external members of the Management Committee andCompliance Committee are as follows.
As of October 28,2021
Title

Name

History
October 1976
January 1980
January 1983
July 2000

December 2000
External
member oftheManagement
Committee

Mizuho Ogata

June 2005
April 2007
April 2011
June 2011
May 2014

November 2014
June 2015
April 2016
April 1992

External
member oftheCompliance
Committee

April 2000
April 2000
April 2010

Eriko Matsuno

April 2011
November 2014
October 2015
June 2019
June 2020

Joined Okochi Fudosan Kantei Jimusho, K.K.
Acquired real estate appraiser certificate
Started Ogata Appraisal OfficeSpecial member and Chairperson of Appraisal Division ofLand Policy Subcommittee, National Land Development
Council, Ministry of Land, Infrastructure, Transport andTourism
Established Ogata Appraisal Corporation Assumes post ofManaging Director (current)
Vice Chairperson of Japan Association of Real EstateAppraisersChairperson of Tokyo Association of Real EstateAppraisers
Advisor of Tokyo Association of Real Estate Appraisers(current)
Chairperson of Japan Association of Real Estate Appraisers
Chairperson of Land Valuation Council, Tokyo Regional
Taxation Bureau
External member of Management Committee, Healthcare
Asset Management Co., Ltd. (the Asset Management
Company) (current)
Advisor of Japan Association of Real Estate Appraisers(current)
Auditor of Concordia Financial Group, Ltd.
Entered Morgan Stanley Japan Limited (currently Morgan
Stanley MUFG Securities Co., Ltd.)
Certified as attorney (52nd period of Tokyo Bar Association)
Joined Nagashima Ohno & Tsunematsu
Opened Tokyo Jay Law Offices Assumes post of Chief
Lawyer(current)
Assumes post of Mediator of Financial Instruments
Mediation Assistance Center (current)
External member of Compliance Committee, Healthcare
Asset Management Co., Ltd. (the Asset Management
Company) (current)
Auditor of WealthNavi Inc. (current)Manager of Japan Womenʼs Bar Association (current)
External Director of Miraca Holdings Inc. (currently H.U.
Group Holdings, Inc.) (current)49

6. Initiatives
Governance Initiatives
Compliance Compliance System
HAM, fully cognizant of the significance of the fact that the asset management it conducts with the assets of HCM
constitutes the management of the funds of HCMʼs investors, in order to ensure the development of an appropriate
management structure, has set up the Compliance Office as a division responsible for matters pertaining to complianceof HAM, and has appointed a Compliance Officer as an individual responsible for supervising matters pertaining tocompliance, thereby ensuring the effectiveness of the function of internal oversight of other departments. The
appointment or the dismissal of the Compliance Officer will be processed through the resolution of the Board of
Directors.
The Compliance Officer, as the key person responsible for compliance at HAM, is charged with establishing andmaintaining the internal compliance structure of the company and raising the level of standards awareness within thecompany with regard to compliance with all applicable laws and rules. Also, the Compliance Officer will promoteawareness of compliance of executives and employees and disseminate compliance through the planning andimplementation of compliance trainings for executives and employees. To those ends, the Compliance Officer continuallymonitors to ensure that all operations conducted for the asset management of HCM by HAM comply with all applicablelaws and the Articles of Incorporation of HCM, and exercises supervision over the overall internal complianceenvironment in daily operations.
In view of the importance of the duties of the Compliance Officer, only a person having adequate investigative andsupervisory capacity for ensuring compliance with all applicable laws, regulations and rules will be appointed as theCompliance Officer.
 Formulation and Execution of the Compliance Manual
In order to ensure thorough compliance with laws, etc. (referring to laws, ordinances, regulations and other orders HAM
must observe in executing operations, the regulations of the Investment Trusts Association, Japan (the “Investment
Trusts Association”), the regulations of the financial instruments exchange to which HCM is listed, the Articles ofIncorporation of HCM, the Articles of Incorporation and in-house rules of HAM and the agreements concluded by HAM
based on such (including asset management entrustment agreements), etc.), HAM has established the Compliance
Rules and the Compliance Manual, has formulated the Compliance Program, which is a concrete practice plan forrealizing compliance with laws, etc., and will strive to implement compliance with laws, etc. in accordance with theprogram.

 Initiatives to Prevent Corruption, Eliminate Anti-Social Forces, and Prevent Money Laundering and Terrorist Funding
HAM has established a system to strictly prohibit and prevent corruption, such as bribery, money laundering,embezzlement, and other violations of the law. This includes the establishment of the Rules on Prevention of Bribery,
Reception of Gifts and Rules on Handling of Verifications on Transactions.
As a basic policy for eliminating anti-social forces, HAM stipulates that “it will sever any ties whatsoever with anti-social
forces, reject unjust demands from them, engage in no backroom deals with and provide no funds to them, and, if
necessary, take legal action against them and adopt a company-wide response to anti-social forces while collaboratingwith specialized external organizations.”
Based on this basic policy, HAM severs all ties with anti-social forces, ensures appropriate management of HAM, andprevents significant harm to stakeholders, including executives and employees, and shareholders, and with the aim offulfilling HAMʼs social responsibilities, it has established Regulations for Eliminating Anti-Social Forces and Manual for
Eliminating Anti-Social Forces, etc., which stipulate policies and specific procedures for handling their elimination.
Furthermore, it has established a department for handling anti-social forces and a supervisory officer, and throughinternal compliance training, it aims to comprehensively inform all executives and employees about the policies foreliminating anti-social forces and the methods of handling them.

50

6. Initiatives
Governance Initiatives
 Establishment of Internal Reporting System
HAM has established a system for consultation and appropriate handling of reports related toviolations and other questionable acts or facts in relation to laws and other societal standards
and the Compliance Manual (compliance-related information). Both internal and external pointsof contact are in place.

 Compliance workshops
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.

51

6. Initiatives
Governance Initiatives


Risk Management
 Risk Management
With regard to the various risks concerning investment management, HCM observes the rules stipulated in theInvestment Trust Act and other related laws and regulations. Also, HAM establishes appropriate company regulations forsuch risks, sets forth necessary organizational structures and educates executives and employees in order to enhancetheir mindfulness of compliance, among other measures.
The specific initiatives are as follows.
A. HCM
HCM is managed by the Board of Directors comprised of one executive director and two supervisory directors. The
Board of Directors convenes at least once every three months as necessary to pass resolutions pertaining to matters
stipulated by law and HCMʼs Board of Directorsʼ Rules and report on the status of execution of operations by HAM andexecutive director of HCM. This system enables supervisory directors that are independent from HAM and interested
parties, etc. to supervise the status of execution of operations. Also, the supervisory directors may request reports
concerning the operations and financial status of HCM from HAM, the asset custody company, etc. and conduct
necessary investigations.
B. HAM
In order to appropriately manage various risks, HAM has formulated the Risk Management Rules as company
regulations, stipulating that significant risks must be reported to the Board of Directors without delay. Additionally, HAM
has formulated the Related Party Transaction Rules in order to prevent harm to the interests of HCM, thereby
establishing strict rules against conflicts of interest. Regarding compliance, HAM has established the Compliance
Regulations and the Compliance Manual to promote thorough legal compliance, has formulated the Compliance Program,which is a concrete practice plan for realizing compliance with laws, etc., and will strive to implement compliance withlaws, etc. in accordance with the program.
Furthermore, HAM has formulated the Internal Audit Rules to secure adequacy of operations and promote efficientmanagement, thereby establishing a self-monitoring system.

 Internal Audits
A. Organization and Details of Internal Audits
The internal audits of HAM are conducted by the Internal Audit Office and Internal Audit Office Manager. Moreover,when the Compliance Officer also occupies the post of Internal Audit Office Manager, the Head of Financial &Administration Department shall have authority over and owe duty for internal audits concerning the operations of theCompliance Officer and Compliance Office.
(The person appointed to the post of Head of Financial & Administration Department shall be one with sufficientknowledge and experience for proper execution of internal audits of the Compliance Officer and Compliance Office.)
The internal audits will target all organizations and divisions and their operations.
The Internal Audit Division formulates an internal audit plan upon understanding the conditions of internal management,risk management, etc. of audited divisions. In principle, internal audits shall be conducted based on the internal audit
plan at least once a year (periodic audits). However, audits will also be conducted by special order of the Representative
Director (special audits). Special audits shall be prescribed by the Representative Director when it is recognized to beparticularly necessary in cases where, during an internal audit planʼs target period, facts contrary to the conditions ofinternal management, risk management, etc. of audited divisions grasped as of the formulation of the internal audit plan
come to light.
When internal audits are being conducted, each division must present and explain documents, registers, etc. to theInternal Audit Office and Internal Audit Office Manager as requested and cooperate for the smooth implementation of
the audit.

52

6. Initiatives
Governance Initiatives
B. Remedial Measures Based on Results of Internal Audits
The Internal Audit Office and Internal Audit Office Manager shall notify the audited divisions of the audit results. The
Representative Director may issue recommendations for improvement to an audited division in light of the audit results.
The audited division shall then prepare an improvement plan and, having effected the improvement, report to theRepresentative Director and Internal Audit Office Manager with regard to the status of improvement. The
Representative Director and Internal Audit Office Manager shall then deliberate the content of the report, thereby
confirming the effective functioning of the internal audit.

 BCP Measures
In preparation for emergency situations that may occur in the course of management of HCMʼsassets due primarily to large-scale earthquakes, fires, typhoons, storms, flooding, abnormal
weather and other natural disasters, other man-made disasters such as terrorist attacks andcyberattacks, infectious diseases such as novel influenza viruses or damage/disruption of
lifelines, HAM has established a Crisis Management Manual for a policy of measures ofpreparation, ensuring of chain-of-command, prevention of spread of damage and continuationof important operations for the purpose of promptly ensuring the safety of executives andemployees, reducing risk and damage, preventing an increase of loss for unitholders andstakeholders, ensuring continuation of important operations and early recovery, etc.
Also, HAMʼs office, general warehouse, etc. are equipped with three daysʼ worth of emergency
food and water for executives and employees and other stockpiles and equipment.

 Confirmation of Safety
In order to quickly grasp the situation and safety of executives and employees in a disaster,
HAM has introduced a system of confirming safety using the internet and emails as part of thecompanyʼs crisis management strategy. Safety confirmation trainings are conducted at least
once a year. The participation rate in fiscal 2021 was 100%.

53

７．Social Finance
SDGs Social Finance Framework

JCR Social Finance Framework Evaluation The highest evaluation
Social １(F)SocialbondSocialloanDate of issue︓January 30, 2020
Amount of issue ︓2 billion yen

Period︓10 years
Interest rate︓0.78%

Social loan balance: 21.15 billion yen(As of July 31, 2021) (about 68% of the loan balance)※ New loans after January 2019 are all social loans.

What Is Social Finance?

Social Finance refers to finance with issuance of bonds and loans “that raise funds for new and existing
projects with positive social outcomes." Specifically, it is a financing approach where (i) The use of funds islimited to projects with a high degree of contribution to society, (ii) The funds are reliably tracked andmanaged, 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 in recent
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 financingthat 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 the source ofJapanʼs competitiveness and “new growth,” as both the Paris Agreement and Sustainable Development
Goals (SDGs) pursue such a society. Against this backdrop, we have confirmed that it is essential todevelop 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 institutionsʼ responses to the global
trend in mind… Given Japanʼs financial structure centered on indirect finance, encouraging considerations
to ESG in loan 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 investments with a highdegree of social contribution when HCM raises funds through borrowings or issuance of bonds as social
finance as well as defining the confirmation and management system of the status 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 in healthcare
facilities and refinancing. In addition, it also defines the criteria and process of project selection, fundmanagement method, status of allocation of funds and reporting on social outcome.

54

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 HCMʼs 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 JCRʼs website.
Evaluation item

ResultSocial Finance Framework Evaluation

Social1 (F)Social Loan EvaluationhSocial1

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

 nhttps://www.jcr.co.jp/en/
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 facilities55

7. Social Finance
List of Borrowings (as of the end of the fiscal period ended July 2021)
Socialfinance

Balance (million
yen)

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

-

-

○
-

Sumitomo Mitsui Banking
Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank
Resona Bank
77 Bank
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
San ju San Bank
Higashi-Nippon Bank

-

○

○

○

○

○

Sumitomo Mitsui Banking
Corporation○

Sumitomo Mitsui Banking
Corporation
Sumitomo Mitsui Trust Bank
Resona Bank
Dai-ichi Life Insurance
Hiroshima Bank
The Bank of YokohamaInterest rate (%)

Fixed/
Variable

Drawdown date

Repayment deadline

Security

2,000

0.77853

Fixed

March 3, 2017

January 31, 2022

Unsecured andunguaranteed

3,000

0.78178

Fixed

March 21, 2017

January 31, 2022

Unsecured andunguaranteed

2,000

0.45353

Fixed

February 1, 2019

January 31, 2022

Unsecured andunguaranteed

1,000

0.89375(Note)

Fixed

March 3, 2017

January 31, 2024

Unsecured andunguaranteed

4,000

0.57650(Note)

Fixed

March 20, 2018

January 31, 2023

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

0.54000(Note)

Fixed

January 31, 2020

January 31, 2025

Unsecured andunguaranteed

500

0.35000

Fixed

January 29, 2021

January 31, 2024

Unsecured andunguaranteed

3,200

0.48925(Note)

Fixed

January 29, 2021

January 31, 2026

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

List of investment corporation bond (as of the end of the fiscal period
ended July 2021)
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

56

Payment date

Redemption date

CreditratingSecurity

January 30, 2020

January 30,2030

A
（JCR）

Unsecured andunguaranteed8. Output Indicators
Portfolio Map

Paid nursing home

33
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
26 Hanakotoba Shin-YokohamaServiced housing for the elderly

27 Hanakotoba Shin-Yokohama II

1

SOMPO CARE Sompo no ie S Awajiekimae

2

SOMPO CARE Sompo no ie S Kobekamisawa

29 Verde Minowa

Medical service-related facilities, etc.

30 Verde Hotaka

1

Niigata Rehabilitation Hospital

31 Sunny Life Kita-Shinagawa

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

28 Hanakotoba Odawara

SHIP SENRI BUILDING

32 Sunny Life Kamakura
33 Nichii Home Nishikokubunji(Note) As for the output indicators in this report, the data announced as of the end of the fiscal period ended July 2021 (13th fiscal
period) is indicated unless otherwise specified.

57

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

Property name

No. ofOccupancy
leasable area leased area
tenants
rate (%)(m2)(m2)(companies)(Note 6)(Note 3)(Note 4)(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

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

1,962.89

1

100.0

Paid nursing
home-16

Medical Home Bonsejour Itami

SRC/11F (exclusivelyowned portion)

Mar. 3, 1989

2,129.87

2,129.87

1

100.0

Paid nursing
home-17

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-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

58

8. Output Indicators
Summary of Buildings and Their Leasing Status
No. ofOccupancy
leased area
tenants
rate (%)(m2)(companies)(Note 6)(Note 4)(Note 5)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

Nichii Home Nishikokubunji

S/3F

Sep. 29, 1990

1,559.99

1,559.99

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

-

-

187,918.74

187,918.74

47

100.0

Property namePaid nursing
home-31
Paid nursing
home-32
Paid nursing
home-33
Servicedhousing forthe elderly-1
Servicedhousing forthe elderly-2
Medicalservicerelated
facilities,
etc.-1
Complex of
paid nursing
homes,
medicalservicerelated
facilities,
etc.-1

leasable area(m2)
(Note 3)Structure/
Number of floor(Note 1)

Property No.

(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, 2021,
and is rounded to one decimal place.

59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
Paid nursing
home-33
Servicedhousing for theelderly-1
Servicedhousing for theelderly-2
Complex of paid
nursing homes,
medical servicerelated facilities,
etc.-1

Property name

Type of facility

Operator

AQUAMARINE
Nishinomiyahama
Bonsejour Chitosefunabashi

Paid nursing home with GREEN LIFE Co., Ltd.
care service
Paid nursing home with Benesse Style Care Co., Ltd.
care service
Paid nursing home with Benesse Style Care Co., Ltd.
Bonsejour Hino
care service
nursing home with Benesse Style Care Co., Ltd.
Bonsejour Musashi-shinjo Paid
care service
Medical Rehabilitation
Paid nursing home with Benesse Style Care Co., Ltd.
Home Bonsejour
care service
Hadanoshibusawa
Medical Rehabilitation
Residential type paid
Benesse Style Care Co., Ltd.
Home Bonsejour Komaki nursing home
Paid nursing home with AS PARTNERS Co., Ltd.
ASHEIM Hikarigaoka
care service
nursing home with AS PARTNERS Co., Ltd.
ASHEIM Bunkyohakusan Paid
care service
SOMPO CARE
Paid nursing home with Sompo Care Inc.
La vie Re Machidaonoji
care service
Paid nursing home with Sompo Care Inc.
SOMPO CARE
La vie Re Azaminocare service
SAWAYAKA
Paid nursing home with Sawayaka Club Co., Ltd.
Tachibanakancare service
Paid nursing home with Sawayaka Club Co., Ltd.
SAWAYAKA Mekarikan
care service
Paid nursing home with Sawayaka Club Co., Ltd.
SAWAYAKA Tagawakancare service
GOOD TIME HOME Fudo- Paid nursing home with JAPAN LIFEDESIGN Inc.
mae
care service
Paid nursing home with Benesse Style Care Co., Ltd.
Bonsejour Yotsugi
care service
Medical Home Bonsejour Residential type paid
Benesse Style Care Co., Ltd.
Itami
nursing home
Kobe Gakuentoshi
Paidnursinghome
with
Building(Hapine Kobe
GREEN LIFE Co., Ltd.
care service
Gakuentoshi)

Paid nursing home with GREEN LIFE Co., Ltd.
GreenLife Moriguchi
care service
Hapine Kobe Uozaki
Paid nursing home with GREEN LIFE Co., Ltd.
Nibankancare service
nursing home with Benesse Style Care Co., Ltd.
Granda Tsuruma-Yamato Paid
care service
Smiling Home Medice
Paid nursing home with GREEN LIFE HIGASHI NIHON
Adachicare service
Co., Ltd.
AIKOEN ICHIBANKAN
Paid nursing home with Medical Corporation AIKOKAI
Building
care service
Paid nursing home with Proud Life Inc.
Hanakotoba Minami
care service
Paid nursing home with Proud Life Inc.
Hanakotoba Miura
care service
SOMPO CARE
Paid nursing home with Sompo Care Inc.
La vie Re Hamacare service
Kawasaki
Hanakotoba ShinPaid nursing home with Proud Life Inc.
Yokohama
care service
Hanakotoba ShinPaid nursing home with Proud Life Inc.
Yokohama II
care service
Paid nursing home with Proud Life Inc.
Hanakotoba Odawara
care service
Paid nursing home with Verde Corporation
Verde Minowa
care service
Paid nursing home with Verde Corporation
Verde Hotaka
care service
Sunny Life KitaPaid nursing home with Kawashima Corporation
Shinagawacare service
Paid nursing home with Kawashima Corporation
Sunny Life Kamakuracare service
Nichii Home
Paid nursing home with Nichii Carepalace Company
Nishikokubunji
care service

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

No. ofresidents(persons)(Note 1)

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

90

100

100

100.0

June 7, 2021

42

47

43

91.5

May 1, 2021

56

58

50

86.2

May 1, 2021

46

49

44

89.8

May 1, 2021

100

101

97

96.0

May 1, 2021

124

165

131

79.4

May 1, 2021

83

89

82

92.1

July 1, 2021

50

52

43

82.7

July 1, 2021

163

169

113

66.9

April 1, 2021

145

145

122

84.1

April 1, 2021

104

104

104

100.0

April 1, 2021

95

95

92

96.8

April 1, 2021

60

60

60

100.0

April 1, 2021

61

67

58

86.6

April 1, 2021

61

65

56

86.2

May 1, 2021

62

64

55

85.9

April 1, 2021

131

138

133

96.4

June 10, 2021

155

189

189

100.0

April 1, 2021
June 7, 2021

47

47

47

100.0

73

90

69

76.7

May 1, 2021

82

82

75

91.5

June 7, 2021

90

90

84

93.3

June 1, 2021

51

51

48

94.1

April 1, 2021

53

54

52

96.3

June 1, 2021

58

58

51

87.9

April 1, 2021

136

136

115

84.6

June 1, 2021

29

30

28

93.3

June 1, 2021

60

65

61

93.8

April 1, 2021

174

206

193

93.7

April 1, 2021

121

174

170

97.7

April 1, 2021

66

66

65

98.5

November 1,
2020

128

128

125

97.7

April 26,2021

46

46

45

97.8

April 1, 2021

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

137

137

119

86.9

July 1, 2021

SOMPO CARE Sompo noie S Kobekamisawa

Serviced housing for the Sompo Care Inc.
elderly

85

85

71

83.5

April 1, 2021

SHIP SENRI BUILDING(Note 4)

Hospital
Paid nursing home

181

200

200

100.0

April 1, 2021

3,245

3,502

3,190

91.1

-

Total

-

GREEN LIFE Co., Ltd.
-60

8. Output Indicators(Note 1)
(Note 2)
(Note 3)(Note 4)”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 with care service, and the overview of the facility concerning the paid
nursing home is indicated in the above table.

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

Medical service-related facilities, etc.-1

Property name

Niigata Rehabilitation Hospital

Operator

Medical Corporation AIKOKAI

Date of establishment

Type of facility

Hospital

Authorized number ofbeds

Subject of
medicaltreatment

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

Facility certification

Main facility
criteria(Hospitalization
fee)
External
evaluation

June 1990(Established as Oyama Hospital, the precursor)
168 beds (general bed: 108 beds/
convalescent-stage beds: 60 beds)
Training facility certified by the Japanese Associationof Rehabilitation Medicine

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

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

Main facility
criteria(Hospitalization
fee)

External
evaluation

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
West 4th floor (50 beds) Facilities for the disabled,
etc. 2 10:1 Basic hospitalization fee
West 3rd floor (50 beds) Facilities for the disabled,
etc. 2 10:1 Basic hospitalization fee
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 forrehabilitation at recovery stage1-(Note) “SHIP SENRI BUILDING” has a hospital and a paid nursing home with care service, and the overview of the facility concerning the
hospital is indicated in the above table.

61

8. Output Indicators
Earnings Performance
Property name

Unit: thousands of yen

Real estate lease business revenue
Rent
Other
revenuerevenue

From February 1, 2021 to July 31, 2021
Real estate lease business expenses
Property Outsourcin
RepairInsurancetax
g expenses expenses
expenses

Depreciation

Other

NOI
(Note 3)

AQUAMARINE
Nishinomiyahama
Bonsejour
Chitose-funabashi

25,746

4,271

2,100

2,476

232

16,265400

57,862

5,583

1,794

225

-

112

3,048

402

21,405

Bonsejour Hino

5,070

1,240

214

-

85

3,130

400

19,493

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

4,103

1,012

167

-

75

2,447

400

16,172

8,402

1,816

213

-

154

5,817

400

21,122

14,138

4,555

201

-

355

8,627

400

39,618ASHEIM Hikarigaoka

17,767

3,824

381

2,100

196

10,864400

38,847ASHEIM Bunkyohakusan

12,141

2,575

381

-

129

8,653

400

38,700

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

45,989

5,950

780

202

392

38,264400

97,27534,124

4,703

780

1,326

285

26,629400

77,70526,512

2,665

1,140

-

371

21,936400

47,277SAWAYAKA Mekarikan

26,049

2,963

1,140

-

273

21,272400

43,456SAWAYAKA Tagawakan

9,033

1,109

1,140

630

119

5,634

400

12,285GOOD TIME HOME
Fudo-mae

15,216

3,051

600

404

182

10,579400

46,362

Bonsejour Yotsugi

4,925

940

223

-

73

3,286

400

20,766

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

6,520

1,377

371

-

111

4,260

400

13,97753,353

9,564

900

1,846

579

40,063400

112,210

36,156

6,920

1,363

2,671

379

24,421

400

108,264

9,645

1,395

1,200

89

90

6,470

400

24,325Granda Tsuruma-Yamato

7,412

1,934

618

150

152

4,158

400

26,994

Smiling Home Medice
AdachiAIKOEN ICHIBANKAN
Building

16,202

3,279

540

793

177

11,013400

60,018

8,542

2,554

780

65

112

4,630

400

22,749Hanakotoba Minami

10,189

1,539

600

2,456

79

5,114

400

25,524

Hanakotoba Miura

8,885

1,549

600

432

88

5,814

400

17,32918,816

3,433

2,770

472

206

11,533400

45,06819,191

4,383

900

4,715

249

8,543

400

51,264
11,010

GreenLife Moriguchi

Not disclosed(Note 2)

Hapine Kobe Uozaki
Nibankan

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

5,779

2,499

600

210

92

1,977

400

Hanakotoba Odawara

8,538

1,366

600

603

99

5,469

400

24,531

Verde Minowa

25,650

5,190

1,020

-

508

18,531400

56,806

Verde Hotaka

25,001

2,177

1,020

776

249

20,378400

45,482Sunny Life
Kita-Shinagawa

10,181

2,794

600

-

119

6,265

401

45,584

Sunny Life Kamakura

12,745

2,796

720

-

178

8,650

400

38,804

Nichii Home
Nishikokubunji
SOMPO CARE
Sompo no ie S
Awajiekimae
SOMPO CARE
Sompo no ie S
Kobekamisawa
Niigata Rehabilitation
Hospital

2,026

-

450

-

61

1,240

273

13,661

27,064

4,911

510

-

290

20,952400

58,345

16,838

2,904

510

160

183

12,680400

36,131

27,211

9,671

1,030

-

387

15,622500

78,291

80,23927,500

1,500

-

1,183

49,655400

341,218

690,998

142,218

28,893

22,5798,622

473,904

14,7781,855,945

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

2,073,038

2,062,148

10,889All figures indicated are rounded down to thousand yen.
”Real estate lease business revenue,” “rent revenue” and “other revenue” of each property are not disclosed as consent for disclosure has notbeen obtained from tenants. The total is the sum of amounts received as rent for the fiscal period under review based on the lease agreements.
“NOI”=Real estate lease business revenue – Real estate lease business expenses + depreciation and amortization

62

8. Output Indicators
Summary of Appraisal Report

Property
No.

Property nameAppraisalcompany

Paid 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
Paid nursing
home-6

Medical Rehabilitation
Home Bonsejour
Hadanoshibusawa
Medical Rehabilitation
Home Bonsejour
Komaki

Paid nursing
home-7ASHEIM 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

Paid nursing
home-8ASHEIM
Bunkyohakusan

Japan Real Estate
Institute

Paid nursing
home-9SOMPO CARE
Japan Real Estate
La vie Re Machidaonoji InstitutePaid nursing
home-10

SOMPO CARE
La vie Re Azamino

Paid nursing
home-11

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

Appraisal
NOI(millionsof yen)(Note 3)

Appraisal
NOI yield(%)(Note 4)

2,060

2,070

5.3

2,050

5.0

5.5

117

6.0

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

1,490

1,490

4.8

1,480

4.6

5.0

76

5.5

1,650

1,660

4.4

1,630

4.2

4.6

74

5.1

3,780

3,820

4.9

3,740

4.7

5.1

193

5.3

Japan Real Estate
Institute

3,230

3,270

4.6

3,190

4.4

4.8

156

5.1

SAWAYAKA
Tachibanakan

Japan Real Estate
Institute

1,520

1,530

5.6

1,500

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

377

380

5.8

374

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.

4,450

4,510

4.7

4,430

4.5

4.9

227

5.2

Paid nursing
home-18

GreenLife Moriguchi

Daiwa Real EstateAppraisal Co., Ltd.

4,400

4,460

4.6

4,370

4.4

4.8

220

5.3

Paid nursing
home-19

Hapine Kobe Uozaki
Nibankan

974

987

4.7

968

4.5

4.9

48

5.2

1,060

1,070

4.7

1,050

4.8

4.9

53

5.3

2,500

2,540

4.6

2,480

4.7

4.8

120

5.3

860

864

5.2

858

5.3

5.4

45

5.8

1,180

1,200

4.6

1,160

4.4

4.8

56

5.2

668

676

4.8

664

4.9

5.0

35

5.6

1,810

1,840

4.6

1,780

4.4

4.8

89

5.2

2,230

2,260

4.5

2,200

4.3

4.7

109

5.2

376

378

5.1

373

4.9

5.3

21

5.8

940 4.8〜5.0

5.1

49

5.6

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

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

946

961

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-3063

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

Property No.

Property nameAppraisalcompany

Appraisalvalue(millionsof yen)Direct capitalization
methodDCF method

Indicated
Capitalization
value
rate
(millions of
(%)
yen)

Indicatedvalue(millions ofyen)

Discount
rate(%)(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.

2,000

2,030

4.4

1,980

4.2

4.6

90

4.9

Paid nursing
home-32

Sunny Life Kamakura

The Tanizawa
Sogo Appraisal
Co., Ltd.

1,580

1,600

4.5

1,570

4.6

4.7

76

5.3

Paid nursing
home-33

Nichii Home
Nishikokubunji

Daiwa Real
Estate Appraisal
Co., Ltd.

762

772

4.3

757

4.1

4.5

36

5.0

Serviced housing
for the elderly-1

SOMPO CARE Sompo
no ie S Awajiekimae

Japan Real Estate
Institute

2,170

2,190

5.2

2,140

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

153

7.4

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

14,20014,4004.5

14,100

4.5〜4.6

4.7

679

5.2

72,53173,378―71,896

―

―

3,771

5.6

Total

(Note 1) Figures are based on appraisal reports with appraisal date of July 31, 2021.
(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 second fiscal years and 5.0% from the third fiscal year, and for “SHIP SENRI
BUILDING," 4.5% for the first to second fiscal years and 4.6% from the third fiscal year.
(Note 3) ”Appraisal NOI” indicates net operating income obtained by direct capitalization method stated in real estate appraisal reportwith July 31, 2021 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.

64

8. Output Indicators
Capital Expenditures of Assets Under Management

12th FP (Ended January 2021) Actual
Name of real estate, etc.

PurposeConstruction costs(thousands of yen)

PeriodSHIP Senri Building(Toyonaka-shi, Osaka)Renewal of Entrance and exit
system

From: July 2020
To: August 2020

36,103

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

Renewal of Elevator

From: September 2020
To: November 2020

13,305

Hanakotoba Shin-Yokohama(Yokohama-Shi, Kanagawa)

Renovation of rooftop
waterproof

From: November 2020
To: December 2020

12,531-

132,622

Other real estate, etc.

Total



194,563

13th FP (Ended July 2021) Actual
Name of real estate, etc.

Construction costs(thousands of yen)

Purpose

PeriodNiigata Rehabilitation Hospital(Niigata-shi, Niigata)Renovation of rooftop waterproof(East, West and South side of North
wing)

From: April 2021
To: July 2021

35,400ASHEIM Hikarigaoka(Nerima-ku, Tokyo)

Renovation of rooftop waterproof

From: June 2021
To: July 2021

21,600

Hanakotoba Shin-Yokohama II(Yokohama-Shi, Kanagawa)

Renovation of exterior walls

From: October 2020
To: April 2021

17,532-92,800

Other real estate, etc.

Total



167,332

14th FP (Ending January 2022) Plan

Name of real estate, etc.

Niigata Rehabilitation Hospital(Niigata-shi, Niigata)
SOMPO CARE Sompo no ie S
Awajiekimae(Osaka-shi, Osaka)
SOMPO CARE Sompo no ie S
Kobekamisawa(Kobe-shi, Hyogo)

Estimated construction costs(thousands of yen)
Total
Payment
Total
amountduringamountalready
13th FP
paid

PurposeScheduled period

Renovation of rooftop
waterproof(South wing)
and Renovation of exterior
walls of machine room andstorage room forhazardous materials.

From: October 2021
To: January 2022

30,700--Renovation of exterior
walls

From: October 2021
To: January 2022

27,900--Renovation of exterior
walls

From: October 2021
To: January 2022

21,300--65

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

Operator name

Headquarters location(Note 1)

Representative(Note 1)

Founded(Note 1)

GREEN LIFE Co., Ltd.

3-20-8 Kasuga, Suitashi, Osaka

Representative
Director
Nobuyuki Tamai

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
Nobuyuki Tamai

July
2003

50

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

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

Kyowakai Medical Corporation

16-5, Chuocho,
Kawanishi-shi, Hyogo

Director
Toru Kitagawa

August
1982

4,760

-

Benesse Style Care Co., Ltd.

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

Proud Life Inc.

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

Representative
Director
Hiroshi Sonoda

July
2006

3

Consolidated subsidiary ofSony Group Corporation, which
is listed on the TSE First
Section

Sawayaka Club Co., Ltd.

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

Representative
DecemberDirector
2004
Fumiharu Uchiyama

200

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

Kawashima Corporation

248-2, Higashiinohara,
Kimitsu-shi, Chiba

Representative
Director
Teruo Kawashima

September
1990

50

Unlisted company

Verde Corporation

839-4, Kamishiba,
Misatomachi, Takasakishi, Gunma

Representative
Director
Tomoyuki Higuchi

June
1970

30

Unlisted company

Medical Corporation AIKOKAI

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

Director
Hiromu Ikeda

November
1993

1,053

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.

2-9, Kandasurugadai,
Chiyoda-ku,Tokyo

Representative
Director
Yukio Akiyama

June
1964

80

Unlisted company
Consolidated subsidiary of
NICHIIGAKKAN CO., LTD.

JAPAN LIFE DESIGN Inc.

Nichii Carepalace Company(Note 1)
(Note 2)Attribute

A medical corporation which
belongs to NSG Group withsales of over 110 billion yen(Note 2)

“Headquarters location,” “Representative,” “Founded” and “Capital stock or total assets” are based on the information in theregistry as of July 1, 2021 (however, Nichii Carepalace Company as of October 11, 2021).
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 2019 based on NSG Groupʼs website.

66

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

5th FP

6th FP

7th FP

Benesse Style Care Co., Ltd.
Mr. Kazuhiro Takanawa, General Manager of Living Facilities Department
Mr. Takayoshi Hasegawa, Home Chief of Granda Tsuruma-Yamato
AS PARTNERS Co., Ltd.
Mr. Koji Yamamoto, Director, Executive Officer and General Manager of Senior Home
Operation Department
Mr. Masataka Kitamura, Home Chief of ASHEIM Hikarigaoka
Sompo Care Inc.
Sompo Care Next Inc.
Mr. Isao Yamakawa, Executive Officer
Ms. Terumi Ogata, Home Chief of SOMPO CARE La vie Re Machidaonoji
AS PARTNERS Co., Ltd.
MR. Takeshi Uemura, Representative Director, President and CEO
Mr. Ryosuke Nakamoto, General Manager of Senior Home Management Department andGroup Leader of Operation Management Group

8th FP

Kyowakai Medical Corporation
Mr. Toru Kitagawa, Director

9th FP

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

10th FP

11th FP

12th FP

13th FP

Verde Corporation
Mr. Tomoyuki Higuchi, CEO
Mr. Kenji Okubo, Director and General manager
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.
Sompo Care Inc.
Ken Endo, COO and Representative Director
Shigeru Ando, CMO, Director and Executive Officer
Nichii Carepalace Company
Yukio Akiyama, President & Representative Director
Osamu Sanno, Director and Executive Officer

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

67

9. Actions of Each Operator
Feature: Interview
Sompo Care Inc.

We are developing personnel who has “caring pride” and transforming the future of nursing care(from the 12th Investment Management Report)
Interview:

Mr. Ken Endo, COO and Representative Director, Sompo Care Inc.
Mr. Shigeru Ando, CMO, Director, and Executive Officer, Sompo Care Inc.

―― Could you tell us about the history of Sompo Care to date and give us an overview of the company, which is leading
the way in the nursing care industry as a member of the Sompo Group?
Mr. Endo
After entering the nursing care business in earnest by acquiring Watami no Kaigo as a subsidiary in December 2015,
Sompo acquired Message as a subsidiary in March 2016, and in July 2018, four Group companies merged to form Sompo
Care. Today, we are delivering a full lineup of nursing care services across the country, from in-home services to nursing
care facilities. For the fiscal period ended March 2020, we had the second-highest sales in the industry and ranked first interms of the number of residential units for seniors with 26,000 rooms.
―― Since your full-scale entry into the nursing care business, where have you most focused your efforts?
Mr. Endo
There is a lot of overlap in expertise between the insurance business and nursing care business, so we have focused ourefforts on the human resource development by using expertise we acquired in the insurance business. Following myappointment as representative director, I visited our sites and discovered that, while we spoke about OJT learning, since
the staff at each facility were doing shift work, there were time periods when the training supervisor was absent andtraining was not being delivered adequately. Therefore, in April 2016, we opened SOMPO Care University, the first suchinitiative in the industry, which enables personnel to learn in an environment similar to our facilities. Based on medium- tolong-term career plans, we are providing ongoing skills development and creating job satisfaction while also proactively
introducing cutting-edge technologies with the aim of improving usersʼ QOL, reducing staff workloads, and increasing
operational efficiency. We take pride in our current approach, with people talking about “Sompo Care education.” We haveintroduced a half-year training program for newly hired personnel who are recent graduates. Itʼs the first of its kind in theindustry. Weʼre also striving to improve working conditions for personnel, including part-time workers, which has led tosignificant improvement in the turnover rate and a significant increase in new hires, too, with 380 more employees added
this year.
People said that the merger of four companies with different corporate cultures, payroll systems, HR systems, andoperations would be impossible, and it was indeed difficult. In the summer of 2017, we created an in-house project, which
first formulated our “respecting people” management vision, which was announced in January of the following year. In
April, we introduced a regional head office system, which enabled a full lineup of services to be provided under one
regional manager, whereas previously there had been managers for each company. By creating the vision first, thenmaking preparations aimed at integrating the HR systems and other systems, we were able to complete the merger inJuly.
―― You use the slogan “transforming the future of nursing care.” Can you tell us what that means?
Mr. Endo
I have served as a representative director of an industry association, the Japanese Council of Daily Life Long-Term Care
Service Facilities, for three years. The scale of the nursing care market is large at 12 trillion yen, but due to the declining
birthrate and aging of society, in the next 10 years the supply-demand gap between demand for nursing care and thenumber of people working in the field will widen at a faster rate, leading to a challenging situation. Whatʼs more, acharacteristic of this industry is that there is a remarkably large number of small-scale operators. Accordingly,“transforming the future of nursing care” expresses our companyʼs approach of realizing a better future for nursing care byendeavoring to achieve more forward-looking, outside-the-box organizational operation, introducing next-generation
technologies, creating an environment that entrusts AI with whatever tasks it can handle and allows people to concentrateon what they alone can do, advocating evidence-based regulatory easing, and so forth. At the Future Care Lab in Japan,
which was launched in 2019, we are constantly conducting tests with the aim of finding practical applications for around 50
new technologies.
―― Could you tell us about the phrase “caring pride,” which is familiar from your advertising?
Mr. Endo
While engaging in dialogue with employees who are recent graduates, when we asked them how they would respond if
asked “What kind of work is nursing care?”, many of them said they would respond by saying “we support the daily life ofusers.” When we said, “What about going one step further and responding that ʻour work is to add color to the final stageof usersʼ livesʼ?”, everyone agreed with that. A generous spirit is indispensable to say such, in addition to a high level ofexpertise, and we have made efforts to position this as “caring pride.” In the 2020 fiscal year, we introduced a system thatcertifies personnel who embody pride in nursing care as Caring Pride Masters. Nationwide, 12 people have been selected.
Going forward, we will certify more Caring Pride Masters, with the aim of being able to say that weʼre putting caring pride
into practice across the company.

689. Actions of Each Operator―― Tell us about the CMOʼs role and your real estate strategy.
Mr. Ando
CMO is a new position with responsibility for monitoring the needs of the industry and elderly people, developing realestate strategy, and handling new business such as the solutions business from a market-oriented perspective to resolve
issues.
Among the approximately 430 facilities that we operate, we have master leases for over 400, and since 2020, the leases
have been expiring on a dozen buildings per year. Generally, we renew the leases, but if the building is aging, there arecases where we seek to improve profitability by rebuilding it or purchasing it. To date, we have invested around 12 billion
yen by rebuilding six facilities and purchasing four.
In terms of our future growth strategy, we are pursuing new development in major cities across Japan. In keeping with the
Sompo Groupʼs slogan, “A theme park for security, health and wellbeing,” we are not just operating facilities but also
making efforts to create added value for the purpose of sustainable urban development, such as interacting andcollaborating with communities, providing opportunities for elderly people to be socially engaged, and making use ofleading-edge ICT, including the use of real data. In Hongodai, Yokohama City, and Izumi Ward, Sendai City, we are
pursuing urban development in partnership with major developers.
Mr. Endo
Following the merger of the four companies, until now we have prioritized the implementation of an internal control
environment and held off on new investment and new facilities, but in December 2020, we acquired Tokyo Tatemono
Senior Life Support, which has enabled us to supplement our facilities with the high-end market in the Tokyo area. We
view M&A as a key option in terms of our growth strategy.
―― Could you tell us about your involvement with the REIT and your expectations?
Mr. Ando
At present, HCM owns five of our facilities. In addition to quickly taking care of repairs and regularly monitoring thefacilities, the fact that the REIT owns some of our facilities improves the strength of our brand, so it plays a significant role.
In order to address the national issue of supporting the supply of healthcare facilities from a financial perspective, REITs
with personnel who have knowledge and experience in the medical and nursing care fields are essential. As the sole REIT
specializing in healthcare facilities, HCM is helping to stimulate the industry. Going forward, we hope that the REIT will
support our growth strategy not just at existing facilities but also by eventually becoming the owner of new facilities that
we develop.
―― Finally, what message do you have for unitholders?
Mr. Endo
In a market where there is uncertainty surrounding some asset types owned by REITs due to the pandemic, HCM focuseson investing in nursing care, which continues to grow due to soaring demand, and we ask unitholders to support us
through stable, long-term investment in HCM.
Mr. Ando
We hope that unitholders will feel there is social value̶in the sense of supporting Japanʼs nursing care industry̶ininvesting in HCM, which is an expert in terms of selecting operators.

SOMPO CARE La vie Re Machidaonoji

SOMPO CARE Sompo no ie S Awajiekimae

SOMPO CARE La vie Re Azamino

SOMPO CARE Sompo no ie S Kobekamisawa
SOMPO CARE La vie Re Hama-Kawasaki

69

9. Actions of Each Operator
Feature: Interview
Nichii Carepalace Company

Employeesʼ embracing of our philosophy leads to customersʼ heartfelt smiles and happiness.
Having improved employee satisfaction by pursuing resident-oriented services, its future vision is to develop
senior homes that are seen by the community as an indispensable part of the local infrastructure.
(from the 13th Investment Management Report)
Interview:

Mr. Yukio Akiyama, President & Representative Director, Nichii Carepalace Company
Mr. Osamu Sanno, Director & Executive Officer, Nichii Carepalace Company―― Could you tell us about the history of Nichii Carepalace, which has been leading the nursing care industry since its
early days, and the extent of its business?
Mr. Akiyama
In 1983, Nihon Silver Service, the predecessor of our company, opened an old folksʼ home in Shuzenji, Shizuoka
Prefecture. Those were the days before the term “paid nursing home” was used. After that, following the creation of thenursing insurance system in 2000, our business grew significantly. In 2007, we became part of the Nichii Group, operating
assisted-living homes, primarily in the Tokyo metropolitan area, as a wholly owned subsidiary. At present, we operate 75
assisted-living homes, totaling about 4,900 rooms, with round-the-clock nursing staff and 6 serviced housing for theelderly, totaling about 230 units, where support can be received when necessary.
―― What is your management philosophy when it comes to operating nursing care facilities?
Mr. Akiyama
Besides the company motto and management philosophy of the Nichii Group, we have our own service philosophy, whichis that we “aim to bring smiles and happiness to our customers.” As a key element in achieving this, we have alsoestablished five guiding principles, and we devote efforts to instilling our philosophy by reciting them aloud together.
―― In your nursing care business, why do you emphasize the instilling of your philosophy?
Mr. Akiyama
At nursing care facilities, staff are often unsure about decisions or forced to make decisions quickly. At those times, ourservice philosophy and guiding principles are one of the criteria that can be used for making decisions. For example, one of
the guiding principles is to “respect clientsʼ individuality and support autonomous living.” When it comes to the services
they offer, our staff can ask themselves a clear question: “Does the service Iʼm providing right now really respect theclientʼs individuality?” Itʼs possible that the significance of our philosophyʼs existence will fade over time, but we bring itback into focus and enhance staffʼs understanding of it by conducting regular training.
―― At Nichii Carepalace, you also devote effort to human resource development. Could you tell us about some specificinitiatives?
Mr. Akiyama
One key initiative is the Platinum Caregiver program we introduced, which is unique to our company. Staff who haveacquired four qualifications (certified care worker, preventive care exercise instructor, authorized specified conduct
practitioner, and specialized dementia care provider) are defined as Platinum Caregivers. As professionals with experience,skills, and knowledge of nursing, they benefit from increased bonuses and career advancement opportunities.
Mr. Sanno
In our in-house newsletter, we publish articles about staff who have acquired Platinum Caregiver status and staff who havereceived training for various qualifications. This has a knock-on effect on other staff who read them: they react by thinking“I want to do that too” or “that would be helpful in providing on-site care,” leading to their setting new career targets andaccumulating expertise.
Mr. Akiyama
We also have staff members who possess specialized qualifications as occupational therapists or physical therapists
available at our 52 nursing homes (as of August 2021). I think one of our strengths is that our nurses are able to supportclientsʼ independence and focus on specialized rehabilitation by working with professional staff like these.
―― There are various kinds of events held at each home.
Mr. Akiyama
There are some activities that canʼt be conducted as we like it because of the pandemic, but we hold various activities,
both large and small, that cater to residentsʼ interests, such as concerts held at the Tokyo Opera City Concert Hall inTokyoʼs Shinjuku Ward in collaboration with the Tokyo Philharmonic Orchestra or exhibitions of artwork created by ourclients. Our residents include many people who used to teach calligraphy or English conversation, and these people
volunteer as instructors. Some of our homes are also involved in initiatives that create spaces for community interaction
with elementary schoolchildren or kindergarteners. Offering a comprehensive program of events and activities helps to giveelderly people more purpose and improves their QOL, and it makes staff membersʼ work more rewarding.

70

9. Actions of Each Operator―― You are also involved in SDG-related initiatives. Could you tell us about those?
Mr. Sanno
As an SDG-related initiative, we launched a volunteer-driven project in July last year. It focuses on five goals among theSDGs, including the third goal, “Good Health and Well-Being,” which is deeply connected to our business. Among these, we
had previously pursued initiatives relating to the fifth goal, “Gender Equality.” Out of our 3,000 employees, around 60%
are female. Our company is intent on providing a work environment that firmly encourages women to have children. As aresult, female employeesʼ childcare leave usage rate is 100%; not only that, but male employees used 66% of theirpaternity leave days last year. The number of female employees obtaining management-level positions is increasing, too.
The ratio of women who return to work after taking childcare leave is high, at 95% last year. We also have our own
system that enables employees to work reduced hours, which they can use until their child enters grade 4.
―― I see you provide employees with a high-quality work environment.
Mr. Akiyama
We conduct an employee satisfaction survey, and up until about 10 years ago, the top reason for leaving the company was“work environment.” In recent years, however, “family” or “physical reasons” have become the top reasons for leaving,and “work environment” has dropped to fourth or fifth place, which I feel is a remarkable decrease.
―― Tell us about your involvement with the REIT and about Nichii Home Nishikokubunji, which is owned by HCM
Mr. Akiyama
Being owned by the REIT provides us with peace of mind, and it further enhances the brandʼs value and peace of mind forthe families of our residents as well. Nichii Home Nishikokubunji is a spacious building close to the station that occupies alarge lot. It is especially popular among our facilities, with the occupation rate always at 100%.
―― What can you tell us about your future business development and initiatives?
Mr. Akiyama
With disasters occurring frequently in recent years, we formulated our own specific BCP (business continuity plan), the Life
Preservation Plan (LPP), the year after Great East Japan Earthquake. The plan establishes three steps in the event of adisaster: “self-help” to ensure oneʼs own survival, followed by “mutual aid” in collaboration with community residents, then“co-operation” by acting in concert with local governments for our joint benefit. At present, we are ensuring power to keeppeople alive by installing solar panels at our homes, providing home oxygen, phlegm aspirators, and the like, and at 10
locations (as of August 2021), as an example of “co-operation,” we have signed disaster-prevention agreements with local
governments to supply water for daily use via wells on the premises and set up facilities to accommodate people affectedby a disaster. Rather than being facilities that receive support, we believe it is our social mission to protect the lives andlifestyles of both our residents and people in the surrounding community.
In terms of future business development, we plan to open three to five new paid nursing homes with care service, which is
our core business, each year. At the same time, given the projected future of Japanese society, we believe it will benecessary to develop serviced housing for the elderly as housing to which single elderly people can move.
Whatʼs more, with regard to future actions, we intend to devote more effort to the services weʼre providing at homes,
including end-of-life care. Lately, people have been referring to QOD (quality of death), which means being able to enjoy
your final days. In the nursing care industry, around 50% of clients are reported to be end-of-life clients, but at ourcompany, weʼre providing end-of-life care to almost 70% of our clients. Our aim is to operate facilities that can offer
residents peace of mind at the end of their life.
―― Finally, what message do you have for unitholders?
Mr. Akiyama
In Japan, which is on the way to becoming a super-aged society unlike any seen before in the world, demand for nursing
care facilities will grow further. At the same time, there is still likely plenty of room for growth in the healthcare REIT
market. I hope that unitholders will consider our future business performance and the size of the market.

Nichii Home Nishikokubunji

71

9. Actions of Each Operator
Case Examples
HAM treats operators with respect and takes an interest in them, and it
strives to collect information about each companyʼs actions throughcommunication in its day-to-day business and conducting interviews. Here,
we introduce some of this information, based mainly on what eachcompany has disclosed.


Actions for Human Resource Development
HAM has confirmed that each company is engaged in human resource development, including
the prevention of abuse and inappropriate care, through the preparation of numerous
manuals and other documents and training activities, such as company-wide training thatbrings together managers and leaders from various facilities, training at each facility, etc.
Some operators have made their expertise publicly available.
[Sompo Care Inc.]
As a leading company supporting the aged society, the company has started offering“Humanitude® Introductory Open Training” to all employees
https://www.sompocare.com/attachment/topic/1496/news_0907.pdf[Benesse Style Care Co., Ltd.]Benesse Method 01: Clues to Creating an Environment That Is Aligned Close to That Personʼs Ways
https://www.benesse-style-care.co.jp/method01/
The result of Benesseʼs practical experience of operating senior homes for 20 years, thismethod introduces 65 tips for creating an environment where the elderly can live more
comfortably.
Kaigo Antenna: a general information site for nursing care staff
https://www.kaigo-antenna.jp/
This site makes expertise and knowledge cultivated during more than 20 years of seniorhome operation publicly available for free. Content from Benesseʼs methods, guidelines,
training and development textbooks, etc., which was previously for internal use only and islikely to be helpful to many people, has been revised and published in online versions.
[Nichii Carepalace Company]
Received an Award of Excellence at the 2021 Assisted-Living Home Research Summit
http://www.nichii-carepalace.co.jp/news/detail/20211006-004354.html

Actions to Improve Business Efficiency[AS PARTNERS Co., Ltd.]
Uploaded a video of a discussion with BONX, a company that makes smartphone-connected
earpieces, entitled “DX at Nursing Sites.”
https://as-heim.com/lp/with-bonx/?_ga=2.231088473.718647460.16378014481065634786.1585186162[Benesse Style Care Co., Ltd.]
Selected by the Japan Agency for Medical Research and Development (AMED) as a businesspromoting the development of robotic nursing care devices, etc. (development grant)
https://kaigo.benessestylecare.co.jp/saved_data/pdf/topic/732/file_20210930104145750883.pdf

72

9. Actions of Each Operator
Case Examples
Actions to Tackle Shortage of Human Resources in Nursing Care (Improvement ofTreatment)
Low salary levels are said to be one of the causes of the shortage of nursing care personnel.
Governments and individual companies are striving to address this. HAM collects information on
the status of efforts to acquire the “allowance to improve working conditions for nursing staff”
and “allowance to improve specific working conditions for nursing staff,” which are also
indicated in nursing homesʼ disclosure statements, and on initiatives to improve the treatmentof staff at each company.
[Benesse Style Care Co., Ltd.]
Improved working conditions for nursing care staff and revised personnel system
For full-time certified care workers (nationwide) who have been with the company for at least
10 years, 84% of those in leadership positions earn 5 million yen or more annually while 97%of typical employees in non-leadership positions earn 4.4 million yen or more annually.
https://kaigo.benesse-stylecare.co.jp/saved_data/pdf/topic/155/file_20190910112225573143.pdf[Nichii Carepalace Company]
About improved working conditions for nursing care staff, etc.

https://www.nichii-home.jp/recruit/news/detail/20190919-003301.html
Actions to Tackle Shortage of Human Resources in Nursing Care (Acceptance of Foreign
Technical Interns)[SHIP HEALTHCARE HOLDINGS, INC. (GREEN LIFE Co., Ltd.)]
Actively recruiting technical intern trainees from abroad
https://www.shiphd.co.jp/blog/irs/d20a343b36704984cececddc588fc7b5f3409101.pdf[UCHIYAMA HOLDINGS Co., Ltd. (Sawayaka Club Co., Ltd.)]
Establishment of joint venture in Indonesia and opening of vocational school
http://www.uchiyama-gr.jp/ir/upload_file/tdnrelease/6059_20180219474383_P01_.pdf
Sawayaka Club accepted workers from abroad with specific skills for the first time
http://www.uchiyama-gr.jp/upload_file/m001-/ut2111.pdf

Actions Related to Dementia and Cognitive Decline[Sompo Care Inc.]
Conducted dementia awareness survey
Using World Alzheimerʼs Day as an opportunity to talk about dementia with loved ones
https://www.sompo-hd.com/-/media/hd/files/news/2021/20210917_1.pdf?la=ja-JP[Medical Corporation AIKOKAI (Niigata Rehabilitation Hospital)]
Started offering a simple cognitive test, Atama no Kenko Check®, in November for the firsttime in Niigata
http://www.niigata-reha.jp/news/info/201910152253/

73

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

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 infections at the facilities weown.
Each operator is implementing measures to prevent infection and limit the
spread of infection while working to improve the satisfaction of residents andfamilies in an environment adapted to living with the pandemic.
[Ship Healthcare Holdings, Inc. ]Rapid increase in demand due to ozone-based COVID-19 countermeasures
Selling Airness low-concentration ozone generators in a new lineup
https://www.shiphd.co.jp/blog/d5b41794422a41d951e6b54907ca11f27726b360.pdf[Proud Life Inc.]
About prevention of COVID-19 infection
https://hanakotoba.co.jp/assets/news20211001.pdf[Sawayaka Club Co., Ltd.]
Notice regarding partial lifting of restrictions on visits, etc.
http://www.sawayakaclub.jp/advert/20210305_2.pdf[Nichii Carepalace Company]
About response to COVID-19
http://www.nichii-carepalace.co.jp/news/news20211028.pdf

74

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)

75