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

REIT Financial Report for the 11th Fiscal Period
December 19, 2019
REIT Issuer:
Nippon Healthcare Investment Corporation
Securities Code: 3308
Representative: Shunichi Suzuki, Executive Director
Asset Manager:
Representative:
Inquiries to:

Stock Exchange Listing: TSE
URL: http://www.nippon-healthcare.co.jp/

Daiwa Real Estate Asset Management Co. Ltd.
Toshio Fukushima, President and Representative Director
Takashi Chiba, General Manager of Corporate Division

TEL: +81-3-6757-9600

Scheduled date of submission of periodic securities report (yuka shoken hokokusho):Scheduled date of start of distribution payments:
Preparing presentation material:
Holding financial brief meeting:January 21, 2020
January 24, 2020

Yes
Yes (for institutional investors and analysts)[Amounts are rounded down to the nearest million yen, except for per unit figures]
1. Status of Management and Assets for the 11th Fiscal Period
11th Fiscal Period: Fiscal period ended October 2019 (from May 1, 2019, to October 31, 2019)(1) Management[% figures show the period-on-period increase (decrease)]
Fiscalperiod11th
10th

Operating revenue
million yen
707
705

Fiscalperiod11th
10th

Operating income
%
0.4
1.1

Net income
per unit

million yen
283
281

Ordinary income
%
0.7
3.4

Net income tounitholders’ equity
yen
3,399
3,437

million yen
254
257

Net income
%
(1.1)
5.4

Ordinary income tototal assets
%
2.5
2.5

%
1.2
1.2

million yen
253
256

%
(1.1)
5.5

Ordinary income tooperating revenue
%
36.0
36.5

(2) Distributions
Distribution Distribution
Total
Total
amountamountdistribution distribution
Distribution
Total
per unit
per unit
amountamountamountdistribution
Dividend
Distribution
Fiscal(including(excluding(including(excluding
in excess ofamountpayoutamount toperioddistribution distribution
distribution distribution
earnings
in excess ofratio
net assets
amountamountamountamountper unit
earnings
in excess of in excess ofin excess of in excess ofearnings)
earnings)
earnings)
earnings)
yen
yen
yen
million yen million yen million yen
%
%
11th
4,279
3,399
880
319
253
65
100.0
2.5
10th
4,307
3,437
870
321
256
64
100.0
2.5
(Note 1) The rate of decrease in surplus, etc. from implementing cash distributions in excess of earnings (reimbursement ofinvestments in capital which falls under the category of distribution reducing unitholders’ capital for tax purpose) in the 11th
Fiscal Period and the 10th Fiscal Period is 0.007 for both periods. Furthermore, calculation of the rate of decrease in surplus,
etc. is pursuant to Article 23, Paragraph 1, Item 4 of the Order for Enforcement of the Corporation Tax Act (Cabinet OrderNo. 97 of 1965; including amendments thereto).
(Note 2) The total distribution amounts in excess of earnings for the 11th and 10th Fiscal Periods are entirely reimbursement ofinvestments in capital which falls under the category of distribution reducing unitholders’ capital for tax purpose.
(Note 3) Dividend payout ratio and distribution amount to net assets are calculated based on figures excluding distribution amount inexcess of earnings.

-1-(3) Financial Position
FiscalperiodTotal assets

Unitholders’ equity tototal assets

Net assets

Net assets
per unit

million yen
20,96221,019million yen
10,225
10,293

%
48.8
49.0

yen
137,012137,920

Net cashprovided by (used in)operating activities
million yen
455
455

Net cashprovided by (used in)investing activities
million yen
(13)
(415)

Net cashprovided by (used in)financing activities
million yen
(322)
(308)

Cash andcash equivalents
at end of period
million yen
1,703
1,584

11th
10th

(4) Cash Flows
Fiscalperiod11th
10th

2. Management Status Forecasts for the 12th Fiscal Period (Final accounting period)
12th Fiscal Period: Fiscal period ending March 2020 (from November 1, 2019, to March 31, 2020)[% figures show the period-on-period increase (decrease)]
FiscalperiodOperating revenue
million yen
589

12th
Fiscalperiod

%(16.6)

Operating income
million yen
265

Ordinary income%(6.1)

million yen
264

Net income%
3.7

million yen
263

%
3.7

Payment on the Merger per unit

yen
12th
3,525
(Reference) Estimated net income per unit for the 12th Fiscal Period: 3,525 yen(Note 1)The period for the Forecasts for Management Status for the Fiscal Period ending March 2020 and Payment on the Merger is the five-month period
from November 1, 2019, to March 31, 2020.

(Note 2)
(Note 3)

Forecast total number of investment units issued and outstanding at end of the period: 74,632 units.
Nippon Healthcare Investment Corporation (hereinafter referred to as “NHI”) and Japan Rental Housing Investments Inc. (hereinafter referred to as“JRH”; and together with NHI, hereinafter collectively referred to as “both REITs”) resolved at their respective board of directors’ meetings held on
November 19, 2019, to implement an absorption-type merger (hereinafter referred to as the “Merger”) with NHI as the absorbed corporation and JRH
as the surviving corporation with the effective date being April 1, 2020; and entered into a merger agreement (hereinafter referred to as the “Merger
Agreement”) dated November 19, 2019, as described in “1. Management Status 1.1. Management Status (2) Outlook for the Next Fiscal Period C.
Significant Subsequent Events” on page 10 below.
Since NHI will be absorbed when the Merger takes effect, no distribution will be paid out for the 12th Fiscal Period. Instead of the cash distribution,
however, the payment on the Merger will be made by JRH, the surviving corporation after the Merger. For details, please refer to “1. Management
Status 1.1. Management Status (2) Outlook for the Next Fiscal Period C. Significant Subsequent Events a. Conclusion of Merger Agreement between
NHI and JRH (Payment on the Merger)” on page 10 below.
For the forecasts of operating results and distribution of JRH, the surviving corporation after the Merger, for the fiscal period ending September 2020
(29th Fiscal Period: April 1, 2020 to September 30, 2020) and the fiscal period ending March 2021 (30th Fiscal Period: October 1, 2020, to March
31, 2021), please refer to “Notice Concerning Forecasts of Operating Results and Distributions for the Fiscal Period Ending September 2020 and the
Fiscal Period Ending March 2021 after the Merger of Japan Rental Housing Investments Inc. and Nippon Healthcare Investment Corporation”
announced by the both REITs on November 19, 2019.

(Note 4)In regard to the Merger, in order to fulfill the taxation requirements for a qualified merger, cash exceeding the cash distributions equivalent to thepayment on the Merger, calculated based on NHI’s distributable amount, cannot be paid out as the merger consideration. As such, payment on the
Merger equivalent to the cash distributions for the Fiscal Period ending March 2020 will not include the amount equivalent to the distribution inexcess of earnings which NHI has heretofore implemented interruptedly every fiscal period (cash distributions in excess of earnings in an amount not
to exceed 40% of depreciation in every accounting period within the scope that would not have adverse impact on the financial position of NHI).
Moreover, as a result of discussions and negotiations among NHI, JRH, and Daiwa Real Estate Asset Management Co., Ltd. (hereinafter referred toas the “Asset Management Company”), the asset management company of both NHI and JRH, regarding the Merger and how to handle the fees andremunerations related to the set of transactions related to the Merger, it was agreed that JRH would bear all the costs related to the Merger andconsideration, discussion, preparation, and execution related to the set of transactions related to the Merger, that merger fees to be paid to the AssetManagement Company from NHI for the Merger and asset management fees I and II to be paid to the Asset Management Company in the Fiscal
Period ending March 2020 would be waived, and that other fees related to administrative services, etc. would be reduced. As a result, the paymenton the Merger is expected to be equivalent to the distribution per unit including distribution in excess of earnings for the 12th Fiscal Period ending
April (after the adjustment taking into consideration the fact that the operating period is five months)-2-

* Other(1) Changes in Accounting Policies, Changes in Accounting Estimates and Retrospective Restatement(i) Changes in accounting policies due to amended accounting standards, etc.: None(ii) Changes in accounting policies other than (i):None(iii) Changes in accounting estimates:None(iv) Retrospective restatement:
None(2) Total Number of Investment Units Issued and Outstanding
11th Fiscal Period
74,632 units
10th Fiscal Period
74,632 units
11th Fiscal Period– units
10th Fiscal Period– units
Please refer to “Notes to Per Unit Information” on page 33 for the number of investment units used as the basis forcalculating the net income per unit.

(i) Total number of investment units issued and outstanding (including
own investment units) at end of period:(ii) Number of own investment units at end of period:(Note)* Financial reports are exempt from the audit by a certified public accountant or an auditing firm.
* Explanation of the appropriate use of the management status forecasts, and other matters of special note
The forecast figures are forward-looking statements based on information currently available to Nippon Healthcare Investment
Corporation and involve uncertainties. Accordingly, the actual operating revenue, operating income, ordinary income, net income
and distribution amount per unit may vary due to changes in the status. In addition, the forecast is not a guarantee of the distribution
amount. For details on the assumptions underlying the forecast figures above, please refer to “Assumptions for the Management
Status Forecasts for the 12th Fiscal Period (from November 1, 2019, to March 31, 2020)” on page 16.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
Table of Contents
1. Management Status ..................................................................................................................................................................... 5
1.1. Management Status ............................................................................................................................................................. 5
1.2. Investment Risks ............................................................................................................................................................... 17
2. Financial Statements.................................................................................................................................................................. 19
2.1. Balance Sheets .................................................................................................................................................................. 19
2.2. Statements of Income ........................................................................................................................................................ 21
2.3. Statements of Unitholders’ Equity ...................................................................................................................................... 222.4. Statements of Cash Distributions........................................................................................................................................ 23
2.5. Statements of Cash Flows .................................................................................................................................................. 24
2.6. Notes to the Going Concern ............................................................................................................................................... 25
2.7. Notes to Significant Accounting Policies ............................................................................................................................ 25
2.8. Notes to Financial Statements ............................................................................................................................................ 26
2.9. Increase (Decrease) in Total Number of Investment Units Issued and Outstanding ............................................................... 38
3. Reference Information ............................................................................................................................................................... 41
3.1. Investment Status .............................................................................................................................................................. 41
3.2. Investment Real Estate Properties ...................................................................................................................................... 42-4-

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
1. Management Status
1.1. Management Status(1) Overview of the Fiscal Period under Review
A. Brief History of the Investment Corporation
Nippon Healthcare Investment Corporation (hereinafter referred to as “NHI”) was established on January 7,
2014, in accordance with the Act on Investment Trusts and Investment Corporations (Act No. 198 of 1951;
including amendments thereto) (hereinafter referred to as the “Investment Trusts Act”) with Daiwa Real Estate
Asset Management Co. Ltd. (hereinafter referred to as the “Asset Management Company”) as the organizer.
After its establishment, NHI implemented an additional issuance of investment units through private placement(18,800 units) on April 3, 2014. NHI commenced actual management with the acquisition of eight properties
on March 28, 2014, by using the proceeds from the concerned capital increase through private placement andborrowings.
After building a track record over approximately seven months since commencement of management, NHI
implemented an additional issuance of investment units through public offering (39,000 units) on November
4, 2014. On the following day, NHI listed on the Tokyo Stock Exchange, Inc. (hereinafter referred to as “Tokyo
Stock Exchange”) Real Estate Investment Trust Securities Market (securities code: 3308), along withadditionally acquiring six properties. In the 3rd Fiscal Period (fiscal period ended October 2015), NHI
additionally acquired three properties with borrowings and cash on hand. In the 4th Fiscal Period (fiscal period
ended April 2016), NHI implemented an additional issuance of investment units through public offering(12,130 units) on November 17, 2015, and additionally acquired four properties. In the 5th Fiscal Period (fiscal
period ended October 2016), NHI additionally acquired one property with borrowings and cash on hand on
October 6, 2016. In the 10th Fiscal Period (fiscal period ended April 2019), NHI additionally acquired one
property with cash on hand on December 20, 2018. The additional acquisition of properties brought the totalacquisition price to 19,712 million yen as of the end of October 2019.
As a Japanese REIT specializing in healthcare facilities in that it invests solely in properties of which theprincipal use is healthcare facilities, NHI effectively utilizes investor capital to initiate expansion of supply ofhigh-quality healthcare facilities that provide users with high-standard services, while at the same time produce
adequate returns to investors for further capital inflow. In this way, NHI aims at creating a new virtuous cyclefor healthcare facilities and the services provided, together with investors. Through these efforts, NHI would
like to contribute to the realization of Japan’s major policy to improve the residential environment for theelderly by effectively utilizing private sector funds.
B. Investment Environment and Management Performancea. Investment Environment (from May 1, 2019, to October 31, 2019)
NHI was established to address Japan’s structural problem of age demographics where the younger
population is decreasing and the ratio of elderly people is increasing, and the associated social demand forthe enhancement of private nursing homes and other facilities for the elderly, which are thought to belacking.
In Japan, where the population of the elderly aged 65 years or over (hereinafter referred to as the “Elderly
Population”) accounts for a little less than 30% of the total population as of November 1, 2019 (according
to the Ministry of Internal Affairs and Communications’ “Population Estimates” (announced on November
20, 2019)), the Elderly Population as a percentage of the total population (hereinafter referred to as the“Elderly Population Percentage”) is forecast to continue to rise, and the population of the elderly living
alone is forecast to continue to grow. There is thus recognized to be sufficient potential for greater
development of housing for the elderly with nursing care services, etc. that are designed for the elderly toreside (referring to “silver housing” (public housing for the elderly), “good rental housing for the elderly,”“elderly housing with supportive services,” “fee-based homes for the elderly” and “low-cost homes for theelderly;” the same shall apply hereinafter).
The Ministry of Land, Infrastructure, Transport and Tourism has set as a policy target that the ratio of
housing for the elderly to the Elderly Population shall be 4% by 2025.
In this manner, as social demand is mounting for healthcare facilities – particularly, private nursing
homes and other facilities for the elderly – and the enhancement of private nursing homes and otherfacilities for the elderly is one of the priority tasks even as a national policy, NHI will focus investment for
the time being on private nursing homes and other facilities for the elderly among healthcare facilities andthereby seize opportunities to earn cash flows arising from the mounting social demand.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Periodb. Management Performance
In the fiscal period under review (11th Fiscal Period: fiscal period ended October 2019 (from May 1,
2018, to October 31, 2019)), there were no property acquisitions.
Concerning the properties owned as of the end of the 11th Fiscal Period (October 31, 2019), the leasable
floor area was 67,903.84 m2 and the occupancy rate was 100.0%.
C. Overview of Capital Procurementa. Procurement of Funds for Loan Repayment
In the 11th Fiscal Period, NHI conducted the following borrowing of funds for use as funds for
repayment of loans.
･ As funds for repayment of the 2,900 million yen in total borrowed from Resona Bank, Limited, Mizuho
Bank, Ltd. and Mizuho Trust & Banking Co., Ltd. due for repayment on October 31, 2019, the sameamount was borrowed from those banks, respectively, on that date.
b. Status of Interest-Bearing Liabilities at the End of the Fiscal Period under Review
As a result of the above, the balance of interest-bearing liabilities outstanding at the end of the 11th
Fiscal Period (October 31, 2019) totaled 9,800 million yen (all are long-term loans payable). Of the longterm loans payable, 3,000 million yen is due for repayment within one year. The average remaining years
to maturity as at the end of the 11th Fiscal Period was 3.0 years.
At the end of the 11th Fiscal Period, unitholders’ capital in the net amount was 9,971 million yen andthe total number of investment units issued and outstanding was 74,632 units.
Balance of Borrowings from Each Financial Institution at the End of the Fiscal Period under Review
End of the 11th Fiscal Period
Share
Lender(October 31, 2019)(%)(million yen)
(Note)
Mizuho Bank, Ltd.
2,300
23.47
Resona Bank, Limited
1,700
17.35
Sumitomo Mitsui Trust Bank, Limited
1,700
17.35
Mizuho Trust & Banking Co., Ltd.
1,200
12.24
The Musashino Bank, Ltd.
1,000
10.20
Shinkin Central Bank900
9.18
Shinsei Bank, Limited
800
8.16
The Dai-ichi Life Insurance Company, Limited
200
2.04
Total
9,800
100.00(Note) Share is rounded to two decimal places.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
D. Overview of Financial Performance and Distributions
As a result of the management described above, NHI posted financial performance for the 11th Fiscal Periodof 707 million yen in operating revenue, 283 million yen in operating income, 254 million yen in ordinary
income and 253 million yen in net income.
Concerning distributions, to ensure that the amount equivalent to distributions from earnings would be
included in the amount of tax-deductible expenses based on application of special provisions for taxation on
investment corporations (Article 67-15 of the Act on Special Measures Concerning Taxation (Act No. 26 of
1957; including amendments thereto) (hereinafter referred to as the “Special Taxation Measures Act”)), NHI
decided to distribute the entire amount of unappropriated retained earnings, excluding fractions of the
distribution amount per unit that are less than 1 yen. Accordingly, NHI declared a distribution amount from
earnings per unit of 3,399 yen.
In addition, in principle, NHI adopts a policy of implementing cash distributions in excess of earnings
uninterruptedly every fiscal period in accordance with the distribution policy set out in the articles ofincorporation (Note). Based on this policy, NHI decided to distribute 65,676,160 yen, which is the amountroughly equivalent to 32% of the 203 million yen in depreciation for the 11th Fiscal Period, as reimbursementof investments in capital which falls under the category of distribution reducing unitholders’ capital for tax
purpose. Accordingly, NHI declared a distribution amount in excess of earnings per unit of 880 yen.
(Note) NHI adopts a policy of implementing uninterrupted cash distributions in excess of earnings (reimbursementof investments in capital which falls under the category of distribution reducing unitholders’ capital for tax
purpose) in an amount not to exceed 40% of depreciation in every accounting period within the scope thatwould not have adverse impact on the financial position of NHI after setting aside the cash and deposits that
NHI deems appropriate, taking into account the status of establishment of lines of credit, etc., in order not toaffect long-term repair plans in light of the capital expenditures for each accounting period assumed basedon the long-term repair plans and to meet needs for funds (new acquisition of investment assets, repairs andcapital expenditures required to maintain and enhance portfolio assets, NHI’s working capital, repayment of
obligations, payout of distributions, etc.).
The six-month average amount of the sum total amount of emergency repair expenses, short-term repair
expenses and long-term repair expenses stated in the engineering report by Tokio Marine & Nichido Risk
Consulting Co., Ltd., Assets Research and Development Inc. and ERI Solution Co., Ltd. for all assets owned
as of the end of the 11th Fiscal Period (23 properties) is 37 million yen.
(2) Outlook for the Next Fiscal Period
A. Investment Environment
In Japan, where the Elderly Population accounts for a little less than 30% of the total population, the Elderly
Population Percentage is expected to continue to rise and the population of the elderly living alone is expected
to continue to grow. With the development of medical technology, among other factors, record-high-level
figures were set in terms of the average life expectancy at birth for Japanese people at 81.25 years for males
and 87.32 years for females according to the Ministry of Health, Labour and Welfare’s “Abridged Life Tables
for Japan 2018,” and in terms of the Elderly Population at 35.78 million people and the Elderly Population
Percentage at 28.3%, the highest ever among the total population of 126.18 million people as of November 1,
2019, according to the Ministry of Internal Affairs and Communications’ “Population Estimates” (announced
on November 20, 2019).
According to the National Institute of Population and Social Security Research’s “Population Projections
for Japan (2017),” the total population at 122.54 million people and the Elderly Population at 36.77 million
people will increase the Elderly Population Percentage to 30.0% by 2025, and while the total population will
decrease by approximately 38.43 million people to 88.07 million people, the Elderly Population will become
33.81 million people and the Elderly Population Percentage will reach 38.4% by 2065.
To provide for future growth in demand for housing for the elderly, the Ministry of Land, Infrastructure,
Transport and Tourism has set as a policy target that the ratio of housing for the elderly to the Elderly
Population shall be 4% by 2025.
In such an environment, there is recognized to be sufficient potential for greater development of housing forthe elderly with nursing care services, etc. that are designed for the elderly to reside through effective utilizationof private sector funds.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
B. Future Management Policy and Tasks
a. Strategy for Managing Existing Properties
NHI implements the following measures to earn stable revenue and serve to maintain and enhanceunitholder value.
(i) Stabilization of earnings
In principle, NHI shall invest in properties with the actual remaining lease contract period at the timeof acquisition of 10 years or more, taking into account also the possibility of contract renewal. In viewof lease agreements concluded between NHI or trustees and operators realizing conversion of expenses
borne by operators into fixed rates and stabilization of earnings of NHI, the policy shall be to make thelease agreements of content that, in principle, operators pay a fixed amount of rent. The leaseagreements with operators for the assets that NHI has acquired are all fixed-rent agreements.
(ii) Criteria and methods for selecting operators
In the event of acquisition of healthcare facilities, not only the quality of the facilities as real estate,
but also the creditworthiness, operational capabilities, etc. of the operators operating the facilities are
regarded as important factors by NHI in realizing stable occupancy. This is because the operators being
capable of providing services of a quality and type that matches the entrance fee, monthly service fee,
etc. in order to be the residents’ choice and the operators being capable of operating the facilities
continuously are regarded as important factors in terms of also the profitability and asset value of
healthcare facilities.
(iii) Employment of “Backup Operator Membership”
NHI has concluded an agreement on backup of operational management with operators. The main
purpose of said agreement is to provide to the effect that, in the event that a lease agreement for ahealthcare facility owned by NHI has ended or is expected to end due to contract termination, contract
cancellation or other reason, where NHI requests another operator of acquired assets to conclude a newlease agreement with NHI and to operate the healthcare facility, the operator shall sincerely discuss therequest. In addition, NHI shall consider concluding a similar agreement with also the operators ofhealthcare facilities to be acquired in the future. Such relationship by agreement with operators isreferred to as “Backup Operator Membership.”b. Strategy for New Property Investments
NHI aims to realize stable external growth through not only leveraging the track record and network of
the Asset Management Company, but also sourcing property information, etc. by working in collaboration
with the sponsor group and the adviser.
(i) Track record and network of the Asset Management Company
The Asset Management Company strives for property acquisitions capitalizing on the wide range ofproperty-sourcing channels based on strong relationship-building with various related parties (businesscompanies, financial institutions, major real estate brokerage companies and real estate brokerage
parties, etc.) accumulated through asset management performed by Daiwa Office Investment
Corporation (balance of assets for which management is entrusted as of the end of November 2019:
approximately 461 billion yen), Japan Rental Housing Investments Inc. (balance of assets for which
management is entrusted as of the end of November 2019: approximately 227.8 billion yen), Daiwa
Residential Private Investment Corporation (balance of assets for which management is entrusted as ofthe end of November 2019: approximately 121.8 billion yen) and Daiwa Hotel Private Investment
Corporation (balance of assets for which management is entrusted as of the end of November 2019:
approximately 40.7 billion yen). In addition, in order to expand and boost opportunities to acquire
healthcare facilities in which NHI invests, the Asset Management Company has installed an investment
team specializing in healthcare facilities and is promoting also the building of relationships with new
suppliers and sources of property information (healthcare facility operators, developers, etc.) other thanexisting property sourcing channels to collect property information.
(ii) Sourcing of property information, etc. by working in collaboration with the sponsor group
The Asset Management Company believes that leveraging the network of branches and clients
possessed by the sponsor group, the Daiwa Securities Group, as needed will enable a search acrossJapan for operators that meet the selection criteria set forth by the Asset Management Company andconsideration of the feasibility of collaboration in property acquisition and development,
commissioning of facility operation, etc., and thinks that expansion of property acquisition
opportunities can thus be expected. Furthermore, in order to expand property acquisition opportunities,
NHI and the Asset Management Company have concluded a pipeline support agreement with Daiwa
ACA HealthCare Inc. (66% stake held by Daiwa Securities Group Inc.) which invests in carefacilities/hospitals in Japan.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period(iii) Sourcing of property information, etc. by working in collaboration with the adviser
The Asset Management Company has concluded an advisory agreement with AIP Healthcare Japan
GK, which implements an investment strategy that has been focused on the healthcare sector (hospitals
and nursing care facilities) since 2001 and has been engaged in investment specializing in private
nursing homes and other facilities for the elderly since 2008. Based on this agreement, the AssetManagement Company receives advice on information provision, management and operation ofhealthcare facilities that are the investment assets of NHI, collaboration with operators, etc. The AssetManagement Company believes that this would contribute to realization of stable performance in themedium to long term of NHI.
c. Financial Strategy
NHI will procure and manage funds in accordance with the following policy in pursuit of realization of
stable revenue and steady growth and efficient management of assets under management.
(i) Additional issuance of investment units
Additional issuance of investment units shall be implemented with agility, while comprehensively
taking into account the timing of acquisition of real estate that are to be newly acquired, ratio of interestbearing liabilities to total assets (hereinafter referred to as “LTV”), economic and market conditions,etc. and also taking into consideration the dilution of investment units.
(ii) Borrowing of funds and issuance of investment corporation bonds
LTV shall be set at a level that takes heed of securing of financing capacity and, in principle, nohigher than 60%. However, LTV may temporarily exceed 60% for such purposes as acquisition of new
investment assets and reduction of refinancing risk.
In order to build a stable financial base and underpin future growth strategies, NHI shall not only
establish a so-called main-bank system of having leading financial institutions as its main banks ofaccount, but also make proactive efforts to diversify fund procurement sources through such means as
borrowing from multiple lenders and issuing investment corporation bonds.
Funds shall be procured appropriately by negotiating with several financial institutions overborrowing costs, loan period, whether or not collateral is provided and other terms and conditions upon
the borrowing of funds, and comprehensively considering the terms and conditions while taking into
consideration interest rate trends, market level, financial agility and security, the balance of lendercomposition and other factors.
In order to reduce the risk of interest rate increases and refinancing risk, NHI shall consider extending
financing periods, converting interest rates to fixed rates, staggering repayment dates, introducing
highly-flexible financial covenants, etc. as needed.
NHI shall consider securing committed, revolving or other lines of credit as needed for agile
procurement of various required funds.
(iii) Fund management
NHI shall retain at all times the cash and deposits that NHI deems appropriate, taking into accountalso the status of establishment of lines of credit, etc., in order to meet needs for funds (new acquisitionof investment assets, repairs and capital expenditures required to maintain and enhance portfolio assets,
NHI’s working capital, repayment of obligations, payout of distributions, etc.).
NHI shall pursue efficient fund management whereby, of the amount equivalent to depreciation, theamount remaining after setting aside cash and deposits shall be allocated to implement cash
distributions in excess of earnings to unitholders uninterruptedly every fiscal period in an amount not
to exceed 40% of depreciation in every accounting period, comprehensively taking into account NHI’s
surrounding economic environment and real estate market trends, the status of portfolio assets andfinancial status of NHI and other factors.
There may be cases where surplus funds will be invested into securities and monetary claims that arehighly secure and liquid.
Derivative transactions (Article 2, Paragraph 6 of the Investment Trusts Act) shall be limited to thosemanaged for the purpose of hedging the risk of fluctuations in interest rates on the liabilities of NHI.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Periodd. Merger of NHI and JRH
NHI and Japan Rental Housing Investments Inc. (hereinafter referred to as “JRH”; and together with
NHI, hereinafter collectively referred to as the “both REITs”) resolved at their respective board of directors’
meetings held on November 19, 2019, to implement an absorption-type merger (hereinafter referred to as
the “Merger”) with NHI as the absorbed corporation and JRH as the surviving corporation with the effective
date being April 1, 2020; and entered into a merger agreement (hereinafter referred to as the “Merger
Agreement”) dated November 19, 2019, based on the judgement that the Merger will enable the both REITs
to further grow in the future and thereby maximize unitholders’ value by securing earnings and stabilizing
and improving distribution.
C. Significant Subsequent Eventsa. Conclusion of Merger Agreement between NHI and JRH (Payment on the Merger)
The both REITs resolved at their respective board of directors’ meetings held on November 19, 2019, to
implement the Merger with the effective date being April 1, 2020, and entered into the Merger Agreement dated
November 19, 2019.
(i) Purpose of the Merger
To date, both REITs have taken the following measures to ensure stable income over the medium to longterm and steady expansion of their assets, taking advantage of their respective characteristics. At the sametime, both REITs are also aware of the challenges they face.
JRH has achieved sustained dividend growth by taking advantage of steady demand for rental housing witha focus on the three major metropolitan areas including the 23 wards of Tokyo, as well as other regions, andby establishing a stable portfolio of 227.8 billion yen based on the total acquisition price. However, JRH is
affected by changes in the supply-demand conditions in the rental housing investment market, as is the casewith other residential J-REITs. For instance, the competition for acquisition of superior properties has
intensified under the continued low interest rate environment. In such situation, JRH has adopted a property
replacement strategy with a view to improve the quality of its portfolio as the top priority under the new
medium-term target announced by JRH in May 2019, and has been replacing its owned properties steadily
thereafter, but expects that it will take some period of time (approximately three to five years) to complete thestrategy.
NHI has developed its expertise on healthcare assets, a growing market, has established good relationships
with operators by engaging in numerous transactions with operators, and has accumulated a track record ofasset management under the backdrop of social demand for the enhancement of private nursing homes andother facilities for the elderly under the macro environment of age demographics where the youth population
is decreasing and the ratio of elderly people is increasing. On the other hand, there are constraints onopportunities for external growth due to factors such as stagnation in its investment unit price due to the small
scale of its portfolio assets.

- 10 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
Under such circumstances, given that both REITs are managed by the same asset manager and sponsoredby the same company and that both REITs manage assets that can be considered as having a certain degree ofaffinity in the framework of “places where people live and reside” for a wide range of age groups from singleperson households, DINKS (double-income households with no kids), and families to senior households,
expansion of their current respective investment targets from rental housing/healthcare facilities to those witha certain degree of affinity in the above framework through the Merger would enable JRH to secure investment
opportunities in other asset classes when property acquisition opportunities decrease due to changes in the
supply-demand conditions in the rental housing investment market, as well as to secure opportunities to acquire
healthcare facilities warehoused by the same sponsor after the Merger. This would enable NHI to secure largescale external growth opportunities and improve stability in its portfolio income and risk diversification byincreasing the likelihood of equity financing through future issuance of new investment units as a result of
expansion of asset size and market capitalization. Therefore, both REITs believe that the Merger would
contribute to resolving the challenges they face as stated above. In addition, both REITs share the view that asa result of industry reorganization and new entries led by major companies in the healthcare industry, the credit
risk of healthcare operators, which had been an issue of concern, has declined and thereby the cap rates ofrental housing and healthcare facilities are now considered to be almost converging. Accordingly, both REITs
reached the conclusion that the Merger would combine the characteristics and strengths of the two andrecharacterize them as a REIT that “comprehensively provides comfortable living spaces suited to each life
stage” and it would therefore contribute to ensuring further growth in the future and thereby maximize
unitholders’ value by securing earnings and stabilizing and improving distribution. Accordingly, both REITs
entered into the Merger Agreement as of today.
(ii) Method of Merger
JRH will be the surviving corporation under the absorption-type merger and NHI will be dissolved upon
the Merger.
(iii) Merger Ratio

Allocation of units upon the
Merger

JRH(Surviving corporation in
the absorption-type merger)

NHI(Absorbed corporation in
the absorption-type merger)

1

2.05

(Note 1) The number of new JRH investment units to be issued upon the Merger: 152,995 investment units (scheduled)(Note 2) Fractions of less than one unit will arise with respect to the number of investment units to be allotted to the unitholders of NHI through the allotmentof 2.05 units of JRH per unit of NHI. These fractional units will be sold through a market transaction in accordance with statutory provisions, andthe proceeds from the sale will be delivered to the unitholders who are allocated fractions in proportion to the size of their fractional units to beallocated.

- 11 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period(ⅳ) Payment on Merger
After the Merger, in lieu of cash distributions to the unitholders of NHI for NHI’s final accounting period
from November 1, 2019, to March 31, 2020, JRH, the surviving corporation, will, within a reasonable period
after the effective date of the Merger, make a payment on the Merger based on the distributable amount of NHI
to the unitholders of NHI (the unitholders listed or recorded on the final unitholders register of NHI as of the
day immediately prior to the effective date of the Merger (excluding the unitholders of NHI who havedemanded the purchase of their investment units pursuant to the provisions of Article 149-3 of the Act on
Investment Trusts and Investment Corporations (hereinafter referred to as the “Allotted Unitholders”))) or theregistered pledgees of investment units held by Allotted Unitholders, in an amount equivalent to the cash
distributions for the above mentioned period (the payment will be the amount of distributable profit of NHI asof the day immediately prior to the effective date of the Merger divided by the number of investment units thatis obtained by deducting (a) the number of investment units held by the unitholders other than the Allotted
Unitholders of NHI from (b) the total number of investment units issued and outstanding of NHI, as of the day
immediately prior to the effective date of the Merger (rounded down to the nearest yen). The same applies
hereinafter.)(v) Overview of the fiscal period immediately preceding the merger (fiscal period ended September 2019) of
the surviving corporation (JRH)Business activities: Managing assets of investment corporations by investing mainly in real estate, etc.
among other specified assets, based on the Investment Trusts Act
Operating revenue: 8,460 million yen
Net income:
3,364 million yen
Assets:227,187 million yen
Liabilities:
118,740 million yen
Net assets:
108,447 million yen(vi) Date of the Merger
The Merger is scheduled to take effect on April 1, 2020.
b. Decision on Acquisition of Assets
NHI concluded sales and purchase agreements concerning acquisition of the following assets on November
19, 2019, and decided on the acquisition of the assets contingent upon the effectuation of the Merger, etc.
The position as well as the rights and obligations of the buyer in the sales and purchase agreement for the
Assets to be Acquired are scheduled to be succeeded from NHI to JRH on April 1, 2020, which is theeffective date of the Merger.

- 12 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period

Property name

AIP Kachidoki-Ekimae
PLAISANT GRAND
MINAMI YUKIGAYA
Aira no mori
Higashi-Ofuna
Aira no mori
Shakujiikoen
Aira no mori EdogawaShinozaki
Senior Forest
Yokohama-Tsuzuki
Sompo no ie
Toyonaka-Minamisone
Irise Komae Bettei(additional
acquisition)
Alpha Living
Takamatsu
Konyamachi
Good Time Living
Center-Minami,
Platesia Center-Minami
Good Time Living
Chibaminato-Kaigandori･
Platesia Chibaminato
Good Time Living
Yokohama-Tsuzuki
Good Time Living
Senri-Hinatagaoka
Good Time Living
Nakamozu
Good Time Living
Kourigaoka
Good Time Living
KameidoGood Time Living
MikageGood Time Living
Amagasaki-Shintoshin
Good Time Living
Minami Senri
Good Time Living
Kobe-Tarumi

Type of asset

Trust
beneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests

Location

Scheduledacquisition
Date of conclusion
Scheduledprice (thousandof sale andacquisition datepurchase agreementyen)(Note 1)

SellerChuo-ku,Tokyo

8,150,000(Note 6)

Ota-ku,Tokyo

3,380,000(Note 8)

Yokohama-shi,
Kanagawa

2,271,195(Note 9)Nerima-ku,
Tokyo

2,070,000(Note 7)

Edogawa-ku,
Tokyo

1,499,307(Note 7)

Yokohama-shi,
Kanagawa

1,202,000(Note 10)

Toyonaka-shi,
Osaka825,000(Note 5)

Komae-shi,Tokyo920,500(Note 5)

Takamatsu-shi,
Kagawa1,225,000(Note 5)

Yokohama-shi,
Kanagawa

11,150,000

Chiba-shi,
Chiba

4,516,000(Note 11)

Yokohama-shi,
Kanagawa

4,064,000(Note 11)

Suita-shi,
Osaka

2,800,000(Note 11)

Sakai-shi,
Osaka

2,180,000(Note 11)

Hirakata-shi,
Osaka

2,120,000(Note 11)

Koto-ku,Tokyo

1,860,000(Note 11)Kobe-shi,Hyogo

1,820,000(Note 11)

Amagasaki-shi,
Hyogo

1,585,000(Note 11)

Suita-shi,
Osaka

1,430,000(Note 11)Kobe-shi,Hyogo

1,370,000(Note 11)

(Note 11)
November 19,
2019- 13 -

April 2,2020

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period

Property name

Good Time Living
Chibaminato-Ekimaedori
Good Time Living
Senboku-Izumigaoka
Good Time Living
Ikeda-Midorigaoka
Good Time Living
Nagatsuta-Minamidai
Good Time Living
Saitama-Hasuda
Good Time Living
Nagareyama-Ichibankan
Good Time Living
Nagareyama-Nibankan
Good Time Living
Amagasaki-Ekimae
Total

Type of asset

Trust
beneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests－

Location

Scheduledacquisition
Date of conclusion
Scheduledprice (thousandof sale andacquisition datepurchase agreementyen)(Note 1)

SellerChiba-shi,
Chiba

1,320,000(Note 11)

Sakai-shi,
Osaka

980,000(Note 11)

Ikeda-shi,
Osaka920,000(Note 11)

Yokohama-shi,
Kanagawa

850,000

Hasuda-shi,
Saitama

659,000(Note 11)

Nagareyama-shi,
Chiba

610,000(Note 11)

Nagareyama-shi,
Chiba

563,000(Note 11)

Amagasaki-shi,
Hyogo320,000(Note 11)－62,660,002(Note 11)
November 19,
2019－

April 2,
2020

－

－

(Note 1)

Scheduled acquisition price indicates an amount excluding expenses required for the acquisition of the real estate (intermediary fees, taxes andpublic dues, etc.) stated in the purchase and sale agreement of the real estate.
(Note 2) Funds procured in the issuance of new investment units through third-party allotment, proceeds from sale in the sale of assets, cash on hand andborrowings scheduled to be announced in the future are scheduled to be allocated to funds for the acquisition.
(Note 3) There is no intermediary in the acquisition of the respective Assets to be Acquired.
(Note 4) The position as well as the rights and obligations of the buyer in the sales and purchase agreement for the Assets to be Acquired are scheduled tobe succeeded from NHI to JRH based on the Merger on April 1, 2020, which is the effective date of the Merger, and acquired by JRH, thesurviving corporation of the Merger.
(Note 5) The seller is GK DA Healthcare 2.
(Note 6) The seller is GK DA Healthcare 3.
(Note 7) The seller is GK DA Healthcare 4.
(Note 8) The seller is GK DA Healthcare 5.
(Note 9) The seller is GK DA Healthcare 6.
(Note 10) The seller is GK DA Healthcare 7.
(Note 11) The seller is GK GTL Healthcare.

(Reference information)
Proposals scheduled to be submitted to the Fifth General Meeting of Unitholders
NHI resolved at its board of directors’ meeting held on June 19, 2019, to submit the following proposals to
the Fifth General Meeting of Unitholders to be held on February 4, 2020.
a. Approval of the Merger Agreement
b. Termination of NHI’s asset management agreement with the Asset Management Company- 14 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
D. Outlook for Management Status
NHI forecasts the following management status for the 12h Fiscal Period (from November 1, 2019, to March
31, 2020 (final accounting period)). For the assumptions for the management status forecasts, please refer tothe “Assumptions for the Management Status Forecasts for the 12th Fiscal Period (from November 1, 2019, to
March 31, 2020 (final accounting period) (5 months)) on page 16.
12th Fiscal Period (from November 1, 2019, to March 31, 2020 (5 months))
Operating revenue
589 million yen
Operating income
265 million yen
Ordinary income
264 million yen
Net income
263 million yen
Payment on the Merger per unit
3,525 yen
(Note 1)Discrepancies between the forecast figures above and the assumptions may arise due to future additional acquisition or sale of real estate, etc., realestate market and other developments, fluctuation in interest rates, change in other circumstances surrounding NHI and other factors. Accordingly,
the actual operating revenue, operating income, ordinary income, net income and payment on the Merger per unit may vary. In addition, theforecast is not a guarantee of the amount of payment on the Merger.

(Note 2)After the Merger, in lieu of cash distributions to the unitholders of NHI for NHI’s final accounting period from November 1, 2019, to March 31,
2020, JRH, the surviving corporation, will, within a reasonable period after the effective date of the Merger, make a payment on the Merger basedon the distributable amount of NHI to the unitholders of NHI (the unitholders listed or recorded on the final unitholders register of NHI as of the
day immediately prior to the effective date of the Merger (excluding the unitholders of NHI who have demanded the purchase of their investment
units pursuant to the provisions of Article 149-3 of the Act on Investment Trusts and Investment Corporations (hereinafter referred to as the“Allotted Unitholders”))) or the registered pledgees of investment units held by Allotted Unitholders, in an amount equivalent to the cash
distributions for the above mentioned period (the payment will be the amount of distributable profit of NHI as of the day immediately prior to theeffective date of the Merger divided by the number of investment units that is obtained by deducting (a) the number of investment units held by
the unitholders other than the Allotted Unitholders of NHI from (b) the total number of investment units issued and outstanding of NHI, as of the
day immediately prior to the effective date of the Merger (rounded down to the nearest yen). The same applies hereinafter.) As such, the amountof payment on the Merger will vary depending on the status of the exercise of rights to demand purchase of investment units. Because the statusof such exercise cannot be confirmed at present, the above forecast figures assume that the right to demand purchase of investment units is not
exercised.

- 15 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
Assumptions for the Management Status Forecasts for the 12th Fiscal Period(from November 1, 2019, to March 31, 2020 (5 months))
Item

Assumption

Accounting
period・12th Fiscal Period
Fiscal period ending March 2020: from November 1, 2019, to March 31, 2020 (152 days)
・The assumption is that the 23 properties owned as of the date of this document will be held.
While there are properties scheduled to be acquired as described in “Notice Concerning
Acquisition and Leasing of Property” announced on November 19, 2019, by NHI, such will
not impact the Fiscal Period ending March 2020 as the properties are scheduled to be acquiredby the surviving investment corporation as of April 2, 2020, following the Merger.
・The actual number of properties may vary due to acquisition of new property, or dispositionof portfolio property, etc.
・Real estate rent revenue of acquired assets is calculated on the basis of the rent stated in leaseagreements that have been concluded. Furthermore, the period-end occupancy rate for each
property is expected to be 100.0% at the end of the Fiscal Period ending March 2020.
・The assumption is that there will be no gain (loss) on sales of real estate properties.
・Expenses related to rent business, which constitute a major component of operating expenses,
are calculated on the basis of historical data and by taking into consideration the factors
causing fluctuation in expenses.
・Operating income from property leasing (excluding gain on sales of real estate properties)
after deduction of expenses related to rent business (including depreciation) is assumed to be
359 million yen.
・Consignment expenses are assumed to be 11 million yen.
・Taxes and dues (fixed property tax, city planning tax, etc.) are assumed to be 42 million yen.
・Depreciation, which is calculated using the straight-line method, is assumed to be 167 million
yen.
・Repair expenses for buildings are assumed to be 7 million yen based on the medium- to longterm repair plans formulated by the Asset Management Company. However, possible
increase in amount of repair expenses or additional arising of repair expenses due tounforeseeable circumstances may result in repair expenses differing materially from theforecast amount.

Assetsundermanagement

Operatingrevenue

OperatingexpensesNon-operating
expenses
Interest-bearing
liabilities
Total number ofinvestment units
issued andoutstanding

Payment on the
Merger per unit

・21 million yen is assumed as interest expenses and other borrowing-related expenses.
・The assumption is that there will be no change in the loan balance of 9,800 million yen as ofthe date of this document through to the end of the Fiscal Period ending March 2020.
・The assumption is 74,632 units, which is the total number of investment units issued andoutstanding as of October 31, 2019.
・The assumption is that there will be no change in the number of investment units due to theissuance of new investment units, etc. in addition to the above, through to the end of the
Fiscal Period ending March 2020.
・Payment on the Merger (payment on the Merger per unit) will be paid in lieu of cash
distributions for the Fiscal Period ending March 2020 (final accounting period), and is
calculated in accordance with the cash distribution policy set forth in the articles ofincorporation of NHI. Calculations are made with the assumption that the entire earnings
will be distributed.
・Payment on the Merger per unit may vary due to various factors, including the status of
exercise of rights to demand purchase as a result of the Merger, expenses related to theMerger, fluctuation in real estate rent revenue accompanying change in assets undermanagement, change in tenants, etc., or the incurrence of unexpected repairs.
・In order for the Merger to fulfill the taxation requirements for a qualified merger, cash
equivalent to distribution in excess of earnings, which has been conducted every fiscal period,
is not scheduled to be issued. Please refer to “(Note 4) for 2. Management Status Forecasts
for the 12th Fiscal Period (Final accounting period): Fiscal period ending March 2020 (fromNovember 1, 2019, to March 31, 2020) mentioned above for the background and measuresin regard to this.

- 16 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
Item

Assumption

Other

・The assumption is that there will be no revision of laws and regulations, tax systems,
accounting standards, listing regulations, rules of The Investment Trusts Association, Japan,
etc., that will impact the forecast figures above.
・The assumption is that there will be no unforeseen serious change in general economic trends
and real estate market conditions, etc.

1.2. Investment Risks“Part I: Fund Information; Section 1: Fund Status; 3. Investment Risks; (1) Risk Factors; ④ Risks concerning
real estate and trust beneficial interests; (v) Risks concerning forward commitment, etc.” set out in the mostrecent periodic securities report (yuka shoken hokokusho) (submitted on July 18, 2019) are amended as follows(Amended portions are underlined). This amendment is associated with the acquisition of assets to be acquired
announced in “Notice Concerning Acquisition and Leasing of Property” dated November 19, 2019.
(v) Risks concerning forward commitment, etc.
NHI may use forward commitments (postdated sale and purchase agreements under which the payment forand delivery of property will be made after a certain period of time after the conclusion of the agreement) andthe like to acquire real estate or trust beneficial interest that have real estate as assets in trust. When the saleand purchase agreement is cancelled due to the buyer’s circumstances, the buyer will be liable for damages
due to default in obligations. Moreover, regardless of proof of the amount of damages, etc., there may be an
agreement made to the effect that a penalty that is a certain percentage of the sale/purchasing price of the realestate or trust beneficial interest that have real estate as assets in trust may apply. In the event of forward
commitments, there is a certain period of time from the signing of the agreement to the payment and delivery.
In cases where NHI fails to procure funds for the real estate acquisition due to such factors as changes in themarket environment or other cases leading to the need to cancel the sale and purchase agreement during that
period, there is a possibility that the financial condition of NHI will negatively affected due to payment of
the penalty, etc.
The sale and purchase agreements for the assets to be acquired which were concluded on November 19,
2019, fall under forward commitment, etc. The said sale and purchase agreements include the following
provisions or provisions similar to those.
･ In the sale and purchase agreement, the obligation of NHI is based on the assumption that fundprocurement will be completed by the date of sale and purchase and that the merger concluded with
JRH on November 19, 2019, will become effective. If such conditions are not satisfied, NHI maycancel the Sale and Purchase Agreement for free without making any payment for the reason that theconditions are not satisfied.
･ When either party violates any provisions of the Sale and Purchase Agreement (hereinafter refer to as
the “Violating Party”), the other party may cancel the Sale and Purchase Agreement and request
payment of an amount equivalent to 20% of the sale and purchase price as a penalty to the Violating
Party.
In addition, the following shall be added to “Part I: Fund Information; Section 1: Fund Status; 3. Investment
Risks; (1) Risk Factors; ⑥Other” set out in the abovementioned periodic securities report (yuka shoken
hokokusho) as “(c) Risk of not being able to acquire the Assets to be Acquired.” This addition is associatedwith the acquisition of the assets to be acquired announced in “Notice Concerning Acquisition and Leasing of
Property” dated November 19, 2019.
(c) Risk of not being able to acquire the Assets to be Acquired
In cases where the economic environment, etc. have changed drastically or where preconditions set by thesale and purchase agreements are not fulfilled due to circumstances of the other party and such, NHI may not
be able to acquire the assets to be acquired for which the sale and purchase agreements were concluded on
November 19, 2019. In such cases, although NHI will make efforts to acquire alternative assets, there is no
guarantee that NHI will be able to acquire properties suitable for investment in a short period of time. If NHI
is not able to acquire properties in a short period of time as the result, such may inflict a loss on unitholders.

- 17 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
Furthermore, the following shall be added to “Part I: Fund Information; Section 1: Fund Status; 3. Investment
Risks; (1) Risk Factors; ⑥Other” set out in the abovementioned periodic securities report (yuka shoken
hokokusho) as “(d) Risks concerning the series of initiatives for NHI’s merger.” This addition is associatedwith the merger of NHI announced in “Notice Regarding Conclusion of Merger Agreement between Japan
Rental Housing Investment Inc. and Nippon Healthcare Investment Corporation” dated November 19, 2019.
(d) Risks concerning the series of initiatives for NHI’s merger
NHI concluded a merger agreement with JRH on November 19, 2019. However, there is no guarantee that
the Merger will materialize. Moreover, the conditions for the Merger may be changed in the process of talks
and discussions in the future. If the Merger is not materialized or conditions for the Merger are changed,
such may affect the market price of NHI’s investment unit.

- 18 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
2. Financial Statements
2.1. Balance Sheets(Unit: thousand yen)

AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Prepaid expenses
Other
Total current assets
Non-current assets
Property, plant and equipment
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Total property, plant and equipment
Intangible assets
Leasehold rights in trust
Trademark right
SoftwareTotal intangible assets
Investments and other assets
Lease and guarantee deposits
Long-term prepaid expenses
Deferred tax assets
Total investments and other assets
Total non-current assets
Total assets- 19 -

10th Fiscal Period(As of Apr. 30, 2019)11th Fiscal Period(As of Oct. 31, 2019)

1,130,311
453,791
15,2371,892
1,601,233

1,232,364
471,207
21,3772,232
1,727,181

*1

*1

*1

*1

*1
*1
*1

*1

12,576,971(1,709,649)
10,867,321
214,567(22,223)
192,344
19,169(1,860)17,30953,793(15,502)38,2918,233,176
1,080
19,349,523
40,886111
382
41,38010,00017,11614
27,13019,418,034
21,019,267

*1

*1

*1

*1

*1
*1

*1

12,581,936(1,904,526 )
10,677,409
214,567(25,064 )
189,503
19,169(2,452 )16,71761,451(20,756 )
40,6958,233,176－
19,157,501
40,886101
1541,002
10,00026,466
13
36,48019,234,984
20,962,165

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period(Unit: thousand yen)

Liabilities
Current liabilities
Operating accounts payable
Current portion of long-term loans payable
Accounts payable – other
Advances received
Deposits received
Income taxes payable
Accrued consumption taxes
Other
Total current liabilities
Non-current liabilities
Long-term loans payable
Tenant leasehold and security deposits
Total non-current liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
Deduction from unitholders’ capital
Unitholders’ capital, net
Surplus
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders’ equity
Total net assets
Total liabilities and net assets- 20 -

10th Fiscal Period(As of Apr. 30, 2019)11th Fiscal Period(As of Oct. 31, 2019)21,3953,400,000
60,92686,817
527
894
846
4,214
3,575,622

22,5613,000,000
71,37586,876
562
883
1,148
2,872
3,186,282

*1

*1

*2

6,400,000
750,376
7,150,376
10,725,998*1*1

6,800,000
750,376
7,550,376
10,736,658

10,504,334(467,609)
10,036,724

10,504,334(532,539)
9,971,794

256,544
256,544
10,293,268
10,293,268
21,019,267

253,712
253,712
10,225,507
10,225,507
20,962,165*2

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
2.2. Statements of Income(Unit: thousand yen)
10th Fiscal Period(From: Nov. 1, 2018
To: Apr. 30, 2019)
Operating revenue
Rent revenue – real estate
Total operating revenue
Operating expenses
Expenses related to rent business
Asset management fee
Asset custody fee
Administrative service fees
Trust fee
Directors’ compensations
Audit fee
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Reversal of distribution payable
Insurance income
Other
Total non-operating income
Non-operating expenses
Interest expenses
Borrowing expenses
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)- 21 -

11th Fiscal Period(From: May 1, 2019
To: Oct. 31, 2019)*1

705,127
705,127*1

707,645
707,645*1

298,978
57,654732
10,434
6,608
4,800
6,000
38,868424,075
281,052*1

296,755
58,471730
10,382
6,600
4,800
6,000
40,856424,597
283,048

1
142
4,504
176
4,824

1
394
－
49
445

21,644
6,805
28,449257,427
257,427894(1)
893
256,53310
256,544

22,003
6,927
28,930254,562
254,562883
0
884
253,678
34
253,712

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
2.3. Statements of Unitholders’ Equity
10th Fiscal Period (from November 1, 2018, to April 30, 2019)(Unit: thousand yen)
Unitholders’ equity

Balanceat beginning ofcurrent period
Changesof items
during period
Distribution
in excess ofearnings

Unitholders’ capital
Surplus
Deduction
UnappropriatedUnitholders’fromUnitholders’
Total
retained earnings
capitalunitholders’capital, net
surplus(undisposed loss)
capitalTotal
unitholders’equityTotal
net assets

10,504,334

10,344,965

10,344,965(64,929)(64,929)(402,679)

10,101,654(64,929)(64,929)

243,311

243,311

Dividends
of surplus(243,300)(243,300)(243,300)(243,300)

Net income

256,533

256,533

256,533

256,533

Total changesof items
during period
Balanceat end ofcurrent period－(64,929)(64,929)

13,233

13,233(51,696)(51,696)

10,504,334(467,609)

10,036,724

256,544

256,544

10,293,268

10,293,268

11th Fiscal Period (from May 1, 2019, to October 31, 2019)(Unit: thousand yen)
Unitholders’ equity

Balanceat beginning ofcurrent period
Changesof items
during period
Distribution
in excess ofearnings

Unitholders’ capital
Surplus
Deduction
UnappropriatedUnitholders’fromUnitholders’
Total
retained earnings
capitalunitholders’capital, net
surplus(undisposed loss)
capitalTotal
unitholders’equityTotal
net assets

10,504,334

10,293,268

10,293,268(64,929)(64,929)(467,609)

10,036,724(64,929)(64,929)

256,544

256,544

Dividends
of surplus(256,510)(256,510)(256,510)(256,510)

Net income

253,678

253,678

253,678

253,678

Total changesof items
during period
Balanceat end ofcurrent period－(64,929)(64,929)(2,831)(2,831)(67,761)(67,761)

10,504,334(532,539)

9,971,794

253,712

253,712

10,225,507

10,225,507- 22 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
2.4. Statements of Cash Distributions
Item

I.

10th Fiscal Period(From: Nov. 1, 2018
To: Apr. 30, 2019)11th Fiscal Period(From: May 1, 2019
To: Oct. 31, 2019)

Amount (yen)Amount (yen)Unappropriated retained earnings

256,544,639

253,712,805

II. Addition of distribution amount in excess of earnings
Deduction from unitholders’ capital
III. Distribution amount[Distribution amount per unit]

64,929,840

65,676,160

321,440,024

319,350,328[4,307][4,279]256,510,184

253,674,168

Of which,
Distribution amount from earnings[Distribution amount from earnings per unit]
Distribution amount in excess of earnings[Distribution amount in excess of earnings per unit]
IV. Retained earnings carried forward
Method of calculating distribution amount(Note)[3,437][3,399]64,929,840

65,676,160

[870]

[880]

34,45538,637
In accordance with the policy that “NHI In accordance with the policy that “NHI
shall distribute an amount in excess of shall distribute an amount in excess of
the amount equivalent to 90% of its the amount equivalent to 90% of its
distributable earnings as defined in distributable earnings as defined in
Article 67-15 of the Act on Special Article 67-15 of the Act on Special
Measures Concerning Taxation” but no Measures Concerning Taxation” but nomore than the amount of earnings more than the amount of earnings
pursuant to the cash distribution policy pursuant to the cash distribution policy
set forth in Article 33, Paragraph 1, set forth in Article 33, Paragraph 1,
Item 1 of its articles of incorporation, Item 1 of its articles of incorporation,
NHI decided the distributions from NHI decided the distributions from
earnings that it shall pay out shall be the earnings that it shall pay out shall be themaximum value of the integral multiple maximum value of the integral multipleof the total number of investment units of the total number of investment units
issued and outstanding (74,632 units) in issued and outstanding (74,632 units) inan amount that is not in excess of an amount that is not in excess ofunappropriated retained earnings. unappropriated retained earnings.
Accordingly,
NHI declared a Accordingly,
NHI declared a
distribution amount of 256,510,184 distribution amount of 253,674,168
yen.
yen.
Furthermore, NHI shall implement
Furthermore, NHI shall implement
cash distributions in excess of earnings cash distributions in excess of earnings(reimbursement of investments in (reimbursement of investments incapital which falls under the category of capital which falls under the category of
distribution reducing unitholders’ distribution reducing unitholders’capital for tax purpose) uninterruptedly capital for tax purpose) uninterruptedly
every fiscal period pursuant to the cash every fiscal period pursuant to the cash
distribution policy set forth in Article distribution policy set forth in Article
33, Paragraph 1, Item 2 of its articles of 33, Paragraph 1, Item 2 of its articles ofincorporation.
incorporation.
Based on this policy, NHI decided toBased on this policy, NHI decided to
distribute 64,929,840 yen, which is the distribute 65,676,160 yen, which is theamount roughly equivalent to 32% of amount roughly equivalent to 32% of
the 202,606,601 yen in depreciation for the 203,564,063 yen in depreciation for
the 10th Fiscal Period, as cash the 11th Fiscal Period, as cash
distributions in excess of earnings distributions in excess of earnings(reimbursement of investments in (reimbursement of investments incapital which falls under the category of capital which falls under the category of
distribution reducing unitholders’ distribution reducing unitholders’capital for tax purposes).
capital for tax purposes).
NHI adopts a policy of implementing uninterrupted cash distributions in excess of earnings (reimbursement of investments
in capital which falls under the category of distribution reducing unitholders’ capital for tax purpose) in an amount not toexceed 40% of depreciation in every accounting period within the scope that would not have adverse impact on the financial
position of NHI after setting aside the cash and deposits that NHI deems appropriate, taking into account the status ofestablishment of lines of credit, etc., in order not to affect long-term repair plans in light of the capital expenditures for eachaccounting period assumed based on the long-term repair plans and to meet needs for funds (new acquisition of investment
assets, repairs and capital expenditures required to maintain and enhance portfolio assets, NHI’s working capital, repaymentof obligations, payout of distributions, etc.).

- 23 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
2.5. Statements of Cash Flows(Unit: thousand yen)

Cash flows from operating activities
Income before income taxes
Depreciation
Interest income
Interest expenses
Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable – other
Increase (decrease) in accrued consumption taxes
Increase (decrease) in advances received
Decrease (increase) in long-term prepaid expenses
Increase (decrease) in deposits received
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment in trust
Proceeds from tenant leasehold and security deposits
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from long-term loans payable
Repayments of long-term loans payable
Earnings dividends paid
Distribution in excess of earnings paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period- 24 -

10th Fiscal Period(From: Nov. 1, 2018
To: Apr. 30, 2019)11th Fiscal Period(From: May 1, 2019
To: Oct. 31, 2019)257,427
202,984(1)
21,644
6,195(8,973)(8,916)
(218)
1,677
5,370
(120)
937
478,0071(21,166)(869)
455,973

254,562
203,942(1)
22,003(6,140)3,482
10,449301
59(9,350)34(342)
479,0011(22,481)(894)
455,627(435,516)
20,160(415,356)(13,855)－(13,855)(243,342)(64,923)(308,266)(267,649)
1,851,753
1,584,103

2,900,000(2,900,000)(257,179)(65,123)(322,303)
119,467
1,584,103
1,703,571*1*1

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
2.6. Notes to the Going Concern
Not applicable.
2.7. Notes to Significant Accounting Policies
1. Depreciation method for(1) Property, plant and equipment (including assets in trust)
non-current assets
The straight-line method is adopted.
The useful life of principal property, plant and equipment is as follows:
Buildings
3–58 years
Structures
10–49 years
Machinery and equipment
10–17 years
Tools, furniture and fixtures
2–15 years(2) Intangible assets
The straight-line method is adopted.
(3) Long-term prepaid expenses
The straight-line method is adopted.
2. Standards for
Accounting for fixed property tax, etc.
revenue and expense
Concerning fixed property tax, city planning tax, depreciated asset tax, etc.
recognitionon owned real estate or trust beneficiary interests that have real estate as
assets in trust, of the tax amount assessed and determined, the method of
accounting for the amount corresponding to the concerned fiscal period as
expenses related to rent business is adopted.
Concerning the amount equivalent to fixed property tax, etc. in the initialfiscal year that shall be borne by NHI in correlation with acquisitions ofreal estate or trust beneficiary interests that have real estate as assets intrust, the amount is not expensed but is included in the cost of acquisitionof the concerned real estate property. The amount equivalent to fixed
property tax, etc. that was included in the cost of acquisition of real estate
properties is 52 thousand yen in the 10th Fiscal Period and 0 yen in the 11th
Fiscal Period.
3. Hedge accounting(1) Hedge accounting approach
Deferral hedge accounting is applied.
However, special accounting is applied to interest rate swaps that meet thecriteria for special accounting.
(2) Hedging instruments and hedged items
Hedging instruments:
Interest rate swap transactions
Hedged items:
Interest on loans(3) Hedging policy
NHI conducts derivative transactions for the purpose of hedging the risks
set forth in its articles of incorporation based on its risk management policy.
(4) Method for assessing the effectiveness of hedging
The effectiveness of hedging is assessed by comparing the accumulated
cash-flow changes of hedged items with that of hedging instruments andverifying the ratio of both amounts of changes.
However, interest rate swaps that meet the criteria for special accounting
are omitted from assessment of the effectiveness.
4. Scope of funds in the
The funds (cash and cash equivalents) in the statements of cash flows consist of
statements of cash flows
cash on hand and cash in trust; deposits that can be withdrawn at any time anddeposits in trust; and short-term investments with a maturity of 3 months or lessfrom the date of acquisition, which are readily convertible to cash and bear only
an insignificant risk of price fluctuation.

- 25 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
5.

Other significant mattersserving as basis for
preparation offinancial statements(1) Accounting method for trust beneficiary interests in real estate properties
Concerning owned trust beneficiary interests that have real estate
properties as assets in trust, all accounts of assets and liabilities within
assets in trust, as well as all accounts of revenue generated and expenses
incurred from assets in trust, are recorded in the relevant account item of
the balance sheets and statements of income.
The following material items of the assets in trust recorded in the relevant
account item are separately listed on the balance sheets.
(i) Cash and deposits in trust(ii) Buildings in trust, structures in trust, machinery and equipment intrust, tools, furniture and fixtures in trust, and land in trust(iii) Leasehold rights in trust(2) Accounting method for consumption taxes
Consumption tax and local consumption tax are accounted for by excludingfrom transaction amounts.
Non-deductible consumption taxes on acquisition of assets are included in
the cost of acquisition of the relevant asset.

2.8. Notes to Financial Statements[Omission of Disclosure]
Concerning notes to lease transactions, securities, retirement benefits, tax-effect accounting and asset retirement
obligations, disclosure is omitted because there is thought to be no substantial need for such disclosure in thefinancial report (kessan tanshin).
[Notes to Balance Sheets]*1. Assets pledged as collateral and secured liabilities
The following are the assets pledged as collateral.

Cash and deposits in trust
Buildings in trust
Structures in trust
Machinery and equipment in trust
Tools, furniture and fixtures in trust
Land in trust
Construction in progress in trust
Leasehold rights in trust
Total

10th Fiscal Period(As of Apr. 30, 2019)453,791
10,867,321
192,344
17,30938,2918,233,176
1,080
40,886
19,844,201(Unit: thousand yen)
11th Fiscal Period(As of Oct. 31, 2019)471,207
10,677,409
189,503
16,717
40,6958,233,176－
40,886
19,669,594

10th Fiscal Period(As of Apr. 30, 2019)
3,400,000
6,400,000
9,800,000(Unit: thousand yen)
11th Fiscal Period(As of Oct. 31, 2019)
3,000,000
6,800,000
9,800,000

The following are the secured liabilities.

Current portion of long-term loans payable
Long-term loans payable
Total*2. Minimum net assets as provided in Article 67, Paragraph 4 of the Act on Investment Trusts and Investment
Corporations(Unit: thousand yen)
10th Fiscal Period
11th Fiscal Period(As of Apr. 30, 2019) (As of Oct. 31, 2019)50,00050,000- 26 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period[Notes to Statements of Income]*1. Breakdown of property-related operating income (loss)

A. Property-related operating revenue
Rent revenue – real estate
Total property-related operating revenue
B. Property-related operating expenses
Consignment expenses
Taxes and dues
Non-life insurance expenses
Repair expenses
Depreciation
Leasehold and office rents
Other lease business expenses
Total property-related operating expenses
C. Property-related operating income (loss) [A − B]10th Fiscal Period(From: Nov. 1, 2018
To: Apr. 30, 2019)(Unit: thousand yen)
11th Fiscal Period(From: May 1, 2019
To: Oct. 31, 2019)705,127

707,645
705,127

13,282
49,915
1,406
30,496202,606
1,200
71

707,645
14,12250,566
1,375
25,925203,564
1,200－

298,978
406,149

296,755
410,89010th Fiscal Period(From: Nov. 1, 2018
To: Apr. 30, 2019)11th Fiscal Period(From: May 1, 2019
To: Oct. 31, 2019)10,000,000 units
74,632 units

10,000,000 units
74,632 units[Notes to Statements of Unitholders’ Equity]

Total number of investment units authorized andtotal number of investment units issued and outstanding
Total number of investment units authorized
Total number of investment units issued and outstanding[Notes to Statements of Cash Flows]*1. Reconciliation of balance sheet items to cash and cash equivalents at end of period in the statements of cash flows(Unit: thousand yen)
10th Fiscal Period
11th Fiscal Period(From: Nov. 1, 2018
(From: May 1, 2019
To: Apr. 30, 2019)
To: Oct. 31, 2019)
Cash and deposits
Cash and deposits in trust
Cash and cash equivalents

1,130,311
453,791
1,584,103- 27 -

1,232,364
471,207
1,703,571

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period[Notes to Financial Instruments](1) Matters concerning status of financial instruments(a) Policy for financial instruments
NHI procures funds through borrowing from financial institutions, issuance of new investment units, etc. forasset acquisitions, repairs and maintenance, distribution payouts, loan repayments, etc. In debt financing, NHI
takes heed of extending loan periods, converting interest rates to fixed rates, staggering repayment dates, etc. inorder to secure financial stability and hedge future interest rate fluctuation risk.
NHI manages surplus funds through deposits, safe and liquid monetary claims and securities, etc. (in principle,
deposits).
Derivative transactions are limited to those that are for the purpose of hedging the risk of fluctuations ininterest rates on the liabilities of NHI.
(b) Contents and risks of financial instruments and related risk management system
The funds from debt financing are used mainly for acquisition of assets (such as real estate trust beneficiaryinterests). These are exposed to liquidity risk upon repayment, but the risk is managed by maintaining LTV at
low levels, staggering repayment dates, maintaining the ratio of long-term interest-bearing liabilities to totalinterest-bearing liabilities at high levels, and diversifying lenders centering on domestic financial institutions.
Loans with floating interest rates are exposed to the risk of fluctuations in the interest rate payable, but derivativetransactions (interest rate swap transactions) are used as a hedging instrument for hedging the risk of fluctuationsin the interest rate payable and converting interest expenses to fixed rates for all or some of those floating-rateloans of which are long-term loans.
The effectiveness of hedging is assessed by comparing the accumulated cash-flow changes of hedged itemswith that of hedging instruments and verifying the ratio of both amounts of changes. However, interest rate
swaps that meet the criteria for special accounting are omitted from assessment of the effectiveness.
Execution and management of derivative transactions are carried out based on the regulations defining thebasic policy of risk management.
Tenant leasehold and security deposits are deposits received from tenants and are exposed to liquidity risk at
the time that the deposits are to be returned to tenants when they vacate the property, but the risk is limited byretaining a certain percentage of that amount.
Deposits are used for investing NHI’s surplus funds and are exposed to credit risk, such as bankruptcy of thedepository financial institutions, but the risk is managed by restricting the tenor of the deposit relatively short,setting a minimum credit rating requirement for the depository financial institutions (excluding checkabledeposits), etc.
(c) Supplementary explanation for fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if applicable. When there is noquoted market price available, fair value is reasonably estimated. As certain assumptions are used for theestimation of fair value, the result of such estimation may differ if, for example, different assumptions are used.
Also, the contract amount, etc. of derivative transactions do not itself represent the market risk involved in thesederivative transactions.
(2) Matters concerning fair value, etc. of financial instruments
The following is the carrying amount, fair value and difference between the two. The financial instruments
for which fair value is extremely difficult to estimate are excluded from the following tables (please refer to(Note 2)).
10th Fiscal Period (as of April 30, 2019)(1) Cash and deposits(2) Cash and deposits in trust
Total assets(3) Current portion of long-term loans payable(4) Long-term loans payable
Total liabilities
Derivative transactions

Carrying amount
1,130,311
453,791
1,584,103
3,400,000
6,400,000
9,800,000―- 28 -

Fair value
1,130,311
453,791
1,584,103
3,401,341
6,412,700
9,814,042―(Unit: thousand yen)
Difference
―
―
―
1,341
12,70014,042―

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
11th Fiscal Period (as of October 31, 2019)(1) Cash and deposits(2) Cash and deposits in trust
Total assets(3) Current portion of long-term loans payable(4) Long-term loans payable
Total liabilities
Derivative transactions

Carrying amount
1,232,364
471,207
1,703,571
3,000,000
6,800,000
9,800,000―

Fair value
1,232,364
471,207
1,703,571
3,001,985
6,832,901
9,834,887―(Unit: thousand yen)
Difference
―
―
―
1,985
32,901
34,887―(Note 1) Methods to estimate fair value of financial instruments and matters concerning derivative transactions
Assets(1) Cash and deposits; (2) Cash and deposits in trust
As these instruments are settled in a short period of time, their fair value and book value are nearly
identical. Therefore, for these items, their book value is assumed as their fair value.
Liabilities(3) Current portion of long-term loans payable; (4) Long-term loans payable
As those with floating interest rates reflect market interest rates in a short period of time and there areno significant changes in NHI’s credit risk after borrowing, their fair value and book value are nearly
identical. Therefore, for these items, their book value is assumed as their fair value. For those with fixedinterest rates, their fair value is based on the sum total amount of principle and interest (*) discounted at
the interest rate reasonably estimated to be applied if similar new borrowing is entered into.
(*) For those long-term loans payable qualifying for special accounting of interest rate swaps (please refer
to “Derivative transactions” below), the sum total amount of principle and interest by the rate of theinterest rate swap
Derivative transactions
Please refer to “Notes to Derivative Transactions” later in this document.
(Note 2) Carrying amount of financial instruments for which fair value is extremely difficult to estimate(Unit: thousand yen)
10th Fiscal Period
11th Fiscal Period(As of Apr. 30, 2019) (As of Oct. 31, 2019)
Tenant leasehold and security deposits
750,376
750,376
Total
750,376
750,376
Tenant leasehold and security deposits that have been deposited from tenants of rental properties are not subject
to disclosure of market price, because these are not marketable and the actual deposit period from when tenants
move in to when tenants move out cannot be reliably determined, thus making it impossible to reasonably
estimate their future cash flows, and therefore, it is considered to be extremely difficult to estimate their fairvalue.
(Note 3) Redemption schedule for monetary claims due after the settlement of accounts
10th Fiscal Period (as of April 30, 2019)

Due within
1 yearCash and deposits
Cash and deposits in trust
Total

1,130,311
453,791
1,584,103

Due after
1 year,but within
2 years―――- 29 -

Due after
2 years,
but within
3 years―――

Due after
3 years,
but within
4 years―――(Unit: thousand yen)
Due after
4 years,
Due after
but within
5 years
5 years
―
―
―
―
―
―

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
11th Fiscal Period (as of October 31, 2019)

Due within
1 yearCash and deposits
Cash and deposits in trust
Total

1,232,364
471,207
1,703,571

Due after
1 year,but within
2 years―――

Due after
2 years,
but within
3 years―――

Due after
3 years,
but within
4 years―――(Unit: thousand yen)
Due after
4 years,
Due after
but within
5 years
5 years
―
―
―
―
―
―

(Note 4) Repayment schedule for short-term loans payable, current portion of long-term loans payable and longterm loans payable due after the settlement of accounts
10th Fiscal Period (as of April 30, 2019)

Current portion of
long-term loans payable
Long-term loans payable
Total(Unit: thousand yen)
Due after
4 years,
Due after
but within
5 years
5 years

Due within
1 yearDue after
1 year,but within
2 years

Due after
2 years,
but within
3 years

Due after
3 years,
but within
4 years

3,400,000

－

－

－

－

－

－
3,400,000

2,500,000
2,500,000

500,000
500,000

2,400,000
2,400,000

1,000,000
1,000,000－－(Unit: thousand yen)
Due after
4 years,
Due after
but within
5 years
5 years

11th Fiscal Period (as of October 31, 2019)

Current portion of
long-term loans payable
Long-term loans payable
Total

Due within
1 yearDue after
1 year,but within
2 years

Due after
2 years,
but within
3 years

Due after
3 years,
but within
4 years

3,000,000

－

－

－

－

－

－
3,000,000－－

2,900,000
2,900,000

1,000,000
1,000,000

2,900,000
2,900,000－－[Notes to Derivative Transactions](1) Derivative transactions to which hedge accounting is not applied
10th Fiscal Period (as of April 30, 2019)
Not applicable.
11th Fiscal Period (as of October 31, 2019)
Not applicable.

(2) Derivative transactions to which hedge accounting is applied
The following is the contract amount, amount equivalent to the principal provided in the contract, etc. as ofthe settlement of accounts for each hedge accounting approach for derivative transactions to which hedge
accounting is applied.

- 30 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
10th Fiscal Period (as of April 30, 2019)(Unit: thousand yen)
Hedge accounting
approach

Type, etc. of
derivative transactionMainhedged item

Contract amount, etc.
Of which,due after
1 yearSpecial accounting
for interest rate swaps

Interest rate swap transactions
Receive floating and pay fixedLong-termloans payable

9,600,000

6,200,000

Fair value

Method ofestimation ofthat fair value(*)―

11th Fiscal Period (as of October 31, 2019)(Unit: thousand yen)
Hedge accounting
approach

Type, etc. of
derivative transactionMainhedged item

Contract amount, etc.
Of which,due after
1 yearSpecial accounting
for interest rate swaps

Interest rate swap transactions
Receive floating and pay fixedLong-termloans payable

6,700,000

3,700,000

Fair value

Method ofestimation ofthat fair value(*)―(*) The fair value of derivative transactions qualifying for special accounting of interest rate swaps is included inthat of related long-term loans payable. This is because such interest rate swaps are handled together withhedged long-term loans payable. (Please refer to “Notes to Financial Instruments; (2) Matters concerning fairvalue, etc. of financial instruments (Note 1); Liabilities (3) (4)” earlier in this document.)[Notes to Transactions with Related Parties](1) Parent company and major corporate unitholders
10th Fiscal Period (as of April 30, 2019)
Not applicable.
11th Fiscal Period (as of October 31, 2019)
Not applicable.
(2) Affiliates
10th Fiscal Period (as of April 30, 2019)
Not applicable.
11th Fiscal Period (as of October 31, 2019)
Not applicable.
(3) Companies under common control
10th Fiscal Period (from November 1, 2018, to April 30, 2019)
Location

Capitalstock orinvestments
in capital

Subsidiary of a
GK DA
Minato-ku,
major
Tokyo
Healthcare 2
unitholder

300
thousandyen

Classification

Name ofcompany,etc.

Percentage
of voting Relationship
Balance atNature ofTransaction
Account end ofrights, etc. with relatedtransaction
amountpartiesperiodheld by/in
NHI
Purchase of Purchase of real
real estate
estate trust
394,500
Real estate
trust
beneficiary－－－
thousand yen
businessbeneficiaryinterests
interests (Note 1, 2, 3 and 4)

Business
description

Of the amounts above, consumption taxes are not included in transaction amounts.
(Note 1) The purchase of real estate trust beneficiary interests described above is for Irise Komae Bettei. Transaction amount does
not include expenses required for the acquisition of the said real estate, etc. (taxes and dues, etc.) (the purchase price of realestate, etc. stated in the purchase and sale agreement of trust beneficiary interests).
(Note 2) Terms of transactions with interested parties, etc. are determined based on the internal rules for conflict of interest set forth
by the Asset Management Company.
(Note 3) Terms of transaction are based on the actual conditions of the market.
(Note 4) The real estate in trust of trust beneficiary interests owned by NHI is the 30% quasi-co-ownership of Irise Komae Bettei.

- 31 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
11th Fiscal Period (as of October 31, 2019)
Not applicable.
(4) Directors and major individual unitholders, etc.
10th Fiscal Period (as of April 30, 2019)
Not applicable.
11th Fiscal Period (as of October 31, 2019)
Not applicable.
[Notes to Investment and Rental Properties]
NHI owns fee-based homes for the elderly, etc. (including land) in the three major metropolitan areas and corecities. The carrying amount, net change in the carrying amount during period and fair value at end of period of theinvestment and rental properties are as follows:(Unit: thousand yen)
10th Fiscal Period(From: Nov. 1, 2018
To: Apr. 30, 2019)11th Fiscal Period(From: May 1, 2019
To: Oct. 31, 2019)

Carrying amount
Balance at beginning of period
19,158,094
19,389,329
Net change during period
231,234(190,941)
Balance at end of period
19,389,329
19,198,387
Fair value at end of period
24,508,000
24,225,000(Note 1) The carrying amount is the amount after accumulated depreciation is deducted from the cost of acquisition.
(Note 2) Significant changes during period
For the 10th Fiscal Period, the major reason for increase is the acquisition of Irise Komae Bettei (394,500
thousand yen); and the major reason for decrease is depreciation (202,606 thousand yen).
For the 11th Fiscal Period, the major reason for decrease is depreciation (203,564 thousand yen).
(Note 3) The fair value at end of period represents the sum of appraisal values estimated by external real estateappraisers.
Income and loss from investment and rental properties are disclosed in “Notes to Statements of Income.”[Segment Information, etc.](1) Segment information
Segment information is omitted because NHI has no segment except the property leasing business.
(2) Related information
10th Fiscal Period (from November 1, 2018, to April 30, 2019)① Information about products and services
Information about products and services is omitted because net sales to external customers for a single
product and service category are in excess of 90% of the operating revenue on the statements of income.
② Information about geographic areas
A. Net sales
Information about net sales is omitted because net sales to external customers in Japan are in excessof 90% of the operating revenue on statements of income.
B. Property, plant and equipment
Information about property, plant and equipment is omitted because the amount of property, plant andequipment located in Japan is in excess of 90% of the amount of property, plant and equipment on thebalance sheets.
③ Information about major customers
Information about major customers is omitted because consent for disclosure on net sales to a single
external customer has not been obtained from tenants.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
11th Fiscal Period (from May 1, 2019, to October 31, 2019)① Information about products and services
Information about products and services is omitted because net sales to external customers for a single
product and service category are in excess of 90% of the operating revenue on the statements of income.
② Information about geographic areas
A. Net sales
Information about net sales is omitted because net sales to external customers in Japan are in excessof 90% of the operating revenue on statements of income.
B. Property, plant and equipment
Information about property, plant and equipment is omitted because the amount of property, plant andequipment located in Japan is in excess of 90% of the amount of property, plant and equipment on thebalance sheets.
③ Information about major customers
Information about major customers is omitted because consent for disclosure on net sales to a single
external customer has not been obtained from tenants.
[Notes to Per Unit Information]
11th Fiscal Period(From: May 1, 2019
To: Oct. 31, 2019)
137,012 yen
Net assets per unit
137,920 yen
3,399 yen
Net income per unit
3,437 yen
(Note 1) Net income per unit is calculated by dividing the net income by the daily weighted average number ofinvestment units.
The diluted net income per unit is not stated as there are no diluted investment units.
10th Fiscal Period(From: Nov. 1, 2018
To: Apr. 30, 2019)(Note 2) The basis for calculating the net income per unit is as follows:
10th Fiscal Period(From: Nov. 1, 2018
To: Apr. 30, 2019)
Net income (thousand yen)Amount not attributable to common unitholders (thousand yen)
Net income attributable to common investment units (thousand yen)
Average number of investment units during period (units)

256,533－
256,533
74,632

11th Fiscal Period(From: May 1, 2019
To: Oct. 31, 2019)
253,678－
253,678
74,632[Notes to Significant Subsequent Events]a. Conclusion of Merger Agreement between NHI and JRH
Both REITs resolved at their respective board of directors’ meetings held on November 19, 2019, to
implement the Merger with the effective date being April 1, 2020, and entered into the Merger Agreement dated
November 19, 2019.
(i) Purpose of the Merger
To date, both REITs have taken the following measures to ensure stable income over the medium to longterm and steady expansion of their assets, taking advantage of their respective characteristics. At the sametime, both REITs are also aware of the challenges they face.
JRH has achieved sustained dividend growth by taking advantage of steady demand for rental housing witha focus on the three major metropolitan areas including the 23 wards of Tokyo, as well as other regions, andby establishing a stable portfolio of 227.8 billion yen based on the total acquisition price. However, JRH is
affected by changes in the supply-demand conditions in the rental housing investment market, as is the casewith other residential J-REITs. For instance, the competition for acquisition of superior properties has
intensified under the continued low interest rate environment. In such situation, JRH has adopted a property
replacement strategy with a view to improve the quality of its portfolio as the top priority under the new
medium-term target announced by JRH in May 2019, and has been replacing its owned properties steadily- 33 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
thereafter, but expects that it will take some period of time (approximately three to five years) to complete thestrategy.
NHI has developed its expertise on healthcare assets, a growing market, has established good relationships
with operators by engaging in numerous transactions with operators, and has accumulated a track record ofasset management under the backdrop of social demand for the enhancement of private nursing homes andother facilities for the elderly under the macro environment of age demographics where the youth population
is decreasing and the ratio of elderly people is increasing. On the other hand, there are constraints onopportunities for external growth due to factors such as stagnation in its investment unit price due to the small
scale of its portfolio assets.
Under such circumstances, given that both REITs are managed by the same asset manager and sponsoredby the same company and that both REITs manage assets that can be considered as having a certain degree ofaffinity in the framework of “places where people live and reside” for a wide range of age groups from singleperson households, DINKS (double-income households with no kids), and families to senior households,
expansion of their current respective investment targets from rental housing/healthcare facilities to those witha certain degree of affinity in the above framework through the Merger would enable JRH to secure investment
opportunities in other asset classes when property acquisition opportunities decrease due to changes in the
supply-demand conditions in the rental housing investment market, as well as to secure opportunities to acquire
healthcare facilities warehoused by the same sponsor after the Merger. This would enable NHI to secure largescale external growth opportunities and improve stability in its portfolio income and risk diversification byincreasing the likelihood of equity financing through future issuance of new investment units as a result of
expansion of asset size and market capitalization. Therefore, both REITs believe that the Merger would
contribute to resolving the challenges the face as stated above. In addition, both REITs share the view that asa result of industry reorganization and new entries led by major companies in the healthcare industry, the credit
risk of healthcare operators, which had been an issue of concern, has declined and thereby the cap rates ofrental housing and healthcare facilities are now considered to be almost converging. Accordingly, both REITs
reached the conclusion that the Merger would combine the characteristics and strengths of the two andrecharacterize them as a REIT that “comprehensively provides comfortable living spaces suited to each life
stage” and it would therefore contribute to ensuring further growth in the future and thereby maximize
unitholders’ value by securing earnings and stabilizing and improving distribution. Accordingly, both REITs
entered into the Merger Agreement as of today.
(ii) Method of Merger
JRH will be the surviving corporation under the absorption-type merger and NHI will be dissolved upon
the Merger.
(iii) Merger Ratio

Allocation of units upon the
Merger

JRH(Surviving corporation in
the absorption-type merger)

NHI(Absorbed corporation in
the absorption-type merger)

1

2.05

(Note 1) The number of new JRH investment units to be issued upon the Merger: 152,995 investment units (scheduled)(Note 2) Fractions of less than one unit will arise with respect to the number of investment units to be allotted to the unitholders of NHI through the allotmentof 2.05 units of JRH per unit of NHI. These fractional units will be sold through a market transaction in accordance with statutory provisions, andthe proceeds from the sale will be delivered to the unitholders who are allocated fractions in proportion to the size of their fractional units to beallocated.

- 34 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period(ⅳ) Payment on Merger
After the Merger, in lieu of cash distributions to the unitholders of NHI for NHI’s final accounting period
from November 1, 2019, to March 31, 2020, JRH, the surviving corporation, will, within a reasonable period
after the effective date of the Merger, make a payment on the Merger based on the distributable amount of NHI
to the unitholders of NHI (the unitholders listed or recorded on the final unitholders register of NHI as of the
day immediately prior to the effective date of the Merger (excluding the unitholders of NHI who havedemanded the purchase of their investment units pursuant to the provisions of Article 149-3 of the Act on
Investment Trusts and Investment Corporations (hereinafter referred to as the “Allotted Unitholders”))) or theregistered pledgees of investment units held by Allotted Unitholders, in an amount equivalent to the cash
distributions for the abovementioned period (the payment will be the amount of distributable profit of NHI asof the day immediately prior to the effective date of the Merger divided by the number of investment units thatis obtained by deducting (a) the number of investment units held by the unitholders other than the Allotted
Unitholders of NHI from (b) the total number of investment units issued and outstanding of NHI as of the day
immediately prior to the effective date of the Merger (rounded down to the nearest yen). The same applies
hereinafter.)(v) Overview of the fiscal period immediately preceding the Merger (fiscal period ended September 2019) of
the surviving corporation (JRH)Business activities: Managing assets of investment corporations by investing mainly in real estate, etc.
among other specified assets, based on the Investment Trusts Act
Operating revenue: 8,460 million yen
Net income:
3,364 million yen
Assets:227,187 million yen
Liabilities:
118,740 million yen
Net assets:
108,447 million yen(vi) Date of the Merger
The Merger is scheduled to take effect on April 1, 2020.
b. Decision on Acquisition of Assets
NHI concluded sales and purchase agreements concerning acquisition of the following assets on November
19, 2019, and decided on the acquisition contingent upon the effectuation of the Merger, etc. The position as
well as the rights and obligations of the buyer in the sales and purchase agreement for the Assets to be Acquired
are scheduled to be succeeded from the Investment Corporation to JRH on April 1, 2020, which is the effective
date of the Merger.

Property name

AIP Kachidoki-Ekimae
PLAISANT GRAND
MINAMI YUKIGAYA
Aira no mori
Higashi-Ofuna
Aira no mori
Shakujiikoen

Type of asset

Trust
beneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests

Location

Scheduledacquisition
Date of conclusion
Scheduledprice (thousandof sale andacquisition datepurchase agreementyen)(Note 1)

SellerChuo-ku,Tokyo

8,150,000

Ota-ku,Tokyo

3,380,000

Yokohama-shi,
Kanagawa

2,271,195(Note 9)Nerima-ku,
Tokyo

2,070,000(Note 7)(Note 6)(Note 8)
November 19,
2019- 35 -

April 2,2020

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period

Property nameAira no mori EdogawaShinozaki
Senior Forest
Yokohama-Tsuzuki
Sompo no ie
Toyonaka-Minamisone
Irise Komae Bettei(additional
acquisition)
Alpha Living
Takamatsu
Konyamachi
Good Time Living
Center-Minami,
Platesia Center-Minami
Good Time Living
Chibaminato-Kaigandori･
Platesia Chibaminato
Good Time Living
Yokohama-Tsuzuki
Good Time Living
Senri-Hinatagaoka
Good Time Living
Nakamozu
Good Time Living
Kourigaoka
Good Time Living
KameidoGood Time Living
MikageGood Time Living
Amagasaki-Shintoshin
Good Time Living
Minami Senri
Good Time Living
Kobe-Tarumi
Good Time Living
Chibaminato-Ekimaedori
Good Time Living
Senboku-Izumigaoka
Good Time Living
Ikeda-Midorigaoka
Good Time Living
Nagatsuta-Minamidai
Good Time Living
Saitama-Hasuda

Type of asset

Trust
beneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests

Location

Scheduledacquisition
Date of conclusion
Scheduledprice (thousandof sale andacquisition datepurchase agreementyen)(Note 1)

Seller

Edogawa-ku,
Tokyo

1,499,307(Note 7)

Yokohama-shi,
Kanagawa

1,202,000(Note 10)

Toyonaka-shi,
Osaka825,000(Note 5)

Komae-shi,Tokyo920,500(Note 5)

Takamatsu-shi,
Kagawa1,225,000(Note 5)

Yokohama-shi,
Kanagawa

11,150,000(Note 11)

Chiba-shi,
Chiba

4,516,000(Note 11)

Yokohama-shi,
Kanagawa

4,064,000(Note 11)

Suita-shi,
Osaka

2,800,000(Note 11)

Sakai-shi,
Osaka

2,180,000

Hirakata-shi,
Osaka

2,120,000(Note 11)

Koto-ku,Tokyo

1,860,000(Note 11)Kobe-shi,Hyogo

1,820,000(Note 11)

Amagasaki-shi,
Hyogo

1,585,000(Note 11)

Suita-shi,
Osaka

1,430,000(Note 11)Kobe-shi,Hyogo

1,370,000(Note 11)

Chiba-shi,
Chiba

1,320,000(Note 11)

Sakai-shi,
Osaka

980,000(Note 11)

Ikeda-shi,
Osaka920,000(Note 11)

Yokohama-shi,
Kanagawa

850,000(Note 11)

Hasuda-shi,
Saitama

659,000(Note 11)
November 19,
2019- 36 -

November 19,
2019

April 2,2020

April 2,2020

(Note 11)

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period

Property name

Good Time Living
Nagareyama-Ichibankan
Good Time Living
Nagareyama-Nibankan
Good Time Living
Amagasaki-Ekimae
Total

Type of asset

Trust
beneficiaryinterests
Trustbeneficiaryinterests
Trustbeneficiaryinterests－

Location

Scheduledacquisition
Date of conclusion
Scheduledprice (thousandof sale andacquisition datepurchase agreementyen)(Note 1)

SellerNagareyama-shi,
Chiba

610,000(Note 11)

Nagareyama-shi,
Chiba

563,000(Note 11)

Amagasaki-shi,
Hyogo320,000(Note 11)－62,660,002(Note 1)－－－

Scheduled acquisition price indicates an amount excluding expenses required for the acquisition of the real estate (intermediary fees, taxes andpublic dues, etc.) stated in the purchase and sale agreement of the real estate.
(Note 2) Funds procured in the issuance of new investment units through third-party allotment, proceeds from sale in the sale of assets, cash on hand andborrowings scheduled to be announced in the future are scheduled to be allocated to funds for the acquisition.
(Note 3) There is no intermediary in the acquisition of the respective Assets to be Acquired.
(Note 4) The position as well as the rights and obligations of the buyer in the sales and purchase agreement for the Assets to be Acquired are scheduled tobe succeeded from NHI to JRH based on the Merger on April 1, 2020, which is the effective date of the Merger, and acquired by JRH, the surviving
corporation of the Merger.
(Note 5) The seller is GK DA Healthcare 2.
(Note 6) The seller is GK DA Healthcare 3.
(Note 7) The seller is GK DA Healthcare 4.
(Note 8) The seller is GK DA Healthcare 5.
(Note 9) The seller is GK DA Healthcare 6.
(Note 10) The seller is GK DA Healthcare 7.
(Note 11) The seller is GK GTL Healthcare.

- 37 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
2.9. Increase (Decrease) in Total Number of Investment Units Issued and Outstanding
The following is the increase (decrease) in the total number of investment units issued and outstanding andunitholders’ capital in the net amount since the establishment of NHI through to the end of the 11th Fiscal Period.

Payment dateJan. 7, 2014
Apr. 3, 2014
Nov. 4, 2014
Dec. 3, 2014

July 17, 2015

Nov. 17, 2015
Dec. 16, 2015

Jan. 21, 2016

July 15, 2016

Jan. 24, 2017

July 18, 2017

Jan. 23, 2018

July 17, 2018

Description
Establishment throughprivate placement
Capital increase throughprivate placement
Capital increase throughpublic offering
Capital increase by way ofthird-party allotment
Cash distributions
in excess of earnings(reimbursement of investments
in capital which falls under the
category of distribution
reducing unitholders’ capitalfor tax purpose)
Capital increase throughpublic offering
Capital increase by way ofthird-party allotment
Cash distributions
in excess of earnings(reimbursement of investments
in capital which falls under the
category of distribution
reducing unitholders’ capitalfor tax purpose)
Cash distributions
in excess of earnings(reimbursement of investments
in capital which falls under the
category of distribution
reducing unitholders’ capitalfor tax purpose)
Cash distributions
in excess of earnings(reimbursement of investments
in capital which falls under the
category of distribution
reducing unitholders’ capitalfor tax purpose)
Cash distributions
in excess of earnings(reimbursement of investments
in capital which falls under the
category of distribution
reducing unitholders’ capitalfor tax purpose)
Cash distributions
in excess of earnings(reimbursement of investments
in capital which falls under the
category of distribution
reducing unitholders’ capitalfor tax purpose)
Cash distributions
in excess of earnings(reimbursement of investments
in capital which falls under the
category of distribution
reducing unitholders’ capitalfor tax purpose)

Total number of investment
units issued and outstanding(units)Increase
Balance(Decrease)

Unitholders’ capital, net(million yen)
(Note 1)
Increase
Balance(Decrease)

Remarks

1,000

1,000

100

100

(Note 2)18,80019,800

1,880

1,980

(Note 3)39,00058,800

5,616

7,596

(Note 4)2,000

60,800288

7,884(Note 5)－60,800

(49)

7,834

(Note 6)

12,13072,9302,297

10,132(Note 7)

1,702

74,632322

10,455(Note 8)－74,632(46)

10,408(Note 9)－74,632(59)

10,348(Note 10)－74,632(59)

10,288(Note 11)－74,632(59)

10,229(Note 12)－74,632(63)

10,165(Note 13)－74,632(64)

10,101(Note 14)

- 38 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period

Payment date

Description

Cash distributions
in excess of earnings(reimbursement of investments
January 23, 2019 in capital which falls under the
category of distribution
reducing unitholders’ capitalfor tax purpose)
Cash distributions
in excess of earnings(reimbursement of investments
July 18, 2019 in capital which falls under the
category of distribution
reducing unitholders’ capitalfor tax purpose)

Total number of investment
units issued and outstanding(units)Increase
Balance(Decrease)

Unitholders’ capital, net(million yen)
(Note 1)
Increase
Balance(Decrease)

Remarks－

74,632(64)

10,036(Note 15)－

74,632

(64)

9,971

(Note 16)

(Note 1) Figures indicate amounts obtained by subtracting deduction from unitholders’ capital from unitholders’capital.
(Note 2) NHI was established at an issue price of 100,000 yen per unit. The subscriber for underwriting ofinvestment units at establishment was Daiwa Real Estate Asset Management Co. Ltd.
(Note 3) Investment units were additionally issued to JHC-LPS and ASIA CUATRO-LPS at an issue price of
100,000 yen per unit for the purpose of procuring funds for acquisition of acquisition properties and otherfunds.
(Note 4) New investment units were issued through public offering at an issue price of 150,000 yen (issue amountof 144,000 yen) per unit for the purpose of procuring funds for acquisition of acquisition properties andother funds.
(Note 5) New investment units were issued by way of third-party allotment at an issue amount of 144,000 yen perunit for the purpose of procuring funds for acquisition of acquisition properties and other funds.
(Note 6) NHI resolved cash distributions in excess of earnings (reimbursement of investments in capital whichfalls under the category of distribution reducing unitholders’ capital for tax purpose) of 810 yen per unit
at its board of directors’ meeting held on June 19, 2015, as cash distribution for the 2nd fiscal period(fiscal period ended April 2015), and started the payout from July 17, 2015.
(Note 7) New investment units were issued through public offering at an issue price of 196,570 yen (issue amountof 189,440 yen) per unit for the purpose of procuring funds for acquisition of acquisition properties andother funds.
(Note 8) New investment units were issued by way of third-party allotment at an issue amount of 189,440 yen perunit for the purpose of procuring funds for acquisition of acquisition properties and other funds.
(Note 9) NHI resolved cash distributions in excess of earnings (reimbursement of investments in capital whichfalls under the category of distribution reducing unitholders’ capital for tax purpose) of 768 yen per unit
at its board of directors’ meeting held on December 18, 2015, as cash distribution for the 3rd fiscal period(fiscal period ended October 2015), and started the payout from January 21, 2016.
(Note 10) NHI resolved cash distributions in excess of earnings (reimbursement of investments in capital whichfalls under the category of distribution reducing unitholders’ capital for tax purpose) of 800 yen per unit
at its board of directors’ meeting held on June 21, 2016, as cash distribution for the 4th fiscal period (fiscal
period ended April 2016), and started the payout from July 15, 2016.
(Note 11) NHI resolved cash distributions in excess of earnings (reimbursement of investments in capital whichfalls under the category of distribution reducing unitholders’ capital for tax purpose) of 800 yen per unit
at its board of directors’ meeting held on December 21, 2016, as cash distribution for the 5th fiscal period(fiscal period ended October 2016), and started the payout from January 24, 2017.
(Note 12) NHI resolved cash distributions in excess of earnings (reimbursement of investments in capital whichfalls under the category of distribution reducing unitholders’ capital for tax purpose) of 800 yen per unit
at its board of directors’ meeting held on June 19, 2017, as cash distribution for the 6th fiscal period (fiscal
period ended April 2017), and started the payout from July 18, 2017.
(Note 13) NHI resolved cash distributions in excess of earnings (reimbursement of investments in capital whichfalls under the category of distribution reducing unitholders’ capital for tax purpose) of 850 yen per unit
at its board of directors’ meeting held on December 19, 2017, as cash distribution for the 7th fiscal period(fiscal period ended October 2017), and started the payout from January 23, 2018.

- 39 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period(Note 14) NHI resolved cash distributions in excess of earnings (reimbursement of investments in capital whichfalls under the category of distribution reducing unitholders’ capital for tax purpose) of 860 yen per unit
at its board of directors’ meeting held on June 18, 2018, as cash distribution for the 8th fiscal period (fiscal
period ended April 2018), and started the payout from July 17, 2018.
(Note 15) NHI resolved cash distributions in excess of earnings (reimbursement of investments in capital whichfalls under the category of distribution reducing unitholders’ capital for tax purpose) of 870 yen per unit
at its board of directors’ meeting held on December 19, 2018, as cash distribution for the 9th fiscal period(fiscal period ended October 2018), and started the payout from January 23, 2019.
(Note 16) NHI resolved cash distributions in excess of earnings (reimbursement of investments in capital whichfalls under the category of distribution reducing unitholders’ capital for tax purpose) of 870 yen per unit
at its board of directors’ meeting held on June 19, 2019, as cash distribution for the 10th fiscal period(fiscal period ended April 2019), and started the payout from July 18, 2019.

- 40 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
3. Reference Information
3.1. Investment Status
11th Fiscal Period(As of October 31, 2019)

Type ofasset

Real estate
trust
beneficiaryinterests

Use

RegionTotal amount owned(million yen)
(Note 1)

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

11,845

56.5

6,754

32.2

－

－

－

－

598

2.9

Other
(Note 5)－－

Other private nursing homes andother facilities for the elderly－－

19,198

91.6

Medical facilities

－

－

Other

－

－

19,198

91.6

1,763

8.4

20,962100.0(19,198)(91.6)

Privatenursing homes
and other
facilities forthe elderly

Fee-based
homes forthe elderly

Elderly
housingwithsupportive
services

Three major
metropolitan areas(Note 3)
Core city areas(Note 4)
Other
(Note 5)Three major
metropolitan areas(Note 3)
Core city areas(Note 4)

Subtotal

Total
Deposits and other assets

Total assets (Note 6)(Note 1) “Total amount owned” is the carrying amount (book value after deducting depreciation in the case of realestate trust beneficiary interests).
(Note 2) “As a percentage of total assets” is rounded to one decimal place.
(Note 3) “Three major metropolitan areas” refers to the greater Tokyo area (Tokyo, Kanagawa, Chiba and Saitama
prefectures), the Chukyo area (Aichi, Mie and Gifu prefectures) and the Kinki area (Osaka, Kyoto, Hyogo,
Nara and Shiga prefectures). The same shall apply hereinafter.
(Note 4) “Core city areas” refers to cities (outside the three major metropolitan areas) with populations of 200,000
or more. The same shall apply hereinafter.
(Note 5) “Other” refers to cities (outside the three major metropolitan areas and the core city areas) withpopulations fewer than 200,000. The same shall apply hereinafter.
(Note 6) The figure in brackets [ ] under “Total assets” is the portion of the applicable assets that, in effect,
corresponds to the holding of real estate properties. The amount of construction in progress (including
construction in progress in trust) is not included in the amount of real estate trust beneficiary interests.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
3.2. Investment Real Estate Properties
3.2.1. Acquisition Price and Investment Ratio of Investment Real Estate Properties
The following is an overview of the real estate in trust of trust beneficiary interests owned as of October 31,
2019, by NHI.
Type ofspecified
asset

RegionProperty nameAcquisition price Carrying amount(million yen)(million yen)
(Note 1)
(Note 2)

Sompo Care LAVIERE
Sagamihara Chuo
Charm Suite
Ryokuchi Koen
Sawayaka
Heart Life Nishikyogoku

Real estate
trust
beneficiaryinterests

Core city
areas

Investment
ratio
(%)
(Note 4)

1,170

1,113

1,780

5.9

1,950

1,891

3,030

9.9

750

713

1,130

3.8

950

896

1,560

4.8

Sompo Care LAVIERE
Kinugasayama Koen

1,839

1,783

2,000

9.3

La’nassica Arakogawa

1,279

1,186

1,400

6.5

Super Court
JR Nara-Ekimae
Minna-no-ie
Omiya Tsutsujigaoka Park
(Note 5)Minna-no-ie
Chuo-ku En’nami
Sompo no ie
Nishitanabeekimae

1,569

1,501

1,700

8.0

740

746

774

3.8

838

855

859

4.3

710

744

736

3.6

Irise Komae Bettei (Note 5)

394

412

399

2.0

Subtotal

12,18911,845

15,36861.8

Nichii Care Center
Fukushima Omori
Sompo Care LAVIERE
Hiroshima Hikarigaoka
Sawayaka
Kaikyokan
Sawayaka
Meisuikan
Sawayaka
Hinodekan
Sawayaka
Riverside Kurinoki
Sawayaka
Obatake Sanbankan
Silver Heights
Hitsujigaoka No.3
Alpha Living
Okayama Nishigawa
Ryokudokoen
Alpha Living
Okayama Korakuen
Alpha Living
Takamatsu Ekimae
Alpha Living
Takamatsu Hyakkenmachi

265

236

336

1.3

960

946

1,210

4.9

630

588

898

3.2

590

539

812

3.0

773

733

896

3.9

266

253

306

1.3

289

270

349

1.5

1,200

1,251

1,330

6.1

730

724

789

3.7

610

607

661

3.1

605

601

642

3.1

605

598

628

3.1

7,523

7,352

8,857

38.2

19,712

19,19824,225100.0

Verger Hirakata

Three major
metropolitan
areas

Estimated priceat end of period(million yen)
(Note 3)

Subtotal
Total (23 properties)(Note 1) “Acquisition price” is excluding acquisition costs, fixed property tax, city planning tax, consumption tax
and local consumption tax.
(Note 2) “Carrying amount” is the book value after deducting depreciation as of October 31.
(Note 3) “Estimated price at end of period” is the price as of October 31, 2019, stated in the appraisal reports
prepared by Japan Real Estate Institute, Daiwa Real Estate Appraisal Co., Ltd. or The Tanizawa Sōgō
Appraisal Co., Ltd. in accordance with the articles of incorporation of NHI and the rules of The Investment
Trusts Association, Japan.
(Note 4) “Investment ratio” is the respective property acquisition price expressed as a percentage of the total
amount of the acquisition prices, rounded to one decimal place.
(Note 5) As to Irise Komae Bettei, the figures indicated are for the interest owned by NHI.

- 42 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
3.2.2. Summary of Building and Leasing of Investment Real Estate Properties
The respective property annual rent is not disclosed because consent for disclosure has not been obtained fromtenants. Annual rent of real estate in trust owned as of October 31, 2019, by NHI totaled 1,413 million yen (Note).
(Note) The amount obtained by adding up the monthly rent in the respective lease agreement valid as of October
31, 2019, in the annualized amount calculated by multiplying by 12, rounded down to the nearest million
yen.
RegionThree major
metropolitan
areas

Total
Total
Structure / Constructionleasable area leased area
Floorscompletion
(m2)
(m2)
(Note 1)
(Note 2)
(Note 3)(Note 4)

Property name

Occupancy Appraisal
rate
NOI
(%)
(million yen)
(Note 6)(Note 7)

Sompo CareLAVIERE
Sagamihara Chuo
Charm Suite
Ryokuchi Koen
Sawayaka
Heart Life
Nishikyogoku

RC /
5F

Mar. 31,2008

3,732.95

3,732.95

1

100.0

88

RC /
B1/5F

Sept. 20,
2006

5,329.73

5,329.73

1

100.0

143

RC /
6F

Aug. 6,2007

2,459.19

2,459.19

1

100.0

60

Verger Hirakata

RC /
5F

Feb. 26,2007

2,925.25

2,925.25

1

100.0

84

Sompo CareLAVIERE
Kinugasayama Koen
La’nassica
ArakogawaSuper Court
JR Nara-Ekimae
Minna-no-ie
Omiya Tsutsujigaoka
Park
Minna-no-ie
Chuo-ku En’nami
Sompo no ie
Nishitanabeekimae
Irise Komae Bettei(Note 8)

RC /
B1/5F

Mar. 3,2011

4,265.88

4,265.88

1

100.0

98

S/
4F
RC /
7F

Apr. 17,2008
June 17,2009

3,590.40

3,590.40

1

100.0

73

5,057.07

5,057.07

1

100.0

90

RC /
4F

Apr. 3,2012

1,800.03

1,800.03

1

100.0

39

RC /
3F
RC /
9F
RC /
3F

Feb. 27,2014
Feb. 11,2007
Jan.27,2017

1,963.03

1,963.03

1

100.0

44

2,095.79

2,095.79

1

100.0

36

605.01605.01

1

100.0

17

33,824.33

33,824.33

11

100.0

778

Subtotal
Nichii Care Center
Fukushima Omori
Sompo CareLAVIERE

S/
3F

Mar. 30,
2007

1,964.68

1,964.68

1

100.0

22

RC /
7F

Dec. 15,
2005

4,133.82

4,133.82

1

100.0

70

RC /
6F
RC /
B1/6F
S/
3F
S/
4F
S/
3F
RC /
3F

Oct. 23,
2003
Mar. 25,
2005
July 11,2007
Oct. 20,2009
Sept. 13,2011
Apr. 18,
2003

2,694.42

2,694.42

1

100.0

50

4,553.67

4,553.67

1

100.0

47

2,674.37

2,674.37

1

100.0

46

1,349.39

1,349.39

1

100.0

16

1,411.78

1,411.78

1

100.0

18

7,267.56

7,267.56

1

100.0

70

RC /
7F

Aug. 18,
2014

2,124.16

2,124.16

1

100.0

37

RC /
4F
RC /
6F

May 25,1988
June 9,2014

2,128.44

2,128.44

1

100.0

32

1,848.06

1,848.06

1

100.0

30

RC /
10F

June 28,2010

1,929.16

1,929.16

1

100.0

31

Subtotal

34,079.51

34,079.51

12

100.0

475

Total (23 properties)

67,903.84

67,903.84

23

100.0

1,253

Hiroshima Hikarigaoka

Core city
areas

Total
number oftenants(Note 5)

Sawayaka
Kaikyokan
Sawayaka
Meisuikan
Sawayaka
Hinodekan
Sawayaka
Riverside Kurinoki
Sawayaka
Obatake Sanbankan
Silver Heights
Hitsujigaoka No.3
Alpha Living
Okayama Nishigawa
Ryokudokoen
Alpha Living
Okayama Korakuen
Alpha Living
Takamatsu Ekimae
Alpha Living
Takamatsu
Hyakkenmachi- 43 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period(Note 1) “Structure / Floors” is the entry in the real estate registry of the building of the respective property. “S”
refers to steel-framed structure, “RC” refers to reinforced concrete structure, “B” refers to floors below
ground and “F” refers to floors above ground.
(Note 2) “Construction completion” is the entry in the real estate registry of the building of the respective property.
(Note 3) “Total leasable area,” which is the floor area available for leasing of the building of the respective property,
is the area indicated in the lease contract, etc. (including store compartments and office compartments),
excluding the total leasable area of land (including level parking space).
(Note 4) “Total leased area” is the sum total of the area that is actually leased based on a lease agreement concluded
with end-tenants as of October 31, 2019.
(Note 5) “Total number of tenants” is the total number of end-tenants. When there is a tenant occupying multiple
buildings, the concerned tenant is counted and stated for each individual building.
(Note 6) “Occupancy rate” is the figure obtained by dividing total leased area by leasable area, rounded down to
one decimal place.
(Note 7) “Appraisal NOI” is the net operating income obtained by subtracting operating expenses from operating
revenue appraised by real estate appraisers as stated in the appraisal report as of October 31, 2019. The
appraisal NOI above is the NOI derived by the direct capitalization method. “Appraisal NOI” is rounded
down to the nearest million yen.
(Note 8) The real estate in trust of trust beneficiary interests owned by NHI is 30% quasi-co-ownership in theproperty. “Total leasable area” and “Total leased area” indicate areas equivalent to 30% of the entire
building. “Appraisal NOI” indicates a figure equivalent to the quasi-co-ownership in trust beneficiaryinterests.

- 44 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
3.2.3. Status of Income (Loss) of Investment Real Estate Properties(Unit: thousand yen)

Property name

Nichii Care Center
Fukushima Omori
Sompo CareLAVIERE

Property-related
operatingrevenue(Note 1)

11th Fiscal Period (from May 1, 2019, to October 31, 2019)
Property-related operating expenses
Consignment
expenses

Taxes andpublic dues

Non-life
insurance
expenses

Repairexpenses

Depreciation

NOI(Note 2)Other

Not disclosed

8,626

162

1,179

34

574

5,474

1,200

11,248Not disclosed

30,482

664

2,868

75

14,835

12,038－21,762Not disclosed

13,628

860

2,292

75

73

10,328－45,119Not disclosed

24,285

1,210

4,557

103

1,077

17,336－71,801

Not disclosed

9,732

608

1,808

73

－

7,242

－

25,954Not disclosed

11,466

571

2,806

108

－

7,979

－

25,014Not disclosed

9,623

838

1,711

49

330

6,694

－

30,335

Not disclosed

13,918

623

1,878

56

598

10,761－42,442Not disclosed

22,579

1,043

3,921

92

1,085

16,437－49,486

Not disclosed

20,128

645

2,232

73

48

17,129－37,800Not disclosed

10,741

444

1,858

49

－

8,388

－

24,197

Not disclosed

4,745

198

935

25

－

3,585

－

8,757

Not disclosed

5,373

202

820

25

－

4,325

－

9,631

Not disclosed

22,621

1,455

2,978

97

160

17,931－

46,101

Not disclosed

10,347

1,005

1,826

40

250

7,225

－

19,529Not disclosed

13,185

995

2,146

42

180

9,820

－

22,027

Not disclosed

17,290

685

6,167

129

1,585

8,723

－

33,673Not disclosed

9,731

385

1,675

43

－

7,626

－

18,776

Not disclosed

6,327

304

1,572

42

－

4,407

－

16,593Not disclosed

7,951

302

1,163

37

－

6,448

－

15,760Not disclosed

14,076

302

1,642

39

5,130

6,961

－

10,887

Not disclosed

7,241

414

1,713

46

－

5,066

－

18,493Not disclosed
2,649
707,645 296,755

197
14,122809
50,566

13
1,375－
25,925

1,628
203,564

Hiroshima Hikarigaoka

Sompo CareLAVIERE
Sagamihara Chuo
Charm Suite
Ryokuchi Koen
Sawayaka
Kaikyokan
Sawayaka
Meisuikan
Sawayaka
Heart Life
Nishikyogoku
Verger Hirakata
Sompo CareLAVIERE
Kinugasayama Koen
La’nassica
Arakogawa
Sawayaka
Hinodekan
Sawayaka
Riverside Kurinoki
Sawayaka
Obatake Sanbankan
Super Court
JR Nara-Ekimae
Minna-no-ie
Omiya Tsutsujigaoka
Park
Minna-no-ie
Chuo-ku En’nami
Silver Heights
Hitsujigaoka No.3
Alpha Living
Okayama Nishigawa
Ryokudokoen
Alpha Living
Okayama Korakuen
Alpha Living
Takamatsu Ekimae
Alpha Living
Takamatsu
Hyakkenmachi
Sompo no ie
Nishitanabeekimae
Irise Komae Bettei
Total

－
9,059
1,200 614,454(Note 1) “Property-related operating revenue” is not disclosed by property because consent for disclosure has notbeen obtained from tenants.
(Note 2) NOI = Property-related operating revenue − Property-related operating expenses + Depreciation- 45 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
3.2.4. Summary of Appraisal Report
Direct capitalization
methodIndicatedvalue
Cap rate(million(%)yen)

Summary of appraisal report
DCF
methodIndicated
Discount Terminal
value
rate
cap rate(million
(%)
(%)
yen)

Property nameAppraisal firm

Appraisalvalue(millionyen)

Nichii Care Center
Fukushima Omori
Sompo CareLAVIERE

Japan Real Estate
Institute

336

339

5.7

333

5.5

5.9

22

Japan Real Estate
Institute

1,210

1,220

5.2

1,200

5.0

5.4

70

Daiwa Real EstateAppraisal Co., Ltd.

1,780

1,810

4.7

1,770

4.5

4.9

88

Daiwa Real EstateAppraisal Co., Ltd.

3,030

3,070

4.6

3,010

4.4

4.8

143

Sawayaka
Kaikyokan

Japan Real Estate
Institute

898

907

5.3

889

5.1

5.5

50

Sawayaka
Meisuikan
Sawayaka
Heart Life
Nishikyogoku

Japan Real Estate
Institute

812

819

5.3

805

5.1

5.5

47

Daiwa Real EstateAppraisal Co., Ltd.

1,130

1,140

5.2

1,120

5.0

5.4

60

Daiwa Real EstateAppraisal Co., Ltd.

1,560

1,570

5.2

1,550

5.0

5.4

84

The Tanizawa Sōgō
Appraisal Co., Ltd.

2,000

2,030

4.7

1,990

4.8

4.9

98

The Tanizawa Sōgō
Appraisal Co., Ltd.

1,400

1,410

5.0

1,390

5.1

5.2

73

Daiwa Real EstateAppraisal Co., Ltd.

896

905

5.0

892

4.8

5.2

46

Daiwa Real EstateAppraisal Co., Ltd.

306

309

5.1

304

4.9

5.3

16

349

355

5.1

346

4.9

5.3

18

1,700

1,720

5.0

1,690

5.1

5.2

90

774

783

4.9

770

5.0

5.1

39

859

868

4.9

849

4.7

5.1

44

Daiwa Real EstateAppraisal Co., Ltd.

1,330

1,340

4.9

1,330

4.7

5.1

70

Daiwa Real EstateAppraisal Co., Ltd.

789

802

4.5

783

4.3

4.7

37

Daiwa Real EstateAppraisal Co., Ltd.

661

671

4.7

656

4.5

4.9

32

Daiwa Real EstateAppraisal Co., Ltd.

642

652

4.6

637

4.4

4.8

30

Daiwa Real EstateAppraisal Co., Ltd.

628

634

4.7

625

4.5

4.9

31

The Tanizawa Sōgō
Appraisal Co., Ltd.

736

744

4.7

732

4.8

4.9

36

Japan Real Estate
Institute

399

405

4.4

393

4.2

4.6

17

24,22524,503－24,064

－

－

1,253

Hiroshima Hikarigaoka

Sompo CareLAVIERE
Sagamihara Chuo
Charm Suite
Ryokuchi Koen

Verger Hirakata
Sompo CareLAVIERE
Kinugasayama Koen
(Note 2)
La’nassica
Arakogawa(Note 3)
Sawayaka
Hinodekan
Sawayaka
Riverside Kurinoki

Sawayaka
Daiwa Real Estate
Obatake Sanbankan Appraisal Co., Ltd.
Super Court
The Tanizawa Sōgō
JR Nara-Ekimae
Appraisal Co., Ltd.
(Note 4)
Minna-no-ie
Omiya Tsutsujigaoka The Tanizawa Sōgō
Appraisal Co., Ltd.
Park
Minna-no-ie
Japan Real Estate
Chuo-ku En’nami
Institute
Silver Heights
Hitsujigaoka No.3
Alpha Living
Okayama Nishigawa
Ryokudokoen
Alpha Living
Okayama Korakuen
Alpha Living
Takamatsu Ekimae
Alpha Living
Takamatsu
Hyakkenmachi
Sompo no ie
Nishitanabeekimae(Note 5)
Irise Komae Bettei(Note 6)Total

- 46 -

Appraisal
NOI(millionyen)

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period(Note 1) The summary is based on the appraisal report with October 31, 2019, as the date of value.
(Note 2) The discount rate for Sompo Care LAVIERE Kinugasayama Koen is the discount rate for the 11th andsubsequent fiscal years (discount rate up to the 10th fiscal year: 4.7%).
(Note 3) The discount rate for La’nassica Arakogawa is the discount rate for the 9th and subsequent fiscal years(discount rate up to the 8th fiscal year: 5.0%).
(Note 4) The discount rate for Super Court JR Nara-Ekimae is the discount rate for the 6th and subsequent fiscal
years (discount rate up to the 5th fiscal year: 5.0%).
(Note 5) The discount rate for Sompo no ie Nishitanabeekimae is the discount rate for the 9th and subsequent fiscal
years (discount rate up to the 8th fiscal year: 4.7%).
(Note 6) As to Irise Komae Bettei, the figures indicate those equivalent to the ratio NHI’s quasi-co-ownershipinterest in trust beneficiary interests (30%).
3.2.5. Capital Expenditures for Assets under Management
A. Schedule of Capital Expenditures
Major capital expenditures in line with repair work, etc. currently planned for existing owned properties
are as follows. Planned construction amount includes portion that is categorized as expense in accounting.
Name of real estate property(Location)

PurposePlanned period

Planned construction amount(million yen)Amount
Total
Total
paid
amountamountin 11th FP
paid

Sompo Care LAVIERE
Hiroshima Hikarigaoka(Hiroshima-shi, Hiroshima)

Upgrading of elevators

From: March 2020
To: March 2020

6

－

－

Silver Heights Hitsujigaoka No.3
(Sapporo-shi, Hokkaido)

Upgrading of elevators

From: March 2020
To: March 2020

5

－

－

Upgrading of elevators

From: March 2020
To: March 2020

5

Upgrading of elevators

From: March 2020
To: March 2020

4

－

－

Super Court JR Nara-Ekimae(Nara-shi, Nara)

Upgrading of elevators

From: March 2020
To: March 2020

3

－

－

Sompo Care LAVIERE
Kinugasayama Koen
(Yokosuka-shi, Kanagawa)

Upgrading of elevators

From: March 2020
To: March 2020

2

－

－

Nichii Care Center Fukushima
Omori(Fukushima-shi, Fukushima)

Upgrading of elevators

From: March 2020
To: March 2020

2

－

－

Sawayaka Heart Life
Nishikyogoku(Kyoto-shi, Kyoto)
Minna-no-ie Omiya
Tsutsujigaoka Park
(Saitama-shi, Saitama)

B. Capital Expenditures during the 11th Fiscal Period
The following summarizes the main construction work that constitutes capital expenditures conducted forexisting owned properties during the 11th Fiscal Period. Capital expenditures in the 11th Fiscal Period was 12
million yen. Combined with 25 million yen of repair expenses categorized as expense for the 11th Fiscal
Period, 38 million yen of work has been implemented.
Name of real estate property(Location)
Sompo Care LAVIERE
Hiroshima Hikarigaoka(Hiroshima-shi, Hiroshima)
Other

Purpose

PeriodConstruction amount(million yen)

Upgrading of air-conditioningin rooms

From: May 2019
To: May 20194―

From: May 2019
To: October 2019

8

Total

12

- 47 -

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
C. Reserve Amount for Long-Term Repair Plans (Reserve for Repairs)
NHI sets aside the following reserve for repairs from cash flows during the fiscal period for future paymentof large-scale repairs and other funds.
Accounting period

7th Fiscal Period

8th Fiscal Period

9th Fiscal Period

10th Fiscal Period(Unit: million yen)
11th Fiscal Period(From: May 1, 2017
To: Oct. 31, 2017)(From: Nov. 1, 2017
To: Apr. 30, 2018)(From: May 1, 2018
To: Oct. 31, 2018)(From: Nov. 1, 2018
To: Apr. 30, 2019)(From: May 1, 2019
To: Oct. 31, 2019)

Balance of reserveat beginning of period
Provision of reserve
during period
Reversal of reserve
during period
Reserve carried forward

65

65

105

105

89

－

40

－

－

－

－

－

－

16

－

65

105

105

89

89

(Note) In principle, NHI adopts a policy of implementing cash distributions in excess of earnings(reimbursement of investments in capital which falls under the category of distribution reducing
unitholders’ capital for tax purpose) uninterruptedly every fiscal period. Upon deciding on theimplementation and amount of such, NHI shall give due consideration to the amount of capital
expenditures required to maintain and enhance the competitiveness of portfolio assets.
3.2.6. Status of Pledged Collateral
The following outlines the collateral on acquired assets as of October 31, 2019.
Property name
Nichii Care Center Fukushima Omori
Sompo Care LAVIERE Hiroshima Hikarigaoka
Sompo Care LAVIERE Sagamihara Chuo
Charm Suite Ryokuchi Koen
Sawayaka Kaikyokan
Sawayaka Meisuikan
Sawayaka Heart Life Nishikyogoku
Verger Hirakata
Sompo Care LAVIERE Kinugasayama Koen
La’nassica Arakogawa
Sawayaka Hinodekan
Sawayaka Riverside Kurinoki
Sawayaka Obatake Sanbankan
Super Court JR Nara-Ekimae
Minna-no-ie Omiya Tsutsujigaoka Park
Minna-no-ie Chuo-ku En’nami
Silver Heights Hitsujigaoka No.3
Alpha Living Okayama Nishigawa Ryokudokoen
Alpha Living Okayama Korakuen
Alpha Living Takamatsu Ekimae
Alpha Living Takamatsu Hyakkenmachi
Sompo no ie Nishitanabeekimae
Irise Komae Bettei

Status ofcollateral

Pledged ascollateral(jointcollateral)

Type ofcollateral

Revolvingpledge- 48 -

Appraisal value(million yen)

Security interests holder

24,225

Mizuho Bank, Ltd.
Resona Bank, Limited
Sumitomo Mitsui Trust Bank,
LimitedMizuho Trust & Banking Co., Ltd.
The Musashino Bank, Ltd.
Shinkin Central BankThe Dai-ichi Life Insurance
Company, Limited
Shinsei Bank, Limited

Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
3.2.7. Matters Concerning Entire Portfolio (Status of Leasing)
A. Diversification by Rent-Paying Capacity
Rent-paying capacity
Annual rent
Share
(Note 1)(million yen) (Note 2)(%) (Note 3)
More than 2.0x
254
18.1
More than 1.5x, but 2.0x or less
836
59.5
More than 1.2x, but 1.5x or less－－1.2x or less
316
22.5
Total
1,407
100.0
(Note 1) “Rent-paying capacity” refers to the multiple obtained by dividing the respective real estate in trust’s mostrecent EBITDAR by rent (monthly rent in the respective lease agreement with operators in the annualized
amount calculated by multiplying by 12; the same shall apply hereinafter).
“EBITDAR” refers to the respective real estate in trust’s operating income, plus depreciation and rent.
However, in the case of operators adopting the method of accounting as a finance lease, the amountequivalent to lease payments is taken into consideration. Furthermore, operating income and depreciation
are based on information on business income and expenditures from October 2018 to September 2019
disclosed by the respective operator. Exceptions are La’nassica Arakogawa for which these are based on
information on business income and expenditures from April 2018 to March 2019 and Silver Heights
Hitsujigaoka No.3 for which these are based on information on business income and expenditures from
September 2018 to August 2019. The same shall apply hereinafter in “A. Diversification by Rent-Paying
Capacity.”(Note 2) “Annual rent” is the amount obtained by adding up the monthly rent in the respective lease agreement for
healthcare facilities with operators per rent-paying capacity in the annualized amount calculated bymultiplying by 12, rounded down to the nearest million yen.
(Note 3) “Share” is the sum total of annual rent per rent-paying capacity expressed as a percentage of the total ofannual rents for real estate in trust, rounded to one decimal place.

(Note)

Average rent-paying capacity(Note)
1.7x“Average rent-paying capacity” is the multiple obtained by dividing the total of EBITDAR by the total ofrents for real estate in trust, rounded to one decimal place.

B. Diversification by Appraisal Rent-Paying Capacity
Appraisal rent-paying capacity
Annual rent
Share
(Note 1)(million yen) (Note 2)(%) (Note 3)
More than 2.0x
197
14.0More than 1.5x, but 2.0x or less851
60.5
More than 1.2x, but 1.5x or less246
17.5
1.2x or less
111
7.9
Total
1,407
100.0
(Note 1) “Appraisal rent-paying capacity” refers to the multiple obtained by dividing the respective assumed
EBITDAR of real estate in trust (figures that are calculated based on information on business income andexpenditures provided by the respective operator, under the same conditions for EBITDAR calculation
standards described in A. above), which is calculated by Japan Real Estate Institute, Daiwa Real EstateAppraisal Co., Ltd. and The Tanizawa Sōgō Appraisal Co., Ltd., by rent.
(Note 2) “Annual rent” is the amount obtained by adding up the monthly rent in the respective lease agreementwith operators per appraisal rent-paying capacity in the annualized amount calculated by multiplying by
12, rounded down to the nearest million yen.
(Note 3) “Share” is the sum total of annual rent per appraisal rent-paying capacity expressed as a percentage of thetotal of annual rents for real estate in trust, rounded to one decimal place.

(Note)

Average appraisal rent-paying capacity(Note)
1.7x“Average appraisal rent-paying capacity” is the multiple obtained by dividing the total of assumed
EBITDAR by the total of rents for real estate in trust, rounded to one decimal place.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
C. Diversification by Proportion of Long-Term Care Fee
Proportion of long-term care fee
Annual rent
Share
(Note 1)(million yen) (Note 2)(%) (Note 3)
50% or less629
44.7
More than 50%, but 60% or less654
46.5
More than 60%, but 70% or less123
8.8
More than 70%
－
－
Total
1,407
100.0
(Note 1) “Proportion of long-term care fee” refers to the proportion of the respective real estate in trust’s net sales
that is accounted for by long-term care fee (including residents’ co-payment portion).
Furthermore, net sales and long-term care fee are based on information on business income and expendituresfrom October 2018 to September 2019 disclosed by the respective operator. Exceptions are La’nassica
Arakogawa for which these are based on information on business income and expenditures from April 2018
to March 2019 and Silver Heights Hitsujigaoka No.3 for which these are based on information on businessincome and expenditures from September 2018 to August 2019. The same shall apply hereinafter in this“C. Diversification by Proportion of Long-Term Care Fee.”(Note 2) “Annual rent” is the amount obtained by adding up the monthly rent in the respective lease agreement per
proportion of long-term care fee in the annualized amount calculated by multiplying by 12, rounded down
to the nearest million yen.
(Note 3) “Share” is the sum total of annual rent per proportion of long-term care fee expressed as a percentage ofthe total of annual rents for real estate in trust, rounded to one decimal place.

(Note)

Average proportion of long-term care fee(Note)
50.7%“Average proportion of long-term care fee” is the proportion of the total of net sales that is accounted forby the total of long-term care fee (including residents’ co-payment portion) for real estate in trust, rounded
to one decimal place.

D. Diversification by Proportion of One-Time Entrance Fee Amortization Income
Proportion of one-time entrance fee amortization income
Annual rent
Share
(Note 1)(million yen) (Note 2)(%) (Note 3)
5% or less860
61.1
More than 5%, but 15% or less546
38.9
More than 15%, but 25% or less――More than 25%
―
―
Total
1,407
100.0
(Note 1) “Proportion of one-time entrance fee amortization income” refers to the proportion of the real estate in trust’s
net sales that is accounted for by one-time entrance fee amortization income.
Furthermore, net sales and one-time entrance fee amortization income are based on information on businessincome and expenditures from October 2018 to September 2019 disclosed by the respective operator.
Exceptions are La’nassica Arakogawa for which these are based on information on business income andexpenditures from April 2018 to March 2019 and Silver Heights Hitsujigaoka No.3 for which these are basedon information on business income and expenditures from September 2018 to August 2019. The same shallapply hereinafter in “D. Diversification by Proportion of One-Time Entrance Fee Amortization Income.”(Note 2) “Annual rent” is the amount obtained by adding up the monthly rent in the respective lease agreement per
proportion of one-time entrance fee amortization income in the annualized amount calculated bymultiplying by 12, rounded down to the nearest million yen.
(Note 3) “Share” is the sum total of annual rent per proportion of one-time entrance fee amortization income
expressed as a percentage of the total of annual rents for real estate in trust, rounded to one decimal place.
Average proportion of one-time entrance fee amortization income(Note)
3.5%(Note) “Average proportion of one-time entrance fee amortization income” is the proportion of the total of net
sales that is accounted for by the total of one-time entrance fee amortization income for real estate in trust,rounded to one decimal place.

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Nippon Healthcare Investment Corporation (3308) Financial Report for the 11th Fiscal Period
3.2.8. Information about Major Assets“Major assets” refers to those assets of which the concerned asset’s total rent income accounts for 10% ormore of the entire portfolio’s total rent income as at the end of the 11th Fiscal Period (October 31, 2019). Thisis the following for the portfolio of 23 investment real estate properties. Annual rent is not disclosed because
consent for disclosure has not been obtained from tenants.
Appraisal
Total
Total
Occupancy
Number of
Property nameNOI
leasable arealeased area
rate
tenants(million yen)
(m2)
(m2)
(%)
Charm Suite Ryokuchi Koen
1
143
5,329.73
5,329.73
100.0
3.2.9. Information about Major Tenants“Major tenants” refers to those tenants of which the area leased to the concerned tenant accounts for 10% ormore of the entire portfolio’s total leased area as at the end of the 11th Fiscal Period (October 31, 2019). Thisis the following for the portfolio of 23 investment real estate properties. Annual rent and lease and guarantee
deposits are not disclosed because consent for disclosure has not been obtained from tenants.
Name of major tenant

Sawayaka Club Co., Ltd.

Sompo Care Next Inc.

Anabuki Medical Care Inc.

Silver Heights SapporoCo., Ltd.

(Note)

Property name
Sawayaka
Kaikyokan
Sawayaka
Meisuikan
Sawayaka
Heart Life Nishikyogoku
Sawayaka
Hinodekan
Sawayaka
Riverside Kurinoki
Sawayaka
Obatake Sanbankan
Sompo Care LAVIERE
Hiroshima Hikarigaoka
Sompo Care LAVIERE
Sagamihara Chuo
Sompo Care LAVIERE
Kinugasayama Koen
Sompo no ie
Nishitanabeekimae
Alpha Living
Okayama Nishigawa
Ryokudokoen
Alpha Living
Okayama Korakuen
Alpha Living
Takamatsu Ekimae
Alpha Living
Takamatsu Hyakkenmachi
Silver Heights
Hitsujigaoka No.3

Appraisal
NOI(million yen)

Totalleased area
(m2)

243

15,142.82

22.3

296

14,228.44

21.0

June 30, 2035

132

8,029.82

11.8

November 30, 2035

70

7,267.56

10.7

Date ofcontract expiration

Share
(%)
(Note 1)March 27, 2034

November 30, 2034

March 28, 2034

September 11, 2034
March 31, 2027

“Share” is the area leased to major tenants expressed as a percentage of the total leased area, rounded to
one decimal place.

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