Strategic Investment

In Japan’s rapidly aging society, the healthcare and elderly care industries have been attracting attention as potentially lucrative investment opportunities. In this area, Kenedix’s key investment properties are pay nursing homes and, as of the end of December 2007, the total investment committed amounted to about \24bn. This remarkable result includes not only facilities simply acquired from existing owners or obtained from owner-operators who wanted the property off of their balance sheets, but also our properties developed through proprietary projects.
Our role is clearly defined as an owner of real estate which are leased to nursing center operators. We have enjoyed the patronage of various operator companies across a widespread area. While the majority of our investment is presently conducted based on our own account, once our portfolio has grown to a certain size, we will establish a fund using equities of our client investors.

In an environment of intensifying competition to acquire real estate, one of our most important challenges is to consistently secure high-quality investment properties. With the goal of becoming a “Total Real Estate Service Provider” that provides one-stop real estate investment services to its clients, we have to ensure that our functions are vertically connected tightly as well.
While the number of acquisitions and money involved in M&A in Japan have been increasing rapidly in recent years, we also proactively leverage M&A and equity investments as methods to effectively secure investment properties and expand functions. We offer one-stop investment services ranging from identifying investment and acquisition targets to due diligence, reviewing the structure and negotiations with the potential sellers.
Our successful projects in the past include acquisition of a real estate owner company which had suffered business succession issues, investment in developers which provide us new properties steadily and preferentially, and property management companies that can offer us complementary functions and resources.

We formulate investment plans in accordance with investor needs, primarily for real estate-backed loans released by financial institutions. We structure investment schemes, analyze the investment and economic environment, conduct due diligence and selection of loans and real estate collateral, and analyze investment returns. We also make the investments, manage, sell collateralized real estate, and broker loans. Furthermore, we establish investment vehicles for investors in collaboration with our client investors ? which we manage and operate ? carrying out everything from the creation of investment plans through loan purchasing and servicing.
In this area of our business, a licensed servicer and our consolidated subsidiary, Pacific Servicing & Asset Management Co., Ltd. (Ministry of Justice License No. 29) and an equity method affiliate, Asset One Co., Ltd. and Jutaku Ryutsu Co., Ltd., our consolidated subsidiary conducts due diligence operations and disposals of collateralized real estate. While most of the loans we purchase are collateralized by real estate, we employ the loan management and collection know-how of these group companies.