8th

Fiscal Period Business Report(Statement of Financial Performance)

November 1, 2017 - April 30, 2018

Hopeful future
for Japan

Stock
Code
6-2-1 Ginza, Chuo Ward, Tokyo3308
http://www.nippon-healthcare.co.jp/en/

I. Overview of Nippon Healthcare Investment Corporation
To Our Investors
Message from Executive Director
We would like to express our deep gratitude to all our unitholders for your support of Nippon Healthcare Investment
Corporation (“NHI”).
NHI posted financial performance of 697 million yen in operating revenue, 273 million yen in operating income and 246
million yen in net income for the fiscal period ended April 30, 2018 (8th Fiscal Period). Concerning distributions, NHI declareda distribution amount per unit of 3,303 yen and a distribution amount in excess of earnings per unit of 860 yen, bringing thetotal distribution amount per unit to 4,163 yen. See page 3 for Financial and Management Highlights
The asset size as of the end of the 8th Fiscal Period stood at 19,318 million yen. NHI will aim to enhance portfolio
value through investments in carefully selected properties going forward.

See pages 4 and 5 for details of Growth Strategy

The number of operators of facilities owned by NHI as of the end of the 8th Fiscal Period is 11 companies. NHI has realized
maintenance and improvement of portfolio stability by pressing forward diversification of operators and concluding longterm fixed rent lease agreements. See page 7 for Stable Management Strategy
On the financial front, NHI will continue to work to further strengthen its financial
standing while reducing refinancing risks in the future. See page 10 for Financial Conditions
Going forward, NHI will strive to maximize unitholders’ value together with the joint
efforts of Daiwa Real Estate Asset Management Co. Ltd., the asset manager for NHI,
Daiwa Securities Group Inc., the sponsor, and AIP Healthcare Japan GK, the advisor.
We wish for the continued success of our unitholders and ask for yourcontinued support of NHI.

Hiroshi Takeuchi Nippon Healthcare Investment Corporation Executive Director
Contents

I. Overview of Nippon Healthcare Investment Corporation
To Our Investors……………………………………………… 2
Financial and Management Highlights………………………… 3
Characteristics and Growth Strategy of
Nippon Healthcare Investment Corporation… ………………… 4
Portfolio Status……………………………………………… 6
Stable Management Strategy………………………………… 7
Portfolio List………………………………………………… 8

II. Investor Information…………………………………… 12
III. Asset Management Report…………………………… 14
IV. Balance Sheets… ……………………………………… 20
V. Statements of Income………………………………… 22
VI. Statements of Changes in Net Assets… ………… 23
VII. Statements of Cash Flows…………………………… 23

Portfolio Map………………………………………………… 9
Financial Conditions… ……………………………………… 10
Description of Asset Manager………………………………… 11

VIII. Notes to Financial Statements……………………… 24
IX. Independent Auditor’s Report……………………… 33
Please refer to the pages starting from the back cover for information on the operators.

2

Financial and Management Highlights
Steady growth in asset size and maintenance of stable distribution level■ Actual Financial Results for Fiscal Period Ended April 2018 (8th Fiscal Period), and Financial Results Forecasts for Fiscal PeriodEnding October 2018 (9th Fiscal Period) and Fiscal Period Ending April 2019 (10th Fiscal Period)
7th Fiscal
Period(October 2017)

8th Fiscal
Period(April 2018)(result)(result)

Difference

9th Fiscal Difference
from 8th
Period(October 2018) Fiscal

10th Fiscal Difference
from 9th
PeriodFiscal(April 2019)

Period(forecast)

Period(forecast)

No. of properties owned at the end of the
fiscal period

22

22

-

22

-

22

-

Operating revenues (million yen)

697

697

+0

697

-0

697

+0

Operating expenses (million yen)

424

424

+0

427

+2

423

-3

Operating income (million yen)

273

273

+0

270

-2

274

+4

Non-operating expenses (million yen)

27

27

-0

28

+0

27

-0

Ordinary income (million yen)

245

247

+2

242

-5

246

+4

Net income (million yen)

244

246

+2

241

-5

245

+4

■ Distribution Result for 8th Fiscal Period, Distribution Forecasts for 9th Fiscal Period and 10th Fiscal Period
9th Fiscal Difference
from 8th
Period(October 2018) Fiscal

8th Fiscal
Period(April 2018)(result)(result)

74,632

74,632-

74,632-

74,632

-

4,124

4,163

+39

4,100

-63

4,160

+60

3,274

3,303

+29

3,230

-73

3,290

+60

850

860

+10

870

+10

870

-

Number of investment units issued andoutstanding at the end of the fiscal period (units)
Distribution per unit
(including distribution in excess of earnings) (yen)Distribution per unit

(excluding distribution in excess of earnings) (yen)Distribution in excess of earnings
per unit (yen)Difference

Period(forecast)■ Operating Revenues■ Operating Income■ Net Income(million yen)
1,000

(million yen)600

(million yen)
400

Period(forecast)

500

800
600

10th Fiscal Difference
from 9th
PeriodFiscal(April 2019)

7th Fiscal
Period(October 2017)

300

697

679

667

697

697

400
300

400

200

200

289

274

277

273

260

246

249

244

246

5th FP

6th FP

7th FP

8th FP

273
100

200

100
0

0
4th FP

5th FP

6th FP

7th FP

8th FP0
4th FP

5th FP

6th FP

7th FP

8th FP

4th FP■ Distribution per Unit (including distribution in excess of earnings)
(yen)
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0

Distribution inexcess of
earnings per unit
Distribution
per unit
excluding
distribution inexcess of
earnings

（

）

3,471

4,067
768

4,295
800

4,106

4,143

4,124

4,163

4,100

4,160

800

800

850

860

870

870

3,306

3,343

3,274

3,303

3,230

3,290

810
2,661

3,299

3,495

Fiscal Period
Fiscal Period
Fiscal Period
Fiscal Period
Fiscal Period
Fiscal Period
Fiscal Period
Fiscal Period
Fiscal Period
ended April 2015 ended October 2015 ended April 2016 ended October 2016 ended April 2017 ended October 2017 ended April 2018 ending October 2018 ending April 2019(2nd FP)(3rd FP)(4th FP)(5th FP)(6th FP)(7th FP)(8th FP)(9th FP)(10th FP)I. Overview of Nippon Healthcare Investment Corporation

3

Characteristics and Growth Strategy of Nippon Healthcare Investment Corporation
Contributing to society and delivering returns to unitholders through substantial support system

Characteristics of NHI

1
2
3
4
5

Investment in social infrastructure to contribute to society

NHI will contribute to the development of quality healthcare facilities which serve as social infrastructure.

Growth through investment in the growing senior market

Social demand for healthcare facilities is expected to grow through further aging of the population.

Stable cash flow

NHI signs long-term fixed-rent lease agreements with operators of healthcare facilities. (Average remaining lease contract period of 17.0 years)

Unitholder return policy utilizing asset characteristics

NHI will implement unitholder returns through distributions in excess of earnings utilizing the asset characteristic of a high rate of depreciation.

Substantial support system and strong independence

NHI will develop the support system that brings together the comprehensive strengths of Daiwa Securities Group Inc. (sponsor) and AIP Healthcare
Japan GK (advisor).

■ Ratios of Investment in Regions
Region■ Ratios of Investment in Healthcare Facility Types
Targetincorporation
ratio

Definition

Tokyo, Kanagawa, Chiba and Saitama
Three Major The greater Tokyo area: prefectures
Metropolitan
The Chukyo area: Aichi, Mie and Gifu prefecturesAreas
The Kinki area: Osaka, Kyoto, Hyogo, Nara and Shiga prefectures

50%

or moreCore City
Areas

Cities outside the Three Major Metropolitan Areas withpopulations of 200,000 or more

50%
or less

Other

Cities outside the Three Major Metropolitan Areas and the Core
City Areas with populations under 200,000

10%or less■ Asset Size (total amount of acquisition prices)Classification of healthcare facility

Fee-based homes for the elderly (Note 1)
Private nursing nursing care/health-type/residential-type) (withhomes and other60%
facilities for the Elderly housing with supportive services (Note 2)
or moreelderly
Other private nursing homes and facilities for the elderly
Medical facilities
40% or less

10% or less

Other

(Note 1) “Fee-based homes for the elderly” refer to facilities as defined by Article 29 of the Act on
Social Welfare for the Elderly. However, this excludes facilities that fall under the category ofelderly housing with supportive services.
(Note 2) “Elderly housing with supportive services” refers to rental housing registered with prefecturesthat meet the registration criteria stipulated by the Act on Securement of Stable Supply for
Elderly Persons’ Housing.

External growth through acquisition of carefully selected properties(million yen)

30,00025,000

Listing asJapan’s
first healthcare
REIT

20,00013,28015,000Total

14 properties

External growth through fund procurement including
the first public offering by a listed healthcare REIT

16,058Total

17properties

18,608
Total

21

19,318properties Total

Further expansion of asset size through formationof bridge funds, etc. utilizing sponsor support(Several preferential negotiation rights in theThree Major Metropolitan Areas including Tokyoof around 10 billion yen have been acquired.)

19,31819,31819,318

Fiscal Period endedApril 2017 (6th FP)

Fiscal Period ended
October 2017 (7th FP)

Fiscal Period endedApril 2018 (8th FP)

22properties Total 22properties Total 22properties Total 22properties

10,0005,000
0At the time of listing4

Fiscal Period ended
October 2015 (3rd FP)

Fiscal Period endedApril 2016 (4th FP)

Fiscal Period ended
October 2016 (5th FP)

Targetincorporation
ratio

■ Status of Property Acquisition by Sourcing Route
Properties acquired before listing
14 properties/13,280 million yen

Properties acquired in the 3rd FP
3 properties/2,778 million yen

Properties acquired in the 4th FP
4 properties/2,550 million yen

Silver Heights Hitsujigaoka No.3
Acquisition price: 1,200 million yen

Asset Management
Company’s unique
network・Needs for securing liquidity on
hand

Alpha Living Takamatsu Ekimae
Alpha Living Takamatsu
Hyakkenmachi
4 properties
Acquisition price: 2,550 million yen

Sales &
LeasebackApproximately
10.0 billion yen

15 properties/
13,990 million yen

Daiwa Securities
Group Inc.
2 properties/
1,578 million yen

・Acquired properties in
the Three Major
Metropolitan Areas
including Tokyo throughformation of bridgefunds, etc. by sponsors

・Properties sold by developergroup which owns operators
・Exclusive needs for facility
management
・Acquired through bridge fundsof sponsors

Sponsor’s bridge
funds

Advisor6th FP ~Alpha Living Okayama
Nishigawa Ryokudokoen
Alpha Living Okayama Korakuen

Offbalancing
in line with ・M&A cases for businesssuccession
M&A

5 properties/
3,750 million yen

Properties acquired in the 5th FP
1 property/710 million yen(Preferential negotiationrights: acquired around10 billion yen)

Sompo no ie Nishitanabeekimae
Acquisition price: 710 million

Change of yen
Owners14 properties/
13,280 million yen

・Needs for asset managementfrom owners

Minna-no-ie Omiya Yoshinocho
Minna-no-ie Chuo-ku En'nami

・Proactively discussing
development properties
in addition to information
on existing facilities
obtained from thesourcing routes

2 properties

Change of Acquisition price: 1,578 million yen
Owners・Properties introduced by thesponsor group
・Needs for asset managementfrom owners

Properties Renovated in the 8th Fiscal Period
・“Verger Hirakata” and “Charm Suite Ryokuchi Koen” were constructed 10 years ago and repair work for maintaining the esthetic appearances
have been implemented in order to stay competitive with rival properties in the surrounding area.
・Proactive implementation of necessary repair work has led to higher satisfaction of not only the residents and their families but also of facility
employees, and has also resulted in a stronger relationship with the operator.

■ Verger Hirakata (Acquisition price: 950 million yen)Charm Suite Ryokuchi Koen (Acquisition price: 1,950 million yen)

Site Features: Located approximately
3.5km from Kuzuha Station on the Keihan
Main Line
Property Features: The Property provides
standard size private rooms for facilities
designed for people requiring long-termcare, and the rooms are equipped with sinks
and toilets.

Renovation of exterior walls (Construction amount: 13 million yen)

Site Features: Located approximately
1.4km from Ryokuchi Koen Station on the
Kita-Osaka Kyuko Railway Namboku Line
Property Features: The Property has
spacious common-use areas. In addition toa cafeteria on each floor, a hall has been
established on the facility’s highest floor,
which is being used for activities, etc. In
addition, a fountain and flowerbed havebeen set up in the entrance lobby, giving it asense of luxury.

Renovation of exterior walls and rooftop waterproofing repair work (Construction amount: 7 million yen)
Rooftop waterproofing repair work

Before construction work

After construction work

Before construction work

After construction work

I. Overview of Nippon Healthcare Investment Corporation

5

Portfolio Status (as of April 30, 2018)
Focusing investment on private nursing homes and other facilities for the elderly for which large demand is expected

Diversification Status■ Region■ Type■ Operator

Elderly housingwith supportive
services

Nihon Kaigo Iryo
Center 4.9%
Silver Heights
Sapporo 6.2%

3.1%
Core City
Areas

Three Major
Metropolitan
Areas

38.9%

6.6%

Cedar

8.1%

Super Court

Nichii Gakkan 1.4%

20.5%

(former)
Sompo Care
Next, Inc.
(Note 2)

(former)
Sompo
Care Inc.
(Note 2)

3.7%

Sawayaka
Club

61.1%

17.1%

AnabukiMedical Care

Wisnet8.2%
Fee-based home for the elderly 96.9%
With nursing care 67.0%
Residential-type 29.9%

13.2%
Charm Care Corporation 10.1%(Note 1) The ratios in the above three pie charts are calculated based on total acquisition prices, and rounded to the first decimal place.
(Note 2) The corporate name of Sompo Care Message Inc. was changed to Sompo Care Inc. as of April 1, 2018 and an absorption-type merger of Sompo Care Next Inc. was conducted as of July 1, 2018.
The same applies hereinafter. The ratio for Sompo Care Inc., the new company, is 24.2%.

Portfolio Status■ Proportion of Long-Term Care Fee (Note 2)■ Rent-Paying Capacity (Note 1)

More than 60%,
but 70% or less

27.8%

5.6%

More than
2.0x

1.2x or less

18.0%

21.2%

More than
5%, but 15%
or less

50％ or less

50.2% 37.4%

1.5xMore than
50%, but on average
60% or lesson average More than
1.5x, but
2.0x or lessMore than
1.2x, but
1.5x or less

■ Proportion of One-Time Entrance Fee
Amortization Income (Note 3)

3.8% 5% or less

39.4% on average 60.6%

57.0%

33.0%

(Note 1) “Rent-paying capacity” refers to the multiple obtained by dividing the respective acquired asset's most recent EBITDAR by rent. EBITDAR ＝ Operating Income + Depreciation + Rent
(Note 2) “Proportion of long-term care fee” refers to the proportion of the acquired asset's net sales that is accounted for by long-term care fee (including residents’ co-payment portion).
(Note 3) “Proportion of one-time entrance fee amortization income” refers to the proportion of the acquired asset's net sales that is accounted for by one-time entrance fee amortization income(*) Data are based on information on business income and expenditures from April 2017 to March 2018 disclosed by the respective operators. However, data for Nichii Care Center Fukushima Omori
are based on information on business income and expenditures from January 2017 to December 2017; for Silver Heights Hitsujigaoka No.3 from March 2017 to February 2018.

■ Portfolio Occupancy Rates(%)
100

Total resident capacity (right axis)(persons)
2,000

Occupancy rate (left axis)

91.2%
80

1,600

60

1,200

40

800

20

400

0

0
Nov. 2014

Apr. 2015

Stableoccupancy rates

Oct. 2015

Apr. 2016

Oct. 2016

Apr. 2017

・The overall occupancy rate rose by 1.7% from 89.5% at the end of October 2017 to 91.2% at the end of April 2018.
・The period average rose by 3.5% from 87.3% for the 7th Fiscal Period to 90.8% for the 8th Fiscal Period.

(Note 1) Occupancy rates are obtained by dividing the number of residents based on interviews with all facilities at the end of each month, by resident capacity.

6

Oct. 2017

Apr. 2018

Stable Management Strategy
Concluding long-term fixed rent lease agreements

Lease Agreements with Highly Reliable Operators
Number of facilities Number of rooms
operated (cases) operated (rooms)(Note 1)
(Note1 and 2)425
13,822

Operator
Nichiigakkan Co., Ltd.
(former) Sompo Care, Inc.

311

17,305

Wisnet Co., Ltd.

125

3,497

(former) Sompo Care Next, Inc.

117

8,826

Sawayaka Club Co., Ltd.

80

4,735

Super Court Co., Ltd.
Cedar Co., Ltd.
Charm Care Corporation
Anabuki Medical Care Inc.
Nihon Kaigo Iryo Center Co., Ltd.
Silver Heights Sapporo Co., Ltd.

48
39
46
29
21
3

3,209
2,209
3,214
1,291
908
321

Established

Attributes

August 1973 Listed on the first section of the Tokyo Stock Exchange
Subsidiary of Sompo Holdings, Inc., a company listed on the first section of the Tokyo Stock
May 1997 Exchange
Subsidiary of Sohgo Security Services Co., Ltd. a company listed on the first section of theJanuary 1998
Tokyo Stock Exchange
November 1992 Subsidiary of Sompo Holdings, Inc., a company listed on the first section of the Tokyo Stock
Exchange
Subsidiary of Uchiyama Holdings Co., Ltd., a company listed on the first section of the Tokyo
December 2004 Stock Exchange
May 1995 April 1981 Listed on JASDAQ Standard on the Tokyo Stock Exchange
August 1984 Listed on the second section of the Tokyo Stock Exchange
June 2009 Subsidiary of Anabuki Kosan Inc., a company listed on the first section of the Tokyo Stock Exchange
October 1997 December 1961 -(Note 1) Number of facilities operated and Number of rooms operated indicate the number of facilities and the number of rooms for fee-based homes for the elderly, group homes and elderly housing with supportive
services based on operators’ websites and interviews with them (as of May 31, 2018).
(Note 2) Operators are indicated in order of the number of facilities they operate.

Overview and Status of Management Back-Up Agreement (as of April 30, 2018 )No. of Operators: 11
Investment
Corporation

Management

Asset
Manager

Hokkaido Area

No. of Operators: 5

Ownership

Chubu Area

Healthcare
facility A

Operator A

Healthcare
facility B

Operator B

Healthcare
facility C

Operator C

Each operator has
concluded amanagement
back-upagreement with NHI.
Discuss handoverof operation to otheroperators in caseof contingency

No. of Operators: 5

Chugoku Area

No. of Operators: 5

Kyushu Area

No. of Operators: 5

Management Back-Up Contractors

Tohoku Area

No. of Operators: 4

Kanto Area

No. of Operators: 7

Kinki Area

No. of Operators: 9

Shikoku Area

No. of Operators: 5

Development of Quality Portfolio through Careful Selection and Continuous Evaluation of Operators■ Business Operation Cycle
Common items for evaluation at the time of new acquisitionand continuous evaluation• Quality and variety of services that the operator provides• Credibility and operational skills of the operator
Quantitative
Perspective•Stability, profitability, growth potential and productivity of the operator’s
finances•Stability, profitability, growth potential of the operator’s healthcare business•The company’s history and the number of years in business (The items are
confirmed on the basis that such financial data, etc. be provided by theoperator.)

Qualitative
Perspective•The operator’s attitude towards information disclosure•Degree of importance, etc. of healthcare-related business in the operator
group•Strength, securement of human resources, etc. at the healthcare facility•Working environment and employment situation of facility workers•Compliance system at the operator or at each facility (Documents provided
by the operator, results of interviews and research by outside experts, etc.
are used for confirming the items.)

Conducting the same evaluation as at the time of acquisitioneven after acquisition• Four members are placed in the Healthcare Management Team.
• Regularly conduct the same evaluation as at the time of property acquisition.
• In addition, visit facilities, etc. and conduct facility monitoring, interviews,
etc. including the following.
Monitoring (twice or more/year)· The Asset Manager and PM companies visit operators’ facilities andconduct examinations every fiscal period.
Interviewing (once or more/year)· Confirming the following items with directors and care providers at facilities:(1) Responses to residents(2) Employees training program(3) Status of governance (including items to check for prevention of resident
mistreatment)

I. Overview of Nippon Healthcare Investment Corporation

7

Portfolio List (as of April 30, 2018)
Consists of 22 properties and 11 operators

Acquisition(Note 1) period
No

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Property nameFacility type

(Note 1)

(Note 1)Fee-based homes forthe elderly withnursing care
Residential-type
Super
Court
2nd Fiscal
fee-based homes for
Period JR Nara-Ekimae
the elderly
Fee-based homes for
1st Fiscal Sompo Care LAVIER
the elderly with
Period Hiroshima Hikarigaoka
nursing careFee-based homes for
1st Fiscal Sompo Care LAVIER
the elderly with
Period Sagamihara Chuo
nursing careFee-based homes for2nd Fiscal Sompo Care LAVIER
the elderly with
Period Kinugasayama Koen
nursing careFee-based homes for
1st Fiscal
the elderly with
Sawayaka Kaikyokan
Periodnursing careFee-based homes for
1st Fiscal
the elderly with
Sawayaka Meisuikan
Periodnursing care
Residential-type
SawayakaHeart
Life
1st Fiscal
fee-based homes for
Period Nishikyogoku
the elderly
Fee-based homes for2nd Fiscal
the elderly with
Sawayaka Hinodekan
Periodnursing care
Residential-type
2nd Fiscal Sawayaka Riverside
fee-based homes for
Period Kurinoki
the elderly
Residential-type
2nd Fiscal Sawayaka Obatakefee-based homes for
Period Sanbankan
the elderly
Fee-based homes for
1st Fiscal Nichii Care Center
the elderly with
Period Fukushima Omori
nursing careFee-based homes for2nd Fiscal
the elderly with
La’nassica Arakogawa
Periodnursing care
Residential-type
1st Fiscal
fee-based homes forVerger Hirakata
Periodthe elderly
Fee-based homes for
Minna-no-ie
Omiya
3rd Fiscal
the elderly with
Period Yoshinocho
nursing careFee-based homes for3rd Fiscal Minna-no-ie Chuo-ku
the elderly with
Period En’nami
nursing careFee-based homes for3rd Fiscal Silver Heights
the elderly with
Period Hitsujigaoka No. 3
nursing care
Residential-type
4th Fiscal Alpha Living Okayama fee-based
homes for
Period Nishigawa Ryokudokoen
the elderly
Residential-type
4th Fiscal Alpha Living Okayama fee-based
homes for
Period Korakuen
the elderly
Residential-type
4th Fiscal Alpha Living Takamatsu fee-based
homes for
Period Ekimae
the elderly

1st Fiscal Charm Suite
Period Ryokuchi Koen

OperatorCharm Care
Corporation

Toyonaka City,
Osaka

1,950

10.1

3,060

128

98.4

98.4

-0.0

Super Court Co.,
Nara City, Nara
Ltd.

1,569

8.1

1,750

155

86.4

93.5

7.1

Hiroshima City,
Hiroshima

960

5.0

1,230

80

80.0

97.5

17.5

Sagamihara
City, Kanagawa

1,170

6.1

1,780

80

67.5

71.2

3.7

Yokosuka City,
Kanagawa

1,839

9.5

2,050

104

86.5

90.3

3.8

Kitakyushu
City, Fukuoka

630

3.3

898

65

93.8

98.4

4.6

Kitakyushu
City, Fukuoka

590

3.1

813

87

100.0

100.0

0.0

Kyoto City,
Kyoto

750

3.9

1,140

84

100.0

98.8

-1.2

Niigata City,
Niigata

773

4.0

920

50

100.0

100.0

0.0

Niigata City,
Niigata

266

1.4

323

33

92.3

94.8

2.5

Kitakyushu
City, Fukuoka

289

1.5

355

50

92.0

100.0

8.0

Nichiigakkan Co., Fukushima City,
Fukushima
Ltd.

265

1.4

341

52

100.0

100.0

0.0

Cedar Co., Ltd.

Nagoya City,
Aichi

1,279

6.6

1,430

100

99.0

98.0

-1.0

Nihon Kaigo Iryo
Center Co., Ltd.

Hirakata City,
Osaka

950

4.9

1,590

104

68.2

70.0

1.8

Saitama City,
Saitama

740

3.8

777

33

78.7

93.9

15.2

Saitama City,
Saitama

838

4.3

860

51

58.8

64.7

5.9

Sapporo City,
Hokkaido

1,200

6.2

1,340

109

90.0

93.6

3.6

Okayama City,
Okayama

730

3.8

787

53

81.8

87.2

5.4

Okayama City,
Okayama

610

3.2

671

45

95.8

89.5

-6.3

Takamatsu
City, Kagawa

605

3.1

641

43

88.6

90.9

2.3

Takamatsu
City, Kagawa

605

3.1

626

50

88.8

85.1

-3.7

Osaka City,
Osaka

710

3.7

739

42

97.6

97.6

-0.0

11 operators 22 properties Total 19,318

100.0

24,121

1,598

-

-

-

(former) Sompo
Care Next, Inc.

Sawayaka Club
Co., Ltd.

Wisnet Co., Ltd.

Silver Heights
Sapporo Co., Ltd.

Anabuki Medical
Care Inc.

Fiscal Alpha Living Takamatsu Elderly housing with
21 4thPeriod
supportive services
Hyakkenmachi
Fiscal Sompo no ie
22 5thPeriod
NishitanabeekimaeFee-based homes forthe elderly withnursing care

Location

Acquisition priceAppraisal Number Occupancy Occupancy(million yen) (Note 2)
value
of rooms rate in the rate in the
Share of (million yen) (rooms) 7th FP (%) 8th FP (%) Difference
portfolio(Note 5)(Note 6)(Note 3)(Note 4)(%)

(former) Sompo
Care, Inc.

(Note 1) Red numbers refer to Three Major Metropolitan Areas and blue numbers to Core City Areas. The background colors for “Property name” and “Facility type” columns indicate types of facilities; orange for feebased homes for the elderly with nursing care, blue for residential-type fee-based homes for the elderly and yellow-green for elderly housing with supportive services.
(Note 2) “Acquisition price” is excluding consumption tax, local consumption tax and the various expenses required for the acquisition. “Share of portfolio” is the respective acquisition price expressed as a percentageof the total of the acquisition prices, rounded to the first decimal place. Therefore, the total of “Share of portfolio” may be different from the figure indicated in “Total.”(Note 3) “Appraisal value” is as of April 30, 2018.
(Note 4) “Number of rooms” is the figure indicated in the written explanation of important matters pertaining to the fee-based home for the elderly provided by the operator.
(Note 5) “Occupancy rate” is obtained by dividing the number of residents indicated in the written explanation of important matter received in December 2017 from operators by the resident capacity, rounded down to
the first decimal place.
(Note 6) “Occupancy rate” is obtained by dividing the number of residents indicated in the written explanation of important matters received in May 2018 from operators by the resident capacity, rounded down to thefirst decimal place.

8

Portfolio Map (as of April 30, 2018)
Making diversified investment in healthcare facilities in Japan

Three Major Metropolitan Areas
1

2

4

5

8

13

Charm Suite
Ryokuchi Koen

Super Court
JR Nara-Ekimae

Sompo Care LAVIER
Sagamihara Chuo

Sompo Care LAVIER
Kinugasayama Koen

Sawayaka Heart Life
Nishikyogoku

La’nassica Arakogawa

14

15

16

Toyonaka City, Osaka

Nara City, Nara

Sagamihara City, Kanagawa

Yokosuka City, Kanagawa

Kyoto City, Kyoto

Nagoya City, Aichi

17 Silver Heights Hitsujigaoka No. 3

Verger Hirakata
Hirakata City, Osaka

Minna-no-ie
Omiya Yoshinocho
Saitama City, Saitama

9 Sawayaka Hinodekan

Minna-no-ie
Chuo-ku En’nami

10 Sawayaka Riverside

Saitama City, Saitama

22

Kurinoki

8 Sawayaka Heart Life Nishikyogoku
1 Charm Suite Ryokuchi Koen
12 Nichii Care Center

19 Alpha Living Okayama Korakuen

Fukushima Omori

18 Alpha Living Okayama Nishigawa Ryokudokoen
3

15 Minna-no-ie Omiya Yoshinocho

Sompo Care LAVIERE Hiroshima Hikarigaoka

16 Minna-no-ie Chuo-ku En’nami
5 Sompo Care LAVIER

Sompo no ie
Nishitanabeekimae

Kinugasayama Koen

11 Sawayaka Obatake Sanbankan

Osaka City, Osaka

4 Sompo Care LAVIER

6 Sawayaka Kaikyokan

13 La’nassica Arakogawa

7 Sawayaka Meisuikan

Sagamihara Chuo

2 Super Court JR Nara-Ekimae
14 Verger Hirakata
22 Sompo no ie Nishitanabeekimae
21 Alpha Living Takamatsu Hyakkenmachi
20 Alpha Living Takamatsu EkimaeCore City Areas
3

6

7

9

10

11

Sompo Care LAVIER
Hiroshima Hikarigaoka

Sawayaka Kaikyokan

Sawayaka Meisuikan

Sawayaka Hinodekan

Sawayaka Riverside
Kurinoki

Sawayaka Obatake
Sanbankan

12

17

18

19

20

21

Nichii Care Center
Fukushima Omori

Silver Heights
Hitsujigaoka No. 3

Alpha Living Okayama
Nishigawa Ryokudokoen

Alpha Living Okayama
Korakuen

Alpha Living Takamatsu
EkimaeAlpha Living Takamatsu
Hyakkenmachi

Kitakyushu City, Fukuoka

Kitakyushu City, Fukuoka

Niigata City, Niigata

Hiroshima City, Hiroshima

Fukushima City, Fukushima

Niigata City, Niigata

Sapporo City, Hokkaido

Okayama City, Okayama

Okayama City, Okayama

Takamatsu City, Kagawa

Kitakyushu City, Fukuoka

Takamatsu City, Kagawa(Note) Red numbers refer to Three Major Metropolitan Areas and blue numbers to Core City Areas. The background colors for property names indicate types of facilities; orange for fee-based homes for the elderly withnursing care, blue for residential-type fee-based homes for the elderly and yellow-green for elderly housing with supportive services.

I. Overview of Nippon Healthcare Investment Corporation

9

Financial Conditions
Stable financial management by converting interest rates into fixed rates and diversifying repayment dates

Status of Interest-Bearing Liabilities (as of April 30, 2018)
Term

LenderShort-term
Mizuho Bank
(Note 2)Current portion Sumitomo Mitsui Trust Bankof long-term The Dai-ichi Life Insurance
loans payable Shinkin Central Bank (Note 2)Long-term

Resona Bank (Note 2)
Mizuho Bank (Note 2)
Mizuho Trust & Banking (Note 2)
Mizuho Bank (Note 2)
Mizuho Trust & Banking (Note 2)
The Musashino Bank (Note 2)
Resona Bank (Note 2)
Sumitomo Mitsui Trust Bank (Note 2)
Mizuho Bank (Note 2)
Shinkin Central Bank (Note 2)
The Musashino Bank (Note 2)
Total

Balance(million yen)
500
1,200
500
400
1,200
1,000
700
500
500
500
500
500
800
500
500
9,800

Type of interest
Floating
Fixed

Fixed

-

Interest rate
Drawdown date
Repayment deadline(%) (Note 1)
Tibor+0.300 September 29, 2017 September 28, 2018
0.431
November 5, 2014
0.431
October 31, 2018
0.293
October 15, 2015
0.532
November 5, 2014
October 31, 2019
0.532
0.532
0.524
June 1, 2015
May 29, 2020
0.524
0.524
0.474
October 15, 2015
October 30, 2020
0.138
April 28, 2016
April 30, 2020
0.402
October 31, 2022
October 31, 2017
0.265
October 30, 2020
0.365
April 28, 2022-

(Note 1) Interest rates are rounded to the third decimal place.
(Note 2) For loans of which floating interest rates have been converted to, in effect, fixed rates through a swap agreement, interest rate indicates the rate after such conversion.

■ Ratio of Long-Term Loans and Short-Term Loans Payable

73.5%

Long-termloans payable■ Ratio of Fixed Rates and Floating Rates

Short-term loans payable and current
portion of long-term loans payable

Floating rate

26.5%

Fixed rate

5.1%

94.9%

■ Repayment Schedule(million yen)
3,000
2,500
2,000

Average remaining
period (Note 1)

1.8 years

LTV (Note 2)

46.3%(as of April 30, 2018)

1,500
1,000

(as of April 30, 2018)

500
0(Note 1) Average remaining period is rounded to the first decimal place.
(Note 2) LTV is calculated based on total assets.

9th FP
10th FP 11th FP 12th FP 13th FP 14th FP 15th FP 16th FP 17th FP
endingendingendingendingendingendingendingendingendingOct. 2018 Apr. 2019 Oct. 2019 Apr. 2020 Oct. 2020 Apr. 2021 Oct. 2021 Apr. 2022 Oct. 2022

Change in Asset Management Fee System■ Reviewing Fee Level and Changing the Asset Management Fee System to System Emphasizing Management Results
Management fee I (based on assets under management)
Basis of fee calculation

Rate
0.3%
(upper limit)

Total assets (book value)

Before changeManagement fee II (based on property-related operating revenues)▼

Basis of fee calculation
NOI

Before change▼

Valuation of assets under management (appraisal value)
After change *To calculate the amount based not on book value but on fair value
by excluding cash, etc. included in total assets

0.15%(upper limit)

No change

▼

NOI

6.5%
(upper limit)

After change■ Estimation when Applying the Change to the 10th Fiscal Period (ending April 2019) (forecast)Management fee I

10th Fiscal Period(ending April 2019)

BeforechangeForecast

Afterchange31170Management fee II

30

Rate
5.0%
(upper limit)

Management fee after
the Change
Amount (rate) ofdecrease

Distribution per unit
after the Change
Amount (rate) ofincrease-4.4 million yen(-7.3%)+60 yen(+1.5%)

39
10

20

30

40

50

60 (million yen)

(Note) The amount after the Change is the estimated figure announced in “REIT Financial Report for the 8th Fiscal Period” dated June 18, 2018 and is calculated by assuming that there was a change in the asset
management fee system based on the assumptions for the financial results forecast. Moreover, the amount of management fee I before the Change is calculated by assuming that there will be no change in theappraisal value as of the end of the 8th fiscal period. The above forecasted figure and estimated figure are based on certain assumptions and may differ from the actual amount.

10Description of Asset Manager

Organization of Asset Manager (as of June 1, 2018)■ Corporate Profile■ Directors and Auditors

Company Name
Address
Established
Paid-in Capital
President

Daiwa Real Estate Asset Management Co., Ltd.
6-2-1 Ginza, Chuo-ku, Tokyo
October 21, 2004
200 million yen
Akira Yamanouchi

Board of Directors

10
Executive directors: 5 Executive auditors: 1
Non-executive directors: 2; Non-executive auditors: 2

Employees
69 (excluding dispatched employees)
Registration of Financial
Registration No. 355 (Financial Instruments), Director
Instruments Business Operator General, Kanto Local Finance Bureau (Kinsho)
Building Lots and Buildings
Transaction Business License

License No. (3)-83920, Governor of Tokyo

Discretionary Agent for Real
Estate Transaction Approval

License No. 34, Minister of Land, Infrastructure, Transport
and Tourism

Association Membership

Member of The Investment Trusts Association, Japan
Member of Japan Investment Advisers Association
Member of Type II Financial Instruments Firms Association

Acquisition and Asset Management Division

Private Fund Division

Origination
Department

Private FundManagement Department

Acquisition
Department
OfficeInvestment Team
Residential
Investment Team
Healthcare
Investment TeamHotelinvestment team

Asset Management
Department
OfficeManagement Team
Residential
Management Team
Healthcare
Management TeamHotelmanagement team
Investment
Planning Team
Construction
Management Team

President and Representative Director
Vice President and Representative Director
Vice President and Representative Director
Executive Managing Director
Director
Director (non-executive)
Director (non-executive)
Auditor
Auditor (non-executive)
Auditor (non-executive)■ Organizational
Chart

Akira Yamanouchi
Yuji Shinotsuka
Yoshiki Nishigaki
Toshio Fukushima
Hajime Imbe
Mikita Komatsu
Naoya Otani
Tamaki Shibayama
Morimasa Matsuda
Shinji Kiso

Shareholders’ Meeting
Corporate Auditors
Board of Directors

Compliance Committee

Compliance Officer

Investment Committee（*）
President andRepresentative Director

Internal Control Office

Corporate Division
Customer Relations
Department

Finance
Department

Administration
Department

Corporate Planning
Department

Finance Team
Accounting TeamManagement Team

*Set up separately for each
investment corporation.

Structure
Asset Custodian②

Investment Corporation③

Administrator of Unitholders’ Register

Mizuho Trust & Banking Co., Ltd.

Sumitomo Mitsui Trust Bank, Ltd.

Management Back-Up Contractors
Sawayaka Club Co., Ltd.
Cedar Co., Ltd.
Super Court Co., Ltd.
Charm Care Corporation
Nichiigakkan Co., Ltd.
Nihon Kaigo Iryo Center Co., Ltd.
Wisnet Co., Ltd.
Silver Heights Sapporo Co., Ltd.
Anabuki Medical Care Inc.
Sompo Care, Inc.

General Meeting of Unitholders⑤

Board of Directors
Executive Director: Hiroshi Takeuchi
Supervisory Director: Tomohiko Shimizu
Supervisory Director: Chizuko Nakata④

General Administrator (Accounting, etc.)
Heiseikaikeisha Tax Corporation

Accounting Auditor
KPMG AZSA LLC①
Specially Related Company(Parent company of the Asset Manager)⑥

Asset Manager General Administration

Sponsor(Organization)

Daiwa Securities Group Inc.

Daiwa Real Estate Asset Management Co., Ltd.

⑦

AdvisorAIP Healthcare Japan GK① Asset management agreement/General administration affairs agreement related to operation ④ General administrator of accounting agreement② Asset custodian agreement⑤ Management back-up agreement③ General administrator of unitholders’ registry agreement⑥ Sponsor support agreement⑦ Advisory agreement

I. Overview of Nippon Healthcare Investment Corporation

11

II. Investor Information
History of Investment Unit Prices(yen) 190,000

900 (units)
Unit price (left axis)

Volume (right axis)

185,000800

180,000700

175,000600

170,000

500

165,000

400

160,000300

155,000

200

150,000

100

145,000

0
May
2016

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.
2017

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Nov.

Dec.

Jan.
2018

Feb.

Mar.

Apr.

Overview of Investment Units and Unitholders (as of April 30, 2018)■ No. of Investment Units by Investor TypeFP ended
April 2018
(8th FP)

Individuals/others
35,474 units (47.5%)

Foreigners 6,199 units (8.3%)

Other domestic companies 12,273 units (16.4%)
Securities companies 854 units (1.1%)

Total 74,632 units

FP ended
October 2017
(7th FP)

Financial institutions
19,832 units (26.6%)■ No. of Unitholders
by Investor Type

Individuals/others
38,649 units (51.8%)

Total 74,632 units

Financial institutions
19,266 units (25.8%)

Foreigners 2,978 units (4.0%)

Other domestic companies 12,280 units (16.5%)
Securities companies 1,459 units (2.0%)

Top Ten Unitholders (as of April 30, 2018)
Name of Investor

12

9,108
(97.2%)

Financial
institutions
Other domestic
companies

24(0.3%)

Foreigners

80(0.9%)

Securities
companies

23(0.2%)

Total

9,368

133
(1.4%)(Note) Rounded to the first decimal place

IR Calendar
Number of Percentage
Units Owned
Share(units)(%)

1. Daiwa Securities Group Inc.

7,600

10.2

2. The Master Trust Bank of Japan, Ltd. (Trust Account)

7,325

9.8

3. Japan Trustee Services Bank Ltd. (Trust Account)
The Nomura Trust and Banking Co., Ltd.
4.
(Investment Trust Account)
Trust & Custody Services Bank Ltd.
5.
(Securities Investment Trust Account)
6. STATE STREET BANK AND TRUST COMPANY 505001

4,649

6.2

2,454

3.3

1,282

1.7

1,033

1.4

7. Daiwa Real Estate Asset Management Co., Ltd.
SCB SG S/A SCB THAILAND AC FOR CIMBPRINCIPAL
8.
PROPERTY JP000294300545
9. Fukui Medical Credit Association

1,000

1.3

953

1.3

945

1.3

10. UENOYA BUILDING Co. Ltd.

903

1.2

Total

28,144

37.7(Note) Rounded to the first decimal place

Individuals/others

June 18, 2018・Announcement of results
for the fiscal period ended April 2018
July 13, 2018・Sending of Financial and Management
Status Report (Asset Management Report)
for FP ended April 2018
July 17, 2018・Commencement of payout of distributions
for the fiscal period ended April 2018
4th General Meeting of Unitholders on July 31, 2018

Apr.
Jan. Account closing
month
Dec.
June
Account closing
month
July
Oct.
December 2018・Announcement of results for the
fiscal period ending October 2018
January 2019・Sending of Financial and Management
Status Report (Asset Management Report)
for FP ending October 2018
January 2019・Commencement of payout of distributions
for the fiscal period ending October 2018

Investor Memo
End of fiscal period

April 30 and October 31 of each year

General Meeting of Unitholders

Held at least once every two years

Date for finalizing Unitholders with voting
rights for the General Meeting of Unitholders Date publicly announced beforehand
Reference date for finalizing payment of April 30 and October 31 of each year (distributions are paid within three months of the reference date)
distributions
Listed financial instruments exchangeTokyo Stock Exchange (securities code: 3308)

Newspaper in which notice is posted

The Nikkei

Manager of Unitholder Registry, etc.

Sumitomo Mitsui Trust Bank, Limited, 1-4-1 Marunouchi, Chiyoda-ku, Tokyo 100-8233

Office handling administrative affairs

Transfer Agency Department of Sumitomo Mitsui Trust Bank, Limited, 2-8-4 Izumi, Suginami-ku, Tokyo 168-0063
Phone 0120-782-031 (toll-free in Japan)

Service counter

Head Office and all branches of the Sumitomo Mitsui Trust Bank nationwide

Procedures for Changing Address, Etc.
Please notify the securities company you are dealing with for changes in address, name, etc. For procedures concerning investment units recorded in
special account, please contact Stock Transfer Agency Department at Sumitomo Mitsui Trust Bank, Limited (TEL: 0120-782-031 (toll-free in Japan)).

Distributions
Distributions will be payable upon presenting the “Receipt for Distributions” at a post office nearby. In case the due date has been passed, please designate
the method of receiving on the back of the receipt and send it to Stock Transfer Agency Department at Sumitomo Mitsui Trust Bank, Limited, or bring it tothe head office or branch offices of the bank to receive it. Please note that distributions will not be payable after three years of the payment start date as
specified by the Articles of Incorporation of NHI. If you wish to receive distributions via bank transfer, etc. in the future, please contact the securities
company you are dealing with.

Notice[Concerning Statement of Distributions]
The “Statement of Distributions” sent upon payment of distributions serves as a “Notice of Payment” required pursuant to the Act on Special
Measures Concerning Taxation. The document may be used to confirm the amount of distributions after receiving, or can serve as an attachment
document upon filing a tax return. Thus please make sure to keep it if you are planning to file a tax return. However, if you have selected the methodof allocation of dividends in proportion to the number of shares, the amount of withholding tax will be calculated by the securities company, etc.
Please confirm with the securities company you are dealing with for any attachment document required for filing a tax return.

Provision of Information via Website

Notice on the 4th General Meeting ofUnitholders and Briefing Session on
Asset Management for 8th Fiscal Period
NHI will hold the 4th General Meeting of Unitholders
and a briefing session on asset management for the
fiscal period ended April 2018 (8th fiscal period).
1. Date and time: July 31, 2018 (Tuesday)
10:00 a.m.~ (venue opening at
9:40 a.m.)
2. Venue:

In order to have unitholders deepen understanding of NHI, NHI has been putting forth
effort to communicate information through its website. It provides information on theoverview of the portfolio and operators as well as healthcare REIT structure. A service
providing e-mail notification of news release updates and such to those registered on“IR Email Distribution Service” is also available.
NHI’s website

http://www.nippon-healthcare.co.jp/en/

17F, GranTokyo North Tower,
1-9-1 Marunouchi,
Chiyoda-ku, TokyoA briefing session on asset management isscheduled to be held after the General Meetingof Unitholders at the same venue. The presenter
will be Akira Yamanouchi, President of Daiwa
Real Estate Asset Management Co., Ltd.

II. Investor Information

13

III. Asset Management Report
1. Management Status and Other Performance Highlights Data
Fiscal Period(

8th Period
From Nov. 1, 2017
To Apr. 30, 2018)(

7th Period
From May. 1, 2017
To Oct. 31, 2017)(

6th Period
From Nov. 1, 2016
To Apr. 30, 2017)(

5th Period
From May 1, 2016
To Oct. 31, 2016)(

4th Period
From Nov. 1, 2015
To Apr. 30, 2016)

(1) Operating Performance(Millions of yen, except per unit data or where otherwise indicated)
Operating revenues
698
698
698
679
667
Rental revenues
698
698
698
679
667
Operating expenses
425
425
420
405
377
Property-related expenses
299
297
295
272
258
Operating income
273
273
278
275
290
Ordinary income
247
245
250
248
262
Net income
247
244
249
247
261
(2) Properties, etc. (as of end of period)
Total assets
21,146
21,21821,27021,316
20,848[period-on-period percentage changes][-0.3%][-0.2%][-0.2%][+2.2%][+18.0%]Interest-bearing liabilities
9,800
9,800
9,800
9,800
9,300
Net assets
10,412
10,474
10,538
10,595
10,669[period-on-period percentage changes][-0.6%][-0.6%][-0.5%][-0.7%][+32.8%]Unitholders’ capital, net
Note 2
10,166
10,22910,28910,34910,408(3) Distributions
Total distribution amount
311
308
309
306
321
Total distribution of retained earnings
247
245
249
246
261
Total distribution in excess of retained earnings
64
63
60
60
60
Dividend payout
Note 3
100%
100%
100%
100%
100%
(4) Per Unit Information
Total number of units issued (units)
74,632
74,632
74,632
74,632
74,632
Net assets per unit (yen)139,516
140,337
141,206
141,969
142,958
Distribution per unit (yen)
4,163
4,124
4,143
4,106
4,295
Distribution amount from earnings per unit (yen)
3,303
3,274
3,343
3,306
3,495
Distribution amount in excess of earnings per unit (yen)
860
850
800
800
800
(5) Financial Indicators
ROA
1.2%
1.2%
1.2%
1.2%
1.4%
Notes 4and 5[annual rate][2.4%][2.3%][2.4%][2.3%][2.7%]
ROE
2.4%
2.3%
2.4%
2.3%
2.8%
Notes 5and 6[annual rate][4.8%][4.6%][4.8%][4.6%][5.6%]
Capital ratio
49.2%
49.4%
49.5%
49.7%
51.2%
[period-on-period percentage changes][-0.1%][-0.1%][-0.2%][-1.5%][5.7%]LTV (loan to value)
46.3%
46.2%
46.1%
46.0%
44.6%
Property leasing cash flows (NOI)
Note 7
597
596
597
596
596
(6) Other Referential Information
Number of investment properties
22
22
22
22
21
Number of tenants
Note 8
22
22
22
22
21
Total rentable area (m2)
67,298.83 67,298.83 67,298.83 67,298.83 65,203.04
Occupancy rate
Note 9100.0%
100.0%
100.0%
100.0%
100.0%
Depreciation
198
196
194
188
187
Capital expenditures
26
60
30
20
10
(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)(Note 9)14

Operating revenues, etc. do not include consumption taxes, etc.
The indicated amounts are unitholders’ equity less deduction amount of unitholders’ equity.
Dividend payout for the 4th fiscal period is calculated by the following formula since the issuance of new investment units was
implemented.
Dividend payout: [Total distribution amount (excluding distribution in excess of earnings) ÷ Net income] × 100
ROA: Ordinary income ÷ [(Total assets at beginning of period + Total assets at end of period) ÷ 2] × 100
Annualized figures are calculated by using the asset management period of the respective fiscal period; 182 days for the 4th Fiscal
Period; 184 days for the 5th Fiscal Period; 181 days for the 6th Fiscal Period; 184 days for the 7th Fiscal Period and 181 days for the
8th Fiscal Period.
ROE: Net income ÷ [(Net assets at beginning of period + Net assets at end of period) ÷ 2] × 100
Property leasing cash flows (NOI): Rental revenues − Property-related expenses + Depreciation
Number of tenants is the total number of end tenants.
Occupancy rate: Total leased area ÷ Total rentable area × 100

2. Developments in Asset Management in the Fiscal Period under Review(1) Brief History of the Investment Corporation
Nippon Healthcare Investment Corporation (hereinafter referred to as “NHI”) was incorporated on January 7, 2014
under 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 incorporation, NHI conducted
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 theconcerned capital increase through private placement and loans.
After accumulating a track record for roughly seven months after the start of asset management, in the previous
fiscal period, NHI conducted a public offering through the issuance of an additional 39,000 investment units on
November 4, 2014. On the following day, NHI made additional acquisitions of six properties concurrently with thelisting on the REIT Securities Section of the Tokyo Stock Exchange (the “TSE”) (Securities code: 3308). In the 3rd
Fiscal Period, NHI made additional acquisitions of three properties with borrowing and cash on hand, and in the 4th
Fiscal Period, NHI implemented an additional issuance of investment units through public offering (12,130 units) on
November 17, 2015 and additionally acquired four properties. Furthermore, in the 5th Fiscal Period, NHI made an
additional acquisition of one property on October 6, 2016 with borrowing and cash on hand. Through these additional
acquisitions of properties, the total acquisition price of NHI properties is 19,318 million yen as of April 30, 2018.
As the REIT specializing in healthcare facilities in that it invests solely in properties of which the principal use ishealthcare facilities, NHI effectively utilizes investor capital to initiate expansion of supply of high-quality healthcare
facilities that provide users with high-standard services, while at the same time produce ample and dependable
returns to investors for further capital circulation. In this way, NHI aims at creating a new value cycle for healthcare
facilities and the services provided, together with investors. Through these efforts, NHI would like to contribute to therealization of Japan’s major policy to improve the residential environment for the elderly by effectively utilizing private
sector funds.

(2) Investment Environment and Management Performance(A) Investment Environment (from November 1, 2017 to April 30, 2018)
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
for the enhancement of private nursing homes and other facilities for the elderly, which are thought to belacking.
Japan has the population of the elderly aged 65 years or over (hereinafter referred to as the elderly
population) accounting for approximately more than one-quarter of the total population as of December 1,
2017 (according to the Ministry of Internal Affairs and Communications’ “Population Estimates”
announced on May 21, 2018), and the population of the elderly is forecast to continue to account for an
increasingly greater proportion and the population of the elderly living alone is forecast to continue togrow. There is thus recognized to be sufficient potential for greater development of housing for the elderlywith nursing care services, etc. that are designed for the elderly to reside (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 the elderly;” 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% in 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.
(B) Management Performance
In the 8th Fiscal Period (fiscal period ended April 30, 2018), NHI acquired no investment properties.
Concerning the properties held as of the end of the 8th Fiscal Period (April 30, 2018), the leasable floor area
was 67,298.83m2 and the occupancy rate was 100.0%.

III. Asset Management Report15

(3) Overview of Capital Procurement
In the 8th Fiscal Period (fiscal period ended April 30, 2018), NHI conducted no new borrowing of funds, but
concluded interest rate swap agreements for borrowings totaling 1,800 million yen to hedge against interest
rate hike risks in the future.
The balance of interest-bearing liabilities outstanding as of the end of the 8th Fiscal Period (April 30, 2018)
stood at 9,800 million yen (short-term debt: 500 million yen; long-term debt: 9,300 million yen). The balanceof the current portion of long-term debt stood at 2,100 million yen. In addition, the average remaining period
at the end of the 6th Fiscal Period was 1.8 years.
The unitholders’ capital (net) was 10,166 million yen, and the total number of units issued was 74,632
investment units as of the end of the 8th Fiscal Period.
(4) Capital Expenditures During the Fiscal Period under Review
The following summarizes the main construction work that constitutes capital expenditures conductedduring the 8th Fiscal Period. Capital expenditures for the 8th Fiscal Period amounted to 26 million yen and,
when combined with the 32 million yen in repair expenses charged to 8th Fiscal Period expenses, totaled 58
million yen in construction work implemented.
Name of Property
Expenditure
Purpose
Period(Location)(Millions of yen)
Sompo Care LAVIERE Hiroshima
Renewal of air-conditioners From: April 2018
Hikarigaoka
17
in common areas
To: April 2018
(Hiroshima City, Hiroshima)
Sompo Care LAVIERE Hiroshima
Hikarigaoka(Hiroshima City, Hiroshima)
Charm Suite Ryokuchi Koen
(Toyonaka City, Osaka)Renewal of rooftop decks

From: April 2018
To: April 20183

Replacement of lighting
equipment in dwelling units

From: April 2018
To: April 2018
From: November 2017
To: April 2018

3

Other
Total

3
26

(5) Overview of Financial Performance and Distributions
As a result of the management described above, NHI posted financial performance for the 8th Fiscal Period of
698 million yen in operating revenue, 273 million yen in operating income, 247 million yen in ordinary incomeand 247 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 per unit of
3,303 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 64,183,520 yen, which is the amountroughly equivalent to 32% of the 198 million yen in depreciation for the 8th Fiscal Period, as reimbursement ofinvestments in capital. Accordingly, NHI declared a distribution amount in excess of earnings per unit of 860
yen.

(Note) NHI adopts a policy of implementing uninterrupted distributions in excess of earnings (reimbursement of investments in capital) 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 of establishment of lines of credit, etc., in order to notaffect long-term repair plans in light of the capital expenditures for each accounting period assumed based on the long-term repair plans and to meetneeds for funds (new acquisition of investment assets, repairs and capital 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. and Assets Research and Development Inc. for all assets held asof the end of the 8th Fiscal Period (22 properties) is 29 million yen.

16

3. Future Management Policy and Tasks(1) Investment Environment
Japan has the population of the elderly accounting for approximately more than one-quarter of the total
population, and the population of the elderly is expected to continue to account for an increasingly greater
proportion and the population of the elderly living alone is expected to continue to grow. With thedevelopment of medical technology, among other factors, the average life expectancy at birth for Japanesepeople is at 80.98 years for males and 87.14 years for females according to the Ministry of Health, Labourand Welfare’s “Abridged Life Tables for Japan 2016,” while record-highs were set in terms of the population
aged 65 years or over at 35 million people and the proportion of the elderly population is at 27.8% of the total
population of 127 million as of December 1, 2017 according to the Ministry of Internal Affairs andCommunications’ “Population Estimates” (announced on May 21, 2018).
According to the National Institute of Population and Social Security Research’s “Population Projections forJapan (2017),” the total population will increase to 123 million people, the elderly population to 37 million
people and the proportion of the elderly population to 30.0% in 2025 and then, while the total population will
decrease by approximately 39 million people from that at present to 88 million people, the elderly population
will reach 34 million people and the proportion of the elderly population to 38.4% in 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
utilization of private sector funds.
(2) 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.
(a) Stabilization of earnings
In principle, NHI shall invest in properties with the actual remaining lease contract period at the timeof acquisition of 10 years of 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 the lease agreements of content that, in principle, operators pay a fixed amount of rent. The
lease agreements with operators for the assets that NHI has acquired are all fixed-rent agreements.
(b) Criteria and methods for selecting operators
In the event of acquisition of healthcare facilities, not only the quality of the facilities as real estate, butalso 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 thefacilities continuously are regarded as important factors in terms of also the profitability and asset valueof healthcare facilities.
(c) Employment of “Backup Operator Membership”
NHI has concluded an agreement on backup of operational management with each and every
operator of acquired assets. The main purpose of said agreement is that, in the event that a leaseagreement for a healthcare facility held by NHI has ended or is expected to end due to contract
termination, contract cancellation or other reason, where NHI requests the operator to operate thehealthcare facility by conclusion of a new lease agreement with NHI, the operator shall sincerely
discuss the request. In addition, NHI shall consider concluding a similar agreement with also theoperators of healthcare facilities to be acquired in the future. Such relationship by agreement with
operators is referred to as “Backup Operator Membership.”III. Asset Management Report17(B) Investment Strategy for New Properties
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 adviser(a) Track record and network of the Asset Management Company
The Asset Management Company is striving for property acquisitions that utilize 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 of Daiwa Office Investment Corporation (balanceof assets for which management is entrusted as of the end of May 2018: approximately 439.4 billion
yen) and Daiwa Residential Private Investment Corporation (balance of assets for which management
is entrusted as of the end of May 2018: approximately 110.0 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 than existing property sourcing channels to collect property
information.
(b) 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, commissioningof facility operation, etc., and thinks that expansion of property acquisition opportunities can thus beexpected.
(c) 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 inprivate nursing homes and other facilities for the elderly since 2008. Based on this agreement, theAsset Management 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.
(a) 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 ofinterest-bearing liabilities to total assets (hereinafter referred to as “LTV”), economic and market
conditions, etc. and also taking into consideration the dilution of investment units.

18(b) 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 over borrowing
costs, borrowing 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 the balance of interest rate trends, market level, financial agility and security, lendercomposition and other factors.
In order to reduce the risk of interest rate fluctuations 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.
(c) 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 (newacquisition of 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 implementing cash
distributions in excess of earnings to unitholders uninterruptedly every fiscal period in an amount not toexceed 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.
(D) Schedule of Capital Expenditures
The following summarizes the main capital expenditures in line with currently planned construction
works for renovation, etc. Furthermore, the scheduled construction amounts include portions that will becharged as expenses in terms of accounting.
Estimated Cost (Millions of yen)
Payment for Cumulative
Total
the current amount paid
periodName of Property(Location)

PurposeEstimated Period

Charm Suite Ryokuchi
Koen(Toyonaka City, Osaka)
Charm Suite Ryokuchi
Koen(Toyonaka City, Osaka)Renewal of electric
hot water supplying
equipment

From: October 2018
To: October 2018

17

–

–

Renewal of lighting indwelling units

From: October 2018
To: October 2018

5

–

–

III. Asset Management Report19IV. Balance Sheets
As of April 30, 2018 and October 31, 2017

(Thousands of yen)

As ofApril 30, 2018

As of
October 31, 2017

AssetsCurrent Assets:
Cash and cash equivalents [Notes 3, 4 and 5]

1,778,876

1,671,399

14,22819,65414

14

Other current assets

1,681

2,527

Total Current Assets

1,794,799

1,693,594

Land in trust accounts

7,949,066

7,949,066

Buildings and structures in trust accounts

12,625,364

12,600,999

Machinery and equipment in trust accounts

18,324

18,324Tools, furniture and fixtures in trust accounts

38,59837,395

Less: accumulated depreciation(1,347,017)(1,148,649)

Leasehold rights in trust accounts

40,88640,886

19,325,221

19,498,021

134

145

Software

1,117

1,484

Lease and guarantee deposits

10,00010,000Long-term prepaid expenses

15,08914,813

Total Other Assets

26,34026,442

21,146,360

21,218,057

Prepaid expenses
Deferred tax assets [Note 12]

Investment Properties, at cost: [Notes 4, 6 and 7]

Total Investment Properties, net
Other Assets:
Right of trademark

Total Assets
The accompanying notes are an integral part of these financial statements.

20

(Thousands of yen)

As ofApril 30, 2018

As of
October 31, 2017

Liabilities
Current Liabilities:
Operating accounts payable

58,31859,651

Short-term debt [Notes 4, 5 and 10]

500,000

500,000

2,100,000

2,100,000

53,69763,646885

894

Accrued consumption taxes

1,110

1,020

Rent received in advance

85,14085,140532

540

Other current liabilities

4,078

3,293

Total Current Liabilities

2,803,760

2,814,184

Long-term debt [Notes 4, 5 and 10]

7,200,000

7,200,000

Tenant security deposits [Note 5]

730,216730,216

7,930,216

7,930,216

10,733,976

10,744,400

10,504,334

10,504,334(338,496)(275,059)

10,165,838

10,229,275

246,546244,382

10,412,384

10,473,657

Total Net Assets

10,412,384

10,473,657

Total Liabilities and Net Assets

21,146,360

21,218,057

Long-term debt due within one year [Notes 4, 5 and 10]
Accounts payable – other
Income taxes payable

Deposits received

Long-Term Liabilities:

Total Long-Term Liabilities
Total Liabilities

Net Assets [Notes 9 and 13]
Unitholders’ Equity:
Unitholders’ capital
Deduction from unitholders’ capital
Unitholders’ capital, net
Units authorized: 10,000,000 units
Units issued and outstanding: 74,632 units
Retained earnings
Total Unitholders’ Equity

The accompanying notes are an integral part of these financial statements.

IV. Balance Sheets

21

V. Statements of Income
For the six months ended April 30, 2018 and October 31, 2017

(Thousands of yen)

For the six months endedApril 30, 2018

For the six months ended
October 31, 2017697,767

697,553

697,767

697,553

298,789

297,063

Asset management fees
Asset custody fees
Administrative service fees
Trust fees

61,433
737
10,5176,450

61,984738
10,195
6,450

Directors’ compensation
Audit fees

4,800
6,000
35,8694,800
6,000
37,302424,595
273,172

424,532
273,021

2
1,811

2
–

1,813

2

21,2006,390

21,511
6,257

27,590247,395

27,768245,255

247,395

245,255

Operating Revenues and Expenses
Operating Revenues:
Rental revenues [Note 8]
Total Operating Revenues
Operating Expenses:
Property-related expenses [Note 8]

Other operating expenses
Total Operating Expenses
Operating Income
Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Insurance income
Total Non-Operating Revenues
Non-Operating Expenses:
Interest expense
Borrowing expenses
Total Non-Operating Expenses
Ordinary Income
Income Before Income Taxes
Income taxes – current
Income taxes – deferred
Total Income Taxes [Note 12]
Net Income

885
1

894
(1)

886
246,509893
244,362

Retained Earnings Brought Forward
Retained Earnings at End of Period

37
246,54620
244,382

The accompanying notes are an integral part of these financial statements.

22

V. Statements of Income

VI. Statements of Changes in Net Assets
For the six months ended October 31, 2017

Balance as of April 30, 2017
Distributions in excess of retained
earnings
Distributions of earnings
Net income
Balance as of October 31, 2017

(Thousands of yen)

Deduction
Number of Unitholders’fromUnitholders’Units
CapitalUnitholders' Capital, Net
Capital74,632 10,504,334(215,354) 10,288,980
–

–

–
–
–
–
74,632 10,504,334(59,705)

Retained
Earnings

249,515 10,538,495(59,705)––––(275,059) 10,229,275

For the six months ended April 30, 2018

Total

–

(59,705)(249,495)(249,495)
244,362
244,362
244,382 10,473,657(Thousands of yen)

Deduction
Number of Unitholders’fromUnitholders’Units
CapitalUnitholders' Capital, Net
Capital74,632 10,504,334(275,059) 10,229,275

Balance as of October 31, 2017
Distributions in excess of retained––(63,437)(63,437)
earnings
Distributions of earnings––––
Net income––––
Balance as of April 30, 2018
74,632 10,504,334(338,496) 10,165,838
The accompanying notes are an integral part of these financial statements.

Retained
Earnings

Total

244,382 10,473,657–(63,437)(244,345)(244,345)
246,509
246,509
246,546 10,412,384

VII. Statements of Cash Flows
For the six months ended April 30, 2018 and October 31, 2017

(Thousands of yen)

For the six months
ended
April 30, 2018

Cash Flows from Operating Activities:
Income before income taxes
247,395
Depreciation and amortization
198,746
Interest expense
21,200
Increase (Decrease) in accounts payable(13,447)
Cash payments of interest expense(20,847)
5,188
Other, net
Net Cash Provided by Operating Activities
438,235
Cash Flows from Investing Activities:
Payments for purchases of investment properties in trust(23,406)
accounts
Net Cash Used in Investing Activities(23,406)
Cash Flows from Financing Activities:
Proceeds from short-term debt–
Repayments of short-term debt–
Proceeds from long-term debt–
Repayments of long-term debt–
Payments of distributions of earnings(244,027)(63,325)
Payments of distributions in excess of retained earnings
Net Cash Used in Financing Activities(307,352)
Net Change in Cash and Cash Equivalents
107,477
1,671,399
Cash and Cash Equivalents at Beginning of Period
1,778,876
Cash and Cash Equivalents at End of Period (Note 3)
The accompanying notes are an integral part of these financial statements.

For the six months
ended
October 31, 2017245,255
196,226
21,511
10,296(21,744)(9,524)442,020(56,875)(56,875)
500,000(500,000)
1,800,000(1,800,000)(249,318)(59,658)(308,976)
76,1691,595,230
1,671,399

VI. Statements of Changes in Net Assets
VII. Statements of Cash Flows23

VIII. Notes to Financial Statements
For the six months ended April 30, 2018 and October 31, 2017

Note 1 – Organization and Basis of Presentation
Organization
Nippon Healthcare Investment Corporation (hereinafter referred to as “NHI”) was established on January 7,
2014 as an investment corporation under the Act on Investment Trusts and Investment Corporations (Act No.
198 of 1951, including subsequent revisions, hereinafter referred to as the “Investment Trust Act”) by the founder(Daiwa Real Estate Asset Management (hereinafter referred to as “DREAM”)).
NHI is an externally managed real estate fund, established as an investment corporation. DREAM, as NHI’s
asset management company, is engaged in acquiring, managing, leasing, and renovating healthcare facilities.
Daiwa Securities Group Inc. currently owns 100% of DREAM.
On November 4, 2014, NHI had raised 5,616,000 thousand yen through an initial public offering of units. Those
units were listed on the J-REIT section of the Tokyo Stock Exchange.
As of April 30, 2018, NHI had trust beneficiary interests in 22 healthcare facilities with approximately 67,299
square meters of healthcare facilities space and had leased space to 22 tenants. The occupancy rate for thehealthcare facilities was 100%.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in theInvestment Trust Act, the Financial Instruments and Exchange Act and their related accounting regulations, andin conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different incertain respects as to application and disclosure requirements of International Financial Reporting Standards or
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been reformatted and translated into English from the financial
statements of NHI prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance
Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act. In preparing theaccompanying financial statements, relevant notes have been expanded and certain reclassifications have been
made from the Japanese GAAP financial statements. Certain supplementary information included in the statutory
Japanese GAAP financial statements, but not required for fair presentation, is not presented in theaccompanying financial statements.
NHI maintains its accounting records in Japanese yen.

Note 2 – Summary of Significant Accounting Policies
Cash and Cash Equivalents
Cash and cash equivalents consist of cash, demand deposits, and short-term investments which are highly
liquid, readily convertible to cash and with insignificant risk of market value fluctuation, with maturities of threemonths or less from the date of acquisition.
Investment Properties
Investment properties are stated at cost, which includes the allocated purchase price, related costs andexpenses for acquisition of the properties. Investment properties balances are depreciated using the straight-line
method over the estimated useful lives. The estimated useful lives of the principal tangible fixed assets (including
assets held in trust) are as follows:
Buildings and structures
Machinery and equipment
Tools, furniture and fixtures

As of April 30, 2018
3-58 years
17 years
2-15 years

As of October 31, 2017
3-58 years
17 years
2-15 years

Costs related to the renovation, construction and improvement of properties are capitalized. Expenditures for repairs
and maintenance which do not add value to a property or prolong its useful life are expensed as incurred.
New Investment Units Issuance Costs
The issuance costs of investment units are expensed when incurred.
Income Taxes
Income taxes are accounted for on the basis of income for financial statement purposes. The tax effect of temporary
differences between the amounts of assets and liabilities for financial statements and for income tax purposes isrecognized as deferred taxes.

24Real Estate Taxes
Real estate taxes are imposed on properties on a calendar year basis and expensed when incurred. In terms of
newly purchased properties, NHI capitalizes a portion of the real estate taxes that relate to a period from the purchasedate of each property until the end of the calendar year as part of the acquisition cost of the relevant property.
There were no capitalized real estate taxes for the six months ended April 30, 2018 and the six months ended
October 31, 2017.
Consumption Taxes
Consumption taxes are excluded from transaction amount.
Non-deductible consumption taxes on acquisition of assets are included in the acquisition costs of the relevant
asset.
Hedge Accounting
NHI conducts derivative transactions in order to hedge against risks defined in its Articles of Incorporation based on
its risk management policy. NHI utilizes derivative financial instruments such as interest-rate swap agreements only
for the purpose of hedging its exposure to changes in interest rates. NHI deferred recognition of gains or losses
resulting from changes in fair value of interest-rate swap agreements because its interest-rate agreements met thecriteria for deferral hedging accounting.
However, NHI applies special treatment to the interest-rate swap agreements that meet the criteria for such special
treatment. Under the special treatment, interest-rate swaps are not remeasured at fair value: instead, the net amount
paid or received under the interest-rate swap agreements is recognized and included in interest expense. The hedge
effectiveness for interest-rate swap agreements is assessed each fiscal period except for those that meet the criteriaof special treatment.
Revenue Recognition
Operating revenues consist of fixed rental revenues, which are recognized on an accrual basis over the life of eachlease.
Accounting Treatment of Beneficiary Interests in Trust Assets Including Real Estate
For trust beneficiary interests in real estate, all accounts of assets and liabilities within assets in trust, as well as all
income generated and expenses incurred from assets in trust, are recorded in the relevant balance sheet and income
statement accounts.

Note 3 – Cash and Cash Equivalents
Cash and cash equivalents stated on the accompanying balance sheets and statements of cash flows as ofApril 30, 2018 and October 31, 2017 consisted of the following:(Thousands of yen)

Cash and deposits
Cash and deposits in trust accounts
Cash and cash equivalents

As of April 30, 2018
1,349,047
429,829
1,778,876

As of October 31, 2017
1,223,990
447,409
1,671,399

Note 4 – Pledged Assets and Secured Liabilities
The carrying amount of assets pledged as collateral and the secured liabilities as of April 30, 2018 and October
31, 2017 were as follows:(Thousands of yen)

Assets pledged:
Cash and deposits in trust accounts
Land in trust accounts
Buildings and structures in trust accounts
Machinery and equipment in trust accounts
Tools, furniture and fixtures in trust accounts
Leasehold rights in trust accounts
Total
Secured liabilities:
Short-term debt
Long-term debt due within one year
Long-term debt
Total

As of April 30, 2018

As of October 31, 2017

429,829
7,949,066
11,286,112
17,591
31,56640,886
19,755,050

447,4097,949,066
11,456,030
18,14033,89940,886
19,945,430

500,000
2,100,000
7,200,000
9,800,000

500,000
2,100,000
7,200,000
9,800,000
VIII. Notes to Financial Statements

25

Note 5 – Financial Instruments(For the six months ended April 30, 2018 and October 31, 2017)(1) Status of Financial Instruments(A) Policy for financial instruments
NHI procures funds through various financing methods (such as borrowings, issuance of investment
units) for acquisition and renovation of investment properties, payments of dividends and reimbursementof bank borrowings.
In financing through interest-bearing debt, to secure stable financing capacity and reduce future risk ofrising interests, NHI secures long-term fixed-rate borrowings with well-diversified maturities.
NHI manages surplus funds with safe and highly liquid money claims and securities (in principle,
deposits).
Derivative transactions are conducted only for the purpose of reducing risk of future interest rate
fluctuations.
(B) Types and risks of financial instruments and related risk management system
Proceeds from debt financing are used mainly for acquisition of investment properties. While these debts are
exposed to liquidity risk upon repayment, NHI manages the risk by maintaining the LTV ratio at low levels,
diversifying maturities, keeping the ratio of long-term debt to total debt at high levels, and diversifying lenders
with particular focus on domestic financial institutions. Bank borrowings with floating interest rates are exposedto the risk of future interest rate fluctuations and NHI manages that by using derivative transactions such as
interest-rate swap agreements.
NHI evaluates the effectiveness of hedges by comparing the accumulated cash-flow changes of hedged
items and that of hedging items, and then verifies the ratio of both amounts of changes. Furthermore, NHI
omits assessment of hedge effectiveness for the interest-rate swap agreements which meet the criteria ofspecial treatment.
Execution and management of derivative transactions have been carried out based on the regulations
defined in the basic policy of risk management.
Tenant security deposits represent funds deposited by tenants, and NHI is exposed to the risk of refunding
deposits in the event that a tenant terminates the contract. However, such risk is limited by reserving someparts of the funds.
Deposits are used for investing NHI’s surplus funds. These deposits are exposed to credit risks such as
bankruptcy of the depository financial institutions. NHI manages credit risk by restricting the tenor of thedeposit relatively short and setting a minimum credit rating requirement for the depository financial institutions.
(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 different assumptions are used. Also, thecontractual amounts of derivative transactions do not represent the market risk involved in these derivativetransactions.
(2) Estimated Fair Value of Financial Instruments
The book value, fair value and difference between the two as of April 30, 2018 and October 31, 2017 are
as follows. The financial instruments whose fair value is extremely difficult to estimate are excluded fromthe following table.
(As of April 30, 2018)
Cash and cash equivalents
Total
Short-term debt
Long-term debt due within one year
Long-term debt
Total
Derivative transactions

26(Thousands of yen)Book Value
1,778,876
1,778,876
500,000
2,100,000
7,200,000
9,800,000–

Fair Value
1,778,876
1,778,876
500,000
2,100,278
7,200,558
9,800,836–

Difference
–
–
–
278
558
836
–

(As of October 31, 2017)(Thousands of yen)

Cash and cash equivalents
Total
Short-term debt
Long-term debt due within one year
Long-term debt
Total
Derivative transactions

Book Value
1,671,399
1,671,399
500,000
2,100,000
7,200,000
9,800,000–

Fair Value
1,671,399
1,671,399
500,000
2,100,546
7,209,162
9,809,708–

Difference
–
–
–
546
9,162
9,708
–

Notes:
1. Methods to estimate fair value of financial instruments and derivative transactions
Assets(1) Cash and cash equivalents
As these instruments are settled in short period of time, their fair value and book value are nearly identical.
Therefore, for these items, the book value is assumed as the fair value.
Liabilities(1) Short-term debt, long-term debt due within one year and long-term debt
For short-term debt, long-term debt due within one year and long-term debt with floating interest rates, theirfair value and book value are nearly identical and there are no significant changes in NHI’s credit risk after
borrowing. Therefore, for these items, their book value is assumed as their fair value. For short-term debt, longterm debt due within one year and long-term debt with fixed interest rates, their fair value is based on thepresent value of principle and interest cash flows discounted at the current interest rate estimated to be applied
if similar new debt is entered into. However, the fair value of certain floating-rate long-term debt due within one
year and long-term debt that qualifies for the special treatment of interest-rate swaps is determined bydiscounting the sum of its principal and interest payments net of any cash flows from the interest-rate swaps.
Derivative Transactions(1) Derivatives to which hedge accounting is applied(As of April 30, 2018)
Method of Hedge
Accounting
Special treatment forinterest rate swap
transactions(Thousands of yen)Type of Derivative
Transactions
Interest rate swap
transactions
Receive floating andpay fixed

Hedged Items

Contract Amount(due after one year)

Long-term debt
due within one
year and longterm debt

8,800,000(7,200,000)–(**)

8,800,000(7,200,000)

–

Total
(As of October 31, 2017)
Method of Hedge
Accounting
Special treatment forinterest rate swap
transactions

Fair Value(*)(Thousands of yen)Type of Derivative
Transactions
Interest rate swap
transactions
Receive floating andpay fixed
Total

Hedged Items

Contract Amount(due after one year)

Long-term debt
due within one
year and longterm debt

7,000,000(5,400,000)–(**)

7,000,000(5,400,000)–

Fair Value(*)*The fair value is provided by the financial institution.
**The values of derivatives qualifying for special treatment of interest rate swap transactions are included in that of related long-term debt. This isbecause such swaps are handled together with hedged long-term debt.

VIII. Notes to Financial Statements27

2. Financial instruments whose fair value is extremely difficult to estimate
Tenant security deposits (with the book value of 730,216 thousand yen as of April 30, 2018 and October 31,2017) that have been deposited from tenants are not marketable and the actual deposit period cannot be reliably
determined, thus making it impossible to reasonably estimate their future cash flows, and therefore, it isconsidered to be extremely difficult to estimate their fair value.
3. Redemption schedule for money claims(As of April 30, 2018)(Thousands of yen)

Due within Due after
Due after
Due after
Due after
1 year1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years
1,778,876––––
1,778,876––––

Cash and cash equivalents
Total(As of October 31, 2017)

Due after
5 years––(Thousands of yen)

Due within Due after
Due after
Due after
Due after
1 year1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years
1,671,399––––
1,671,399––––

Cash and cash equivalents
Total

Due after
5 years––

4. Redemption schedule for long-term debt
(As of April 30, 2018)(Thousands of yen)

Short-term debt
Long-term debt due within one
year
Long-term debt
Total

Due within Due after
Due after
Due after
Due after
1 year1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years
500,000––––

Due after
5 years–

2,100,000

–

–

–

–

–

–
2,600,000

3,400,000
3,400,000

2,500,000
2,500,000

500,000
500,000

800,000
800,000––(As of October 31, 2017)(Thousands of yen)

Short-term debt
Long-term debt due within one
year
Long-term debt
Total

Due within Due after
Due after
Due after
Due after
1 year1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years
500,000––––

Due after
5 years–

2,100,000

–

–

–

–

–

–
2,600,000

2,900,000
2,900,000

3,000,000
3,000,000––

1,300,000
1,300,000––

Note 6 – Schedule of Tangible Fixed Assets of Investment Properties
Investment properties as of April 30, 2018 and October 31, 2017 consisted of the following:		

Land in trust accounts
Buildings andstructures in trust
accounts
Machinery andequipment in trust
accounts
Tools, furniture andfixtures in trust
accounts
Total

28(Thousands of yen)

As of April 30, 2018
Acquisition Accumulated Book value
costs
depreciation

As of October 31, 2017
Acquisition Accumulated Book value
costs
depreciation

7,949,066–

7,949,066

7,949,066–

7,949,066

12,625,364(1,339,252)

11,286,112

12,600,999(1,144,969)

11,456,030

18,324(733)

17,591

18,324(184)

18,14038,598(7,032)

31,56637,395(3,496)33,89920,631,352(1,347,017)

19,284,335

20,605,784(1,148,649)

19,457,135

Note 7 – Investment and Rental Properties
NHI owns fee-based homes for the elderly, etc. (including land) in the three major metropolitan areas and core cities.
The book value, net change in the book value and the fair value of the investment and rental properties are as follows:(For the six months ended April 30, 2018)
Book Value
As of
ChangeOctober 31, 2017
during the period(*1)
19,498,021(172,800)(For the six months ended October 31, 2017)
Book Value
As of
ChangeApril 30, 2017
during the period(*2)
19,634,316(136,295)(Thousands of yen)

As ofApril 30, 2018
19,325,221

Fair value as ofApril 30, 201824,121,000(Thousands of yen)

As of
October 31, 201719,498,021

Fair value as of
October 31, 201724,184,000(Note 1) The book value represents the acquisition costs less accumulated depreciation.
(Note 2) Significant changes(*1) For the six months ended April 30, 2018, the major reason of decrease is depreciation (198,368 thousand yen).
(*2) For the six months ended October 31, 2017, the major reason of decrease is depreciation (195,848 thousand yen).
(Note 3) The fair values as of April 30, 2018 and October 31, 2017 represent the sum of appraisal values estimated by external real estate appraisers.

Income and loss from investment and rental properties for the six months ended April 30, 2018 and October 31,
2017 are disclosed in Note 8.

Note 8 – Rental Revenues and Expenses
Rental revenues and expenses for the periods ended April 30, 2018 and October 31, 2017 were as follows:(Thousands of yen)

A. Revenues from property leasing
Rental revenues
Total revenues from property leasing
B. Property-related expenses
Consignment expenses
Utilities expenses
Taxes and dues
Non-life insurance expenses
Repair expenses
Depreciation
Leasehold fees
Total property-related expenses
C. Operating income from property leasing [A – B]

For the six months endedApril 30, 2018

For the six months ended
October 31, 2017697,767
697,767

697,553
697,553

13,1092,523
50,036
1,480
32,073
198,368
1,200
298,789
398,978

12,445379
50,0091,520
35,662
195,848
1,200
297,063
400,490

Note 9 – Net Assets
NHI issues only non-par value units in accordance with the Investment Trust Act and all of the issue prices of newunits are designated as stated capital. NHI maintains at least 50,000 thousand yen as the minimum amount of net
assets, as required by the Investment Trust Act.

Note 10 – Short-term debt, long-term debt due within one year and long-term debt
Short-term debt, long-term debt due within one year and long-term debt as of April 30, 2018 and October 31, 2017consisted of the following:(Thousands of yen)

Secured loans due 2017 to 2022, principally frombanks and insurance companies with interest rates
mainly ranging from 0.3% to 0.6%
Total

As of April 30, 2018

As of October 31, 2017

9,800,000

9,800,000

9,800,000

9,800,000[Note] The interest rates presented are daily weighted average interest rates. As for long-term debts due within one year and long-term debts whichwere hedged by interest-rate swaps for the purpose of avoiding interest rate fluctuation risk, the swapped interest rates are used.

VIII. Notes to Financial Statements

29

The annual maturities of short-term debt, long-term debt due within one year andlong-term debt as of April 30, 2018 were as follows:(Thousands of yen)

Due within one year
Due after one to two years
Due after two to three years
Due after three to four years
Due after four to five years
Due after five years

2,600,000
3,400,000
2,500,000
500,000
800,000–

Note 11 – Leases
As Lessor
The future minimum rental revenues under existing non-cancelable operating leases as of April 30, 2018 andOctober 31, 2017 were as follows:(Thousands of yen)

Due within one year
Due after one year
Total

As of April 30, 2018
1,393,218
10,399,125
11,792,343

As of October 31, 2017
1,393,218
11,052,426
12,445,644

Note 12 – Income Taxes
NHI is subject to income taxes in Japan. The effective tax rate on NHI’s income based on applicable Japanese
tax law was estimated as 0.36% for the six months ended April 30, 2018 and for the six months ended October
31, 2017. The following table summarizes the significant differences between the statutory tax rates and NHI’s
effective tax rates for financial statement purposes.
For the six months ended
For the six months endedApril 30, 2018
October 31, 2017
Statutory tax rate
31.74%
31.74%
Deductible dividends(31.63)(31.62)Others0.25
0.24
Effective tax rate
0.36%
0.36%
NHI was established as an investment corporation under the Investment Trust Act, and as long as aninvestment corporation distributes to its unitholders at least 90% of earnings available for dividends for a period
and other requirements prescribed in the Special Taxation Measures Law of Japan are met, the investment
corporation is allowed to deduct the total amount of dividends, excluding distribution in excess of earnings, incalculating its taxable income under Japanese tax regulations.
The significant components of deferred tax assets and liabilities as of April 30, 2018 and October 31, 2017
were as follows:(Thousands of yen)

Deferred tax assets:
Accrued enterprise tax
Total deferred tax assets
Net deferred tax assets

30

As of April 30, 2018

As of October 31, 2017
14
14
14

14
14
14

Note 13 – Per Unit Information
Information about net assets per unit and net income per unit as of April 30, 2018 and October 31, 2017 andfor the periods then ended were as follows. The computation of net income per unit is based on the daily
weighted average number of units outstanding during the period. The computation of net assets per unit isbased on the number of units outstanding at each period end.

Net assets at period end per unit
Net income per unit

For the six months endedApril 30, 2018
139,516 yen
3,302 yen

For the six months ended
October 31, 2017
140,337 yen
3,274 yen

Net income per unit is calculated by dividing the net income by the daily weighted average number ofinvestment units issued and outstanding. The diluted net income per unit is not stated as there are no diluted
investment units.
(Note) The basis for calculating the net income per unit is as follows.

For the six months endedApril 30, 2018
246,509

For the six months ended
October 31, 2017244,362––

Net income available to ordinary unitholders

246,509244,362

Average number of units during the period (units)

74,632

74,632

Net income (thousands of yen)Amount not available to ordinary unitholders(thousands of yen)(thousands of yen)

Note 14 – Distribution
In accordance with the cash distribution policy described in Article 33-1-1 of the Articles of Incorporation of
NHI, NHI determines that the amount of distribution shall exceed the amount equivalent to 90% of its
distributable profit as stipulated in Article 67-15 of the Special Taxation Measures Law, and shall be up to its
earnings as the maximum amount. Following this policy, NHI has decided that it shall distribute 246,509,496 yen
for the fiscal period ended April 30, 2018, which is the maximum integral multiple to 74,632 units issued andoutstanding as the distribution of earnings, and 244,345,168 yen for the fiscal period ended October 31, 2017,
which is the maximum integral multiple to 74,632 units. In addition, NHI will continue to make distributions inexcess of earnings (refund of capital contribution to unitholders) every period in accordance with the cash
distribution policy described in Article 33-1-2 of the Articles of Incorporation of NHI. Based on the policy, NHI
has decided that it shall distribute 64,183,520 yen, which is calculated as the approximate equivalent of 32% of
198,367,756 yen of the depreciation amount posted for the fiscal period ended April 30, 2018, as distributions inexcess of earnings (refund of capital contribution to unitholders) and 63,437,200 yen for the fiscal period ended
October 31, 2017, which is calculated as the approximate equivalent of 32% of 195,847,818 yen of thedepreciation amount posted for the fiscal period ended October 31, 2017.
(Yen)

Unappropriated retained earnings
Distributions in excess of retained earnings
Deduction from unit holders’ capital
Distributions
Distributions of retained earnings
Distributions in excess of retained earnings
Total distributions
Retained earnings brought forward

For the six months endedApril 30, 2018
Total
Per unit
246,546,358

For the six months ended
October 31, 2017Total
Per unit
244,382,227

64,183,520

63,437,200

246,509,496
64,183,520
310,693,016
36,862

3,303
860
4,163

244,345,168
63,437,200
307,782,368
37,059

3,274
850
4,124

VIII. Notes to Financial Statements

31

Note 15 – Transactions with Related Parties(For the six months ended April 30, 2018)
No related-party transaction was entered into for the six months ended April 30, 2018.
(For the six months ended October 31, 2017)
No related-party transaction was entered into for the six months ended October 31, 2017.

Note 16 – Segment Information
For the six months ended April 30, 2018 and October 31, 2017
Segment Information
Segment information has been omitted as NHI has only one segment, which is the property leasing business.
Related Information
Information about Products and Services
Disclosure of this information has been omitted as operating revenues to external customers for a single
product/service category account for more than 90% of the operating revenues on the statements ofincome and retained earnings.
Information about Geographic Areas(1) Operating revenues
Disclosure of this information has been omitted as domestic operating revenues account for morethan 90% of total operating revenues.
(2) Investment properties
Disclosure of this information has been omitted as domestic investment properties account for morethan 90% of the book value of the total investment properties.
Information about Major Tenants
Disclosure of this information has been omitted as there is no tenant that accounts for 10% or more of
the operating revenues recorded in the statements of income and retained earnings.

Note 17 – Significant Subsequent Events
Not applicable.

32

IX. Independent Auditor’s Report

IX. Independent Auditor’s Report33Overview of Alpha Living Facilities
We open elderly housing in locations that are very convenient, utilizing the foundation of the Anabuki Group.
We are particular with the locations of the facilities so that it is easy for families to visit, but another feature is that it becomes easy for the staff
to come to work as well.
KagawaElderly housing with supportive services Day services center also built

Elderly housing with supportive services

Alpha Living Takamatsu Hyakkenmachi

Elderly housing with supportive services

Alpha Living Takamatsu Fuseishi Sunflower-dori●Type: Elderly housing with●Type: Elderly housing with●Type: Elderly housing●Location: 8-11

●Location: 2111-2●Location: 1006-20, etc.

supportive services

supportive services

Hyakkenmachi,
Takamatsu-shi, Kagawa●Total number of rooms:
50 (resident capacity of
54 persons)●Type of residential rights:
Lease●Completed: July 2010

●Type: Residential-type

Opened: October 2012

Opened: January 2014

43 (resident capacity of
44 persons)●Type of residential

Dentist clinic also built

rights: Rights to use●Completed: June 2014

Opened: July 2014

Ehime
Residential-type fee-based homes
for the elderly with nursing care

Day services center also built

Elderly housing with supportive services Day services center also built

Alpha Living Takamatsu Konyacho

Alpha Living Matsuyama Kumanodai

Elderly housing with supportive services

Alpha Living Matsuyama Honmachi●Type: Elderly housing●Type: Residential-type fee-based●Type: Elderly housing●Type: Elderly housing with

●Location 2171-1●Location: 5-3 Konyacho,●Location: 1217

●Location: 6-3-3, etc. Honmachi,with supportive services

Fuseishicho,
Takamatsu-shi●Total number of rooms:
45 (resident capacity of
45 persons)●Type of residential
rights: Lease●Completed: November
2016

Opened: January 2017

Nishiuchimachi,
Takamatsu-shi●Total number of rooms:

Facility owned by the Investment Corporation

KagawaAlpha Living Takamatsu Fuseishi Minami

fee-based home for theelderly●Location: 1-6

Matsunawacho,
Takamatsu-shi●Total number of rooms:
40 (resident capacity of
42 persons)●Type of residential
rights: Lease●Completed: November
2013

Facility owned by the Investment Corporation

Elderly housing with supportive services

Alpha Living Takamatsu Ekimaewith supportive services

Fuseishicho, Takamatsu-shi●Total number of rooms: 36(resident capacity of 38
persons)●Type of residential rights:
Lease●Completed: August 2012

Opened: August 2010

Residential-type fee-based home for the elderly

Alpha Living Takamatsu Matsunawa

homes for the elderly with nursing carewith supportive services

Takamatsu-shi●Total number of rooms: [With nursingcare] 19 (resident capacity of 19
persons); [Residential-type] 46(resident capacity of 48 persons)●Type of residential rights: Rights to use●Completed: September 2016

Opened: April 2017

Kumanodai,
Matsuyama-shi●Total number of rooms:
48 (resident capacity of
51 persons)●Type of residential
rights: Lease●Completed: August
2012

Opened: October 2012

Dentist clinic also built

supportive services
Matsuyama-shi●Total number of rooms: 51(resident capacity of 55 persons)●Type of residential rights: Lease●Completed: November 2013
Medical anddentist clinic also built

Opened: January 2014

*There are two facilities, one with nursing care and the otherresidential-type.

Ehime

Hiroshima

Elderly housing with supportive services Day services center also built

Alpha Living Matsuyama Yotsuba Circulation Clinic-mae●Type: Fee-based home for the●Location: 4-5-40●Location: 2-1-7 Nakahiromachi,

Minamiedo,
Matsuyama-shi●Total number of rooms:
54 (resident capacity of
54 persons)●Type of residential
rights: Lease●Completed: September
2014

Opened: November 2014

Alpha Living Hiroshima Nakahiro●Type: Elderly housingwith supportive services

Residential-type fee-based
home for the elderly

Fee-based home for the elderly with nursing care

Day services center also built

Alpha Living Fukuyama Tajime

Opened: November 2011

Alpha Living Hiroshima Danbara

Opened: April 2012

Opened: March 2013

fee-based home for theelderly●Location: 2-7-5
Danbarahinode,
Minami-ku, Hiroshima-shi●Total number of rooms:
37 (resident capacity of
37 persons)●Type of residential rights:
Rights to use●Completed: January 2013

Elderly housing with supportive services

Alpha Living Hiroshima Kanonhonmachi

Alpha Living Hiroshima Furue Ekimae●Type: Elderly housing●Type: Elderly housing with

●Location: 13-24●Location: 1-3 Furueshinmachi,with supportive services

Opened: November 2016

fee-based home for theelderly●Location: 1-2-23 Konan,

Naka-ku, Hiroshima-shi●Total number of rooms: 38(resident capacity of 41
persons)●Type of residential rights:

Rights to use●Completed: April 2012

Opened: June 2012

OkayamaElderly housing with supportive services●Type: Residential-type●Type: Residential-type

fee-based home for theelderly●Location: 2-22-10
Tajimecho, Fukuyama-shi●Total number of rooms:
52 (resident capacity of
55 persons)●Type of residential rights:
Rights to use●Completed: February
2012

Nishi-ku, Hiroshima-shi●Total number of rooms: 36(resident capacity of 36
persons)●Type of residential rights:
Rights to use●Completed: September 2011

Day services center also built

Alpha Living Hiroshima Yoshijima-dori●Type: Residential-type

elderly with nursing care

Hiroshima
Residential-type fee-based home for the elderly

Residential-type fee-based
home for the elderly

Residential-type fee-based
home for the elderly●Type: Residential-type

fee-based home for theelderlysupportive services

Kanonhonmachi,
Nishi-ku, Hiroshima-shi●Total number of rooms:
55 (resident capacity of
55 persons)●Type of residential
rights: Lease●Completed: August
2016

Day services center also built

Alpha Living Kurashiki Ekimae-dori●Location: 1-5-7

Nishi-ku, Hiroshima-shi●Total number of rooms: 47(resident capacity of 47 persons)●Type of residential rights: Lease●Completed: March 2018

Hinodecho, Kurashiki-shi●Total number of rooms:

42 (resident capacity of
46 persons)●Type of residential rights:

Rights to use

Opened: May 2018

Opened: November 2012

●Completed: October

2012

OkayamaResidential-type fee-based
home for the elderly

Day services center also built

Alpha Living Okayama Nishigawa Ryokudokoen●Type: Residential-type

fee-based home for theelderly●Location: 6-2 Chuocho,
Kita-ku, Okayama-shi●Total number of rooms:
53 (resident capacity of
55 persons)●Type of residential rights:
Rights to use●Completed: August 2014

Opened: October 2014

Alpha Living Okayama Ekinishi●Type: Residential-type

Opened: April 2016

7

Introduction of Operators

fee-based home for theelderly●Location: 5-36
Saiwaicho, Kurashiki-shi●Total number of rooms:
35 (resident capacity of
35 persons)●Type of residential
rights: Rights to use●Completed: January
2016

Residential-type fee-based
home for the elderly

Kita-ku, Okayama-shi●Total number of rooms: 44(resident capacity of 44
persons)●Type of residential rights:
Rights to use●Completed: September 2014

Opened: November 2014

Opened: March 2015

fee-based home for theelderly●Location: 1-11-4 Hama,
Naka-ku, Okayama-shi●Total number of rooms:
45 (resident capacity of48 persons)●Type of residential
rights: Rights to use●Completed: January2015

Day services center also built

Alpha Living Okayama Noda

●Type: Residential-type

fee-based home for the elderly●Location: 11-21 Showacho,●Type: Residential-type

fee-based home forthe elderly●Location: 3-8-8 Noda,

Kita-ku, Okayama-shi●Total number of rooms:

42 (resident capacityof 42 persons)●Type of residential

rights: Rights to use

Opened: May 2015

●Completed: March

2015

Facility owned by the Investment Corporation

OkayamaAlpha Living Kurashiki Saiwaicho

Day services center also built

Alpha Living Okayama Korakuen●Type: Residential-type

Facility owned by the Investment Corporation

Residential-type fee-based home for the elderly

Residential-type fee-based
home for the elderly

Residential-type fee-based home for the elderly

Hyogo
Elderly housing with supportive services Day services center also built

Alpha Living Kawanishi-Noseguchi Ekimae

FukuokaElderly housing with supportive services Day services center also built

Alpha Living Himeji Josai●Type: Elderly housing with●Type: Elderly housing with

●Location: 1-6-6 Obana,●Location: 272-1

supportive services

Kawanishi-shi●Total number of rooms: 55(resident capacity of 55
persons)●Type of residential rights:
Lease●Completed: August 2015

Opened: October 2015

Residential-type fee-based
home for the elderly●Type: Residential-type

supportive services

fee-based home forthe elderly●Location: 7-8-8

Kotookacho, Himeji-shi●Total number of rooms: 42(resident capacity of 42
persons)●Type of residential rights:
Lease●Completed: March 2016

Opened: July 2016

Day services center also built

Alpha Living Fukuoka Nanakuma
Nanakuma, Jonan-ku,
Fukuoka-shi●Total number of rooms:

43 (resident capacityof 43 persons)●Type of residential

Opened: August 2014

rights: Rights to use●Completed: June 2014

Fukuoka

Nagasaki
Residential-type fee-based
home for the elderly

Elderly housing with supportive services Day services center also built

Alpha Living Hakata Minami

with supportive services

Opened: October 2014

Elderly housing with supportive services

Alpha Living Nagasaki Oura

●Type: Elderly housing with●Type: Residential-type●Location: 3-6-1 Yanaga,

Opened: December 2014

Alpha Living Nagasaki Suwanomori

Alpha Living Fukuoka Hara

●Type: Elderly housing

Minami-ku,
Fukuoka-shi●Total number of rooms:
42 (resident capacity of
42 persons)●Type of residential
rights: Lease●Completed: October
2014

Elderly housing with supportive services Day services center also built

Day services center also built●Type: Elderly housing

supportive services

fee-based home for theelderly●Location: 3-760-1 Hara,
Sawara-ku, Fukuoka-shi●Total number of rooms:
42 (resident capacity of
42 persons)●Type of residential
rights: Rights to use●Completed: August
2014

with supportive
services●Location: 41

Katsuyamamachi,
Nagasaki-shi●Total number of rooms: 62(resident capacity of 66
persons)●Type of residential rights:
Lease●Completed: June 2014

Opened: August 2014

●Location: 12-1, etc.

Shitamachi,
Nagasaki-shi●Total number ofrooms: 47 (resident
capacity of 47
persons)●Type of residential
rights: Lease

Scheduled to open:
early summer 2019

Kagoshima
Residential-type fee-based
home for the elderly

Day services center also built

Residential-type fee-based home for the elderly

Alpha Living Kagoshima Uenosono

Alpha Living Kagoshima Higashisengoku●Type: Residential-type●Type: Residential-type

fee-based home for theelderly●Location: 4-15 Uenosonocho,
Kagoshima-shi●Total number of rooms: 47(resident capacity of 49
persons)●Type of residential rights:
Rights to use●Completed: September 2013

fee-based home for the elderly●Location: 4-7

Higashisengokucho,
Kagoshima-shi●Total number of rooms: 47(resident capacity of 49
persons)●Type of residential rights:

Rights to use●Completed: January 2014

Opened: November 2013

Opened: March 2014

Opening Status of Alpha Living Facilities
Tottori
ShimaneHiroshima
Hiroshima
City
Yamaguchi

Saga

Hyogo

Kyoto

Okayama
Himeji City
City
Kurashiki
City

Fukuyama City

FukuokaCity

NagasakiOkayama

Kawanishi
City

Takamatsu City

Fukuoka

KagawaOsaka

Matsuyama City

Ehime
Oita

Nagasaki City

Kochi

Nara

Tokushima
Wakayama

Kumamoto

MiyazakiKagoshima
Kagoshima City

Opened: 29 buildings (30 facilities); 1,338 rooms (resident capacity of 1,379 persons)
Scheduled to open: 1 building (1 facility); 47 rooms (resident capacity of 47 persons)Total of 30 buildings (31 facilities) and 1,385 rooms (resident capacity of 1,426 persons)
As of the end of May 2018

*Properties shown above with photos include those which the Investment Corporation does not own. Furthermore it is not indicated that the Investment Corporation plans to own
these properties in the future.
Introduction of Operators

6

Supporting the Growth of Staff and
an Excellent Work Environment
Certification Assistance System (Expenses Support)
We assist with up to 100,000 yen per certification for acquisition expenses and provide a maximum of 30,000 yen as a gift to those thatsucceed. Staff can join without any certifications and use this system to get certified while working.
*Certifications related to nursing care are targeted for assistance.
*Part-time workers are also eligible if they participate in the care worker induction course

Class-Based Training and Training for Reception Manners
We deal not only with nursing care skills but also train for reception manners and human skills.
The training also serves to create a space of interaction for coworkers in various areas as well as for staff in the same field of work.

Class-based training

Training for reception manners

Efforts for Work-Life Balance
We support a synergy of “work” and “living” so that our staff do not have to give up or start
to let go of either of the two, but rather are able to revitalize both by completing work within thescheduled time and enjoy living that is vibrant.
Actively

At events,
etc.

recommend

Rate of useof annual
paid vacation

50%*Results at
Anabuki Medical Carefor fiscal 2016

Supporting
healthRate of employees
Number ofwhose monthly overtimedays for whichis less than 5 hours
a holiday can be selected (excluding
management/managers)

2

71%

days
per month*Results at
Anabuki Medical Carefor fiscal 2016Childcare Support System
We have unique support systems such as the short working hour regular employee system
where staff with small children can have time for child rearing while continuing their work as
well as a system that allows staff to flexibly arrange their work.
Shiftconsiderations

5

Introduction of Operators

Max
shortening of
2 hours

Flexibleworking

Leave for before
and after childbirthMaternity leave

Short working
hour regular
employee system(selection of employment type)★ Night shifts are exempted★ Work hours can beshortened by a maximum of
2 hours per day and the timeof work can be selected★ The employment typecan be flexibly changed
while maintaining
the same gradeWork style selection
systemags areschool b child
ru
e
s
o
d
n
Ra
en thegifts whool
given as elementary sch
entersInitiatives and Systems in View of the Future
Originally Developed Nursing Care System
With the principle of supporting authentic living, we developed a care-record management and work shift system that aims to better the sharing
of information among different job classifications, minimize the work burden of staff and improve operational efficiency. Its main function is theautomation of creation of work rosters and shifts, check on the status of inputting service provision records, extraction of medical informationand information concerning nursing care and living as well as calculation of productivity metrics.
The improvement of operational efficiency creates more time that can be allotted to meetings, technical training and such and this in turnresults in improved quality of services, supplementation of labor shortage and prevention of nursing care accidents.
Nursing care data
platform

Homes
for theelderly

Checking

Input

Housing service
officeHome-visit
care support
Home-visit
nursing care
In-home long-termcare support
Day services

Input

Information is
synchronized

Checking

Active Recruitment of “Foreign Nursing Care Students”
Anabuki Medical Care has established a foreign nursing care student scholarshipprogram in which foreigners who wish to become care workers in Japan are given
loans to pay for part of their entrance fees and schooling expenses for training
schools in Japan.
As of May 2018, about 30 people have come to Japan, mainly from Vietnam and
the Philippines, as eligible persons for the program. They are working at Alpha
Living facilities which we established while attending a Japanese language school
operated by the Anabuki College Group. We will continue to our work to nurture
care workers so that they can become excellent human resources in the field ofnursing care.

Introduction of a Remote Monitoring System for Residents through IoT
We have introduced a remote monitoring system developed by Fujitsu Limited at some of the Alpha Living facilities. Special devices are installed
in residential rooms to pick up information on sound and movement of people to get a real-time understanding of the situation of the rooms. If
there is anything out of the ordinary, staff are notified through their devices so that they can rush to the scene. IoT technology, which connects
the net with things, will reduce the risk of accidents at facilities and further make operations more efficient to improve services. There is also
the aim of reducing the burden of staff as a shortage of personnel is also an issue.
Operator

FujitsuService contract

Management offices, etc.

・Data checking
・Alarm notifications
・Phone (optional)

ReportDispatch staff

Staff
・Alarm・Notification via e-mail Staff
・Phone (optional

Families

Room No. XX

Sound and motion ofpeople (signs of life)
Temperature and humidity(indoor condition)

Nurses on duty 24 hours

Setting to forward to
Fujitsu’s call center is possible
for night time, holidays, etc.
(optional)

Staff
Collecting sensing data

Cloud
analysis・Signs of living
・Unusual sounds
・Heat indices・Coughing and snoring

Image of the remote monitoring system
Introduction of Operators

4Social Mission

Providing secure livelihoods
through safe and comfortable

Safe housing at
excellent locations

Risk
management andlegal compliance

24 hours a day
all year roundFor secure living…
Expert attention
to careMeals that
support health

A nursing andcaring system
supporting the local
community

Prevention andcare of cognitive
impairment

Supporting
individual
self-reliance

The desire and determination of
Anabuki Medical Care is to help
clients be themselves
Since its founding in 2009 under the management philosophy of helping
clients be themselves, Anabuki Medical Care Inc. has aimed to provide
clients with living environments where they feel as though it is theirpeaceful home.
Japan is seeing the progression of a super aging society that the world
has yet to experience. We are entering an age in which nursing carecan no longer be dismissed as merely the business of others. It will bea real problem that every person will have to face. While the nursing
industry is dealing with many social and regional challenges, it is also adeveloping industry and can be said to be full of innovative possibilities.
We will earnestly confront the social and regional challenges to findsolutions with our spirit of moving forward on a daily basis, which is ourbusiness creed, and utilizing the Anabuki Group’s foundation, andtogether with our staff continue to evolve as a regional leading
company.
Anabuki Medical Care Inc. Representative director Yoshihisa Otani

3Introduction of Operatorsand the joy of authentic living
housing and heartfelt service.

Ending
The joy of being able tomeet the end at one’s homeRole
By taking communal roles,
clients find the power
for self-directed living

Hobbies
We support curiosity and the
pursuit of interests

The joy ofliving authenticallyWays of life
We respect clients’ lifestyles
that have been kept intheir daily lives

Community
We support enjoyable momentsof connection between
clients as well as with the local
community and staff

Overview of Anabuki Medical Care Inc.
Company name Anabuki Medical Care Inc.
Head office Anabuki Central Building 5F, 2-8
Togiyamachi, Takamatsu, Kagawa 760-0026
Established June 24, 2009
Paid-in capital 80 million yen
Business activities Senior-related business (nursing care business, operation offee-based homes for the elderly, etc.), real estate
management business, etc.
Representative director Yoshihisa Otani
Phone 087-825-0561
Fax 087-825-0562

Official characterof the Anabuki GroupAna-chanIntroduction of Operators

2

Feature Vol. 7

Introduction of Operators
Anabuki Medical Care Inc.