3rd

Fiscal Period Business Report(Statement of Financial Performance)

May 1, 2015 – October 31, 2015

Hopeful future
for Japan

6-2-1 Ginza, Chuo Ward, Tokyo

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 555 million yen in operating revenue, 224 million yen in operating income and 200
million yen in net income for the fiscal period ended October 2015 (3rd Fiscal Period). Concerning distributions, NHI declareda distribution amount per unit of 3,299 yen and a distribution amount in excess of earnings per unit of 768 yen, bringing thetotal distribution amount per unit to 4,067 yen. See page 3 for Financial and Management Highlights
During the 3rd Fiscal Period, NHI acquired Minna-no-ie Omiya Yoshinocho (acquisition price: 740 million yen), Minnano-ie Chuo-ku En'nami (acquisition price: 838 million yen) and Silver Heights Hitsujigaoka No.3 (acquisition price:
1,200 million yen). In addition, NHI acquired Alpha Living Okayama Nishigawa Ryokudokoen, Alpha Living Okayama
Korakuen, Alpha Living Takamatsu Ekimae and Alpha Living Takamatsu Hyakkenmachi (total acquisition price: 2,550
million yen) with the capital gained through the public offering announced in October 2015, expanding the asset size
from 13,280 million yen at the time of listing to 18,608 million yen. NHI will aim to enhance portfolio value throughinvestments in carefully selected properties going forward. See page 6 for details of External Growth
The number of operators of facilities owned by NHI has increased from 7 at the time oflisting to 10 after the pubic offering. NHI has realized maintenance and improvement of
portfolio stability by pressing forward diversification of operators and concluding longterm fixed rent lease agreements. See page 9 for Stable Management Strategy
On the financial front, NHI has promoted diversification of payment dates. NHI
will continue to work to further strengthen its financial standing while reducing
refinancing risks in the future. See page 12 for Financial Conditions
Going forward, NHI will strive to maximize unitholders’ value together with the joint
efforts by 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 Fujioka Nippon Healthcare Investment Corporation Executive Director
Contents

I. Overview of Nippon Healthcare Investment Corporation
To Our Investors……………………………………………… 2
Financial and Management Highlights………………………… 3
Characteristics of Nippon Healthcare Investment Corporation…… 4External Growth……………………………………………… 6

II. Investor Information…………………………………… 14
III. Asset Management Report…………………………… 16
IV. Balance Sheets… ……………………………………… 22

Properties Acquired in 3rd FP (ended October 2015)
and 4th FP (ending April 2016)… …………………………… 7

V. Statements of Income………………………………… 24

Portfolio Development Policy and Portfolio Status……………… 8

VI. Statements of Changes in Net Assets… ………… 25

Stable Management Strategy………………………………… 9
Portfolio List………………………………………………… 10
Portfolio Map………………………………………………… 11
Financial Conditions… ……………………………………… 12
Description of Asset Manager………………………………… 13

VII. Statements of Cash Flows…………………………… 26
VIII. Notes to Financial Statements……………………… 27
IX. Independent Auditor’s Report… …………………… 37
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 October 2015 (3rd Fiscal Period), Forecast of 0perating Results for Fiscal PeriodEnding April 2016 (4th Fiscal Period) and Fiscal Period Ending October 2016 (5th Fiscal Period)
2nd Fiscal
Period

3rd Fiscal
Period(result)(result)

4th Fiscal Difference 5th Fiscal Difference
from 3rdfrom 4th
PeriodPeriod(April 2016)(October 2016) Fiscal
FiscalPeriodPeriod(forecast)(forecast)(April 2015) (October 2015) Difference

No. of properties owned at end of the
fiscal period

14

17

3

21

4

21

-

Operating revenue (million yen)

507

555

47

667

111

676

9

Operating expense (million yen)

261

330

69

388

58

402

13

Recurrent income (million yen)

245

224

-21

278

53

274

-3

Non-operating expenses (million yen)

83

23

-59

34

10

30

-3

Ordinary income (million yen)

162

201

38

244

42

244

0

Net income (million yen)

161

200

38

243

42

243

0

■ Distribution Result for 3rd Fiscal Period, Distribution Forecast for 4th Fiscal Period and 5th Fiscal Period
4th Fiscal Difference 5th Fiscal Difference
from 3rdfrom 4th
PeriodPeriod(April 2016)(October 2016) Fiscal
FiscalPeriodPeriod(forecast)(forecast)

2nd Fiscal
Period

3rd Fiscal
Period(result)(result)

60,80060,800-74,632

13,832

74,632

-

3,471

4,067

596

4,060

-7

4,060

-

2,661

3,299

638

3,260

-39

3,260

-

810

768

-42

800

32

800

-

(April 2015) (October 2015) Difference

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)■ Distribution per Unit (including distribution in excess of earnings)
(yen)
4,500
4,000

4,067

4,060

4,060

768

800

800

3,471

3,500
3,000

■ Asset Size (total amount of acquisition prices)(million yen)
20,000Distribution in excess ofearnings per unit

810

18,60816,05816,000

3,299

3,260

13,2803,260
12,000

2,500

2,661

2,000
8,000
1,500
1,000

Distribution per unit
excluding
distribution inexcess of earnings

（

）

7,265

4,000

500
0

0
2nd Fiscal
Period(April 2015)(result)

3rd Fiscal
Period(October 2015)(result)

4th Fiscal
Period(April 2016)(forecast)

5th Fiscal
Period(October 2016)(forecast)

1st Fiscal
Period(October 2014)

2nd Fiscal
Period(April 2015)

3rd Fiscal
Period(October 2015)

As ofNovember24, 2015

I. Overview of Nippon Healthcare Investment Corporation

3

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

1

Growth through investment in the growing senior market◦ Social demand for healthcare facilities is expected to grow in the medium to long term through further aging of the population.
◦ NHI aims to expand assets under management in the medium to long term using our expertise on healthcare,extensive network and fund raising capabilities.

Japan’s graying population The ratio of the number of people 65 years or older (elderly population) to the total population (population agingrate) in Japan is expected to rise, and the population of the elderly living alone is expected to grow along with the rising population aging rate.

■ Domestic Demographics by Age■ Changes and Ratio of Elderly Population Living Alone

Population (million)

27.51

90

22.49

18.47 16.80 14.57

25.15

81.03

28.43

0

10

75 years or older
65-74 years old
15-64 years old
Population aging rate (rate of population 65 years or older)

120

30

Population living alone (million)

Estimated figures 50.0

Actual figures

150

60

Population aging rate (%)

86.22

29.79

50.17
4.9

60.47
5.7

3.09
1.07

3.76
1.64

72.12
7.1
5.16
2.24

78.83
9.1

23.0

12.04
31.6 10.73

38.8

39.9 40.0

8

30.0

9.39

Male
Male

73.41 67.73

57.87

50.01

44.18

17.9

6
14.7

12.1
17.33 14.07 16.45 13.83 11.28

20.0

4

10.0

13.01
8.92
18.79 22.78 22.23 23.85 23.36
5.97 9.00 14.07

12.9

4.3

9.7

11.1
4.119

8.0
5.2

4.6

21.3

12.9

21.9

13.9

22.6

14.6

4.506 4.710

23.1

15.4

4.865

23.4

25.0
20.0

16.3

15.0
5.014

10.0

3.405

6.1
1.742

0

19.0

20.3

16.2

11.2

2

0.0

Estimated figures

FemaleFemale7.91

85.90 17.4

15.17

6.99
3.66

29.1

0-14 years old
36.1

Ratio of elderly population (%)

Actual figures

2.290

5.0

2.814

1.313
0.688 0.948
1.051 1.386
0.193 0.233 0.310 0.460 0.742

2.608
1.889 2.173 2.296 2.433

1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

(Source) Cabinet Office “White Paper on Aging Society 2015”(Source) Cabinet Office “White Paper on Aging Society 2015”■ Fill-Rate of Housing for Elderly to Elderly Population Target Rate for 2020
Fill-rate of housing for elderly toelderly population(%) 5.0

Fill-rate of housing for elderly to elderly population

4.0

Policy target by
the Ministry ofLand, Infrastructure,
Transport and Tourism

2.04%(2013)

3.0

1.60

〜5.0%
3.0(2020)

Housing for elderly for
1.806
approximately 430,000 to
1.20
Approx. 1.15
1,150,000 is needed

Urgent need of for widespread availabilityof housing for elderly

2.0
1.0
0.0

Capacity of housing for elderly
2.00 (million)

0.71

0.80

0.89

0.99

1.09

2.04

1.85
1.48

1.18

1.23

1.30
0.383

0.441

2010

2011

0.54

0.60

0.65
0.153

0.199

0.228

0.332

0.137

0.173

0.299

0.120

0.263

0.357

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

0.571

0.651

2012

2013

0.80

Approx. 0.43

1.084 0.40
0.00
2020

(Source) Cabinet Office, Ministry of Health, Labour and Welfare, Ministry of Internal Affairs and Communications, National Institute of Population and Social Security Research, etc.

2

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

■ Role of NHISupply of capital to operators will become possible with NHI's
acquisition of private nursing homes and facilities for the elderly
using funds procured through financial and capital markets.
Operators are expected to develop facilities to expand thehealthcare facility operation business with the funds gained
through sales of facilities, and as such is expected to encourage
supply of private nursing homes and facilities for the elderly.

4

Expansion of social demand in line with shortage ofprivate nursing homes and facilities for the elderly
Nippon Healthcare
Investment Corporation
Supply of capital to operators
through acquisition of private
nursing homes and facilities
for the elderly

Supply ofcapitalSales ofproperties

Operators
Development of facilities
with funds gained fromsales of facilities

Promotion of supply of quality private nursing homes and facilities for the elderly

0.0

3

■ Diversification by Remaining ■ Ratio of Fixed Rent
Lease Contract Period (Note)

Stable cash flow

10 years or less◦ To stabilize cash flow, NHI will sign long-term
fixed-rent lease agreements with operating bodies(“operators”) of healthcare facilities.

More than
20 years

39.2
%

0.0%

Fixed rentMore than
10 years,
but 20 years
or less

100.0%

60.8%

4(Note) The graph indicates thesum total of acquisition
price per remaining
lease contract period (asof October 31, 2015)
expressed as apercentage of the total of
the acquisition prices.

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.
◦ NHI offers a unitholder benefits program for the purpose of expanding the horizons of NHI's unitholders, under the agreementwith operators of healthcare facilities which NHI owns.

Charm Care Corporation
Rentalbusiness
expensesand SG&A
expenses

RentalincomeDistributions inexcess of earnings(refund of investment)with an upper limit of
40% of depreciation

Discount coupon for
the initial lump sum
payment

Nichii Gakkan Company
Discount voucher for
Free enrollment in homemaking,childcare
COCO Juku, andand nursing-care at
discount for the course his/herown
expensefee
services

Depreciation
Distributions
in excess ofearnings
Incomebeforetaxes

Free voucher (withmeals) for trial stay

Distributions
toDistributions unitholders(income)5

Sompo Care Next Inc.

(Note)
Discount
coupon for the
initial lumpsum payment

Discount onroom fee

Cedar Co., Ltd.
Free voucher (withmeals) for trial stayFree voucher for a
one-day facility tour
(with lunch provided)

Silver Heights
Sapporo Co., Ltd.

Wisnet Co., ltd.
WelfareFree voucher Free visiting
equipment
meals) for beauty parlor/
presented to (withtrial staybarber service
residents
Free visiting massage Gift voucher for trips
servicewith nursing careFree voucher
for a one-day
facility tour
(with lunch
provided)Free voucher
Discount
Free voucher for a one-day
coupon for the (withmeals) for facility tour
initial lumptrial stay(with lunch
sum payment
provided)

Sawayaka Club Co., Ltd.
Free voucher
Free voucher for a one-day
Discount on (withmeals)
forfacility tour
room feetrial stay(with lunch
provided)

Nihon Kaigo Iryo Center
Co., Ltd.
Free voucher (with meals) for trial stay

Anabuki Medical Care Inc.
Furniture presented to new residents ofAnabuki Medical Care’s facilities that are
owned by NHI(Note) Watami Co., Ltd. transferred all of issued shares of Watami No Kaigo Co., Ltd. to Sompo Japan Nipponkoa Holdings, Inc. on December 1, 2015. The businessname of Watami No Kaigo Co., Ltd. was changed to Sompo Care Next Inc. on the same day.

Substantial support system by sponsor and advisor◦ NHI will develop the support system that brings together the comprehensive strengths of Daiwa Securities Group Inc. (sponsor), an expert
finance company, and AIP Healthcare Japan GK (advisor), an expert healthcare company.
◦ NHI’s asset manager is able to establish cooperative relations with a wide range of operators as it is very independent with no participation ofoperator groups.

■ Same Boat Investment by the
Daiwa Securities Group

Investment Corporation

As part of its CSR strategy, it is the Daiwa Securities Group's
policy to offer sufficient support for NHI's listing and growthstrategy after listing on an ongoing basis. The ownership of
NHI's investment units (same boat investment) is therefore

SponsorOperators

Advisor10 companies

in line with this policy.

Ownership of 10.2%
Daiwa Securities Group's
ownership ratio of NHI's of issued and outstanding
investment units
investment units after listing

Asset Manager

I. Overview of Nippon Healthcare Investment Corporation

5

External Growth
Continuous development of portfolio through acquisition of carefully selected properties

Overview of the Public Offering Change in Major Indices due to the Public Offering
Issuance type

Public offering (primary offering,
secondary offering)Issuance
resolution date

October 29, 2015

Pricing dateNovember 10, 2015

Subscription
periodNovember 11 – November 12, 2015

Payment datePrimary offering: November 17, 2015
Third-party allotment: December 16,
2015

Number ofinvestment units
outstanding
60,800 units
before the public
offering
Number ofinvestment units
offeredTotal: 13,832 units (Primary offering:
12,130units, third-party allotment: 1,702
units)
Secondary offering: 18,500 units

Number ofinvestment units
outstanding
74,632 units
after the public
offering
Issue price

196,570 yen

Paid-in amount

189,440 yen

Total paid-in
amountPrimary offering: 2,620 million yen(including third-party allotment)
Secondary offering: 3,504 million yen

Upon listing Assets acquired The 3rd FP Assets acquired
After the public
in 3rd FP
Major indices (as of November(ended October at the time ofoffering(ended October
5, 2014)2015)
public offering
2015)
Number of properties
Total assets(total acquisition price)(million yen)
Total appraisal value(million yen)
Average appraisal
NOI yield (%)

14

3

17

4

21

13,2802,778

16,0582,550

18,60815,1382,924

20,4102,637

23,047

6.94

5.60

6.70

5.19

6.49

End of the 2nd
FP (ended April
2015)

End of the 3rd
FP (ended
October 2015)

After the public
offering

42.3

49.8

44.7

174,096

190,907

191,175

LTV (%)
NAV per unit (yen)(Note 1) Figures for Upon listing, The 3rd FP (ended October 2015) are figures as of the respective timing.
(Note 2) Appraisal NOI at the time of acquisition is used for NOI yield for assets acquired after the public offering.
(Note 3) Figures for After the public offering are calculated based on actual figures as of the end of the 3rd FP (ended October 2015).
(Note 4) LTV after the public offering (plan) = (Total interest-bearing liabilities at the end of the 3rd FP + New borrowings in the 4th FP – Shortterm borrowings planned to be repaid with part of proceeds from the public offering) / (Total assets at the end of the 3rd FP + Total
paid-in amount of the public offering + New borrowings in the 4th FP - Short-term borrowings planned to be repaid with part ofproceeds from the public offering)(Note 5) NAV after the public offering (plan) = {(Unitholders’ equity at the end of the 3rd FP + Total paid-in amount of the public offering Expected amount of refund of investment from distributions in excess of earnings in the 3rd FP) + (Total appraisal value at the end of
the 3rd FP + Appraisal value of properties acquired in the 4th FP at the time of the acquisition) – (Total period-end book value at theend of the 3rd FP + Total acquisition price of properties acquired in the 4th FP)} / Number of investment units issued after the public
offering (74,632 units)

Market Size by Segment
Market size of fee-based homes for the elderly requiring nursing care is large, therefore there is much room for NHI to expand■ Market Size by Type of Private-Sector Profit-Making Facility(annual net sales)Group homes

Fee-based homes for the elderly

Market size: 756.8 billion yen
No. of facilities: 12,643(192,024 rooms)

Market size: 1,333.6 billion yen
No. of facilities: 9,889(340,734 rooms)(for those requiring nursing care)■ Market Size by Price (fee-based homes for the elderly
requiring nursing care/who are independent)High

10.3 billion yen

76.2 billion yen(8 facilities, 1,023 rooms)(163 facilities, 8,824 rooms)
500 thousand yen/month

600 thousand yen/month

27.5 billion yen

29.5%
Total

2,565.5billion yen

52.0%

13.1%

Price (assumed monthly fees)

130.9 billion yen(46 facilities, 4,963 rooms)(377 facilities, 20,473 rooms)
350 thousand yen/month

400 thousand yen/month

327.7 billion yen

87.9 billion yen(1,284 facilities, 69,380 rooms)(248 facilities, 23,056 rooms)

200 thousand yen/month

200 thousand yen/month

5.4%

Rental housing exclusively for the elderly/
Elderly housing with supportive services
Market size: 336.1 billion yen
No. of facilities: 4,579 (144,434 rooms)

6

Zone ofowned
properties

Fee-based homes
for the elderly(for those who are independent)

Market size: 139.0 billion yen
No. of facilities: 476(35,760 rooms)

13.5 billion yen

798.8 billion yen(174 facilities, 6,718 rooms)(8,065 facilities, 242,057 rooms)

Low
Requiring nursing care/requiring support

Independent

Required level of nursing care/support
Source: KPMG Healthcare Japan Co., Ltd.

Properties Acquired in 3rd FP (ended October 2015) and 4th FP (ending April 2016)
Investing in carefully selected properties with an aim to expand the asset size

■ Status of Property Acquisition by Sourcing Route
Properties acquired before listing
14 properties/13,280 million yen
AssetManagement
Company’s unique
network

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

Off-balancing in Silver Heights Hitsujigaoka No.3
line with M&A

Change ofownersAlpha Living Okayama Nishigawa Ryokudokoen
Alpha Living Okayama Korakuen
Alpha Living Takamatsu Ekimae
Alpha Living Takamatsu Hyakkenmachi

Sale & leaseback・M&A cases for business succession
・Needs for securing liquidity on handSponsor group
Advisor

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

5 properties/3,750 million yen

・Sales cases by developer groups which haveoperators as affiliates
・Needs to focus entirely on facility operations

Minna-no-ie Omiya Yoshinocho
Minna-no-ie Chuo-ku En'nami
・Properties introduced by the sponsor group
・Needs for asset management from owners

2 properties/1,578 million yen

14 properties/13,280 million yen

14 properties/13,280 million yen■ Properties Acquired in 3rd FP (ended October 2015)

Silver Heights Hitsujigaoka No.3

Mu Sa
nic ppip o
Toz al Su roai L bw
ine ay,Shiraishi
Minami Park
Nango 18-chome Sta.

Ts
uk
isa

Ka
wa

Nango 13-chome Sta.

Location
Sapporo-shi, Hokkaido
Acquisition date
October 15, 2015
Acquisition price (million yen) 1,200
Total leased area (m2)
7,267.56
Structure / floors
RC/3F
Number of rooms (rooms) 109
Resident capacity
111
Range of room size (m2)
21.00 ~ 42.00
Opening dateJune 12, 2003

mu

Silver Heights
Hitsujigaoka No.3 Higashi Tsukisamu
Park

Shirakabadai Higashi Tsukisamu
Tsukisamu Higashi
Ryokuchi
Clinic82
Yoshidagawa Park
36

Sapporo Shirakaba-dai Hospital0

Sapporo Dome

600m

Site Features The Property is located approximately a 15-minute
walk from Nango Juhatchome Station on the Tozai Line of the
Sapporo Municipal Subway. The Property faces Mukogaoka-dorion its southeast side, which serves as a community road for daily
life, and the whole block is an orderly developed quiet area.
Property Features The most common room area size of theProperty is 21m2 which is a typical size for rooms with nursing
care. The public space has a kiosk, a courtyard with many plants,
a beauty parlor/barber and a dental clinic, etc. Although it is aproperty with nursing care, it has as many service facilities as theproperties for independent elderly people do.

During the 3rd FP, NHI acquired two other properties (Minna-no-ie Omiya Yoshinocho and Minna-no-ie Chuo-ku En’nami) on June 1, 2015 besides the above Silver Heights Hitsujigaoka No. 3.

■ Properties Acquired in 4th FP (ending April 2016)

Okayama
Korakuen

Okayama Sta.

Joka

AEON MALL
OkayamaAlpha Living
Okayama Nishigawa
Ryokudokoen

Okayama ElectricTramway
Higashiyama Main Line

Okayama ElectricTramway
Seikibashi Line

Acquisition dateNovember 24, 2015
Acquisition price (million yen) 730
Total leased area (m2)2,124.16
Structure / floors
RC/7F
Number of rooms (rooms) 53
Resident capacity
55
Range of room size (m2)
18.06 ~ 36.63
Opening date
October 1, 2014

Alpha Living Okayama Korakuen
Alpha Living
Okayama Korakuen

Alpha Living Takamatsu Ekimae

0

300m

Okayama-shi,
OkayamaAcquisition dateNovember 24, 2015
Acquisition price (million yen) 610
Total leased area (m2)2,128.44
Structure / floors
RC/4F
Number of rooms (rooms) 45
Resident capacity
48
Range of room size (m2)
18.40 ~ 37.94
Opening date
March 1, 2015

Alpha Living Takamatsu Hyakkenmachie/Lin
an LineYos toku
Ko

LocationTakamatsu Chikkou Sta.

Takamatsu Sta.

Takamatsukita
Police Station

Tamamo Park
(Takamatsu Castle Ruins)

Alpha Living
Takamatsu Ekimae Sta.
30

Chuo DoriStreetAcquisition dateNovember 24, 2015
Acquisition price (million yen) 605
2
Total leased area (m )1,848.06
Structure / floors
RC/6F
Number of rooms (rooms) 43
Resident capacity
44
Range of room size (m2)
18.00 ~ 45.71
Opening dateJuly 15, 2014

OkayamaPrefectural
Government

Location

Site Features The Property is closely located to the east side of Asahigawa River,which runs north to south in Okayama City. On its south, across an arterial road, isKorakuen, which is one of the three great gardens of Japan and Okayama castle; andquiet residential areas spread on the west and southwest sides.
Property Features The Property which opened in 2015 was converted from a recreation
property owned by a local major company in Okayama City. The Property provides
private rooms of around 18m2 to 25m2 which is a standard room size for facilities withnursing care. The rooms are equipped with sink and toilet.

Property Features The Property was completed in 2014 and is relatively new andprovides private rooms of around 18m2 which is a standard room size for facilities
with nursing care. The rooms are equipped with sink and toilet.

Takamatsu-shi,
KagawaOkayama
CastleDaiunjimae
Okayama City OfficeSite Features The Property is located close to Okayama Station and the prefectural
government’s office of Okayama, which are in the center of Okayama City. Trees areplanted effectively along the nearby Nishigawa River, creating a tasteful community
environment with a park on the north side of the Property

Location

Asahi Gawa

Kataharamachi Sta.

Alpha Living
Takamatsu
Hyakkenmachi

Takamatsu City Office
Chuo Park

Site Features The Property is located a five-minute walk from Takamatsu Statin on
the JR Yosan Line, enjoying the transport convenience. The area is also close to acommercial district with local shopping streets, offering daily convenience.
Property Features The residential-type Property for the elderly completed in year
2014 is relatively new and provides private rooms of around 18m2 which is astandard room size for facilities with nursing care. The rooms are equipped with sinkand toilet. There is also a dental clinic on the first floor.

11

Taka
Electrimcatsu-Kotoh
Railroa ira
Kotohira
Line dOkayama-shi,
Okayama402

San

LocationSan
Mainyo
Line
yo S
hink
ans
en

Alpha Living Okayama Nishigawa Ryokudokoen

0

200m

Takamatsu-shi,
KagawaAcquisition dateNovember 24, 2015
Acquisition price (million yen) 605
2
Total leased area (m )1,929.16
Structure / floors
RC/10F
Number of rooms (rooms) 52
Resident capacity
54
Range of room size (m2)
21.29 ~ 40.80
Opening dateAugust 15, 2010

Site Features The Property is located a four-minute walk to Kataharamachi Station
on Kotohira Line of Takamatsu-Kotohira Electric Railroad and is also within walking
distance to Takamatsu Station on the JR Yosan Line. It is fairly close to an area where
Takamatsu Mitsukoshi department store and other brand shops are located. There isalso a shopping arcade on the west side, boasting excellent living convenience.
Property Features The Property which is an elderly housing with supportive services
provides private rooms of around 27m2 which is larger than the standard size forrooms designed for independent elderly people. The rooms are equipped withmini-kitchen, bathroom, sink and toilet.

I. Overview of Nippon Healthcare Investment Corporation

7

Portfolio Development Policy and Portfolio Status
Focusing investment on private nursing homes and other facilities for the elderly for which large demand is expected

Ratios of Investment in Regions
Ratios ofinvestment
in regions

Ratios of Investment in Healthcare Facility Types
Targetincorporation
ratio

Definition

Tokyo, Kanagawa, Chiba and Saitama
Three Major The greater Tokyo area: prefectures
Metropolitan
The
Chukyoarea:
Aichi,
Mie and Gifu prefecturesAreas
The Kinki area: Osaka, Kyoto, Hyogo, Nara and Shiga prefectures
Cities outside the Three Major Metropolitan Areas withpopulations of 200,000 or more.

Core City
Areas

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

Other

50%

or more50%
or less

Classification of healthcare facility

Targetincorporation
ratio

Fee-based homes for the elderly (Note 1) (withPrivate nursing nursing care / health-type / residential-type)homes andother facilities Elderly housing with supportive services (Note 2)
for the elderly
Other private nursing homes and facilities for the elderly

60%
or less
40% or less
10% or less

Medical facilities
Other

10%
or less(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 by prefecturesthat meet the registration criteria stipulated by the Act on Securement of Stable Supply for
Elderly Persons’ Housing.

Diversification Status (after public offering)■ Region■ Type■ Operator
Elderly housingwith supportive
services

3.3%

Nihon Kaigo Iryo Center 5.1%

6.4%

Sompo
Care Next

Cedar

6.9%
Core City
Areas

Three Major
Metropolitan
Areas

40.4%

Nichii Gakkan 1.4%

Silver Heights Sapporo

21.3%

Super Court

Sawayaka
Club

8.4%

59.6%

17.7%
AnabukiMedical Care

13.7%

Wisnet

8.5%
Fee-based home for the elderly 96.7%

With nursing care 65.7%

Residential-type 31.0%

Charm Care Corporation 10.5%(Note) The ratios in the above three pie charts are calculated based on total acquisition prices, and rounded to one decimal place.

Portfolio Status (after public offering)■ Rent-Paying Capacity (Note 1)■ Proportion of Long-Term Care Fee (Note 2)
More than 60%,
but 70% or less1.2x or less

22.3%

More than
2.0xMore than 15%,
but 20% or less

4.2%

14.5%

14.6%

1.4x

More thanMore than on average 1.5x, but
1.2x, but
2.0x or less1.5x or less28.3%

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

34.8%

More than
50%, but
60% or less48.1%

or less
50.6% 50％
47.7%

on average

More than
5%, but 15%
or less

26.1%

5.7%

on average

5% or less

59.4%

(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 October 2014 to September 2015 disclosed by the respective operator. However, data for Nichii Care Center Fukushima Omori arebased on information on business income and expenditures from July 2014 to June 2015; for La'nassica Arakogawa from April 2014 to March 2015; for Silver Heights Hitsujigaoka No.3 from February 2014
to January 2015; for Alpha Living Okayama Nishigawa Ryokudokoen from October 2014 to June 2015; for Alpha Living Okayama Korakuen from March 2015 to June 2015; and for Alpha Living Takamatsu
Ekimae and Alpha Living Takamatsu Hyakkenmachi from July 2014 to June 2015.

8

Stable Management Strategy
Concluding long-term fixed rent lease agreements

Lease Agreements with Highly Reliable Operators
Number of
Number of
facilities
rooms operated
operated (cases)(rooms)402
12,573123
3,355

Operator
Nichii Gakkan Company
Wisnet Co., Ltd.
Sompo Care Next, Inc.

115

8,626

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

62
44
36
28
27
23
3

3,796
2,949
1,872
1,985
1,088
1,009
321

Established

Attributes

August 1973 Listed on the first section of the Tokyo Stock Exchange
January 1998 Subsidiary of Sompo Japan Nipponkoa Holdings, Inc., a company listed on the first section ofNovember 1992
the Tokyo Stock Exchange
December 2004 Subsidiary of Uchiyama Holdings Co., Ltd., a company listed on the first section of the Tokyo Stock Exchange
May 1995 April 1981 Listed on JASDAQ on the Tokyo Stock Exchange
August 1984 Listed on JASDAQ on the Tokyo Stock Exchange
October 1997 June 2009 Subsidiary of Anabuki Kosan Inc., a company listed on the first section of the Tokyo Stock Exchange
December 1961 -(Note) Number of managed facilities and Number of operating rooms 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 September 30, 2015).

Management

Investment Corporation
Ownership

Healthcare facility A

Healthcare facility B

Healthcare facility C

Operator A

Operator B

Operator C

Management Back-up Contractors

Asset Manager…
…

Hokkaido Area

Each operator has concluded a management
back-up agreement with NHI.
Discuss handover of operation to otheroperators in case of contingency

No. of Operators: 10

No. of Operators: 4

Total 503 facilities

Chubu Area

No. of Operators: 4

Chugoku Area

Tohoku Area

No. of Operators: 4

No. of Operators: 3

Kyushu Area

Kanto Area

No. of Operators: 4

No. of Operators: 6

Kinki Area

No. of Operators: 8

Shikoku Area

No. of Operators: 3

Development of Quality Portfolio through Careful Selection and Continuous Evaluation of Operators■ At the Time of New Acquisition■ At the Time of Continuous Evaluation

Careful selection of operators

Continuous evaluation

Conducting due diligence utilizing the screening know-how of financial institutions

Conducting the same evaluation as at the time of acquisition even after acquisition◦ Conduct due diligence utilizing the screening know-how held by the◦ Three 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,

sponsor group, which is a financial institution, in order to confirm continuity
and superiority of operators’ operations

NHI’s Board of Directors(Note)

Asset Management
Company’s Boardof Directors

Compliance Committee

Investment Committee

Compliance Officer

Acquisition Department

Flow of decision-making through to property acquisition

etc. including the following.

Monitoring (Twice or more/year)
・The Asset Management Company and PM companies visit operators’
facilities and conduct 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)(Note) Approval by NHI’s Board of Directors is required for transactions with interested parties.

I. Overview of Nippon Healthcare Investment Corporation

9

Portfolio List (after public offering)Consists of 10 operators and 21 properties

Acquisition(Note 1)
periodNo.

Property nameFacility typeOperator

LocationFee-based homes forthe elderly with Charm Care Corporation
nursing care

1

1st Fiscal
Charm Suite Ryokuchi Koen
Period2

Residential-type
2nd Fiscal
Super Court JR Nara-Ekimae fee-based homes for Super Court Co., Ltd.
Periodthe elderly

3

1st Fiscal Rest Villa Hiroshima
Period Hikarigaoka

Fee-based homes forthe elderly withnursing care4

1st Fiscal
Rest Villa Sagamihara Chuo
PeriodFee-based homes forthe elderly withnursing care

56Acquisition price(million yen) (Note 2)

Appraisal Number of
value
rooms
Share of (million yen) (rooms)(Note 3)(Note 4)
portfolio(%)

Toyonaka City, Osaka

1,950

10.5

3,030

128

Nara City, Nara

1,569

8.4

1,690

155

Hiroshima City,
Hiroshima

960

5.2

1,220

80

Sagamihara City,
Kanagawa

1,170

6.3

1,720

80

Fee-based homes for2nd Fiscal
Rest Villa Kinugasayama Koen the elderly with
Periodnursing care

Yokosuka City,
Kanagawa

1,839

9.9

1,990

104

1st Fiscal
Sawayaka Kaikyokan
PeriodFee-based homes forthe elderly withnursing care

Kitakyushu City,
Fukuoka

630

3.4

886

65

7

1st Fiscal
Sawayaka Meisuikan
PeriodFee-based homes forthe elderly withnursing care

Kitakyushu City,
Fukuoka

590

3.2

802

87

8

1st Fiscal Sawayaka Heart Life
Period Nishikyogoku

Residential-type
fee-based homes forthe elderly

Kyoto City, Kyoto

750

4.0

1,210

84

9

2nd Fiscal
Sawayaka Hinodekan
PeriodFee-based homes forthe elderly withnursing care

Niigata City, Niigata

773

4.2

923

50

10

Residential-type
2nd Fiscal
Sawayaka Riverside Kurinoki fee-based homes for
Periodthe elderly

Niigata City, Niigata

266

1.4

318

33

11

2nd Fiscal Sawayaka Obatake
Period Sanbankan

Kitakyushu City,
Fukuoka

289

1.6

350

50

12

homes for1st Fiscal Nichii Care Center Fukushima Fee-based
the elderly with
Nichii Gakkan Company
Period Omori
nursing care

Fukushima City,
Fukushima

265

1.4

349

52

13

2nd Fiscal
La’nassica Arakogawa
PeriodFee-based homes forthe elderly withnursing care

Cedar Co., Ltd.

Nagoya City, Aichi

1,279

6.9

1,380

100

14

1st Fiscal
Verger Hirakata
PeriodResidential-type
fee-based homes forthe elderly

Nihon Kaigo Iryo Center
Co., Ltd.

Hirakata City, Osaka

950

5.1

1,570

104

15

3rd Fiscal Minna-no-ie Omiya
Period Yoshinocho

Fee-based homes forthe elderly withnursing care

Saitama City, Saitama

740

4.0

770

33

Saitama City, Saitama

838

4.5

882

51

Sapporo City, Hokkaido

1,200

6.4

1,320

109

Okayama City, Okayama

730

3.9

760

53

Okayama City, Okayama

610

3.3

646

45

Takamatsu City, Kagawa

605

3.3

622

43

Takamatsu City, Kagawa

605

3.3

609

52

10 operators 21 properties Total

18,608100.0

23,047

1,558

Fee-based homes for3rd Fiscal
Minna-no-ie Chuo-ku En’nami the elderly with
Periodnursing care17

3rd Fiscal Silver Heights Hitsujigaoka
Period No. 3

Fee-based homes forthe elderly withnursing care18

* 4th Fiscal Alpha Living Okayama

Residential-type
fee-based homes forthe elderly

19* 4th Fiscal Alpha Living Okayama

Residential-type
fee-based homes forthe elderly

20* 4th Fiscal Alpha Living Takamatsu

21* 4th Fiscal Alpha Living Takamatsu

PeriodPeriodPeriodNishigawa Ryokudokoen
Korakuen
EkimaeHyakkenmachi

Sawayaka Club Co., Ltd.

Residential-type
fee-based homes forthe elderly

16

PeriodSompo Care Next Inc.

Residential-type
fee-based homes forthe elderly
Elderly housing withsupportive services

Wisnet Co., Ltd.

Silver Heights SapporoCo., Ltd.

Anabuki Medical Care
Inc.

(Note 1) Red numbers refer to Three major metropolitan areas and blue numbers to Core cities. The background colors for Property name and Facility type columns indicate types of facilities; orange for fee-based
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. Properties with “ ” are properties acquired in
the fiscal period ending April 2016.
(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 one 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 July 31, 2015 for properties acquired in the fiscal period ending April 2016. , and as of October 31, 2015 for other properties.
(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.

*

10

Portfolio Map (after public offering)
Making diversified investment in healthcare facilities in Japan

Three Major Metropolitan Areas
1

2

4

5

8

Charm Suite
Ryokuchi Koen

Super Court
JR Nara-Ekimae

Rest Villa
Sagamihara Chuo

Rest Villa
Kinugasayama Koen

Sawayaka Heart Life
Nishikyogoku

13

14

15

Toyonaka City, Osaka

Nara City, Nara

Sagamihara City, Kanagawa

Yokosuka City, Kanagawa

Kyoto City, Kyoto

17 Silver Heights Hitsujigaoka No. 3

9Sawayaka Hinodekan

10 Sawayaka Riverside

La’nassica Arakogawa
Nagoya City, Aichi

Verger Hirakata

Kurinoki

Minna-no-ie
Omiya Yoshinocho

Hirakata City, Osaka

Saitama City, Saitama

8 Sawayaka Heart Life Nishikyogoku

16
19
18

*Alpha Living Okayama Korakuen

12 Nichii Care Center

Fukushima Omori*Alpha Living Okayama Nishigawa Ryokudokoen

3 Rest Villa Hiroshima Hikarigaoka

15 Minna-no-ie Omiya Yoshinocho
16 Minna-no-ie Chuo-ku En’nami

Minna-no-ie
Chuo-ku En’nami

5 Rest Villa Kinugasayama Koen

11 Sawayaka Obatake Sanbankan

4 Rest Villa Sagamihara Chuo

6 Sawayaka Kaikyokan

Saitama City, Saitama

13 La’nassica Arakogawa

7 Sawayaka Meisuikan

2 Super Court JR Nara-Ekimae
14 Verger Hirakata
1 Charm Suite Ryokuchi Koen

*Alpha Living Takamatsu Ekimae
20 *Alpha Living Takamatsu Hyakkenmachi
21

Core Cities
3

6

7

9

10

11

Rest Villa 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

Living Okayama*AlphaKorakuen

Living Takamatsu*AlphaEkimaeLiving Takamatsu*AlphaHyakkenmachi

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 cities. The background colors for Property name and Facility type columns 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. Properties with “ ” are properties acquired in the fiscal period ending April 2016.

*

I. Overview of Nippon Healthcare Investment Corporation

11

Financial Conditions
Conducting stable financial management by converting interest rate into a fixed rate and diversifying repayment dates

Status of Interest-Bearing Liabilities (as of October 31, 2015)
Term

Balance
Interest
Type of interest(million yen)rate

LenderMizuho Bank (Note 2)
Resona Bank (Note 2)
Sumitomo Mitsui Trust Bank (Note 2)
Mizuho Trust & Banking (Note 2)
The Musashino Bank (Note 2)Long-term Shinkin Central BankThe Dai-ichi Life Insurance
Mizuho Bank (Note 2)
Mizuho Trust & Banking (Note 2)
The Musashino Bank (Note 2)
Resona Bank (Note 2)
Shinkin Central Bank (Note 2)
Total

800
1,000
1,200
1,200
700
500
500
500
500
500
500
500
400
8,800

Drawdown date

0.344
0.532
0.532
0.431
0.532
0.329
0.355
0.431
0.524
0.524
0.524
0.474
0.293
-

Fixed

-

Repayment deadline

November 5, 2014

June 1, 2015
October 15, 2015-

October 31, 2017
October 31, 2019
October 31, 2019
October 31, 2018
October 31, 2019
October 31, 2017
October 31, 2017
October 31, 2018
May 29, 2020
May 29, 2020
May 29, 2020
October 30, 2020
October 31, 2018-

(Note 1) Interest rates are rounded to three decimal places.
(Note 2) For loans of which variable interest rates have been converted to, in effect, fixed rates through a swap agreement, interest rate indicates the rate after such conversion.
(Note 3) Interest rates are converted on a one year=365 days basis.

■ Ratio of Long-Term Loans and Short-Term Loans■ Ratio of Fixed Rates and Variable Rates

Long-term loans

Ratio of fixed rate

100.0%

100.0%■ Repayment Schedule
Average remaining
period (Note 1)

3.5 years(million yen)
3,000
2,500

(End of 3rd Fiscal Period)

2,000

49.8%

LTV (Note 2)(End of 3rd Fiscal Period)

44.7%(after public offering)(Note 1) Average remaining period is rounded to one decimal place.
(Note 2) LTV is calculated based on total assets.

1,500
1,000
500
0
3rd FP 4th FP 5th FP 6th FP 7th FP 8th FP 9th FP 10th FP 11th FP 12th FP 13th FP

Indices that Include NHI

12Month / year

Name of index

December 2015

Thomson Reuters GPR / APREA Investable REIT 100 Index

September 2015

Thomson Reuters GPR / APREA Composite Index

Description of Asset Manager

Organization of Asset Manager (as of November 30, 2015)■ 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

9
Executive directors: 4 / Executive auditors: 1
Non-executive directors: 2 / Non-executive auditors: 2

Employees

64 (excluding dispatched employees)

President and Representative Director
Vice President and Representative Director
Vice President and Representative Director
Director
Director (non-executive)
Director (non-executive)
Auditor
Auditor (non-executive)
Auditor (non-executive)

Akira Yamanouchi
Yuji Shinotsuka
Yoshiki Nishigaki
Naoyuki Owa
Toshihiro Matsui
Mikita Komatsu
Tamaki Shibayama
Masaru Shirataki
Shinji Kiso

Registration No. 355 (Financial Instruments), DirectorRegistration of Financial
General,Instruments Business Operator
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■ Organizational Chart
Shareholders’ Meeting
Corporate Auditors
Board of Directors

Compliance Committee
Investment Committee（*）*Set up separately for each
investment corporation

Compliance Officer
President and Representative Director

Internal Control OfficeAcquisition
Department
Office Investment
Team
Residential
Investment Team
Healthcare
Investment Team

Origination
Department

Asset Management
Department
Office Management
Team
Residential
Management Team
Healthcare
Management Team
Investment
Planning Team
Construction
Management Team

Private FundManagement Department

Customer Relations
Department

Finance Department

Advisory Team

Finance Team

Operational Team

Accounting Team

Administration
Department

Corporate Planning
Department

Management Team

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
Nichii Gakkan Company
Nihon Kaigo Iryo Center Co., Ltd.
Sompo Care Next Inc.
Wisnet Co., Ltd.
Silver Heights Sapporo Co., Ltd.
Anabuki Medical Care Inc.

General Meeting of Unitholders⑤

Board of Directors
Executive Director: Hiroshi Fujioka
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

13

II. Investor Information
History of Investment Unit Prices(yen) 350,000

24,000 (units)
Unit price (left axis)

Volume (right axis)

300,000

21,000250,000

15,000200,000

12,000150,000

9,000

100,000

6,000

50,0003,000

0Nov. 2014

0
Dec.

Jan. 2015

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Oct.

Overview of Investment Units and Unitholders (as of October 31, 2015)■ No. of Investment Units by Investor TypeFP ended
October 2015
(3rd FP)
Total 60,800 units

FP ended
April 2015
(2nd FP)
Total 60,800 units

Individuals/others
16,319 units (26.8%)

Financial institutions
16,195 units (26.6%)

Other domestic companies 26,976 units (44.4%)
Individuals/others
14,578 units (24.0%)■ No. of Unitholders
by Investor Type

Financial institutions
16,056 units (26.4%)

Other domestic companies 27,539 units (45.3%)

Foreigners 764 units (1.3%)

Individuals/others

4,923(96.8%)
27(0.5%)

Securities companies 546 units (0.9%)

Financial
institutions
Other domestic
companies
Foreigners

31(0.6%)

Securities
companies

22(0.4%)

Total

5,087

Foreigners 2,095 units (3.5%)

Securities companies 532 units (0.9%)

Top Ten Unitholders (as of October 31, 2015)

IR Calendar

Total

60

9,900
8,600
6,080
5,192

80

16.28
14.14
10.00
8.54

4,018

6.61

1,905

3.13

1,189

1.96

1,000
667

1.64
1.10

483

0.79

39,03464.20(Note) Rounded to two decimal places.

14

December 18, 2015・Announcement of results
for the fiscal period ended October 2015

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

Name of Investor
1. JHC-LPS
2. ASIA CUATRO-LPS
3. Daiwa Securities Group Inc.
40
The Master Trust20
Bank of Japan, Ltd.
4.0 (Investment Trust Account)
Japan Trustee Services Bank Ltd.
5. (Trust Investment Trust Account)
6. Trust & Custody Services Bank Ltd.
(Trust Investment Trust Account)
Nomura Trust and Banking Co., Ltd.
7. The(Investment Trust Account)
8. Daiwa Real Estate Asset Management Co., Ltd.
9. Chugoku Bank, Ltd.
Trust & Custody Services Bank Ltd.
10.
(Cash in Trust Taxable Account)84(1.7%)

January 20, 2016・Sending of Financial and Management
Status Report (Asset Management Report)
for FP ended October 2015
January 21, 2016・Commencement of payout of distributions
for the fiscal period ended October 2015

100

Oct.
July Account closing
month
June
Dec.
Account closing
month
Jan.
Apr.
June 2016・Announcement of results for the
fiscal period ending April 2016
July 2016・Sending of Financial and Management
Status Report (Asset Management Report)
for FP ending April 2016
July 2016・Commencement of payout of distributions
for the fiscal period ending April 2016

Investor Memo
End of fiscal period
General Meeting of Unitholders
Date for finalizing Unitholders with voting rights
for the General Meeting of Unitholders
Reference date for finalizing payment
of distributions

April 30 and October 31 of each year
Held at least once every two years

Listed financial instruments exchangeTokyo Stock Exchange (securities code: 3308)

Newspaper in which notice is posted

Nihon Keizai Shimbun

Manager of Unitholder Registry, etc.

Sumitomo Mitsui Trust Bank, Limited, 1-4-1 Marunouchi, Chiyoda-ku, Tokyo 100-8233
Transfer Agency Department of Sumitomo Mitsui Trust Bank, Limited, 2-8-4 Izumi, Suginamiku,
Tokyo 168-0063 Phone 0120-782-031 (toll-free in Japan)
Head Office and all branches of the Sumitomo Mitsui Trust Bank nationwide

Office handling administrative affairs
Service counter

Date publicly announced beforehand
April 30 and October 31 of each year (distributions are paid within three months of the reference date)

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 to the 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 Briefing Session on AssetManagement for 3rd Fiscal Period
NHI will hold a briefing session on asset
management for the fiscal period ended October
2015 (3rd fiscal period).
1. Date and time: January 29, 2016 (Friday)
10:00 a.m.~ (venue opening at
9:40 a.m.)

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

2. Venue:

18F, GranTokyo North Tower,
1-9-1 Marunouchi,
Chiyoda-ku, Tokyo

3. Presenter:

Akira Yamanouchi, President of
Daiwa Real Estate AssetManagement Co., Ltd.

http://www.nippon-healthcare.co.jp/en/
II. Investor Information

15

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

3rd Period
From May 1, 2015
To Oct. 31, 2015)(

2nd Period
From Nov. 1, 2014
To Apr. 30, 2015)(

1st Period
From Jan. 7, 2014
To Oct. 31, 2014)

(1) Operating Performance(Millions of yen, except per unit data or where otherwise indicated)
Operating revenues
556
508
355
Rental revenues
556
508
355
Operating expenses
331
262
185
Property-related expenses
208
166
113
Operating income
225
246
170
Ordinary income
201
163
131
Net income
201
162
130
(2) Properties, etc. (as of end of period)
Total assets
17,667
15,135
8,466[period-on-period percentage changes][+16.7%][+78.8%][-]Interest-bearing liabilities
8,800
6,400
5,850
Net assets
8,035
8,046
2,110
[period-on-period percentage changes][-0.1%][+281.4%][-]
Unitholders’ capital, net
Note 3
7,835
7,884
1,980
(3) Distributions
Total distribution amount
247
211
130
Total distribution of retained earnings
200
162
130
Total distribution in excess of retained earnings
47
49
Dividend payout
Note 4
100%
100%
100%
(4) Per Unit Information
Total number of units issued (units)
60,80060,80019,800Net assets per unit (yen)132,160
132,332
106,546
Distribution per unit (yen)
4,067
3,471
6,546
Distribution amount from earnings per unit (yen)
3,299
2,661
6,546
Distribution amount in excess of earnings per unit (yen)768810(5) Financial Indicators
ROA
1.2%
1.4%
1.5%
Notes 5and 6[annual rate][2.4%][2.8%][2.6%]
ROE
2.5%
3.2%
6.1%
Notes 6and 7[annual rate][4.9%][6.4%][10.3%]
Capital ratio
45.5%
53.2%
24.9%
[period-on-period percentage changes][-7.7%][28.2%][-]LTV (loan to value)
49.8%
42.3%
69.1%
Property leasing cash flows (NOI)
Note 8499479336(6) Other Referential Information
Number of investment properties
17
14
8
Number of tenants
Note 917
14
8
Total rentable area (m2)
57,173.22
46,142.60
27,793.71
Occupancy rate
Note 10100.0%
100.0%
100.00%Depreciation
152
138
94
Capital expenditures20
1(Note 1)The Fund has two fiscal periods per year, a six months period from May 1 to October 31, and November 1 to April 30 of the following
year. However, the first fiscal period of the Fund is from the date of incorporation (January 7, 2014) to the end of October 2014.
(Note 2) Operating revenues, etc. do not include consumption taxes, etc.
(Note 3) The indicated amounts are unitholders’ equity less deduction amount of unitholders’ equity.
(Note 4) Since issuance of new investment units was implemented, dividend payout ratios for the 1st and 2nd fiscal periods are calculatedusing the following formula.
Dividend payout: [Total distribution amount (excluding distribution in excess of earnings) ÷ Net income] × 100(Note 5) ROA: Ordinary income ÷ [(Total assets at beginning of period + Total assets at end of period) ÷ 2] × 100(Note 6) Figures for the 1st Fiscal Period are the annualized figures calculated based on 218 days of management, which is from the date ofcommencement of actual management on March 28, 2014 to October 31, 2014. Figures for the 2nd Fiscal Period and 3rd Fiscal
Period are the annualized figures calculated based on 181 days and 184 days of management, respectively.
ROA and ROE for the 1st Fiscal Period are calculated based on total assets at end of period and net assets at end of period,
respectively.
(Note 7) ROE: Net income ÷ [(Net assets at beginning of period + Net assets at end of period) ÷ 2] × 100(Note 8) Property leasing cash flows (NOI): Rental revenues − Property-related expenses + Depreciation(Note 9) Number of tenants is the total number of end tenants.
(Note 10) Occupancy rate: Total leased area ÷ Total rentable area × 100

16

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 proceedsfrom the concerned 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.
As the first Japanese REIT specializing in healthcare facilities in that it invests solely in properties of which theprincipal use is healthcare facilities, NHI effectively utilizes investor capital to initiate expansion of supply of highquality healthcare facilities that provide users with high-standard services, while at the same time produce ample anddependable returns to investors for further capital circulation. In this way, NHI aims at creating a new value cyclefor healthcare facilities and the services provided, together with investors. Through these efforts, NHI would like tocontribute to the realization 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 May 1, 2015 to October 31, 2015)
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 one-quarter of the total population as of June 1, 2015
(according to the Ministry of Internal Affairs and Communications’ “Population Estimates”), 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 to grow. There is thus recognized to be
sufficient potential for greater development of housing for the elderly with nursing care services, etc. thatare designed for the elderly to reside (referring to “silver housing” (public housing for the elderly), “goodrental housing for the elderly,” “elderly housing with supportive services,” “fee-based homes for theelderly” 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 range between 3% and 5% in 2020. In order toaccomplish this policy target, new supply of housing for the elderly for between approximately 430,000
people and approximately 1,150,000 people is required by 2020.
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 3rd Fiscal Period (fiscal period ended October 2015), NHI acquired two properties (Minna-no-ie Omiya
Yoshinocho and Minna-no-ie Chuo-ku En'nami; sum total of acquisition price: 1,578 million yen) on June 1,2015 and one property (Silver Heights Hitsujigaoka No.3; acquisition price: 1,200 million yen) on October 15,
2015 for a total of three properties (sum total of acquisition price: 2,778 million yen).
Concerning the properties held as of the end of the 3rd Fiscal Period (October 31, 2015), the leasable floorarea was 57,173.22m and the occupancy rate was 100.0%.
2III. Asset Management Report17

(3) Overview of Capital Procurement(A) Procurement of Funds for Acquisitions
In the 3rd Fiscal Period, NHI conducted the following borrowing of funds for use as funds for acquisition,etc. of new properties.
(a) A total of 1,500 million yen was borrowed from Mizuho Bank, Ltd., Mizuho Trust & Banking Co., Ltd.
and The Musashino Bank, Ltd. on June 1, 2015 to fund the acquisition of new properties (Minna-no-ie
Omiya Yoshinocho and Minna-no-ie Chuo-ku En'nami) acquired on the same day.
(b) A total of 900 million yen was borrowed from Resona Bank, Ltd. and Shinkin Central Bank on October 15,
2015 to fund the acquisition of a new property (Silver Heights Hitsujigaoka No.3) acquired on the same day.
(B) Status of Interest-Bearing Liabilities
As a result of the above, the balance of interest-bearing liabilities outstanding at the end of the 3rd Fiscal
Period (as of October 31, 2015) totaled 8,800 million yen (all long-term loans payable). None are due forrepayment within one year of the end of the 3rd Fiscal Period.
Having borrowed long-term loans with periods ranging between 3 years and 5 years during the 3nd
Fiscal Period, the average remaining period at the end of the 3rd Fiscal Period was 3.51 years.
In addition, NHI concluded an interest rate swap agreement for converting future interest rate payable
into a fixed rate for loans in a total amount of 2,400 million yen for the purpose of hedging the risk ofinterest rate fluctuations.
(4) Capital Expenditures During the Fiscal Period under Review
The following summarizes the main construction work that constitutes capital expenditures conductedduring the 3rd Fiscal Period. Capital expenditures for the 3rd Fiscal Period amounted to 2,078 thousand yen
and, when combined with the 13,675 thousand yen in repair expenses charged to 3rd Fiscal Period expenses,
totaled 15,753 thousand yen in construction work implemented.
Name of Property(location)
Rest Villa Hiroshima Hikarigaoka(Hiroshima- shi, Hiroshima)
Rest Villa Hiroshima Hikarigaoka(Hiroshima-shi, Hiroshima)
Rest Villa SagamiharaChuo(Sagamihara-shi, Kanagawa)PurposeReplacement of water heater
Replacement of electrical water
heaterReplacement of air-conditioning
panel, compressor, etc.

Other
Total

PeriodFrom: August 2015
To: September 2015
From: October 2015
To: October 2015
From: July 2015
To: August 2015
From: May 2015
To: October 2015

Expenditure(thousands of
yen)
744
450
435
449
2,078

(5) Overview of Financial Performance and Distributions
As a result of the management described above, NHI posted financial performance for the 3rd Fiscal Period of
556 million yen in operating revenue, 225 million yen in operating income, 201 million yen in ordinary incomeand 201 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 3,299 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 of incorporation(Note). Based on this policy, NHI decided to distribute 46,694,400 yen, which is the amount roughly equivalent to
31% of the 152 million yen in depreciation for the 3rd Fiscal Period, as reimbursement of investments in capital.
Accordingly, NHI declared a distribution amount in excess of earnings per unit of 768 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 3rd Fiscal Period (17 properties) is 25 million yen.

18

3. Future Management Policy and Tasks(1) Investment Environment
Japan has the population of the elderly accounting for approximately one-quarter of the total population,and the population of the elderly is expected to continue to account for an increasingly greater proportionand the population of the elderly living alone is expected to continue to grow. With the development of
medical technology, among other factors, record-highs were set in terms of the average life expectancy atbirth for Japanese people at 80.50 years for males and 86.83 years for females according to the Ministry of
Health, Labour and Welfare’s “Abridged Life Tables for Japan 2014,” and in terms of the population aged 65
years or over at 34 million people and the proportion of the elderly population at 26.5% of the total populationof 126 million as of June 1, 2015 according to the Ministry of Internal Affairs and Communications’“Population Estimates.”
According to the National Institute of Population and Social Security Research’s “Population Projections forJapan (January 2012),” the total population will increase to 124 million people, the elderly population to 36
million people and the proportion of the elderly population to 29.1% in 2020 and then, while the total
population will decrease by approximately 40 million people from that at present to 86 million people, theelderly population will reach 34 million people and the proportion of the elderly population to 39.9% in 2060.
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 range between 3% and 5% by 2020. In order to accomplish this policy target, new supply of
housing for the elderly for between approximately 430,000 people and approximately 1,150,000 people isrequired by 2020.
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,
but also the creditworthiness, operational capabilities, etc. of the operators operating the facilities are
regarded as important factors by NHI in realizing stable occupancy. This is because the operators
being capable of providing services of a quality and type that matches the entrance fee, monthly
service fee, etc. in order to be the residents’ choice and the operators being capable of operating 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 or the trustee, the operator shallsincerely discuss the request. In addition, NHI shall consider concluding a similar agreement with also
the operators 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 Report19(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 November 2015: approximately 445.7
billion yen) and Daiwa Residential Private Investment Corporation (balance of assets for which
management is entrusted as of the end of November 2015: approximately 78.2 billion yen). In addition,in order to expand and boost opportunities to acquire healthcare facilities in which NHI invests, theAsset Management Company has installed an investment team specializing in healthcare facilities andis 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 collectproperty 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.
In the 3rd Fiscal Period (fiscal period ended October 2015), NHI acquired two properties (Minna-no-ie
Omiya Yoshinocho and Minna-no-ie Chuo-ku En'nami; sum total of acquisition price: 1,578 million yen) on
June 1, 2015 and one property (Silver Heights Hitsujigaoka No.3; acquisition price: 1,200 million yen) on
October 15, 2015 for a total of two properties (sum total of acquisition price: 2,778 million yen).
In addition, in the 4th Fiscal Period (fiscal period ending April 2016), NHI has acquired a total of four
properties (Alpha Living Okayama Nishigawa Ryokudokoen, Alpha Living Okayama Korakuen, Alpha Living
Takamatsu Ekimae and Alpha Living Takamatsu Hyakkenmachi; sum total of acquisition price: 2,550
million yen) as stated later in this document in “VIII. Notes to Financial Statements – Note 18 – Significant
Subsequent Events” on November 24, 2015.
(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.

20(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
Not applicable.

III. Asset Management Report21IV. Balance Sheets
As of October 31, 2015 and April 30, 2015

(Thousands of yen)

As of
October 31, 2015

As ofApril 30, 2015

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

965,199

1,321,520

Consumption tax refundable

2,069

3,141

Prepaid expenses

19,142

11,276

Deferred tax assets [Note 13]

14

14

Other current assets

874-

Total Current Assets

987,298

1,335,951

Land in trust accounts

6,504,957

5,185,156

Buildings and structures in trust accounts

10,474,057

8,766,759

Tools, furniture and fixtures in trust accounts

1,325

-

Construction in progress including trust accounts

1,910

1,674

Less: accumulated depreciation(383,629)(231,852)

Leasehold rights in trust accounts

40,88640,886

16,639,506

13,762,623

188

199

Software

2,952

3,320

Lease and guarantee deposits in trust

10,00010,000Long-term prepaid expenses

26,636

22,761

Total Other Assets

39,77636,28017,666,580

15,134,854

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.

22

(Thousands of yen)

As of
October 31, 2015

As ofApril 30, 2015

Liabilities
Current Liabilities:
Operating accounts payable

16,385

9,573

Accounts payable – other

98,11544,911896

900

69,12754,035

Deposits received

598

513

Other current liabilities

870-

Total Current Liabilities

185,991

109,932

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

8,800,000

6,400,000

Tenant security deposits [Note 5]645,231

579,123

9,445,231

6,979,123

9,631,222

7,089,055

7,884,000

7,884,000(49,248)-

7,834,752

7,884,000

200,606

161,799

8,035,358

8,045,799

Total Net Assets

8,035,358

8,045,799

Total Liabilities and Net Assets

17,666,580

15,134,854

Income taxes payable
Rent received in advanceLong-Term Liabilities:

Total Long-Term Liabilities
Total Liabilities

Net Assets [Notes 9 and 14]
Unitholders’ Equity:
Unitholders’ capital
Deduction from unitholders’ capital
Unitholders’ capital, net
Units authorized: 10,000,000 units
Units issued and outstanding: 60,800 units
Retained earnings
Total Unitholders’ Equity

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

IV. Balance Sheets

23

V. Statements of Income
For the six months ended October 31, 2015 and April 30, 2015

Operating Revenues and Expenses
Operating Revenues:
Rental revenues [Note 8]
Total Operating Revenues
Operating Expenses:
Property-related expenses [Note 8](Thousands of yen)

For the six months ended
October 31, 2015

For the six months endedApril 30, 2015

555,589

507,643555,589

507,643

208,266

166,036

Asset management fees
Asset custody fees
Administrative service fees
Trust fees

49,037
554
8,163
4,909

40,652
545
5,551
4,368

Directors’ compensation
Audit fees

3,600
4,400
51,7293,600
3,000
37,901

330,658
224,931

261,653
245,990

26
4

40
8

30

48

18,0135,391
61

14,435
26,57042,340-23,465
201,496

83,345
162,693

Income Before Income Taxes
Income taxes – current
Income taxes – deferred

201,496

162,693

901
(0)

908
6

Total Income Taxes [Note 13]
Net Income [Note 14]
Retained Earnings Brought Forward

901
200,595
11
200,606

914
161,77920
161,799

Other operating expenses
Total Operating Expenses
Operating Income
Non-Operating Revenues and Expenses
Non-Operating Revenues:
Interest income
Other non-operating revenues
Total Non-Operating Revenues
Non-Operating Expenses:
Interest expense
Borrowing expenses
New Investment units issuance costs
Other non-operating expenses
Total Non-Operating Expenses
Ordinary Income

Retained Earnings at End of Period

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

24

V. Statements of Income

VI. Statements of Changes in Net Assets
For the six months ended October 31, 2015

Balance as of April 30, 2015

(Thousands of yen)

Deduction
Number of Unitholders’fromUnitholders’Units
Capitalunitholders' Capital, net
capital60,800 7,884,000- 7,884,000

Retained
Earnings

Total

161,799

8,045,799

Distributions in excess of retained
earnings--(49,248)(49,248)-(49,248)

Distributions of earnings

-

-

-

-

(161,788)(161,788)

Net income

-

-

-

-

200,595

200,595

60,8007,884,000(49,248)

7,834,752

200,606

8,035,358

Balance as of October 31, 2015

For the six months ended April 30, 2015

Balance as of October 31, 2014
Issuance of new investment units(Thousands of yen)

Deduction
Number of Unitholders’fromUnitholders’Units
Capitalunitholders' Capital, net
capital19,800 1,980,000- 1,980,000

Retained
Earnings

Total

129,6312,109,631

41,0005,904,000-

5,904,000-

5,904,000

Distributions of earnings

-

-

-

-

(129,611)(129,611)

Net income

-

-

-

-

161,779

161,779

60,8007,884,000-

7,884,000

161,799

8,045,799

Balance as of April 30, 2015

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

VI. Statements of Changes in Net Assets

25VII. Statements of Cash Flows
For the six months ended October 31, 2015 and April 30, 2015

(Thousands of yen)

For the six months
ended
October 31, 2015

For the six months
ended
April 30, 2015

Income before income taxes

201,496

162,693

Depreciation and amortization

152,155

138,003-42,340Interest expense

18,013

14,435

Increase (Decrease) in accounts payable

37,256

10,961

Increase (Decrease) in rent received in advance

15,092

16,071

Cash payments of interest expense(17,902)(14,435)

1,072

414

(11,724)(6,635)395,458

363,847(3,007,609)(6,387,762)-(3,671)

66,108160,798(2,941,501)(6,230,635)

Proceeds from short-term debt-

300,000

Repayment of short-term debt-

(300,000)

Proceeds from long-term debt

2,400,000

6,400,000

Repayments of long-term debt-

(5,850,000)

Proceeds from issuance of new investment units-

5,861,660

Payments of distributions of earnings(161,240)(129,611)

Payments of distributions in excess of retained earnings(49,038)-

Net Cash Provided by Financing Activities

2,189,722

6,282,049

Net Change in Cash and Cash Equivalents(356,321)

415,261

Cash and Cash Equivalents at Beginning of Period

1,321,520

906,259

Cash and Cash Equivalents at End of Period (Note 3)

965,199

1,321,520

Cash Flows from Operating Activities:

New investment units issuance costs(Increase) Decrease in consumption taxes refundable
Other, net
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Payments for purchases of investment properties
Payments for purchases of intangible assets
Proceeds from tenant security deposits
Net Cash Used in Investing Activities
Cash Flows from Financing Activities:

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

26

VII. Statements of Cash FlowsVIII. Notes to Financial Statements
For the six months ended October 31, 2015 and April 30, 2015

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 October 31, 2015, NHI had trust beneficiary interests in 17 healthcare facilities with approximately 57,173
square meters of healthcare facilities space and had leased space to 17 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 recorded at cost, which includes the allocated purchase price, related costs andexpenses for acquisition of the properties. Property and equipment balances are depreciated using the straightline 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
Tools, furniture and fixtures

As of October 31, 2015
4-58 years
6 years

As of April 30, 2015
4-56 years-

Costs related to the renovation, construction and improvement of properties are capitalized. Expenditures for repairs
and maintenance which do not add to the value of 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.
VIII. Notes to Financial Statements

27

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.
Capitalized real estate taxes amounted to 6,877 thousand yen for the six months ended October 31, 2015 and 3,564
thousand yen for the six months ended April 30, 2015.
Consumption Taxes
Consumption taxes are excluded from the 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 of
October 31, 2015 and April 30, 2015 consisted of the following:(Thousands of yen)

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

As of October 31, 2015
550,649
414,550
965,199

As of April 30, 2015
964,475
357,045
1,321,520

Note 4 – Pledged Assets and Secured Liabilities
The carrying amount of assets pledged as collateral and the secured liabilities as of October 31, 2015 and April
30, 2015 were as follows:(Thousands of yen)

Assets pledged:
Cash and cash equivalents
Land in trust accounts
Buildings and structures in trust accounts
Tools, furniture and fixtures in trust accounts
Leasehold rights in trust accounts
Total
Secured liabilities:
Long-term debt
Total

28

As of October 31, 2015

As of April 30, 2015

414,550
6,504,957
10,090,461
1,292
40,886
17,052,146

357,045
5,185,156
8,534,907
40,886
14,117,994

8,800,000
8,800,000

6,400,000
6,400,000

Note 5 – Financial Instruments(For the six months ended October 31, 2015 and April 30, 2015)(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. Furthermore, in order to reduce financing risks at the time of property
acquisitions with forward commitment, etc., NHI utilizes commitment-type term loans.
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 ofrefunding deposits in the event that a tenant terminates the contract. However, such risk is limited byreserving some parts 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 October 31, 2015 and April 30, 2015 are
as follows. The financial instruments whose fair value is extremely difficult to estimate are excluded fromthe following table.
(As of October 31, 2015)
Cash and cash equivalents
Total
Long-term debt
Total
Derivative transactions(Thousands of yen)Book Value
965,199
965,199
8,800,000
8,800,000–

Fair Value
965,199
965,199
8,789,863
8,789,863–

Difference––(10,137)(10,137)–

VIII. Notes to Financial Statements29

(As of April 30, 2015)(Thousands of yen)Book Value
1,321,520
1,321,520
6,400,000
6,400,000–

Cash and cash equivalents
Total
Long-term debt
Total
Derivative transactions

Fair Value
1,321,520
1,321,520
6,375,873
6,375,873–

Difference––(24,127)(24,127)–

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) Long-term debt
For long-term debt with floating interest rates, their fair 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 isassumed as their fair value. For long-term debt with fixed interest rates, their fair value is based on the present
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 that qualifies forthe special treatment of interest-rate swaps is determined by discounting 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 October 31, 2015)
Method of Hedge
Accounting
Special treatment
for interest 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

Total

(As of April 30, 2015)
Method of Hedge
Accounting
Special treatment
for interest rate swap
transactions

Fair
Value(*)

7,800,000(7,800,000)–(**)

7,800,000(7,800,000)–(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

Total

Fair
Value(*)

5,400,000(5,400,000)–(**)

5,400,000(5,400,000)–*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.

2. Financial instruments whose fair value is extremely difficult to estimate.
Tenant security deposits including trust accounts (with a book value of 645,231 thousand yen as of October
31, 2015 and 579,123 thousand yen as of April 30, 2015) that have been deposited from tenants are notmarketable and the actual deposit period cannot be reliably determined, thus making it impossible toreasonably estimate their future cash flows, and therefore, it is considered to be extremely difficult to estimate
their fair value.

30

3. Redemption schedule for money claims(As of October 31, 2015)(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
965,199––––
965,199––––

Cash and cash equivalents
Total(As of April 30, 2015)

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
1,321,520––––
1,321,520––––

Cash and cash equivalents
Total

Due after
5 years––

4. Redemption schedule for long-term debt
(As of October 31, 2015)(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– 1,800,000 2,100,000 2,900,000 2,000,000– 1,800,000 2,100,000 2,900,000 2,000,000

Long-term debt
Total
(As of April 30, 2015)

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–– 1,800,000 1,700,000 2,900,000–– 1,800,000 1,700,000 2,900,000

Long-term debt
Total

Due after
5 years––

Note 6 – Schedule of Tangible Fixed Assets of Investment Properties
Investment properties as of October 31, 2015 and April 30, 2015 consisted of the following:(Thousands of yen)

As of October 31, 2015
Acquisition
AccumulatedBook value
costs
depreciation

As of April 30, 2015
Acquisition
AccumulatedBook value
costs
depreciation

Land in trust
accounts

6,504,957–

6,504,957

5,185,156–

5,185,156

Buildings andstructuresin trust accounts

10,474,057(383,596)

10,090,461

8,766,759(231,852)

8,534,907

Tools, furniture andfixtures in trust
accounts

1,325

(33)

1,292

–

–

–

Construction inprogress
including trust
accounts

1,910

–

1,910

1,674

–

1,674

16,982,249(383,629)

16,598,620

13,953,589(231,852)

13,721,737

Total

VIII. Notes to Financial Statements

31

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 October 31, 2015)
Book Value
As of
ChangeApril 30, 2015
during the period(*1)
13,760,949
2,876,647(For the six months ended April 30, 2015)
Book Value
As of
ChangeOctober 31, 2014
during the period(*2)
7,517,514
6,243,435(Thousands of yen)

As of
October 31, 2015
16,637,596

Fair value as of
October 31, 2015
20,410,000(Thousands of yen)

As ofApril 30, 2015
13,760,949

Fair value as ofApril 30, 2015
16,462,000(Note 1) The book value represents the acquisition costs less accumulated depreciation.
(Note 2) Significant changes(*1) For the six months ended October 31, 2015, the major reason of increase is acquisition of three properties (2,778,000 thousand yen). The
major reason of decrease is depreciation (151,777 thousand yen).
(*2) For the six months ended April 30, 2015, the major reason of increase is acquisition of six properties (6,015,000 thousand yen). The
major reason of decrease is depreciation (137,640 thousand yen).
(Note 3) The fair values as of October 31, 2015 and April 30, 2015 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 October 31, 2015 and April 30,
2015 are disclosed in Note 8.

Note 8 – Rental Revenues and Expenses
Rental revenues and expenses for the periods ended October 31, 2015 and April 30, 2015 were as follows:(Thousands of yen)

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

For the six months ended
October 31, 2015

For the six months endedApril 30, 2015

555,589555,589

507,643
507,643

9,821
30,608
1,185
13,675
151,777
1,200
208,266
347,323

8,878
9,521
1,540
7,083
137,640
1,200
174
166,036
341,607Note 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 – Long-Term Debt
Long-term debt as of October 31, 2015 and April 30, 2015 consisted of the following:(Thousands of yen)

Secured loans due 2017 to 2020, principally frombanks and insurance companies with interest rates
mainly ranging from 0.3% to 0.5%
Total

As of October 31, 2015

As of April 30, 2015

8,800,000

6,400,000

8,800,000

6,400,000[Note] The interest rate presented is the spot rate as of October 31, 2015. As for long-term debts which were hedged by interest-rate swaps for the
purpose of avoiding interest rate fluctuation risk, the swapped interest rates are used.

32

The annual maturities of long-term debt as of October 31, 2015 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

1,800,000
2,100,000
2,900,000
2,000,000-

Note 11 – Leases
As Lessor
The future minimum rental revenues under existing non-cancelable operating leases as of October 31, 2015 andApril 30, 2015 were as follows:(Thousands of yen)

Due within one year
Due after one year
Total

As of October 31, 2015
1,162,805
11,845,138
13,007,943

As of April 30, 2015
1,022,633
11,335,655
12,358,288

Note 12 – Commitment-Type Term Loans
NHI has entered into credit facilities in the form of commitment-type term loan agreements with one bank as of
October 31, 2015 as follows:(Thousands of yen)

Total amount of commitment-type term loans
Borrowing execution balance
Net unused balance

As of October 31, 2015
1,200,000
1,200,000

As of April 30, 2015-

Note 13 – 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 0.45% for the six months ended October 31, 2015 and 0.56% for the six months
ended April 30, 2015. The following table summarizes the significant differences between the statutory tax rates
and NHI’s effective tax rates for financial statement purposes.
(Thousands of yen)

Statutory tax rate
Deductible dividends
Others
Effective tax rate

For the six months ended
October 31, 201532.31%(32.16)0.30
0.45%

For the six months endedApril 30, 201534.15%(33.96)0.37
0.56%

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 October 31, 2015 and April 30, 2015
were as follows:(Thousands of yen)

As of October 31, 2015
Deferred tax assets:
Accrued enterprise tax
Total deferred tax assets
Net deferred tax assets

As of April 30, 2015
14
14
14

14
14
14
VIII. Notes to Financial Statements

33

Note 14 – Per Unit Information
Information about net assets per unit and net income per unit as of October 31, 2015 and April 30, 2015 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

For the six months ended
October 31, 2015
132,160yen

For the six months endedApril 30, 2015
132,332 yen

3,299yen

2,705 yen

Net income per unit

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.

Net income (thousands of yen)

For the six months ended
October 31, 2015
200,595

For the six months endedApril 30, 2015
161,779––

200,595

161,779

60,80059,800

Amount not available to ordinary unitholders(thousands of yen)

Net income available to ordinary unitholders(thousands of yen)

Average number of units during the period (units)

Note 15 – 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 200,579,200 yen
for the fiscal period ended October 2015, which is the maximum integral multiple to 60,800 units issued andoutstanding as the distribution of earnings, and 161,788,800 yen for the fiscal period ended April 2015, which is
the maximum integral multiple to 60,800 units. In addition, NHI will continue to make distributions in excess ofearnings (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 46,694,400 yen, which is calculated as the approximate equivalent of 31% of 151,776,702
yen of the depreciation amount posted for the fiscal period ended October 2015, as distributions in excess ofearnings (refund of capital contribution to unitholders) and 49,248,000 yen for the fiscal period ended April 2015,
which is calculated as the approximate equivalent of 36% of 137,640,283 yen of the depreciation amount posted
for the fiscal period ended April 2015.
(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

34

For the six months ended
October 31, 2015
Total
Per unit
200,605,559

For the six months endedApril 30, 2015
Total
Per unit
161,798,905

46,694,400

49,248,000

200,579,200
46,694,400
247,273,600
26,359

3,299
768
4,067

161,788,800
49,248,000
211,036,800
10,105

2,661
810
3,471

Note 16 – Transactions with Related Parties(For the six months ended October 31, 2015)
No related-party transaction was entered into for the six months ended October 31, 2015
(For the six months ended April 30, 2015)
Classification
Name of company, etc.
Business description
Percentage of voting rights, etc. held byrelated party (held in NHI)
Nature of transaction
Amount of transaction (thousands of yen)Account
Balance at end of period (thousands of yen)

Major unitholder, interested party
Daiwa Securities Group Inc.
Holding company
10.00% directly held in NHI
1.65% indirectly held in NHI
Subscription of investment units (Note)
912,000––

Consumption taxes are not included in transaction amounts.
(Note) Subscription to NHI’s capital increase through public offering at 150,000 yen per unit.

Note 17 – Segment Information
For the six months ended October 31, 2015 and April 30, 2015
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 of income
and retained earnings.
Information about Geographic Areas(1) Operating revenues
Disclosure of this information has been omitted as domestic operating revenues account for more than 90% of
total operating revenues.
(2) Investment properties
Disclosure of this information has been omitted as domestic investment properties account for more than 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 theoperating revenues recorded in the statements of income and retained earnings.

Note18 – Significant Subsequent Events(1) Issuance of New Investment Units
At the meetings of the board of directors held on October 29, 2015 and November 10, 2015, NHI resolved on
the issuances of new investment units as described below. The payments for the issues were completed on
November 17, 2015 and December 16, 2015, respectively.
a. Issuance of new investment units through public offering (primary offering)(i) Number of investment units issued
12,130 units(ii) Paid-in amount (issue price)
189,440 yen per unit(iii) Total paid-in amount (total issue price)
2,297,907,200 yen(iv) Payment dateNovember 17, 2015
To use for acquisition of the specified assets described in(v) Use of the proceeds“(2) Acquisition of Assets,” below as well as the various
expenses associated with the acquisitions

VIII. Notes to Financial Statements35

b. Issuance of new investment units through third-party allotment(i) Number of investment units issued
1,702 units(ii) Paid-in amount (issue price)
189,440 yen per unit(iii) Total paid-in amount (total issue price)
322,426,880 yen(iv) Allottee and number of units allotted
1,702 units allotted to Daiwa Securities Co., Ltd.
(v) Payment date
December 16, 2015
To use as cash on hand and be deposited at financial
institutions until expenditure (to be used as part of funds for(vi) Use of the proceeds
future acquisitions of specified assets or partial repayment
of interest-bearing liabilities)(2) Acquisition of Assets
NHI acquired the following real estate trust beneficiary interests in four properties (sum total of acquisition
price: 2,550 million yen) on November 24, 2015.
Alpha Living
OkayamaNishigawa
Ryokudokoen

Alpha Living
Okayama Korakuen

Type of facility

Residential-type
fee-based homes
for the elderly

Residential-type
fee-based homes
for the elderly

Residential-type
fee-based homes
for the elderly

Elderly housing withsupportive services

Location

6-2 Chuo-cho,
Kita-ku, Okayamashi, Okayama

1-11-4, Hama,
1-6, NishiuchiNaka-ku, Okayama- machi, Takamatsushi, Okayama
shi, Kagawa

8-11, Hyakkenmachi, Takamatsushi, Kagawa

Acquisition price

730 million yen(excluding
acquisition-related
costs, consumption
tax, etc.)

610 million yen(excluding
acquisition-related
costs, consumption
tax, etc.)

605 million yen(excluding
acquisition-related
costs, consumption
tax, etc.)

Overview of acquired
asset /Property name
Type of asset acquired

Date of delivery

Alpha Living
Takamatsu Ekimae

Alpha Living
Takamatsu
Hyakkenmachi

Trust beneficiary interests in real estate

605 million yen(excluding
acquisition-related
costs, consumption
tax, etc.)

November 24, 2015

SellerDA Healthcare Alpha LLC

LesseeAnabuki Medical Care Inc.

(3) Borrowing of Funds
NHI concluded the following commitment-type term loan contract on October 29, 2015 and borrowing of funds
on November 24, 2015. The loans are for use as the funds for acquisition of the new properties stated above in“(2) Acquisition of Assets,” as well as the various expenses associated with the acquisitions.
LenderDate of loan
Balance (thousands of yen)interest rate
Date of maturity
Repayment method
Notes

Mizuho Bank, Ltd.
November 24, 2015
900,000
1 month Japanese Yen TIBOR +0.30% (Note)
May 24, 2016
Bullet payment
Secured(Note) Interest payment dates shall be the last day of each month and the maturity date (however, if the concerned date is not a business day, then it
shall be the next business day; if that next business day falls into the next calendar month, then it shall be the business day immediately
preceding the concerned date). The base rate applicable to the calculation period for the interest payable on an interest payment date shall be
the Japanese Bankers Association (JBA) 1-month Japanese Yen TIBOR two business days prior to the date of commencement of the interest
calculation period.

36

IX. Independent Auditor’s Report

IX. Independent Auditor’s Report37[Feature] Introduction of Operators

Industry-Academia-Government Partnership Project

Partnership agreement with Kyushu Dental University
Uchiyama Holdings Co., Ltd. signed an industry-academia-government partnership agreementwith Kyushu Dental University and Kitakyushu Foundation for the Advancement of Industry, Scienceand Technology on October 20, 2014. This partnership agreement is part of the initiatives taken by
Kitakyushu Medical, Dental and Engineering Collaborative Study Group and aims to provide higher
quality services in oral care as well as to improve quality of life (QOL)

At the signing ceremony.
From left: Dr. Toyoki Kunitake, President of Kitakyushu
Foundation for the Advancement of Industry, Scienceand Technology; Fumiharu Uchiyama, President andRepresentative Director of Uchiyama Holdings Co., Ltd.;and Dr. Tatsuji Nishihara, Chair of the Board of Directors
and President of Kyushu Dental University

Fields of cooperation:(1) Conducing joint research and exchanging researchers and engineers associated with theresearch(2) Providing internship opportunities at nursing care facilities to students of Kyushu Dental
University(3) Providing research opportunities at Kyushu Dental University to employees of nursing carefacilities(4) Other cooperation and support for activities which promote partnership

In order to further promote the initiative, an endowed course for learning how to support the elderly was launched at Kyushu Dental University in April
2015. Upholding “Creating a society where every person can continue eating, talking and laughing” as the course’s vision, it aims to improve thetypes of food customers eat by cultivating care workers with the knowledge of oral care and providing adequate oral care at nursing care facilities.

Participation in Kyushu University’s “Support projectfor reinforcement of university, etc. seeds and needs
creation (COI vision dialogue program)”
Led by Yasuyuki Hirai, associate professor at the faculty of design of the Kyushu University,
Uchiyama Holdings Co., Ltd. and Kitakyushu Foundation for the Advancement of Industry, Scienceand Technology participated in “Social inclusion COI from the Elderly’s viewpoint” of “Support
project for reinforcement of university, etc. seeds and needs creation (COI vision dialogue
program),” for which Kyushu University was chosen to conduct.
*COI = Center of Innovation

Four workshops using “design thinking” were held in fiscal 2014 with Associate Professor Yasuyuki Hirai of the Kyushu University playing a central
role. At the workshops, ideas were brainstormed under the theme of “Would be nice to have nursing care facilities like this,” and a number of uniquedesigns were suggested. Five prototypes were created through these workshops.

What is Sawayaka Club like?
A facility guide tool for residents to ease anxiety ofentering the facilityLife Map
A tool to open customers’ minds by illustrating theirpast and futureWith-Family Program
A tool to support actions toachieve goals with the families

Image Cards
A tool (sets of photographs) to draw out conversation by
evoking memories of events, things and relationships
with other people

Guinness-teki Book
A tool to draw special skills
from customers to motivatethemSawayaka Club Co., Ltd.
Message from President

People’s smiles and joy are thedriving force of my life and business

Fumiharu Uchiyama
President and Representative Director
I was four years old when World War II ended. After the war was a periodof poverty with everything burnt to the ground and nothing to eat orwear. I used to ask occupation American soldiers to “give me chocolate”
as snacks. When I shared them with neighbors’ children and my siblings
instead of eating them all by myself, their faces would light up with big
smiles.
Giving people something without expecting a reward will surely makethem happy, and that, in return, gives me the power to take action – Thesmiles I saw on their faces inspired the basis of my life of “wanting
people to be happy” and of myself as a business manager.
Uchiyama Holdings Co., Ltd., which has Sawayaka Club Co., Ltd. as
its affiliate, mainly develops business in nursing care, karaoke andrestaurants. Currently, consolidated sales stands at around 25 billion
yen. Having listed on the first section of the Tokyo Stock Exchange in
September 2014, our future vision includes a focus on opening new
shops in the Tokyo metropolitan area, particularly in central Tokyo.
Having said this, however, the start of my career as a business man
was not under fortunate or ideal circumstances. Just as I turned 20, myfather, who was running a rice shop, suddenly fell ill and I had to takeover the business.
I set my mind on thinking that “If I am going to do it, I want to be thenumber one rice merchant” and “I will do work that will make people
happy,” and then worked hard. When I was reaching my late 20s, aturning point came. First, our branch store and then our main store
became subject to governmental land acquisition for constructing roads.
I purchased land with the money I received and soon the land prices
nearly doubled, partly due to high economic growth that Japan was
experiencing. Encouraged by this incident, I decided to switch to thereal estate business and founded Uchiyama Building Co., Ltd. (currently
Uchiyama Holdings Co., Ltd.) in 1971 at the age of 30, making a fullfledged entry to the rental building business.
Helped by the strong economy, my real estate business steadily grewand I entered the restaurant/karaoke business utilizing vacated shops in1991. However, I thought just “singing” would not please families, so I
focused on the food and drinks when I opened our first “Croquette Club”

in Kurosaki, Kitakyushu City. We installed a glass-walled open kitchen
and clean restrooms. Furthermore, we were the first in Japan to start
providing around-the-clock service.
However, we continued to be in the red even after six months ofoperation and were unable to gain any profits. We were almost forced
to consider possible withdrawal from the business, but then I realizedthat I couldn’t just give up. I once again went back to the fundamentals,
remembering that the top priority lies in making customers smile andhappy, and continued to make dedicated efforts and improvements.
Through such experiences, a proverb sank in as my guide in life. It is;“Half a tatami mat for standing up, a single tatami mat for sleeping. Twoand a half bowls of rice, even if you conquer the nation,” meaning there
is only so much that you can have as luxuries and desiring more thanwhat is needed, will only make you feel empty.
Based on this teaching, I donated my personal wealth of about 200
million yen to establish the social welfare corporation Hakkenkai in1998 after overcoming the crisis following the collapse of the bubble
economy. Capitalizing on the knowhow gained at Hakkenkai, we, as
Uchiyama Building Co., Ltd., made a full-scale entry into the elderly
nursing care business in 2003. The nursing care business is what weare focusing on at the moment. We call it “the ultimate service business”
since it is appreciated by residents, their families and also by people inthe community, as well as looking after people’s lives.
Since Japan has one of the world’s highest proportions of the elderly,
I have a sense of mission to quickly develop a nursing care system sothat people can be happy living a meaningful life to the very end. I also
think that if people forget what we owe to the elderly who worked so
hard after the war to rebuild this country from scratch and do not takegood care of them, this country will go into decline.
Another one of my favorite sayings is a Native American Indian proverb;“When you were born, you cried and the world rejoiced. Live your life sothat when you die, the world cries and you rejoice.” My hope is to see
as many people as possible lead such a happy life. To that end, I willcontinue to work, with all my heart, on this business that can bring joy
to people.

[Feature] Introduction of Operators

Cherish the “Smiles,” “Gratitude” and “Excitemen

a
n
p
d
x
S
E
r
e
h
t
Fur

Sawayaka Club will contribute to communities by responding to people’s exp

We offer total support for those who reby utilizing our strong netw
local medical andFee-based homes for the elderly with nursing care

Fukuoka Prefecture
Sawayaka Shimojikan

1543-1 Oaza Hata, Moji-ku, Kitakyushu City

Sawayaka Mekarikan

Sawayaka Cl
69 facilit
137 offices a

1-9-15 Okubo, Moji-ku, Kitakyushu City

Sawayaka Parkside Shinkawa

2-13 Shinkawamachi, Tobata-ku, Kitakyushu City

Sawayaka Kaikyokan

1-11-13 Hamamachi, Wakamatsu-ku, Kitakyushu City

Sawayaka Hanamikan

3-4-30 Takasuhigashi, Wakamatsu-ku, Kitakyushu City

Sawayaka Meisuikan

5-7-6 Higashinarumizu, Yahatanishi-ku, Kitakyushu City

(as of Novem

Sawayaka Lakeside Nakanoharu

2-19-2 Nakanoharu, Yahatanishi-ku, Kitakyushu City

Sawayaka Keifukan

11-15 Naganohigashimachi, Kokuraminami-ku, Kitakyushu City

Sawayaka Munakatakan

1-13-2 Ishimaru, Munakata City

Sawayaka Yukuhashi Nibankan
3-11-4 Kitaizumi, Yukuhashi City

Sawayaka Yukuhashikan

3-11-3 Kitaizumi, Yukuhashi City

Sawayaka Nogatakan

442-1 Oaza Yamabe, Nogata City

Sawayaka Tagawakan

393-1 Oaza Ita, Tagawa City

Sawayaka Tachibanakan

173-15 Ryugeji, Hakata-ku, Fukuoka City

Sawayaka Kasugakan

4-11 Shirouzu, Kasuga City

Sawayaka Izumikan

260-1 Amagi, Asakura City

Sawayaka Cosmoskan

2 Kitanomachi Imayama, Kurume City

Fukuoka Prefecture

Hyogo Prefecture Kyoto Prefecture

Oita Prefecture
Sawayaka Sakanoichikan

Oita Prefecture

Ehime Prefecture

3-16-22 Sakanoshi Chuo, Oita City

Osaka Prefecture

Ehime Prefecture

Aichi Prefecture

Mie Prefecture

Sawayaka Niihamakan

3-chome, Otsu, 11-77 Touda, Niihama City

Sawayaka Kanumakan

Hyogo Prefecture
Sawayaka Riverside Nishiwaki

168-2 Aza Dejima, Wabucho, Nishiwaki City

Osaka Prefecture
Sawayaka Hirakatakan

2-21-7 Shodai Otani, Hirakata City

Sawayaka Sumiyoshikan

10-6-20 Karita, Sumiyoshi-ku, Osaka City

Mie Prefecture
Sawayaka Seaside Toba

300-73 Aza Hamabe, Ohamacho, Toba City

Aichi Prefecture
Sawayaka Nanyokan

1921 Higashikanita, Minato-ku, Nagoya City

Sawayaka Kasaderakan

58-2 Aza Matsuhigashi Kasaderacho, Minami-ku, Nagoya City

914-1 Teramachi, Kanuma City

Chiba Prefecture
Sawayaka Yukinosato

254-1 Kawadocho, Chuo-ku, Chiba City

Sawayaka Naritakan

142-28 Namikicho, Narita City

Saitama Prefecture
Sawayaka Iwatsukikan

4-21-30 Kakura, Iwatsuki-ku, Saitama City

Sawayaka Omiyakan

1082-1 Uchino Hongo, Nishi-ku, Saitama City

Tochigi Prefecture
Sawayaka Suzumenomiya

2-18-26 Wakamatsuhara, Utsunomiya City

Sawayaka Sanokan

3261-1 Horigomecho, Sano City

Sawayaka Nasushiobarakan

3-4 Nishiasahicho, Nasushiobara City

Niigata Prefecture
Sawayaka Hinodekan

2-2-33 Hinode, Chuo-ku, Niigata City

Sawayaka Minatokan

5155-3 Jusanbancho, Furumachidori, Chuo-ku, Niigata City

Akita Prefecture
Sawayaka Sakurakan

126-2 Nakadomari, Nishinagano, Kakunodatemachi, Senboku City

Sawayaka Sakura Nibankan
1-10-3 Oroshimachi, Akita City

Hokkaido Prefecture
Sawayaka Higashi Kagurakan

2-9-18 Kita 1-jo Higashi, Higashikaguracho, Kamikawagun

Sawayaka Club Co., Ltd.

t” and enjoy an active life filled with smiles andawayaka Network

ectations and trust with our nationwide network from Hokkaido to Kyushu.

quire nursing care in the community
ork and teaming up withwelfare services.

ub operates
ies andcross Japan

Hokkaido PrefectureGroup Home Kagayaki

2-10-14 Kantake, Kokurakita-ku, Kitakyushu Cityber 1, 2015)

Group Home Hikari

Sawayaka Obatakeichibankan

11-16 Naganohigashimachi, Kokuraminami-ku, Kitakyushu City

3-3-51 Obatake, Kokurakita-ku, Kitakyushu City

Group Home Munakatanomori

Sawayaka Fukufukukan

2-17-1 Jiyugaoka, Munakata City

1-18-22 Fukuryugi, Tobata-ku, Kitakyushu City

Group Home Aoiumi

Sawayaka Hanaminibankan
Akita Prefecture

1-12-33 Nishinomiyaichi, Yukuhashi City

3-3-13 Takasuhigashi, Wakamatsu-ku, Kitakyushu City

Sawayaka Honjokan

Tochigi Prefecture

Sawayaka Kiyotakan

Sawayaka Group Home Nasumachi

22-17 Rikimarumachi, Yahatanishi-ku, Kitakyushu City

3967-21 Oaza Terako Otsu, Nasumachi, Nasugun

3-4-7 Kiyota, Yahatahigashi-ku, Kitakyushu City

Sawayaka Megurikan

Scheduled for opening

3-20-18 Nagaoka, Minami-ku, Fukuoka City

Niigata Prefecture

Sawayaka Isodakan

Sawayaka Group Home Iikura

3-3-18 Isoda, Hakata-ku, Fukuoka City

Iikura, Fukuoka City, Fukuoka Prefecture (Sawayaka Club Main Office)

Sawayaka Nokatakan

Sawayaka Group Home Muroran

Muroran City, Hokkaido (Sawayaka Club Main Office)4-34-1 Nokata, Nishi-ku, Fukuoka City

Oita Prefecture
Tochigi Prefecture

Single-functional day service

Sawayaka Heart Pier Myoban

Sawayaka Sakura Sanso

1190-1 Oaza Tsurumi, Beppu City

5-34 Higashikawagashiramachi, Yahatanishi-ku, Kitakyushu City, Fukuoka Prefecture

Sawayaka Beppunosato
Saitama Prefecture

Sawayaka Rehabilitation Day Service Obatakenibankan

4-2 Horita, Beppu City

1-6-26 Obatake, Kokurakita-ku, Kitakyushu City, Fukuoka Prefecture

Sawayaka Rehabilitation Day Service Kimachi

Kyoto Prefecture
Chiba Prefecture

3-13-17 Kimachi, Kokurakita-ku, Kitakyushu City, Fukuoka Prefecture

Sawayaka Day Service Center Nishikyogoku

Sawayaka Heart Life Nishikyogoku

6 Kisshoin Nishinoshomukaidacho, Minami-ku, Kyoto City, Kyoto Prefecture

8 Nishikyogoku Tsutsumishita-cho, Ukyo-ku, Kyoto City

Small-scale multi-functional homecare

Niigata Prefecture

Sawayaka Otsumikan

Sawayaka Riverside Kurinoki
Sawayaka Murorankan

9-8 Saiwaicho, Muroran City

Scheduled for opening
Sawayaka Inazawakan

Inazawa City, Aichi Prefecture (Sawayaka Club Main Office)

Sawayaka Kashiwakan

Minamisakai, Kashiwa City, Chiba Prefecture (Sawayaka Club Main Office)

Sawayaka Sakadokan

Sakado City, Saitama Prefecture (Sawayaka Club Main Office)

Residential type fee-based homes for the elderly

Fukuoka Prefecture

Sawayaka small-scale multi-functional Nakabarukan

Elderly housing with supportive services

3-5-18 Nakabarunishi, Tobata-ku, Kitakyushu City, Fukuoka Prefecture

Sawayaka Tachibananibankan

2-11-13 Seinou, Yahatanishi-ku, Kitakyushu City, Fukuoka Prefecture

Sawayaka small-scale multi-functional Seinoukan

173-15 Ryugeji, Hakata-ku, Fukuoka City, Fukuoka Prefecture

Hot spring hotels

Fukuoka Prefecture

Sawayaka Heart Pier Myoban

Sawayaka Group Home Nakabaru

1190-1 Oaza Tsurumi, Beppu City, Oita Prefecture

3-5-18 Nakabarunishi, Tobata-ku, Kitakyushu City

Sawayaka Beppunosato

Sawayaka Group Home Seinou

4-2 Horita, Beppu City, Oita Prefecture

2-11-13 Seinou, Yahatanishi-ku, Kitakyushu City

Group Home Midorinoki

1-9-2 Okubo, Moji-ku, Kitakyushu City

Sawayaka Obatakesanbankan

1174-1 Otsumi, Moji-ku, Kitakyushu City

Sawayaka Munakatanomori

2-17-1 Jiyugaoka, Munakata City, Fukuoka PrefectureGroup homes

Sawayaka Mekarinibankan

1-9-20 Okubo, Moji-ku, Kitakyushu City

1175-8 Otsumi, Moji-ku, Kitakyushu City, Fukuoka Prefecture

2-2-43 Hinode, Chuo-ku, Niigata City

After school daycare service
Sawayaka Ainoie

Group Home Taiyo

2F, 2-10-28 Kumamoto, Kokurakita-ku, Kitakyushu City, Fukuoka Prefecture

1-6-37 Obatake, Kokurakita-ku, Kitakyushu City= Day Service Center= Short Stay

= Helper Station= Care Plan Center[Feature] Introduction of Operators

Corporate Profile (as of June 30, 2015)
Company name Sawayaka Club Co., Ltd.
Established December 2004
Representative Fumiharu Uchiyama, President and Representative Director
Paid-in Capital 200,800,000 yen
Headquarters address Uchiyama Dai20 Building, 2-10-10 Kumamoto, Kokurakita-ku, Kitakyushu City
Telephone: +81-93-551-5555

FAX: +81-93-513-3222

No. of employees 2,039
Business details Operation of nursing care facilities for the elderly
・Fee-based homes for the elderly (with nursing care/residential type)・Elderly housing with supportive services
・Community-based daily life care responding to dementia patients (Group homes)
・Short-term in-facility daily life care (Short-stay service)・Small-scale multi-functional homecare
・Outpatient nursing care (Day service)
・Home-visit nursing care (Home help service)
・In-home nursing care support (Care plan center)
Operation of hot spring hotels
Operation of facilities for the disabled・After school daycare service

Structure of the Uchiyama Group
Holding company

Uchiyama Holdings Co., Ltd. Listed on the first section of the Tokyo Stock Exchange Securities code: 6059

Consolidated
subsidiary

Sawayaka Club Co., Ltd.

Consolidated
subsidiary

Bonheure Co., Ltd.

Overseas jointcompany

Nursing care business, etc.

Karaoke/restaurant business, etc.

Bonheure (Thailand) Co., Ltd.

Restaurant business

The Uchiyama Group History
June 1971 Established Uchiyama Building Co., Ltd. in Kitakyushu City, Fukuoka
April 1991 Opened “Croquette Club Kurosaki,” its first karaoke box shop, in Kitakyushu City, Fukuoka
June 1994 Established Kouno Ltd. (current: Bonheure Co., Ltd.) in Kitakyushu City, Fukuoka
November 1995 Opened an izakaya “Shuzenbo Zen,” its first restaurant, in Kitakyushu City, Fukuoka
April 2003 Opened “Sawayaka Parkside Shinkawa,” a facility combining a fee-based home for the elderly with nursing care and a day service centerin Kitakyushu City, Fukuoka
December 2004 Established Sawayaka Club Co., Ltd. in Kitakyushu City, Fukuoka
October 2006 Established Uchiyama Holdings Co., Ltd. in Kitakyushu City, Fukuoka as a holding company of Sawayaka Club Co., Ltd. and Bonheure Co., Ltd.
July 2008 Opened “Sawayaka Heart Pier Myoban,” a facility combining a hotel and a residential-type fee-based home for the elderly in Beppu City, Oita
November 2009 Established Sawayaka Amanogawa Co., Ltd. in Hirakata City, Osaka as a subsidiary of Sawayaka Club Co., Ltd.
April 2012 Uchiyama Holdings Co., Ltd. listed its shares on JASDAQ market of Osaka Securities Exchange (current: Tokyo Stock Exchange)
December 2012 Sawayaka Club Co., Ltd. conducted absorption-type merger to Sawayaka Amanogawa Co., Ltd.
December 2013 Uchiyama Holdings Co., Ltd. changed its listing market to the second section of Tokyo Stock Exchange
August 2014 Established Bonheure (Thailand) Co., Ltd. in Thailand as an overseas joint company of Bonheure Co., Ltd.
September 2014 Uchiyama Holdings Co., Ltd. was designated to be listed on the first section of Tokyo Stock Exchange
November 2015 Opened “Ainoie,” an after school daycare service center as support business for disabled children, in Kitakyushu City, Fukuoka

Sawayaka Club Co., Ltd.
Basic Principles“Spirit of Love” “Respect Dignity” “Customers First”
SloganCo-existence of children, young people and the elderly
Aim to create a society where children, young people and the elderly can all lead a happy life.

Strive for “Japan’s number one service and operation”

Through operations based on our aim of“bringing purpose to life” to residents and users,
we would like to be a “facility that is needed.”Offering an “easy-to-enter and easy-to-leavesystem” such as “no one-time entrance fees,” fromthe perspective of residents and their families
Most of our facilities operate under a “no one-time entrance fee” system,and only some facilities require deposits. Furthermore, monthly fees are set
at an average level to greatly benefit the residents. Our operating system isestablished considering the standpoint of residents and their families, andthus is known as an “easy-to-enter and easy-to-leave system.”Securing significantly high occupancy rates
compared to other facilities in the industry against
a backdrop of providing high hospitality services
based on our aim of “bringing purpose in life.”
By providing thorough service training so that staff will learn to value thedignity of residents, we pursue building trust relationships. In addition to thebasics such as addressing residents with “sama” (honorific name suffix toshow respect), we place importance on providing occasions where residents
can feel a purpose in life; including, for instance, holding birthday parties,
growing vegetables in a field, cooking, taking overnight trips to hot springsand holding other seasonal events, as well as having residents provide facility
tours for visitors.
As a result of these efforts, our nursing care facilities have secured highoccupancy rates that surpass the industry average.

Developing various “community-based” nursing
care services centering on fee-based homes for theelderly (with nursing care/residential type) in orderto respond to a wide range of nursing care needs byfamilies
We select locations with convenient transportation access to allow easy
visitation by families and locations with good natural environments to promote
the health of residents of our facilities.
With community-based development centering on fee-based homes for theelderly (with nursing care/residential type) as a hub, we develop day services,
short stays, helper stations, care plan centers, etc. to respond to the wide
range of nursing care needs of families.

Feature

Introduction of Operators
Sawayaka Club Co., Ltd.