Statement of Financial Performancefor the 34th Fiscal Period
From: June 1, 2022
To: November 30, 2022

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

34th Period 33rd Period 32nd Period 31st Period

From June 1, 2022
To Nov. 30,2022

From Dec. 1, 2021
To May 31,2022

From June 1, 2021
To Nov. 30,2021

From Dec. 1, 2020
To May 31,2021

30th Period

From June 1, 2020
To Nov. 30,2020(1) Operating Performance
(Millions of yen, except per unit data or where otherwise indicated)
Operating revenues
13,891
14,474
13,882
15,054
14,849Rental revenues
13,836
13,56013,846
13,887
14,482
Operating expenses
6,828
6,551
6,531
6,917
7,133
Property-related expenses
5,453
5,143
5,146
5,454
5,696
Operating income
7,062
7,923
7,351
8,137
7,715
Ordinary income
6,494
7,493
6,784
7,550
7,125
Net income
6,512
7,493
6,799
7,549
7,124
(2) Properties, etc. (as of end of period)
Total assets
481,049
483,461483,279
484,310488,570[period-on-period percentage changes][−0.5%][+0.0%][−0.2%][−0.9%][+0.3%]
Interest-bearing liabilities
205,800
205,800
202,350
203,350
204,450
Net assets
247,491
250,538
253,637
253,522
255,511[period-on-period percentage changes][−1.2%][−1.2%][+0.0%][−0.8%][+0.2%]
Note 1
238,093
241,093
245,093
245,093
247,876
Unitholders’ capital, net(3) Distributions
Total distribution amount
6,552
6,755
6,833
6,833
6,796
Dividend payout
100.6%
90.2%
100.5%
90.5%
95.4%(4) Per Unit Information
478,258
482,529
488,088
488,088491,877
Total number of units issued (units)
Net assets per unit (yen)517,484
519,220519,655
519,419
519,462
13,70014,00014,00014,00013,817
Distribution per unit (yen)13,70014,00014,00014,00013,817
Distribution amount from earnings per unit (yen)Distribution amount in excess of earnings per unit (yen)
–
–
–
–
–
(5) Financial Indicators
ROA
1.3%
1.6%
1.4%
1.6%
1.5%
Notes 2and 3[annual rate][2.7%][3.1%][2.8%][3.1%][2.9%]
2.6%
3.0%
2.7%
3.0%
2.8%
ROE
Notes 3and 4[annual rate][5.2%][6.0%][5.3%][5.9%][5.6%]
Capital ratio
51.4%
51.8%
52.5%
52.3%
52.3%
[period-on-period percentage changes][−0.4%][−0.7%][+0.1%][+0.0%][−0.1%]LTV (loan to value)
42.8%
42.6%
41.9%
42.0%
41.8%
Note 5
10,171
10,20010,508
10,248
10,612
Property leasing cash flows (NOI)(6) Other Referential Information
Number of investment properties
59
59
60
59
60
Note 6
Number of tenants
639
635
641
625
629
359,705.62 356,122.21 361,534.74 360,471.93 363,740.62
Total rentable area (m2)Note 7
97.4%
98.4%
97.8%
97.5%
98.9%
Occupancy rate
Depreciation
1,788
1,783
1,808
1,816
1,827
Capital expenditures
798
856
498
436
802
(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 30th Fiscal Period are the annualized figures calculated based on 183 days of management.
Figures for the 31st Fiscal Period are the annualized figures calculated based on 182 days of management.
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.
(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 468,486 million yen as of the last day of
November 2022.
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 saw a lifting of behavioral restrictions
related to COVID-19 and expectations for movement toward the normalization of economic and social
activities. Despite this, the real GDP growth rate (Second Preliminary Estimates) for July to September
2022 sat at an annual rate of -0.8%, registering negative growth. In addition, prices are rising due to a
combination of factors including high resource prices, stagnant logistics, and the weak yen. The
underlying tone in the November 2022 Consumer Confidence Survey was revised downward to“weakening” from the previous month’s “signs of weakness.” As such, consumer sentiment has failed
to achieve a sustained recovery due to stagnation.
In the office building leasing market in central Tokyo, the vacancy rate had continued to be on an
improving trend since June 2013, but has rose to 6.38% as of the end of November 2022 (Miki Shoji’s
average vacancy rate for the five central wards of Tokyo). Although there is a partial return andexpansion trend for offices, the situation remains unpredictable, with average office rents in central
Tokyo declining for 28 consecutive months from August 2020 to November 2022 caused by weakbusiness performance and cancellations due to office consolidation and relocation amid work stylereviews triggered by the COVID-19 pandemic.
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.

I. Asset Management Report3

(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, the development project in Nihonbashi-Bakurocho 1-Chome
Development Project was completed. This was DOI’s first development project, for which thedevelopment site was acquired in November 2020. DOI acquired Daiwa Nihonbashi Bakurocho,
constructed in the development project. As a result, DOI’s assets under management as of the end of
the 34th Fiscal Period (November 30, 2022) totaled 59 properties, the sum total of acquisition pricesof which amounted to 468,486 million yen.
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 34th Fiscal Period (November 30, 2022) was 97.4%.
(3) Overview of Capital Procurement(A) Procurement of Capital for Repayment of Borrowings
In the 34th Fiscal Period, DOI made the following borrowings to fund the repayment of borrowings.
(i)	DOI took out loans totaling 5,300 million yen from Shinsei Bank, Ltd. (Note), The Nishi-Nippon
City Bank Ltd., The 77 Bank, Ltd., and Nippon Life Insurance Company on August 31, 2022, tofund the repayment of the same amount borrowed from the same banks and company due forrepayment on the same day.
(ii)	DOI took out loans totaling 12,300 million yen from Sumitomo Mitsui Banking Corporation,
Sumitomo Mitsui Trust Bank, Ltd., MUFG Bank, Ltd., Mizuho Bank, Ltd., Resona Bank, Limited,
Tokio Marine & Nichido Fire Insurance Co., Ltd. and Taiyo Life Insurance Company on November
30, 2022 to fund the repayment of the same amount borrowed from the same banks andcompanies due for repayment on the same day.
(Note) Shinsei Bank, Ltd. changed its name to SBI Shinsei Bank, Ltd. as of January 4, 2023. The same shall apply
hereafter.

(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 the34th Fiscal Period (November 30, 2022) stood at 205,800 million yen in total (long-term loans payable:
196,800 million yen; investment corporation bonds: 9,000 million yen). The balance of the current
portion of long-term loans payable stood at 26,200 million yen.
The average remaining period of interest-bearing liabilities as of the end of the 34th Fiscal Period
stands at 4.1 years.

4(4) Capital Expenditures during the 34th Fiscal Period
The following summarizes the primary construction work that constitutes capital expenditures
implemented during the 34th Fiscal Period for existing portfolio properties. Capital expenditures for the34th Fiscal Period amounted to 798 million yen and, when combined with the 130 million yen in repair
expenses charged to the 34th Fiscal Period expenses, totals 929 million yen in construction work
implemented.
Name of real estate
properties

Purpose

PeriodConversion to LED lighting at commonand exclusive areas

From: July2022
To: Oct.2022
From: June2022
To: Nov.2022
From: July2022
To: Aug.2022(Location)

Daiwa Ogikubo Tower(Suginami-ku, Tokyo)
Shinjuku Maynds Tower(Shibuya-ku, Tokyo)
Daiwa Akasaka(Minato-ku, Tokyo)
OtherConstruction
amount paid
(Millions of yen)

Upgrading of air-conditioning facilities
3F setup office work
Total

72
43
35
646
798

(5) Overview of Financial Performance and Distributions
As a result of the management described above, DOI posted financial performance for the 34th Fiscal
Period of 13,891 million yen in operating revenue, 7,062 million yen in operating income, 6,494 million yen
in ordinary income and 6,512 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 internally reserved reserve for reduction entry(40,039,351 yen) to unappropriated 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 recovery in individual spending due to the
expansion of the acceptance of inbound tourists from overseas resulting from the slowdown of the spreadof COVID-19 infection. However, as issues such as the situation in Ukraine, rise in resource prices anddisruption of supply chain in the manufacturing industry centering on the automobile industry may taketime to normalize, the outlook for the Japanese economy remains unpredictable.
In the central Tokyo office building leasing market, although recovery is expected with normalization of
economic activities going forward, rising vacancy rate due to office consolidations and relocations
triggered by COVID-19, moderate rent drop, and the impact of supply of multiple large-scale officebuildings expected in 2023 continue to warrant close monitoring. In addition, rising electricity charges
associated with rising resource prices and the impact on borrowing rates associated with interest rate
hike warrant caution. Volatility in long-term interest rates has increased as the BOJ’s Monetary Policy
Meeting on December 20, 2022 expanded the range of fluctuation in long-term interest rates to “about±0.50%,” with interest rate trends warranting particularly close monitoring.
In the office building transaction market, backed by the favorable financing environment, among otherfactors, the property acquisition appetite among overseas investors, real estate companies and funds(including J-REITs) is expected to remain strong. However, the re-spread of the COVID-19 pandemic,interest rate trends and other factors may impact future developments in the transaction market.
(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 the movement due to various needs such as downsizing, consolidation, expansion,and location 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. Therefore, DOI considers that maintaining/improving
competitiveness of buildings to qualify as prime offices that can increase the productivity of
employees and accommodate needs of the times and environment will be the future issue, and isdetermined to continue 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.

6

(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,
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 its own information-sourcing channels, DOI willcontinue to search for properties that meet its investment criteria by proactively gathering real estatetransaction market information through greater collaboration with the Asset Manager and Sponsor
Group and utilizing the Group’s extensive network of clients, partners, etc.
During the 34th Fiscal Period, the development project in Nihonbashi-Bakurocho 1-Chome
Development Project was completed. This was DOI’s first development project, for which thedevelopment site was acquired in November 2020. DOI acquired Daiwa Nihonbashi Bakurocho,
constructed in the development project. DOI will strive to acquire properties in accordance with theinvestment 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 payable 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 34th 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

PurposeScheduled
implementation
periodModification of heatsource system
Upgrading of airconditioning facilities
Repair of exteriorwalls
Upgrading of 3F
PAC/HEX
Upgrading of airconditioning facilities

From: Dec.2022
To: May2023
From: Dec.2022
To: May2023
From: Dec.2022
To: May2023
From: Dec.2022
To: May2023
From: Dec.2022
To: May2023(Location)

Daiwa River Gate
(Chuo-ku, Tokyo)
Daiwa Shibuya Square(Shibuya-ku, Tokyo)
Daiwa Nakano-Sakaue(Nakano-ku, Tokyo)
E SPACE TOWER(Shibuya-ku, Tokyo)
Daiwa Kodenmacho(Chuo-ku, Tokyo)

TotalamountAmountpaid
duringcurrent
periodTotalamountalready
paid

346

–

–

129

–

–

66

–

–

61

–

–

69

I. Asset Management Report7II. Balance Sheets
As of November 30, 2022 and May 31, 2022
(Thousands of yen)

As ofNovember 30, 2022

As of
May 31, 2022

AssetsCurrent Assets:
Cash and cash equivalents (Note 3)

22,808,682

26,773,007

Tenant receivables

100,636

86,072

Consumption taxes receivable

82,420–Prepaid expenses

371,486

355,818

Other current assets

43,891

34,136

Total Current Assets

23,407,118

27,249,034

Land

12,302,226

12,302,226

Buildings and structures

3,615,398

3,595,823

Tools, furniture and fixtures

21,87521,085Construction in progress

3,491

4,006

Land in trust accounts (Note 15)

360,010,799

359,932,790

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

111,336,686

108,778,379

Machinery and equipment in trust accounts

950,322

870,980

Tools, furniture and fixtures in trust accounts

420,289

366,416

Construction in progress in trust accounts

903,381

846,159(36,801,368)(35,012,710)

2,398,275

2,398,275

306,884

306,884

455,468,263

454,410,317

113,684

113,684

1,293,339

1,203,731

Derivative assets (Note 4)

614,733

329,840

Deferred investment corporation bond issuance costs

39,32644,357

Others

112,712110,137

2,173,797

1,801,750

481,049,178

483,461,103

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

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, 2022

As of
May 31, 2022

Liabilities
Current Liabilities:
Accounts payable

1,514,187

1,067,842

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

26,200,000

30,600,000

607,519600,232880

880

Accrued consumption taxes

149,957

294,268

Rent received in advance

2,660,384

2,326,716

Other current liabilities

513,476

501,287

Total Current Liabilities

31,646,405

35,391,228

9,000,000

9,000,000

Long-term debt (Notes 4 and 11)

170,600,000

166,200,000

Tenant security deposits including trust accounts (Note 4)

22,074,341

22,165,062

237,123

165,917

201,911,465

197,530,979

233,557,871

232,922,207

251,551,759

251,551,759

Deduction from unitholders’ capital(13,457,770)(10,458,319)

Unitholders’ capital, net

238,093,989

241,093,440

Reserve for reduction entry

2,459,048

1,721,383

Retained earnings

6,512,095

7,493,070

247,065,132

250,307,894

Deferred gains or losses on hedges

426,174

231,001

Total valuation and translation adjustments

426,174

231,001

Total Net Assets

247,491,307

250,538,895

Total Liabilities and Net Assets

481,049,178

483,461,103

Accounts payable – other
Income taxes payable

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

Deferred tax liabilities (Note 16)
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, 2022 and 482,529 units as of May
31, 2022

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, 2022 and May 31, 2022
(Thousands of yen)

For the fiscal period
endedNovember 30, 2022

For the fiscal period
ended
May 31, 2022

13,836,714

13,560,238

54,553

13,769–900,931

13,891,267

14,474,939

Property-related expenses (Note 8)

5,453,596

5,143,017

Asset management fees

1,147,433

1,163,658

Asset custody fees

24,06424,190Administrative service fees

78,232

72,641

Trust fees

18,036

18,879Directors’ compensation

7,200

7,200

Other operating expenses

99,757122,114

Total Operating Expenses

6,828,320

6,551,700

Operating Income

7,062,947

7,923,238

Interest income

15

14

Reversal of distribution payable

705

646

7,290

138,785

33

285

8,044

139,731

Interest expense

395,458

398,294

Interest expense on investment corporation bonds

26,041

26,328Borrowing expenses

137,796130,398

Other non-operating expenses

17,09613,997576,393569,018

Ordinary Income

6,494,598

7,493,952

Income Before Income Taxes

6,494,598

7,493,952

Income taxes – current

881

881

Income taxes – deferred(18,378)–

Total Income Taxes (Note 16)(17,496)881

6,512,095

7,493,070

Retained Earnings Brought Forward––

Retained Earnings at End of Period

6,512,095

7,493,070

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:

Insurance income
Other 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, 2022 and May 31, 2022
(Thousands of yen)

Unitholders’ Equity
Number of
Units(Units)Balance as ofNovember 30,
2021

Deduction
Reserve forUnitholders’fromUnitholders’
Reduction
CapitalUnitholders’ Capital, net
Entry
Capital

488,088 251,551,759(6,458,395) 245,093,364

Retained
Earnings

Treasury
Investment
Units1,755,357

6,799,258–

Deferred
Gains or
Losses on
HedgesTotal Net
Assets(10,319) 253,637,659

Cashdistributions
declared

–

–

–

–

–

(6,833,232)––(6,833,232)

Net income

–

–

–

–

–

7,493,070––

7,493,070

Reversal ofreserve for
reduction entry

–

–

–

–

(33,973)

33,973–––Acquisition oftreasury
investment
units

–

–

–

–

–

–

(3,999,924)–(3,999,924)

Cancellation oftreasury
investment
units (Note 10)(5,559)–(3,999,924)(3,999,924)––

3,999,924––

Net changes of
items otherthanunitholders’equity

–

–

–

–

–

–

–

241,321

241,321482,529 251,551,759 (10,458,319) 241,093,440

1,721,383

7,493,070–

231,001

250,538,895

Balance as of
May 31, 2022
Cash
distributions
declared

–

–

–

–

–

(6,755,406)––(6,755,406)

Net income

–

–

–

–

–

6,512,095––

6,512,095

Provision ofreserve for
reduction entry

–

–

–

–

737,664(737,664)–––

Acquisition oftreasury
investment
units

–

–

–

–

–

–

(2,999,451)–(2,999,451)

Cancellation oftreasury
investment
units (Note 10)(4,271)–(2,999,451)(2,999,451)––

2,999,451––

Net changes of
items otherthanunitholders’equity

–

–

–

–

–

–

–

195,173

195,173478,258 251,551,759 (13,457,770) 238,093,989

2,459,048

6,512,095–

426,174

247,491,307

Balance as ofNovember 30,
2022

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, 2022 and May 31, 2022
(Thousands of yen)

For the fiscal period
endedNovember 30, 2022

For the fiscal period
ended
May 31, 2022

Income before income taxes

6,494,598

7,493,952

Depreciation and amortization

1,790,107

1,787,160

5,030

5,003

Interest expense

421,500

424,622(Increase) decrease in tenant receivables(14,564)

103,843

Increase (decrease) in accounts payable

64,052(155,572)

Increase (decrease) in rent received in advance

333,668(24,831)

Interest payments(421,759)(423,389)(Decrease) increase in accrued consumption taxes(144,311)

8,099

Increase in consumption taxes receivable(82,420)––

7,179,984(102,642)(184,230)

8,343,259

16,214,641(2,461,144)(12,010,286)–(12,000)

Proceeds from tenant security deposits including trust
accounts

870,257

661,359

Refunds of tenant security deposits including trust
accounts(960,977)(989,783)(2,551,864)(12,350,710)

Repayments of short-term debt–

(2,400,000)

Proceeds from long-term debt

17,600,000

19,850,000

Repayments of long-term debt

(17,600,000)(14,000,000)

Payments for acquisition of treasury investment units(2,999,451)(3,999,924)

Distributions paid

(6,756,268)(6,832,436)

Net Cash Used in Financing Activities(9,755,719)(7,382,360)

Net Change in Cash and Cash Equivalents(3,964,325)(3,518,428)

Cash and Cash Equivalents at Beginning of Period

26,773,007

30,291,436

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

22,808,682

26,773,007

Cash Flows from Operating Activities:

Amortization of bond issuance costs

Decrease due to sale of investment properties in trust
accounts
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, 2022 and May 31, 2022

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, 2022, DOI had ownership or trust beneficiary interests in 59 office properties withapproximately 359,705.62 m² of rentable office space and had leased office space to 639 tenants engaged ina variety of businesses. The occupancy rate for the office properties was approximately 97.4 %.
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, 2022

As of May 31, 2022

Buildings and structures

2-64 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.
The following is a summary of capitalized real estate taxes.
(Thousands of yen)

For the fiscal period ended For the fiscal period ended
November 30, 2022
May 31, 2022
Capitalized real estate taxes–

380(f) Consumption Taxes
Non-deductible consumption taxes relating to investment properties are amortized equally over five years.

14(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.
(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
Amount of investment properties recorded on the financial statements as of November 30, 2022 and May
31, 2022 were as follows:(Thousands of yen)

As of November 30, 2022

As of May 31, 2022

Tangible fixed assets

452,763,103

451,705,157

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.

VI. Notes to Financial Statements15

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.

Note 3 – Cash and Cash Equivalents
Cash and cash equivalents stated on the accompanying balance sheets and statements of cash flows as ofNovember 30, 2022 and May 31, 2022 consisted of the following:(Thousands of yen)

As of November 30, 2022

As of May 31, 2022

Cash and deposits

19,084,282

23,095,517

Cash and deposits in trust accounts

3,724,400

3,677,490

Cash and cash equivalents

22,808,682

26,773,007

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.

16

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.
(b) Estimated Fair Value of Financial Instruments
The book value, fair value and difference between the two as of November 30, 2022 and May 31, 2022
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, 2022

As of May 31, 2022

Liabilities

Book value

Fair value

DifferenceBook value

Fair value

DifferenceLong-term debt
due within one
year

26,200,000

26,194,431(5,568)30,600,000

30,594,419(5,580)Investment
corporation
bonds

9,000,000

8,915,880(84,120)

9,000,000

8,959,310(40,690)

Long-term debt

170,600,000 169,587,590(1,012,409)

166,200,000 165,401,287(798,712)

Total

205,800,000 204,697,901(1,102,098)

205,800,000 204,955,017(844,982)

Derivativetransactions (*)(*)

621,789

621,789–

337,031

337,031–

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) 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.
(2) Investment corporation bonds
The fair value of investment corporation bonds is based on their quoted market price.

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, 2022

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

76,500,000

58,500,000

621,789

Long-term debt

28,900,000

28,900,000– (*2)

105,400,000

87,400,000

621,789(Thousands of yen)

As of May 31, 2022

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

89,800,000

67,500,000

337,031

Long-term debt

28,900,000

28,900,000– (*2)

118,700,000

96,400,000

337,031(*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 22,074,341 thousand yen and
22,165,062 thousand yen as of November 30, 2022 and May 31, 2022, 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, 2022

Due within
one yearInvestment corporation bonds–

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

26,200,000 27,200,000 23,000,000 22,400,000 27,600,000 70,400,000

Total

26,200,000 31,000,000 24,500,000 22,400,000 27,600,000 74,100,000(Thousands of yen)

As of May 31, 2022
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

30,600,000 25,600,000 30,800,000 20,700,000 20,200,000 68,900,000

Total

30,600,000 25,600,000 34,600,000 22,200,000 20,200,000 72,600,000Note 5 – Tangible Fixed Assets of Investment Properties
Investment properties as of November 30, 2022 and May 31, 2022 consisted of the following:(Thousands of yen)

As of November 30, 2022

As of May 31, 2022

Acquisition AccumulatedBook value
cost
depreciation

Acquisition AccumulatedBook value
cost
depreciationLand

12,302,226–

12,302,226

12,302,226–

12,302,226

Buildings andstructures

3,615,398(2,837,628)

777,770

3,595,823(2,765,434)

830,389

Tools, furnitureand fixtures

21,875(18,040)

3,834

21,085(17,016)

4,069

Construction inprogress

3,491

–

3,491

4,006

–

4,006

– 360,010,799

359,932,790

Land in trust
accounts

360,010,799

Buildings andstructures in trust
accounts

111,336,686(33,145,538)

78,191,147

108,778,379(31,482,153)

77,296,226

Machinery andequipment in trust
accounts

950,322(554,056)

396,265

870,980(520,910)

350,069

Tools, furnitureand fixtures intrust accounts

420,289(246,104)

174,184

366,416(227,197)

139,218

Construction inprogress in trust
accounts

903,381–

903,381

846,159–

846,159(36,801,368) 452,763,103

486,717,868

Total

489,564,471– 359,932,790(35,012,710) 451,705,157

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, 2022
May 31, 2022
Book value: (Note 1)
Balance at beginning of period

453,560,151

450,782,802

1,001,239

2,777,348

Balance at end of period

454,561,390

453,560,151

Fair value (Note 3)

593,390,000

590,840,000

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, 2022, the major reason for the increase is acquisition of “Daiwa Nihonbashi
Bakurocho” (1,958 million yen). The major reason for the decrease is depreciation (1,788 million yen). For the fiscal period
ended May 31, 2022, the major reason for the increase is acquisition of “Kandasudacho 2-Chome Development Site (land)”(10,600 million yen). The major reason for the decrease is disposition of 2 properties, “Daiwa Minami-Aoyama Building” (4,408
million yen) and “Daiwa Kojimachi 4-chome Building” (2,805 million yen) and depreciation (1,783 million yen).
(Note 3)	The fair values as of November 30, 2022 and May 31, 2022 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, 2022 and May 31, 2022 was as follows:(Thousands of yen)

For the fiscal period ended November 30, 2022
Revenues arising fromcontracts with customers(Note)
Sales of investment properties

Sales to externalcustomers––

1,028,764

1,028,764

Other

–

12,862,502

Total

1,028,764

13,891,267

Utility charge revenues(Note)	Rental revenues and other revenues relating to property leasing for which “Accounting Standards 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, 2022
Revenues arising fromcontracts with customers(Note 1)
Sales of investment properties (Note 2)

Sales to externalcustomers

8,190,000

900,931

891,583

891,583

Other–

12,682,424

Total

9,081,583

14,474,939

Utility charge revenues(Note 1)	Rental revenues and other revenues relating to property leasing for which “Accounting Standards 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, 2022 and May 31, 2022 were as
follows:(Thousands of yen)

For the fiscal period ended For the fiscal period ended
November 30, 2022
May 31, 2022
Revenues from property leasing:
Rental revenues

13,836,714

13,560,238

54,553

13,76913,891,267

13,574,007

Consignment expenses

1,024,032

974,462

Utilities expenses

1,263,217

924,472

Taxes and dues

1,149,657

1,144,699

Insurance expenses

22,42520,748

Repair expenses

130,738

222,314

1,788,657

1,783,619

74,866

72,701

Total rental expenses

5,453,596

5,143,017

Income from property leasing

8,437,671

8,430,990

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, 2022 and May 31, 2022 were as follows.
(Thousands of yen)

As of November 30, 2022
Total number of own investments units
cancelled (units)
Total amount of cancellation

As of May 31, 2022

19,611

15,34013,457,770

10,458,319

Total number of treasury investment units cancelled and total amount of cancellation during the fiscal
period ended November 30, 2022 were 4,271 units and 2,999,451 thousand yen, respectively.

VI. Notes to Financial Statements

21

Note 11 – Long-Term Debt Due Within One Year, Long-Term Debt andInvestment Corporation Bonds
Long-term debt due within one year, long-term debt and investment corporation bonds as of November 30,
2022 and May 31, 2022 consisted of the following(Thousands of yen)

As of November 30, 2022
Unsecured loans due 2022 to 2031,
principally from banks and insurancecompanies with interest rates mainly ranging
from 0.1% to 0.8%

As of May 31, 2022

196,800,000

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

205,800,000

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, 2022 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

26,200,000 31,000,000 24,500,000 22,400,000 27,600,000 74,100,000

DOI maintains commitment line contracts with one financial institution. There was no borrowing execution
balance as of November 30, 2022. The amounts of unused commitments on loans as of November 30, 2022
and May 31, 2022 were as follows:(Thousands of yen)

As of November 30, 2022
Total amounts of borrowing commitment lines
Borrowing execution balances
Net unused balance

As of May 31, 2022

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,
2022 and May 31, 2022 were as follows:(Thousands of yen)

As of November 30, 2022

22

As of May 31, 2022

Due within one year

10,600,046

9,433,002

Due after one year

18,470,787

17,362,934

Total

29,070,833

26,795,936

Note 13 – Gain on Sale of Investment Properties
No investment properties were sold during the fiscal period ended November 30, 2022.
Gain on sale of investment properties for the fiscal period ended May 31, 2022 was as follows:(Thousands of yen)

For the fiscal period
ended May 31, 2022
Daiwa Minami-Aoyama Building:
Proceeds from sale of investment property

4,990,000

Cost of selling investment property(4,408,570)

Other expenses related to sale(44,927)

Gain on sale of investment property

536,502

Daiwa Kojimachi 4-Chome Building:
Proceeds from sale of investment property

3,200,000

Cost of selling investment property(2,805,594)

Other expenses related to sale

(29,977)

Gain on sale of investment property

364,428

Note 14 – Reduction of Investment Properties Purchased with Government Subsidies
Government subsidies of 32,898 thousand yen were deducted from the acquisition cost of the buildings intrust as of November 30, 2022 and May 31, 2022.

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, 2022 and May 31, 2022.
(Thousands of yen)

As of November 30, 2022

As of May 31, 2022

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

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.

VI. Notes to Financial Statements

23

(%)

For the fiscal period ended For the fiscal period ended
November 30, 2022
May 31, 2022
Statutory tax rate

31.46

31.46

Deductible cash distributions(31.74)(28.36)–(3.10)

Others0.01

0.01

Effective tax rate

(0.27)

0.01

Provision of reserve for reduction entry

The significant components of deferred tax assets and liabilities as of November 30, 2022 and May 31,
2022 were as follows:(Thousands of yen)

As of November 30, 2022

As of May 31, 2022

Deferred tax assets:
Accrued enterprise tax

13

13

Deferred losses on hedges

54

–

67

13

Reserve for reduction entry

41,522

59,900

Deferred gains on hedges

195,669

106,030

Total deferred tax liabilities

237,191

165,930

Net deferred tax liabilities(237,123)(165,917)

Total deferred tax assets
Deferred tax liabilities:

Note 17 – Per Unit Information
Information about earnings per unit for the fiscal periods ended November 30, 2022 and May 31, 2022, andnet assets per unit as of November 30, 2022 and May 31, 2022 were as follows:(Yen)

For the fiscal period ended For the fiscal period ended
November 30, 2022
May 31, 2022
Earnings per Unit:
Net income per unit

13,561

15,443Weighted average number of units
outstanding (units)

480,206

485,190(Yen)

As of November 30, 2022
Net Assets per Unit

As of May 31, 2022

517,484

519,220

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.

24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, 2022 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,
2022 of 6,755,406,000 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, 2022
May 31, 2022
I

Unappropriated retained earnings

6,512,095,249

7,493,070,628

II

Reversal of voluntary reserves
Reversal of reserve for reduction entry

40,039,351–

III

Cash distributions declared

6,552,134,600

6,755,406,000

IV

Voluntary reserves
Provision of reserve for reduction entry–

737,664,628

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, 2022
May 31, 2022
Cash distributions per unit
Board of directors meeting dates

13,70014,000January 20, 2023

July 21, 2022

Note 19 – Related-Party Transactions
No related-party transaction was entered into for the fiscal periods ended November 30, 2022 and May 31,
2022.
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.

Note 20 – Segment Information
For the fiscal periods ended November 30, 2022 and May 31, 2022
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.

VI. Notes to Financial Statements

25

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(a) Sales of Assets
DOI sold a trust beneficial interest in real estate on December 21, 2022 as described below.
Overview of the asset
Property name
Asset type
Sales priceAgreement date
Delivery date
Purchaser

Daiwa SHIBUYA EDGE
Trust beneficial interest in domestic real estate
7,313,000 thousand yen (excluding settlement amounts of property taxes and city
planning taxes, and consumption taxes, etc.)
November 21, 2022
December 21, 2022
Non-disclosed (Note)(Note)	The purchaser is a domestic company. Its information is not disclosed since consent for disclosure has not been obtained
from the purchaser.

(b) Borrowing of Funds
DOI borrowed funds on December 30, 2022 as described below. These funds were allocated as part of thefunds for acquisition of a property (Daiwa Nihonbashi Bakurocho) on November 30, 2022.
Details of borrowing
LenderSumitomo Mitsui
Banking
Corporation

Balance(Thousands of yen)

2,000,000

Interest rate

Borrowingdate

Repayment
methodMaturity

1 monthJapanese yen
TIBOR +0.250% (Note)

December30, 2022

Unsecured/
Bulletpayment

December29, 2023(Note)	Interest payments shall be paid at the end of each month and the maturity date (if any such date is not a business day, it willbe the following business day; if such date falls within the next month, the preceding business day of the month will be thepayment day). Interest rate is calculated based on the 1 month Japanese Yen TIBOR which Japanese Bankers Association
announces two business days prior to the first day of the applicable period.

26

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

27

28

VII. Independent Auditor’s Report29

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

2020 2021
Dec. Jan. Feb. Mar. Apr. May Jun.

Jul.

2022
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, 2022)
No. of Investment Units by Investor Type

34th
Fiscal Period

No. of Unitholders
by Investor Type

Individuals/others

Financial institutions

14,961 units (3.1%)

157,804 units (33.0%)

Foreign nationals 86,122 units (18.0%)

Financial
institutions
Other domestic
corporations

Total: 478,258 units
Other domestic corporations 200,283 units (41.9%)

33rd
Fiscal Period

Securities firms 19,088 units (4.0%)

Individuals/others

Financial institutions

13,701 units (2.8%)

147,578 units (30.6%)

Foreign nationals

Foreign nationals 102,740 units (21.3%)

Securities firms

Total: 482,529 units
Other domestic corporations 200,313 units (41.5%)

Securities firms 18,197 units (3.8%)

Top Ten Unitholders (As of November 30, 2022)
Name of Unitholder

Total

IR Calendar
Number ofPercentage
Units Owned
Share(Units)January 20, 2023: Announcement of financial results for
34th Fiscal Period

1. Daiwa Investment Management Inc.

128,905

27.0

February 13, 2023: Sending of Japanese version ofBusiness Report for 34th Fiscal Period(Statement of Financial Performance)

2. Daiwa Securities Group Inc.

67,321

14.1

February 14, 2023: S tart paying distributions for
34th Fiscal Period

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

59,32912.4

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

52,01410.9

Nov.

17,082

3.6

Aug.

End offiscal period

13,363

2.8

July

5. STICHTING PENSIOEN FONDS ZORG EN WELZIJN
6.

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

7. SMBC Nikko Securities Inc.

7,486

1.6

8. BNYM AS AGT/CLTS 10 PERCENT

4,935

1.0

9. STATE STREET BANK WEST CLIENT - TREATY 505234

4,565

1.0

10. STATE STREET BANK AND TRUST COMPANY 505103

4,078

0.9

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

Jan.
End offiscal period

Feb.

May
July 2023: Announcement of financial results for
35th Fiscal Period
August 2023: S ending of Japanese version ofBusiness Report for 35th Fiscal Period(Statement of Financial Performance)
August 2023: S tart paying distributions for
35th Fiscal Period

30

5,019
(91.2%)
104(1.9%)
101(1.8%)
259(4.7%)
21(0.4%)
5,504

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
Transfer Agency Department of Sumitomo Mitsui Trust Bank, Limited, 1-4-1 Marunouchi, Chiyoda-ku, Tokyo
Office handling administrative affairs
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.
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 Information31