Disclaimers
This document has been prepared solely for the purpose of providing U.K. and Dutch
investors with certain information under Article 23 of the European Alternative
Investment Fund Managers Directive (European Directive 2011/61/EU) (the “AIFMD”) as
implemented in their respective jurisdictions. Accordingly, you should not use thisdocument for any other purpose.
Netherlands
The units of Daiwa House REIT Investment Corporation (“DHR” or the “AIF”) are being
marketed in the Netherlands under Section 1:13b of the Dutch Financial Supervision Act(Wet op het financieel toezicht, or the “Wft”). In accordance with this provision, Daiwa
House Asset Management Co., Ltd. (the “AIFM”) has submitted a notification with the
Netherlands Authority for the Financial Markets. The units of DHR will not, directly or
indirectly, be offered, sold, transferred or delivered in the Netherlands, except to or byindividuals or entities that are qualified investors (gekwalificeerde beleggers) within themeaning of Article 1:1 of the Wft, and as a consequence neither the AIFM nor DHR is
subject to the license requirement pursuant to the Wft. Consequently, neither the AIFM
nor the AIF is subject to supervision of the Dutch Central Bank (De Nederlandsche Bank,“DNB”) or the Netherlands Authority for the Financial Markets (Autoriteit Financiële
Markten, the “AFM”) and this Article 23 AIFMD Prospectus is not subject to approval by
the AFM. No approved prospectus is required to be published in the Netherlands pursuant
to Article 3 of the European Directive 2003/71/EC (the EU Prospectus Directive) as
amended and implemented in Netherlands law. The AIFM is solely subject to limited
ongoing regulatory requirements as referred to in Article 42 of the AIFMD.
United Kingdom
Units of DHR are being marketed in the United Kingdom pursuant to Article 59 of theUnited Kingdom Alternative Investment Fund Managers Regulations 2013. In accordancewith this provision, the AIFM has submitted a notification with the Financial Conduct
Authority (the “FCA”) in the United Kingdom.
For the purposes of the United Kingdom Financial Services and Markets Act 2000(“FSMA”) DHR is an unregulated collective investment scheme which has not beenauthorized by the FCA.

1

Accordingly, any communication of an invitation or inducement to invest in DHR may bemade to persons in the United Kingdom only if the communication falls within one ormore of the categories of exempt financial promotions under the Financial Services andMarkets Act (Financial Promotion) Order 2005 (the “Order”), such as financial
promotions communicated to:
(1)
(2)
(3)
(4)

persons who are investment professionals, as defined in article 19 of theOrder;
persons who are certified high net worth individuals, as defined in article 48of the Order;
persons who are high net worth companies, unincorporated associations, orother entities listed in article 49 of the Order; or
persons who are certified sophisticated investors, as defined in article 50 of
the Order,

or if the communication is made to persons to whom such an invitation or inducement
may otherwise lawfully be communicated. The distribution of this document to any personin the United Kingdom in circumstances not falling within one of the above categories is
not permitted and may contravene FSMA. No person falling outside those categories
should treat this document as constituting a promotion to him, or act on it for any purposes
whatever.
In relation to each Member State of the European Economic Area which has implemented
the Prospectus Directive (each, a Relevant Member State), with effect from and including
the date on which the Prospectus Directive is implemented in that Relevant Member State(the Relevant Implementation Date) no offer of units of DHR may be made to the publicin that Relevant Member State except in circumstances falling within Article 3(2) of theProspectus Directive, provided that no such offer of units shall require the publication of aprospectus pursuant to Article 3 of the Prospectus Directive, or a supplement to aprospectus pursuant to Article 16 of the Prospectus Directive.
For the purposes of this provision, the expression “an offer of units to the public” inrelation to any units in any Relevant Member State means the communication in any formand by any means of sufficient information on the terms of the offer and the units to beoffered so as to enable an investor to decide to purchase or subscribe the units, as the same
may be varied in that Member State by any measure implementing the Prospectus
Directive in that Member State, the expression “Prospectus Directive” means Directive
2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to theextent implemented in the Relevant Member State), and includes any relevant2implementing measure in the Relevant Member State and the expression “2010 PD
Amending Directive” means Directive 2010/73/EU.

3

Article 23 (1)(a)Objectives of the

On September 1, 2016, Daiwa House Residential Investment Corporation, a predecessor entity

AIF

to DHR (“DHI”), and Daiwa House REIT Investment Corporation (“Former DHR”) conducted amerger (the “Merger”), with DHI as the surviving entity and subsequently being renamed“Daiwa House REIT Investment Corporation”.
Following the Merger, DHR has operated as a diversified REIT that focuses on investing in
logistics, residential, and retail properties as well as hotels as core assets, and also in officebuildings, healthcare facilities and other properties as non-core assets. DHR’s portfolio after
the Merger includes the residential properties formerly held by DHI and the logistics and retailproperties formerly held by Former DHR.

Investment

DHR aims to achieve enhanced external growth potential and further internal growthstrategy

opportunities through pursuing a diversified REIT strategy, improvement of DHR’s position in
the J-REIT market and asset-management flexibility through scale enhancement, and targets
acceleration of growth leveraging the value chain of the integrated capabilities of the Daiwa
House group, which consists of Daiwa House Industry Co., Ltd. and its 332 consolidated
subsidiaries, one non-consolidated subsidiary, 39 equity method affiliates and three otheraffiliates, as of December 31, 2018 (the “Daiwa House Group”).

Types of assets theReal estate, trust beneficiary interests in real estate, real estate securities, specified assets

AIF may invest in

and other assets.

Techniques it may

DHR is a diversified REIT that focuses on investing in logistics, residential, and retail properties

employ and all

as well as hotels as core assets, and also in office buildings, healthcare facilities and otherassociated risks

properties as non-core assets.
The principal risks with respect to investment in DHR are as follows:

any adverse conditions in the Japanese economy could adversely affect DHR;

DHR recognized a substantial amount of goodwill in connection with the Merger, andany impairment of goodwill could adversely impact DHR’s financial condition andresults of operations;

DHR may not be able to acquire properties to execute the growth and investment
strategy in a manner that is accretive to earnings;

illiquidity in the real estate market may limit the ability to grow or adjust theportfolio;the past experience of the AIFM in the Japanese real estate market is not an indicatoror guarantee of the future results;

DHR’s reliance on Daiwa House Industry Co., Ltd. (the “Sponsor”), Daiwa HouseGroup, DHR’s support companies, the AIFM, and other third party service providers
could have a material adverse effect on its business;4

there are potential conflicts of interest between DHR, the Sponsor, Daiwa HouseGroup and DHR’s support companies as well as the AIFM;

DHR’s revenues largely comprise leasing revenues from the portfolio properties,
which may be negatively affected by factors including vacancies, decreases in rent,
and late or missed payments by tenants;

DHR’s current portfolio consists primarily of logistics, residential, retail and hotel
properties, the market for which may be effected by macro-economic trends andother forces which DHR cannot control;

DHR intends to target in hotel properties as one of its core asset classes, as well asother types of properties including healthcare properties, child day-care facilities andoffice buildings, but has a limited track record of investing in these properties;

investments in hotel properties and other properties will increase DHR’s exposure torisks associate with these property types;



DHR faces significant competition in seeking tenants and it may be difficult to findreplacement tenants;

increases in interest rates may increase the interest expense and may result in a
decline in the market price of the units;

DHR may be adversely affected by defective title, design, construction or otherdefects or problems in the properties; for example, it was discovered in March 2015that one of DHR’s existing properties uses seismic isolation rubber products
manufactured by Toyo Tire Corporation (“Toyo Tire”) that do not meet governmentmandated safety standards, and DHR later reached an agreement with Toyo Rubber
to be compensated for this matter; In addition, we have discovered that one of ourproperties uses the seismic oil dampers manufactured by KYB Corporation and Kayaba
System Machinery Co., Ltd. that may not meet government-mandated safety
standards;

risks related to properties located on reclaimed land, including building subsidence;

DHR may suffer large losses if any of the properties incurs damage from a natural or
man-made disaster;a large proportion of the properties in DHR’s portfolio is concentrated in Tokyo
Metropolitan area;

many of DHR’s properties, including most of its logistics properties, cater to a single
tenant or a small number of tenants, which may make it difficult to find substitutetenants;

DHR relies on key tenants for certain of its properties;



any inability to obtain financing for future acquisitions could adversely affect thegrowth of the portfolio;5

DHR’s failure to satisfy a complex series of requirements pursuant to Japanese tax
regulations would disqualify DHR from certain taxation benefits and significantly
reduce the cash distributions to the unitholders;

the ownership rights in some of the properties may be declared invalid or limited; andthe offer of special discounts at Daiwa Royal Hotels to the unitholders may beamended or terminated without notice.

In addition, DHR is subject to the following risks:risks related to increasing operating costs;

risks related to DHR’s dependence on the efforts of the AIFM’s key personnel;risks related to the restrictive covenants under debt financing arrangement;risks related to entering into forward commitment contracts;risks related to third party leasehold interests in the land underlying DHR’s properties;risks related to holding the property in the form of stratified ownership (kubun shoyū)interests or co-ownership interests (kyōyū-mochibun);risks related to properties not in operation (including properties under development);risks related to suffering impairment losses relating to the properties;risks related to decreasing tenant leasehold deposits and/or security deposits;risks related to lease terminations, decreases in lease renewals, tenant demands for
decreases in rent and tenants’ default as a result of financial difficulty or insolvency;risks related to the insolvency of master lessors;

risks related to relying on expert appraisals and engineering, environmental andseismic reports as well as industry and market data;risks related to the presence of hazardous or toxic substances in the properties, or the
failure to properly remediate such substances;

risks related to the strict environmental liabilities for the properties;risks related to the insider trading regulations;risks related to the amendment of the applicable administrative laws and local
ordinances;

risks related to infringing third party’s intellectual property right;risks related to holding Japanese anonymous association (tokumei kumiai) interests;risks related to investments in trust beneficiary interest;

risks related to the tight supervision by the regulatory authorities and compliancewith applicable rules and regulations;risks related to the tax authority disagreement with the AIFM’s interpretations of theJapanese tax laws and regulations;risks related to being unable to benefit from reductions in certain real estate taxes
enjoyed by qualified J-REITs;



risks related to changes in Japanese tax laws; and6the risk of dilution as a result of further issuances of units.

Any applicable

DHR is subject to investment restrictions under Japanese laws and regulations (e.g., the Act on

investment

Investment Trusts and Investment Corporations (the “ITA”), the Financial Instruments andrestrictions

Exchange Act (the “FIEA”)) as well as its articles of incorporation.
DHR must invest primarily in specified assets as defined in the ITA. Specified assets include,
but are not limited to, securities, real estate, leaseholds of real estate, surface rights (chijōken) (i.e., right to use land for the purpose of having a structure on it) or trust beneficiaryinterests for securities or real estate, leaseholds of real estate or surface rights.
Furthermore, a listed J-REIT must invest substantially all of its assets in real estate, real estaterelated assets and liquid assets as provided by the listing requirements. Real estate in thiscontext includes, but is not limited to, real estate, leaseholds of real estate, surface rights, andtrust beneficiary interests for these assets, and real estate-related assets in this context
include, but are not limited to, anonymous association (tokumei kumiai) interests forinvestment in real estate.
Pursuant to the ITA, investment corporations may not independently develop land for housing
or to construct buildings, but may outsource such activities in certain circumstances.
Investment restrictions DHR places in its articles of incorporation are as follows:(1) Restrictions relating to securities and monetary claims
DHR will place importance on stability and convertibility of investments into securities andmonetary claims, and it will not make investments aimed only at gaining positive
management profits.
(2) Restrictions relating to derivatives transactions
DHR will invest in rights associated with derivatives transactions only for the purpose ofhedging against interest risks arising from DHR’s liabilities and other related risks.
(3) DHR will restrict its real estate investment targets to real estate located in Japan.
(4) DHR will not invest in assets denominated in a foreign currency.

Circumstances in

DHR may take out loans or issue long-term or short-term corporate bonds for the purpose ofwhich the AIF may

investing in properties, conducting repairs, paying cash distributions, repaying obligations

use leverage(including repayment of tenant leasehold or security deposits, and obligations related to loans
or long-term or short-term corporate bonds) and other activities.

The types andLoans or corporate bonds. DHR currently does not have any outstanding guarantees, but may

sources of leverage

be subject to restrictive covenants in connection with any future indebtedness that may

permitted andrestrict the operations and limit the ability to make cash distributions to unitholders, toassociated risks

dispose of the properties or to acquire additional properties. Furthermore, DHR may violate
restrictive covenants contained in the loan agreements DHR executes, such as the7maintenance of debt service coverage or loan-to-value ratios, which may entitle the lenders
to require DHR to collateralize the properties or demand that the entire outstanding balance
be paid. Further, in the event of an increase in interest rates, to the extent that DHR has any
debt with unhedged floating rates of interest or DHR incurs new debt, interest payments may
increase, which in turn could reduce the amount of cash available for distributions tounitholders. Higher interest rates may also limit the capacity for short- and long-termborrowings, which would in turn limit the ability to acquire properties, and could cause themarket price of the units to decline.
Any restrictions on

The maximum amount of each loan and corporate bond issuance will be one trillion yen, andleverage

the aggregate amount of all such debt will not exceed one trillion yen.

Any restrictions on

No applicable arrangements.

collateral and asset
reusearrangements
Maximum level of

DHR has set an upper limit of 60% as a general rule for its loan-to-value, or LTV, ratio in orderleverage which theto operate with a stable financial condition. Additionally, DHR strives to maintain its LTV

AIFM is entitled towithin a conservative range of 40 – 50%. DHR may, however, temporarily exceed any such

employ on behalf

levels as a result of property acquisitions or other events.

of the AIF
Article 23(1) (b)Procedure by

Amendment of the articles of incorporation. Amendment requires a quorum of a majority ofwhich the AIF may

the total issued units and at least a two-thirds vote of the voting rights represented at thechange its

meeting. Unitholders should note, however, that under the ITA and DHR’s articles ofinvestment

incorporation, unitholders who do not attend and exercise their voting rights at a general

strategy /meeting of unitholders are deemed to be in agreement with proposals submitted at theinvestment policy

meeting, except in cases where contrary proposals are also being submitted.
Additionally, the guidelines of the AIFM, which provide more detailed policies within DHR’s
overall investment strategy and policy, can be modified without such formal amendment of
the articles of incorporation.

Article 23(1) (c)Description of the

DHR has entered into the following support agreements with the Sponsor or either of themain legal

support companies, which are Cosmos Initia Co., Ltd., Daiwa Lease Co., Ltd., Daiwa

implications of theInformation Service Co., Ltd., Daiwa Royal Co., Ltd., Fujita Corporation and Daiwa Logistics Co.,

contractualLtd., each of which is governed by Japanese law:

relationship New Basic Agreement Regarding Pipeline Support, Etc. by and among DHR, the AIFM andentered into forthe purpose of

the Sponsor, which came into effect on September 1, 2016;
 Various asset sale and purchase agreements with the Sponsor;

investment,8

including Basic Agreement Regarding Pipeline Support, Etc. dated as of September 1, 2016 by andjurisdiction,

among DHR, the AIFM and Cosmos Initia Co., Ltd., another support company of DHR;

applicable law, and Basic Agreement Regarding Pipeline Support, Etc. dated as of September 1, 2016 by andthe existence oramong DHR, the AIFM and Daiwa Lease Co., Ltd., another support company of DHR;

not of any legal

 Basic Agreement Regarding Pipeline Support, Etc. dated as of September 1, 2016 by andinstruments

among DHR, the AIFM and Daiwa Information Service Co., Ltd., another support company

providing for theof DHR;

recognition and Basic Agreement Regarding Pipeline Support, Etc. dated as of September 1, 2016 by andenforcement of

among DHR, the AIFM and Daiwa Royal Co., Ltd., another support company of DHR;

judgments in the Basic Agreement Regarding Pipeline Support, Etc. dated as of September 1, 2016 by andterritory where theamong DHR, the AIFM and Fujita Corporation, another support company of DHR; andAIF is established Basic Agreement Regarding Pipeline Support, Etc. dated as of September 1, 2016 by andamong DHR, the AIFM and Daiwa Logistics Co., Ltd., the other support company of DHR
Additionally, subsidiaries or affiliated companies provide property management services to
DHR with respect to each of the portfolio properties.

Article 23(1) (d)The identity of the AIFM (Asset Manager): Daiwa House Asset Management Co., Ltd.

AIFM, AIF's

 Auditor: Ernst & Young ShinNihon LLC

depository, auditor Custodian, Transfer Agent, General Administrator, Special Account Manager and Generaland any other

Administrator for Investment Corporation Bonds: Sumitomo Mitsui Trust Bank, Limited

service providers

 General Administrator for Investment Corporation Bonds: The Bank of Tokyo-Mitsubishi

and a descriptionof their duties andthe investors'
rights thereto

UFJ, Ltd.
Service providers owe contractual obligations under their respective agreements with the AIF
or AIFM, as the case may be. In addition, the FIEA provides that the Asset Manager owes the
AIF a fiduciary duty and must conduct its activities as the asset manager in good faith.
The FIEA also prohibits the Asset Manager from engaging in certain specified conduct,
including entering into transactions outside the ordinary course of business or with relatedparties of the Asset Manager that are contrary to or violate the AIF’s interests.
Pursuant to the ITA, the unitholders have the right to approve the execution or termination of
the asset management agreement at a general meeting of unitholders.

Article 23(1) (e)9Description of how

Not applicable.

the AIFM complies
with therequirements tocover professional
liability risks (ownfunds /
professional
indemnity
insurance)
Article 23(1) (f)Description of any
delegatedmanagement

Not applicable.
There is no delegation of such functions beyond the AIFM, which is responsible for portfolio
and risk management, and the Custodian, which is responsible for safekeeping activities.

function such as
portfolio
management orrisk management
and of any
safekeeping
function delegatedby the depositary,
the identificationof the delegate andany conflicts ofinterest that may
arise from suchdelegations
Article 23(1) (g)Description of the

DHR makes investment decisions based on the valuation of properties, upon consideration of

AIF’s valuation

the property appraisal value.

procedure andpricing
methodology,
including themethods used in

DHR shall evaluate assets in accordance with its article of incorporation. The methods andstandards that DHR uses for the evaluation of assets shall be based on the Regulations
Concerning the Calculations of Investment Corporations, as well as the Regulations
Concerning Real Estate Investment Trusts and Real Estate Investment Corporations and otherregulations stipulated by ITA, in addition to Japanese GAAP.

valuing hard-tovalue assets

10

J-REITs may only use the valuation methods prescribed in the rules of the Investment Trusts
Association, Japan, which emphasize market price valuation.
Article 23(1) (h)Description of the
AIF’s liquidity risk
management,
includingredemption rights
in normal and

The AIFM stipulates basic provisions of risk management in its risk management rules.
Additionally, the AIF uses various financing methods, including investment corporation bonds
and long-term or short-term loans, to finance acquisitions and repayment obligations. DHR
controls related risk by maintaining the ratio of interest-bearing debt to total assets under acertain percentage, diversifying repayment deadlines, and retaining a certain amount ofhighly liquid cash and deposits.

exceptional
circumstances andexisting
redemption
arrangements withinvestors

For floating rate borrowings exposed to the risk of interest rate fluctuations, DHR closely
monitors the movement of interest rates, and intends to increase the proportion of its
obligations subject to fixed rate loans and similar instruments.
Risks related to deposits are managed through the use of liquid deposits.
As DHR is a closed-end investment corporation, unitholders are not entitled to request theredemption of their investment.

Article 23(1) (i)Description of allCompensation: The articles of incorporation provide that DHR may pay its executive officer up

fees, charges andto 800 thousand yen per month and each of its supervisory officers up to 350 thousand yen

expenses and a

per month. The board of officers is responsible for determining a reasonable compensation

maximum amountamount for the executive officer and each of the supervisory officers.

which is directly /indirectly borne by

Asset Manager:

the investors Asset Management Fee: DHR will pay the Asset Manager an asset management fee asfollows:oAsset Management Fee 1

DHR will, within 1 month after the end of each fiscal period, pay an amount up to a
maximum of the amount (calculated pro rata based on the actual number of days in therelevant fiscal period, taking one year as being 365 days; the same applies tocalculations of the base fee below) calculated by multiplying total asset value (minus
the amount equivalent to unamortized positive goodwill) (as assessed under DHR’s
articles of incorporation and in accordance with Article 131, Paragraph 2 of theInvestment Trusts Act), as of the closing of the latest fiscal period, by 0.40% p.a.
oAsset Management Fee 2

11

DHR will pay, by the end of the month following that of the day of the approval of thefinancial statements for the previous fiscal period, an amount not exceeding theamount calculated by multiplying the total of real estate rental business income after
subtracting the total of the real estate rental business expenses (excluding gain on
negative goodwill) for the relevant fiscal period by 5.0%.
 Acquisition/Disposition Fee
When real estate or real-estate-backed securities are newly acquired or sold, DHR will
pay the Asset Manager, by the end of the month following the month of
acquisition/sale, an amount not exceeding the amount calculated by multiplying thepurchase/sale price of the asset acquired by 0.5%, or 0.25% if acquired from/sold to a
related party. No amount will be paid for a sale that does not result in any profit fromsale, where “profit from sale” means the positive difference in amount between thesale price and the sum of sale related expenses and the book value of the relevant asset
to be sold.
 Merger Fee
If the AIFM conducts a survey or valuation of the assets held by a possible merger
partner for DHR and DHR inherits these assets held by the merger partner through amerger, an amount multiplied by a rate not exceeding 0.8% of real estate and realestate-backed securities on the merger effective date shall be paid to the AssetManager by the end of the month following that of the effective date of the merger.
Custodian: Custodian Fee: DHR will pay the Custodian a fee per operational period calculated asfollows:
The amount of total assets as of the end of the prior month x 0.03% ÷ 12 per month
General Administrators:
 General Administrators Fee: DHR will pay the General Administrators a fee per
operational period calculated as follows:
The amount of total assets as of the end of the prior month x 0.09% ÷ 12 per month
Transfer Agent: Transfer Agent Fee (Standard Fee):

12

Standard transfer agent fees are for services such as preparation, maintenance andstorage of DHR’s unitholder register; preparation and reporting of the end-of-period
unitholders register and unitholder statistical data.
The monthly standard fees will be the total of the amount calculated using the following
table divided by 6, with a minimum monthly fee of 200,000 yen.
Number of Unitholders

Fees per Unitholder

first 5,000 unitholders

480 yenover 5,000 to 10,000

420 yenover 10,000 to 30,000

360 yenover 30,000 to 50,000

300 yenover 50,000 to 100,000

260 yenover 100,000

225 yen Other fees:
DHR pays the transfer agent other fees for various other services, including inconnection with the issuance of dividends.
Auditor: Auditor Fee:
DHR may pay the independent auditor up to 25 million yen per fiscal period. The board
of officers is responsible for determining the actual compensation amount.
The AIF may also incur other miscellaneous fees in connection with the issuance of units,
investment corporation bonds and the operation, acquisition or disposition of properties.
Article 23(1) (j)Description of theUnder Article 77 paragraph 4 of the Act on Investment Trusts and Investment Corporations of

AIFM's procedure

Japan, which applies the requirements of Article 109 paragraph 1 of the Companies Act toto ensure fair

investment corporations, investment corporations are required to treat unitholders equallytreatment ofdepending on the number and content of units held. In addition, upon liquidation, theinvestors andallotment of residual assets to unitholders is required to be made equally depending on thedetails of any

number units held under Article 77 paragraph 2 item 2 and Article 158 of the ITA.

preferential
treatment received
by investors,
including detailingthe type ofinvestors and theirlegal or economic

13

links with the AIF
or AIFM
Article 23(1) (k)The latest annual

Additional information may be found in DHR’s most recent semi-annual report prepared inreport referred toaccordance with Article 22 of the AIFMD, which is available at the AIFM’s office located at

in Article 22(1)Nissei Nagatacho Building, 7th Floor, 4-8 Nagatacho 2-chome, Chiyoda-ku, Tokyo, Japan.

Article 23(1) (l)The procedure and

DHR is authorized under the articles of incorporation to issue up to 8,000,000 units. DHR’s

conditions for theunits have been listed on the Tokyo Stock Exchange since March 22, 2006. Secondary market

issue and sale ofsales and transfers of units will be conducted in accordance with the rules of the Tokyo Stockthe units

Exchange. Unit prices on the Tokyo Stock Exchange are determined on a real-time basis by theequilibrium between bids and offers. The Tokyo Stock Exchange sets daily price limits, which
limit the maximum range of fluctuation within a single trading day. Daily price limits are set
according to the previous day’s closing price or special quote.

Article 23(1) (m)Latest net asset

DHR’s unit’s latest market price is publicly available at the Tokyo Stock Exchange or fromvalue of the AIF or

financial information venders (including Reuters, which can be viewed at

latest market price

http://www.reuters.com/finance/stocks/overview?symbol=8984.T).

of the unit or shareof the AIF
Article 23(1) (n)Details of the

The units of DHR were listed on the Tokyo Stock Exchange on March 22, 2006.

historical

The most recent five fiscal periods’ performance of DHR is as follows.

performance of theAIF, whereavailable

Fiscal period

Total Assets

Total Net Assets

Net Assets per unit

(JPY million)(JPY million)(JPY)

22nd Fiscal Period(September 1, 2016 to

604,142

330,304

217,408

682,359

377,321

223,267

681,192

376,300

222,663771,281430,596

223,454

February 28, 2017)
23rd Fiscal Period(March 1, 2017 toAugust 31, 2017)24th Fiscal Period(September 1, 2017 to
February 28, 2018)
25th Fiscal Period

14

(March 1, 2018 toAugust 31, 2018)
26th Fiscal Period(September 1, 2018 to

777,727

429,223

222,741

February 28, 2019)

Article 23(1) (o)Identity of theNo applicable prime broker.

prime broker, anymaterial
arrangements of
the AIF with its
prime brokers,
how conflicts ofinterest aremanaged with theprime broker andthe provision in thecontract with thedepositary on thepossibility oftransfer and reuseof AIF assets, andinformation about
any transfer of
liability to theprime broker that
may exist
Article 23(1) (p)Description of how

The AIFM will disclose the matters described in Articles 23(4) and 23(5) periodically throughand when periodic

the AIF Internet website and fiscal report.

disclosures will bemade in relation toleverage, liquidity
and risk profile of
the assets,pursuant to15

Articles 23(4) and23(5)Article 23(2)The AIFM shallNot applicable.

inform theinvestors before
they invest in the
AIF of any
arrangement madeby the depository
to contractuallydischarge itself ofliability inaccordance with
Article 21(13)The AIFM shall also

Not applicable.

inform investors of
any changes withrespect todepositary liability
without delay
Article 23(4)(a)Percentage of the

There are no assets that are subject to special arrangements arising from their illiquid nature.

AIF's assets which
are subject tospecialarrangements
arising from their
illiquid nature. The
percentage shallbe calculated as
the net value of
those assets
subject to special
arrangements
divided by the net
asset value of the
AIF concerned16Overview of any

There are no such special arrangements.

specialarrangements,
including whether
they relate to side
pockets, gates orotherarrangements
Valuation

There are no such special arrangements.

methodology
applied to assets
which are subject
to sucharrangements
How management

There are no such special arrangements.

and performancefees apply to such
assets
Article 23(4)(b)Any new

Any new arrangements or change in applicable arrangements will be disclosed at anarrangements forappropriate time.

managing theliquidity of the AIF
For each AIF thatAny new arrangements or change in applicable arrangements will be disclosed at an

the AIFM manages

appropriate time.

that is not an
unleveraged
closed-end AIF,
notify to investors
whenever they
make changes to
its liquidity
management
systems (whichenable an AIFM tomonitor theliquidity risk of the
AIF and to ensure

17

the liquidity profileof the investmentsof the AIF complies
with its underlying
obligations) thatare material inaccordance with
Article 106(1) ofRegulation (EU) No
231/2013 (i.e.
there is a
substantial
likelihood that areasonable
investor, becoming
aware of suchinformation, would
reconsider its
investment in theAIF, including
because suchinformation could
impact an
investor’s ability to
exercise its rights
in relation to its
investment, orotherwise
prejudice theinterests of one ormore investors in
the AIF).

18

Immediately notify

Any new arrangements or change in applicable arrangements will be disclosed at an

investors whereappropriate time.

they activate
gates, side pockets
or similar special
arrangements or
where they decideto suspend
redemptions
Overview of

Any new arrangements or change in applicable arrangements will be disclosed at anchanges to liquidity appropriate time.
arrangements,
even if not special
arrangements
Terms of

DHR is a closed-end investment corporation, and unitholders are not entitled to request theredemption andredemption of their investment.

circumstanceswheremanagement
discretion applies,
where relevant
Also any voting or

There are no voting or other restrictions on the rights attaching to units.

other restrictions
exercisable, thelength of any lockup or any provision
concerning ‘first inline’ or ‘pro-rating’on gates andsuspensions shallbe included
Article 23(4)(c)
The current risk

The AIFM stipulates basic provisions of risk management in their risk management rules.

profile of the AIF
and the risk

Investment corporation bonds and long-term or short-term loans are used to financemanagement

acquisition of real estate, redemption of investment corporation bonds and repayment ofsystems employedloans. These financial instruments are exposed to liquidity risk. DHR controls such risk by
maintaining the ratio of interest-bearing debt to total assets under a certain percentage,

19

by the AIFM todiversifying repayment deadlines, and retaining a certain amount of highly liquid cash andmanage those risks

deposits.
For floating rate borrowings exposed to the risk of interest rate fluctuations, DHR, in order toreduce the impact caused by rising interest rates, closely monitors the movement of interest
rates, and intends to increase the ratio of fixed rate loans compared to floating rate loans.
Deposits are exposed to credit risks, including collapse of the financial institutions where
deposits are made, and, thus, are managed through the use of liquid deposits.

Measures to assess

No such measures have been implemented.

the sensitivity of
the AIF’s portfolio
to the most
relevant risks towhich the AIF is or
could be exposed
If risk limits set by

No such situation has occurred.

the AIFM havebeen or are likely
to be exceeded
and where theserisk limits havebeen exceeded a
description of thecircumstances andthe remedial
measures taken
Article 23(5)(a)Any changes to the

Any new arrangements or change in applicable arrangements will be disclosed at an

maximum amountappropriate time.

of leverage which
the AIFM may
employ on behalfof the AIF,
calculated inaccordance withthe gross andcommitment

20

methods. This shall
include the originaland revised
maximum level ofleverage calculated
in accordance with
Articles 7 and 8 ofRegulation (EU) No
231/2013,
whereby the levelof leverage shall becalculated as therelevant exposure
divided by the net
asset value of the
AIF.
Any right of the

No such right or guarantee exists.

reuse of collateralor any guarantee
granted under theleveraging
agreement,
including thenature of the rights
granted for thereuse of collateraland the nature of
the guarantees
granted
Details of any

Any new arrangements or change in applicable arrangements will be disclosed at anchange in service

appropriate time.

providers relating
to the above.
Article 23(5)(b)Information on the

The aggregate amount of DHR’s interest-bearing debt (including investment corporation

total amount ofbonds) was JPY 348,768 million as of April 10, 2019.

leverage employedby the AIF

21

calculated inaccordance withthe gross andcommitment
methods

22