28th

Fiscal Period Business Report(Statement of Financial Performance)

June 1, 2019 – November 30, 2019

Stock
Code

8976

6-2-1 Ginza, Chuo Ward, Tokyo http://www.daiwa-office.co.jp/en/

I. Overview of Daiwa Office Investment Corporation
To Our Investors
In the 28th Fiscal Period, DOI posted operating revenues of 14,094 million yen and operating income of 7,114 million yen. Our
distribution per unit for the 28th Fiscal Period is 13,139 yen, an increase of 580 yen from the 27th Fiscal Period.
See page 4 for financial and management highlights
Average contract rent at the end of the 28th Fiscal Period was 19,759 yen. Rent revisions contributed to a 12 million yen increasein monthly contracted rents from the end of the previous fiscal period, which was a 7.3% rate of increase for average monthlyrent. Furthermore, the rate of increase for average monthly rent stood at 23.0% due to replacement of tenants, and the occupancy
rate was 99.1%. We will realize sustainable internal growth through the thorough implementation of the hands-on approach that
continuously applies “Bonji-Tettei” as the code of conduct.

See page 8 for details of internal growth

During the 28th Fiscal Period, DOI exchanged Daiwa Osaki 3-chome (sale price: 2,685 million yen) for Daiwa Mita 2-Chome (acquisition
price: 2,635 million yen).
In addition, DOI acquired Daiwa Nakano-Sakaue (acquisition price: 2,750 million yen) in the 29th Fiscal
Period. DOI will continue to selectively acquire office properties located in the five central wards ofTokyo in an effort to further improve the value of its portfolio.
See page 12 for details of external growthIn financial matters, DOI promoted diversification of repayment dates by taking out long-termborrowings. DOI will continue striving to further strengthen its financial structure while working to
reduce future refinancing risks. See page 14 for details of financial conditions
DOI will continue to increase the competitiveness of its properties and aim to achieve
its medium- to long-term goal of continuous growth through leveraging borrowing
capacity backed by robust financial base, while increasing long-term EPS (netincome after deducting gain on sales of properties). We wish our unitholders
continued success and ask for your continued support of DOI.

Motoi Takahashi Executive Director of Daiwa Office Investment Corporation
Table of Contents

I. Overview of Daiwa Office Investment Corporation
To Our Investors……………………………………………… 2

II. Asset Management Report…………………………… 17
III. Balance Sheets… ……………………………………… 22

Characteristics and Strategies of
Daiwa Office Investment Corporation ………………………… 3
Financial and Management Highlights………………………… 4
Overview of Portfolio (Portfolio list)…………………………… 5
Overview of Portfolio (Portfolio distribution)…………………… 6
Internal Growth Measures… ………………………………… 8External Growth Measures…………………………………… 12
Financial Conditions… ……………………………………… 14
ESG Measures… …………………………………………… 15
Description of Asset Manager………………………………… 16

2

IV. Statements of Income and Retained Earnings…… 24
V. Statements of Changes in Net Assets……………… 25
VI. Statements of Cash Flows… ………………………… 26
VII. Notes to Financial Statements……………………… 27
VIII. Independent Auditor’s Report… …………………… 41
IX. Investor Information… ………………………………… 42

Characteristics and Strategies of Daiwa Office Investment Corporation

Characteristics of Daiwa Office Investment Corporation

Office Specialized
REIT

REIT Focused on the Five
Central Wards of Tokyo

Effective application of operational knowhow specialized in officebuildings

Places priority on owning office buildings in favorable locations forwhich there is high demand

Office buildings 100.0%

Major Regional Cities 2.0%
Greater Tokyo

Five Central
Wards of Tokyo

80.6%

17.4%

Based on acquisition price(Note) Please note that the percentages in the above graphs are as of December 13, 2019

Growth Strategies
Activities for solid growth・Continue acquiringproperties

Achievement of a 500 billion yen asset size

・Leverage borrowing
capacity

Keep the medium- to long-term, upper-limit
LTV target range within 40%~50%

500.0(Billions of yen)
500

469.3 469.3

439.4

459.7 460.0

461.0 463.8

400

300

Establishment of stable revenue base・Property management
activities

Continuation of “Bonji-Tettei”
Thorough implementation of hands-on
approach
Further strengthen relations with tenants

・Maintain andimprove property
value

Capture tenant needs by reinforcing ties withproperty managers
Strategic renewals and lease-up activities

・Financial activities

Reduce refinancing risk by extending
borrowing periods and diversifying
repayment dates

Distribution per Unit

200

100

0
Fiscal period Fiscal period Fiscal period Fiscal period Fiscal period Fiscal period
As of
ended
ended
ended
ended
ended
ended
DecemberMay 2017 November 2017 May 2018 November 2018 May 2019 November 2019 13, 2019

Fiscal period ending November 2019(28th Fiscal Period)

Fiscal period ending May 2020
(Note) The forecasts on distribution are calculated basedon certain assumptions and may vary due tochanges in the status and other factors. Moreover,the forecasts set forth herein should not be
construed as a guarantee of distribution amounts.

(29th Fiscal Period)

Fiscal period ending November 2020
(30th Fiscal Period)

13,139 yen
13,400 yen
13,700 yen

Medium-term
goal(Actual)(Forecast)(Forecast)

I. Overview of Daiwa Office Investment Corporation

3

Financial and Management Highlights
Steady increase of distributions due to progress in internal growth■ Operating Revenues■ Operating Income■ Net Income(Millions of yen)
14,000(Millions of yen)
7,000(Millions of yen)
7,000

12,735

13,44013,19314,094

13,833

6,678
6,177

11,000

6,979

7,114

6,535

6,462

6,320
5,887

5,000

5,000

3,000

3,000

5,901

5,455

8,000

5,000

0

0
24th Period 25th Period 26th Period 27th Period 28th Period■ Distribution per Unit

Forecast from one year earlier
Actual dividends(Yen)
14,00012,00010,0000
24th Period 25th Period 26th Period 27th Period 28th Period

Forecast from six months earlier

9,750
9,850
10,5089,900
10,55010,695

10,56010,70010,764

10,71010,77010,957

10,80011,000
11,15021st Period

22nd Period

23rd Period

24th Period

25th Period

9,000
9,350
9,688

24th Period 25th Period 26th Period 27th Period 28th Period

11,40011,85011,997

13,70012,40013,00013,13913,20013,40028th Period

29th Period 30th Period(Forecast) (Forecast)

12,00012,30012,559

8,000
6,000
4,000
2,000
0
20th Period

26th Period

27th Period

28th Period

27th Period

26th Period

25th Period

24th Period(November 2019)(May 2019)(November 2018)(May 2018)(November 2017)

Operating revenues (Millions of yen)

14,094

13,833

13,193

13,44012,735

Operating income (Millions of yen)

7,114

6,979

6,535

6,678

6,177

Ordinary income (Millions of yen)

6,463

6,320

5,902

5,888

5,456

Net income (Millions of yen)

6,462

6,320

5,901

5,887

5,455

Total number of units issued (Units)491,877

491,877

491,877

491,877

497,869

Net assets per unit (Yen)

518,203517,324

516,641

515,730

515,790

Distribution per unit (Yen) (Note)

13,13912,55911,997

11,15010,957

Total assets (Millions of yen)

486,030

485,636479,212467,040

483,173

42.1

42.1

41.5

40.5

42.3

59

59

58

55

54

Asset size (Billions of yen)

461.0

460.0

459.7

439.4

469.3

Total rentable area (m )364,787.57

364,375.19

360,958.95

340,144.07

338,377.31

99.1

97.1

98.9

99.0

98.2

Loan-to-value (LTV) (Based on total asset value) (%)
Number of investment properties

2

Occupancy rate (%)(Note) Distribution per unit for the 25th fiscal period is calculated by dividing the amount obtained by subtracting provision for reserve for reduction entry (403 million yen) from unappropriated retained earnings by the
total number of investment units issued.
Distribution per unit for the 27th fiscal period is calculated by dividing the amount obtained by subtracting provision for reserve for reduction entry (142 million yen) from unappropriated retained earnings by the
total number of investment units issued.

4Overview of Portfolio (Portfolio list)(As of December 13, 2019)
Property Name

Address

Appraisal
Execution Acquisition
Rentable Structure andPrice
Value at End
Area (m2) No. of Floors Completion of Major
of Period
Share(Note 2)
(Note 3)
Repairs mm yen (%) (mm yen) (Note 4)

Five Central Wards of Tokyo (Note 1)
1 Daiwa Ginza
Ginza, Chuo-ku, Tokyo
8,114.93 SRC B3/12F July 1963
2 Daiwa Ginza Annex
Ginza, Chuo-ku, Tokyo
2,032.11 SRC B3/8F Aug. 1972
3 Daiwa Shibaura
Shibaura, Minato-ku, Tokyo
9,619.67 SRC B1/12F Oct. 1987
4 Daiwa Minami-Aoyama
Minami Aoyama, Minato-ku, Tokyo
2,715.54 S SRC B2/5F Sept. 1990
5 Daiwa Sarugakucho
Kanda Sarugakucho, Chiyoda-ku, Tokyo
3,657.43
SRC 8F
June 1985
6 Daiwa A Hamamatsucho
Hamamatsucho, Minato-ku, Tokyo
3,663.38 SRC B2/10F July 1993
7 Daiwa Jingumae
Jingumae, Shibuya-ku, Tokyo
2,198.61 RC B1/4F
Dec. 1997
8 Daiwa Shibadaimon
Shibadaimon, Minato-ku, Tokyo
2,386.48 SRC RC B1/7F Nov. 1996
9 Daiwa Misakicho
Kanda Misakicho, Chiyoda-ku, Tokyo
2,137.53
S 8F
July 1996
10 Daiwa Shimbashi 510
Shinbashi, Minato-ku, Tokyo
2,595.76 SRC B1/8F
Apr. 1974
11 Daiwa Tsukijiekimae
Tsukiji, Chuo-ku, Tokyo
2,659.59
SRC 10F
Jan. 1996
12 Daiwa Tsukiji
Tsukiji, Chuo-ku, Tokyo
1,487.44 SRC B1/7F Jan. 1990
13 Daiwa Tsukishima
Tsukishima, Chuo-ku, Tokyo
8,425.69
S 5F
July 1996
14 Daiwa Nihonbashi Horidomecho Nihombashi-Horidomecho, Chuo-ku, Tokyo
2,850.81 SRC B2/7F
Apr. 1993
15 Daiwa Azabudai
Azabudai, Minato-ku, Tokyo
1,697.88 SRC B2/9F
Apr. 1984
16 Daiwa Kyobashi
Hatchobori, Chuo-ku, Tokyo
3,265.83 SRC B1/8F Oct. 1974
17 Daiwa Kojimachi 4-chome
Kojimachi, Chiyoda-ku, Tokyo
2,695.31 SRC B2/9F Oct. 1987
Yoyogi, Shibuya-ku, Tokyo
22,759.66 S SRC B3/34F Sept. 1995
18 Shinjuku Maynds Tower (Note 5)
Udagawacho, Shibuya-ku, Tokyo
2,480.65 RC B1/9F
Aug. 200619 Daiwa SHIBUYA EDGE
20 Daiwa Kodenmacho
Nihombashi-Odenmacho, Chuo-ku, Tokyo
2,379.31
SRC 8F
Mar. 1985
21 Daiwa Jimbocho
Kanda-Jimbocho, Chiyoda-ku, Tokyo
3,164.26
S B1/8F
Mar. 199722 Daiwa Nishi-Shimbashi
Nishi-Shimbashi, Minato-ku, Tokyo
4,815.84 SRC B1/10F July 1993
23 Daiwa Kayabacho Building
Nihombashi-Kayabacho, Chuo-ku, Tokyo
5,899.11 S SRC B1/8F Apr. 201024 Daiwa Jinbocho 3-chome
Kanda-Jimbocho, Chiyoda-ku, Tokyo
2,889.34
S 9F
Feb. 2010
25 E SPACE TOWER
Maruyamacho, Shibuya-ku, Tokyo
13,960.87 S SRC B1/15F Oct. 2002
26 Daiwa Nihonbashi Hongokucho
Nihombashi Hongokucho, Chuo-ku, Tokyo
2,143.08
S 8F
May 2010
27 shinyon curumu
Shinjuku, Shinjuku-ku, Tokyo
6,751.31 S RC B2/11F Jan. 201228 Daiwa Akasaka
Akasaka, Minato-ku, Tokyo
8,747.39 SRC B2/7F Sept. 1990
29 Daiwa Shibuya Miyamasuzaka
Shibuya, Shibuya-ku, Tokyo
6,328.94 S B1/12F
Dec. 1988
30 Daiwa Azabu Terrace
Minami Azabu, Minato-ku, Tokyo
13,234.39 S RC B1/6F Sept. 200931 Daiwa Ebisu 4-chome
Ebisu, Shibuya-ku, Tokyo
2,951.70 SRC B1/9F Dec. 1997
32 LAQUAS Higashi Shinjuku
Okubo, Shinjuku-ku, Tokyo
7,498.33
S10F
Aug. 201033 Daiwa Aoyama
Jingumae, Shibuya-ku, Tokyo
4,426.10 S RC B1/7F Nov. 2001
34 Shinsen Place
Shinsen-cho, Shibuya-ku, Tokyo
2,811.35 RC B1/9F
Sept. 2001
Nanpeidaicho, Shibuya-ku, Tokyo
8,566.73 S SRC B1/11F Feb. 2004
35 Daiwa Shibuya Square (Note 6)
36 Daiwa River Gate
Nihonbashi Hakozakicho, Chuo-ku, Tokyo
32,055.85 S SRC RC B2/20F Feb. 1994
37 Daiwa Hatchobori ekimae
Hatchobori, Chuo-ku, Tokyo
2,622.42 S SRC B1/10F Feb. 200638 Daiwa Hatchobori ekimae West
Hatchobori, Chuo-ku, Tokyo
1,734.68 SRC B1/9F Feb. 1996
Nishishinjuku, Shinjuku-ku, Tokyo
6,967.61 SRC RC S B2/11F Aug. 1991
39 Daiwa Nishi-Shinjuku
40 Kirin Nihonbashi Building
Nihonbashi Koami-cho, Chuo-ku, Tokyo
5,630.17 S SRC 7F
Feb. 1999
41 Daiwa Higashi-nihonbashi
Higashi Nihonbashi, Chuo-ku, Tokyo
5,015.88
S 7F
Mar. 200842 Daiwa Daikanyama
Daikanyamacho, Shibuya-ku, Tokyo
1,642.83
S 6F
Mar. 2001
Nishishinjuku, Shinjuku-ku, Tokyo
1,120.58
RC 4F
Mar. 1989
43 Daiwa Shinjuku West (Note 6)
Kanda Mikura-cho, Chiyoda-ku, Tokyo
1,719.51 SRC S B1/7F Jan. 1991
44 Daiwa Kanda Mikuracho Building
Kanda Higashi Matsushitacho, Chiyoda-ku, Tokyo 3,980.56
S 9F
Feb. 2005
45 Daiwa Kanda East
Kanda Suda-cho, Chiyoda-ku, Tokyo
2,211.64 S RC B1/10F Aug. 1990
46 Daiwa Kandasudacho (Note 6)
Sasazuka, Shibuya-ku, Tokyo
16,160.25 SRC RC S B2/18F Feb. 1993
47 Daiwa Sasazuka Tower (Note 6)
Sasazuka, Shibuya-ku, Tokyo
3,828.95 SRC S B1/8F Dec. 1991
48 Daiwa Sasazuka (Note 6)
Harumi, Chuo-ku, Tokyo
11,227.10 S B1/12F
Jan. 200849 Daiwa Harumi (Note 6)
Mita, Minato-ku, Tokyo
2,101.61
S 8F
Mar. 201750 Daiwa Mita 2-Chome (Note 6)
Subtotal
282,031.99
Greater Tokyo Area (Note 1)
51 Daiwa Higashi-Ikebukuro
Higashi-Ikebukuro, Toshima-ku, Tokyo
4,462.28 SRC S B1/9F June 1993
52 Daiwa Shinagawa North
Kita-Shinagawa, Shinagawa-ku, Tokyo
6,548.17 SRC B1/11F July 1991
Kamiooka Nishi, Konan-ku, Yokohama City, Kanagawa 2,630.30 S SRC B3/7F May 201153 Daiwa Kamiooka(Note
6)
Kamiogi, Suginami-ku, Tokyo
17,778.14 S SRC B2/18F June 1993
54 Daiwa Ogikubo Tower
55 Daiwa Meguro Square
Meguro, Meguro-ku, Tokyo
3,519.50 S SRC B2/14F July 200956 Daiwa Ogikubo
Ogikubo, Suginami-ku, Tokyo
3,849.63 SRC B1/7F Nov. 1990
(Note
7)
Kinko-cho, Kanagawa-ku, Yokohama City, Kanagawa 28,052.98 S SRC B1/20F Feb. 200857 CONCURRED Yokohama(Note
6)
Kita-Shinagawa, Shinagawa-ku, Tokyo
2,396.96 SRC S 8F
July 1992
58 Daiwa Shinagawa Gotenyama
59 Daiwa Nakano-Sakaue
Honcho, Nakano-ku, Tokyo
2,869.13 SRC B1/8F Jan. 1995
Subtotal
72,107.09
Major Regional Cities (Note 1)
60 Daiwa Kitahama
Awaji-cho, Chuo-ku, Osaka City, Osaka
13,517.62 S SRC B1/16F Feb. 2008
Subtotal
13,517.62
Total
367,656.70

2003
2003

Ownership TypeLand

Building

PML (%)

14,100 3.0
3,050 0.7
8,265 1.8
4,550 1.0
3,190 0.7
2,865 0.62,800 0.6
2,578 0.6
2,346 0.5
2006
2,080 0.4
1,560 0.3
1,240 0.3
7,840 1.7
2,520 0.51,600 0.3
2005
3,460 0.7
2,910 0.6
66,900 14.4
5,900 1.3
2,460 0.5
4,150 0.95,000 1.1
5,600 1.2
3,550 0.8
24,000 5.2
1,721 0.4
9,650 2.1
9,200 2.0
7,000 1.5
14,000 3.0
4,135 0.98,450 1.89,800 2.1
4,800 1.0
16,000 3.4
28,000 6.0
2,871 0.6
1,647 0.4
13,710 3.08,180 1.8
6,370 1.4
2,280 0.5
942 0.2
1,592 0.3
4,200 0.9
2,295 0.5
15,500 3.3
3,000 0.6
11,200 2.4
2,635 0.6
373,692 80.6

simple and17,600 Feeleasehold
Fee simple
4,060 Fee simple
Fee simple
8,350 Fee simple
Fee simple
4,840 Fee simple
Fee simple
4,230 Fee simple
Fee simple
Compartmentalized
3,920 Fee simple
ownership
3,100 Fee simple
Fee simple
3,560 Fee simple
Fee simple
2,940 Fee simple
Fee simple
2,530 Fee simple
Fee simple
2,170 Fee simple
Fee simple
1,660 Fee simple
Fee simple
10,800 Fee simple
Fee simple
2,840 Fee simple
Fee simple
1,940 Fee simple
Fee simple
Compartmentalized
3,450 Fee simple ownership (100%)Compartmentalized
2,910 Fee simple ownership (100%)
63,900 Co-ownership Co-ownership
5,410 Fee simple
Fee simple
simple andFee simple
2,310 Feeleasehold
3,990 Fee simple
Fee simple
7,240 Fee simple
Fee simple
8,210 Fee simple
Fee simple
5,250 Fee simple
Fee simple
36,600 Fee simple
Fee simple
2,610 Fee simple
Fee simple
Compartmentalized
16,500 Right of site ownership (100%)
15,500 Fee simple
Fee simple
11,800 Fee simple
Fee simple
17,800 Fee simple
Fee simple
6,290 Fee simple
Fee simple
11,200 Fee simple
Fee simple
12,600 Fee simple
Fee simple
6,780 Fee simple
Fee simple
21,700 Fee simple
Fee simple
33,200 Fee simple
Fee simple
3,470 Fee simple
Fee simple
1,930 Fee simple
Fee simple
16,600 Fee simple
Fee simple
8,350 Fee simple
Fee simple
7,030 Fee simple
Fee simple
3,590 Fee simple
Fee simple
1,210 Fee simple
Fee simple
1,800 Fee simple
Fee simple
5,620 Fee simple
Fee simple
2,810 Right of site Compartmentalized
ownership (100%)Fee simple
16,300 Fee simple
3,470 Fee simple Compartmentalized
ownership (100%)
12,300 Fee simple
Fee simple
3,280 Fee simple
Fee simple
457,550

4.53
3.97
3.82
9.19
7.14
3.79
13.33
3.72
4.24
5.51
4.23
4.98
4.87
4.68
6.64
4.51
6.19
2.03
1.56
4.19
5.05
3.76
4.50
5.33
3.11
3.80
4.44
7.14
5.64
2.67
2.44
4.46
4.42
6.21
1.61
1.76
5.89
7.03
4.32
5.76
4.37
6.21
8.28
6.01
3.86
5.12
1.52
5.90
4.30
3.21

2,958 0.6
7,710 1.7
2,000 0.4
15,220 3.3
5,600 1.2
3,800 0.8
38,100 8.2
2,500 0.52,750 0.6
80,638 17.4

4,300 Fee simple
Fee simple
6,350 Fee simple
Fee simple
2,900 Fee simple
Fee simple
22,700 Fee simple
Fee simple
7,090 Fee simple
Fee simple
Compartmentalized
4,730 Fee simple ownership (100%)
41,100 Quasi co-ownership Quasi co-ownership
2,710 Fee simple
Fee simple
2,910 Fee simple
Fee simple
94,790

3.55
7.19
6.29
1.18
1.68
6.41
0.92
7.07
5.93

9,481
9,481
463,811

13,30013,300565,640

3.48

2.0
2.0
100

Fee simple

Fee simple(Note 1) The Five Central Wards of Tokyo are Chiyoda, Chuo, Minato, Shinjuku and Shibuya Wards (or ku). The Greater Tokyo Area is Tokyo (excluding the Five Central Wards), and Kanagawa, Chiba and Saitama prefectures.
Major Regional Cities are the Osaka area (Osaka, Kyoto and Hyogo prefectures), Nagoya area (Aichi, Mie and Gifu prefectures) and ordinance designated cities and core cities set forth in the Local Autonomy Act.
(Note 2) The Rentable Area is indicated as of November 30. 2019 (end of 28th Fiscal Period).
(Note 3) Structure acronyms are S for steel, RC for reinforced concrete and SRC for steel-reinforced concrete.
(Note 4) The values entered in the Appraisal Value at End of Period column are the appraisal values in the real estate appraisal reports with a pricing point of October 10, 2019 for Daiwa Nakano-Sakaue, and of November
30. 2019 (end of 28th Fiscal Period) for other properties.
(Note 5) The entrusted real estate corresponding to trust beneficiary interests that DOI owns regarding Shinjuku Maynds Tower is a co-ownership interest equal to 3/7 of the entire property. The figure shown for the Rentable
Area is the figure equivalent to 3/7 of the total rentable area of the entire building.
(Note 6) Concerning the names of properties, DOI changed Glass City Shibuya to Daiwa Shibuya Square, Shinjuku West Building to Daiwa Shinjuku West, Prime Kanda Building to Daiwa Kandasudacho, Sasazuka NA Building
to Daiwa Sasazuka Tower, Sasazuka South Building to Daiwa Sasazuka, Glass City Harumi to Daiwa Harumi, Sumitomo Fudosan Mita 2-Chome Building to Daiwa Mita 2-Chome, Integral Tower to Daiwa Ogikubo
Tower, and Kita-Shinagawa Gotenyama Building to Daiwa Shinagawa Gotenyama on September 1, 2019.
(Note 7) The entrusted real estate corresponding to trust beneficiary interests that DOI owns regarding CONCURRED Yokohama is a quasi co-ownership interest equal to 75/100 of the entire property. The figure shown for
the Rentable Area is the figure equivalent to 75/100 of the total rentable area of the entire building.

I. Overview of Daiwa Office Investment Corporation

5Overview of Portfolio (Portfolio distribution)
DOI concentrates its investment in the Five Central Wards of Tokyo (Chiyoda, Chuo, Minato, Shinjuku and Shibuya)
Shibuya-ku

7 Daiwa Jingumae

18 Shinjuku Maynds Tower

19 Daiwa SHIBUYA EDGE

25 E SPACE TOWER

29 Daiwa Shibuya Miyamasuzaka

31 Daiwa Ebisu 4-chome

51 Daiwa Higashi-Ikebukuro

Ikebukuro Sta.
51

33 Daiwa Aoyama

34 Shinsen Place

35 Daiwa Shibuya Square

54

42 Daiwa Daikanyama

Suginami-ku

47 Daiwa Sasazuka Tower

Toshimaku

48 Daiwa Sasazuka

Nakano Sta.

56 Ogikubo Sta.
54 Daiwa Ogikubo Tower

32
HigashiShinjuku Sta.

59 Daiwa Nakano-Sakaue

Shinjuku-ku

Shinjuku-ku

59
43
39
e 18
Lin
ew
oN
i
e
K
and
Line
Keio

Honancho Sta.
56 Daiwa Ogikubo

Tokyo Metro
Ginza Line
Marunouchi Line
Hibiya Line
Tozai Line
Chiyoda Line
Yurakucho Line
Hanzomon Line
Namboku Line
Fukutoshin Line

Toei Subway

27 shinyon curumu

32 LAQUAS Higashi Shinjuku

39 Daiwa Nishi-Shinjuku

43 Daiwa Shinjuku West

48 47

Minato-ku

Yotsuya Sta.

Shibuya-ku

1925
3 Daiwa Shibaura

4 Daiwa Minami-Aoyama

34

6 Daiwa A Hamamatsucho

35

ine
hi L
Tos
n
e
Den
yu
Tok

Lin
e
To
kyu
To
yok
o
8 Daiwa Shibadaimon

10 Daiwa Shimbashi 510

29
Shibuya Sta.
42

Naka-meguro Sta.

31
Ebisu Sta.

15 Daiwa Azabudai

55

Main investment area:
Five Central Wards ofTokyo
Focused investmentarea: Greater Tokyo

6

Gaienmae Sta.

4

Omotesando Sta.

JR

Major Regional Cities

Aoyamaitchome Sta.

7
33

Oedo Line
Asakusa Line
Mita Line
Shinjuku Line
Yamanote Line
Saikyo Line
Chuo Line
Sobu Line
Keiyo Line
Yokosuka Lineand
Sobu Rapid Line

Shinjuku Sta.
27

Meguro Sta.

Osaki Sta.
22 Daiwa Nishi-Shimbashi

28 Daiwa Akasaka

30 Daiwa Azabu Terrace

50 Daiwa Mita 2-Chome

55 Daiwa Meguro Square(As of December 13, 2019)

Chuo-ku

1 Daiwa Ginza

2 Daiwa Ginza Annex

11 Daiwa Tsukijiekimae

23 Daiwa Kayabacho Building

26 Daiwa Nihonbashi Hongokucho 36 Daiwa River Gate

12 Daiwa Tsukiji

13 Daiwa Tsukishima

37 Daiwa Hatchobori ekimae

38 Daiwa Hatchobori ekimae West 40 Kirin Nihonbashi Building 41 Daiwa Higashi-nihonbashi

14 Daiwa Nihonbashi Horidomecho

16 Daiwa Kyobashi

20 Daiwa Kodenmacho

49 Daiwa Harumi

Chiyoda-ku

Asakusa Sta.
Oshiage Sta.

Suidobashi Sta.

9

Akihabara Sta.

5

24 21

Kudanshita Sta.

46
45
44

26

41
20

Chiyoda-ku

12Toranomon Sta.

28

Shimbashi Sta.
22
10

6

15
8

50 Shibakoen

17 Daiwa Kojimachi 4-chome

21 Daiwa Jimbocho

24 Daiwa Jinbocho 3-chome

44 Daiwa Kanda Mikuracho Building

45 Daiwa Kanda East

46 Daiwa Kandasudacho

Nihombashi Sta.

Hibiya Sta.

Akasaka Sta.

9 Daiwa Misakicho

Ningyocho Sta.

Tokyo Sta.
Akasakamitsuke Sta.

5 Daiwa Sarugakucho

14

Otemachi Sta.

17

Kinshicho Sta.

23 Suitengumae36

Chuo-ku

40

16

38 37

Ginza Sta.

12

Sta.

Hatchobori
Sta.

11
Tsukishima Sta.

13
49

Minato-ku Sta.
30

352 Daiwa Shinagawa North

53 Daiwa Kamiooka

58 Daiwa Shinagawa Gotenyama

60 Daiwa Kitahama

57 CONCURRED Yokohama

Shinagawa
Sta.

52
58

Shinagawaku

60

53 57

I. Overview of Daiwa Office Investment Corporation

7

Internal Growth Measures
Realizing rent increases upon contract renewal and tenant replacement while working to heighten tenant satisfaction

Office Market Trends
Further improvements in vacancy rate are observed and rent levels are continuously increasing.

■ Office Building Rental Market of Tokyo■ Office Market Medium-Term Forecast
(%)
10.0

(Tsubo)500,000

22,021 8.0

400,000

8.0

300,000

6.0

200,000

4.0(Yen/tsubo)
24,00022,000New supplies (Grade-A, etc.)
Floor area of new demands

New supplies (others)
Vacancy rate

(%)
10.0

New supplies (overall)

20,000

6.0

18,0004.0

100,000

2.0

16,000

2.0

0

0.0

-100,0000.0
Predicted
figures (Note 1) -2.0

Average rents of existing buildings (left axis)
Vacancy rate of existing buildings (right axis)

14,0001.49

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

(Source) Miki Shoji(Source) CBRE “Office market medium term forecast 2019-2023(Note 1) Predicted figures as of June 2019
(Note 2) No information on the breakdown of new supply is available in or before 2004
(only the total amount is available■ Occupancy Rate

■ Rate of New Leases and Cancellations*

(%)
100.0

96.4
95.0

95.0

96.3 96.4

97.2 97.3

98.3 98.7

97.7 97.7

98.2

(%)
20.0

99.1 99.1

99.0 98.9

98.6
99.0 98.4

9.8

10.0

97.1

8.2

3.3

94.3

5.7

4.4

6.1 6.2
2.0

4.3

5.1
2.9 3.8 4.4 4.0 2.7 3.5

1.8

1.3 0.8

0.0
92.4
90.0

Occupancy rate (actual)
Occupancy rate (forecast)Occupancy rate (forecast)(as of disclosure in July 2019))

85.0

-10.0

-5.9

-5.3
-7.3 -6.3-2.4 -1.7 -1.5

-2.8
-6.1 -5.7-3.8 -3.6 -3.9 -3.3 -2.7 -3.8 -3.0

Rate of new leases
Rate of cancellations-20.0-1.3 -1.3

Expected rate of new leases
Expected rate of cancellations

End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of
12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 29th 30th
Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period

End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of
12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 29th 30th
Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period* Transition of rate of new leases and cancellation areas to the total rentable area.

Rental Business Status■ Average Contract Rent and Market Rent

■ Attribution Analysis/Monthly Contract Rent*(Yen/tsubo)
30,000(Millions of yen)100

27,000

88.35
84.79

24,000

86.67

90

2,300

Increasedue tonew leases

2,250

+108

2,200

80

–58

+12

2,150

21,00070

2,100

18,00019,571
19,75960
19,237

2,050

Increasedue tocontract
renewals

2,083

Decreasedue totenants’cancellations

Increasedue tonew acquisition–0
Decreasedue tocontract
renewals

+12

–9

2,149

Decreasedue to sales

2,000

15,000

Average contract rent (left axis)*
Unit rent index(Period-on-period comparison, right axis)**12,00050

40
End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of
8th 9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th
Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period* Average contract rent is average monthly contracted rent with tenants at the end of each fiscal period.
** Unit rent index is the earning rate of unit rent of individual properties indexed with the 7th Fiscal Period
as100.

8

1,950
1,900
End of 27th FP
monthly contract rent

End of 28th FP
monthly contract rent

* Monthly contract rent is the total of final rent from tenants contracting at the end of the Fiscal Period.
Monthly contract rent for Shinjuku Maynds Tower and CONCURRED Yokohama were respectively adjusted to
3/7 and 75/100 of the total.

Status of Contract Renewal/New Lease■ Area of which Contract Ended/Will End In and Afterthe Fiscal Period Ended November 2019 (28th fiscal period)(Based on rentable area)■ Changes in Ratios of Areas with Rent Increase/Decrease/
Unchanged and Cancellation upon Contract Renewal

(%)
30.0

28th Period

53.4

27th Period 0.7(Note 2)

Scheduled
21.0

20.0

20.0

17.3

25th Period 3.2(Note 1)

20.5

16.2

15.0

43.8

40.4

7.8

44.4

6.6

53.4

3.9

42.6
49.0

1.4

70.8
20.0

40.0

Decrease

32nd Period

0.7

61.1

26.5
0.0

31st Period

50.1

37.5

19th Period
30th Period

2.9

51.7

0.0

29th Period

4.2

49.9

48.8

21st Period 0.2

28th Period

49.9

24th Period

20th Period

5.0

7.7

23rd Period
22nd Period

10.0

8.1

34.0

45.8

26th Period

25.0

38.4

57.4

Increase

2.7

60.0
Unchanged

80.0
Cancellation

100.0
（%）

(Note) The ratio of areas of which lease contracts are scheduled to be renewed in each fiscal period to thetotal rentable area (361,788.08m2) as of the end of November 2019 is indicated.

(Note 1) Decrease in the 25h FP is due to some tenants switching from sublease agreements to master leaseagreements.
(Note 2) Decrease in the 27th FP is due to an agreement on rent decrease made under the previous owner.

■ Changes in Rent Increase/Decrease Rate of Contract
Renewal Tenants (Sections)■ Total Monthly Rent and Increase/Decrease Rate at Tenant
Replacement

(%)
15.0

New tenant (left axis)
Previous tenant (left axis)(Thousands of yen)
100,000

10.0

5.0
1.0

5.0

9.8
4.3

0.0
-5.0

-7.0

-4.9

5.2
5.2
0.0

9.0
9.0

0.0

7.3
7.2

6.1
6.1

-5.1

0.0

8.1
8.1

7.8

0.0

0.0

7.8

9.9
6.6

9.9

7.2
7.0

7.3
7.3

80,0000.0

60,00040,000-10.0

98,246

96,29491,394
83,962
83,7724.2
0.0

Increase/decrease rate (right axis)

14.9

23.1
79,804

66,10456,967 16.0

（%）
25.0

23.0
78,60963,923

20.0

15.0

10.0

8.9

-12.3

-15.0

20,000

Increase rate
-20.0

Decrease rate

-21.2

Rent increase/decrease rate

-25.0

5.0

0

17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th
Period Period Period Period Period Period Period Period Period Period Period Period(Note) Indicates rent increase/decrease rate against contract rents before the renewals for lease contracts
whose contract renewal periods have arrived in the above periods and whose rent renewals have been
agreed. Rent increase/decrease rate is calculated based on net amount for increased/decreased rents.

0.0

24th Period

25th Period

26th Period

27th Period

28th Period(Note) Compared monthly rent before and after tenant replacement for the same leasing areas. The rate isbased on total monthly rent.

Improvement in Financial Standing■ Monthly Rent Increase Due to Contract Renewal/New Lease(Financial Standing)(Thousands of yen/month)
40,00037,56518,441

Contract Renewal
Tenant Replacement

30,00020,00010,000014,246
14,376 766
12,7479,020 6,438 13,479 3,988
3,157 7,938
8,759
5,862
19th
Period28,22527,02025,5289,137
14,686
6,680 21,804 21,309
21,184
7,432 12,521
8,325
19,087 19,123
18,847
14,371

12,334 12,859
8,787

20th
21st 22nd 23rd
24th
25th
26th
Period Period Period Period Period Period Period■ Increase in Dividend Resource Due to Improved Financial Standing
Simple19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th averageof tenPeriod Period Period Period Period Period Period Period Period Period fiscal
periods

6-monthGrowth rate conversion 0.7% 1.0% 0.8% 0.7% 1.4% 1.2%1.2% 1.5% 1.9% 1.3% 1.2%of rent andcommonarea fees 12-month 1.3% 2.0% 1.7% 1.5% 2.8% 2.4%2.3% 3.0% 3.9% 2.6% 2.3%
conversion(Note 1)
Growth rate 6-month 1.5% 2.1% 1.8% 1.5% 2.9% 2.4%2.3% 2.9% 3.8% 2.6% 2.4%
of dividend conversion
resource 12-month
4.8%(Note 2)conversion 3.0% 4.3% 3.6% 2.9% 5.8% 4.9%4.7% 5.8% 7.6% 5.1%

27th
28th Simple
Period Period average often fiscal periods(Note 1) The figures are calculated by dividing the rent increase due to improvement in financial standing each period (monthly rent increase X 6 months) by rents and common area fees income in the immediately prior fiscal
period.
(Note 2) The figures are calculated by dividing the rent increase due to improvement in financial standing each period (monthly rent increase X 6 months) by net income in the immediately prior fiscal period.

I. Overview of Daiwa Office Investment Corporation

9

Internal Growth Measures“Bonji-Tettei”
Continuous internal growth and maximization of asset value through “Bonji-Tettei”“Bonji-Tettei”
Accurate grasp of present
situations◦Accurate understanding of the leasing market◦Grasping of needs and trends of occupying tenants through regular visits◦In-depth understanding of property features

Activities for internal growth◦Information gathering from brokers◦Implementing tenant satisfaction surveys and proposing improvement measures◦Periodical property examination

Realization of internal growth◦Maintenance of a stable occupancy rate by promptly filling vacancies◦Realization of stable management through solid relationship with tenants◦Securement of revenue based on well-planned medium- to long-term management

Aims to maximize asset value
Office Management Team
(8 members)

Aims at maximizing asset value
through efforts of the specialist
group by assigning personnel incharge to each property in DOI's
portfolio.

Hiroshi Udagawa Takafumi Ushiku Kotaro Ishii

Jun Arai

Chie Kamimura

Kosuke Mizunara Jun Iwasaki

Construction Management
Team (7 members)

Engineering: Formulation and implementation of construction planning of the assets

Investment Planning Team

Middle office work: Budget and performance management for the portfolio(5 members)

Takeshi Morikawa

Asset management
Asset management
Asset management
Asset management
Asset management
Asset management
Asset management
Asset management
work history:
work history:
work history:
work history:
work history:
work history:
work history:
work history:
13 years 6 months
15 years 4 months
13 years 9 months
13 years 9 months
13 years 7 months
5 years 9 months
3 years 3 months
1 year 2 months(Note) The numbers of members are the figures as of January 21, 2020. “Asset Management work history” is the number of years engaged in the relevant work (as of January 21, 2020) and does not indicate the number of years
employed at the asset management company.

Leasing Highlight in the Fiscal Period ended November 2019 (28th FP)■ Daiwa Shibadaimon (Acquisition price: 2,578 million yen)

■ Daiwa Kandasudacho (Acquisition price: 2,295 million yen)

■ Daiwa Shinagawa Gotenyama• The property is a 5-minute walk from Shibakoen Stationon the Toei Mita Line and a 7-minute walk from
Hamamatsucho Station on the JR Yamanote Line.
• Easy access to Haneda Airport is available via Tokyo
Monorail and the Toei Asakusa Line, and theHamamatsucho bus terminal serves as a departure andarrival depot for highway buses going to local cities.
Having such excellent convenience of transportation
while also displaying a rent level that is comparatively
cheap, the property expects demand from a wide rangeof companies.

• The property is a 1-minute walk from Iwamotocho
Station on the Toei Subway Shinjuku Line, a 7-minute
walk from the JR Akihabara Station, a 4-minute walkfrom Akihabara Station on the Tokyo Metro Hibiya Line,an 8-minute walk from the JR Kanda Station and a
6-minute walk from Kanda Station on the Tokyo Metro
Ginza Line.
• The property expects demand from a wide range ofcompanies that prioritize the comparatively cheap rent
while enjoying excellent convenience of transportation.

• The property is a 10-minute walk from Shinagawa
Station on the JR Yamanote Line, JR Keihin Tohoku Lineand JR Tokaido Line and a 1-minute walk from
Kita-Shinagawa Station on the Keikyu Line.
• The property expects demand for headquarters,
branches and business offices in Tokyo from companies
developing businesses nationwide and emphasizing
wide-area traffic convenience as well as demand forback-offices from companies that have bases in large
buildings in the neighboring areas.

Leasing Results

Leasing Results

Leasing Results

Newly Leased Area (Note 1)
Unit Rent
Location
Site Area
Structure
Floor
Use
Total Floor Area
Construction Date

284.01 tsubos+48.6 % (Note 2)
Shibadaimon, Minato-ku, Tokyo
532.31m2
SRC/RC
B1/7F
Office/Parking
3,524.42m2
November 1996

Newly Leased Area (Note 1)
Unit Rent
Location
Site Area
Structure
Floor
Use
Total Floor Area
Construction Date

145.20 tsubos+31.5% (Note 2)
Kanda Suda-cho, Chiyoda-ku, Tokyo
302.42m2
S/RC
B1/10F
Office/Parking
2,435.80m2
August 1990

(Acquisition price: 2,500 million yen)

Newly Leased Area (Note 1)
Unit Rent
Location
Site Area
Structure
Floor
Use
Total Floor Area
Construction Date

99.64 tsubos+60.0% (Note 2)
Kita-Shinagawa, Shinagawa-ku, Tokyo
602.41m2
SRC/S
8F
Office/Parking
2,897.64m2
July 1992(Note 1) “Newly leased” refers to the leases contracted in the 28th FP or in December 2019 for each property.
(Note 2) The figures are calculated by dividing the new contract rent for the section subject to leasing by the previous contract rent.

10Portfolio Composition by Region and Status in Shinjuku and Shibuya Areas■ Portfolio Composition by Region (%)
Osaka City 2.0%
Yokohama City 8.6%

Shibuya Ward

■ Shinjuku Maynds Tower (Acquisition price: 66,900 million yen)
Shinjuku Maynds Tower Occupancy Rate

35.0%

Other 23 Wardsof Tokyo 8.7%(%)
98.8 98.8 96.6 99.8 99.3 98.3 120.0
100.0 99.9 94.9
94.7
99.9
99.9 98.3
99.9
95.7 94.0 96.1 99.2 96.6
95.1
80.0
110.0

Regional Cities 2.0%

Chiyoda Ward 5.2%

Greater Tokyo 17.4%

Shibuya Ward/
Shinjuku Ward

Five Central
Wards of Tokyo 80.6%

42.0%

Minato Ward 11.4%

60.0

100.0

40.0

90.0

Occupancy rate at end of period (left axis)
80.0
Occupancy rate (forecast) (left axis)
Rent revenue index (right axis)
Rent revenue index (forecast) (right axis) 70.0

20.0

Shinjuku Ward

7.1%

Chuo Ward 22.0%(Note 1) Based on acquisition price.
(Note 2) Percentage is rounded to the first decimal place.

(As of January 21, 2020)■ Large-Scale Office Building Supply in the 23 Wards of Tokyo

Location
2-chome, Yoyogi,
Shibuya-ku

End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of

12th 13th 14th 15th 16th 17th 18th 19th 20th 21st22nd23rd 24th 25th 26th 27th 28th 29th 30th
Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period■ E SPACE TOWER (Acquisition price: 24,000 million yen)
E SPACE TOWER Occupancy Rate(%)
100.0 100.0 100.0
100.0 100.0 100.0

Total from 2019 to 2023 4,890,000m2
Other 700,000m2

0.0

80.0

Chiyoda Ward 1,030,000m2

100.0 100.0
89.1

100.0 120.0
96.8 100.0 100.0
100.0
97.0 100.0
92.8 93.3 89.6
110.0

96.4

60.0

Shibuya Ward

460,000m2

40.0

Total from2019 to 2023

Chuo Ward 430,000m2

4,890,000

Shinjuku Ward

230,000m2

100.0

20.0

m2

Location

Minato Ward

3 Maruyama-cho,Shibuya-ku

2,040,000m2

0.0

90.0

Occupancy rate at end of period (left axis)
80.0
Occupancy rate (forecast) (left axis)
Rent revenue index (right axis)
Rent revenue index (forecast) (right axis) 70.0

End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of

12th 13th 14th 15th 16th 17th 18th 19th 20th 21st22nd23rd 24th 25th 26th 27th 28th 29th 30th
Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period(Note) Rent revenue is indexed as 11/11 = 100. Ownership interest of Shinjuku Maynds Tower is adjusted from the25th FP.

Source: Mori Trust Large-scale properties: Offices with total floor areas of 10,000 m2 or more

■ Average Rent in Five Central Wards of Tokyo (Note 1),
Shinjuku Ward and Shibuya Ward

■ Shinjuku Maynds Tower (Acquisition price: 66,900 million yen)
Leasing Results

(%)
116.0

Newly Leased Area (Note 1)

112.0

111.3
109.1
107.0

108.0
104.0

Unit Rent

467.92 tsubos (Note 2)+24.5 % (Note 3)

100.0

Shinjuku Ward

Shibuya Ward

96.0
2018
Nov.

Dec.

2019
Jan.

Feb.

Mar.

Apr.

May

June

July

Aug.

Five Central Wards of Toyo

■ E SPACE TOWER (Acquisition price: 24,000 million yen)

Sept.

Leasing Results

Oct.

Nov.

(Note 1) Five central wards including Shinjuku Ward and Shibuya Ward.
(Note 2) Average rent in each area is indexed as Nov. 2018 =100.
Source: Miki Shoji

Newly Leased Area (Note 1)■ Portfolio Map of the Shinjuku and Shibuya Areas
Daiwa Shinjuku WestLAQUAS Higashi Shinjuku
Shinjuku
Ward
Shinjuku Sta.

Daiwa Nishi-Shinjuku
Shinjuku Maynds Tower
Daiwa Sasazuka Tower
Daiwa Sasazuka

Shinsen Place
Daiwa Shibuya Square

shinyon curumu■ Daiwa Nishi-Shinjuku (Acquisition price: 13,710 million yen)
Leasing Results

Daiwa Jingumae

Newly Leased Area (Note 1)

Daiwa Aoyama

Unit Rent

Shibuya Ward

Daiwa SHIBUYA EDGEE SPACE TOWER

Unit Rent

155.13 tsubos+37.9 % (Note 3)

Shibuya Sta.

Daiwa Shibuya
Miyamasuzaka
Daiwa Ebisu 4-chome199.08 tsubos+39.1 % (Note 3)(Note 1) “Newly leased” refers to the leases contracted in or after the 28th FP for each property.
(Note 2) The figure indicated is arrived by multiplying the actual newly leased area by 3/7, which is equivalent to the coownership interest.
(Note 3) The figures are calculated by dividing the new contract rent for the section subject to leasing by the previous
contract rent.

Daiwa Daikanyama

I. Overview of Daiwa Office Investment Corporation

11

External Growth Measures
Investment in selectively-chosen, high-quality competitive properties even in a harsher acquisition environment

Acquisition Performance in 28th Fiscal Period■ Acquisition and Sale through Exchange

Acquisition

Effect of asset
replacement

Sale

Daiwa Mita 2-Chome

Daiwa
Osaki 3-chome

Location
Mita, Minato-ku, Tokyo
Site Area454.37m2
Structure/Floor
S / 8F
Total Floor Area
3,003.17m2① Acquisition Price ① 2,635 million yen② Assumed Book Value ② 1,599 million yen (Note 1)
3,240 million yen
Appraisal Value

Increase in unrealized
gain throughexchange (Note 4)

0.8 billion yen

1.6 billion yen(as of June 1, 2019)

NOI Yield
Appraisal NOI Yield
Construction Date
Occupancy Rate
Number of Tenants
SellerAgainst acquisition price:
4.7% (Note 2)
Against assumed book value:
7.9%
4.8%
March 2017100% (as of acquisition)
1 (as of acquisition)
Sumitomo Realty &Development Co., Ltd.

Property acquired
Assumed book value
NOI yield

Exchange

7.9%

Location
Structure/Floor
Acquisition PriceAppraisal Value• The property is a 6-minute walk from Akabanebashi Station on the Toei
Oedo Subway Line, a 7-minute walk from Mita Station on the Toei Mita andAsakusa Subway Lines and a 10-minute walk from Tamachi Station on the
JR Yamanote and Keihin Tohoku Lines. With train rides from Tamachi Station
taking approximately 9 minutes to reach Tokyo Station and those from Mita
Station taking approximately 9 minutes to reach Otemachi Station, etc., theproperty enjoys excellent access to major stations in Tokyo.

Osaki, Shinagawa-ku, Tokyo
S/RC / B1/6F
2,685 million yen
2,480 million yen(as of May 31, 2019)

NOI Yield (Note 3)
Against sale price: 4.0%
Difference from
Exchange of Property 50 million yen
Construction Date September 2007
Sumitomo Realty &SellerDevelopment Co., Ltd.

Sold a 11.8-year oldproperty
and acquired a 2.3-year
old property
Rejuvenation of portfolio-0.1 years(Note 1) The Investment Corporation made a reduction entry for the land and building of the property acquired by applying the provisions of the “Inclusion in Deductible Expenses of the Amount of Advanced
Depreciation of Assets Acquired by Exchange” in Article 50 of the Corporation Tax Act and deducted advanced depreciation amount of 1,069 million yen among the gain on sale of the property sold from thebook value of the property acquired. As a result, the book value as of November 30, 2019 was 1,599 million yen.
(Note 2) NOI yield against acquisition price is calculated based on the leasing agreement for the property acquired on the acquisition date by dividing the annual income with the assumption of the occupancy rate
being 100.0% in consideration of the taxes and other costs that may be incurred by acquisition price. The figures are rounded to the first decimal place.
(Note 3) NOI as is NOI yield is calculated by dividing the annualized NOI for the 26th FP by the sale price.
(Note 4) The difference between the appraisal value (3,280 million yen) and book value (1,599 million yen) as of November 30, 2019 is calculated for the property acquired and the difference between the appraisal
value as of May 31, 2019 and the book value as of July 1, 2019 for the property sold.

Acquisition Performance in 29th Fiscal Period■ Newly Acquired Properties

Toei Subway Oedo Line

Daiwa Nakano-Sakaue [Acquired on December 13, 2019]

Tokyo Metro
NakanoNakano-sakaue
Marunouchi
Line
StationLocation
Site Area
Structure/Floor
Total Floor Area
Acquisition Price

12

Yamate-dori Street

Daiwa
Nakano-sakaue

Honcho, Nakano-ku, Tokyo
915.72m2
SRC/B1/8F
3978.82m2
2,750 million yen• The property is a 6-minute walk from Nakano-sakaue Station on
the Tokyo Metro Marunouchi Line and Toei Subway Oedo Line.
With train rides from Nakano-sakaue Station taking 4 minutes toreach Shinjuku Station and 23 minutes to reach Tokyo Station,etc., the Property enjoys excellent access to major stations incentral Tokyo.
• The Nakano-sakaue area where the property stands is asubmarket of the adjacent Nishi-shinjuku area offering relatively
inexpensive rent despite being close to central Tokyo, and thus
has strong appeal for tenants.
• The property has a rentable area of approximately 120 tsubos per
floor is secured. It is equipped with 2,600 mm of typical floor
ceiling height, OA floor, individual air-conditioning systems, etc.
• Since there are no pillars in the rental spaces, a flexible andefficient layout is possible.
Appraisal Value
Construction Date
Occupancy Rate
Number of Tenants

2910 million yen (as of October 10, 2019)
January 1995
100.0% (as of acquisition)
6 (as of acquisition)

Current Portfolio and Acquisition Policy
DOI will invest in competitive properties based on in-depth data analysis upon careful selection from among the vast information on properties obtained
through diverse sourcing.
■ Acquisition Policy■ Distribution Chart of Portfolio Properties* Distance to station is indicated by calculating 80m as
one minute

Building age (Years)
60• Place priority on the Five Central Wards of Tokyo and equivalent areas.
• Thoroughly select properties in view of actual demand toward location (distance tostation, station power, crowd attraction, surrounding environment), building specs, etc.

55

• Target properties to improve stability and profitability of our existing portfolio.

50

Properties acquired in the 28th FP
Properties sold in the 28th FP
Properties acquired in the 29th FP
Properties acquired after
sponsor change
Properties acquired before
sponsor change• Invest in buildings with an age of less than 25 years.
45■ Sale Policy

40• Consider replacement of properties if necessary in light of properties’ futurecompetitiveness, profitability, etc.

35
30

■ Number of Properties Reviewed for Acquisition(cases)
500
400

393

356

289

300
200

23

100
0

344

288

31
12

329

Daiwa Nakano-Sakaue

20

80

326

281

15

14

13

9

Daiwa Osaki 3-chome

60

10

40

29

20

19

18

100

320

276

25

* Number of gross proposals (cases)

Number of properties reviewed (left axis)
Number of properties reviewed in detail (right axis)

20

5

0

0

19th Fiscal 20th Fiscal 21st Fiscal 22nd Fiscal 23rd Fiscal 24th Fiscal 25th Fiscal 26th Fiscal 27th Fiscal 28th Fiscal
PeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodDaiwa Mita 2-Chome

0

1

2

3

4

5

6

11
8
9
10
Distance to station (minutes)

7

Changes in Asset Size and Acquisition Performance
Aim to achieve medium-term goal of an asset size of 500 billion yen.
(Billions of yen)
550

(%)
80.0
Total Acquisition Price (left axis)

LTV (based on total assets) (right axis)

500.0

500

445.7

450

350

250

311.3

313.2 314.9

34.2

34.0

34.4

332.0

150 Acquisition property Acquisition property• E SPACE
TOWER

352.7

37.5

200

0

469.3
439.4

459.7

460.0

461.0

463.8

364.0

40.6

43.0

40.2

Acquisition property• Daiwa Azabu
Terrace• Daiwa Kitahama

Acquisition property

Acquisition property• Daiwa
Nihonbashi
Hongokucho• shinyon curumu• Daiwa Meieki• Daiwa Kamiooka

60.0

50.0

44.3

• Daiwa Shibuya
Dougenzaka• Daiwa Akasaka• Daiwa Shibuya
Miyamasuzaka• Daiwa Osaki
3-chome

70.0

387.5

Acquisition property

100
50

469.3

413.2

400

300

458.3

467.7

41.7

43.3

Acquisition property• Daiwa River Gate
• Daiwa Hatchobori
ekimae• Daiwa Hatchobori
ekimae West

Acquisition property

42.3

42.2

42.3

Acquisition property• Daiwa
Higashinihonbashi• Daiwa
Daikanyama• Daiwa Shinjuku
West• Daiwa Ogikubo• Daiwa Ebisu 4-chome• LAQUAS Higashi
Shinjuku
Acquisition property • Daiwa Aoyama
Acquisition property• Daiwa Ogikubo • Shinsen Place• Daiwa
Tower
Nishi-Shinjuku• Daiwa Shibuya• Kirin Nihonbashi
SquareBuilding• Daiwa Meguro
SquareAcquisition property• Daiwa Kanda
Mikuracho
Building

40.5

41.5

Acquisition property

42.1

42.1

Acquisition property

Acquisition property• CONCURRED• Daiwa Sasazuka
Yokohama• Daiwa Harumi• Daiwa Kanda East

• Daiwa
Nakano-Sakaue

Acquisition property

Acquisition property• Daiwa Shinagawa
Gotenyama• Daiwa Sasazuka
Tower• Daiwa
Kandasudacho• Daiwa
Mita 2-Chome

40.0

30.0

20.0

10.0

0.0

12th
13th
14th
15th
16th
17th
18th
19th
20th
21st
22nd
23rd
24th
25th
26th
27th
28th As of December Mediumterm goal
Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period 13, 2019

I. Overview of Daiwa Office Investment Corporation

13

Financial Conditions
Reduce refinancing risk by extending borrowing periods and diversifying repayment dates

Status of Interest-Bearing Liabilities (As of November 30, 2019)
During the 28th Fiscal Period, DOI issued unsecured investment corporation bonds of 3.0 billion yen to redeem the existing investment
corporation bonds of 3.0 billion yen.
Furthermore, DOI refinanced 8.0 billion yen in order to repay 8.0 billion yen of matured existing loans, successfully diversifying
repayment dates. DOI will continue to focus on stable financial management.
■ Interest-Bearing Liabilities■ Change in Remaining Years at Time of
Procurement of Interest-Bearing Liabilities(Billions of yen)
280

(%)
70.0
Interest-bearing liabilities (left axis)

240

60.0

LTV (based on acquisition price) (Note) (right axis)

200

50.0

Medium-to-long term, upper-limit
LTV target range

160

42.1

120
80

(Years)10.0
9.0(Years)
5.0
Average years remaining at the period
end (right axis)

4.5

8.0

7.8

7.0

7.8

3.5

6.0

3.0

5.0

2.5

30.0

4.0

2.0

20.0

3.0

1.5

40.0

2.0
40

10.0

0

0.0
End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of
12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th
Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period

1.0
0.0

1.0

Average remaining years at the time ofprocurement during the 28th Fiscal Period (left axis)
Average remaining years at the time of procurement during the28th Fiscal Period (excluding short-term borrowings) (left axis)

0.5
0.0

16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th
Period Period Period Period Period Period Period Period Period Period Period Period Period(Note) LTV (based on acquisition price): Total interest-bearing liabilities / Total acquisition price of properties(Note) Dotted line indicates average remaining years at the time of procurement during
the 28th Fiscal Period excluding short-term borrowings.

■ Diversification of Repayment Dates■ Balance of Borrowings by Financial Institution(Millions of yen)
20,000Investment corporation bond

16,00012,000

8,000

4,000

0
29th 30th 31st 32nd 33rd 34th 35th 36th 37th 38th 39th 40th 41st 42nd 43rd 44th 45th 46th 47th 48th 49th 50th 51st 52nd
Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal Fiscal
Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period■ Ratio of Fixed- to
Floating-Rate Borrowings■ Ratio of Long- to
Short-Term Liabilities

End of 28th
PeriodEnd of 28th
Period

17.9%

82.1%

16.2%

83.8%

Fixed interest rates

Long-term borrowings

Floating interest rates

Short-term loans payable and current
portion of long-term loans payable

LenderSumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank
Development Bank of Japan
MUFG Bank, Ltd.
Mizuho Bank
Shinsei Bank
Resona Bank
Mizuho Trust and Banking
The Bank of Fukuoka
Kansai Mirai Bank, Limited
Nishi-Nippon City BankThe Gunma Bank
Aozora Bank
The 77 Bank
The Musashino Bank
Tokio Marine & Nichido Fire Insurance
The Yamaguchi Bank
The Norinchukin Bank
Nippon Life Insurance Company
The Higashi-Nippon Bank
The Hyakugo Bank, Ltd.
The Yamanashi Chuo Bank, Ltd.
Taiyo Life Insurance Company
Fukoku Mutual Life Insurance
Investment Corporation Bonds
Total

Balance(Millions of yen)

41,40024,50021,75021,50020,40014,00012,500
9,500
6,500
5,000
3,000
2,500
2,000
2,000
2,000
2,000
2,000
2,000
1,300
1,000
1,000
1,000
300
200
5,100
204,450■ Status of Rating
Rating agency

Rating and Investment Information, Inc. (R&I)
Japan Credit Rating Agency, Ltd. (JCR)

14

4.0

3.9

Target rating

RatingRating outlook

Issuer rating

AA-

StableLong-term issuer rating

AA

Stable

Share

20.8
12.3
10.9
10.8
10.2
7.0
6.3
4.8
3.3
2.5
1.5
1.3
1.0
1.0
1.0
1.0
1.0
1.0
0.7
0.5
0.5
0.5
0.2
0.1
100.0

ESG Measures
Realize stable and sustainable growth through intensifying efforts on ESG

Environment■ Environmental Certification
GRESB Real Estate Assessment

CASBEE Property Appraisal/ Daiwa Shibuya Square and Shinjuku Maynds Tower

DOI has participated in the GRESB Real Estate Assessment
since 2011 and earned the best rating of Green Star for eighthconsecutive year from 2012.

Daiwa Shibuya Square and Shinjuku Maynds
Tower were awarded "A rank" in CASBEE for
Market Promotion certification system.

Acquisition of rating in “MUFG ESG Rating Certificate
for J-REIT supported by JCR”

BELS Evaluation/ Daiwa Jimbocho, Daiwa Kayabacho Building and shinyon curumu

DOI received the “A Rank” for its wide range of activities in allareas of ESG.

have newly acquired a Building Energyefficiency Labeling System (BELS)
evaluation of ★★★, ★★ and ★,respectively.

DBJ Green Building Certification/ Shinjuku Maynds Tower

Certification Based on SMBC Sustainable
Building Assessment Loan/

Shinjuku Maynds Tower was evaluatedfor improving its building habitability byintroducing various environmental andenergy conserving technologies whileproviding a lot of restaurants, clinics
and other facilities that facilitate
convenience for tenants.

Daiwa Ginza Building and E SPACE TOWER
Daiwa Ginza Building earned "Gold" and E SPACETOWER earned "Silver".

LEED Certification/ Daiwa Harumi
Daiwa Harumi acquired a GOLD level in LEED

Daiwa Ginza (left), E SPACE TOWER

The “LEED® Certification Mark”
is a registered trademark ownedby the U.S. Green Building Council
and is used with permission inthis material.

Social■ Efforts for Enhancing Tenant Satisfaction
Emergency disaster kit cabinets in elevators

Installation rate
among properties■ Efforts for Employees

58.3%

Improving various
programs

Target properties: Sequentially, properties for which the cabinets can be installed
Install emergency disaster kit cabinets in elevators to secure safety of tenants’
office workers as well as those using the offices. Stock food and emergency
kit that will be necessary until rescued after trapped in elevators.

Digital signage in elevator halls

Installation rate
among properties

Target: Officers and employeesof the Asset Management
Company
Daiwa Azabu Terrace

36.7%

Target properties: Sequentially, properties for which the signage can be installed
Install digital signage in elevator halls to communicate information to tenants’
office workers as well as those using the offices during their waiting time andreduce their stress from the congestion.

Daiwa Shibaura

Childcare-related• Childcare leave/Childcare
Support Leave system• Short working hours system• Daycare subsidy/Babysitter
system, etc.
Nursing care-related• Nursing care leave• Time for nursing care, etc.

Ratio of women at the AssetManagement Company
Ratio of women among all
employees

32.5%
Ratio of women in managerial
positions(assistant manager or higher)

20.9%
Family Day
Hold an annual family visit day
during the summer holiday

Governance■ Establishment of Policy Regarding ESG
DOI established the Policy Regarding ESG on March 31, 2019 as follows judging that emphasizing ESG (Environment, Social and Governance) contributes tothe enhancement of DOI's medium- to long-term corporate value.

1. Initiatives on Environmental Protection (Environment)
We will proactively promote initiatives on environmental protection such as resource and energy-saving measures such as the introduction of facilities
and equipment contributing to environmental protection at the properties owned.

2. Connection to Society (Social)
We will proactively disclose information and fulfill accountability to all of stakeholders through IR activities, etc. We will accomplish social missions of alisted investment corporation by providing high-quality and comfortable residential spaces in partnership.

3. Corporate Governance (Governance)
We will make highly transparent and reasonable decision under the laws and regulations and various rules while being aware of the importance ofcorporate ethics and compliance.

I. Overview of Daiwa Office Investment Corporation

15

Description of Asset Manager

Organization of Asset Manager (As of January 1, 2020)■ Description■ Directors and Auditors

Company Name
Address
Established
Paid-in Capital
President
Board of Directors
No. of Employees
Registration of Financial
Instruments Business Operator
Building Lots and Buildings
Transaction Business License
Discretionary Agent for Real
Estate Transaction Approval
Association MembershipDaiwa Real Estate Asset Management Co., Ltd.
6-2-1 Ginza, Chuo-ku, Tokyo
October 21, 2004
200 million yen
Toshio Fukushima
9
Executive directors: 5; Executive auditor: 1
Non-executive director: 1; Non-executive auditors: 2
115 (excluding dispatched employees)
Registration No. 355 (Financial Instruments), Director-General,
Kanto Local Finance Bureau (Kinsho)

Chairman of the Board
Vice President and Representative
Director
Vice President and Representative
Director
Director
Director
Director (non-executive)
Auditor
Auditor (non-executive)
Auditor (non-executive)

License No. (4)-83920, Governor of Tokyo■ Organizational
Chart

License No. 34, Minister of Land, Infrastructure, Transport andTourism
Member of The Investment Trusts Association, Japan
Member of Japan Investment Advisers Association
Member of Type II Financial Instruments Firms Association

Akira Yamanouchi
Toshio Fukushima
Yoshiki Nishigaki
Hajime Imbe
Yuji Shinotsuka
Keiichi Ishikawa
Tamaki Shibayama
Sachiko Hanaoka
Shinji Kiso

Shareholders’ Meeting

Corporate Auditors

Board of Directors

Compliance Committee
Investment Committee
President andRepresentative Director

Acquisition and Asset Management Division
DOI Asset
Management
Dept.

Private Fund Division

DOI Investment
Team

AM Team

Construction
Private Fund
Investment Management
Management Planning
Dept.
Dept.
Department
DRP ManagementTeam

JRH Investment
Team

Portfolio
System TeamNHI Management
Team

Acquisition
Department

Origination
Department

JRH Asset
Management
Department

DRP Investment
Team

DHP Management
Team

NHI InvestmentTeam

DLP Management
Team

Compliance Officer
Internal Control Office

Corporate Division

Private FundREIT
Management
Department Planning Dept.
Infrastructure
Team

Finance
Department

Fund Management
Team

Accounting
Team

Administration
Department

Corporate
Planning
Department

FinanceTeam

Compliance &RiskManagement
Department

ManagementTeam

DHP InvestmentTeam
DLP Investment
Team

Structure
Asset Manager
General Administrator
related to the operation of theadministrative instruments
Daiwa Real Estate AssetManagement Co., Ltd④①

Investment Corporation②

General Administrator
Asset Custodian
Sumitomo Mitsui Trust Bank, Limited

General Meeting of Unitholders
Officers
Executive Director: Motoi Takahashi
Supervisory Director: Takayuki Hiraishi
Supervisory Director: Hiroshi Sakuma

Supporting Company

Accounting Auditor

Daiwa Securities Group Inc.

KPMG AZSA LLC① Asset management contract/General administration affairs contract related to operationof administrative instruments② General administrative affairs contract/Asset custodian contract③ Unitholder register, etc. management contract/Special account management contract③⑤

Manager of Unitholder
Registry, etc.
Special Account Management
Institution
Sumitomo Mitsui Trust Bank, Limited

General Administrator(Investment Corporation Bonds)
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited④ Sponsor support agreement⑤ Fiscal agency agreement(Note) The specified affiliated juridical person (meaning a specified affiliated juridical person as provided in Article 12, Paragraph 3 of the Cabinet Office Ordinance on Disclosure of Information, etc. on Specified
Securities (Ordinance of the Ministry of Finance No. 22 of 1993; including amendments thereto)) of DOI is Daiwa Securities Group Inc. Daiwa Securities Group Inc. is the Asset Management Company’s parent
company (meaning a parent company as stipulated in Article 8, Paragraph 3 of the Ordinance on Terminology, Forms and Preparation Methods of Financial Statements, etc. (Ordinance of the Ministry of Finance
No. 59 of 1963; including amendments thereto))16II. Asset Management Report
1. Management Status and Other Performance Highlights Data
Fiscal Period

28th Period 27th Period 26th Period 25th Period 24th Period

June. 1, 2019 From Dec. 1, 2018 From June 1, 2018 From Dec. 1, 2017 From June 1, 2017
( From
To Nov 30,2019 )( To May 31,2019 )( To Nov. 30,2018 )( To May 31, 2018 )( To Nov. 30, 2017 )(1) Operating Performance(Millions of yen, except per unit data or where otherwise indicated)
Operating revenues
14,094
13,833
13,193
13,44012,735
Rental revenues
13,916
13,628
13,164
12,86812,718Operating expenses
6,980
6,853
6,658
6,761
6,557
Property-related expenses
5,584
5,479
5,344
5,410
5,279
Operating income
7,114
6,979
6,535
6,678
6,177
Ordinary income
6,463
6,320
5,902
5,888
5,456
Net income
6,462
6,320
5,901
5,887
5,455
(2) Properties, etc. (as of end of period)
Total assets
486,030
485,636479,212467,040
483,173[period-on-period percentage changes][+0.1%][+1.3%][+2.6%][−3.3%][−0.1%]
Interest-bearing liabilities
204,450
204,450
198,950
188,950
204,300
Net assets
254,892
254,460
254,124
253,676
256,796[period-on-period percentage changes][+0.2%][+0.1%][+0.2%][−1.2%][+0.1%]
Notes 2
247,876
247,876
247,876
247,876
251,551
Unitholders’ capital, net(3) Distributions
Total distribution amount
6,462
6,177
5,901
5,484
5,455
Dividend payout
100.0%
97.8%
100.0%
93.2%
100.0%(4) Per Unit Information
Total number of units issued (units)491,877
491,877
491,877
491,877
497,869
Net assets per unit (yen)518,203517,324
516,641
515,730
515,790
Distribution per unit (yen)13,13912,55911,997
11,15010,957
Distribution amount from earnings per unit (yen)13,13912,55911,997
11,15010,957
Distribution amount in excess of earnings per unit (yen)
–
–
–
–
–
(5) Financial Indicators
1.3%
1.3%
1.2%
1.2%
1.1%
ROA
Notes 3and4[annual rate][2.7%][2.6%][2.5%][2.5%][2.3%]
2.5%
2.5%
2.3%
2.3%
2.1%
ROE
Notes 4and 5[annual rate][5.1%][5.0%][4.6%][4.6%][4.2%]
Capital ratio
52.4%
52.4%
53.0%
54.3%
53.1%
[period-on-period percentage changes][+0.0%][−0.6%][−1.3%][+1.2%][+0.1%]LTV (loan to value)
42.1%
42.1%
41.5%
40.5%
42.3%
Note 6
Property leasing cash flows (NOI)
10,157
9,962
9,553
9,230
9,207
(6) Other Referential Information
Number of investment properties
59
59
58
55
54
Note 7
637
639
624
606
580
Number of tenants
364,787.57 364,375.19 360,958.95 340,144.07 338,377.31
Total rentable area (m2)
Note
8
99.1%
97.1%
98.9%
99.0%
98.2%
Occupancy rate
Depreciation
1,826
1,813
1,734
1,772
1,768
Capital expenditures
1,351
471
1,738
1,564
535
(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)(Note 8)Operating revenues, etc. do not include consumption taxes, etc.
Unitholders’ capital, net: Unitholders’ capital − Deduction from Unitholders' Capital
ROA: Ordinary income ÷ [(Total assets at beginning of period + Total assets at end of period) ÷ 2] × 100
Figures for the 24th Fiscal Period are the annualized figures calculated based on 183 days of management.
Figures for the 25th Fiscal Period are the annualized figures calculated based on 182 days of management.
Figures for the 26th Fiscal Period are the annualized figures calculated based on 183 days of management.
Figures for the 27th Fiscal Period are the annualized figures calculated based on 182 days of management.
Figures for the 28th Fiscal Period are the annualized figures calculated based on 183 days of management.
ROE: Net income ÷ [(Net assets at beginning of period + Net assets at end of period) ÷ 2] × 100
Property leasing cash flows (NOI): Rental revenues − Property-related expenses + Depreciation
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.
Occupancy rate: Total leased area ÷ Total rentable area

II. Asset Management Report17

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 AssetManagement 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 461,061 million yen as of the last day of November
2019.
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 2,000m2 situated in downtown Tokyo, as well as throughdedicated efforts to heighten tenant satisfaction levels.
(2) Investment Environment and Management Performance(A)		 Investment Environment
The Japanese economy during the fiscal period under review saw real GDP growth rate (Second
Preliminary Estimates) for July to September 2019 at an annual rate of 1.8%, falling after a temporary
standstill in the recovery trend that had continued for eight consecutive quarters under the ongoing
quantitative/qualitative monetary easing policy by the Bank of Japan.
In the office building leasing market in central Tokyo, the vacancy rate took a turn after peaking in June
2013, dropping to 1.56% at the end of November 2019. Led by improvement in the vacancy rate forexisting large buildings, the overall vacancy rate that includes small- to medium-sized buildings also
continues to be on an improving trend. The drop in the vacancy rate has led to an increase in office rent insome areas, and the market as a whole continues to see increase in rent, albeit slight.
For the office building transaction market, a strong appetite for property acquisitions continued among
real estate companies, funds (including J-REITs) and overseas investors with the continuing proactive
lending attitude by financial institutions.
(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, DOI acquired “Daiwa Mita 2-Chome Building” (acquisition price: 2,635
million yen) and divested “Daiwa Osaki 3-chome Building” (sale price: 2,685 million yen) throughexchange in July 2019. As a result, DOI’s assets under management as of the end of the 28th Fiscal
Period (November 30, 2019) totaled 59 properties, the sum total of acquisition prices of which amounted
to 461,061 million yen.
Concerning internal growth, while the office leasing market remained strong, DOI conducted proactive
leasing, such as capturing needs for floor expansion within the same property through strengthening
relationships with existing tenants and reinforcing collaboration with leasing brokers and property
managers. Consequently, the occupancy rate as of the end of the 28th Fiscal Period (November 30, 2019)was 99.1%.

18

(3) Overview of Capital Procurement(A) Procurement of Capital for Repayment of Borrowings and Redemption of Investment Corporation
Bonds
In the 28th Fiscal Period, DOI made the following borrowings and issuance of investment corporation
bonds to fund the repayment of borrowings and redemption of investment corporation bonds.
(i) DOI took out loans of 2,500 million yen in total from Kansai Mirai Bank, Ltd. and MUFG Bank, Ltd. on
August 30, 2019, to fund the repayment of 2,500 million yen in total borrowed from the same banks
for the same amount that was due for repayment on the same day.
(ii) DOI issued the 5th unsecured investment corporation bonds (1,700 million yen) and 6th unsecured
investment corporation bonds (1,300 million yen) on September 12, 2019, to fund redemption of the
3rd unsecured investment corporation bonds (3,000 million yen) due on the same day.
(iii) DOI took out loans of 2,000 million yen in total from Resona Bank, Ltd. on September 30, 2019, tofund the repayment of 2,000 million yen in total borrowed from the same bank due on the same day.
(iv) DOI took out loans of 3,500 million yen in total from Sumitomo Mitsui Trust Bank, Ltd. andDevelopment Bank of Japan Inc. on November 29, 2019, to fund the repayment of 3,500 million yen
in total borrowed from the same banks due 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 the
28th Fiscal Period (November 30, 2019) stood at 204,450 million yen in total (short-term loans payable:
5,000 million yen, long-term loans payable: 194,350 million yen; investment corporation bonds: 5,100
million yen). The balance of the current portion of long-term loans payable stood at 28,100 million yen.
The average remaining period of interest-bearing liabilities as of the end of the 28th Fiscal Period
stands at 3.9 years.
(4) Capital Expenditures during the 28th Fiscal Period
The following summarizes the primary construction work that constitutes capital expenditures implemented
during the 28th Fiscal Period. Capital expenditures for the 28th Fiscal Period amounted to 1,351 million yen
and, when combined with the 474 million yen in repair expenses charged to the 28th Fiscal Period expenses,
totals 1,826 million yen in construction work were implemented.
Name of real estate
properties(Location)
Daiwa Ogikubo Tower(Suginami-ku, Tokyo)
Daiwa Sasazuka(Shibuya-ku, Tokyo)
Daiwa Kojimachi 4-chome(Chiyoda-ku, Tokyo)
Other

PurposeUpgrading of air-conditioning system(West side)
Renovation of exclusive areas on 8th floor
Upgrading of air-conditioning facilities on
3rd to 8th floors

PeriodFrom: Jul. 2018
To: Jun. 2019
From: Jun. 2019
To: Nov. 2019
From: Apr. 2019
To: Jul. 2019

Construction
amount paid
(Millions of yen)
931
77
53
288

Total

1,351

II. Asset Management Report19(5) Overview of Financial Performance and Distributions
As a result of the management described above, DOI posted financial performance for the 28th Fiscal Periodof 14,094 million yen in operating revenue, 7,114 million yen in operating income, 6,463 million yen in ordinary
income and 6,462 million yen in net income.
Concerning distributions, application of special provisions for taxation 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”)) is planned. DOI decided to distribute almost the entire amount remaining after
deducting provision of reserve for reduction entry from unappropriated retained earnings (excluding fractions of
the distribution amount per unit that are less than 1 yen), and declared a per unit distribution amount of 13,139
yen.

3. Outlook for the Next Fiscal Period(1) Investment Environment
The Japanese economy going forward was expected to continue to expand backed by solid trends inpersonal spending against the backdrop of a favorable employment environment and the improved income
environment while the monetary easing policy implemented by Bank of Japan continued. However, it is more
likely that the economy will remain sluggish, falling below the potential growth rate. In addition, factors suchas policies set out by the U.S. President Donald Trump, the downward swing of the Chinese economy,
deterioration of European economy, and rise of crude oil price may slow down the Japanese economy, andare thus thought to require attention.
In the Tokyo office building leasing market, the vacancy rate has dropped backed due to strong corporate
performance. With demand for office floor space projected to continue increasing, rent is expected tocontinue rising moderately mainly in central Tokyo. In the office building transaction market, backed by thefavorable financing environment, among other factors, the property acquisition appetite among overseas
investors, real estate companies and funds (including J-REITs) is thought to remain strong.
(2) Future Management Policy and Tasks(A) Strategy for Managing Existing Properties
Although some have become cautious towards overall economic trends and the office market, themarket in central Tokyo remains strong centering on the Shibuya and Shinjuku areas and vacancy rates
have remained low. Under such solid office market trends supported by strong office demand, DOI
intends to improve its skill in building management by constantly attempting to grasp the latest tenantneeds and market conditions, regularly reviewing management systems and such. Consequently, DOI will
carry out operational management under the following policy with an aim to enhance the competitivenessof existing properties and thereby increase the long-term EPS over the medium to long term.
(i) Maintain and raise occupancy rates
Concerning existing tenants, strive to reduce cancellation risks by improving the quality of buildings,
equipment and management system. In addition, concerning new tenants, strive to maintain and raiseoccupancy rates through the provision of highly satisfactory services from gaining deeper
understanding of tenant needs through proactive participation 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 of hightenant satisfaction levels by implementing efficient operational management and reviewing systematicconstruction work by optimally leveraging the economies of scale achieved from proactively realizing
external growth.

20(B) Strategy for New Property Investments
DOI will invest in office buildings that have a total floor area of about 2,000m2 or more based on various
external growth strategies, while maintaining a balance with the asset acquisition environment andfinancing 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 a viewpoint ofterritorially-distributed investments.
As pipeline support, in addition to expanding its own information-sourcing channels, DOI will continue tosearch for properties that meet its investment criteria by proactively gathering real estate transaction
market information through greater collaboration with the Asset Manager and Sponsor Group and utilizing
the Group’s extensive network of clients, partners, etc.
Furthermore, in the 28th Fiscal Period, DOI acquired “Daiwa Mita 2-Chome Building” located in Tokyothrough an exchange for “Daiwa Osaki 3-chome Building.” DOI believes that acquisition of the property
will contribute to further stabilization and enhancement of the portfolio. DOI will continue to strive toacquire properties in line with the investment strategy described above.
(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 the rangeof 40% to 50% at maximum, taking into consideration also the LTV, etc. based on appraisal value, as aprinciple.
(ii) Diversify repayment deadlines, targeting 30.0 billion yen as the maximum amount of interest-bearing
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 28th 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.

Name of real estate
properties(Location)

PurposeScheduled
implementation
periodDaiwa Higashi-nihonbashi
Building(Chuo-ku, Tokyo)

Upgrading of airconditioning facilities

Shinsen Place(Shibuya-ku, Tokyo)

Expected construction amount(Millions of yen)TotalamountAmount paid
duringcurrent
periodTotalamountalreadypaid

From: June 2019
To: May 2020

102

–

–

Upgrading of airconditioning facilities

From: Sep. 2019
To: Apr. 2020

86

–

–

Daiwa Shibaura(Minato-ku, Tokyo)

Renovation of exterior
walls

From: Nov. 2019
To: May 2020

67

–

–

CONCURRED Yokohama(Yokohama-shi, Kanagawa)

Repair of fire-resistantcoating on facility
balconies
Repair of waterproof
treatment for thepenthouse floor

From: Aug. 2019
To: Apr. 2020

49

–

–

From: Dec. 2019
To: May 2020

37

–

–

Daiwa River Gate
(Chuo-ku, Tokyo)

II. Asset Management Report21III. Balance Sheets
As of November 30, 2019 and May 31, 2019

(Thousands of yen)

As ofNovember 30, 2019

As of
May 31, 2019

AssetsCurrent Assets:
Cash and cash equivalents (Notes 3 and 4)

31,380,717

30,143,640

Tenant receivables

187,778

173,823

Prepaid expenses

358,962333,048

Other current assets

63,16565,520Total Current Assets

31,990,623

30,716,033

Land

12,302,226

12,302,226

Buildings and structures

3,283,401

3,282,182

Tools, furniture and fixtures

19,917

19,917

Construction in progress

2,846

2,846

Land in trust accounts

352,270,629

352,187,043

Buildings and structures in trust accounts

108,828,089

107,676,537

Machinery and equipment in trust accounts

876,713858,858

Tools, furniture and fixtures in trust accounts

276,211

266,040

Construction in progress in trust accounts

55,178

828,644(27,909,328)(26,238,466)

2,398,275

2,398,275

306,884

306,884

452,711,045

453,890,990

215

270

113,684

113,684

Long-term prepaid expenses

1,123,455

791,008

Deferred tax assets (Note 15)–

63,978Derivative assets (Note 4)

19,097

7,486

Deferred investment corporation bond issuance costs

34,852

11,758Others37,46040,934

1,328,766

1,029,121

486,030,435

485,636,144

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

Less: accumulated depreciation
Leasehold rights
Leasehold rights in trust accounts
Total Investment Properties, net
Investments and Other Assets:
TrademarkLease and guarantee deposits in trust accounts

Total Investments and Other Assets
Total Assets
The accompanying notes are an integral part of these financial statements.

22

(Thousands of yen)

As ofNovember 30, 2019

As of
May 31, 2019

Liabilities
Current Liabilities:
Accounts payable

701,775

981,467

5,000,000

5,000,000–

3,000,000

28,100,000

19,500,000

580,867

567,015886

803

Accrued consumption taxes

321,963

364,984

Rent received in advance

2,355,146

2,323,112

Other current liabilities

479,916

895,324

Total Current Liabilities

37,540,555

32,632,707

5,100,000

2,100,000

Long-term debt (Notes 4 and 9)

166,250,000

174,850,000

Tenant security deposits including trust accounts (Note 4)

21,861,236

20,989,857

3,484

–

Derivative liabilities (Note 4)

193,083

409,112

Other long-term liabilities

189,641

194,297

Total Long-Term Liabilities

193,597,445

198,543,268

231,138,001

231,175,975

251,551,759

251,551,759(3,675,523)(3,675,523)

247,876,236

247,876,236

710,209567,422

6,462,843

6,320,338

255,049,288

254,763,996

Deferred gains or losses on hedges(156,854)(303,827)

Total valuation and translation adjustments(156,854)(303,827)

Total Net Assets

254,892,434

254,460,169

Total Liabilities and Net Assets

486,030,435

485,636,144

Short-term debt (Notes 4 and 9)
Investment corporation bonds due within one year
(Notes 4 and 9)
Long-term debt due within one year (Notes 4 and 9)
Accounts payable – other
Income taxes payable

Long-Term Liabilities:
Investment corporation bonds (Notes 4 and 9)

Deferred tax liabilities (Note 15)

Total Liabilities
Net Assets (Notes 8 and 16)
Unitholders’ Equity:
Unitholders’ capital
Units authorized: 2,000,000 units
Units issued and outstanding: 491,877 units as ofNovember 30, 2019 and May 31, 2019
Deduction from unitholders’ capital
Unitholders’ capital, net
Reserve for reduction entry
Retained earnings
Total Unitholders’ Equity
Valuation and translation adjustments

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

23

IV. Statements of Income and Retained Earnings
For the fiscal periods ended November 30, 2019 and May 31, 2019

(Thousands of yen)

For the fiscal period
endedNovember 30, 2019

For the fiscal period
ended
May 31, 201913,916,051

13,628,608

159,798–

62,035
142,474

18,789–14,094,639

13,833,118

5,584,803
1,145,795

5,479,166
1,116,953

24,24973,63518,742

24,287
74,132
19,671

7,200
126,183

7,200
132,496

6,980,610
7,114,028

6,853,907
6,979,210

16
611
6,517
1,810

17
538
2,728
1,076

8,955

4,360

499,974
16,646
137,997
4,706

503,464
16,892
137,389
5,203

659,325

662,948

6,463,659
6,463,659

6,320,622
6,320,622

888
(4)

804
(302)

884

502

6,462,774
68
6,462,843

6,320,120
217
6,320,338

Operating Revenues:
Rental revenues (Note 7)
Other revenues related to property leasing (Note 7)
Gain on sale of investment properties (Note 11)
Gain on exchange of investment properties(Note 12)
Total Operating Revenues
Operating Expenses:
Property-related expenses (Note 7)
Asset management fees
Asset custody fees
Administrative service fees
Trust fees
Directors’ compensation
Other operating expenses
Total Operating Expenses
Operating Income
Non-Operating Revenues:
Interest income
Reversal of distribution payable
Insurance income
Other non-operating revenues
Total Non-Operating Revenues
Non-Operating Expenses:
Interest expense
Interest expense on investment corporation bonds
Borrowing expenses
Other non-operating expenses
Total Non-Operating Expenses
Ordinary Income
Income Before Income Taxes
Income taxes – current
Income taxes – deferred
Total Income Taxes (Note 15)
Net Income
Retained Earnings Brought Forward
Retained Earnings at End of Period
The accompanying notes are an integral part of these financial statements.

24

IV. Statements of Income and Retained Earnings

V. Statements of Changes in Net Assets
For the fiscal periods ended November 30, 2019 and May 31, 2019

(Thousands of yen)

Unitholders’ Equity
Number of
Deduction
Reserve for
Units
Unitholders’fromUnitholders’(Units)CapitalUnitholders’ capital, net Reduction
Entry
CapitalBalance as ofNovember 30,
2018
Cash
distributions
declared
Net income
Net changes of
items otherthanunitholders’equityBalance as of
May 31, 2019
Cash
distributions
declared
Net income

Deferred
Gains or
Losses on
HedgesRetained
Earnings

Total Net
Assets491,877

251,551,759(3,675,523)

247,876,236

567,422

5,901,266

－

－

－

－

－

(5,901,048)－(5,901,048)

－

－

－

－

－

6,320,120－

6,320,120

－

－

－

－

－

－

(83,182)(83,182)

491,877

251,551,759(3,675,523)

247,876,236

567,422

6,320,338

－

－

－

－

－

(6,177,483)－(6,177,483)

－

－

－

－

－

6,462,774－

6,462,774(142,786)－－－

146,973

146,973

Provision of
142,786－－－－
reserve for
reduction entry
Net changes of
items other
－
－
－
－
－
than
unitholders’equityBalance as of491,877
251,551,759(3,675,523) 247,876,236
710,209
November 30,
2019
The accompanying notes are an integral part of these financial statements.

6,462,843(220,645) 254,124,279(303,827) 254,460,169(156,854) 254,892,434

V. Statements of Changes in Net Assets

25VI. Statements of Cash Flows
For the fiscal periods ended November 30, 2019 and May 31, 2019

(Thousands of yen)

For the fiscal period
endedNovember 30, 2019

For the fiscal period
ended
May 31, 2019

Income before income taxes

6,463,659

6,320,622

Depreciation and amortization

1,829,629

1,816,695

2,921

2,938

Gain on exchange of investment properties(18,789)–

Interest expense

516,621520,356(Increase) decrease in tenant receivables(13,954)

27,517(Decrease) increase in accounts payable(265,092)

205,600

32,033

145,422

Interest payments(514,073)(520,264)(Decrease) increase in accrued consumption taxes(43,021)242,692–

314,284–

13,486,543(746,284)

417,486

7,243,648

22,979,896

Payments for purchases of investment properties
including trust accounts(675,254)(15,943,531)

Proceeds from tenant security deposits including trust
accounts

1,438,240

1,575,417

Refunds of tenant security deposits including trust
accounts(566,861)(1,378,190)

Net Cash Provided by (Used in) Investing Activities

196,124(15,746,304)

Proceeds from short-term debt–

14,000,000

Repayments of short-term debt–

(9,000,000)

Proceeds from long-term debt

8,000,000

10,500,000

Repayments of long-term debt

(8,000,000)(10,000,000)

Proceeds from issuance of investment corporation bonds

2,973,984–

Redemption of investment corporation bonds(3,000,000)–

Distributions paid

(6,176,680)(5,900,516)

Net Cash Used in Financing Activities(6,202,695)(400,516)

Net Change in Cash and Cash Equivalents

1,237,077

6,833,074

Cash and Cash Equivalents at Beginning of Period

30,143,640

23,310,565

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

31,380,717

30,143,640

Cash Flows from Operating Activities:

Amortization of bond issuance costs

Increase in rent received in advance

Decrease in consumption taxes receivable
Decrease due to sale of investment properties in trust
accounts
Other, net
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:

Cash Flows from Financing Activities:

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

26

VI. Statements of Cash Flows

VII. Notes to Financial Statements
For the fiscal periods ended November 30, 2019 and May 31, 2019

Note 1 – Organization and Basis of Presentation
Organization
Daiwa Office Investment Corporation (the former DA Office Investment Corporation; hereinafter referred to as“DOI”) was established on July 11, 2005 as an investment corporation under the Act on Investment Trusts andInvestment 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 Asset Management(hereinafter referred to as the “Asset Manager”)).
DOI is an externally managed real estate fund, established as an investment corporation. The Asset Manager,
as DOI’s asset management company, is engaged in acquiring, managing, leasing, and renovating officeproperties. 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 offeringof units. Those units were listed on the J-REIT section of the Tokyo Stock Exchange.
As of November 30, 2019, DOI had ownership or trust beneficiary interests in 59 office properties withapproximately 364,787m2 of rentable office space and had leased office space to 637 tenants engaged in avariety of businesses. The occupancy rate for the office properties was approximately 99.1 %.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in theInvestment Trust Act, the Financial Instruments and Exchange Act and their related accounting regulations, andin conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different incertain 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 the financial
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 theaccompanying 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 fair presentation, is not presented in theaccompanying 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 have been rounded
down. As a result, the total shown in the financial statements and notes does not necessarily agree with the sumof individual account balances. This policy has been applied to the financial statements from the current period.
DOI’s fiscal period is a six-month period ending at the end of May and November of each year.

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 of threemonths or less from the date of acquisition.
(b) Investment Properties
Investment properties are recorded at cost, which includes the allocated purchase price, related costs andexpenses for acquisition of the office properties and the trust beneficiary interests in trust. Investment property
balances are depreciated using the straight-line method over the estimated useful lives as follows:
As of November 30, 2019
As of May 31, 2019
Buildings and structures
2-64 years
2-64 years
Machinery and equipment
6-23 years
6-23 years
Tools, furniture and fixtures
5-15 years
5-15 years
Cost related to the renovation, construction improvement of properties is capitalized. Expenditures for repairs andmaintenance which do not add to the value or prolong the useful life of property, are expensed as incurred.

VII. Notes to Financial Statements

27

(c) Deferred Investment Corporation Bond Issuance Costs
Deferred investment corporation bond issuance costs are amortized on a straight-line basis over the respective
terms of the bonds.
(d) Income Taxes
Deferred tax assets and liabilities are computed based on the difference between the financial statements andincome 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. Owners of theproperties are registered by records maintained in each jurisdiction by the local government. The taxes are imposedon 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 imposedon the seller. DOI pays the seller the corresponding amount of the taxes for the period from property acquisition dateto 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)

Capitalized real estate taxes

For the fiscal period ended For the fiscal period ended
November 30, 2019
May 31, 201953,974
3,316(f) Consumption Taxes
Consumption taxes are excluded from transaction amounts. Generally, consumption taxes paid are offset against thebalance of consumption taxes withheld. As such, the excess of payments over amounts withheld is included in thecurrent assets while the excess of amounts withheld over payments is included in the current liabilities. 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 tohedge the risk of interest rate fluctuations related to borrowings. Pursuant to Japanese GAAP, DOI applies the special
accounting treatment to interest-rate swaps which qualify for hedge accounting and meet specific criteria. Under the
special accounting treatment, the related differentials paid or received under such swap contracts can be recognized
and included in interest expense or income of the hedged assets or liabilities, and the interest-rate swaps are notrequired 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 other operating
revenues such as utility charge reimbursements, parking space rental revenues and other income. Rental revenues
are generally recognized on an accrual basis over the life of each lease. Utility charge reimbursements are recognizedwhen earned and their amounts can be reasonably estimated.
(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 relevant balance sheet
and income statement accounts of the accompanying financial statements.

28

Note 3 – Cash and Cash Equivalents
Cash and cash equivalents stated on the accompanying balance sheets and statements of cash flows as ofNovember 30, 2019 and May 31, 2019 consisted of the following:(Thousands of yen)

Cash and deposits
Cash and deposits in trust accounts
Cash and cash equivalents

As of November 30, 201927,799,432
3,581,284
31,380,717

As of May 31, 201926,663,769
3,479,870
30,143,640

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 of investment units
for acquisition and renovation of investment properties, cash distributions of dividends and repayment of bankborrowings. In financing through interest-bearing debt, DOI raises funds with longer term, fixed-rate and welldiversified maturities 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 and securities(in principle, deposits).
DOI enters into derivative transactions only for the purpose of hedging interest rate risks arising from liabilities.
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 andrepay or redeem outstanding borrowings and bonds. These borrowings and bonds are exposed to liquidity risk. Suchrisk 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 therisk of future interest rate fluctuations, DOI uses derivative transactions (interest-rate swap) as hedging instruments, inorder 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 of cash
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 specific criteria under the
special accounting treatment.
Derivative transactions are executed and monitored in compliance with the rules and procedures set forth in the risk
management policy of DOI.
Tenant security deposits including trust accounts are exposed to liquidity risk arising from refunding deposits in theevent of vacating of properties by tenants. Such risk is managed by reserving some parts of the 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 in short-term deposit andsetting a minimum credit rating requirement for the depository financial institutions (excluding deposits for settlement
purposes).
Supplemental Explanation regarding Fair Value of Financial Instruments
The fair value of financial instruments is based on their quoted market price. When there is no quoted market priceavailable, fair value is reasonably estimated. Since certain assumptions and factors are reflected in estimating the fairvalue, different assumptions and factors could result in a different value. Also, the contractual amounts of derivativetransactions do not represent the market risk involved in these derivative transactions.

VII. Notes to Financial Statements

29

(b) Estimated Fair Value of Financial Instruments
The book value, fair value and difference between the two as of November 30, 2019 and May 31, 2019 were as
follows:(Thousands of yen)

As of November 30, 2019

As of May 31, 2019

AssetsBook value

Fair value

DifferenceBook value

Fair value

Difference

Cash and cash
equivalents
Total

31,380,717

31,380,717–

30,143,640

30,143,640–

31,380,717

31,380,717–

30,143,640

30,143,640–

5,000,000

5,000,000–

5,000,000

5,000,000

–

–

–

–

3,000,000

3,001,500

1,500

28,100,000

28,107,557

7,557

19,500,000

19,502,614

2,614

5,100,000

5,115,100

15,1002,100,000

2,166,780

66,780Long-term debt

166,250,000

166,408,056

158,056

174,850,000

174,967,636

117,636

Total

204,450,000

204,630,714

180,714204,450,000

204,638,530

188,530(228,850)(228,850)–(443,290)(443,290)–

Liabilities
Short-term debt
Investment
corporation bonds
due within one
year
Long-term debt
due within one
year
Investment
corporation bonds

Derivativetransactions (*)(*) 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.

The financial instruments whose fair value is deemed extremely difficult to determine are excluded from theabove table (See Note 2 below).
Notes:
1. Methods to estimate fair value of financial instruments and derivative transactions
Assets:Cash and cash equivalents
Due to the short maturities, the book value of these assets is deemed a reasonable approximation of the fairvalue.
Liabilities:(1) Short-term debt, long-term debt due within one year and long-term debt
For short-term debt and 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, theirbook value is assumed as their fair value. For short-term debt and long-term debt with fixed interest rates, theirfair value is calculated based on the present value of principle and interest cash flows discounted at the current
interest rate which is estimated to be applied if similar new debt is entered into. However, the fair value of certain
floating-rate long-term debt that qualifies for the special treatment of interest-rate swaps is calculated based on
the present value of principle and interest cash flows which are processed as a single unit with the interest-rate
swap.
(2) 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.

30

Derivative Transactions:
The Company applies the hedge accounting for all derivative transactions. Contractual amount and fair value
were as follows:(Thousands of yen)Hedge
accounting
methodType ofderivativetransaction

Hedged item

As of November 30, 2019
Contracted amount
Fair value (*1)
Due after one year
Total

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

Long-term debt

129,600,000

104,500,000(228,850)

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

Long-term debt

3,000,000

1,000,000– (*2)

132,600,000

105,500,000(228,850)(Thousands of yen)Hedge
accounting
methodType ofderivativetransaction

Hedged item

As of May 31, 2019
Contracted amount
Fair value (*1)
Due after one year
Total

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

Long-term debt

135,600,000

118,100,000(443,290)

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

Long-term debt

3,000,000

3,000,000– (*2)

138,600,000

121,100,000(443,290)(*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 areprocessed as a single unit with the hedged long-term debt.

2. Financial instruments whose fair value is deemed extremely difficult to determine
Tenant security deposits including trust accounts (whose book values were 21,861,236 thousand yen and
20,989,857 thousand yen as of November 30, 2019 and May 31, 2019, respectively) that have been depositedby tenants were excluded from the scope of fair value disclosure because they are not marketable, and theactual deposit period is not estimable, which in turn makes it difficult to reasonably estimate the future cash
flows.
3. Redemption schedule for monetary claims(Thousands of yen)

As of November 30, 2019

Cash and cash equivalents
Total

Due after
Due after
Due after
Due after
one to two two to three three to four four to five
years
years
years
years
31,380,717––––
31,380,717––––
Due within
one year

Due after
five years––(Thousands of yen)

As of May 31, 2019

Cash and cash equivalents
Total

Due after
Due after
Due after
Due after
one to two two to three three to four four to five
years
years
years
years
30,143,640––––
30,143,640––––
Due within
one year

Due after
five years

VII. Notes to Financial Statements

–
–

31

4. Redemption schedule for short-term debt, investment corporation bonds and long-term debt
(Thousands of yen)

As of November 30, 2019

Short-term debt
Investment corporation bonds
Long-term debt
Total

Due after
Due after
Due after
Due after
one to two two to three three to four four to five
years
years
years
years

Due within
one year

Due after
five years

5,000,000
–
–
–
–
–
–
–
–
– 3,800,000 1,300,000
28,100,000 24,200,000 31,600,000 26,200,000 24,300,000 59,950,000
33,100,000 24,200,000 31,600,000 26,200,000 28,100,000 61,250,000(Thousands of yen)

Due after
Due after
Due after
Due after
one to two two to three three to four four to five
years
years
years
years

Due within
one year

As of May 31, 2019

Short-term debt
Investment corporation bonds
Long-term debt
Total

Due after
five years

5,000,000–––––
3,000,000–––– 2,100,000
19,500,000 33,300,000 21,500,000 30,600,000 23,700,000 65,750,000
27,500,000 33,300,000 21,500,000 30,600,000 23,700,000 67,850,000

Note 5 – Tangible Fixed Assets of Investment Properties
Investment properties as of November 30, 2019 and May 31, 2019 consisted of the following:
As of November 30, 2019
Acquisition
cost

Accumulated
depreciationLand

12,302,226

Buildings andstructures

As of May 31, 2019

Book value

Acquisition
cost

Accumulated
depreciation

Book value–

12,302,226

12,302,226–

12,302,226

3,283,401(2,398,351)

885,050

3,282,182(2,321,845)

960,336

Tools, furnitureand fixtures

19,917(12,119)

7,797

19,917(11,031)8,885

Construction inprogress

2,846

–

2,846

2,846

–

2,846

Land in trust
accounts

352,270,629–

352,270,629

352,187,043–

352,187,043

Buildings andstructuresin trust accounts

108,828,089(24,866,900)

83,961,188

107,676,537(23,321,100)

84,355,436

Machinery andequipmentin trust accounts

876,713(471,131)

405,582

858,858(439,084)

419,773

Tools, furnitureand fixturesin trust accounts

276,211(160,826)

115,385

266,040(145,403)

120,637

Construction inprogressin trust accounts

55,178–55,178

828,644–828,644477,915,213(27,909,328)

450,005,885

477,424,296(26,238,466)

451,185,830

Total

32

(Thousands of yen)

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 wereas follows:(Thousands of yen)

For the fiscal period ended For the fiscal period ended
November 30, 2019
May 31, 2019
Book value: (Note 1)
Balance at beginning of period

453,059,500

453,459,299(406,479)(399,799)

Balance at end of period

452,653,020

453,059,500

Fair value (Note 3)

562,730,000

548,130,000

Change during the period (Note 2)(Notes)1. The book value represents the acquisition cost less accumulated depreciation.
2. Significant changes
For the fiscal period ended November 30, 2019, the major reason for the increase is acquisition of “Daiwa Mita 2-chome Building” (1,565,078
thousand yen). The major reason for the decrease is disposition of “Daiwa Osaki 3-chome Building” (1,581,029 thousand yen) and depreciation(1,826,120 thousand yen).
For the fiscal period ended May 31, 2019, the major reason for the increase is acquisition of “Sasazuka South Building” and “Glass City Harumi”(14,200,000 thousand yen). The major reason for the decrease is sale of “Daiwa Onarimon Building” (13,486,543 thousand yen) and depreciation(1,813,035 thousand yen).
3. The fair values as of November 30, 2019 and May 31, 2019 were determined by the sum of appraisal values provided by external real estateappraisers.

VII. Notes to Financial Statements

33

Note 7 – Rental Revenues and Expenses
Rental revenues and expenses for the fiscal periods ended November 30, 2019 and May 31, 2019 were as
follows:(Thousands of yen)

For the fiscal period ended For the fiscal period ended
November 30, 2019
May 31, 2019
Revenues from property leasing:
Rental revenues

13,916,051

13,628,608

159,798

62,035

14,075,850

13,690,644

Consignment expenses

1,010,578

1,062,834

Utilities expenses

1,074,122

1,099,123

Taxes and dues

1,131,152

1,041,049

Insurance expenses

16,47915,289Repair expenses

474,514395,024

1,826,120

1,813,035

51,83652,809Total rental expenses

5,584,803

5,479,166

Income from property leasing

8,491,046

8,211,477

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

Depreciation
Other

Note 8 – Net Assets
DOI issues non-par value units in accordance with the Investment Trust Act and all of the amounts issued aredesignated as stated capital. DOI maintains a minimum of 50 million yen of net assets as required by theInvestment Trust Act.

34

Note 9 – Short-Term Debt, Long-Term Debt Due Within One Year, Investment Corporation
Bonds Due Within One Year, Long-Term Debt and Investment Corporation Bonds
Short-term debt, long-term debt due within one year, investment corporation bonds due within one year, longterm debt and investment corporation bonds as of November 30, 2019 and May 31, 2019 consisted of thefollowing:(Thousands of yen)

As of November 30, 2019

As of May 31, 2019

0.3% unsecured short-term loans due 2020,
principally from banks

5,000,000

5,000,000

Total

5,000,000

5,000,000

194,350,000

194,350,000

0.4% unsecured bond due 2019–

3,000,000

1.0% unsecured bond due 2024

2,100,000

2,100,000

0.2% unsecured bond due 2024

1,700,000–

0.7% unsecured bond due 2031

1,300,000–

199,450,000

199,450,000

Unsecured loans due 2019 to 2029, principallyfrom banks and insurance companies with interest
rates mainly ranging from 0.2% to 1.0%

Total

(Note) The interest rates presented are daily weighted average interest rates. As for long-term debts which were hedged by interest-rate 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 short-term debt, long-term debt and investment corporation bonds as of November
30, 2019 were as follows:(Thousands of yen)

Due within
one
year

Due after
Due after
Due after
Due after
one to two two to three three to four four to five
years
years
years
years

Due after
five
years

Short-term debt, long-term debt
33,100,000 24,200,000 31,600,000 26,200,000 28,100,000 61,250,000
and investment corporation bonds

Note 10 – Leases
As Lessor
The future minimum rental revenues under existing non-cancelable operating leases as of November 30, 2019and May 31, 2019 were as follows:(Thousands of yen)

As of November 30, 2019

As of May 31, 2019

Due within one year

11,358,805

11,742,711

Due after one year

15,530,206

21,694,279

Total

26,889,011

33,436,990

VII. Notes to Financial Statements

35

Note 11 – Gain on Sale of Investment Properties
No investment properties were sold during the fiscal period ended November 30, 2019.
Gain on sale of investment properties for the fiscal period ended May 31, 2019 was as follows:(Thousands of yen)

For the fiscal period
ended May 31, 2019
Daiwa Onarimon Building:
Proceeds from sale of investment property

13,700,000

Cost of selling investment property(13,486,543)

Other expenses related to sale

(70,981)Gain on sale of investment property

142,474

Note 12 – Gain on Exchange of Investment Properties
Gain on exchange of investment properties for the fiscal period ended November 30, 2019 was as follows:(Thousands of yen)

For the fiscal period
ended November 30, 2019
Daiwa Osaki 3-chome Building:
Proceeds from exchange of investment property

2,685,000

Cost of exchanging investment property(1,581,029)

Other expenses related to exchange(15,259)

Reduction entry of fixed assets(1,069,921)

Gain on exchange of investment property

18,789No investment properties were exchanged during the fiscal period ended May 31, 2019.

Note 13 – Reduction of Investment Properties Purchased with Government Subsidies
Government subsidies of 32,898 thousand yen were deducted from the acquisition cost of the buildings intrust as of November 30, 2019 and May 31, 2019.

Note 14 – Reduction of Investment Properties Acquired through Exchange
Amounts deducted from the acquisition cost of the investment property in trust acquired through exchange asof November 30, 2019 and May 31, 2019 were as follows:(Thousands of yen)

As of November 30, 2019
Buildings and structures in trust accounts

182,846–

Land in trust accounts

887,074–

1,069,921

–

Total

36

As of May 31, 2019

Note 15 – Income Taxes
DOI is subject to Japanese corporate income taxes on all of its taxable income. However, DOI may deduct theamount distributed to its unitholders from its taxable income when certain requirements, including a requirement
to distribute in excess of 90% of distributable profit for the fiscal period, are met under the Special 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 be able
to deduct such amount from taxable income.
The following table summarizes the significant difference between the statutory tax rate and DOI’s effective tax
rate for financial statement purposes.

(%)

For the fiscal period ended For the fiscal period ended
November 30, 2019
May 31, 2019
Statutory tax rate

31.51

31.51

Deductible cash distributions(31.51)(30.80)–(0.71)

Others0.01

0.01

Effective tax rate

0.01

0.01

Provision of reserve for reduction entry

The significant components of deferred tax assets and liabilities as of November 30, 2019 and May 31, 2019were as follows:(Thousands of yen)

As of November 30, 2019

As of May 31, 2019

Deferred tax assets:
Accrued enterprise tax

13

978,004

141,818

78,018141,827

Reserve for reduction entry

75,49475,494

Deferred gains on hedges

6,008

2,355

Total deferred tax liabilities

81,502

77,849Net deferred tax (liabilities) assets(3,484)

63,978Deferred losses on hedges
Total deferred tax assets
Deferred tax liabilities:

VII. Notes to Financial Statements

37

Note 16 – Per Unit Information
Information about earnings per unit for the fiscal periods ended November 30, 2019 and May 31, 2019, net
assets per unit as of November 30, 2019 and May 31, 2019 were as follows:(Yen)

For the fiscal period ended For the fiscal period ended
November 30, 2019
May 31, 2019
Earnings per Unit:
Net income per unit

13,13912,848Weighted average number of units outstanding (units)491,877

491,877(Yen)

As of November 30, 2019
Net Assets per Unit

518,203

As of May 31, 2019517,324

The computation of earnings per unit is based on the weighted average number of units outstanding during theperiod. The computation of net assets per unit is based on the number of units outstanding at each period 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.

Note 17 – 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. Therefore, thetotal amount of dividends that DOI has determined to pay out is 6,462,771,903 yen for the fiscal period ended
November 30, 2019 and 6,177,483,243 yen for the fiscal period ended May 31, 2019 that are the largest integral
multiple of 491,877, the number of units outstanding as of November 30, 2019 and May 31, 2019, after
deducting provision of reserve for reduction entry as stipulated in Article 65-7 of the Special Taxation Measure
Act of Japan and adjustments to deferred tax liabilities due to a change in the statutory tax rate fromunappropriated retained earnings. Furthermore, DOI does not pay out dividends that exceed accounting profits
as outlined in Article 32-2 of DOI’s Articles of Incorporation.
(Yen)

For the fiscal period ended For the fiscal period ended
November 30, 2019
May 31, 2019
I Unappropriated retained earnings

6,462,843,324

6,320,338,406

II Cash distributions declared

6,462,771,903

6,177,483,243–

142,786,780

71,421

68,383

III Voluntary reserves Provision of reserve for
reduction entry
IV Retained earnings brought forward

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

For the fiscal period ended For the fiscal period ended
November 30, 2019
May 31, 2019
Cash distributions per unit
Board of directors meeting dates

38

13,13912,559January 21, 2020

July 18, 2019

Note 18 – Related-Party Transactions
Related-party transactions for the fiscal periods ended November 30, 2019 and May 31, 2019 were as follows:
For the fiscal period ended November 30, 2019
No related-party transaction was entered into for the fiscal period ended November 30, 2019.
For the fiscal period ended May 31, 2019
Classification
Name
Location
Capital stock (Thousands of yen)
Principal business
Ratio of voting rights
Relation to the related party
Nature of transaction
Amount of transaction (Thousands of yen)Account
Balance at the end of period(Thousands of yen)

Subsidiary of other related party
Daiwa Property Co., Ltd.
Chuo-ku, Tokyo
100,000
Real estate management–
Divestment of trust beneficial interest in real estate
Divestment of trust beneficial interest in real estate (Notes 1 and 2)
13,700,000––

The above amount of transaction does not include consumption tax, etc.
(Notes) 1. Terms of transactions were determined based on market price.
2. Terms of transactions with interested parties were determined based on the Assets Manager’s internal regulation which was established toprevent conflict of interest.

Note 19 – Segment Information
For the fiscal periods ended November 30, 2019 and May 31, 2019
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.

VII. Notes to Financial Statements

39

Note 20 – Significant Subsequent Events
Acquisition of Asset
DOI acquired the trust beneficial interest in real estate on December 13, 2019 as described below.
Overview of the acquired asset
Property name
Asset type
Location
Acquisition priceAgreement date
Acquisition dateSellerDaiwa Nakano-Sakaue Building (Note)
Trust beneficial interest in domestic real estate
3-31-11 Honcho, Nakano-ku, Tokyo
2,750,000 thousand yen (excluding acquisition costs, consumption tax, etc.)
December 9, 2019
December 13, 2019
TMK Shine Residence(Note) The name of the property is scheduled to change from Leopalace 21 Dairoku Building to Daiwa Nakano-Sakaue as of June 1, 2020.

40

VIII. Independent Auditor’s Report

VIII. Independent Auditor’s Report41

IX. Investor Information
History of Investment Unit Price
4,500 (Units)(Yen) 900,000
Investment unit price (left axis)

Trading volume (right axis)

800,000

4,000

700,000

3,500

600,000

3,000

500,000

2,500

400,000

2,000

300,000

1,500

200,000

1,000

100,000500

002017 2018
Dec. Jan.

Feb.

Mar.

Apr.

May

June

July

Aug. Sept. Oct.

Nov.

2019
Dec. Jan.

Feb.

Mar.

Apr.

May

June

July

Aug. Sept. Oct.

Nov.

Overview of Investment Units and Unitholders (As of November 30, 2019)■ No. of Investment Units by Investor Type
Financial institutions
169,082 units (34.4%)

Individuals/others

28th
Fiscal Period

13,625 units (2.8%)■ No. of Unitholders
by Investor Type
Foreigners 96,373 units (19.6%)

Total: 491,877 units
Other domestic corporations 192,012 units (39.0%)

27th
Fiscal Period

Financial institutions
161,625 units (32.9%)

Individuals/others
14,092 units (2.9%)

Securities firms 20,785 units (4.2%)

Foreigners 108,524 units (22.1%)

Total: 491,877 units
Other domestic corporations 190,743 units (38.8%)

Number ofPercentage
Units Owned
Share(Units)2. The Master Trust Bank of Japan, Ltd. (Trust Account)

67,247

13.7

3. Daiwa Securities Group Inc.

59,321

12.1

4. Japan Trustee Services Bank, Ltd. (Trust Account)

41,142

8.4

Aug.

Trust & Custody Services Bank, Ltd.
5.
(Securities Investment Trust Account)

14,564

3.0

July

14,2332.9

7. Mizuho Securities Co., Ltd.

7,059

1.4

104
(1.8%)

Foreigners

266(4.5%)

Securities firms

18(0.3%)

Total

5,923

8. Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.

6,916

1.4

9. BNYM AS AGT/CLTS 10 PERCENT

6,609

1.3

5,153

1.0

February 14, 2020 : Start paying distributions for
28th Fiscal PeriodNov.
End offiscal periodJan.
End offiscal period

Feb.

May

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

42

Other domestic
corporations

February 13, 2020 : Sending of Japanese version Business
Report for 28th Fiscal Period(Statement of Financial Performance)

26.2

10. SSBTC CLIENT OMNIBUS ACCOUNT

97(1.6%)

January 21, 2020 : Announcement of financial results
28th Fiscal Period

128,905

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

Financial institutions

IR Calendar

1. Daiwa Investment Management Inc.

6.

5,438
(91.8%)

Securities firms 16,893 units (3.4%)

Top Ten Unitholders (As of November 30, 2019)
Name of Investor

Individuals/others

July 2020: Announcement of financial results for
29th Fiscal Period
August 2020 : Sending of Japanese version Business
Report for 29th Fiscal Period(Statement of Financial Performance)
August 2020 : Start paying distributions for
29th 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 rights
for the General Meeting of Unitholders

Date prescribed in Article 15 of the Articles of Incorporation

Reference date for finalizing payment of
distributions

May 31 and November 30 of each year
(distributions are paid within three months of this reference date)

Listed financial instruments exchangeTokyo Stock Exchange (stock code: 8976)

Newspaper in which notice is posted

Nikkei Inc.

Manager of Unitholder Registry, etc.

Sumitomo Mitsui Trust Bank, Limited, 1-4-1 Marunouchi, Chiyoda-ku, Tokyo 100-8233

Office handling administrative affairs

Transfer Agency Department of Sumitomo Mitsui Trust Bank, Limited, 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 via Website
Daiwa Office Investment Corporation conducts information distribution via its website as an important tool for IR activities. DOI also provides an
e-mail delivery service, “IR mail Delivery Service,” which informs the subscribers of updates in website content such as press releaseannouncements via e-mail free of charge. 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

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

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

IX. Investor Information

43

The Daiwa Office Investment Corporation logo symbolizes hospitality with an open door and the desire to be a brightand open investment corporation. We will continue to aim to be a highly-transparent investment corporation that isfurther cherished and trusted by our investors and tenants.