29th

Fiscal Period Business Report(Statement of Financial Performance)

December 1, 2019 – May 31, 2020

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 29th Fiscal Period, DOI posted operating revenues of 14,272 million yen and operating income of 7,312 million yen. Our
distribution per unit for the 29th Fiscal Period is 13,595 yen, an increase of 456 yen from the 28th Fiscal Period.
See page 4 for financial and management highlights
Average contract rent at the end of the 29th Fiscal Period was 20,121 yen. Rent revisions contributed to a 21 million yen increasein monthly contracted rents from the end of the previous fiscal period, which was a 9.6% rate of increase for average monthlyrent. Furthermore, the rate of increase for average monthly rent stood at 27.9% due to replacement of tenants, and the occupancy
rate was 99.5%. 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 29th Fiscal Period, DOI acquired two properties (total acquisition price: 6,271 million yen), Daiwa Nakano-Sakaue andNihonbashi Central Square, and sold Daiwa Jimbocho (sale price: 4,000 million yen). DOI will continue to selectively acquire officeproperties located in the five central wards of Tokyo 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 mediumto long-term goal of continuous growth through leveraging borrowing capacity backed byrobust financial base, while increasing long-term EPS (net income after deducting gainon sales of properties). We wish our unitholders continued success and ask for yourcontinued 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… …………………… 40
IX. Investor Information… ………………………………… 44

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

80.5%

17.4%

Based on acquisition price(Note) Please note that the percentages in the above graphs are as of May 31, 2020.

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%(Billions of yen)
500

469.3

439.4

459.7

460.0

461.0

463.1

500.0

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
ended
ended
ended
ended
ended
ended
November 2017 May 2018 November 2018 May 2019 November 2019 May 2020

Fiscal period ended May 2020
(29th Fiscal Period)

Fiscal period ending November 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.

(30th Fiscal Period)

Fiscal period ending May 2021
(31st Fiscal Period)

13,595 yen
13,700 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)
7,500

(Millions of yen)
7,000

13,44013,193

13,83314,094

14,272

6,678

11,000

7,114

6,979

7,312
6,320

6,535

5,887

5,500

5,000

3,500

3,000

6,687

6,462

5,901

8,000

5,000

0

0
25th Period 26th Period 27th Period 28th Period 29th Period

025th Period 26th Period 27th Period 28th Period 29th Period

25th Period 26th Period 27th Period 28th Period 29th Period■ Distribution per Unit
(Yen)
14,00012,000

Forecast from one year earlier
Actual dividends

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

11,40011,85011,997

12,00012,30012,55912,40013,00013,13913,20013,40013,595

13,70013,70028th Period

29th Period

30th Period 31st Period(Forecast) (Forecast)

13,70010,000
8,000
6,000
4,000
2,000
0
26th Period

27th Period

29th Period

28th Period

27th Period

26th Period

25th Period(May 2020)(November 2019)(May 2019)(November 2018)(May 2018)

Operating revenues (Millions of yen)

14,272

14,094

13,833

13,193

13,440Operating income (Millions of yen)

7,312

7,114

6,979

6,535

6,678

Ordinary income (Millions of yen)

6,688

6,463

6,320

5,902

5,888

Net income (Millions of yen)

6,687

6,462

6,320

5,901

5,887

Total number of units issued (Units)491,877

491,877

491,877

491,877

491,877

Net assets per unit (Yen)518,681518,203517,324

516,641

515,730

Distribution per unit (Yen) (Note)

13,595

13,13912,55911,997

11,150Total assets (Millions of yen)

487,212

486,030

485,636479,212467,040

42.0

42.1

42.1

41.5

40.5

60

59

59

58

55

Asset size (Billions of yen)

463.1

461.0

460.0

459.7

439.4

Total rentable area (m )366,336.34

364,787.57

364,375.19

360,958.95

340,144.07

99.5

99.1

97.1

98.9

99.0

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 May 31, 2020)
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
2,848.91 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
22,768.41 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 Nishi-Shimbashi
Nishi-Shimbashi, Minato-ku, Tokyo
4,815.84 SRC B1/10F July 1993
22 Daiwa Kayabacho Building
Nihombashi-Kayabacho, Chuo-ku, Tokyo
5,899.11 S SRC B1/8F Apr. 201023 Daiwa Jinbocho 3-chome
Kanda-Jimbocho, Chiyoda-ku, Tokyo
2,889.34
S 9F
Feb. 2010
24 E SPACE TOWER
Maruyamacho, Shibuya-ku, Tokyo
13,960.87 S SRC B1/15F Oct. 2002
25 Daiwa Nihonbashi Hongokucho
Nihombashi Hongokucho, Chuo-ku, Tokyo
2,143.08
S 8F
May 2010
26 shinyon curumu
Shinjuku, Shinjuku-ku, Tokyo
6,751.31 S RC B2/11F Jan. 201227 Daiwa Akasaka
Akasaka, Minato-ku, Tokyo
8,747.39 SRC B2/7F Sept. 1990
28 Daiwa Shibuya Miyamasuzaka
Shibuya, Shibuya-ku, Tokyo
6,328.94 S B1/12F
Dec. 1988
29 Daiwa Azabu Terrace
Minami Azabu, Minato-ku, Tokyo
13,234.39 S RC B1/6F Sept. 200930 Daiwa Ebisu 4-chome
Ebisu, Shibuya-ku, Tokyo
2,951.70 SRC B1/9F Dec. 1997
31 LAQUAS Higashi Shinjuku
Okubo, Shinjuku-ku, Tokyo
7,498.33
S10F
Aug. 201032 Daiwa Aoyama
Jingumae, Shibuya-ku, Tokyo
4,426.10 S RC B1/7F Nov. 2001
33 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. 200434 Daiwa Shibuya Square
35 Daiwa River Gate
Nihonbashi Hakozakicho, Chuo-ku, Tokyo
32,055.85 S SRC RC B2/20F Feb. 1994
36 Daiwa Hatchobori ekimae
Hatchobori, Chuo-ku, Tokyo
2,622.42 S SRC B1/10F Feb. 2006
37 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
38 Daiwa Nishi-Shinjuku
39 Kirin Nihonbashi Building
Nihonbashi Koami-cho, Chuo-ku, Tokyo
5,630.17 S SRC 7F
Feb. 1999
40 Daiwa Higashi-nihonbashi
Higashi Nihonbashi, Chuo-ku, Tokyo
5,015.88
S 7F
Mar. 200841 Daiwa Daikanyama
Daikanyamacho, Shibuya-ku, Tokyo
1,642.83
S 6F
Mar. 2001
42 Daiwa Shinjuku West
Nishishinjuku, Shinjuku-ku, Tokyo
1,120.58
RC 4F
Mar. 1989
1,719.51 SRC S B1/7F Jan. 1991
43 Daiwa Kanda Mikuracho Building Kanda Mikura-cho, Chiyoda-ku, Tokyo
Kanda Higashi Matsushitacho, Chiyoda-ku, Tokyo 3,980.56
S 9F
Feb. 2005
44 Daiwa Kanda East
45 Daiwa Kandasudacho
Kanda Suda-cho, Chiyoda-ku, Tokyo
2,211.64 S RC B1/10F Aug. 1990
46 Daiwa Sasazuka Tower
Sasazuka, Shibuya-ku, Tokyo
16,160.25 SRC RC S B2/18F Feb. 1993
47 Daiwa Sasazuka
Sasazuka, Shibuya-ku, Tokyo
3,828.95 SRC S B1/8F Dec. 1991
48 Daiwa Harumi
Harumi, Chuo-ku, Tokyo
11,227.10 S B1/12F
Jan. 200849 Daiwa Mita 2-Chome
Mita, Minato-ku, Tokyo
2,101.61
S 8F
Mar. 2017
1,837.05
S 8F
Jan. 2010
50 Nihonbashi Central Square (Note 6) Nihonbashi, Chuo-ku, Tokyo
Subtotal
280,711.63
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-shi, Kanagawa 2,630.30 S SRC B3/7F May 201153 Daiwa Kamiooka
54 Daiwa Ogikubo Tower
Kamiogi, Suginami-ku, Tokyo
17,778.14 S SRC B2/18F June 1993
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-shi, Kanagawa 28,052.98 S SRC B1/20F Feb. 200857 CONCURRED Yokohama
58 Daiwa Shinagawa Gotenyama
Kita-Shinagawa, Shinagawa-ku, Tokyo
2,396.96 SRC S 8F
July 1992
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-shi, Osaka
13,517.62 S SRC B1/16F Feb. 2008
13,517.62
Subtotal
Total
366,336.34

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 0.55,000 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 3.5
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
3,521 0.8
373,063 80.5

simple and17,600 Feeleasehold
Fee simple
4,060 Fee simple
Fee simple
8,380 Fee simple
Fee simple
4,840 Fee simple
Fee simple
4,230 Fee simple
Fee simple
Compartmentalized
3,970 Fee simple
ownership
3,100 Fee simple
Fee simple
3,970 Fee simple
Fee simple
3,040 Fee simple
Fee simple
2,530 Fee simple
Fee simple
2,240 Fee simple
Fee simple
1,740 Fee simple
Fee simple
10,800 Fee simple
Fee simple
3,000 Fee simple
Fee simple
1,940 Fee simple
Fee simple
Compartmentalized
3,450 Fee simple ownership (100%)Compartmentalized
2,910 Fee simple ownership (100%)
64,300 Co-ownership Co-ownership
5,410 Fee simple
Fee simple
simple andFee simple
2,310 Feeleasehold
7,360 Fee simple
Fee simple
8,230 Fee simple
Fee simple
5,250 Fee simple
Fee simple
36,600 Fee simple
Fee simple
2,690 Fee simple
Fee simple
Compartmentalized
16,500 Right of site ownership (100%)
15,500 Fee simple
Fee simple
12,900 Fee simple
Fee simple
18,200 Fee simple
Fee simple
6,440 Fee simple
Fee simple
11,300 Fee simple Compartmentalized
ownership (100%)
12,600 Fee simple
Fee simple
6,790 Fee simple
Fee simple
22,000 Fee simple
Fee simple
33,700 Fee simple
Fee simple
3,320 Fee simple
Fee simple
1,970 Fee simple
Fee simple
17,200 Fee simple
Fee simple
8,350 Fee simple
Fee simple
7,150 Fee simple
Fee simple
3,590 Fee simple
Fee simple
1,250 Fee simple
Fee simple
1,810 Fee simple Compartmentalized
ownership (100%)
5,700 Fee simple
Fee simple
2,820 Right of site Compartmentalized
ownership (100%)Fee simple
16,000 Fee simple
3,560 Fee simple Compartmentalized
ownership (100%)
12,600 Fee simple
Fee simple
3,980 Fee simple
Fee simple
3,800 Right of site Compartmentalized
ownership
462,980

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
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
5.21

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

4,360 Fee simple
Fee simple
6,350 Fee simple
Fee simple
2,900 Fee simple
Fee simple
23,200 Fee simple
Fee simple
7,270 Fee simple
Fee simple
Compartmentalized
4,820 Fee simple ownership (100%)
41,200 Quasi co-ownership Quasi co-ownership
2,860 Fee simple
Fee simple
2,850 Fee simple
Fee simple
95,810

3.55
7.19
6.29
1.18
1.68
6.41
0.92
7.07
5.93

9,481
9,481
463,183

13,30013,300572,090

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 May 31, 2020 (end of 29th 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 May 31, 2020 (end of 29th Fiscal Period).
(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) The entrusted real estate corresponding to trust beneficiary interests that DOI owns regarding Nihonbashi Central Square is a compartmentalized ownership building. DOI’s ownership ratio regarding the master leasebusiness is 60.99% based on the agreement, etc. among the compartmentalized co-owners of the property. The figures shown for the Rentable Area and the Leased Area are the figures equivalent to 60.99% of thearea subject to the business.
(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

24 E SPACE TOWER

28 Daiwa Shibuya Miyamasuzaka

30 Daiwa Ebisu 4-chome

51 Daiwa Higashi-Ikebukuro

Ikebukuro Sta.
51

32 Daiwa Aoyama

33 Shinsen Place

34 Daiwa Shibuya Square

54

41 Daiwa Daikanyama

Suginami-ku

46 Daiwa Sasazuka Tower

Toshimaku

47 Daiwa Sasazuka

Nakano Sta.

56 Ogikubo Sta.
54 Daiwa Ogikubo Tower

31
HigashiShinjuku Sta.

59 Daiwa Nakano-Sakaue

Shinjuku-ku

Shinjuku-ku

59
42
38
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

26 shinyon curumu

31 LAQUAS Higashi Shinjuku

38 Daiwa Nishi-Shinjuku

42 Daiwa Shinjuku West

47 46

Minato-ku

Yotsuya Sta.

Shibuya-ku

19
24
3 Daiwa Shibaura

4 Daiwa Minami-Aoyama

33

6 Daiwa A Hamamatsucho

34

ine
hi L
Tos
n
e
Den
yu
Tok

Lin
e
To
kyu
To
yok
o
8 Daiwa Shibadaimon

10 Daiwa Shimbashi 510

28
Shibuya Sta.
41

Naka-meguro Sta.

30
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
32

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.
26

Meguro Sta.

Osaki Sta.
21 Daiwa Nishi-Shimbashi

27 Daiwa Akasaka

29 Daiwa Azabu Terrace

49 Daiwa Mita 2-Chome

55 Daiwa Meguro Square(As of May 31, 2020)

Chuo-ku

1 Daiwa Ginza

2 Daiwa Ginza Annex

11 Daiwa Tsukijiekimae

12 Daiwa Tsukiji

20 Daiwa Kodenmacho

22 Daiwa Kayabacho Building

25 Daiwa Nihonbashi Hongokucho 35 Daiwa River Gate

13 Daiwa Tsukishima

14 Daiwa Nihonbashi Horidomecho

36 Daiwa Hatchobori ekimae

37 Daiwa Hatchobori ekimae West 39 Kirin Nihonbashi Building

40 Daiwa Higashi-nihonbashi

48 Daiwa Harumi

50 Nihonbashi Central Square

9 Daiwa Misakicho

17 Daiwa Kojimachi 4-chome

23 Daiwa Jinbocho 3-chome

43 Daiwa Kanda Mikuracho Building

44 Daiwa Kanda East

45 Daiwa Kandasudacho

16 Daiwa Kyobashi

Asakusa Sta.
Oshiage Sta.

Suidobashi Sta.

Kudanshita Sta.

9

Akihabara Sta.

5

23

25

45
44
43

40
20

Chiyoda-ku

Nihombashi Sta.

Hibiya Sta.

Akasaka Sta.

12

Toranomon Sta.

27

Ningyocho Sta.

Tokyo Sta.
50

Akasakamitsuke Sta.

Shimbashi Sta.
21
10

16

Chuo-ku
Ginza Sta.

12

22 Suitengumae35
39
37 36
5 Daiwa Sarugakucho

11
Tsukishima Sta.

13

849 Shibakoen

48

Minato-ku

Sta.

Hatchobori
Sta.

6

15

Chiyoda-ku

14

Otemachi Sta.

17

Kinshicho Sta.

Sta.

29

3

52 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

(Yen/tsubo)
24,00022,60722,000(Tsubo)500,000

8.0

New supplies (Grade-A, etc.)
Floor area of new demands

New supplies (others)
Vacancy rate

(%)
10.0

New supplies (overall)

400,000

8.0

300,000

6.0

200,000

4.0

20,000

6.0

18,0004.0

100,000

2.0

16,0001.95 2.000.0-100,0000.0
Predicted
figures (Note 1) -2.0

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

14,0002001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

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

(Source) Miki Shoji(Source) CBRE “Office market medium term forecast 2020-2024(Note 1) Predicted figures as of June 2020.
(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

99.0 98.9
97.1

(%)
20.0

99.1 99.5

98.6
99.1
97.9

10.0

9.8

8.2

95.5

94.3

5.7

4.4

6.1 6.2
2.0

4.3

1.8

0.0
90.0

Occupancy rate (actual)
Occupancy rate (forecast)Occupancy rate (forecast)(as of disclosure in January 2020)

85.0

-10.0

-7.3

-6.3 -5.3-2.8-2.4 -1.7 -1.5
-6.1 -5.7

5.1
2.9 3.8 4.4 4.0 2.7 3.5
1.7 1.1 1.9-3.8 -3.6 -3.9 -3.3 -2.7 -3.8 -3.0

Rate of new leases
Rate of cancellations

-20.0

-1.3

-2.7

-4.4

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
13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 29th 30th 31st
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
13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 29th 30th 31st
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 Unit Rent Index■ Attribution Analysis/Monthly Contract Rent*(Millions of yen)

(Yen/tsubo)
30,000100

27,000

88.35
89.86
86.67

24,00021,00020,121
19,571
19,75918,00090

2,300

Increasedue tonew leases

2,250

+51

2,200
80

70

60

2,150

2,149

2,100

–27

Decreasedue totenants’cancellations

Increasedue tocontract
renewals+21

Increasedue tonew acquisition–0
Decreasedue tocontract
renewals

+25

–17

2,201

Decreasedue to sales

2,050
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
9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 29th
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
as 100.

8

1,950
1,900
End of 28th FP
monthly contract rent

End of 29th 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.
Monthly contract rent for Nihonbashi Central Square has been adjusted to 60.99% based on agreements,
etc. among the compartmentalized owners.

Status of Contract Renewal/New Lease■ Area of Which Contract Ended/Will End In and Afterthe Fiscal Period Ended May 2020 (29th fiscal period)(Based on rentable area)■ Changes in Ratios of Areas with Rent Increase/Decrease/
Unchanged and Cancellation upon Contract Renewal

(%)
30.0

Scheduled

25.6

25.0

29th Period

53.5

28th Period

53.4

27th Period 0.7(Note 2)

20.5

20.0

20.6

19.4

10.0

2.3

38.4

57.4

26th Period

15.9

15.0

44.1

8.1

34.0

45.8

7.7

49.9

4.2

25th Period 3.2(Note 1)

43.8

49.9

2.9

24th Period

51.7

40.4

7.8

23rd Period

48.8

44.4

6.6

53.4

3.9

22nd Period

42.6

5.0

21st Period 0.2
20th Period

0.0

29th Period

30th Period

31st Period

32nd Period

33rd Period

49.0

50.1

37.5

0.7

61.1

0.0

20.0
Decrease

40.0
Increase

1.4

60.0

80.0

Unchanged

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 (364,836.94m2) as of the end of May 2020 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(Thousands of yen)
100,000

(%)
15.0

10.0

5.0

98,246

96,294

4.3

9.9

9.0

9.8

0.0

-5.0

Increase/decrease rate (right axis)

New tenant (left axis)
Previous tenant (left axis)

5.2

7.3

9.0

7.2

5.2

0.0

8.1
6.1

8.1

6.1

7.8
7.8

6.6

9.9

9.6
7.2
7.0

7.3
7.3

9.6

0.0

-4.9

0.0

0.0

0.0

27.9

83,77279,80480,00066,104
0.0

0.0

0.0

60,00025.0

78,609

23.1

4.2

（%）
30.0

23.0
63,92320.0

56,96751,027-5.1
40,000

14.9

-10.0

39,893

16.0

15.0

-12.3
-15.0

-20.0

20,000
Increase rate
Decrease rate

-25.0

10.0

-21.2

Rent increase/decrease rate

18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 29th
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 rent renewals have been agreed. Rent increase/decrease rate is calculated based on net
amount for increased/decreased rents.

0

5.0

25th Period

26th Period

27th Period

28th Period

29th Period(Note) Compared monthly rent before and after tenant replacement for the same leasing areas. The rate isbased on total monthly rent.

I. Overview of Daiwa Office Investment Corporation

9

Internal Growth Measures

Assumption of Performance Forecast Amid the COVID-19 Crisis, Etc.
■ Assumption of Forecast (Announced on July 17, 2020)
We have been controlling repair plans to secure revenue based on medium- to long-term management in our normal operations, in the 31st FP
we will maintain the dividend level also by adjusting the amount of decrease in existing revenue (rents and common area fees) with repair
costs even amid the COVID-19 crisis.
Fiscal PeriodEnding November
2020 (30th FP)
Decrease in existing revenue (rents and common-96 million yen
area fees) in consideration of the COVID-19 crisis
Occupancy rate before taking into consideration the
98.6%
impact of the COVID-19 crisis (in consideration of the(-0.7%)
impact of the COVID-19 crisis)
Assumed occupancy rate based on performance
97.9%
forecast

Fiscal PeriodEnding May
2021 (31st FP)

Comment-142 million yen

Some move-outs by major tenants are expected in the 31st
FP before taking into consideration the COVID-19 crisis

96.6%(-1.1%)

Revenue decrease in existing properties and decline inoccupancy rate are conservatively assumed as temporary
impacts of the COVID-19 crisis

95.5%

Repair cost

575 million yen

235 million yen

Dividend

13,700 yen

13,700 yen

Repair cost will be reduced by -339 million yen
compared with the 30th FP in the 31st FP
Dividend level will remain the same

■ Current Tenant Status (As of June 30, 2020)● 81 tenants requested postponement of rent payment or rent reduction (15.5% of all tenants). Reached agreements with 26 tenants among
them (all of which are postponement of rent payment)▶ Plan to continue responding flexibly on an individual basis●The rent collection rate for April to July 2020 was 99.2%●As of July 15, 2020, cancellation notices were received from 29 tenants for the 30th FP and 18 tenants for the 31st FP▶ The tenants that issued cancellation notices are restaurants, service stores, offices, etc.

Improvement in Financial Standing■ Monthly Rent Increase Due to Contract Renewal/New Lease (Financial Standing)(Thousands of yen/month)
40,000Contract Renewal
30,00025,5286,680

20,00010,00037,56518,441

Tenant Replacement

14,246766
13,47914,376
6,438
7,938

12,747
3,988
8,759

18,84721,804
7,432

21,30912,521

28,225
9,137
19,08732,295
11,13427,02014,68622,193
8,580

21,161

19,123

14,371

13,613

12,3348,787

0

20th Period

21st Period

22nd Period

23rd Period

24th Period

25th Period

26th Period

27th Period

28th Period

29th Period

Simple average often fiscal periods■ Increase in Dividend Resource Due to Improved Financial Standing

Growth rate of 6-month
conversion
rent andcommon area 12-month
fees (Note 1)
conversion
Growth rate of 6-month
conversion
dividend
resource
12-month(Note 2)conversion

20th Period

21st Period

22nd Period

23rd Period

24th Period

25th Period

26th Period

27th Period

28th Period

29th Period

Simple averageof ten fiscal
periods

1.0%

0.8%

0.7%

1.4%

1.2%

1.2%

1.5%

1.9%

1.3%

1.6%

1.2%

2.0%

1.7%

1.5%

2.8%

2.4%

2.3%

3.0%

3.9%

2.6%

3.1%

2.4%

2.1%

1.8%

1.5%

2.9%

2.4%

2.3%

2.9%

3.8%

2.6%

3.0%

2.4%

4.3%

3.6%

2.9%

5.8%

4.9%

4.7%

5.8%

7.6%

5.1%

6.0%

4.9%

(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.

10

Portfolio Composition by Region and Status in Shinjuku and Shibuya Areas■ Portfolio Composition by Region (%)
Osaka City 2.0%
Yokohama City 8.7%
Other 23 Wardsof Tokyo 8.8%
Chiyoda Ward 4.3%

Shibuya Ward

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

35.0%

(%)
98.8 98.8 96.6 99.8 99.3 100.0 100.0 120.0
100.0 99.9 94.9
94.7
100.0
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%
Greater Tokyo 17.4%

Shibuya Ward/
Shinjuku Ward

Five Central
Wards of Tokyo 80.5%

42.1%

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 22.7%(Note 1) Based on acquisition price.
(Note 2) Percentage is rounded to the first decimal place.

(As of July 17, 2020)■ Large-Scale Office Building Supply in the 23 Wards of Tokyo

Location
2-chome, Yoyogi,
Shibuya-ku(%)
100.0 100.0 100.0
100.0 100.0 100.0

100.0 100.0
89.1

96.4

100.0 100.0 180.0
96.8 100.0 100.0
100.0
97.0
92.8 93.3 89.6
92.8
160.0

Chiyoda Ward

970,000m2

230,000m2

60.0

140.0

40.0

Total from2020 to 2024

4,540,000m

2

Chuo Ward

340,000m2

0.0

3 Maruyama-cho,Shibuya-ku

Minato Ward

2,120,000m2
Large-scale properties: Offices with total floor areas of 10,000m2 or more

120.0

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

20.0

Location

Source: Mori Trust

Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period

80.0

Other 700,000m2

Shibuya Ward

190,000m2

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

12th 13th 14th 15th 16th 17th 18th 19th 20th 21st22nd23rd 24th 25th 26th 27th 28th 29th 30th 31st

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

Total from 2020 to 2024 4,540,000m2

Shinjuku Ward

0.0

100.0
80.0

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 End of

12th 13th 14th 15th 16th 17th 18th 19th 20th 21st22nd23rd 24th 25th 26th 27th 28th 29th 30th 31st

Period 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 End of 12th Fiscal Period = 100. Ownership interest of Shinjuku Maynds Tower is adjusted
from the 25th FP.

“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
(9 members)

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

Construction Management
Team (7 members)
Investment Planning Team
(5 members)

Hiroshi Udagawa Kotaro Ishii

Kosuke Yanagisawa Jun Arai

Chie Kamimura Yuki Obata

Kosuke Mizunara Jun Iwasaki

Takeshi Morikawa

Asset management 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:
work history:
14 years 14 years 3 months 6 years 5 months 14 years 3 months 14 years 1 month 7 years 9 months 6 years 3 months 3 years 9 months
1 year 8 months

Engineering: Formulation and implementation of construction planning of the assets
Middle office work: Budget and performance management for the portfolio(Note) “Asset Management work history” is the number of years engaged in the relevant work (as of July 17, 2020) and does not indicate the number of years employed at the asset management company.

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 29th Fiscal Period■ Newly Acquired Properties

Daiwa Nakano-Sakaue [Acquired on December 13, 2019]
Toei Subway Oedo Line• 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.

Tokyo Metro
NakanoNakano-sakaue
Marunouch
i LineStationYamate-dori Stre

et

Daiwa
Nakano-sakaue

Location
Site Area

Honcho, Nakano-ku, Tokyo
915.72m2
SRC/B1/8F
3978.82m2
2,750 million yen

Structure/Floor
Total Floor Area
Acquisition PriceAppraisal 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)

Nihombashi Central Square [Acquired on May 21, 2020]
Mitsukoshimae
StationTokyo Metro

Hanzomon

Line

tree

t

Metro
Toza
i Lin
e

Tokyo Stock
Exchange

Nihombashi
Station

Sho
wa

Tokyo
Station

-do

ri S

Tokyo

Eita

ri S

Daiwa
Kayabacho
BuildingtreetNihonbashi Central Square Kayabacho
Station

ibiy
etro
H

Toe

i Su

Tok
yo M

bwa
yA

Tok

sak
usa

yo M

aL
ine

Line

Nihombashi
Takashimaya
S.C.

etro

Gin
za

Lin
e

i-do

Kyobashi
StationTakaracho
StationLocation
Site Area
Structure/Floor
Total Floor Area
Acquisition Price

Hatchobori
StationNihombashi, Chuo-ku, Tokyo
655.15m2
S/8F
4,100.23m2
3,521 million yen

Kirin
Nihonbashi
Building• The property is a 1-minute walk from Nihombashi Station on theTokyo Metro Ginza and Tozai Lines and Toei Subway Asakusa Lineand a 3-minute walk from Kayabacho Station on the Tokyo Metro
Hibiya Line. With train rides from Nihombashi Station taking
approximately 1 minute to reach Otemachi Station, etc., theproperty enjoys excellent access to major stations in Tokyo.
• The Nihombashi-Yaesu-Kyobashi area where the property stands is
an area that enjoys excellent access to areas within Tokyo andsuburban areas via JR and subway lines, as well as access to various
regions through use of Shinkansen bullet lines. As a result, tenants
engaged in a wide variety of businesses aspire to be in the area.
• The building has a leasable area of approximately 130 tsubos per
floor secured and equipped with 2,800mm of typical floor cellingheight and 100mm of OA floor.
• Since the office space is without pillars, flexible layout andefficient use is possible.
Appraisal Value
Construction Date
Occupancy Rate
Number of Tenants■ Sold Property

Daiwa Jimbocho[Sold on May 21, 2020]12

Location

Kanda-Jimbocho, Chiyoda-ku, Tokyo

Book Value

3,943 million yen (as of November 30, 2019)

Structure/Floor

S/B1/8F

Appraisal Value

3,990 million yen (as of November 30, 2019)

Sold Price

4,000 million yen

Construction Date March 1997

3,800 million yen (as of April 30, 2020)
January 2010
100.0% (as of acquisition)
7 (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.
■ Distribution Chart of Portfolio Properties■ Acquisition Policy* 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 29th FP
Properties sold 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
289

300
200

288

18

12

15

281

60

10

40

29

20

19

20

80

360

326

14

13

9

Daiwa Nakano-Sakaue
Daiwa Jimbocho

100

329

320

276

31

100
0

344

25

* Number of gross proposals (cases)

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

6

Nihombashi Central Square

20

5

0

0

20th Fiscal 21st Fiscal 22nd Fiscal 23rd Fiscal 24th Fiscal 25th Fiscal 26th Fiscal 27th Fiscal 28th Fiscal 29th Fiscal
PeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriod

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
34.4

34.2

34.0

332.0
37.5

200
150 Acquisition property Acquisition property• E SPACE
TOWER

352.7

0

364.0

40.6

469.3
439.4

459.7

460.0

461.0

463.1

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

42.0

40.0

Acquisition property

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

• Daiwa
Nakano-Sakaue• Nihombashi
Central Square

Acquisition property

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

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
29th
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 Fiscal Period

Mediumterm goal

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 May 31, 2020)
During the 29th Fiscal Period, DOI refinanced 16.5 billion yen in order to repay 16.5 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 total assets) (Note) (right axis)

200

50.0

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

42.0

40.0

(Years)10.0(Years)
5.0

Average years remaining at the period end (right axis)

9.0

4.5

8.0

3.8

7.0

7.0

6.0
5.0

120
80

30.0

4.0

20.0

3.0
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
13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 29th
Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period

1.0
0.0

5.2

3.5
3.0
2.5
2.0
1.5
1.0

Average remaining years at the time ofprocurement during the 29th Fiscal Period (left axis)
Average remaining years at the time of procurement during the29th Fiscal Period (excluding short-term borrowings) (left axis)

0.5
0.0

17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th 28th 29th
Period Period Period Period Period Period Period Period Period Period Period Period Period(Note) LTV (based on total assets): Total interest-bearing liabilities / Total assets(Note) Dotted line indicates average remaining years at the time of procurement during
the 29th Fiscal Period excluding short-term borrowings.

■ Diversification of Repayment Dates■ Balance of Borrowings by Financial Institution(Millions of yen)
25,000Investment corporation bond

20,00015,00010,0005,000

030th 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
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 29th
PeriodEnd of 29th
Period

23.0%

77.0%

18.7%

81.3%

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
Mizuho Bank
Shinsei Bank
Resona Bank
Mizuho Trust and Banking
The Bank of Fukuoka
Kansai Mirai Bank
Nishi-Nippon City Bank
The 77 Bank
The Norinchukin BankThe Gunma Bank
The Musashino Bank
Tokio Marine & Nichido Fire Insurance
The Yamaguchi Bank
Nippon Life Insurance Company
The Higashi-Nippon Bank
The Hyakugo BankThe Yamanashi Chuo Bank
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
3,000
3,000
2,500
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

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
1.5
1.5
1.3
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

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

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

In "MUFG ESG Rating Certificate for J-REIT Supported by JCR" by
MURC, the Investment Corporation received an “A Rank” for its
wide range of activities in all areas of ESG.

DBJ Green Building Certification/ Shinjuku Maynds Tower
Shinjuku Maynds Tower acquired 4 Stars, andwas evaluated for improving its building
habitability by introducing various environmental
and energy conserving technologies whileproviding several restaurants, clinics, and otherfacilities that facilitate convenience for tenants.

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

BELS Evaluation/

The “LEED® Certification Mark”
is a registered trademark
owned by the U.S. Green
Building Council and is usedwith permission in this material.

Daiwa Kayabacho Building and shinyon curumu

CASBEE Property Appraisal/ Daiwa Shibuya Square

Daiwa Kayabacho Building and shinyon curumu have
newly acquired a Building Energy efficiency Labeling
System (BELS) evaluation of ★★ and★, respectively.

Daiwa Shibuya Square was awarded "A rank" in CASBEE for
Market Promotion certification system.

■ Establishment of Green Finance Framework(July 17, 2020)■ Target Rate of LED Lighting Installation• Established the “Green Finance Framework” which sets out a basic policy on green
finance.
• Obtained “Green1 (F)” evaluation for the framework from Japan Credit Rating
Agency, Ltd. (JCR).
Eligibility criteria Property which has obtained or is to obtain any one of the following
certifications from third-party certification bodies.

DBJ Green Building
Certification
3 stars – 5 stars

CASBEE for New Construction
B+ Rank - S Rank

BELS Evaluation
3 stars – 5 stars

LEED Certification
Silver level – Platinumlevel

DOI will promote installing LED lighting in common areas and exclusive areas in all offices owned
from the 30th Fiscal Period, and aim to achieve a 100% installation progress rate in ten fiscal
periods (five years) (Installation rate assumed at the end of the 30th Fiscal Period was 28%.)（%）100

Amount of electricity (End of the 30th FP=100%)(left axis) 100（%）
Progress rate of LED installation (right axis)

100%

Rate of electricity
reduction

95

75

11.1%

90

50

100%

85

28%

Rate of CO2
reduction
Equivalent to89%
25

30th 31st 32nd 33rd 34th 35th 36th 37th 38th 39th 40th 41st
FP FP FP FP FP FP FP FP FP FP FP FP

5,000tSocial■ Efforts for Enhancing Tenant Satisfaction
Measures Against the Spread of COVID-19
Target properties: Sequentially, properties which can take the measures• Put up a notice on safety measures and place disinfectant.
• Disinfect the elevator buttons, doorknobs of facilities, etc.
• Make sure that staff of building management and building cleaning companies thoroughly follow
hygienic measures (face masks, hand-washing, disinfection, etc.).
• Establish system for conducting disinfection of the building in cooperation with the public administrationin case there is infection or possible infection among the tenants.

Expression of Respect for HealthCare Workers
Target properties: Daiwa Shibuya Miyamasuzaka,
Shinjuku Maynds Tower
Lit up the buildings and facilities in blue toexpress and share with office users the Daiwa Shibuya
gratitude and respect for health care workers Miyamasuzaka
lit up in blueand essential workers.

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 to the 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 theintroduction 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 willaccomplish social missions of a listed investment corporation by providing high-quality and comfortable residential spaces inpartnership.

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 of corporate ethics and compliance.

I. Overview of Daiwa Office Investment Corporation

15

Description of Asset Manager

Organization of Asset Manager (As of July 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
10
Executive directors: 6; Executive auditor: 1
Non-executive director: 1; Non-executive auditors: 2
119 (excluding dispatched employees)
Registration No. 355 (Financial Instruments), Director-General,
Kanto Local Finance Bureau (Kinsho)
License No. (4)-83920, Governor of Tokyo
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

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

Akira Yamanouchi
Toshio Fukushima
Yoshiki Nishigaki
Hajime Imbe
Yuji Shinotsuka
Tatsui Yanagisawa
Satoru Shibasaki
Kazuyoshi Mizukoshi
Hiromasa Kawashima
Toshiyuki Kato

■ Organizational Chart
Shareholders’ Meeting
Corporate Auditors

Board of Directors

Compliance Committee
Investment Committee
Valuation Committee
President andRepresentative Director
Private Fund Division

Acquisition and Asset Management Division
DOI Asset
Management
Department

DHP Management
Team

Fund Management
Team

Accounting
Team

DLP Management
Team

Overseas BusinessPreparation TeamManagement
Team

DOI Investment
Team

SourcingTeam

AM Team

Asset
Management
Department
DRP ManagementTeam

JRH Investment
Team

Development
Team

Portfolio
System TeamDLI Asset
Management
Department

DLI Investment
Team

Investment
Planning
Department

Finance
Department

Origination
Department

Construction
Management
Department

Internal Control Office

Corporate Division

Private Fund REIT Corporation
Management
Planning
Department
Department
Infrastructure
Team

Acquisition
Department

Compliance Officer

Administration
Department

Corporate
Planning
Department

FinanceTeam

Compliance &RiskManagement
Department

DRP InvestmentTeam
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

29th Period 28th Period 27th Period 26th Period 25th Period

Dec. 1, 2019 From June. 1, 2019 From Dec. 1, 2018 From June 1, 2018 From Dec. 1, 2017
( FromTo May 31, 2020 )( To Nov. 30, 2019 )( To May 31, 2019 )( To Nov. 30, 2018 )( To May 31, 2018 )(1) Operating Performance(Millions of yen, except per unit data or where otherwise indicated)
Operating revenues
14,272
14,094
13,833
13,193
13,440Rental revenues
14,23813,916
13,628
13,164
12,868Operating expenses
6,959
6,980
6,853
6,658
6,761
Property-related expenses
5,540
5,584
5,479
5,344
5,410
Operating income
7,312
7,114
6,979
6,535
6,678
Ordinary income
6,688
6,463
6,320
5,902
5,888
Net income
6,687
6,462
6,320
5,901
5,887
(2) Properties, etc. (as of end of period)
Total assets
487,212
486,030
485,636479,212467,040[period-on-period percentage changes][+0.2%][+0.1%][+1.3%][+2.6%][−3.3%]
Interest-bearing liabilities
204,450
204,450
204,450
198,950
188,950
Net assets
255,127
254,892
254,460
254,124
253,676[period-on-period percentage changes][+0.1%][+0.2%][+0.1%][+0.2%][−1.2%]
Notes 2
247,876
247,876
247,876
247,876
247,876
Unitholders’ capital, net(3) Distributions
Total distribution amount
6,687
6,462
6,177
5,901
5,484
Dividend payout
100.0%
100.0%
97.8%
100.0%
93.2%(4) Per Unit Information
Total number of units issued (units)491,877
491,877
491,877
491,877
491,877
Net assets per unit (yen)518,681518,203517,324
516,641
515,730
Distribution per unit (yen)13,595
13,13912,55911,997
11,150Distribution amount from earnings per unit (yen)13,595
13,13912,55911,997
11,150Distribution amount in excess of earnings per unit (yen)
–
–
–
–
–
(5) Financial Indicators
1.4%
1.3%
1.3%
1.2%
1.2%
ROA
Notes 3and4[annual rate][2.7%][2.7%][2.6%][2.5%][2.5%]
2.6%
2.5%
2.5%
2.3%
2.3%
ROE
Notes 4and 5[annual rate][5.2%][5.1%][5.0%][4.6%][4.6%]
Capital ratio
52.4%
52.4%
52.4%
53.0%
54.3%
[period-on-period percentage changes][−0.1%][+0.0%][−0.6%][−1.3%][+1.2%]LTV (loan to value)
42.0%
42.1%
42.1%
41.5%
40.5%
Note 6
Property leasing cash flows (NOI)
10,536
10,157
9,962
9,553
9,230
(6) Other Referential Information
Number of investment properties
60
59
59
58
55
Note 7
645
637
639
624
606
Number of tenants
366,336.34 364,787.57 364,375.19 360,958.95 340,144.07
Total rentable area (m2)
Note
8
99.5%
99.1%
97.1%
98.9%
99.0%
Occupancy rate
Depreciation
1,838
1,826
1,813
1,734
1,772
Capital expenditures
489
1,351
471
1,738
1,564
(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 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.
Figures for the 29th 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 463,183 million yen as of the last day of May 2020.
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 January to March 2020 at an annual rate of -2.2%, showing negative growth forthe second consecutive quarter under the ongoing quantitative/qualitative monetary easing policy of 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 1.64% at the end of May 2020. Led by improvement in the vacancy rate for existinglarge buildings, the overall vacancy rate that includes small- to medium-sized buildings also continues tobe on an improving trend. The drop in the vacancy rate has led to an increase in office rent in some areas,
and the market as a whole continues to see an increase in rent, albeit slight. Although there has been nomaterial impact of COVID-19, future developments should be watched carefully.
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 Nakano-Sakaue” (acquisition price: 2,750 million yen)in December 2019; and acquired “Nihonbashi Central Square” (acquisition price: 3,521 million yen) anddivested “Daiwa Jimbocho” (sale price: 4,000 million yen) in May 2020. As a result, DOI’s assets undermanagement as of the end of the 29th Fiscal Period (May 31, 2020) totaled 60 properties, the sum total ofacquisition prices of which amounted to 463,183 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 29th Fiscal Period (May 31, 2020) was
99.5%.

18

(3) Overview of Capital Procurement(A) Procurement of Capital for the Acquisition of New Properties and Repayment of Borrowings
In the 29th Fiscal Period, DOI made the following borrowings to fund the repayment of borrowings.
(i) DOI took out loans of 5,000 million yen in total from Sumitomo Mitsui Banking Corporation,
Sumitomo Mitsui Trust Bank, Ltd., MUFG Bank, Ltd. and Mizuho Bank, Ltd. on January 31, 2020, tofund the repayment of 5,000 million yen in total borrowed from the same banks for the same amountthat was due for repayment on the same day.
(ii) DOI took out loans of 5,500 million yen in total from Resona Bank, Ltd., Sumitomo Mitsui Trust Bank,
Ltd., The Norinchukin Bank and The 77 Bank, Ltd. on February 28, 2020, to fund the repayment of
5,500 million yen in total borrowed from Resona Bank, Ltd., Sumitomo Mitsui Trust Bank, Ltd. andAozora Bank, Ltd. that was due for repayment on the same day.
(iii) DOI took out loans of 6,000 million yen in total from Sumitomo Mitsui Trust Bank, Ltd. and MUFG
Bank, Ltd. on May 29, 2020, to fund the repayment of 6,000 million yen in total borrowed from thesame banks for the same amount that was due for repayment on the same day.
(B) Status of Interest-Bearing Liabilities at End of the Fiscal Period under Review
As a result of the above, the balance of interest-bearing liabilities outstanding as of the end of the
29th Fiscal Period (May 31, 2020) 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 millionyen). The balance of the current portion of long-term loans payable stood at 33,300 million yen.
The average remaining period of interest-bearing liabilities as of the end of the 29th Fiscal Period
stands at 3.8 years.
(4) Capital Expenditures during the 29th Fiscal Period
The following summarizes the primary construction work that constitutes capital expenditures implemented
during the 29th Fiscal Period. Capital expenditures for the 29th Fiscal Period amounted to 489 million yen
and, when combined with the 538 million yen in repair expenses charged to the 29th Fiscal Period expenses,
totals 1,028 million yen in construction work were implemented.
Name of real estate
properties(Location)
Shinsen Place(Shibuya-ku, Tokyo)
Daiwa Higashi-nihonbashi
Building(Chuo-ku, Tokyo)
Daiwa Ogikubo Tower(Suginami-ku, Tokyo)
Other

Purpose

PeriodConstruction
amount paid
(Millions of yen)

Upgrading of air-conditioning facilities

From: Mar. 2020
To: May 2020

Upgrading of air-conditioning facilities

From: Sept. 2019
To: Mar. 202070

Upgrading of automatic fire alarm
sensors

From: Mar. 2020
To: Apr. 2020

16

75

327
Total

489

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 29th Fiscal Periodof 14,272 million yen in operating revenue, 7,312 million yen in operating income, 6,688 million yen in ordinary
income and 6,687million yen in net income.
Concerning distributions, it is planned that the amount equivalent to distributions from earnings would be
included in the amount of tax-deductible expenses based on application of special provisions 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”)). Accordingly, DOI decided to distributealmost the entire amount of unappropriated retained earnings (excluding fractions of the distribution amount perunit that are less than 1 yen), and declared a distribution amount per unit of 13,595 yen.

3. Outlook for the Next Fiscal Period(1) Investment Environment
It was expected that the Japanese economy going forward would continue to expand backed by solid
trends in personal spending against the backdrop of a favorable employment environment and improved
income environment while the monetary easing policy implemented by the Bank of Japan continued.
However, it is more likely that the economy will remain sluggish, falling below the potential growth rate. In
addition, since the Japanese economy may slow down due to the U.S-China trade friction and the COVID-19
pandemic, careful attention is required.
In the Tokyo office building leasing market, the vacancy rate has continued to drop and rent has continued
to rise moderately mainly in central Tokyo. Although there has been no material impact of COVID-19, future
development should be carefully watched.
In the office building transaction market, backed by the favorable financing environment, among otherfactors, the property acquisition appetite among overseas investors, real estate companies and funds(including J-REITs) is thought to remain strong.
(2) Future Management Policy and Tasks(A) Strategy for Managing Existing Properties
As to macro trends for the office market, the office market is expected to weaken temporarily over the
short term, mainly in Tokyo, since the vacancy rate may start rising partly due to the impact of COVID-19.
However, the market for prime locations in central Tokyo, which attract solid demand, is believed to remain
stable over the medium to long term. Going forward, needs for offices are likely to vary for companies inline with the diversification of work styles and places. Therefore, DOI considers that maintaining/improving
competitiveness of buildings to qualify as prime offices that can increase the productivity of employees
and accommodate the needs of the times as well as that the environment will be the future issue, and isdetermined to continue carrying out operational management under the following policy.
(i) Maintain and raise occupancy rates
Concerning existing tenants, strive to reduce cancellation risks by improving the quality 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 involvement in the market.
(ii) Maintain and raise profitability
Aim to secure stable revenue over the medium to long term through further strengthening good
relationships with existing tenants, as well as proactively tapping the needs of new tenants bydiscerning the market environment.
(iii) Control operational management costs
Strive to control operational management costs based on maintaining office environments with hightenant satisfaction levels by implementing efficient operational management and reviewing systematicconstruction work through optimal leveraging of 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 29th Fiscal Period, DOI acquired “Daiwa Nakano-Sakaue” located in Tokyo; andacquired “Nihonbashi Central Square” through mutual transactions with divestment of “Daiwa Jimbocho.”
DOI believes acquisition of the property will contribute to further stabilization and enhancement of theportfolio. DOI will continue to strive to acquire properties in line with the investment strategy describedabove.
(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 29th 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 Shibaura(Minato-ku, Tokyo)

Upgrading of airconditioning facilities

E SPACE TOWER(Shibuya-ku, Tokyo)

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

From: Mar. 2020
To: Nov. 2020

200

–

–

Upgrading of airconditioning facilities

From: Feb. 2020
To: Nov. 2020

149

–

–

Daiwa Aoyama(Shibuya-ku, Tokyo)

Upgrading of airconditioning facilities

From: Feb. 2020
To: Nov. 2020

86

–

–

Daiwa Akasaka(Minato-ku, Tokyo)

Renovation of exterior
walls/coating of roof

From: Jan. 2020
To: Nov. 2020

79

–

–

Daiwa Nishi-Shimbashi(Minato-ku, Tokyo)

Upgrading of elevators

From: Dec. 2019
To: Oct. 2020

59

–

–

Daiwa Azabu Terrace(Minato-ku, Tokyo)

Upgrading of airconditioning facilities

From: Jun. 2020
To: Nov. 2020

58

–

–

II. Asset Management Report21III. Balance Sheets
As of May 31, 2020 and November 30, 2019

(Thousands of yen)

As of
May 31, 2020

As ofNovember 30, 2019

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

31,349,701

31,380,717

Tenant receivables

265,445

187,778

Prepaid expenses

351,399358,962

Other current assets

66,852

63,165

Total Current Assets

32,033,400

31,990,623

Land

12,302,226

12,302,226

Buildings and structures

3,291,666

3,283,401

Tools, furniture and fixtures

20,207

19,917

Construction in progress

3,829

2,846

Land in trust accounts

354,391,051

352,270,629

Buildings and structures in trust accounts

109,281,898

108,828,089

Machinery and equipment in trust accounts

884,623876,713

Tools, furniture and fixtures in trust accounts

297,798

276,211

Construction in progress in trust accounts

29,061

55,178(29,297,679)(27,909,328)

2,398,275

2,398,275

306,884

306,884

453,909,843

452,711,045

161

215

113,684

113,684

1,046,864

1,123,455–

19,097

Deferred investment corporation bond issuance costs

31,99734,852Others76,917

37,4601,269,624

1,328,766

487,212,868

486,030,435

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
Long-term prepaid expenses
Derivative assets (Note 4)

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

22

(Thousands of yen)

As of
May 31, 2020

As ofNovember 30, 2019

Liabilities
Current Liabilities:
Accounts payable

929,601

701,775

Short-term debt (Notes 4 and 9)

5,000,000

5,000,000

Long-term debt due within one year (Notes 4 and 9)33,300,000

28,100,000

646,330

580,867996

886

Accrued consumption taxes

393,369

321,963

Rent received in advance

2,341,174

2,355,146

Other current liabilities

576,816

479,916

Total Current Liabilities

43,188,288

37,540,555

5,100,000

5,100,000

Long-term debt (Notes 4 and 9)

161,050,000

166,250,000

Tenant security deposits including trust accounts (Note 4)

22,391,925

21,861,236

8,220

3,484

Derivative liabilities (Note 4)

162,509

193,083

Other long-term liabilities

184,620

189,641

Total Long-Term Liabilities

188,897,276

193,597,445

232,085,565

231,138,001

251,551,759

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

247,876,236

247,876,236

710,209710,2096,687,380

6,462,843

255,273,826

255,049,288

Deferred gains or losses on hedges(146,523)(156,854)

Total valuation and translation adjustments(146,523)(156,854)

Total Net Assets

255,127,303

254,892,434

Total Liabilities and Net Assets

487,212,868

486,030,435

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 of
May 31, 2020 and November 30, 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 May 31, 2020 and November 30, 2019

(Thousands of yen)

For the fiscal period
ended
May 31, 2020

For the fiscal period
endedNovember 30, 201914,238,965

13,916,051

18,247
15,435–

159,798–
18,78914,272,648

14,094,639

5,540,802

5,584,803

Asset management fees
Asset custody fees
Administrative service fees

1,168,091
24,29473,442

1,145,795
24,24973,635

Trust fees
Directors’ compensation
Other operating expenses

19,4397,200
126,692

18,742
7,200
126,183

6,959,962
7,312,685

6,980,610
7,114,028

15
630
5,267
5,471

16
611
6,517
1,810

11,385

8,955

480,295
16,751

499,974
16,646

134,367
4,354

137,997
4,706

635,767
6,688,302
6,688,302

659,325
6,463,659
6,463,659

998
(5)

888
(4)

993
6,687,309
71
6,687,380

884
6,462,774
68
6,462,843

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)

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 May 31, 2020 and November 30, 2019

(Thousands of yen)

Unitholders’ Equity
Number of
Deduction
Reserve for
Units
Unitholders’fromUnitholders’(Units)Capital Unitholders’ Capital, Net Reduction
Entry
CapitalBalance as of
May 31, 2019
Cash distributions
declared
Net income
Provision of reserve
for reduction entry
Net changes of
items other thanunitholders’ equity
Balance as ofNovember 30, 2019
Cash distributions
declared
Net income

491,877

251,551,759(3,675,523) 247,876,236

567,422

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

－

491,877

251,551,759

－

－

－

－

－

－

Retained
Earnings
6,320,338

Deferred
Gains or
Losses on
HedgesTotal Net
Assets(303,827) 254,460,169－(6,177,483)

6,462,774－

6,462,774

142,786(142,786)

－

－

－

－

－

146,973

146,973(3,675,523) 247,876,236

710,2096,462,843－－(6,462,771)－(6,462,771)－－

6,687,309－

6,687,309－

10,33010,330Net changes of
－
－
－
－
－
items other thanunitholders’ equity
Balance as of491,877 251,551,759(3,675,523) 247,876,236
710,209
May 31, 2020
The accompanying notes are an integral part of these financial statements.

(6,177,483)

6,687,380(156,854) 254,892,434(146,523) 255,127,303

V. Statements of Changes in Net Assets

25VI. Statements of Cash Flows
For the fiscal periods ended May 31, 2020 and November 30, 2019

(Thousands of yen)

For the fiscal period
ended
May 31, 2020

For the fiscal period
endedNovember 30, 2019

Income before income taxes

6,688,302

6,463,659

Depreciation and amortization

1,842,226

1,829,629

2,855

2,921

–

(18,789)

Interest expense

497,046

516,621

Increase in tenant receivables(77,667)(13,954)

Increase (decrease) in accounts payable

145,649(265,092)(Decrease) increase in rent received in advance(13,972)

32,033

Interest payments(494,658)(514,073)

71,405(43,021)3,922,534–

235,402(746,284)

12,819,125

7,243,648

Payments for purchases of investment properties
including trust accounts(6,919,517)(675,254)

Proceeds from tenant security deposits including trust
accounts

1,042,727

1,438,240

Refunds of tenant security deposits including trust
accounts(512,038)(566,861)

Net Cash (Used in) Provided by Investing Activities(6,388,828)

196,124

Proceeds from short-term debt

5,000,000–

Repayments of short-term debt

(5,000,000)–

Proceeds from long-term debt

11,500,000

8,000,000

Repayments of long-term debt

(11,500,000)(8,000,000)

Proceeds from issuance of investment corporation bonds–

2,973,984

Redemption of investment corporation bonds–(3,000,000)(6,461,313)(6,176,680)(6,461,313)(6,202,695)(31,016)

1,237,077

Cash and Cash Equivalents at Beginning of Period

31,380,717

30,143,640

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

31,349,701

31,380,717

Cash Flows from Operating Activities:

Amortization of bond issuance costs
Gain on exchange of investment properties

Increase (decrease) in accrued consumption taxes
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:

Distributions paid
Net Cash Used in Financing Activities
Net Change in Cash and Cash Equivalents

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 May 31, 2020 and November 30, 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 May 31, 2020, DOI had ownership or trust beneficiary interests in 60 office properties with approximately
366,336m2 of rentable office space and had leased office space to 645 tenants engaged in a variety ofbusinesses. The occupancy rate for the office properties was approximately 99.5 %.
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 yen have been rounded
down. As a result, the total shown in the financial statements and notes does not necessarily agree to sum of
individual account balances. This policy has been applied to the financial statements from the fiscal period
ended November 30, 2019.
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 May 31, 2020
As of November 30, 2019
Buildings and structures
2-64 years
2-64 years
Machinery and equipment
10-23 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
May 31, 2020
November 30, 2019
7,661
53,974(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 of
May 31, 2020 and November 30, 2019 consisted of the following:(Thousands of yen)

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

As of May 31, 2020
27,688,243
3,661,457
31,349,701

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

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 May 31, 2020 and November 30, 2019 were as
follows:(Thousands of yen)

As of May 31, 2020

As of November 30, 2019

AssetsBook value

Fair value

DifferenceBook value

Fair value

Difference

Cash and cash
equivalents
Total

31,349,701

31,349,701–

31,380,717

31,380,717–

31,349,701

31,349,701–

31,380,717

31,380,717–

5,000,000

5,000,000–

5,000,000

5,000,000–

33,300,000

33,303,783

3,783

28,100,000

28,107,557

7,557

5,100,000

5,057,090(42,910)

5,100,000

5,115,100

15,100Long-term debt

161,050,000

161,206,148

156,148

166,250,000

166,408,056

158,056

Total

204,450,000

204,567,021

117,021204,450,000

204,630,714

180,714(213,777)(213,777)–(228,850)(228,850)–

Liabilities
Short-term debt
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
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 May 31, 2020
Contracted amount
Fair value (*1)
Due after one year
Total

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

Long-term debt

118,100,000

87,800,000(213,777)

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

Long-term debt

3,000,000

1,000,000– (*2)

121,100,000

88,800,000(213,777)(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)(*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 22,391,925 thousand yen and21,861,236 thousand yen as of May 31, 2020 and November 30, 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 May 31, 2020

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
31,349,701––––
31,349,701––––
Due within
one year

Due after
five years––(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

VII. Notes to Financial Statements

–
–

31

4. Redemption schedule for short-term debt, investment corporation bonds and long-term debt
(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, 2020

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

Due after
five years

5,000,000
–
–
–
–
–
–
–
–
– 3,800,000 1,300,000
33,300,000 21,500,000 30,600,000 23,700,000 27,350,000 57,900,000
38,300,000 21,500,000 30,600,000 23,700,000 31,150,000 59,200,000(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 November 30, 2019

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

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

Note 5 – Tangible Fixed Assets of Investment Properties
Investment properties as of May 31, 2020 and November 30, 2019 consisted of the following:
As of May 31, 2020
Acquisition
cost

Accumulated
depreciationLand

12,302,226

Buildings andstructures

As of November 30, 2019

Book value

Acquisition
cost

Accumulated
depreciation

Book value–

12,302,226

12,302,226–

12,302,226

3,291,666(2,471,226)

820,439

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

885,050

Tools, furnitureand fixtures

20,207(13,159)

7,047

19,917(12,119)

7,797

Construction inprogress

3,829

–

3,829

2,846

–

2,846

Land in trust
accounts

354,391,051–

354,391,051

352,270,629–

352,270,629

Buildings andstructuresin trust accounts

109,281,898(26,145,879)

83,136,018

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

83,961,188

Machinery andequipmentin trust accounts

884,623(490,777)

393,845876,713(471,131)

405,582

Tools, furnitureand fixturesin trust accounts

297,798(176,636)

121,161

276,211(160,826)

115,385

Construction inprogressin trust accounts

29,061–

29,061

55,178–55,178

480,502,363(29,297,679)

451,204,683

477,915,213(27,909,328)

450,005,885

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
May 31, 2020
November 30, 2019
Book value: (Note 1)
Balance at beginning of period

452,653,020

453,059,500

1,223,931(406,479)

Balance at end of period

453,876,951

452,653,020

Fair value (Note 3)

572,090,000

562,730,000

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 May 31, 2020, the major reason for the increase is acquisition of “Daiwa Nakano-Sakaue Building” (2,750,000 thousandyen) and “Nihonbashi Central Square” (3,521,531 thousand yen). The major reason for the decrease is sale of “Daiwa Jimbocho Building”(3,922,534 thousand yen) and depreciation (1,838,770 thousand yen).
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).
3. The fair values as of May 31, 2020 and November 30, 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 May 31, 2020 and November 30, 2019 were as
follows:(Thousands of yen)

For the fiscal period ended For the fiscal period ended
May 31, 2020
November 30, 2019
Revenues from property leasing:
Rental revenues

14,238,965

13,916,051

18,247

159,798

14,257,212

14,075,850

Consignment expenses

998,730

1,010,578

Utilities expenses

935,302

1,074,122

Taxes and dues

1,134,736

1,131,152

Insurance expenses

19,923

16,479Repair expenses

538,920474,514

1,838,770

1,826,120

74,41951,836

Total rental expenses

5,540,802

5,584,803

Income from property leasing

8,716,410

8,491,046

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,
Long-Term Debt and Investment Corporation Bonds
Short-term debt, long-term debt due within one year, long-term debt and investment corporation bonds as of
May 31, 2020 and November 30, 2019 consisted of the following:(Thousands of yen)

As of May 31, 2020

As of November 30, 2019

0.3% unsecured short-term loans due 2021,
principally from banks

5,000,000

5,000,000

Total

5,000,000

5,000,000

194,350,000

194,350,000

1.0% unsecured bond due 2024

2,100,000

2,100,000

0.2% unsecured bond due 2024

1,700,000

1,700,000

0.7% unsecured bond due 2031

1,300,000

1,300,000

199,450,000

199,450,000

Unsecured loans due 2020 to 2029, principallyfrom banks and insurance companies with interest
rates mainly ranging from 0.2% to 0.9%

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 May 31, 2020
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
38,300,000 21,500,000 30,600,000 23,700,000 31,150,000 59,200,000
and investment corporation bonds

Note 10 – Leases
As Lessor
The future minimum rental revenues under existing non-cancelable operating leases as of May 31, 2020 andNovember 30, 2019 were as follows:(Thousands of yen)

As of May 31, 2020

As of November 30, 2019

Due within one year

10,656,341

11,358,805

Due after one year

16,770,630

15,530,206

Total

27,426,971

26,889,011

VII. Notes to Financial Statements

35

Note 11 – Gain on Sale of Investment Properties
Gain on sale of investment properties for the fiscal period ended May 31, 2020 was as follows:(Thousands of yen)

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

4,000,000

Cost of selling investment property(3,922,534)

Other expenses related to sale

(62,030)

Gain on sale of investment property

15,435No investment properties were sold during the fiscal period ended November 30, 2019.

Note 12 – Gain on Exchange of Investment Properties
No investment properties were exchanged during the fiscal period ended May 31, 2020.
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

18,789Note 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 May 31, 2020 and November 30, 2019.

Note 14 – Reduction of Investment Properties Acquired through Exchange
The following amounts were deducted from the acquisition cost of the investment property in trust acquired
through exchange as of May 31, 2020 and November 30, 2019.

(Thousands of yen)

As of May 31, 2020
Buildings and structures in trust accounts

182,846

182,846

Land in trust accounts

887,074

887,074

1,069,921

1,069,921

Total

36

As of November 30, 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
May 31, 2020
November 30, 2019
Statutory tax rate

31.46

31.51

Deductible cash distributions(31.45)(31.51)Others(0.00)

0.01

Effective tax rate

0.01

0.01

The significant components of deferred tax assets and liabilities as of May 31, 2020 and November 30, 2019were as follows:(Thousands of yen)

As of May 31, 2020

As of November 30, 2019

Deferred tax assets:
Accrued enterprise tax

18

13

70,59578,00470,61378,018Reserve for reduction entry

75,49475,494

Deferred gains on hedges

3,340

6,008

Total deferred tax liabilities

78,83481,502

Net deferred tax liabilities(8,220)(3,484)

Deferred 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 May 31, 2020 and November 30, 2019, net
assets per unit as of May 31, 2020 and November 30, 2019 were as follows:(Yen)

For the fiscal period ended For the fiscal period ended
May 31, 2020
November 30, 2019
Earnings per Unit:
Net income per unit

13,595

13,139Weighted average number of units outstanding (units)491,877

491,877(Yen)

As of May 31, 2020
Net Assets per Unit

518,681

As of November 30, 2019
518,203

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 6,687,067,815 yen for the fiscal period ended
May 31, 2020 and 6,462,771,903 yen for the fiscal period ended November 30, 2019 that are the largest integral
multiple of 491,877, the number of units outstanding as of May 31, 2020 and November 30, 2019. Furthermore,
DOI does not pay out dividends that exceed accounting profits as outlined in Article 32-2 of DOI’s Articles ofIncorporation.
(Yen)

For the fiscal period ended For the fiscal period ended
May 31, 2020
November 30, 2019
I Unappropriated retained earnings

6,687,380,982

6,462,843,324

II Cash distributions declared

6,687,067,815

6,462,771,903

313,167

71,421

III 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
May 31, 2020
November 30, 2019
Cash distributions per unit
Board of directors meeting dates

38

13,595

13,139July 17, 2020

January 21, 2020

Note 18 – Related-Party Transactions
No related-party transaction was entered into for the fiscal periods ended May 31, 2020 and November 30,
2019.

Note 19 – Segment Information
For the fiscal periods ended May 31, 2020 and November 30, 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.

Note 20 – Significant Subsequent Events
Not applicable.

VII. Notes to Financial Statements

39

VIII. Independent Auditor’s Report40

VIII. Independent Auditor’s Report

41

42

43

IX. Investor Information
History of Investment Unit Price
10,000 (Units)(Yen) 1,000,000
Investment unit price (left axis)

Trading volume (right axis)

900,000

9,000

800,000

8,000

700,000

7,000

600,000

6,000

500,000

5,000

400,000

4,000

300,000

3,000

200,000

2,000

100,000

1,000
0

0

2018
June July

Aug. Sept. Oct.

2019
Dec. Jan.

Nov.

Feb.

Mar.

Apr.

May

June

July

Aug. Sept. Oct.

Nov.

2020
Dec. Jan.

Feb.

Mar.

Apr.

May

Overview of Investment Units and Unitholders (As of May 31, 2020)■ No. of Investment Units by Investor Type
Individuals/others

29th
Fiscal Period

13,544 units (2.8%)

Financial institutions
164,656 units (33.5%)■ No. of Unitholders
by Investor Type
Foreigners 97,416 units (19.8%)

Total: 491,877 units
Other domestic corporations 199,978 units (40.7%)
Financial institutions
169,082 units (34.4%)

Individuals/others

28th
Fiscal Period

13,625 units (2.8%)

Securities firms 16,283 units (3.3%)

Foreigners 96,373 units (19.6%)

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

Number ofPercentage
Units Owned
Share(Units)

128,905

26.2

2. Daiwa Securities Group Inc.

67,321

13.7

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

59,08312.0

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

44,731

9.1

5.

STICHTING PGGM DEPOSITARY PGGM
LISTED REAL ESTATE PF FUND

15,8593.2

6.

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

15,476

3.2

7.

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

13,2262.7

89(1.5%)

Other domestic
corporations

103(1.8%)

Foreigners

236(4.1%)

Securities firms

20(0.3%)

Total

5,786

8. Mizuho Securities Co., Ltd.

8,803

1.8

9. BNYM AS AGT/CLTS 10 PERCENT

8,732

1.8

4,306

0.9

July 17, 2020 : Announcement of financial results for
29th Fiscal Period
August 13, 2020 : Sending of Japanese version Business
Report for 29th Fiscal Period(Statement of Financial Performance)
August 14, 2020 : Start paying distributions for
29th Fiscal Period
August 25, 2020 : 11th General Meeting of Unitholders

May
End offiscal period

Feb.
Jan.

July
End offiscal period

Aug.

Nov.

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

44

Financial institutions

IR Calendar

1. Daiwa Investment Management Inc.

10. STATE STREET BANKWEST CLIENT - TREATY 505234

5,338(92.3%)

Securities firms 20,785 units (4.2%)

Top Ten Unitholders (As of May 31, 2020)
Name of Investor

Individuals/others

January 2021 : Announcement of financial results for
30th Fiscal Period
February 2021 : Sending of Japanese version Business
Report for 30th Fiscal Period(Statement of Financial Performance)
February 2021 : Start paying distributions for
30th 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

45

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.