Statement of Financial Performancefor the 36th Fiscal Period
From: June 1, 2023
To: November 30, 2023

Stock
Code

6-2-1 Ginza, Chuo-ku, Tokyo

https://www.daiwa-office.co.jp/en/

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

36th Period 35th Period 34th Period 33rd Period 32nd Period

From June 1, 2023
To Nov. 30,2023

From Dec. 1, 2022
To May 31,2023

From June 1, 2022
To Nov. 30,2022

From Dec. 1, 2021
To May 31,2022

From June 1, 2021
To Nov. 30,2021(1) Operating Performance
(Millions of yen, except per unit data or where otherwise indicated)
Operating revenues
13,646
15,05013,891
14,474
13,882
Rental revenues
13,604
13,503
13,836
13,56013,846
Operating expenses
6,898
7,384
6,828
6,551
6,531
Property-related expenses
5,559
5,987
5,453
5,143
5,146
Operating income
6,747
7,665
7,062
7,923
7,351
Ordinary income
6,151
7,100
6,494
7,493
6,784
Net income
6,192
7,099
6,512
7,493
6,799
(2) Properties, etc. (as of end of period)
Total assets
482,200
482,471
481,049
483,461483,279[period-on-period percentage changes][−0.1%][+0.3%][−0.5%][+0.0%][−0.2%]
Interest-bearing liabilities
207,800
207,800
205,800
205,800
202,350
Net assets
247,523
247,849
247,491
250,538
253,637[period-on-period percentage changes][−0.1%][+0.1%][−1.2%][−1.2%][+0.0%]
Note 1
238,093
238,093
238,093
241,093
245,093
Unitholders’ capital, net(3) Distributions
Total distribution amount
6,552
6,552
6,552
6,755
6,833
Dividend payout
105.8%
92.3%
100.6%
90.2%
100.5%(4) Per Unit Information
478,258
478,258
478,258
482,529
488,088
Total number of units issued (units)
Net assets per unit (yen)517,551
518,232
517,484
519,220519,655
13,70013,70013,70014,00014,000Distribution per unit (yen)13,70013,70013,70014,00014,000Distribution amount from earnings per unit (yen)Distribution amount in excess of earnings per unit (yen)
–
–
–
–
–
(5) Financial Indicators
ROA
1.3%
1.5%
1.3%
1.6%
1.4%
Notes 2and 3[annual rate][2.5%][3.0%][2.7%][3.1%][2.8%]
2.5%
2.9%
2.6%
3.0%
2.7%
ROE
Notes 3and 4[annual rate][5.0%][5.7%][5.2%][6.0%][5.3%]
Capital ratio
51.3%
51.4%
51.4%
51.8%
52.5%
[period-on-period percentage changes][−0.0%][−0.1%][−0.4%][−0.7%][+0.1%]LTV (loan to value)
43.1%
43.1%
42.8%
42.6%
41.9%
Note 5
9,832
9,313
10,171
10,20010,508Property leasing cash flows (NOI)(6) Other Referential Information
Number of investment properties
58
58
59
59
60
Note 6
Number of tenants
643
642
639
635
641
357,215.08 357,214.34 359,705.62 356,122.21 361,534.74
Total rentable area (m2)Note 7
97.7%
97.7%
97.4%
98.4%
97.8%
Occupancy rate
Depreciation
1,787
1,797
1,788
1,783
1,808
Capital expenditures
994
1,116
798
856
498
(Note 1) Unitholders’ capital, net: Unitholders’ capital − Deduction from Unitholders’ Capital(Note 2) ROA: Ordinary income ÷ [(Total assets at beginning of period + Total assets at end of period) ÷ 2] × 100(Note 3)	Figures for the 32nd Fiscal Period are the annualized figures calculated based on 183 days of management.
Figures for the 33rd Fiscal Period are the annualized figures calculated based on 182 days of management.
		
Figures for the 34th Fiscal Period are the annualized figures calculated based on 183 days of management.
		
Figures for the 35th Fiscal Period are the annualized figures calculated based on 182 days of management.
		
Figures for the 36th Fiscal Period are the annualized figures calculated based on 183 days of management.
(Note 4) ROE: Net income ÷ [(Net assets at beginning of period + Net assets at end of period) ÷ 2] × 100(Note 5) Property leasing cash flows (NOI): Rental revenues − Property-related expenses + Depreciation(Note 6)	Number of tenants is the number of end tenants. When there is a tenant occupying multiple buildings, the concerned tenant iscounted and stated for each individual building.
(Note 7) Occupancy rate: Total leased area ÷ Total rentable area2

2. Developments in Asset Management in the Fiscal Period under Review(1) Brief History of the Investment Corporation
Daiwa Office Investment Corporation (the former DA Office Investment Corporation; hereinafter referred
to as “DOI”) was established on July 11, 2005, in accordance with the Act on Investment Trusts andInvestment Corporations (Act No. 198 of 1951; including amendments thereto) with Daiwa Real Estate
Asset Management Co., Ltd. (former name K.K. daVinci Select) (the “Asset Manager”) as the organizer.
After its establishment, DOI implemented an additional issuance of investment units through a public
offering (99,600 units) on October 18, 2005 and then listed on the Tokyo Stock Exchange, Inc. (TSE) Real
Estate Investment Trust Section (stock code: 8976) on the following day.
Though initial assets under management were 79,573 million yen (sum total of acquisition price),
subsequent activities, such as additional acquisition of properties and replacement of portfolio properties,
resulted in the assets under management amounting to 462,586 million yen as of the last day of
November 2023.
DOI strives to secure stable revenue and sustained growth of the investment assets based on a clear
portfolio development policy of specializing in investment in office buildings, with a particular focus on
investment in a total floor area of more than about 2,000 m2 situated in downtown Tokyo, as well as
through dedicated efforts to heighten tenant satisfaction levels.
(2) Investment Environment and Management Performance(A) Investment Environment
The Japanese economy during the fiscal period under review continued to recover moderately in the
post-COVID 19 period albeit stagnation in some areas, such as the real GDP growth rate (Second
Preliminary Estimates) for July to September 2023 showing a negative annualized growth rate of-2.9%. Meanwhile, there is risk of downward pressure on the Japanese economy from a slowdown inoverseas economies, such as monetary policy trends among central banks around the world andconcerns about China’s future economy, and there is the need to continue monitoring the impact ofrising prices, situation in the Middle East, fluctuation in the financial and capital markets and otherfactors.
In the office building leasing market in central Tokyo, the average vacancy rate has hovered about
6% since June 2021, and was 6.03% as of the end of November 2023 (Miki Shoji’s average vacancy
rate for the five central wards of Tokyo). Although there are some signs of demand recovery due toemployees returning to offices and re-recognition of office functions, the situation remains
unpredictable as conditions have yet to recover to pre-pandemic levels.
However, for the office building transaction market, the appetite for property acquisitions remained
strong among real estate companies, funds (including J-REITs) and overseas investors with nomaterial change made to the proactive lending attitude by financial institutions. Nevertheless, future
developments warrant close monitoring.
(B) Management Performance
In view of increasing the ordinary EPS (EPS (net income per unit) after deducting gain on sale fromproperties) over the medium to long term, DOI continued to work on “external growth,” which aims toboost revenue through acquisition of properties, and “internal growth,” which aims to maximize
income generating from owned properties.
Concerning external growth, no new acquisition or sale took place, and DOI’s assets undermanagement as of the end of the 36th Fiscal Period (November 30, 2023) totaled 58 properties, thesum total of acquisition prices of which amounted to 462,586 million yen. Alongside the acquisition ofproperties including future development projects, DOI will pursue initiatives to enhance the quality of
its portfolio.
Concerning internal growth, DOI conducted proactive leasing, such as capturing needs for floor
expansion within the same property through strengthening relationships with existing tenants andreinforcing collaboration with leasing brokers and property managers. Consequently, the occupancy
rate as of the end of the 36th Fiscal Period (November 30, 2023) was 97.7%.

I. Asset Management Report3(3) Overview of Capital Procurement(A) Procurement of Capital for Repayment of Borrowings
In the 36th Fiscal Period, DOI made the following borrowings to repay borrowings.
(i)	DOI took out a loan of 1,000 million yen from Tokio Marine & Nichido Fire Insurance Co., Ltd. on
July 31, 2023, to fund the repayment of the same amount borrowed from the same company due
for repayment on the same day.
(ii)	DOI took out loans totaling 2,000 million yen from Resona Bank, Limited and Mizuho Trust &Banking Co., Ltd. on August 31, 2023, to fund the repayment of the same amount borrowed fromthe same two banks due for repayment on the same day.
(iii)	DOI took out a loan of 2,000 million yen from Sumitomo Mitsui Banking Corporation on
September 29, 2023, to prepay 2,000 million yen of short-terms loans payable from the samebank due for repayment on December 29, 2023.
(iv)	DOI took out loans totaling 10,200 million yen from Sumitomo Mitsui Trust Bank, Limited, theDevelopment Bank of Japan Inc., MUFG Bank, Ltd., Mizuho Bank, Ltd., SBI Shinsei Bank,
Limited and Resona Bank, Limited on November 30, 2023, to fund the repayment of the sameamount borrowed from the same six banks due for repayment on the same day.
DOI concluded interest-rate swap agreements in the 36th Fiscal Period for 6,000 million yen of loans
with floating interest rates. Converting the interest payable to fixed rates, these are for the purpose ofhedging against future interest rate fluctuation risks.
(B) Status of Interest-Bearing Liabilities at End of the Fiscal Period under Review
As a result of the above, the balance of interest-bearing liabilities outstanding as of the end of the36th Fiscal Period (November 30, 2023) stood at 207,800 million yen in total (short-term loans
payable: 500 million yen; long-term loans payable: 198,300 million yen; investment corporation bonds:
9,000 million yen). The balance of the current portion of long-term loans payable stood at 27,200
million yen, and that of investment corporation bonds stood at 3,800 million yen.
The average remaining period of interest-bearing liabilities as of the end of the 36th Fiscal Period
stands at 4.1 years.
(4) Capital Expenditures during the 36th Fiscal Period
The following summarizes the primary construction work that constitutes capital expenditures
implemented during the 36th Fiscal Period for existing portfolio properties. Capital expenditures for the36th Fiscal Period amounted to 994 million yen and, when combined with the 319 million yen in repair
expenses charged to the 36th Fiscal Period expenses, totals 1,314 million yen in construction work
implemented.
Name of real estate
properties

Purpose

Period(Location)

Daiwa Kanda East
(Chiyoda-ku, Tokyo)
Daiwa Shibuya Square(Shibuya-ku, Tokyo)
Daiwa Ogikubo Tower(Suginami-ku, Tokyo)
Other(Millions of yen)

Upgrading of air-conditioning facilities
Upgrading of air-conditioning facilities
Renewal of window cleaner platform
Total

4

Construction
amount paid

From: June2023
To: Nov.2023
From: June2023
To: June2023
From: Sept.2023
To: Nov.2023

169
95
89
640
994

(5) Overview of Financial Performance and Distributions
As a result of the management described above, DOI posted financial performance for the 36th Fiscal
Period of 13,646 million yen in operating revenue, 6,747 million yen in operating income, 6,151 million yen
in ordinary income and 6,192 million yen in net income.
Concerning distributions, it is planned that the amount equivalent to distributions from earnings would
be included in the amount of tax-deductible expenses based on application of special provisions fortaxation of corporation tax (Article 67-15 of the Act on Special Measures Concerning Taxation (Act No. 26
of 1957; including amendments thereto) (the “Special Taxation Measures Act”)). Accordingly, DOI decided
to distribute the entire amount after adding reversal of reserve for reduction entry (359,965,015 yen) tounappropriated retained earnings, and declared a distribution amount per unit of 13,700 yen.

I. Asset Management Report53. Outlook for the Next Fiscal Period(1) Investment Environment
The Japanese economy going forward is expected to see a moderate recovery, supported by
movements such as improvement in employment and income conditions, as well as accommodative
fiscal and monetary policies. On the other hand, attention should continue to be paid to downside risks ofoverseas economies, such as monetary policy trends among central banks around the world andconcerns about China’s future economy, while monitoring the impact of rising prices, situation in the
Middle East, fluctuation in the financial and capital markets and other factors.
In the central Tokyo office building leasing market, demand recovery is expected centering on officebuildings in highly competitive location due to employees returning to offices and re-recognition of office
functions. However, the impact of a new supply of large-scale office buildings in central Tokyo expected
in 2025 continues to warrant close monitoring. In addition, the impact on borrowing rates associated withinterest rate hike warrant caution.
In the office building transaction market, backed by the favorable financing environment, interest rate
differentials with overseas markets, yen depreciation, among other factors, the property acquisition
appetite among overseas investors, real estate companies and funds (including J-REITs) is expected toremain strong. However, we will need to monitor how the market develops alongside changes in thesocioeconomic situation.
(2) Future Management Policy and Tasks(A) Strategy for Managing Existing Properties
As to macro trends for the office market, the vacancy rate in the overall market has still not made aturnaround, as many companies are adopting a hybrid work style of in-office and telecommuting, and
it is expected that movement due to various needs such as downsizing, consolidation, expansion, andlocation improvement will continue. Although DOI has been steadily acquiring solid new demandmainly from small and medium-sized companies, for the time being, it is striving to maintainoccupancy rates by flexibly pursuing leasing within the current market scope, without adhering to theconventional strategy of targeting top rents. Given that office needs are likely to change by company
as work-style and workplace diversify, DOI considers that maintaining/improving competitiveness ofbuildings to qualify as prime offices that can increase the productivity of employees andaccommodate needs of the times and environment will be the future issue, and is determined tocontinue carrying out operational management under the following policy.
(i) Maintain and raise occupancy rates
	Concerning existing tenants, strive to reduce cancellation risks by improving the quality ofbuildings, equipment and management system. In addition, concerning new tenants, strive tomaintain and raise occupancy rates through the provision of highly satisfactory services fromgaining deeper understanding of tenant needs through proactive involvement in the market.
(ii) Maintain and raise profitability
	Aim to secure stable revenue over the medium to long term through further strengthening good
relationships with existing tenants, as well as proactively tapping the needs of new tenants bydiscerning the market environment.
(iii) Control operational management costs
	Strive to control operational management costs based on maintaining office environments withhigh tenant satisfaction levels by implementing efficient operational management and reviewing
systematic construction work through optimal leveraging of economies of scale achieved fromproactively realizing external growth.
(B) Strategy for New Property Investments
DOI will invest in office buildings that have a total floor area of about 2,000 m2 or more based on
various external growth strategies, while maintaining a balance with the asset acquisition environment
and financing situation. In principle, considerations will focus on Tokyo as the investment target area,6

but DOI will also consider investing in competitive properties in cities other than Tokyo from aviewpoint of territorially-distributed investments.
As pipeline support, in addition to expanding the Asset Manager’s own information-sourcing
channels, DOI will continue to search for properties that meet its investment criteria by proactively
gathering real estate transaction market information through greater collaboration with the Sponsor
Group and utilizing the Group’s extensive network of clients, partners, etc.
During the previous fiscal period (35th Fiscal Period), DOI concluded a purchase agreement to acquire
S-GATE FIT Nihonbashi Bakurocho. (Planned acquisition price: 6,300 million yen) The agreement
constitutes a forward commitment in which the scheduled property delivery date is to be March 29,2024, or a date separately agreed upon by the Sellers and DOI by the same date. With regard to theproperty, a real estate appraisal report by Japan Real Estate Institute with November 30, 2023, as theappraisal date has been obtained, and the appraisal value as of the date is 6,860 million yen.
In addition, development work on the Kandasudacho 2-Chome Development Project, which was
acquired as a development site in December 2021, is in progress, and the developed and completedbuilding is scheduled to be delivered by June 2024. DOI will strive to acquire properties in accordancewith the investment strategy described above, while continuing to carefully assess such development
projects.
(C) Financial Strategy
DOI will conduct disciplined financial management of the following basic content.
(i)	Control leverage by keeping the ratio of interest-bearing liabilities to total assets (LTV) within therange of 40% to 50% at maximum, taking into consideration also the LTV, etc. based on
appraisal value, as a principle.
(ii)	Diversify repayment deadlines, targeting 30.0 billion yen as the maximum amount of interestbearing liabilities that shall become due during any single fiscal period as a principle.
(iii) Aim to have long-term loans account for at least 70% of balance of loans as a principle.
(iv) Achieve diversification of lenders, which shall mainly be Japanese financial institutions.
(v)	Pursuant to its fund management rules, maintain stability in its financial standing by managing
necessary funds, such as the amount equivalent to distributions paid, separately from working
capital.
(D) Schedule of Capital Expenditures for the 37th Fiscal Period
The following are the principal capital expenditures arising from renovation construction work, etc.
currently planned for existing portfolio properties. Please note that the expected construction amountincludes portions that are expensed as a separate account item of accounting costs.
Expected construction amount(Millions of yen)

Name of real estate
properties

Purpose(Location)

CONCURRED Yokohama(Yokohama-shi,
Kanagawa)
Daiwa Sasazuka Tower(Shibuya-ku, Tokyo)
Daiwa Shibuya Shinsen(Shibuya-ku, Tokyo)
Daiwa River Gate
(Chuo-ku, Tokyo)
Daiwa Sasazuka(Shibuya-ku, Tokyo)

Conversion to LED
lighting at exclusiveand common areas
Renewal of windowcleaner platform
Repair of exterior
walls
Renovation ofelevators
Renovation ofelevators

Scheduled
implementation
periodFrom: Dec.2023
To: May2024
From: Dec.2023
To: May2024
From: Dec.2023
To: May2024
From: Dec.2023
To: May2024
From: Dec.2023
To: May2024

Total
amountAmountpaid
duringcurrent
periodTotalamountalready
paid

104

–

–

63

–

–

61

–

–

59

–

–

51

–

–

I. Asset Management Report7II. Balance Sheets
As of November 30, 2023 and May 31, 2023
(Thousands of yen)

As ofNovember 30, 2023

As of
May 31, 2023

AssetsCurrent Assets:
Cash and cash equivalents (Note 3)

29,705,371

30,798,288

Tenant receivables

95,994

94,142

Prepaid expenses

390,865

376,529

Other current assets

48,77834,818

Total Current Assets

30,241,010

31,303,779

Land

12,302,226

12,302,226

Buildings and structures

3,659,486

3,658,236

Tools, furniture and fixtures

21,87521,87588–

Land in trust accounts (Note 15)354,910,042

354,910,042

Buildings and structures in trust accounts(Notes 14 and 15)

112,350,660

111,442,545

Machinery and equipment in trust accounts

1,027,501

965,276

Tools, furniture and fixtures in trust accounts

456,163432,907

Construction in progress in trust accounts

2,381,246

912,793(39,897,158)(38,109,457)

2,398,275

2,398,275

306,884

306,884

449,917,293

449,241,606

113,684

113,684

1,326,510

1,308,489

Derivative assets (Note 4)

445,563

353,911

Deferred investment corporation bond issuance costs

29,291

34,322Others127,468

115,288

2,042,518

1,925,696

482,200,822

482,471,082

Investment Properties, at cost (Notes 5 and 6):

Construction in progress

Less: accumulated depreciation
Leasehold rights
Leasehold rights in trust accounts
Total Investment Properties, net
Investments and Other Assets:
Lease and guarantee deposits in trust accounts
Long-term prepaid expenses

Total Investments and Other Assets
Total Assets

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

8

(Thousands of yen)

As ofNovember 30, 2023

As of
May 31, 2023

Liabilities
Current Liabilities:
Accounts payable

1,286,974

1,261,162

500,000

2,000,000

Investment corporation bonds due within one year
(Notes 4 and 11)

3,800,000–

Long-term debt due within one year (Notes 4 and 11)

27,200,000

25,600,000

574,378

584,998880

880

Accrued consumption taxes

277,129395,300

Rent received in advance

2,307,530

2,273,087

Other current liabilities

688,158

502,682

Total Current Liabilities

36,635,051

32,618,110

5,200,000

9,000,000

Long-term debt (Notes 4 and 11)

171,100,000

171,200,000

Tenant security deposits including trust accounts (Note 4)

21,559,338

21,646,201

Deferred tax liabilities (Note 16)

124,083

149,977

Derivative liabilities

59,196

7,722

198,042,617

202,003,901

234,677,669

234,622,012

251,551,759

251,551,759

Deduction from unitholders’ capital(13,457,770)(13,457,770)

Unitholders’ capital, net

238,093,989

238,093,989

Reserve for reduction entry

2,966,633

2,419,008

Retained earnings

6,192,169

7,099,759

247,252,791

247,612,756

Deferred gains or losses on hedges

270,361

236,313

Total valuation and translation adjustments

270,361

236,313

Total Net Assets

247,523,153

247,849,070

Total Liabilities and Net Assets

482,200,822

482,471,082

Short-term debt (Note 11)

Accounts payable – other
Income taxes payable

Long-Term Liabilities:
Investment corporation bonds (Notes 4 and 11)

Total Long-Term Liabilities
Total Liabilities
Net Assets (Notes 9 and 17)
Unitholders’ Equity:
Unitholders’ capital
Units authorized: 2,000,000 units
Units issued and outstanding: 478,258 units as ofNovember 30, 2023 and May 31, 2023

Total Unitholders’ Equity
Valuation and translation adjustments

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

9III. Statements of Income and Retained Earnings
For the fiscal periods ended November 30, 2023 and May 31, 2023
(Thousands of yen)

For the fiscal period
endedNovember 30, 2023

For the fiscal period
ended
May 31, 2023

13,604,055

13,503,773

42,17327,545–

1,519,036

13,646,229

15,050,355

Property-related expenses (Note 8)

5,559,019

5,987,987

Asset management fees

1,120,650

1,148,882

Asset custody fees

24,04824,084

Administrative service fees

72,78572,437

Trust fees

17,654

18,577

Directors’ compensation

7,200

7,200

Other operating expenses

96,895

125,604

Total Operating Expenses

6,898,253

7,384,774

Operating Income

6,747,975

7,665,581

Interest income

15

14

Reversal of distribution payable

693

1,072

Insurance income

99

13,800

Other non-operating revenues

0

318

808

15,207

Interest expense

414,549

401,671

Interest expense on investment corporation bonds

26,041

26,328Borrowing expenses

144,541

140,634

Other non-operating expenses

12,123

11,513597,255

580,147

Ordinary Income

6,151,529

7,100,640

Income Before Income Taxes

6,151,529

7,100,640

Income taxes – current

881

881

Income taxes – deferred(41,522)–

Total Income Taxes (Note 16)(40,640)881

6,192,169

7,099,759

Retained Earnings Brought Forward––

Retained Earnings at End of Period

6,192,169

7,099,759

Operating Revenues (Note 7):
Rental revenues (Note 8)
Other revenues related to property leasing (Note 8)
Gain on sale of investment properties (Note 13)
Total Operating Revenues
Operating Expenses:

Non-Operating Revenues:

Total Non-Operating Revenues
Non-Operating Expenses:

Total Non-Operating Expenses

Net Income

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

10

III. Statements of Income and Retained Earnings

IV. Statements of Changes in Net Assets
For the fiscal periods ended November 30, 2023 and May 31, 2023
(Thousands of yen)

Unitholders’ Equity
Number of
Units(Units)Unitholders’CapitalDeduction
fromUnitholders’CapitalUnitholders’Capital, net

Reserve for
Reduction
Entry

Retained
Earnings

478,258

251,551,759(13,457,770) 238,093,989

2,459,048

6,512,095

426,174

247,491,307

Cash distributions
declared

–

–

–

–

–

(6,552,134)–(6,552,134)

Net income

–

–

–

–

–

7,099,759–

7,099,759

Reversal of reserve
for reduction entry

–

–

–

–

(40,039)

40,039––Net changes of
items other thanunitholders’ equity

–

–

–

–

–

–

(189,861)(189,861)

478,258

251,551,759(13,457,770) 238,093,989

2,419,008

7,099,759

236,313247,849,070

Cash distributions
declared

–

–

–

–

–

(6,552,134)–(6,552,134)

Net income

–

–

–

–

–

6,192,169–

6,192,169

Provision of reserve
for reduction entry

–

–

–

–

547,624(547,624)––

Net changes of
items other thanunitholders’ equity

–

–

–

–

–

–

34,04734,047478,258

251,551,759(13,457,770) 238,093,989

2,966,633

6,192,169

270,361

247,523,153

Balance as ofNovember 30, 2022

Balance as of
May 31, 2023

Balance as ofNovember 30, 2023

Deferred Gains
or Losses on
HedgesTotal Net
Assets

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

IV. Statements of Changes in Net Assets

11

V. Statements of Cash Flows
For the fiscal periods ended November 30, 2023 and May 31, 2023
(Thousands of yen)

For the fiscal period
endedNovember 30, 2023

For the fiscal period
ended
May 31, 2023

Income before income taxes

6,151,529

7,100,640

Depreciation and amortization

1,789,425

1,798,721

5,030

5,003

440,590427,999(Increase) decrease in tenant receivables(1,851)

6,493(Decrease) increase in accounts payable(329,223)

483,029

34,443(387,297)Interest payments(440,713)(427,882)(Decrease) increase in accrued consumption taxes(118,170)

245,342

Decrease in consumption taxes receivable–

82,420Decrease due to sale of investment properties in trust
accounts–

5,536,413

152,632

17,444

7,683,693

14,888,329(2,128,193)(1,918,590)(9,670)–

Proceeds from tenant security deposits including trust
accounts

662,628595,712

Refunds of tenant security deposits including trust
accounts(749,491)(1,023,852)(2,224,726)(2,346,730)

Proceeds from short-term debt

500,000

2,000,000

Repayments of short-term debt

(2,000,000)

Proceeds from long-term debt

14,700,000

13,000,000

Repayments of long-term debt

(13,200,000)(13,000,000)

Distributions paid

(6,551,884)(6,551,992)

Net Cash Used in Financing Activities(6,551,884)(4,551,992)

Net Change in Cash and Cash Equivalents(1,092,917)

7,989,606

Cash and Cash Equivalents at Beginning of Period

30,798,288

22,808,682

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

29,705,371

30,798,288

Cash Flows from Operating Activities:

Amortization of bond issuance costs
Interest expense

Increase (decrease) in rent received in advance

Other, net
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Payments for purchases of investment properties
including trust accounts
Payments for purchases of intangible assets

Net Cash Used in Investing Activities
Cash Flows from Financing Activities:

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

12

V. Statements of Cash FlowsVI. Notes to Financial Statements
For the fiscal periods ended November 30, 2023 and May 31, 2023

Note 1 – Organization and Basis of Presentation
Organization
Daiwa Office Investment Corporation (the former DA Office Investment Corporation; hereinafter referred toas “DOI”) was established on July 11, 2005 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 (the former daVinci Select; now, Daiwa Real Estate AssetManagement (hereinafter referred to as the “Asset Manager”)).
DOI is an externally managed real estate fund, established as an investment corporation. The AssetManager, as DOI’s asset management company, is engaged in acquiring, managing, leasing, and renovating
office properties. Daiwa Securities Group Inc. currently owns 100% of the shares of the Asset Manager.
On October 18, 2005, DOI had raised approximately 49,498,710 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 November 30, 2023, DOI had ownership or trust beneficiary interests in 58 office properties withapproximately 357,215.08 m2 of rentable office space and had leased office space to 643 tenants engaged ina variety of businesses. The occupancy rate for the office properties was approximately 97.7 %.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in
the Investment Trust Act, the Financial Instruments and Exchange Act and their related accounting
regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”),
which are different in certain 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 thefinancial statements of DOI 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 the accompanying 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 fairpresentation, is not presented in the accompanying financial statements. Certain reclassifications have been
made to the prior period’s financial statements to conform to the presentation for the current period.
DOI maintains its accounting records in Japanese yen. Amounts less than 1 thousand yen have beenrounded down. As a result, the total shown in the financial statements and notes does not necessarily agree
to sum of individual account balances.
DOI’s fiscal period is a six-month period ending at the end of May and November of each year.

VI. Notes to Financial Statements

13

Note 2 – Summary of Significant Accounting Policies(a) 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 ofthree months or less from the date of acquisition.
(b) Investment Properties
Investment properties are recorded at cost, which includes the allocated purchase price, related costs andexpenses for acquisition of the office properties and the trust beneficiary interests in trust. Investment
property balances are depreciated using the straight-line method over the estimated useful lives as follows:
As of November 30, 2023

As of May 31, 2023

Buildings and structures

4-64 years

2-64 years

Machinery and equipment

10-23 years

10-23 years

Tools, furniture and fixtures

4-15 years

4-15 years

Cost related to the renovation, construction improvement of properties is capitalized. Expenditures forrepairs and maintenance which do not add to the value or prolong the useful life of property, are expensed
as incurred.
(c) Deferred Investment Corporation Bond Issuance Costs
Deferred investment corporation bond issuance costs are amortized on a straight-line basis over therespective terms of the bonds.
(d) Income Taxes
Deferred tax assets and liabilities are computed based on the difference between the financial statements
and income tax bases of assets and liabilities using the statutory rate.
(e) Real Estate Taxes
Investment properties are subject to various taxes, such as property taxes and city planning taxes. Ownersof the properties are registered by records maintained in each jurisdiction by the local government. The taxes
are imposed on the registered record owner as of January 1 of each year, based on an assessment made by
the local government.
When a property is purchased within the calendar year, the taxes for the corresponding calendar year are
imposed on the seller. DOI pays the seller the corresponding amount of the taxes for the period fromproperty acquisition date to December 31 of the calendar year and capitalizes these amounts as acquisition
costs of the property, rather than expensing them. In subsequent calendar years, such taxes on investment
properties are charged as operating expenses in each fiscal period.
There were no capitalized real estate taxes for the fiscal periods ended November 30, 2023 and May 31,
2023.
(f) Consumption Taxes
Non-deductible consumption taxes relating to investment properties are amortized equally over five years.
(g) Hedge Accounting
DOI enters into derivative transactions for the purpose of hedging risks in the Articles of Incorporation of
DOI in accordance with its general risk management policy. DOI uses interest-rate swaps as hedging
instruments in order to hedge the risk of interest rate fluctuations related to borrowings. Pursuant toJapanese GAAP, DOI applies the special accounting treatment to interest-rate swaps which qualify for hedge
accounting and meet specific criteria. Under the special accounting treatment, the related differentials paidor received under such swap contracts can be recognized and included in interest expense or income of thehedged assets or liabilities, and the interest-rate swaps are not required to be measured at fair value
separately. The assessment of hedge effectiveness has been made each fiscal period except for interest-rate
swaps which meet the special criteria.

14(h) Revenue Recognition
Operating revenues consist of rental revenues including base rents and common area charges, and otheroperating revenues such as utility charge reimbursements, parking space rental revenues and other income.
Major contents of performance obligations relating to revenue arising from contracts with DOI’s customers
and general timing of satisfying such performance obligations (general timing of revenue recognition) are as
follows:(1) Sales of Investment Properties
Revenue is recognized at the time when a purchaser of the investment property as a customer obtains
control over the investment property by satisfying delivery obligation as described in a contract
regarding the sale of the investment property.
(2) Utility Charge Revenue
Utility charge revenue is recognized depending on the volume of supply of electricity, water and others
to a tenant as a customer based on the lease agreement of the related property and contents ofancillary agreements. For utility charge revenue for which DOI is determined to be an agent, the net
amount is recognized as revenue, which is calculated by deducting the amount payable to other parties
from utility charges received by DOI for electricity, water and others supplied by those parties.
(i) Accounting Treatment of Trust Beneficiary Interests in Real Estate
For trust beneficiary interests in real estate, all assets and liabilities with respect to assets in trust, as well
as all income generated and expenses incurred with respect to assets in trust, are recorded in the relevantbalance sheet and income statement accounts of the accompanying financial statements.
(j) Accounting Estimates
Impairment of long-lived assets
Amounts of investment properties recorded on the financial statements as of November 30, 2023 and May
31, 2023 were as follows:(Thousands of yen)

As of November 30, 2023

As of May 31, 2023

Tangible fixed assets

447,212,133

446,536,446

Intangible fixed assets

2,705,160

2,705,160

DOI reviews investment properties for impairment whenever events or changes in circumstances indicate
the carrying amount of an asset or asset group may not be recoverable in conformity with the accounting
standard for impairment of long-lived assets. The book value of investment properties has been reduced to
its recoverable amount when the invested amount may not be recoverable due to decrease in profitability.
DOI’s investment properties are grouped on an individual asset basis. DOI reviews the investment
properties for impairment when factors such as consecutive operating losses, significant decline in themarket price, deteriorated business environment and others related to investment properties indicate thecarrying amount of an asset may not be recoverable.
An impairment loss is recognized if the carrying amount of an asset exceeds the sum of the undiscounted
future cash flows expected from the asset. In such a case, the book value of the asset is reduced to therespective recoverable amount and the difference between the book value and recoverable amount isrecorded as an impairment loss.
Future cash flows used in determining recoverable amounts are measured by comprehensive judgement on
estimates based on market trends on rental revenues, occupancy rates, rental expenses and other factors aswell as transaction information of similar properties.
Operating results and market prices of each investment property may be affected by trends in the property
leasing market and property trading market. It is possible to have an impact on DOI’s financial position andresults of operations in the next fiscal period if assumptions used in estimates change.

VI. Notes to Financial Statements

15

Note 3 – Cash and Cash Equivalents
Cash and cash equivalents stated on the accompanying balance sheets and statements of cash flows as ofNovember 30, 2023 and May 31, 2023 consisted of the following:(Thousands of yen)

As of November 30, 2023

As of May 31, 2023

Cash and deposits

25,875,644

27,028,187

Cash and deposits in trust accounts

3,829,727

3,770,101

Cash and cash equivalents

29,705,371

30,798,288

Note 4 – Financial Instruments(a) Qualitative Information for Financial Instruments
Policy for Financial Instrument Transactions
DOI raises funds through borrowings, issuance of investment corporation bonds and issuance ofinvestment units for acquisition and renovation of investment properties, cash distributions of dividends andrepayment of bank borrowings. In financing through interest-bearing debt, DOI raises funds with longer term,
fixed-rate and well-diversified maturities and utilizes commitment lines to secure stable financing capacity
and avoid potential risk of rising interest rates.
Surplus funds are managed considering risk and liquidity, by investing in highly liquid monetary assets andsecurities (in principle, deposits).
DOI enters into derivative transactions only for the purpose of hedging interest rate risks arising fromliabilities.
Nature and Extent of Risks arising from Financial Instruments and Risk Management
Proceeds from borrowings and investment corporation bonds are used mainly to acquire investment
properties and repay or redeem outstanding borrowings and bonds. These borrowings and bonds are
exposed to liquidity risk. Such risk is managed in ways such as 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. For the floating-rate borrowings exposed to the risk of future interest rate fluctuations, DOI uses
derivative transactions (interest-rate swap) as hedging instruments, in order to avoid interest rate fluctuations
and to fix the amount of interest payments for floating-rate borrowings.
DOI evaluates the effectiveness of hedges by the correlation between the change in aggregated amount ofcash flow of the hedging instruments and the change in aggregated amount of cash flow of the hedged
items. The assessment of hedge effectiveness is omitted for the interest-rate swaps which meet the specificcriteria under the special accounting treatment.
Derivative transactions are executed and monitored in compliance with the rules and procedures set forthin the risk management policy of DOI.
Tenant security deposits including trust accounts are exposed to liquidity risk arising from refunding
deposits in the event of vacating of properties by tenants. Such risk is managed by reserving some parts ofthe funds.
Bank deposits are used for investing DOI’s surplus funds. These bank deposits are exposed to credit risks
such as bankruptcy of the depository financial institutions. DOI manages credit risk by investing only inshort-term deposit and setting a minimum credit rating requirement for the depository financial institutions(excluding deposits for settlement purposes).
Supplemental Explanation regarding Fair Value of Financial Instruments
Since certain assumptions and factors are reflected in estimating the fair value, different assumptions andfactors could result in a different value. Also, the contractual amounts of derivative transactions do not
represent the market risk involved in these derivative transactions.

16

(b) Estimated Fair Value of Financial Instruments
The book value, fair value and difference between the two as of November 30, 2023 and May 31, 2023
were as follows. Cash and cash equivalents, and short-term debt are not disclosed because the book valuesof these assets are deemed reasonable approximations of the fair values as they are cash or with shortmaturities.
(Thousands of yen)

As of November 30, 2023
Liabilities

As of May 31, 2023

Book value

Fair value

DifferenceBook value

Fair value

Difference

Investment
corporation
bonds due within
one year

3,800,000

3,806,180

6,180

–

–

–

Long-term debt
due within one
year

27,200,000

27,190,274(9,725)25,600,000

25,588,019(11,980)

Investment
corporation
bonds

5,200,000

5,070,430(129,570)

9,000,000

8,915,280(84,720)

Long-term debt

171,100,000 169,982,937(1,117,062)

171,200,000 170,430,316(769,683)

Total

207,300,000 206,049,821(1,250,178)

205,800,000 204,933,615(866,384)

Derivativetransactions (*)(*)

394,457

394,457–

344,781344,781–The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parenthesis indicating the
net liability position.

Notes:
1. Methods to estimate fair value of financial instruments and derivative transactions
Liabilities:(1) Investment corporation bonds due within one year and investment corporation bonds
The fair value of investment corporation bonds is based on their quoted market price.
(2) Long-term debt due within one year and 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 DOI’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 calculated based on
the present value of principle and interest cash flows discounted at the current interest rate which isestimated to be applied if similar new debt is entered into. However, the fair value of certain floating-ratelong-term debt that qualifies for the special treatment of interest-rate swaps is calculated based on thepresent value of principle and interest cash flows which are processed as a single unit with the interest-rate
swap.

VI. Notes to Financial Statements

17Derivative Transactions:
The Company applies the hedge accounting for all derivative transactions. Contractual amount and fairvalue were as follows:(Thousands of yen)

As of November 30, 2023

Hedge
accounting
methodType of derivativetransaction

Hedged item

Deferral hedge
accounting
methodInterest-rate swap
Receive floating/
Pay fixed

Special treatment
for interest-rate
swapsInterest-rate swap
Receive floating/
Pay fixed

Contracted amount

Fair value (*1)

Total

Due after one year

Long-term debt

64,500,000

46,700,000

394,457

Long-term debt

29,900,000

28,000,000– (*2)

94,400,000

74,700,000

394,457(Thousands of yen)

As of May 31, 2023

Hedge
accounting
methodType of derivativetransaction

Hedged item

Deferral hedge
accounting
methodInterest-rate swap
Receive floating/
Pay fixed

Special treatment
for interest-rate
swapsInterest-rate swap
Receive floating/
Pay fixed

Contracted amount

Fair value (*1)

Total

Due after one year

Long-term debt

68,500,000

52,500,000

344,781Long-term debt

28,900,000

27,000,000– (*2)

97,400,000

79,500,000

344,781(*1) The fair value is provided by financial institutions.
(*2) Fair values of interest-rate swaps with the special treatment are included in fair values of related long-term debt as the interest-rate
swaps are processed as a single unit with the hedged long-term debt.

2. Tenant security deposits including trust accounts (whose book values were 21,559,338 thousand yen and
21,646,201 thousand yen as of November 30, 2023 and May 31, 2023, respectively) that have been
deposited by tenants were excluded from the scope of fair value disclosure because they are immaterial.
3. Redemption schedule for investment corporation bonds and long-term debt
(Thousands of yen)

As of November 30, 2023

Due within
one year

Due after Due after Due after
one totwo tothree totwo years three years four years

Investment corporation bonds

3,800,000

1,500,000

Long-term debt

27,200,000 23,000,000 22,400,000 27,600,000 26,200,000 71,900,000

Total

31,000,000 24,500,000 22,400,000 27,600,000 26,200,000 75,600,000––

Due after
four tofive years

Due after
five years–

3,700,000(Thousands of yen)

As of May 31, 2023
Investment corporation bonds

18

Due within
one year–

Due after Due after Due after
one totwo tothree totwo years three years four years
3,800,000

1,500,000–

Due after
four tofive years

Due after
five years–

3,700,000

Long-term debt

25,600,000 30,800,000 20,700,000 20,200,000 29,100,000 70,400,000

Total

25,600,000 34,600,000 22,200,000 20,200,000 29,100,000 74,100,000Note 5 – Tangible Fixed Assets of Investment Properties
Investment properties as of November 30, 2023 and May 31, 2023 consisted of the following:(Thousands of yen)

As of November 30, 2023

As of May 31, 2023

Acquisition AccumulatedBook value
cost
depreciation

Acquisition AccumulatedBook value
cost
depreciationLand

12,302,226–

12,302,226

12,302,226–

12,302,226

Buildings andstructures

3,659,486(2,942,628)

716,857

3,658,236(2,890,257)

767,978

Tools, furnitureand fixtures

21,875(19,830)

2,044

21,875(19,030)

2,845

Construction inprogress

88

–

88

–

–

–

– 354,910,042

354,910,042

Land in trust
accounts

354,910,042

Buildings andstructuresin trust accounts

112,350,660(36,042,761)

76,307,899

111,442,545(34,364,367)

77,078,178

Machinery andequipmentin trust accounts

1,027,501(611,138)

416,362965,276(574,656)

390,620

Tools, furnitureand fixturesin trust accounts

456,163(280,798)

175,364

432,907(261,146)

171,761

Construction inprogressin trust accounts

2,381,246–

2,381,246

912,793–912,793(39,897,158) 447,212,133

484,645,904

Total

487,109,291– 354,910,042(38,109,457) 446,536,446

Note 6 – Fair Value of Investment and Rental Properties
The book value, net changes in the book value and the fair value of the investment and rental properties
were as follows:(Thousands of yen)

For the fiscal period ended For the fiscal period ended
November 30, 2023
May 31, 2023
Book value: (Note 1)
Balance at beginning of period

448,328,813

454,561,390(792,854)(6,232,577)

Balance at end of period

447,535,958

448,328,813

Fair value (Note 3)

587,530,000

587,160,000

Change during the period (Note 2)(Note 1) The book value represents the acquisition cost less accumulated depreciation.
(Note 2)	Significant changes
For the fiscal period ended November 30, 2023, the major reason for the decrease is depreciation (1,787 million yen). For the
fiscal period ended May 31, 2023, the major reason for the decrease is disposition of “Daiwa SHIBUYA EDGE” (5,536 million
yen) and depreciation (1,797 million yen).
(Note 3)	The fair values as of November 30, 2023 and May 31, 2023 were determined by the sum of appraisal values provided byexternal real estate appraisers.

VI. Notes to Financial Statements

19Note 7 – Revenue Recognition
Information on breakdown of revenues arising from contracts with customers for the fiscal periods ended
November 30, 2023 and May 31, 2023 was as follows:(Thousands of yen)

For the fiscal period ended November 30, 2023
Revenues arising fromcontracts with customers(Note)
Sales of investment properties

Sales to externalcustomers––

1,044,485

1,044,485

Other

–

12,601,743

Total

1,044,485

13,646,229

Utility charge revenues(Note)	Rental revenues and other revenues relating to property leasing for which “Accounting Standard for Lease Transactions”(ASBJ Statement No. 13) is applied are not included in revenues arising from contracts with customers because the
Accounting Standard for Revenue Recognition is not applied to such revenues. Major revenues arising from contracts withcustomers are sales of investment properties and utility charge revenues.
(Thousands of yen)

For the fiscal period ended May 31, 2023
Revenues arising fromcontracts with customers(Note 1)
Sales of investment properties (Note 2)

Sales to externalcustomers

7,313,000

1,519,036

967,320

967,320

Other–

12,563,998

Total

8,280,320

15,050,355

Utility charge revenues(Note 1)	Rental revenues and other revenues relating to property leasing for which “Accounting Standard for Lease Transactions”(ASBJ Statement No. 13) is applied are not included in revenues arising from contracts with customers because the
Accounting Standard for Revenue Recognition is not applied to such revenues. Major revenues arising from contracts withcustomers are sales of investment properties and utility charge revenues.
(Note 2)	Sales of investment properties are presented in the net amount by deducting the cost of selling investment properties andother expenses related to the sales from the proceeds from the sales of investment properties in order to present gain/loss on
the sales of investment properties on the statements of income and retained earnings in accordance with Article 48, paragraph(2) of the “Ordinance on Accountings of Investment Corporations” (Cabinet Office Order No. 47 of 2006.)

20Note 8 – Rental Revenues and Expenses
Rental revenues and expenses for the fiscal periods ended November 30, 2023 and May 31, 2023 were as
follows:(Thousands of yen)

For the fiscal period ended For the fiscal period ended
November 30, 2023
May 31, 2023
Revenues from property leasing:
Rental revenues

13,604,055

13,503,773

42,17327,545

13,646,229

13,531,319

Consignment expenses

1,004,099

1,076,880

Utilities expenses

1,141,646

1,288,850

Taxes and dues

1,205,457

1,150,420

Insurance expenses

25,131

24,719Repair expenses

319,560

575,184

1,787,700

1,797,518

75,422

74,413

Total rental expenses

5,559,019

5,987,987

Income from property leasing

8,087,210

7,543,331

Other revenues related to property leasing
Total revenues from property leasing
Rental expenses:

Depreciation
Other

Note 9 – Net Assets
DOI issues non-par value units in accordance with the Investment Trust Act and all of the amounts issued
are designated as stated capital. DOI maintains a minimum of 50 million yen of net assets as required by theInvestment Trust Act.

Note 10 – Treasury Investment Units
Cancellation of treasury investment units as of November 30, 2023 and May 31, 2023 were as follows.
(Thousands of yen)

As of November 30, 2023
Total number of own investments units
cancelled (units)
Total amount of cancellation

As of May 31, 2022

19,611

19,611

13,457,770

13,457,770

VI. Notes to Financial Statements

21

Note 11 – Short-Term Debt, Long-Term Debt Due Within One Year, Long-Term Debt andInvestment Corporation Bonds
Short-term debt, long-term debt due within one year, long-term debt and investment corporation bonds asof November 30, 2023 and May 31, 2023 consisted of the following:(Thousands of yen)

As of November 30, 2023

As of May 31, 2023

0.3% unsecured short-term loans due 2023
to 2024, from banks

500,000

2,000,000

Total

500,000

2,000,000(Thousands of yen)

As of November 30, 2023
Unsecured loans due 2023 to 2032,
principally from banks and insurancecompanies with interest rates mainly ranging
from 0.1% to 1.0%

As of May 31, 2023

198,300,000

196,800,000

1.0% unsecured bond due 2024

2,100,000

2,100,000

0.2% unsecured bond due 2024

1,700,000

1,700,000

0.3% unsecured bond due 2025

1,500,000

1,500,000

0.6% unsecured bond due 2030

2,400,000

2,400,000

0.7% unsecured bond due 2031

1,300,000

1,300,000

207,300,000

205,800,000

Total(Note)	The interest rates presented are daily weighted average interest rates. As for long-term debts which were hedged by interestrate swaps for the purpose of avoiding interest rate fluctuation risk, the swapped interest rates are used to calculate daily
weighted average interest rates.

The annual maturities of long-term debt and investment corporation bonds as of November 30, 2023 wereas follows:(Thousands of yen)

Due within
one yearLong-term debt andinvestment corporationbonds

Due after Due after Due after
one totwo tothree totwo years three years four years

Due after
four tofive years

Due after
five years

31,000,000 24,500,000 22,400,000 27,600,000 26,200,000 75,600,000

DOI maintains commitment line contracts with one financial institution. There was no borrowing execution
balance as of November 30, 2023. The amounts of unused commitments on loans as of November 30, 2023
and May 31, 2023 were as follows:(Thousands of yen)

As of November 30, 2023
Total amounts of borrowing commitment lines
Borrowing execution balances
Net unused balance

22

As of May 31, 2023

5,500,000

5,500,000––

5,500,000

5,500,000

Note 12 – Leases
As Lessor
The future minimum rental revenues under existing non-cancelable operating leases as of November 30,
2023 and May 31, 2023 were as follows:(Thousands of yen)

As of November 30, 2023

As of May 31, 2023

Due within one year

10,660,407

10,820,984

Due after one year

18,941,854

18,132,726

Total

29,602,262

28,953,711

Note 13 – Gain on Sale of Investment Properties
No investment properties were sold during the fiscal period ended November 30, 2023.
Gain on sale of investment properties for the fiscal period ended May 31, 2023 was as follows:(Thousands of yen)

For the fiscal period
ended May 31, 2022
Daiwa SHIBUYA EDGE:
Proceeds from sale of investment property

7,313,000

Cost of selling investment property(5,536,413)

Other expenses related to sale(257,549)

Gain on sale of investment property

1,519,036

Note 14 – Reduction of Investment Properties Purchased with Government Subsidies
Government subsidies of 77,363 thousand yen were deducted from the acquisition cost of the buildings intrust as of November 30, 2023 and May 31, 2023.

Note 15 – Reduction of Investment Properties Acquired through Exchange
The following amounts were deducted from the acquisition cost of the investment property in trust acquired
through exchange as of November 30, 2023 and May 31, 2023.
(Thousands of yen)

As of November 30, 2023

As of May 31, 2023

Buildings and structures in trust accounts

182,846

182,846

Land in trust accounts

887,074

887,074

1,069,921

1,069,921

Total

VI. Notes to Financial Statements

23

Note 16 – Income Taxes
DOI is subject to Japanese corporate income taxes on all of its taxable income. However, DOI may deduct
the amount distributed to its unitholders from its taxable income when certain requirements, including arequirement to distribute in excess of 90% of distributable profit for the fiscal period, are met under theSpecial Taxation Measure Act of Japan. If DOI does not satisfy all of the requirements as specified in the Act,the entire taxable income of DOI will be subject to regular corporate income taxes in Japan.
DOI has made distribution in excess of 90% of its distributable profit for each fiscal period in order to beable to deduct such amount from taxable income.
The following table summarizes the significant difference between the statutory tax rate and DOI’s effective
tax rate for financial statement purposes.
(%)

For the fiscal period ended For the fiscal period ended
November 30, 2023
May 31, 2023
Statutory tax rate

31.46

31.46

Deductible cash distributions(33.51)(29.03)

Provision of reserve for reduction entry

1.38(2.43)

Others0.01

0.01

Effective tax rate

(0.66)

0.01

The significant components of deferred tax assets and liabilities as of November 30, 2023 and May 31,
2023 were as follows:(Thousands of yen)

As of November 30, 2023

As of May 31, 2023

Deferred tax assets:
Accrued enterprise tax

13

13

18,713

3,146

18,727

3,159

Reserve for reduction entry–

41,522

Deferred gains on hedges

142,810

111,614

Total deferred tax liabilities

142,810

153,137

Net deferred tax liabilities(124,083)(149,977)

Deferred losses on hedges
Total deferred tax assets
Deferred tax liabilities:

24

Note 17 – Per Unit Information
Information about earnings per unit for the fiscal periods ended November 30, 2023 and May 31, 2023, andnet assets per unit as of November 30, 2023 and May 31, 2023 were as follows:(Yen)

For the fiscal period ended For the fiscal period ended
November 30, 2023
May 31, 2023
Earnings per Unit:
Net income per unit

12,947

14,845Weighted average number of units
outstanding (units)

478,258

478,258(Yen)

As of November 30, 2023
Net Assets per Unit

As of May 31, 2023

517,551

518,232

The computation of earnings per unit is based on the weighted average number of units outstanding during
the period. The computation of net assets per unit is based on the number of units outstanding at eachperiod end as stated on the balance sheets.
The diluted net income per unit is not stated as there are no diluted investment units.
There is no amount that is not available to ordinary unitholders.

VI. Notes to Financial Statements

25

Note 18 – Distribution Information
DOI’s Articles of Incorporation stipulate that DOI is required to make cash distribution in excess of 90% of
distributable profit as defined in the Special Taxation Measure Act of Japan for each fiscal period. DOI has
determined to pay out as earnings distributions a total amount of dividends for the fiscal period ended
November 30, 2023 of 6,552,134,600 yen after adding the amount of reversal of reserve for reduction entry
to unappropriated retained earnings and a total amount of dividends for the fiscal period ended May 31,
2023 of 6,552,134,600 yen after deducting the amount of provision of reserve for reduction entry as
stipulated in Article 65-7 of the Special Taxation Measure Act of Japan from unappropriated retained
earnings. Furthermore, DOI does not pay out dividends that exceed accounting profits as outlined in Article
32-2 of DOI’s Articles of Incorporation.
(Yen)

For the fiscal period ended For the fiscal period ended
November 30, 2023
May 31, 2023
I

Unappropriated retained earnings

6,192,169,585

7,099,759,180

II

Reversal of voluntary reserves
Reversal of reserve for reduction entry

359,965,015–

III

Cash distributions declared

6,552,134,600

6,552,134,600

IV

Voluntary reserves
Provision of reserve for reduction entry–

547,624,580

V

Retained earnings brought forward––

Cash distributions are declared by the board of directors after the end of each period. Such distributions
are payable to unitholders of record at the end of each period. Information of cash distributions per unit andthe board of directors meeting dates when the distributions were proposed and approved were as follows:(Yen)

For the fiscal period ended For the fiscal period ended
November 30, 2023
May 31, 2023
Cash distributions per unit
Board of directors meeting dates

13,70013,700January 22, 2024

July 21, 2023

Note 19 – Related-Party Transactions
No related-party transaction was entered into for the fiscal periods ended November 30, 2023 and May 31,
2023.
DOI became a consolidated subsidiary of Daiwa Securities Group Inc., which is listed in Tokyo Stock
Exchange, Inc. and Nagoya Stock Exchange, Inc. during the fiscal period ended May 31, 2021.

26

Note 20 – Segment Information
For the fiscal periods ended November 30, 2023 and May 31, 2023
Segment Information
Segment information has been omitted as DOI has only one segment, which is 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.

Note 21 – Significant Subsequent Events
At the meeting of the board of directors held on January 22, 2024, DOI resolved on the split of investment
units (the “Split”) as described below.
(1) Purpose of the Split
The Split will be conducted to establish a better environment where investors can invest with ease as wellas to further widen the spectrum of investors and increase the liquidity of the investment units by decreasing
the unit price of the investment units.
(2) Method of the Split
As of the record date of May 31, 2024, DOI will implement a 2 for 1 split of its investment units held byunitholders stated or recorded on the unitholders’ registry at the closing of that date.
(3) Increase in number of investment units through the Spliti)

Total number of investment units issued and outstanding before the Split: 

478,258 unitsii)

Increase in number of investment units through the Split: 

478,258 units

iii)

Total number of investment units issued and outstanding after the Split: 956,516 units

iv)

Total number of investment units authorized after the Split: 

4,000,000 units(4) Schedule of the Spliti)

Date of public notice of record date:

Wednesday, May 15, 2024 (scheduled)ii)

Record date: Friday, May 31, 2024 (Note)iii)

Effective date: Saturday, June 1, 2024

(Note) The last trading date with rights at the Tokyo Stock Exchange is scheduled to be Wednesday, May 29, 2024.

VI. Notes to Financial Statements27

(5) Effect on per unit information
Per unit information for the fiscal period ended November 30, 2023 assuming the Split has been executed
as of June 1, 2023 will be as follows:i)

Net assets per unit:

258,775 yenii)

Net income per unit:

6,473 yen

Note 22 – Additional Information
Acquisition of Assets
DOI decided to acquire a trust beneficial interest in real estate on March 22, 2023 as described below.
Overview of the asset
Property name

S-GATE FIT Nihonbashi Bakurocho

Asset type

Trust beneficial interest in domestic real estate (Note 1)

Location

1-11-10 Nihonbashi-bakurocho, Chuo-ku, Tokyo

Acquisition price6,300,000 thousand yen (excluding acquisition costs, consumption tax, etc.)

Agreement date

March 22, 2023

Scheduled delivery
date

March 29, 2024, or a date agreed upon separately by the sellers and DOI by thesame dateSellers

THE SANKEI BUILDING CO., LTD. and Mitsubishi Corporation Urban Development,
Inc. (Note 2)(Note 1)	The asset to be acquired represents a trust beneficial interest with trust assets primarily of compartmentalized ownership for a
portion of the first floor and all of the second through eleventh floors of the property.
(Note 2)	DOI will acquire quasi co-ownership interest (55/100 of holdings) in trust beneficial interest from THE SANKEI BUILDING CO.,LTD. and quasi co-ownership interest (45/100 of holdings) in trust beneficial interest from Mitsubishi Corporation Urban
Development, Inc.

28

VII. Independent Auditor’s ReportVII. Independent Auditor’s Report

29

30

VII. Independent Auditor’s Report

31

VIII. Investor Information
History of Investment Unit Price(Yen) 1,000,000

Investment unit price (left axis)

Trading volume (right axis)

10,000 (Units)

900,000

9,000

800,000

8,000

700,000

7,000

600,000

6,000

500,000

5,000

400,000

4,000

300,000

3,000

200,000

2,000

100,000

1,000

0

0

2021 2022
Dec. Jan. Feb. Mar. Apr. May Jun.

Jul.

2023
Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun.

Jul.

Aug. Sept. Oct. Nov.

Overview of Investment Units and Unitholders (As of November 30, 2023)
No. of Investment Units by Investor Type

36th
Fiscal Period

No. of Unitholders
by Investor Type

Individuals/others

Financial institutions

14,723 units (3.08%)

175,682 units (36.73%)

Foreign nationals
69,336 units (14.50%)

Financial
institutions
Other domestic
corporations

Total: 478,258 units
Other domestic corporations 199,845 units (41.79%)

35th
Fiscal Period

Individuals/others

Financial institutions

18,510 units (3.87%)

168,331 units (35.20%)

Securities firms 18,672 units (3.90%)
Foreign nationals
70,192 units (14.68%)

Foreign nationals
Securities firms

Total: 478,258 units
Other domestic corporations 199,969 units (41.81%)

Securities firms 21,256 units (4.44%)

Top Ten Unitholders (As of November 30, 2023)
Name of Unitholder

Total

IR Calendar
Number ofPercentage
Units Owned
Share(Units)January 22, 2024: Announcement of financial results for
36th Fiscal Period

1. Daiwa Investment Management Inc.

128,905

26.95

February 14, 2024: Sending of Japanese version ofBusiness Report for 36th Fiscal Period(Statement of Financial Performance)

2. Custody Bank of Japan, Ltd. (Trust Account)

69,234

14.48

February 15, 2024: S tart paying distributions for
36th Fiscal Period

3. Daiwa Securities Group Inc.

67,321

14.08

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

58,47012.23

5.

The Nomura Trust and Banking Co., Ltd.
(Investment Trust Account)

14,176

2.96

6. STICHTING PENSIOEN FONDS ZORG EN WELZIJN

11,7172.45

7. SMBC Nikko Securities Inc.

9,020

1.89

8. SSBTC CLIENT OMNIBUS ACCOUNT

4,940

1.03

9. STATE STREET BANK WEST CLIENT - TREATY 505234

4,694

0.98

10. Japan Securities Finance Co., Ltd.

3,550

0.74

(Note) The percentage share figures are rounded to the second decimal place.

Nov.
End offiscal period

Aug.
July

Jan.
End offiscal period

Feb.

May
July 2024: Announcement of financial results for
37th Fiscal Period
August 2024: S ending of Japanese version ofBusiness Report for 37th Fiscal Period(Statement of Financial Performance)
August 2024: S tart paying distributions for
37th Fiscal Period

32

4,931
(91.11%)101(1.87%)
99(1.83%)
260(4.80%)
21(0.39%)
5,412

Individuals/others

Investor Memo
End of fiscal period
May 31 and November 30 of each year
General Meeting of Unitholders
Held at least once every two years
Date for finalizing unitholders with voting
Date prescribed in Article 15 of the Articles of Incorporationrights for the General Meeting of Unitholders
Reference date for finalizing payment of
May 31 and November 30 of each year
distributions(distributions are paid within three months of the record date of distribution payment)
Listed financial instruments exchangeTokyo Stock Exchange (stock code: 8976)
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
Stock Transfer Agency Business Planning Department of Sumitomo Mitsui Trust Bank, Limited
Office handling administrative affairs
1-4-1 Marunouchi, Chiyoda-ku, Tokyo
100-8233; Phone: 0120-782-031 (toll-free in Japan)
Service counter
Head Office and all branches of the Sumitomo Mitsui Trust Bank nationwide

Provision of Information on the Website
Daiwa Office Investment Corporation conducts information distribution on its website as an important tool for IR activities.
For DOI’s management status, please refer to the Presentation Material, Speech Presentation and Q&A in Earnings Announcement on the website.
In addition, DOI also provides an e-mail delivery service, “IR Mail Delivery Service,” which informs subscribers of updates to website content
such as news release announcements free of charge via e-mail.
The website will be continually enhanced and enriched so that the current situation and future strategies of DOI are clearly communicated.

Daiwa Office Investment Corporation

https://www.daiwa-office.co.jp/en/

Important information is distributed
via e-mail. Please access and follow
the simple steps if you wish toreceive our IR mail Delivery Service.

VIII. Investor Information

33