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Financial Strategy

Financial strategy

In order to realize stable revenues and promote the steady growth and effective management of assets under management, Nippon Healthcare Investment Corporation (NHI) will follow the policy stated below to procure and manage funds.

Additional issuance of investment units
Additional issuance of investment units will be implemented flexibly upon comprehensive consideration of the timing of new real estate acquisitions, the loan-to-value ratio (LTV), economic and market conditions, etc. as well as considering dilution of investment units.
Borrowings and issuance of investment corporation bonds
The upper limit of LTV will be 60% in principle, a setting that considers the fund capacity.
A stable financial foundation will be constructed, a main bank system will be established to support the future growth strategy and funding sources will be actively diversified.
Fund management
Cash and deposits of an amount considered reasonable upon consideration of the status of credit lines and such will be held at all times in order to respond to demand for funds.
Effective fund management will be implemented by allotting in each period from among the amount equivalent to depreciation the amount remaining after cash retention to distribution in excess of earnings for unitholders, with an upper limit of 40% of depreciation in each accounting period upon comprehensive consideration of the economic environment, real estate market, the status of assets owned by NHI and its financial status, etc.

Implementation of distributions in excess of earnings (distribution in excess of earnings (refund of investment))

Regarding facilities in which Nippon Healthcare Investment Corporation (NHI) invests, the value of the building in relation to the value of the entire asset tends to be higher compared to such assets as office buildings, and high depreciation is expected to be recorded as a result. On the other hand, since there are facilities where repairs in which NHI bears the expenses are limited according to the lease agreements to building frames and main structural sections, expenses required for update of equipment, etc. will be tend to be low compared to depreciation. Considering such circumstances, NHI’s policy is to implement distributions in excess of earnings (refund of investment) every accounting period with an upper limit of 40% of depreciation(Note 1,2).

Implementation of distributions in excess of earnings (distribution in excess of earnings (refund of investment))

(Note 1) A closed-end J-REIT may distribute in excess of earnings (refund of investment), an amount equivalent to maximum 60% of the depreciation expenses posted on the last day of the relevant fiscal period ("Rules on Real Estate Investment Trusts and Real Estate Investment Corporations" set by the Investment Trust Association of Japan).
(Note 2) 22 million yen is the 6-month average of the sum of the urgent repair expenses, short-term repair expenses and long-term repair expenses stated in the engineering report of each asset acquired, provided by Tokio Marine & Nichido Risk Consulting Co., Ltd. and Assets Research and Development Inc.,. NHI adapts the straight-line method to calculate the depreciation of buildings. the monthly average depreciation of assets acquired (Charm Suite Ryokuchi Koen, Rest Villa Hiroshima Hikarigaika, Rest Villa Sagamihara Chuo, Sawayaka Kaikyokan, Sawayaka Meisuikan, Sawayaka Heart Life Nishikyogoku, Nichii Care Center Fukushima Omori, Verger Hirakata) for the period from April 1, 2014 to September 30, 2014 was 11 million yen. NHI expects the monthly avarege depreciation of assets acquired (Super Court JR Nara-Ekimae, Rest Villa Kinugasayama Koen, Sawayaka Hinodekan, Sawayaka Riverside Kurinoki, Sawayaka Obatake Sanbankan, La`nassica Arakogawa) for the period from November 1,2014 to April 30, 2015 to be 11 million yen(forecast) when calculated applying same accounting method. Furthermore, NHI expects the monthly average depreciation of assets acquired for the period from November 1, 2014 to April 30, 2015 (total of 14 properties) to be 23 million yen (forecast) when calculated a applying the same accounting method.

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