Statement of Financial Performancefor the 37th Fiscal Period
From: December 1, 2023
To: May 31, 2024

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

37th Period 36th Period 35th Period 34th Period 33rd Period

From Dec. 1, 2023
To May 31,2024

From June 1, 2023
To Nov. 30,2023

From Dec. 1, 2022
To May 31,2023

From June 1, 2022
To Nov. 30,2022

From Dec. 1, 2021
To May 31,2022(1) Operating Performance
(Millions of yen, except per unit data or where otherwise indicated)
Operating revenues
13,57013,646
15,05013,891
14,474
Rental revenues
13,562
13,604
13,503
13,836
13,560Operating expenses
6,698
6,898
7,384
6,828
6,551
Property-related expenses
5,348
5,559
5,987
5,453
5,143
Operating income
6,871
6,747
7,665
7,062
7,923
Ordinary income
6,215
6,151
7,100
6,494
7,493
Net income
6,214
6,192
7,099
6,512
7,493
(2) Properties, etc. (as of end of period)
Total assets
488,526
482,200
482,471
481,049
483,461[period-on-period percentage changes][+1.3%][−0.1%][+0.3%][−0.5%][+0.0%]
Interest-bearing liabilities
214,400
207,800
207,800
205,800
205,800
Net assets
247,342
247,523
247,849
247,491
250,538[period-on-period percentage changes][−0.1%][−0.1%][+0.1%][−1.2%][−1.2%]
Note 1
238,093
238,093
238,093
238,093
241,093
Unitholders’ capital, net(3) Distributions
Total distribution amount
6,552
6,552
6,552
6,552
6,755
Dividend payout
105.4%
105.8%
92.3%
100.6%
90.2%(4) Per Unit Information
478,258
478,258
478,258
478,258
482,529
Total number of units issued (units)
Note 2
258,587
517,551
518,232
517,484
519,220
Net assets per unit (yen)Distribution per unit (yen)13,70013,70013,70013,70014,000Distribution amount from earnings per unit (yen)13,70013,70013,70013,70014,000–––––Distribution amount in excess of earnings per unit (yen)(5) Financial Indicators
1.3%
1.3%
1.5%
1.3%
1.6%
ROA
Notes 3and 4[annual rate][2.6%][2.5%][3.0%][2.7%][3.1%]
2.5%
2.5%
2.9%
2.6%
3.0%
ROE
Notes 4and 5[annual rate][5.0%][5.0%][5.7%][5.2%][6.0%]
Capital ratio
50.6%
51.3%
51.4%
51.4%
51.8%
[period-on-period percentage changes][−0.7%[−0.0%][−0.1%][−0.4%][−0.7%]LTV (loan to value)
43.9%
43.1%
43.1%
42.8%
42.6%
Note 6
10,037
9,832
9,313
10,171
10,200Property leasing cash flows (NOI)(6) Other Referential Information
Number of investment properties
59
58
58
59
59
Note
7
667
643
642
639
635
Number of tenants
Total rentable area (m2)
360,981.39 357,215.08 357,214.34 359,705.62 356,122.21
Note 8
Occupancy rate
97.0%
97.7%
97.7%
97.4%
98.4%
Depreciation
1,823
1,787
1,797
1,788
1,783
Capital expenditures
964
994
1,116
798
856
(Note 1) Unitholders’ capital, net: Unitholders’ capital − Deduction from Unitholders’ capital(Note 2)	The Investment Corporation conducted a 2-for-1 investment unit split with May 31, 2024, as the record date and June 1,
2024, as the effective date. Net income per unit is calculated based on the assumption that said investment unit split was
conducted at the beginning of the 37th Fiscal Period.
(Note 3) ROA: Ordinary income ÷ [(Total assets at beginning of period + Total assets at end of period) ÷ 2] × 100(Note 4) Figures for the 33rd Fiscal Period are the annualized figures calculated based on 182 days of management.
		
Figures for the 34th Fiscal Period are the annualized figures calculated based on 183 days of management.
		
Figures for the 35th Fiscal Period are the annualized figures calculated based on 182 days of management.
		
Figures for the 36th Fiscal Period are the annualized figures calculated based on 183 days of management.
		
Figures for the 37th Fiscal Period are the annualized figures calculated based on 183 days of management.
(Note 5) ROE: Net income ÷ [(Net assets at beginning of period + Net assets at end of period) ÷ 2] × 100(Note 6) Property leasing cash flows (NOI): Rental revenues − Property-related expenses + Depreciation(Note 7)	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 8) 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 468,886 million yen as of the last day of May
2024.
DOI strives to secure stable revenue and sustained growth of the investment assets based on a clear
portfolio development policy of specializing in investment in office buildings, with a particular focus on
investment in a total floor area of more than about 2,000 m2 situated in downtown Tokyo, as well as
through dedicated efforts to heighten tenant satisfaction levels.
(2) Investment Environment and Management Performance(A) Investment Environment
The Japanese economy during the fiscal period under review continued to recover moderately in the
post-COVID 19 period albeit stagnation in some areas, such as the real GDP growth rate (Second
Preliminary Estimates) for January to March 2024 showing a negative annualized growth rate of-1.8%. Meanwhile, price hikes are progressing, owing to the yen’s depreciation and climbing prices
globally for energy and food, leading to risk of downward pressure on the Japanese economy affectedby consumer spending and such. There is also the need to monitor the effects of the situation in the
Middle East and fluctuations in financial and capital markets.
In the office building leasing market in central Tokyo, the average vacancy rate has hovered around
5 to 6% since June 2021, and was 5.48% as of the end of May 2024 (Miki Shoji’s average vacancy
rate for the five central wards of Tokyo). Although there are some signs of demand recovery due toemployees returning to offices and re-recognition of office functions, the situation remains
unpredictable as conditions have yet to recover to pre-pandemic levels.
However, for the office building transaction market, the appetite for property acquisitions remained
strong among real estate companies, funds (including J-REITs) and overseas investors with nomaterial change made to the proactive lending attitude by financial institutions. Nevertheless, future
developments warrant close monitoring.
(B) Management Performance
In view of increasing the ordinary EPS (EPS (net income per unit) after deducting gain on sale fromproperties) over the medium to long term, DOI continued to work on “external growth,” which aims toboost revenue through acquisition of properties, and “internal growth,” which aims to maximize
income generating from owned properties.
Concerning external growth, in March 2024, DOI acquired S-GATE FIT Nihonbashi Bakurocho(acquisition price: 6,300 million yen). As a result, DOI’s assets under management as of the end of the37th Fiscal Period (May 31, 2024) totaled 59 properties, the sum total of acquisition prices of whichamounted to 468,886 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 37th Fiscal Period (May 31, 2024) was 97.0%.

I. Asset Management Report3(3) Overview of Capital Procurement(A) Procurement of Capital for Repayment of Borrowings
In the 37th Fiscal Period, DOI conducted the following borrowing activities to fund the acquisition of
new properties and the repayment of borrowings.
(i)	DOI took out loans totaling 4,000 million yen from Sumitomo Mitsui Trust Bank, Limited, SBI
Shinsei Bank, Limited, The Nishi-Nippon City Bank, Limited, and MUFG Bank, Ltd. on February
29, 2024, to fund repayment of the same amount borrowed from the same four banks due forrepayment on the same day.
(ii)	DOI took out loans totaling 10,000 million yen from Sumitomo Mitsui Banking Corporation,
Sumitomo Mitsui Trust Bank, Limited, MUFG Bank, Ltd., Mizuho Bank, Ltd., Mitsubishi UFJ Trustand Banking Corporation, and The Yamagata Bank, Ltd. on March 29, 2024, and allocated themas described below.
• Funds for acquisition of S-GATE FIT Nihonbashi Bakurocho acquired on the same day, etc.
• Funds for repayment of a loan of 1,900 million yen from Mizuho Bank, Ltd., due for repaymenton the same day.
• Funds for the prepayment of short-term loans totaling 1,500 million yen from MUFG Bank, Ltd.
due for repayment on November 29, 2024, and February 28, 2025.
(iii)	DOI took out loans totaling 6,500 million yen from Sumitomo Mitsui Banking Corporation andDevelopment Bank of Japan Inc. on May 31, 2024, to fund repayment of the same amountborrowed from the same two banks due for repayment on the same day.
(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 the37th Fiscal Period (May 31, 2024) stood at 214,400 million yen in total (long-term loans payable:
205,400 million yen; investment corporation bonds: 9,000 million yen). The balance of the current
portion of long-term loans payable stood at 30,800 million yen, and that of investment corporation
bonds stood at 3,800 million yen.
The average remaining period of interest-bearing liabilities as of the end of the 37th Fiscal Period
stands at 4.2 years.
(4) Capital Expenditures during the 37th Fiscal Period
The following summarizes the primary construction work that constitutes capital expenditures
implemented during the 37th Fiscal Period for existing portfolio properties. Capital expenditures for the
37th Fiscal Period amounted to 964 million yen and, when combined with the 155 million yen in repair
expenses charged to the 37th Fiscal Period expenses, totals 1,120 million yen in construction work
implemented.
Name of real estate
properties

Purpose

Period(Location)

CONCURRED Yokohama(Yokohama-shi, Kanagawa)Daiwa Sasazuka Tower(Shibuya-ku, Tokyo)
Daiwa Shibuya Shinsen(Shibuya-ku, Tokyo)
Other(Millions of yen)

Conversion to LED lighting at
exclusive and common areas
Renewal of window cleaner platform
Repair of exterior walls
Total

4

Construction
amount paid

From: Dec.2023
To: May2024
From: Jan.2024
To: Mar.2024
From: Jan.2024
To: May2024

100
64
55
744
964

(5) Overview of Financial Performance and Distributions
As a result of the management described above, DOI posted financial performance for the 37th Fiscal
Period of 13,570 million yen in operating revenue, 6,871 million yen in operating income, 6,215 million yen
in ordinary income and 6,214 million yen in net income.
Concerning distributions, it is planned that the amount equivalent to distributions from earnings would
be included in the amount of tax-deductible expenses based on application of special provisions fortaxation of corporation tax (Article 67-15 of the Act on Special Measures Concerning Taxation (Act No. 26
of 1957; including amendments thereto) (the “Special Taxation Measures Act”)). Accordingly, DOI decided
to distribute the entire amount after adding reversal of reserve for reduction entry (337,934,263 yen) tounappropriated retained earnings, and declared a distribution amount per unit of 13,700 yen.

I. Asset Management Report53. Outlook for the Next Fiscal Period(1) Investment Environment
The Japanese economy going forward is expected to see a moderate recovery, supported by
movements such as improvement in employment and income conditions, as well as accommodative
fiscal and monetary policies. On the other hand, attention should continue to be paid to downside risks ofoverseas economies, such as monetary policy trends among central banks around the world andconcerns about China’s future economy, while monitoring the impact of rising prices, situation in the
Middle East, fluctuation in the financial and capital markets and other factors.
In the central Tokyo office building leasing market, demand recovery is expected centering on officebuildings in highly competitive location due to employees returning to offices and re-recognition of office
functions. However, the impact of a new supply of large-scale office buildings in central Tokyo expected
in 2025 continues to warrant close monitoring. In addition, the impact on borrowing rates associated withinterest rate hike warrant caution.
In the office building transaction market, backed by the favorable financing environment, interest rate
differentials with overseas markets, yen depreciation, among other factors, the property acquisition
appetite among overseas investors, real estate companies and funds (including J-REITs) is expected toremain strong. However, we will need to monitor how the market develops alongside changes in thesocioeconomic situation.
(2) Future Management Policy and Tasks(A) Strategy for Managing Existing Properties
As to macro trends for the office market, although the long-lasting adjustment phase has beenbroken by the emergence of positive corporate demand for relocation, work styles are changing andoffices are becoming more selective, and this has resulted in the market continuing to fail to show
significant improvement. Although DOI has been steadily acquiring solid new demand mainly fromsmall and medium-sized companies, it is striving to maintain and raise occupancy rates by assessing
the market environment in each area and flexibly pursuing leasing within the current market scope.
Given that office needs are likely to change by company as work-style and workplace diversify, DOI
considers that maintaining/improving competitiveness of buildings to qualify as prime offices that canincrease the productivity of employees and accommodate needs of the times and environment will be
the future issue, and is determined to continue carrying out operational management under thefollowing policy.
(i) Maintain and raise occupancy rates
	Concerning existing tenants, strive to reduce cancellation risks by improving the quality ofbuildings, equipment and management system. In addition, concerning new tenants, strive tomaintain and raise occupancy rates through the provision of highly satisfactory services fromgaining deeper understanding of tenant needs through proactive involvement in the market.
(ii) Maintain and raise profitability
	Aim to secure stable revenue over the medium to long term through further strengthening good
relationships with existing tenants, as well as proactively tapping the needs of new tenants bydiscerning the market environment.
(iii) Control operational management costs
	Strive to control operational management costs based on maintaining office environments withhigh tenant satisfaction levels by implementing efficient operational management and reviewing
systematic construction work through optimal leveraging of economies of scale achieved fromproactively realizing external growth.
(B) Strategy for New Property Investments
DOI will invest in office buildings that have a total floor area of about 2,000 m2 or more based on
various external growth strategies, while maintaining a balance with the asset acquisition environment
and financing situation. In principle, considerations will focus on Tokyo as the investment target area,
but DOI will also consider investing in competitive properties in cities other than Tokyo from a6viewpoint of territorially-distributed investments.
As pipeline support, in addition to expanding the Asset Manager’s own information-sourcing
channels, DOI will continue to search for properties that meet its investment criteria by proactively
gathering real estate transaction market information through greater collaboration with the Sponsor
Group and utilizing the Group’s extensive network of clients, partners, etc.
During the 37th Fiscal Period, DOI acquired S-GATE FIT Nihonbashi Bakurocho located in Tokyo.
This acquisition is expected to contribute to the further stabilization and enhancement of the portfolio,
and DOI will continue striving to acquire properties in line with the aforementioned investment
strategy.
Moreover, to acquire properties in favorable locations and in relatively new buildings and to improve
medium- to long-term profitability, DOI is engaged in efforts to acquire land in central Tokyo and todevelop new office buildings.
(C) Financial Strategy
DOI will conduct disciplined financial management of the following basic content.
(i)	Control leverage by keeping the ratio of interest-bearing liabilities to total assets (LTV) within therange of 40% to 50% at maximum, taking into consideration also the LTV, etc. based on
appraisal value, as a principle.
(ii)	Diversify repayment deadlines, targeting 30.0 billion yen as the maximum amount of interestbearing liabilities that shall become due during any single fiscal period as a principle.
(iii) Aim to have long-term loans account for at least 70% of balance of loans as a principle.
(iv) Achieve diversification of lenders, which shall mainly be Japanese financial institutions.
(v)	Pursuant to its fund management rules, maintain stability in its financial standing by managing
necessary funds, such as the amount equivalent to distributions paid, separately from working
capital.
(D) Schedule of Capital Expenditures for the 38th Fiscal Period
The following are the principal capital expenditures arising from renovation construction work, etc.
currently planned for existing portfolio properties. Please note that the expected construction amountincludes portions that are expensed as a separate account item of accounting costs.
Expected construction amount(Millions of yen)

Name of real estate
properties

Purpose(Location)

Daiwa Sasazuka Tower(Shibuya-ku, Tokyo)
Daiwa River Gate
(Chuo-ku, Tokyo)
Daiwa Nishi-Shinjuku(Shinjuku-ku, Tokyo)
Daiwa Kodenmacho(Chuo-ku, Tokyo)
Daiwa Sasazuka Tower(Shibuya-ku, Tokyo)

Interior work on
exclusive area
Renovation ofelevators
Renovation ofelevators
Repair of south
exterior wall
Repair of central
monitoring andautomatic control
equipment

Scheduled
implementation
periodFrom: June2024
To: Nov.2024
From: June2024
To: Nov.2024
From: June2024
To: Nov.2024
From: June2024
To: Nov.2024
From: June2024
To: Nov.2024

Total
amountAmountpaid
duringcurrent
periodTotalamountalready
paid

79

–

–

57

–

–

40

–

–

36

–

–

26

–

–

I. Asset Management Report7II. Balance Sheets
As of May 31, 2024 and November 30, 2023
(Thousands of yen)

As of
May 31, 2024

As ofNovember 30, 2023

AssetsCurrent Assets:
Cash and cash equivalents (Note 3)

28,826,765

29,705,371

Tenant receivables

112,837

95,994

Consumption taxes receivable

38,028–Prepaid expenses

405,450

390,865

Other current assets

79,395

48,778

Total Current Assets

29,462,477

30,241,010

Land

12,302,226

12,302,226

Buildings and structures

3,663,816

3,659,486

Tools, furniture and fixtures

22,546

21,875–88

Land in trust accounts (Note 15)359,705,136

354,910,042

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

114,986,482

112,350,660

Machinery and equipment in trust accounts

1,106,380

1,027,501

Tools, furniture and fixtures in trust accounts

491,798

456,163

Construction in progress in trust accounts

3,568,041

2,381,246(41,720,223)(39,897,158)

2,398,275

2,398,275

306,884

306,884

456,831,365

449,917,293

113,684

113,684

1,359,733

1,326,510

Derivative assets (Note 4)605,649445,563

Deferred investment corporation bond issuance costs

24,26029,291Others129,326

127,468

2,232,655

2,042,518

488,526,498

482,200,822

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

Construction in progress

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

Total Investments and Other Assets
Total Assets

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

8

(Thousands of yen)

As of
May 31, 2024

As ofNovember 30, 2023

Liabilities
Current Liabilities:
Accounts payable

1,458,941

1,286,974–

500,000

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

3,800,000

3,800,000

Long-term debt due within one year (Notes 4 and 11)30,800,000

27,200,000

552,096574,378880

880

Accrued consumption taxes

139,720

277,129

Rent received in advance2,287,235

2,307,530

Other current liabilities

834,330

688,158

Total Current Liabilities

39,873,204

36,635,051

5,200,000

5,200,000

Long-term debt (Notes 4 and 11)

174,600,000

171,100,000

Tenant security deposits including trust accounts (Note 4)

21,298,291

21,559,338

Deferred tax liabilities (Note 16)

196,447

124,083

Derivative liabilities

15,681

59,196201,310,419

198,042,617

241,183,624

234,677,669

251,551,759

251,551,759

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

Unitholders’ capital, net

238,093,989

238,093,989

Reserve for reduction entry

2,606,668

2,966,633

Retained earnings

6,214,200

6,192,169

246,914,857

247,252,791

Deferred gains or losses on hedges

428,016

270,361

Total valuation and translation adjustments

428,016

270,361

Total Net Assets

247,342,874

247,523,153

Total Liabilities and Net Assets

488,526,498

482,200,822

Short-term debt (Note 11)

Accounts payable – other
Income taxes payable

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

Total Long-Term Liabilities
Total Liabilities
Net Assets (Notes 9 and 17)
Unitholders’ Equity:
Unitholders’ capital
Units authorized: 2,000,000 units
Units issued and outstanding: 478,258 units as of
May 31, 2024 and November 30, 2023

Total Unitholders’ Equity
Valuation and translation adjustments

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

9III. Statements of Income and Retained Earnings
For the fiscal periods ended May 31, 2024 and November 30, 2023
(Thousands of yen)

For the fiscal period
ended
May 31, 2024

For the fiscal period
endedNovember 30, 2023

13,562,061

13,604,055

8,481

42,173

13,570,542

13,646,229

Property-related expenses (Note 8)

5,348,011

5,559,019

Asset management fees

1,119,555

1,120,650

Asset custody fees

24,16424,048Administrative service fees

72,64972,785

Trust fees

17,821

17,654

Directors’ compensation

7,200

7,200

Other operating expenses

109,544

96,895

Total Operating Expenses

6,698,948

6,898,253

Operating Income

6,871,594

6,747,975

Interest income

40

15

Reversal of distribution payable

514

693

3,156

99

0

0

3,711

808

Interest expense

454,546414,549

Interest expense on investment corporation bonds

26,32826,041

Borrowing expenses

167,302

144,541

Other non-operating expenses

12,046

12,123

660,223597,255

Ordinary Income

6,215,082

6,151,529

Income Before Income Taxes

6,215,082

6,151,529

Income taxes – current

881

881

Income taxes – deferred–(41,522)

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

6,214,200

6,192,169

Retained Earnings Brought Forward––

Retained Earnings at End of Period

6,214,200

6,192,169

Operating Revenues (Note 7):
Rental revenues (Note 8)
Other revenues related to property leasing (Note 8)
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 May 31, 2024 and November 30, 2023
(Thousands of yen)

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

Reserve for
Reduction
Entry

Retained
Earnings

478,258

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

2,419,008

7,099,759

236,313247,849,070

Cash distributions
declared

–

–

–

–

–

(6,552,134)–(6,552,134)

Net income

–

–

–

–

–

6,192,169–

6,192,169

Provision of reserve
for reduction entry

–

–

–

–

547,624(547,624)––

Net changes of
items other thanunitholders’ equity

–

–

–

–

–

–

34,04734,047478,258

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

2,966,633

6,192,169

270,361

247,523,153

Cash distributions
declared

–

–

–

–

–

(6,552,134)–(6,552,134)

Net income

–

–

–

–

–

6,214,200–

6,214,200

Reversal of reserve
for reduction entry

–

–

–

–

(359,965)

359,965––

Net changes of
items other thanunitholders’ equity

–

–

–

–

–

–

157,655

157,655478,258

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

2,606,668

6,214,200

428,016

247,342,874

Balance as of
May 31, 2023

Balance as ofNovember 30, 2023

Balance as of
May 31, 2024

Deferred Gains
or Losses on
HedgesTotal Net
Assets

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

IV. Statements of Changes in Net Assets

11

V. Statements of Cash Flows
For the fiscal periods ended May 31, 2024 and November 30, 2023
(Thousands of yen)

For the fiscal period
ended
May 31, 2024

For the fiscal period
endedNovember 30, 2023

Income before income taxes

6,215,082

6,151,529

Depreciation and amortization

1,825,232

1,789,425

5,030

5,030

Interest expense

480,874

440,590

Increase in tenant receivables(16,843)(1,851)

Increase (decrease) in accounts payable

279,042(329,223)(Decrease) increase in rent received in advance(20,295)

34,443

Interest payments(480,874)(440,713)

Decrease in accrued consumption taxes(137,409)(118,170)

Increase in consumption taxes receivable(38,028)–

Other, net

89,573

152,632

8,201,585

7,683,693(8,866,494)(2,128,193)–(9,670)

Proceeds from tenant security deposits including trust
accounts

1,330,445

662,628

Refunds of tenant security deposits including trust
accounts(1,591,493)(749,491)(9,127,542)(2,224,726)

Proceeds from short-term debt

1,000,000

500,000

Repayments of short-term debt

(1,500,000)(2,000,000)

Proceeds from long-term debt

19,500,000

14,700,000

Repayments of long-term debt

(12,400,000)(13,200,000)

Distributions paid

(6,552,649)(6,551,884)

47,350(6,551,884)(878,606)(1,092,917)

Cash and Cash Equivalents at Beginning of Period

29,705,371

30,798,288

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

28,826,765

29,705,371

Cash Flows from Operating Activities:

Amortization of bond issuance costs

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:

Net Cash Provided by (Used in) Financing Activities
Net Change in Cash and Cash Equivalents

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 May 31, 2024 and November 30, 2023

Note 1 – Organization and Basis of Presentation
Organization
Daiwa Office Investment Corporation (the former DA Office Investment Corporation; hereinafter referred toas “DOI”) was established on July 11, 2005 as an investment corporation under the Act on Investment Trusts
and Investment Corporations (Act No. 198 of 1951, including subsequent revisions, hereinafter referred to as
the “Investment Trust Act”) by the founder (the former daVinci Select; now, Daiwa Real Estate AssetManagement (hereinafter referred to as the “Asset Manager”)).
DOI is an externally managed real estate fund, established as an investment corporation. The AssetManager, as DOI’s asset management company, is engaged in acquiring, managing, leasing, and renovating
office properties. Daiwa Securities Group Inc. currently owns 100% of the shares of the Asset Manager.
On October 18, 2005, DOI had raised approximately 49,498,710 thousand yen through an initial public
offering of units. Those units were listed on the J-REIT section of the Tokyo Stock Exchange. DOI
implemented a 2 for 1 split of its investment units with a record date of May 31, 2024 and an effective date ofJune 1, 2024.
As of May 31, 2024, DOI had ownership or trust beneficiary interests in 59 office properties withapproximately 360,981.39 m2 of rentable office space and had leased office space to 667 tenants engaged ina variety of businesses. The occupancy rate for the office properties was approximately 97.0 %.
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 May 31, 2024

As of November 30, 2023

Buildings and structures

5-64 years

4-64 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
May 31, 2024
November 30, 2023
Capitalized real estate taxes

8,171

–

(f) Consumption Taxes
Non-deductible consumption taxes relating to investment properties are amortized equally over five years.
(g) Hedge Accounting
DOI enters into derivative transactions for the purpose of hedging risks in the Articles of Incorporation of
DOI in accordance with its general risk management policy. DOI uses interest-rate swaps as hedging
instruments in order to hedge the risk of interest rate fluctuations related to borrowings. Pursuant toJapanese GAAP, DOI applies the special accounting treatment to interest-rate swaps which qualify for hedge

14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
Amounts of investment properties recorded on the financial statements as of May 31, 2024 and November
30, 2023 were as follows:(Thousands of yen)

As of May 31, 2024

As of November 30, 2023

Tangible fixed assets

454,126,205

447,212,133

Intangible fixed assets

2,705,160

2,705,160

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

15

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 of
May 31, 2024 and November 30, 2023 consisted of the following:(Thousands of yen)

As of May 31, 2024

As of November 30, 2023

Cash and deposits

24,965,028

25,875,644

Cash and deposits in trust accounts

3,861,736

3,829,727

Cash and cash equivalents

28,826,765

29,705,371

Note 4 – Financial Instruments(a) Qualitative Information for Financial Instruments
Policy for Financial Instrument Transactions
DOI raises funds through borrowings, issuance of investment corporation bonds and issuance ofinvestment units for acquisition and renovation of investment properties, cash distributions of dividends andrepayment of bank borrowings. In financing through interest-bearing debt, DOI raises funds with longer term,
fixed-rate and well-diversified maturities and utilizes commitment lines to secure stable financing capacity
and avoid potential risk of rising interest rates.
Surplus funds are managed considering risk and liquidity, by investing in highly liquid monetary assets andsecurities (in principle, deposits).
DOI enters into derivative transactions only for the purpose of hedging interest rate risks arising fromliabilities.
Nature and Extent of Risks arising from Financial Instruments and Risk Management
Proceeds from borrowings and investment corporation bonds are used mainly to acquire investment
properties and repay or redeem outstanding borrowings and bonds. These borrowings and bonds are
exposed to liquidity risk. Such risk is managed in ways such as maintaining the LTV ratio at low levels,
diversifying maturities, keeping the ratio of long-term debt to total debt at high levels, and diversifying
lenders. For the floating-rate borrowings exposed to the risk of future interest rate fluctuations, DOI uses
derivative transactions (interest-rate swap) as hedging instruments, in order to avoid interest rate fluctuations
and to fix the amount of interest payments for floating-rate borrowings.
DOI evaluates the effectiveness of hedges by the correlation between the change in aggregated amount ofcash flow of the hedging instruments and the change in aggregated amount of cash flow of the hedged
items. The assessment of hedge effectiveness is omitted for the interest-rate swaps which meet the specificcriteria under the special accounting treatment.
Derivative transactions are executed and monitored in compliance with the rules and procedures set forthin the risk management policy of DOI.
Tenant security deposits including trust accounts are exposed to liquidity risk arising from refunding
deposits in the event of vacating of properties by tenants. Such risk is managed by reserving some parts ofthe funds.
Bank deposits are used for investing DOI’s surplus funds. These bank deposits are exposed to credit risks
such as bankruptcy of the depository financial institutions. DOI manages credit risk by investing only inshort-term deposit and setting a minimum credit rating requirement for the depository financial institutions(excluding deposits for settlement purposes).

16

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 May 31, 2024 and November 30, 2023
were as follows. Cash and cash equivalents, and short-term debt are not disclosed because the book valuesof these assets are deemed reasonable approximations of the fair values as they are cash or with shortmaturities.
(Thousands of yen)

As of May 31, 2024
Liabilities

As of November 30, 2023

Book value

Fair value

DifferenceBook value

Fair value

Difference

Investment
corporation
bonds due within
one year

3,800,000

3,800,610

610

3,800,000

3,806,1806,180Long-term debt
due within one
year

30,800,000

30,779,533(20,466)

27,200,000

27,190,274(9,725)Investment
corporation
bonds

5,200,000

5,014,400(185,600)

5,200,000

5,070,430(129,570)

Long-term debt

174,600,000 173,269,744(1,330,255)

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

Total

214,400,000 212,864,288(1,535,711)

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

Derivativetransactions (*)(*)

624,476

624,476–

394,457

394,457–

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

Notes:
1. Methods to estimate fair value of financial instruments and derivative transactions
Liabilities:(1) Investment corporation bonds due within one year and investment corporation bonds
The fair value of investment corporation bonds is based on their quoted market price.
(2) Long-term debt due within one year and long-term debt
For long-term debt with floating interest rates, their fair value and book value are nearly identical and there
are no significant changes in DOI’s credit risk after borrowing. Therefore, for these items, their book value isassumed as their fair value. For long-term debt with fixed interest rates, their fair value is calculated based on
the present value of principle and interest cash flows discounted at the current interest rate which isestimated to be applied if similar new debt is entered into. However, the fair value of certain floating-ratelong-term debt that qualifies for the special treatment of interest-rate swaps is calculated based on thepresent value of principle and interest cash flows which are processed as a single unit with the interest-rate
swap.

VI. Notes to Financial Statements

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

As of May 31, 2024

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

57,500,000

37,700,000

624,476

Long-term debt

28,000,000

28,000,000– (*2)

85,500,000

65,700,000

624,476(Thousands of yen)

As of November 30, 2023

Hedge
accounting
methodType of derivativetransaction

Hedged item

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

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

Contracted amount

Fair value (*1)

Total

Due after one year

Long-term debt

64,500,000

46,700,000

394,457

Long-term debt

29,900,000

28,000,000– (*2)

94,400,000

74,700,000

394,457(*1) The fair value is provided by financial institutions.
(*2) Fair values of interest-rate swaps with the special treatment are included in fair values of related long-term debt as the interest-rate
swaps are processed as a single unit with the hedged long-term debt.

2. Tenant security deposits including trust accounts (whose book values were 21,298,291 thousand yen and21,559,338 thousand yen as of May 31, 2024 and November 30, 2023, respectively) that have been
deposited by tenants were excluded from the scope of fair value disclosure because they are immaterial.
3. Redemption schedule for investment corporation bonds and long-term debt
(Thousands of yen)

As of May 31, 2024

Due within
one year

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

Investment corporation bonds

3,800,000

1,500,000

Long-term debt

30,800,000 20,700,000 20,200,000 31,600,000 20,200,000 81,900,000

Total

34,600,000 22,200,000 20,200,000 31,600,000 20,200,000 85,600,000––

Due after
four tofive years

Due after
five years–

3,700,000(Thousands of yen)18

As of November 30, 2023

Due within
one year

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

Investment corporation bonds

3,800,000

1,500,000

Long-term debt

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

Total

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

Due after
four tofive years

Due after
five years–

3,700,000

Note 5 – Tangible Fixed Assets of Investment Properties
Investment properties as of May 31, 2024 and November 30, 2023 consisted of the following:(Thousands of yen)

As of May 31, 2024

As of November 30, 2023

Acquisition AccumulatedBook value
cost
depreciation

Acquisition AccumulatedBook value
cost
depreciationLand

12,302,226–

12,302,226

12,302,226–

12,302,226

Buildings andstructures

3,663,816(2,994,150)

669,666

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

716,857

Tools, furnitureand fixtures

22,546(20,429)

2,116

21,875(19,830)

2,044

Construction inprogress

–

–

–

88

–

88

– 359,705,136

354,910,042

Land in trust
accounts

359,705,136

Buildings andstructuresin trust accounts

114,986,482(37,751,708)

77,234,773

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

76,307,899

Machinery andequipmentin trust accounts

1,106,380(652,321)

454,059

1,027,501(611,138)

416,362

Tools, furnitureand fixturesin trust accounts

491,798(301,614)

190,183

456,163(280,798)

175,364

Construction inprogressin trust accounts

3,568,041–

3,568,041

2,381,246–

2,381,246(41,720,223) 454,126,205

487,109,291

Total

495,846,429– 354,910,042(39,897,158) 447,212,133

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
May 31, 2024
November 30, 2023
Book value: (Note 1)
Balance at beginning of period

447,535,958

448,328,813

5,727,365(792,854)

Balance at end of period

453,263,324

447,535,958

Fair value (Note 3)

594,750,000

587,530,000

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 May 31, 2024, the major reason for the increase is acquisition of “S-GATE FIT Nihonbashi
Bakurocho” (6,300 million yen). The major reason for the decrease is depreciation (1,823 million yen). For the fiscal period
ended November 30, 2023, the major reason for the decrease is depreciation (1,787 million yen).
(Note 3)	The fair values as of May 31, 2024 and November 30, 2023 were determined by the sum of appraisal values provided byexternal real estate appraisers.

VI. Notes to Financial Statements

19Note 7 – Revenue Recognition
Information on breakdown of revenues arising from contracts with customers for the fiscal periods ended
May 31, 2024 and November 30, 2023 was as follows:(Thousands of yen)

For the fiscal period ended May 31, 2024
Revenues arising fromcontracts with customers(Note)
Sales of investment properties

Sales to externalcustomers––

892,940

892,940

Other–

12,677,602

Total

892,940

13,570,542

Utility charge revenues(Thousands of yen)

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

Sales to externalcustomers––

1,044,485

1,044,485

Other

–

12,601,743

Total

1,044,485

13,646,229

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

20Note 8 – Rental Revenues and Expenses
Rental revenues and expenses for the fiscal periods ended May 31, 2024 and November 30, 2023 were as
follows:(Thousands of yen)

For the fiscal period ended For the fiscal period ended
May 31, 2024
November 30, 2023
Revenues from property leasing:
Rental revenues

13,562,061

13,604,055

8,481

42,173

13,570,542

13,646,229

Consignment expenses

1,061,359

1,004,099

Utilities expenses

1,000,803

1,141,646

Taxes and dues

1,205,932

1,205,457

Insurance expenses

25,40025,131

Repair expenses

155,778

319,560

1,823,065

1,787,700

75,67075,422

Total rental expenses

5,348,011

5,559,019

Income from property leasing

8,222,531

8,087,210

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 May 31, 2024 and November 30, 2023 were as follows.
(Thousands of yen)

As of May 31, 2024
Total number of own investments units
cancelled (units)
Total amount of cancellation

As of November 30, 2023

19,611

19,611

13,457,770

13,457,770

VI. Notes to Financial Statements

21

Note 11 – Short-Term Debt, Long-Term Debt Due Within One Year, Long-Term Debt andInvestment Corporation Bonds
Short-term debt, long-term debt due within one year, long-term debt and investment corporation bonds asof May 31, 2024 and November 30, 2023 consisted of the following:(Thousands of yen)

As of May 31, 2024

As of November 30, 2023

0.3% unsecured short-term loans due 2024,
from a bank–

500,000

Total–

500,000(Thousands of yen)

As of May 31, 2024
Unsecured loans due 2024 to 2034,
principally from banks and insurancecompanies with interest rates mainly ranging
from 0.1% to 1.2%

As of November 30, 2023

205,400,000

198,300,000

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

214,400,000

207,300,000

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 May 31, 2024 were as
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

34,600,000 22,200,000 20,200,000 31,600,000 20,200,000 85,600,000

DOI maintains commitment line contracts with one financial institution. There was no borrowing execution
balance as of May 31, 2024. The amounts of unused commitments on loans as of May 31, 2024 andNovember 30, 2023 were as follows:(Thousands of yen)

As of May 31, 2024
Total amounts of borrowing commitment lines
Borrowing execution balances
Net unused balance

22

As of November 30, 2023

5,500,000

5,500,000––

5,500,000

5,500,000

Note 12 – Leases
As Lessor
The future minimum rental revenues under existing non-cancelable operating leases as of May 31, 2024
and November 30, 2023 were as follows:(Thousands of yen)

As of May 31, 2024

As of November 30, 2023

Due within one year

11,627,173

10,660,407

Due after one year

20,546,488

18,941,854

Total

32,173,662

29,602,262

Note 13 – Gain on Sale of Investment Properties
No investment properties were sold during the fiscal periods ended May 31, 2024 and November 30, 2023.

Note 14 – Reduction of Investment Properties Purchased with Government Subsidies
Government subsidies of 77,363 thousand yen were deducted from the acquisition cost of the buildings intrust as of May 31, 2024 and November 30, 2023.

Note 15 – Reduction of Investment Properties Acquired through Exchange
The following amounts were deducted from the acquisition cost of the investment property in trust acquired
through exchange as of May 31, 2024 and November 30, 2023.
(Thousands of yen)

As of May 31, 2024

As of November 30, 2023

Buildings and structures in trust accounts

182,846

182,846

Land in trust accounts

887,074

887,074

1,069,921

1,069,921

Total

VI. Notes to Financial Statements

23

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

For the fiscal period ended For the fiscal period ended
May 31, 2024
November 30, 2023
Statutory tax rate

31.46

31.46

Deductible cash distributions(33.17)(33.51)

Reversal of reserve for reduction entry

1.71

1.38

Others0.01

0.01

Effective tax rate

0.01

(0.66)The significant components of deferred tax assets and liabilities as of May 31, 2024 and November 30,
2023 were as follows:(Thousands of yen)

As of May 31, 2024

As of November 30, 2023

Deferred tax assets:
Accrued enterprise tax

13

13

4,933

18,713

4,946

18,727

Deferred gains on hedges

201,393

142,810

Total deferred tax liabilities

201,393

142,810Net deferred tax liabilities(196,447)(124,083)

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

Note 17 – Per Unit Information
Information about earnings per unit for the fiscal periods ended May 31, 2024 and November 30, 2023, andnet assets per unit as of May 31, 2024 and November 30, 2023 were as follows:(Yen)

For the fiscal period ended For the fiscal period ended
May 31, 2024
November 30, 2023
Earnings per Unit:
Net income per unit
Weighted average number of units
outstanding (units)

6,496

12,947

956,516

478,258(Yen)

As of May 31, 2024
Net Assets per Unit

24

258,587

As of November 30, 2023
517,551

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.
DOI implemented a 2 for 1 split of its investment units with a record date of May 31, 2024 and an effective
date of June 1, 2024. Earnings per unit and net assets per unit are calculated assuming the split has been
executed as of December 1, 2023.

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 May
31, 2024 of 6,552,134,600 yen after adding the amount of reversal of reserve for reduction entry tounappropriated retained earnings and a total amount of dividends for the fiscal period ended November 30,
2023 of 6,552,134,600 yen after adding the amount of reversal of reserve for reduction entry tounappropriated 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
May 31, 2024
November 30, 2023
I

Unappropriated retained earnings

II

Reversal of voluntary reserves
Reversal of reserve for reduction entry

III

Cash distributions declaredIV

Retained earnings brought forward

6,214,200,337

6,192,169,585

337,934,263

359,965,015

6,552,134,600

6,552,134,600––

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
May 31, 2024
November 30, 2023
Cash distributions per unit
Board of directors meeting dates

13,70013,700July 19, 2024

January 22, 2024

Note 19 – Related-Party Transactions
No related-party transaction was entered into for the fiscal periods ended May 31, 2024 and November 30,
2023.
DOI became a consolidated subsidiary of Daiwa Securities Group Inc., which is listed in Tokyo Stock
Exchange, Inc. and Nagoya Stock Exchange, Inc. during the fiscal period ended May 31, 2021.

VI. Notes to Financial Statements

25

Note 20 – Segment Information
For the fiscal periods ended May 31, 2024 and November 30, 2023
Segment Information
Segment information has been omitted as DOI has only one segment, which is property leasing business.
Related Information
Information about Products and Services
Disclosure of this information has been omitted as operating revenues to external customers for a single
product/service category account for more than 90% of the operating revenues on the statements of income
and retained earnings.
Information about Geographic Areas(1) Operating revenues
Disclosure of this information has been omitted as domestic operating revenues account for more than
90% of total operating revenues.
(2) Investment properties
Disclosure of this information has been omitted as domestic investment properties account for more than
90% of the book value of the total investment properties.
Information about Major Tenants
Disclosure of this information has been omitted as there is no tenant that accounts for 10% or more of theoperating revenues recorded in the statements of income and retained earnings.

Note 21 – Significant Subsequent Events(a) Split of Investment Units
DOI implemented a 2 for 1 split of its investment units (the “Split”) with a record date of May 31, 2024 andan effective date of June 1, 2024.
(1) Purpose of the Split
The Split was conducted to establish a better environment where investors can invest with ease as well as
to further widen the spectrum of investors and increase the liquidity of the investment units by decreasing
the unit price of the investment units.
(2) Method of the Split
As of the record date of May 31, 2024, DOI implemented a 2 for 1 split of its investment units held byunitholders stated or recorded on the unitholders’ registry at the closing of that date.
(3) Increase in number of investment units through the Spliti)

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

478,258 unitsii)

Increase in number of investment units through the Split: 

478,258 units

iii)

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

iv)

Total number of investment units authorized after the Split: 

4,000,000 units

Per unit information assuming the Split has been executed as of December 1, 2023 is disclosed in Note 17.
Per Unit Information.

26

(b) Acquisition of Own Investment Units
At the meeting of the board of directors held on July 19, 2024, DOI resolved the matters regarding theacquisition of own investment units as described below based on the provisions of Article 80-2 of the Act on
Investment Trusts and Investment Corporations which is applied by replacing the terms and phrases
pursuant to the provisions of Article 80-5, paragraph 2 of the said Act. All own investment units to beacquired are scheduled to be cancelled during the fiscal period ending November 30, 2024.
(1) Reason for acquisition of own investment units
As a result of comprehensive consideration of the level of investment unit prices, the status of cash on
hand, financial conditions, market environment, etc., DOI has determined that the improvement of capitalefficiency through the acquisition and cancellation of its own investment units and the return to unitholders
will contribute to the enhancement of unitholders' value over the medium to long term.
(2) Summary of matters concerning acquisition of own investment units
Total number of investment units that can be acquired

14,000 units (upper limit)

Total acquisition price of investment units

3,000,000 thousand yen (upper limit)

Acquisition period

From July 22, 2024 to November 14, 2024

Acquisition method

Market purchase on the Tokyo Stock Exchange
based on discretionary transaction agreement for
the acquisition of own investment units with asecurities company(c) Acquisition of Assets
The development of the Kandasudacho 2-chome Development Project has been completed and DOI
acquired the building constructed under the project on June 28, 2024 (the “Building”) as described below.
The name of the property was changed to Daiwa Akihabara with the completion of acquisition of the
Building.
Overview of the asset
Property nameDaiwa Akihabara

Asset type

Trust beneficial interest in domestic real estate

Location

19-8 and other parcels of land, Kandasuda-cho 2-chome, Chiyoda-ku, Tokyo

Acquisition price

15,503,000 thousand yen (excluding acquisition costs, consumption tax, etc.) (Note 1)

Acquisition dateJune 28, 2024 (Note 2)

Constructor

Taisei Corporation(Note 1)	The amount represents the sale and purchase price of the land acquired on December 16, 2021 (the “Land”), of 10,600,000
thousand yen stated in the sale and purchase agreement, plus the finalized construction cost of 4,903,000 thousand yen.
Accordingly, the acquisition price differs from the amount of expenses required for the acquisition of the Building.
(Note 2)	DOI owns both the Land and the Building and the date of the acquisition of the Building is indicated.

VI. Notes to Financial Statements

27

(d) Borrowing of Funds
DOI borrowed funds on July 31, 2024 as described below. These funds were partly allocated for acquisitionof the property described in (c) Acquisition of Assets above.
Details of borrowings
LenderBalance(Thousandsof yen)Interest rate

Sumitomo Mitsui
Banking Corporation

1,600,000

1 month Japanese yen
TIBOR +0.4250% (Note 1)

Sumitomo Mitsui
Trust Bank, Limited

1,450,000

1 month Japanese yen
TIBOR +0.4000% (Note 1)

1,000,000

3 month Japanese yen
TIBOR +0.4000% (Note 2)

450,000

1 month Japanese yen
TIBOR +0.2417% (Note 1)

SBI Shinsei Bank,
Limited

Borrowingdate

Repayment
methodMaturity
January
31, 2033

July 31,2024

Unsecured/
Bulletpayment

July 30,2032
May 31,
2029(Note 1)	Interest payments shall be paid at the end of each month (if any such date is not a business day, it will be the following
business day; if such date falls within the next month, the preceding business day of the end of each 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.
(Note 2)	Interest payments shall be paid at the end of February, May, August and November (if any such date is not a business day, it
will be 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 3 month Japanese Yen TIBOR which Japanese Bankers Association
announces two business days prior to the first day of the applicable period.

(e) Sales of Assets
DOI concluded a contract to sell a trust beneficial interest in real estate on July 19, 2024 as described
below.
Overview of the asset
Property nameDaiwa Tsukishima

Asset type

Trust beneficial interest in domestic real estate

Sales price(planned) (Note)

9,800,000 thousand yen (excluding settlement amounts of property taxes and city
planning taxes, and consumption taxes, etc.)(1) 3,920,000 thousand yen(Quasi co-ownership of40%)(2) 2,940,000 thousand yen(Quasi co-ownership of30%)(3) 2,940,000 thousand yen(Quasi co-ownership of30%)(2) May 30, 2025

(3) November 28, 2025

Agreement dateJuly 19, 2024

Delivery date(scheduled)(1) November 29, 2024

Purchaser

Daiwa Securities Realty Co. Ltd.

(Note)	DOI intends to pay the purchaser the costs for a soil contamination investigation and countermeasures as a settlement fee. In
addition, based on the status of future discussions with tenants, DOI, as the seller, may be responsible for tenant response
costs. As stated in the securities report submitted by DOI on February 19, 2024, the cost of soil contamination investigationand countermeasures is related to soil contamination surveys required by the Ordinance on the Environment to Ensure the
Health and Safety of Tokyo Residents when the land of the property is cut or excavated.

28

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

29

30

VII. Independent Auditor’s Report

31

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

Investment unit price (left axis)

Trading volume (right axis)

10,000 (Units)

900,000

9,000

800,000

8,000

700,000

7,000

600,000

6,000

500,000

5,000

400,000

4,000

300,000

3,000

200,000

2,000

100,000

1,000

0

2022
Jun. Jul.

02023
Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun.

Jul.

2024
Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May(Note) A 2-for-1 split of investment units took place on June 1, 2024. This graph is based on the number of investment units before the split.

Overview of Investment Units and Unitholders (As of May 31, 2024)
No. of Investment Units by Investor Type

37th
Fiscal Period

No. of Unitholders
by Investor Type

Individuals/others

Financial institutions

17,410 units (3.64%)

185,202 units (38.72%)

Foreign nationals
66,497 units (13.90%)

Financial
institutions
Other domestic
corporations

Total: 478,258 units
Other domestic corporations 199,873 units (41.79%)

36th
Fiscal Period

Individuals/others

Financial institutions

14,723 units (3.08%)

175,682 units (36.73%)

Securities firms 9,276 units (1.94%)
Foreign nationals
69,336 units (14.50%)

Foreign nationals
Securities firms

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

Securities firms 18,672 units (3.90%)

Top Ten Unitholders (As of May 31, 2024)
Name of Unitholder

Total

IR Calendar
Number ofPercentage
Units Owned
Share(Units)July 19, 2024: Announcement of financial results for
37th Fiscal Period

1. Daiwa Investment Management Inc.

128,905

26.95

August 14, 2024: Sending of Japanese version ofBusiness Report for 37th Fiscal Period(Statement of Financial Performance)

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

69,25014.48

August 15, 2024: Start paying distributions for
37th Fiscal Period

3. Daiwa Securities Group Inc.

67,321

14.08

August 27, 2024: 13th General Meeting of Unitholders

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

65,70013.74

15,514

3.24

10,9952.30

5.

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

6. STICHTING PENSIOEN FONDS ZORG EN WELZIJNTHE NOMURA TRUST AND BANKING CO., LTD. AS THE
7.
TRUSTEE OF REPURCHASE AGREEMENT MOTHER FUND

9,000

1.88

8. STATE STREET BANK WEST CLIENT - TREATY 505234

4,823

1.01

9. Mizuho Securities Co., Ltd.

3,722

0.78

10. SMBC Nikko Securities Inc.

3,567

0.75

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

32

5,531
(92.05%)98(1.63%)
118(1.96%)
245(4.08%)
17(0.28%)
6,009

Individuals/others

May
End offiscal period

Feb.
Jan.

July
End offiscal period

Aug.

Nov.
January 2025: Announcement of financial results for
38th Fiscal Period
February 2025: S ending of Japanese version ofBusiness Report for 38th Fiscal Period(Statement of Financial Performance)
February 2025: S tart paying distributions for
38th Fiscal Period

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

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

Daiwa Office Investment Corporation

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

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

VIII. Investor Information

33