27th

Fiscal Period Business Report(Statement of Financial Performance)

December 1, 2018 – May 31, 2019

Stock
Code

8976

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

I. Overview of Daiwa Office Investment Corporation
To Our Investors
We would like to express our deep gratitude to all our unitholders for your support of Daiwa Office Investment Corporation (DOI).
In the 27th Fiscal Period, DOI posted operating revenues of 13,833 million yen and operating income of 6,979 million yen. Our
distribution per unit for the 27th Fiscal Period is 12,559 yen, an increase of 562 yen from the 26th Fiscal Period.
See page 4 for financial and management highlights
Average contract rent at the end of the 27th Fiscal Period was 19,571 yen. Contract renewals contributed to a 19 million yen increasein monthly contracted rents from the end of the previous fiscal period, which was a 7.0% rate of increase for average monthly rent.
Furthermore, the rate of increase for average monthly rent stood at 23.1% due to tenant replacement, and the occupancy rate was
97.1%. We will realize sustainable internal growth through the thorough implementation of the hands-on approach that continuously
applies “Bonji-Tettei” as the code of conduct.

See page 8 for details of internal growth

During the 27th Fiscal Period, DOI acquired two properties (total acquisition price: 14,200 million yen), Sasazuka South Building andGlass City Harumi, and sold Daiwa Onarimon Building (sale price: 13,700 million yen).
During the 28th Fiscal Period, DOI acquired Sumitomo Fudosan Mita 2-Chome Building (acquisition price: 2,635 million yen) and soldDaiwa Osaki 3-chome Building (sale price: 2,685 million yen) through exchange.
DOI will continue to selectively acquire office properties 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 medium- to long-term goal of continuous growth through leveraging borrowing
capacity backed by robust financial base, while increasing long-term EPS (netincome after deducting gain on sales of properties). We wish our unitholders
continued success and ask for your continued support of DOI.

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

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

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

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

2

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

Characteristics and Strategies of Daiwa Office Investment Corporation

Characteristics of Daiwa Office Investment Corporation

Office Specialized
REIT

REIT Focused on the Five
Central Wards of Tokyo

Effective application of operational knowhow specialized in officebuildings

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

Office buildings 100.0%

Major Regional Cities 2.1%
Greater Tokyo

Five Central
Wards of Tokyo

81.1%

16.9%

Based on acquisition price(Note) Please note that the percentages in the above graphs are as of July 1, 2019.

Growth Strategies
Activities for solid growth・Continue acquiringproperties

Achievement of a 500 billion yen asset size

・Leverage borrowing
capacity

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

500.0(billion yen)
500

467.7 469.3 469.3

439.4

459.7 460.0

461.0

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
(Note 1) The forecasts on distribution are calculated
based on certain assumptions and may vary due
to changes in the status and other factors.
Moreover, the forecasts set forth herein should
not be construed as a guarantee of distribution
amounts.
(Note 2) Distribution per unit for the 27th Fiscal Period is
calculated by dividing the amount obtained bydeducting provision of reserve for reduction
entry (142 million yen) from unappropriatedretained earnings by the total number ofinvestment units issued and outstanding.

200

100

0
Fiscal period Fiscal period Fiscal period Fiscal period Fiscal period Fiscal period As of July Medium-term
ended
ended
ended
ended
ended
ended
1, 2019
goal
November 2016 May 2017 November 2017 May 2018 November 2018 May 2019

Fiscal period ended May 2019

(Note 2)(27th Fiscal Period)

Fiscal period ending November 2019(28th Fiscal Period)

Fiscal period ending May 2020
(29th Fiscal Period)

12,559 yen
13,000 yen
13,200 yen(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(Million yen)
14,000(Million yen)
7,000(Million yen)
6,000

11,00012,547

12,735

13,44013,193

13,833

6,678
6,133

6,320

6,979

5,887

6,535

6,177

5,359

5,000

4,000

3,000

2,000

5,901

5,455

8,000

5,000

0

0
23rd Period 24th Period 25th Period 26th Period 27th Period■ Distribution per Unit
(Yen)
12,00010,000

Forecast from one year earlier
Actual dividends

9,000
9,350
9,688

8,328
8,700
9,142

0
23rd Period 24th Period 25th Period 26th Period 27th Period

23rd Period 24th Period 25th Period 26th Period 27th Period

Forecast from six months earlier

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

10,56010,70010,764

10,71010,77010,957

10,80011,000
11,15021st Period

22nd Period

23rd Period

24th Period

25th Period

11,40011,85011,997

13,20012,00012,30012,55912,40013,00027th Period

28th Period 29th Period(Forecast) (Forecast)

8,000

6,000

4,000

2,000

0
19th Period

20th Period

26th Period

27th Period

26th Period

25th Period

24th Period

23rd Period(May 2019)(November 2018)(May 2018)(November 2017)(May 2017)

Operating revenues (Million yen)

13,833

13,193

13,44012,735

12,547

Operating income (Million yen)

6,979

6,535

6,678

6,177

6,133

Ordinary income (Million yen)

6,320

5,902

5,888

5,456

5,360

Net income (Million yen)

6,320

5,901

5,887

5,455

5,359

Total number of units issued (Units)491,877

491,877

491,877

497,869

497,869

Net assets per unit (Yen)

517,324

516,641

515,730

515,790

515,317

Distribution per unit (Yen) (Note)

12,55911,997

11,15010,957

10,764

Total assets (Million yen)

485,636479,212467,040

483,173483,730

42.1

41.5

40.5

42.3

42.2

59

58

55

54

54

460.0

459.7

439.4

469.3

469.3

364,375.19

360,958.95

340,144.07

338,377.31

338,436.22

97.1

98.9

99.0

98.2

97.7

Loan-to-value (LTV) (Based on total asset value) (%)
Number of investment properties
Asset size (Billion yen)
Total rentable area (m )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 July 1, 2019)
Property Name

Address

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

Ownership TypeLand

Building

PML (%)

Five Central Wards of Tokyo (Note 1)
Ginza, Chuo-ku, Tokyo
8,114.93 SRC B3/12F July 1963
1 Daiwa Ginza
Ginza, Chuo-ku, Tokyo
2,032.11 SRC B3/8F Aug. 1972
2 Daiwa Ginza Annex
Shibaura, Minato-ku, Tokyo
9,619.67 SRC B1/12F Oct. 1987
3 Daiwa Shibaura
Minami Aoyama, Minato-ku, Tokyo
2,715.54 S SRC B2/5F Sept. 1990
4 Daiwa Minami-Aoyama
Kanda Sarugakucho, Chiyoda-ku, Tokyo
3,657.43
SRC 8F
June 1985
5 Daiwa Sarugakucho
Hamamatsucho, Minato-ku, Tokyo
3,663.38 SRC B2/10F July 1993
6 Daiwa A Hamamatsucho
Jingumae, Shibuya-ku, Tokyo
2,198.61 RC B1/4F
Dec. 1997
7 Daiwa Jingumae
Shibadaimon, Minato-ku, Tokyo
2,386.48 SRC RC B1/7F Nov. 1996
8 Daiwa Shibadaimon
Kanda Misakicho, Chiyoda-ku, Tokyo
2,137.53
S 8F
July 1996
9 Daiwa Misakicho
Shinbashi, Minato-ku, Tokyo
2,595.76 SRC B1/8F
Apr. 1974
10 Daiwa Shimbashi 510
Tsukiji, Chuo-ku, Tokyo
2,659.59
SRC 10F
Jan. 1996
11 Daiwa Tsukijiekimae
Tsukiji, Chuo-ku, Tokyo
1,487.44 SRC B1/7F Jan. 1990
12 Daiwa Tsukiji
Tsukishima, Chuo-ku, Tokyo
8,425.69
S 5F
July 1996
13 Daiwa Tsukishima
2,850.81 SRC B2/7F
Apr. 1993
14 Daiwa Nihonbashi Horidomecho Nihombashi-Horidomecho, Chuo-ku, Tokyo
Azabudai, Minato-ku, Tokyo
1,697.88 SRC B2/9F
Apr. 1984
15 Daiwa Azabudai
Hatchobori, Chuo-ku, Tokyo
3,265.83 SRC B1/8F Oct. 1974
16 Daiwa Kyobashi
Kojimachi, Chiyoda-ku, Tokyo
2,695.31 SRC B2/9F Oct. 1987
17 Daiwa Kojimachi 4-chome
22,746.12 S SRC B3/34F Sept. 1995
18 Shinjuku Maynds Tower (Note 5) Yoyogi, Shibuya-ku, Tokyo
Udagawacho, Shibuya-ku, Tokyo
2,480.65 RC B1/9F
Aug. 200619 Daiwa SHIBUYA EDGE
Nihombashi-Odenmacho, Chuo-ku, Tokyo
2,379.31
SRC 8F
Mar. 1985
20 Daiwa Kodenmacho
Kanda-Jimbocho, Chiyoda-ku, Tokyo
3,164.26
S B1/8F
Mar. 1997
21 Daiwa Jimbocho
Nishi-Shimbashi, Minato-ku, Tokyo
4,815.84 SRC B1/10F July 1993
22 Daiwa Nishi-Shimbashi
Nihombashi-Kayabacho, Chuo-ku, Tokyo
5,899.11 S SRC B1/8F Apr. 201023 Daiwa Kayabacho Building
Kanda-Jimbocho, Chiyoda-ku, Tokyo
2,889.34
S 9F
Feb. 201024 Daiwa Jinbocho 3-chome
Maruyamacho, Shibuya-ku, Tokyo
13,960.87 S SRC B1/15F Oct. 2002
25 E SPACE TOWER
Nihombashi Hongokucho, Chuo-ku, Tokyo
2,143.08
S 8F
May 2010
26 Daiwa Nihonbashi Hongokucho
Shinjuku, Shinjuku-ku, Tokyo
6,751.31 S RC B2/11F Jan. 201227 shinyon curumu
Akasaka, Minato-ku, Tokyo
8,747.39 SRC B2/7F Sept. 1990
28 Daiwa Akasaka
Shibuya, Shibuya-ku, Tokyo
6,328.94 S B1/12F
Dec. 1988
29 Daiwa Shibuya Miyamasuzaka
Minami Azabu, Minato-ku, Tokyo
13,234.39 S RC B1/6F Sept. 200930 Daiwa Azabu Terrace
Ebisu, Shibuya-ku, Tokyo
2,951.70 SRC B1/9F Dec. 1997
31 Daiwa Ebisu 4-chome
Okubo, Shinjuku-ku, Tokyo
7,498.33
S10F
Aug. 201032 LAQUAS Higashi Shinjuku
Jingumae, Shibuya-ku, Tokyo
4,426.10 S RC B1/7F Nov. 2001
33 Daiwa Aoyama
Shinsen-cho, Shibuya-ku, Tokyo
2,811.35 RC B1/9F
Sept. 2001
34 Shinsen Place
Nanpeidaicho, Shibuya-ku, Tokyo
8,566.73 S SRC B1/11F Feb. 2004
35 Glass City Shibuya
Nihonbashi Hakozakicho, Chuo-ku, Tokyo
32,055.85 S SRC RC B2/20F Feb. 1994
36 Daiwa River Gate
Hatchobori, Chuo-ku, Tokyo
2,622.42 S SRC B1/10F Feb. 2006
37 Daiwa Hatchobori ekimae
Hatchobori, Chuo-ku, Tokyo
1,723.15 SRC B1/9F Feb. 1996
38 Daiwa Hatchobori ekimae West
Nishishinjuku, Shinjuku-ku, Tokyo
6,967.61 SRC RC S B2/11F Aug. 1991
39 Daiwa Nishi-Shinjuku
Nihonbashi Koami-cho, Chuo-ku, Tokyo
5,630.17 S SRC 7F
Feb. 1999
40 Kirin Nihonbashi Building
Higashi Nihonbashi, Chuo-ku, Tokyo
5,015.88
S 7F
Mar. 200841 Daiwa Higashi-nihonbashi(Note
6)
Daikanyamacho, Shibuya-ku, Tokyo
1,642.83
S 6F
Mar. 2001
42 Daiwa Daikanyama
Nishishinjuku, Shinjuku-ku, Tokyo
1,120.58
RC 4F
Mar. 1989
43 Shinjuku West Building
Kanda Mikura-cho, Chiyoda-ku, Tokyo
1,719.51 SRC S B1/7F Jan. 1991
44 Daiwa Kanda Mikuracho Building
Kanda Higashi Matsushitacho, Chiyoda-ku, Tokyo 3,980.56
S 9F
Feb. 2005
45 Daiwa Kanda East
Kanda Suda-cho, Chiyoda-ku, Tokyo
2,211.64 S RC B1/10F Aug. 1990
46 Prime Kanda Building
Sasazuka, Shibuya-ku, Tokyo
16,160.25 SRC RC S B2/18F Feb. 1993
47 Sasazuka NA Building
Sasazuka, Shibuya-ku, Tokyo
3,758.00 SRC S B1/8F Dec. 1991
48 Sasazuka South Building
Harumi, Chuo-ku, Tokyo
11,227.10 S B1/12F
Jan. 200849 Glass City Harumi
2,101.61
S 8F
Mar. 201750 Sumitomo Fudosan Mita 2-Chome Building Mita, Minato-ku, Tokyo
Subtotal
281,935.97
Greater Tokyo Area (Note 1)
Higashi-Ikebukuro, Toshima-ku, Tokyo
4,461.47 SRC S B1/9F June 1993
51 Daiwa Higashi-Ikebukuro
Kita-Shinagawa, Shinagawa-ku, Tokyo
6,548.17 SRC B1/11F July 1991
52 Daiwa Shinagawa North
Kamiooka Nishi, Konan-ku, Yokohama City, Kanagawa 2,630.30 S SRC B3/7F May 201153 Daiwa Kamiooka
Kamiogi, Suginami-ku, Tokyo
17,778.14 S SRC B2/18F June 1993
54 Integral Tower
Meguro, Meguro-ku, Tokyo
3,519.50 S SRC B2/14F July 200955 Daiwa Meguro Square
Ogikubo, Suginami-ku, Tokyo
3,849.63 SRC B1/7F Nov. 1990
56 Daiwa Ogikubo(Note7)
Kinko-cho, Kanagawa-ku, Yokohama City, Kanagawa 28,052.98 S SRC B1/20F Feb. 200857 CONCURRED Yokohama
2,396.96 SRC S 8F
July 1992
58 Kita-Shinagawa Gotenyama Building Kita-Shinagawa, Shinagawa-ku, Tokyo
Subtotal
69,237.15
Major Regional Cities (Note 1)
Awaji-cho, Chuo-ku, Osaka City, Osaka
13,517.62 S SRC B1/16F Feb. 200859 Daiwa Kitahama
Subtotal
13,517.62
Total
364,690.74

14,100 3.1
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 0.5
1,560 0.3
1,240 0.3
7,840 1.7
2,520 0.51,600 0.3
2005
3,460 0.8
2,910 0.6
66,900 14.5
5,900 1.3
2,460 0.5
4,150 0.95,000 1.1
5,600 1.2
3,550 0.8
24,000 5.2
1,721 0.4
9,650 2.1
9,200 2.0
7,000 1.5
14,000 3.0
4,135 0.98,450 1.89,800 2.1
4,800 1.0
16,000 3.5
28,000 6.1
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 3.4
3,000 0.7
11,200 2.4
2,635 0.6
373,692 81.1

simple and17,400 Feeleasehold
Fee simple
3,860 Fee simple
Fee simple
8,080 Fee simple
Fee simple
4,660 Fee simple
Fee simple
3,970 Fee simple
Fee simple
Compartmentalized
3,810 Fee simple
ownership
2,880 Fee simple
Fee simple
3,290 Fee simple
Fee simple
2,870 Fee simple
Fee simple
2,530 Fee simple
Fee simple
2,150 Fee simple
Fee simple
1,640 Fee simple
Fee simple
10,500 Fee simple
Fee simple
2,780 Fee simple
Fee simple
1,940 Fee simple
Fee simple
3,450 Fee simple Compartmentalized
ownership (100%)
2,890 Fee simple Compartmentalized
ownership (100%)
63,000 Co-ownership Co-ownership
5,250 Fee simple
Fee simple
simple and2,230 Feeleasehold
Fee simple
3,890 Fee simple
Fee simple
7,050 Fee simple
Fee simple
8,190 Fee simple
Fee simple
5,240 Fee simple
Fee simple
35,900 Fee simple
Fee simple
2,580 Fee simple
Fee simple
16,200 Right of site Compartmentalized
ownership (100%)
15,000 Fee simple
Fee simple
11,400 Fee simple
Fee simple
17,400 Fee simple
Fee simple
6,100 Fee simple
Fee simple
10,900 Fee simple
Fee simple
12,400 Fee simple
Fee simple
6,720 Fee simple
Fee simple
21,300 Fee simple
Fee simple
32,600 Fee simple
Fee simple
3,360 Fee simple
Fee simple
1,860 Fee simple
Fee simple
16,000 Fee simple
Fee simple
8,290 Fee simple
Fee simple
6,860 Fee simple
Fee simple
3,510 Fee simple
Fee simple
1,210 Fee simple
Fee simple
1,770 Fee simple
Fee simple
5,470 Fee simple
Fee simple
Compartmentalized
2,760 Right of site ownership (100%)Fee simple
16,100 Fee simple
3,340 Fee simple Compartmentalized
ownership (100%)
12,000 Fee simple
Fee simple
3,240 Fee simple
Fee simple
447,820

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

2,958 0.6
7,710 1.7
2,000 0.4
15,220 3.3
5,600 1.2
3,800 0.8
38,100 8.3
2,500 0.5
77,888 16.9

4,250 Fee simple
Fee simple
6,210 Fee simple
Fee simple
2,840 Fee simple
Fee simple
22,000 Fee simple
Fee simple
6,910 Fee simple
Fee simple
4,610 Fee simple Compartmentalized
ownership (100%)
39,900 Quasi co-ownership Quasi co-ownership
2,650 Fee simple
Fee simple
89,370

3.55
7.19
6.29
1.18
1.68
6.41
0.92
7.07

9,481
9,481
461,061

11,70011,700548,890

3.48

2003
2003

2.1
2.1
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. 2019 (end of 27th 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 June 1, 2019 for Sumitomo Fudosan Mita 2-Chome Building, andof May 31. 2019 (end of 27th Fiscal Period) for other properties.
(Note 5) The entrusted real estate corresponding to trust beneficiary interests that DOI owns regarding Shinjuku Maynds Tower is a co-ownership interest equal to 3/7 of the entire property. The figure shown for the Rentable
Area is the figure equivalent to 3/7 of the total rentable area of the entire building.
(Note 6) Concerning the names of properties, DOI changed Square Daikanyama Building to Daiwa Daikanyama on May 1, 2019.
(Note 7) The entrusted real estate corresponding to trust beneficiary interests that DOI owns regarding CONCURRED Yokohama is a quasi co-ownership interest equal to 75/100 of the entire property. The figure shown for
the Rentable Area is the figure equivalent to 75/100 of the total rentable area of the entire building.

I. Overview of Daiwa Office Investment Corporation

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

7 Daiwa Jingumae

18 Shinjuku Maynds Tower

19 Daiwa SHIBUYA EDGE

25 E SPACE TOWER

29 Daiwa Shibuya Miyamasuzaka

31 Daiwa Ebisu 4-chome

51 Daiwa Higashi-Ikebukuro

Ikebukuro Sta.
51

33 Daiwa Aoyama

34 Shinsen Place

35 Glass City Shibuya

54

42 Daiwa Daikanyama

Suginami-ku

47 Sasazuka NA Building

Toshimaku

48 Sasazuka South Building

Nakano Sta.

56 Ogikubo Sta.
54 Integral Tower

32
HigashiShinjuku Sta.

Shinjuku-ku

Shinjuku-ku
43
39
Honancho Sta.

56 Daiwa Ogikubo

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

Toei Subway

27 shinyon curumu

32 LAQUAS Higashi Shinjuku

39 Daiwa Nishi-Shinjuku

43 Shinjuku West Building

e 18
Lin
ew
oN
i
e
K
and
Line
Keio

19
25
3 Daiwa Shibaura

4 Daiwa Minami-Aoyama

34

6 Daiwa A Hamamatsucho

35

ine
hi L
Tos
n
e
Den
yu
Tok

Lin
e
To
kyu
To
yok
o
8 Daiwa Shibadaimon

10 Daiwa Shimbashi 510

29
Shibuya Sta.
42

Naka-meguro Sta.

31
Ebisu Sta.

15 Daiwa Azabudai

55

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

6

Gaienmae Sta.

4

Omotesando Sta.

JR

Major Regional Cities

Aoyamaitchome Sta.

7
33

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

Yotsuya Sta.

Shibuya-ku

48 47

Minato-ku

Shinjuku Sta.
27

Meguro Sta.

Osaki Sta.
22 Daiwa Nishi-Shimbashi

28 Daiwa Akasaka

30 Daiwa Azabu Terrace

50 Sumitomo Fudosan Mita

2-Chome Building

55 Daiwa Meguro Square(As of July 1, 2019)

Chuo-ku

1 Daiwa Ginza

2 Daiwa Ginza Annex

11 Daiwa Tsukijiekimae

23 Daiwa Kayabacho Building

26 Daiwa Nihonbashi Hongokucho 36 Daiwa River Gate

12 Daiwa Tsukiji

13 Daiwa Tsukishima

37 Daiwa Hatchobori ekimae

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

14 Daiwa Nihonbashi Horidomecho

16 Daiwa Kyobashi

20 Daiwa Kodenmacho

49 Glass City Harumi

Chiyoda-ku

Asakusa Sta.
Oshiage Sta.

Suidobashi Sta.

9

Akihabara Sta.

5

24 21

Kudanshita Sta.

46
45
44

26

41
20

Chiyoda-ku

12Toranomon Sta.

28

Shimbashi Sta.
22
10

6

15
8

50 Shibakoen

17 Daiwa Kojimachi 4-chome

21 Daiwa Jimbocho

24 Daiwa Jinbocho 3-chome

44 Daiwa Kanda Mikuracho Building

45 Daiwa Kanda East

46 Prime Kanda Building

Nihombashi Sta.

Hibiya Sta.

Akasaka Sta.

9 Daiwa Misakicho

Ningyocho Sta.

Tokyo Sta.
Akasakamitsuke Sta.

5 Daiwa Sarugakucho

14

Otemachi Sta.

17

Kinshicho Sta.

23 Suitengumae36

Chuo-ku

40

16

38 37

Ginza Sta.

12

Sta.

Hatchobori
Sta.

11
Tsukishima Sta.

13
49

Minato-ku Sta.
30

352 Daiwa Shinagawa North

53 Daiwa Kamiooka

58 Kita-Shinagawa Gotenyama Building

59 Daiwa Kitahama

57 CONCURRED Yokohama

Shinagawa
Sta.

52
58

Shinagawaku

59

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)
24,000
Average rents of existing buildings (left axis)
Vacancy rate of existing buildings (right axis)

22,00021,2878.0

20,000

6.0

18,0004.0

16,0002.0

1.69

14,000(Tsubo)500,000

New supplies (others)
Vacancy rate

(%)
10.0

New supplies (overall)

400,000

8.0

300,000

6.0

200,000

4.0

100,0002.0
0.00Predicted figures*-100,000

0.02001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20192001 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

(Source) Miki Shoji(Source) CBRE “Mid-term Office Market Outlook 2019~2023”*Predicted figures as of June 2019

■ Occupancy Rate

96.4

95.4

95.0

-2.0

■ Rate of New Leases and Cancellations*

(%)
100.0

95.0

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

96.3 96.4

97.2 97.3

98.3 98.7

97.7 97.7

98.2

99.0 98.9

(%)
20.0

99.0
97.6

97.1

97.8

98.4

9.8

10.0

(Note)
3.2

94.3

8.2

3.3

5.7

4.4

6.1 6.2
2.0

4.3

4.7
2.9 3.8 4.4 4.0 2.7 3.5

1.8

0.0
92.4
90.0

-3.9

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

85.0

-5.9

-10.0

-7.3

-6.3 -5.3-2.4 -1.7 -1.5

-2.8
-6.1 -5.7-3.8 -3.6 -3.9 -3.3 -2.7 -3.8 -2.9

Rate of new leases
Rate of cancellations

-20.0

0.9
-1.4

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
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

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
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* Transition of rate of new leases and cancellation areas to the total rentable area.

(Note) The occupancy rate excluding Glass City Harumi acquired in the 27th Fiscal Period(occupancy rate at the time of acquisition: 47.3%) is 98.7%

Rental Business Status■ Average Contract Rent and Market Rent

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

27,00090

84.79
24,000

83.52

86.67

80

19,295 19,571
19,23718,0002,250

Increasedue tonew leases

2,200

70

21,000

2,300

60

+99

2,150
2,100
2,050

2,067

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

8–87

Increasedue tocontract
renewals+19

Decreasedue totenants’cancellations

Increasedue tonew acquisition

+34

–50

–0
Decreasedue tocontract
renewals

2,083
Decreasedue to sales

1,950
1,900
End of 26th FP
monthly contract rent

End of 27th FP
monthly contract rent

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

Status of Contract Renewal/New Lease■ Area of which Contract Ended/Will End In and Afterthe Fiscal Period Ended May 2019 (27th fiscal period)(Based on rentable area)■ Changes in Ratios of Areas with Rent Increase/Decrease/
Unchanged and Cancellation upon Contract Renewal
27th Period 0.7(Note 2)

(%)
30.0

25.0

20.4

20.0

22.2

20.1

18.8

45.8

49.9

4.2

49.9

2.9

24th Period

51.7

40.4

7.8

44.4

6.6

53.4

3.9

48.8

23rd Period

21st Period
10.0

42.6

0.2

49.0

19th Period

26.5

18th Period 4.8

8.6

0.0

0.0

27th Period

28th Period

29th Period

30th Period

31st Period

50.1

37.5

20th Period

5.0

7.7

43.8

22nd Period

15.3

15.0

34.0

25th Period 3.2(Note 1)

26th Period

Scheduled

57.4

0.7

61.1

1.4

70.8

2.7

66.7
20.0

Decrease

40.0

19.9
60.0
Unchanged

Increase

80.0
Cancellation

100.0
（%）

(Note) The ratio of areas of which lease contracts are scheduled to be renewed in each fiscal period to thetotal rentable area (354,005.35m2) as of the end of May 2019 is indicated.

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

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

(%)
15.0

(Thousand yen)
100,000

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

80,00091,394
83,962
83,77275,943
69,26260,000

14.9

10.0
5.0

2.5

0.0

-6.5

-5.0

5.0
1.0

-7.0

9.8
4.3

-4.9

5.2
5.2
0.0

9.0
9.0

0.0

7.3
7.2

-5.1

6.1
6.1
0.0

8.1
8.1

7.8

0.0

0.0

7.8

9.9
9.9

6.6

7.2
7.0

4.2
0.0

40,000

-10.2

-10.0

9.6

Increase/decrease rate (right axis)

98,246

96,294

（%）
25.0

23.1
79,804

66,10456,967 16.0

20.0

15.0

10.0

8.9

-12.3

-15.0

20,000

5.0

Increase rate
-20.0

Decrease rate

-21.2

Rent increase/decrease rate

-25.0

0

16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th
Period Period Period Period Period Period Period Period Period Period Period Period(Note) Indicates rent increase/decrease rate against contract rents before the renewals for lease contracts
whose contract renewal periods have arrived in the above periods and whose rent renewals have been
agreed. Rent increase/decrease rate is calculated based on net amount for increased/decreased rents.

0.0

23rd Period

24th Period

25th Period

26th Period

27th Period(Note) Compared monthly rent before and after tenant replacement for the same leasing areas. The rate isbased on total monthly rent.

Improvement in Financial Standing■ Monthly Rent Increase Due to Contract Renewal/New Lease(Financial Standing)(Thousand yen/month)
40,00020,00010,0000Tenant Replacement

14,246
14,376 766
12,7479,020 6,438 13,479 3,988
3,157 7,938
8,759
5,862
19th
20th
Period Period

Simple19th 20th 21st 22nd 23rd 24th 25th 26th 27th averageof ninePeriod Period Period Period Period Period Period Period Period fiscal
periods

37,564
18,441

Contract Renewal
30,000■ Increase in Dividend Resource Due to Improved Financial Standing

28,22525,5289,137
6,680 21,804 21,309
20,536
7,432 12,521
7,618
19,087 19,123
18,847
14,3716-monthGrowth rate conversion 0.7% 1.0% 0.8% 0.7% 1.4% 1.2%1.2% 1.5% 1.9% 1.0%
of rent andcommonarea fees 12-month 1.3% 2.0% 1.7% 1.5% 2.8% 2.4% 2.3% 3.0% 3.9% 2.1%
conversion(Note 1)

12,917
8,787

Growth rate 6-month 1.5% 2.1% 1.8% 1.5% 2.9% 2.4% 2.3% 2.9% 3.8% 2.4%
of dividend conversion
resource 12-month
4.9% 4.7% 5.8% 7.6% 4.7%
(Note 2)conversion 3.0% 4.3% 3.6% 2.9% 5.8%

21st 22nd 23rd
24th
25th
26th
27th Simple
Period Period Period Period Period Period Period average ofnine fiscal periods(Note 1) The figures are calculated by dividing the rent increase due to improvement in financial standing each period (monthly rent increase X 6 months) by rents and common area fees income in the immediately prior fiscal
period.
(Note 2) The figures are calculated by dividing the rent increase due to improvement in financial standing each period (monthly rent increase X 6 months) by net income in the immediately prior fiscal period.

I. Overview of Daiwa Office Investment Corporation

9

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

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

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

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

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

Hiroshi Udagawa Takafumi Ushiku Kotaro Ishii

Jun Arai

Chie Kamimura

Kosuke Mizunara Jun Iwasaki

Takeshi Morikawa

Asset management
Asset management
Asset management
Asset management
Asset management
Asset management
Asset management
Asset management
work history: 13 years work history:
work history:
work history:
work history:
work history:
work history:
work history: 8 months
14 years 10 months
13 years 3 months
13 years 3 months
13 years 1 month
5 years 3 month
2 years 9 months

Construction Management
Team (6 members)

Engineering: Formulation and implementation of construction planning of the assets

Investment Planning Team

Middle office work: Budget and performance management for the portfolio(4 members)(Note) The numbers of members are the figures as of July 19, 2019. “Asset Management work history” is the number of years engaged in the relevant work (as of July 19, 2019) and does not indicate the number of years
employed at the asset management company.

Occupancy Status of Properties Subject to Leasing Improvement in the Fiscal Period Ended May 2019 (27th FP)■ Kita-Shinagawa Gotenyama Building (Acquisition price: 2,500 million yen)

■ Daiwa Jingumae (Acquisition price: 2,800 million yen)
100.0

100.0 (%)

86.2

80.0

100.0

100.0 (%)

Upon acquisition

100.0

86.2

80.0

78.5
60.0

60.0

58.6
40.0

40.0
’18/5

’18/8

’18/11

’19/2

’19/5

• Advertised to a wide range of markets with its strength of a relatively low leasing cost
despite its location within walking distance from Shinagawa Station, and successfully
attracted tenants from a wide range of areas including the area between Shibuya
Station and Shinagawa Station along the Yamanote Line and the southern part of Tokyo.
100• Occupancy rate as of the end of the 27th FP is 100.0%.

’18/5

’18/8

’18/1180• Contracts were concluded at a level which is 30.0% higher than the previous unit rent60
as a result of attracting companies which prefer the Shibuya area and focus
on building
image by utilizing the characteristics of the property such as its stylish appearance andthe acquisition of “A rank” in CASBEE Property Appraisal.
40• Advertised its size where a maximum of approximately 400 tsubos per floor can be
secured against the backdrop of the scarcity of vacant rooms in the Shibuya area.
Maintained an occupancy rate of 100.0% with no downtime although occupancy rate
was initially expected to decrease to 49.0% at the end of November 2018.

60

100.0 (%)

100.0
40

100.0

91.1

80.0
60.0

Forecasted figures as of November 2018

40.0
’18/5

’18/8

’18/11

’19/2

’19/5

• The property is located in an area where redevelopments for the Tokyo Olympic Gamesare underway and features a refined design. It received multiple applications foroccupancy and unit rent increased due to special demands associated with the Olympic
Games. In addition, contracts were concluded with no free rent.
100• Occupancy rate as of the end of February 2019 is 100%80

■ Glass City Shibuya (Acquisition price: 16,000 million yen)

’19/2

49.0
’19/5

Leasing Results
Occupancy Maintained
100.0% occupancy rate
Rate
Downtime

0 monthUnit Rent
Appraisal Value

31.5%UP (Note 1)
15.8%UP (Note 2)(Note 1) Calculated by dividing the newly contracted unit rent for the section subject to leasing by the previous unit rent.
(Note 2) Comparison with appraisal value as of the end of November 2018.

10

100
80

Leasing Highlight in the Fiscal Period ended May 2019 (27th FP)■ Glass City Harumi (Acquisition price: 11,200 million yen)
Location
Site Area
Structure
Floor
Use
Total Floor Area
Occupancy Rate
Construction Date

Leasing Results

Harumi, Chuo-ku, Tokyo
2,230.55m2
S
B1/12F
Office/Store
15,012.46m2
47.3% (as of acquisition)
January 2008

Occupancy Rate
Leasing Period

Newly Leased
Area

47.3% 100.0%
Approx. 4 months

Unit Rent

2,652.54 tsubos
23.1%UP (Note)(Note) Calculated by dividing the actual contracted unit rent for the section subject to leasing on the typical floor by theprevious unit rent.
Occupancy Rate
100.0 (%)
100.0

• Promoted leasing activities taking into account leasing by section in order to take indemand also from startups while targeting companies which need several floors as themain target by utilizing the characteristics of enjoying cost benefits while offeringcertain transportation convenience to central Tokyo.
• As a result, new contracts were concluded for a total of 2,652.54 tsubos inapproximately 4 months after the acquisition and the occupancy rate is expected to be
100.0% as of September 1, 2019.

Predicted figures

80.0

65.7
60.0

47.3
40.0
’19/2
’19/5
’19/8
’19/11(Note) Calculated by dividing the actual contracted unit rent for the section subject to leasing on the typical floor by theprevious unit rent.

Cases of Value Enhancement Work in the Fiscal Period ended May 2019 (27th FP)
100■ Daiwa Shibuya Miyamasuzaka

80
Value enhancement through large-scale renovation work of exterior
wall
60
of exterior walls conducted◦Visibility, name recognition and asset value increased significantly with the large-scale renovation work
jointly with Tange Associates.
40of construction work.
◦ Although the property is over 30 years old, average rent increased by 20% or more with the completion◦ Achieved rent increase by a little over 34% through tenant replacement.
◦ Annual amount of appraised NOI increased by approximately 19 million yen with the increase in signboard space.

beforeafter

Total construction costs: approximately 270 million yen
Construction period: approximately 1 year

Impact on unit rent

Impact on appraisal value

Achieved rent increase largely exceeding the increase in market unit rent
(existing buildings in Shibuya Ward).

Appraisal value as of the end of the 27th FP increased by 31% from the 24th FP
Contributed to the improvement of property value with the improvement of profitability.

Change in Market Rent and Rent (Note 1)

125
120
115
110
105

Average in Shibuya Ward (Note 2)

Daiwa Shibuya Miyamasuzaka(100 million yen)
120

Change in Appraisal Value
Increase in net
operating revenue

115
110
105

Announcement ofconstruction work(from around
November 2017)

100

100

85

103

Decrease in cap rate

+7.9

95
90

114

+18.7

94

87

80

95
24th
FP

25th
FP

26th
FP

27th
FP

24th
FP

25th
FP

26th
FP

27th
FP

(Note 1) Indexed with the figure at the 24th FP as 100.
(Note 2) Data: Miki Shoji

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 27th Fiscal Period■ Newly Acquired Properties

Sasazuka South Building [Acquired on December 27, 2018]

Glass City Harumi [Acquired on February 27, 2019]
ay
bw
Su e
ei LinTo edoO

Daiwa
Tsukishima

Kachidoki Station

e

Avenu

Keio

New

Line

ori

Sasazuka NA
Building

Harumi Island Triton Squareori

Sasazuka Station

/Keio

Line

i-D
rum
Ha

ri
a Do
nan
Kan

aido

K
Koshu

i-D

um

s
iyo

K

Sasazuka South
Building
Daitabashi
StationGlass City Harumi

Location
Sasazuka, Shibuya-ku, Tokyo
1,001.88m2
Site Area
Structure/Floor SRC/S / B1/8F
Total Floor Area 5,400.70m2
Acquisition Price 3,000 million yen

Location
Harumi, Chuo-ku, Tokyo
2,230.55m2
Site Area
Structure/Floor S / B1/12F
Total Floor Area 15,012.46m2
Acquisition Price 11,200 million yen

million yen
Appraisal Value 3,300(as of December 1, 2018)
Construction Date December 1991
Occupancy Rate 100.0% (as of acquisition)
Number of Tenants 9 (as of acquisition)• Located a 7-minute walk from Sasazuka Station on the Keio Line and Keio
New Line. Excellent location from the point of proximity to the terminal
station considering that Sasazuka Station is only a 5-minute train ride from
Shinjuku Station.

■ SoldProperty

0

100m

million yen
Appraisal Value 12,000(as of February 13, 2019)
Construction Date January 2008
Occupancy Rate 47.3% (as of acquisition)
Number of Tenants 6 (as of acquisition)• The property is a 10-minute walk from Kachidoki Station on the Toei Subway OedoLine. With train rides from Kachidoki Station taking approximately 13 minutes toreach Otemachi Station and approximately 22 minutes to reach Shinjuku Station,etc., the property enjoys excellent access to major stations in Tokyo.

Daiwa Onarimon [Acquired on February 28, 2019]
Location
Structure/Floor
Sale Price

Shinbashi, Minato-ku, Tokyo
SRC/9F
13,700 million yen

Book Value
Appraisal Value
Construction Date

13,504 million yen (as of November 30, 2018)13,700 million yen (as of November 30, 2018)
April 1973

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

Acquisition

Sale

Sumitomo Fudosan Mita 2-Chome Building
Location
Mita, Minato-ku, Tokyo
Site Area454.37m2
Structure/Floor
S / 8F
Total Floor Area
3,003.17m2① Acquisition Price ① 2,635 million yen② Assumed Book Value ② 1,567 million yen (Note 1)
Appraisal Value
3,240 million yen (as of June 1, 2019)
Against acquisition price: 4.7% (Note 2)
NOI Yield
Against assumed book value: 7.9%
Appraisal NOI Yield 4.8%
Construction Date
March 2017
Occupancy Rate
100% (as of acquisition)
Number of Tenants 1 (as of acquisition)
Sumitomo Realty &SellerDevelopment Co., Ltd.

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

Daiwa
Osaki 3-chome
Building

Effect of asset
replacement
Property acquired
Assumed book value
NOI yield

7.9%
Exchange

Location
Osaki, Shinagawa-ku, Tokyo
Structure/Floor
S/RC / B1/6F①Acquisition Price ① 2,685 million yen②Assumed Book Value ② 1,594 million yen (Note 3)
2,350 million yen
Appraisal Value

Increase in unrealized
gain throughexchange (Note 5)
0.7 billion yen

1.6 billion yen(as of November 30, 2018)

NOI Yield (Note 4)

Against sale price: 4.0%
Against book value: 6.8%

Difference from
Exchange of Property 50 million yen
Construction Date September 2007
Sumitomo Realty &SellerDevelopment Co., Ltd.

Sold a 11.8-year oldproperty
and acquired a 2.3-year
old property
Rejuvenation of portfolio-0.1 years(Note 1) The Investment Corporation is scheduled to make a reduction entry for the land and building of the property acquired by applying the provisions of the “Inclusion in Deductible Expenses of the Amount ofAdvanced Depreciation of Assets Acquired by Exchange” in Article 50 of the Corporation Tax Act and deduct advanced depreciation amount of 1,067 million yen among the gain on sale of the property soldfrom the book value of the property acquired. As a result, the book value of the property acquired is expected to be 1,567 million yen before applying the acquisition cost, etc.
(Note 2) NOI yield against acquisition price is calculated based on the leasing agreement for the property acquired on the acquisition date by dividing the annual income with the assumption of the occupancy rate
being 100.0% in consideration of the taxes and other costs that may be incurred by acquisition price. The figures are rounded to the first decimal place.
(Note 3) Book value is as of November 30, 2018.
(Note 4) NOI in the NOI yield is calculated based on the annualized NOI for the 26th FP.
(Note 5) The difference between the appraisal value and assumed book value as of June 1, 2019 is calculated for the property acquired and the difference between the appraisal value as of the end of the 26th FP and
the book value as of the end of November 2018 for the property sold.

12

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 27th FP
Properties sold in the 27th FP
Properties acquired in the 28th FP
Properties sold in the 28th FP
Properties acquired after
sponsor change
Properties acquired before
sponsor change

Daiwa Onarimon• Invest in buildings with an age of less than 25 years.
45■ Sale Policy

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

35
30

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

393

356

26

100
0

344

289

300
200

* Number of gross proposals (cases)

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

416

288

100

20

80

329

326

15

Daiwa Osaki 3-chome

60

14

9

20

5

0

0

18th Fiscal 19th Fiscal 20th Fiscal 21st Fiscal 22nd Fiscal 23rd Fiscal 24th Fiscal 25th Fiscal 26th Fiscal 27th Fiscal
PeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodGlass City Harumi

10

40

29

20

19

18

12

320

276

31

23

Sasazuka South Building

25

Sumitomo Fudosan Mita 2-Chome Building

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.
(Billion yen)
5,500

(%)
80.0
Total Acquisition Price (left axis)

LTV (based on total assets) (right axis)

500.0

5,000

445.7

4,500

3,500

311.3

313.2 314.9

332.0

352.7

287.3

2,500
2,000

469.3

469.3
439.4

459.7

460.0

461.0

413.2

4,000

3,000

458.3

467.7

34.0

34.2

34.4

37.5

28.9

1,500

Acquisition property

Acquisition property• E SPACE
TOWER• Daiwa Osaki
3-chomeAcquisition
property

Kayabacho• Daiwa Jinbocho
0 3-chome

40.6

50.0

43.0

44.3
40.2

Acquisition property• Daiwa Shibuya
Dougenzaka• Daiwa Akasaka• Daiwa Shibuya
Miyamasuzaka• Daiwa Azabu
Terrace• Daiwa Kitahama

Acquisition property

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

60.0

387.5

Acquisition property

1,000
500 • Daiwa

364.0

70.0

41.7

43.3

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

Acquisition property• Daiwa Ebisu
4-chome• LAQUAS Higashi
Acquisition property
Shinjuku• Integral Tower • Daiwa Aoyama• Shinsen Place• Glass City Shibuya• Daiwa Meguro
Square

42.3

42.2

42.3

Acquisition property• Daiwa
Higashinihonbashi• Daiwa
Daikanyama• Shinjuku West
Building• Daiwa Ogikubo

Acquisition property

Acquisition property• Daiwa
Nishi-Shinjuku• Kirin Nihonbashi
Building• Daiwa Kanda
Mikuracho
Building

40.5

41.5

Acquisition property

42.1

40.0

Acquisition property• CONCURRED• Sasazuka South
Yokohama
Building• Daiwa Kanda East • Glass City Harumi

Acquisition property

Acquisition property• Kita-Shinagawa
Gotenyama
Building• Sasazuka
NA Building• Prime Kanda
Building• Sumitomo
FudosanMita 2-Chome
Building

30.0

20.0

10.0

0.0

11th
12th
13th
14th
15th
16th
17th
18th
19th
20th
21st
22nd
23rd
24th
25th
26th
27th
As of
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 July 1, 2019

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, 2019)
During the 27th Fiscal Period, DOI took out short-term borrowings of 14 billion yen in total to raise funds for the acquisition of new
properties as well as conducted early repayment of 9 billion yen out of the short-term borrowings.
Furthermore, DOI refinanced 6.5 billion yen and newly borrowed 4 billion yen in order to repay 10 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(Billion yen)
280

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

240

60.0

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

200

50.0

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

160

42.1

120
80

40.0

(Years)
10.0
9.0

2.5

1.0
0.0

4.1

2.0
1.5
1.0

Average remaining years at the time ofprocurement during the 27th Fiscal Period (left axis)
Average remaining years at the time of procurement during the27th Fiscal Period (excluding short-term borrowings) (left axis)

0.5
0.0

15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th
Period Period Period Period Period Period Period Period Period Period Period Period Period(Note) LTV (based on acquisition price): Total interest-bearing liabilities / Total acquisition price of properties(Note) Dotted line indicates average remaining years at the time of procurement during
the 27th Fiscal Period excluding short-term borrowings.

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

16,00012,000

8,000

4,000

0
28th 29th 30th 31st 32nd 33rd 34th 35th 36th 37th 38th 39th 40th 41st 42nd 43rd 44th 45th 46th 47th
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■ Ratio of Fixed- to
Floating-Rate Borrowings■ Ratio of Long- to
Short-Term Liabilities

End of 27th
Fiscal Period

End of 27th
Fiscal Period

14.4%

85.6%

13.5%

86.5%

Fixed interest rates

Long-term borrowings

Floating interest rates

Short-term borrowings, current portionof long-term borrowings and current
portion of investment corporation bonds

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

Balance (mm yen)Share

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

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

(Note) The lenders within the red frame are financial institutions from which new
borrowings were made during the 27th fiscal period■ Status of Rating
Rating agency

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

14

3.5
3.0

2.0

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
11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th 27th
Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period

4.0

5.0

20.0

0.0

4.5

6.0

3.0

0

4.0

7.0

4.0

10.0

8.3

8.0

30.0

40

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

Target rating

RatingRating outlook

Issuer rating

A+

Positive

Long-term issuer rating

AA

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

Environment■ Environmental Certification
GRESB Real Estate Assessment

CASBEE Property Appraisal/ Glass City Shibuya and Shinjuku Maynds Tower

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

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

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

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

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

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

DBJ Green Building Certification/ Shinjuku Maynds Tower

Certification Based on SMBC Sustainable
Building Assessment Loan/

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

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

LEED Certification/ Glass City Harumi
Glass City Harumi acquired a GOLD level in
LEED

Daiwa Ginza (left), E SPACE TOWER

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

Social■ Efforts for Enhancing Tenant Satisfaction■ Coexistence with Local Communities

Giving Out Novelty Goods/ Shinjuku Maynds Tower

Shinjuku Minami Lumi/ Shinjuku Maynds Tower• Held “Shinjuku Minami Lumi,” an event to illuminate Shinjuku South Exit
area, jointly with Odakyu Electric Railway, Takashimaya, East Japan
Railway and Asahi Mutual Life Insurance for six consecutive years since2013.

• Give out annual (around December) Shinjuku Maynds
Tower desk calendars. The aim is to improve a sense ofaffinity among office workers of its tenants toward
Shinjuku Maynds Tower.

■ Efforts for Employees
Improving Work Environment/ Daiwa Ginza• Substantially expanded open space and secured community space for
employees to relax or have meetings. The aim is to enable fruitfulcommunications among employees.

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

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

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

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

I. Overview of Daiwa Office Investment Corporation

15

Description of Asset Manager

Organization of Asset Manager (As of July 1, 2019)■ Description■ Directors and Auditors

Company Name
Address
Established
Paid-in Capital
President
Board of Directors
No. of Employees
Registration of Financial
Instruments Business Operator
Building Lots and Buildings
Transaction Business License
Discretionary Agent for Real
Estate Transaction Approval
Association MembershipDaiwa Real Estate Asset Management Co., Ltd.
6-2-1 Ginza, Chuo-ku, Tokyo
October 21, 2004
200 million yen
Toshio Fukushima
9
Executive directors: 5; Executive auditor: 1
Non-executive director: 1; Non-executive auditors: 2110 (excluding dispatched employees)
Registration No. 355 (Financial Instruments), Director-General,
Kanto Local Finance Bureau (Kinsho)
License No. (3)-83920, Governor of Tokyo
License No. 34, Minister of Land, Infrastructure, Transport andTourism

Chairman of the Board
Vice President and Representative
Director
Vice President and Representative
Director
Executive Managing Director
Director
Director (non-executive)
Auditor
Auditor (non-executive)
Auditor (non-executive)■ Organizational
Chart

Member of The Investment Trusts Association, Japan
Member of Japan Investment Advisers Association
Member of Type II Financial Instruments Firms Association

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

Shareholders’ Meeting

Corporate Auditors
Board of Directors
Compliance Committee
Investment Committee
President andRepresentative Director
Private Fund Division

Acquisition and Asset Management Division
DOI Asset
Management
Department

JRH Asset
Management
Department

Investment
Planning
Department

Construction
Management
Department

Private FundManagement
Department

REIT
Planning
Department

DOI Investment
Team

AM Team

JRH Investment
Team

Portfolio
System TeamNHI Management
Team

Accounting
Team

DHP Management
Team

Management
Team

Origination
Department

DRP Investment
Team

Internal Control Office

Corporate Division

Asset
Management
Department
DRP Management
Team

Acquisition
Department

Compliance Officer

Finance
Department

Administration
Department

Corporate
Planning
Department

FinanceTeam

Compliance &RiskManagement
Department

NHI InvestmentTeam
DHP 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
Resona Bank, Ltd.

④ 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

27th Period 26th Period 25th Period 24th Period 23rd Period

Dec. 1, 2018 From June 1, 2018 From Dec. 1, 2017 From June 1, 2017 From Dec. 1, 2016
( FromTo May 31,2019 )( To Nov. 30,2018 )( To May 31, 2018 )( To Nov. 30, 2017 )( To May 31, 2017 )(1) Operating Performance(Millions of yen, except per unit data or where otherwise indicated)
Operating revenues
13,833
13,194
13,441
12,735
12,547
Rental revenues
13,62913,164
12,86912,71812,513Operating expenses
6,854
6,658
6,762
6,558
6,414
Property-related expenses
5,479
5,345
5,410
5,279
5,151
Operating income
6,979
6,536
6,679
6,177
6,133
Ordinary income
6,321
5,902
5,888
5,456
5,360
Net income
6,320
5,901
5,887
5,455
5,359
(2) Properties, etc. (as of end of period)
Total assets
485,636479,213467,040
483,173483,731[period-on-period percentage changes][+1.3%][+2.6%][−3.3%][−0.1%][+0.1%]
Interest-bearing liabilities
204,450
198,950
188,950
204,300
204,300
Net assets
254,460
254,124
253,676
256,796
256,561[period-on-period percentage changes][+0.1%][+0.2%][−1.2%][+0.1%][+0.0%]
Notes 2
247,876
247,876
247,876
251,552
251,552
Unitholders’ capital, net(3) Distributions
Total distribution amount
6,177
5,901
5,484
5,455
5,359
Dividend payout
97.7%
100.0%
93.2%
100.0%
100.0%(4) Per Unit Information
Total number of units issued (units)491,877
491,877
491,877
497,869
497,869
Net assets per unit (yen)517,325
516,642515,731515,790
515,318
Distribution per unit (yen)12,55911,997
11,15010,957
10,764
Distribution amount from earnings per unit (yen)12,55911,997
11,15010,957
10,764
Distribution amount in excess of earnings per unit (yen)
–
–
–
–
–
(5) Financial Indicators
1.3%
1.2%
1.2%
1.1%
1.1%
ROA
Notes 3and4[annual rate][2.6%][2.5%][2.5%][2.3%][2.2%]
2.5%
2.3%
2.3%
2.1%
2.1%
ROE
Notes 4and 5[annual rate][5.0%][4.6%][4.6%][4.2%][4.2%]
Capital ratio
52.4%
53.0%
54.3%
53.1%
53.0%
[period-on-period percentage changes][−0.6%][−1.3%][+1.2%][+0.1%][−0.0%]LTV (loan to value)
42.1%
41.5%
40.5%
42.3%
42.2%
Note 6
Property leasing cash flows (NOI)
9,962
9,553
9,231
9,208
9,133
(6) Other Referential Information
Number of investment properties
59
58
55
54
54
Note 7
639
624
606
580
577
Number of tenants
364,375.19 360,958.95 340,144.07 338,377.31 338,436.22
Total rentable area (m2)
Note
8
97.1%
98.9%
99.0%
98.2%
97.7%
Occupancy rate
Depreciation
1,813
1,734
1,772
1,769
1,771
Capital expenditures
471
1,738
1,564
536
824
(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 23rd Fiscal Period are the annualized figures calculated based on 182 days of management.
Figures for the 24th Fiscal Period are the annualized figures calculated based on 183 days of management.
Figures for the 25th Fiscal Period are the annualized figures calculated based on 182 days of management.
Figures for the 26th Fiscal Period are the annualized figures calculated based on 183 days of management.
Figures for the 27th Fiscal Period are the annualized figures calculated based on 182 days of management.
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 460,077 million yen as of the last day of May 2019.
DOI strives to secure stable revenue and sustained growth of the investment assets based on a clear
portfolio development policy of specializing in investment in office buildings, with a particular focus on
investment in a total floor area of more than about 2,000m2 situated in downtown Tokyo, as well as throughdedicated efforts to heighten tenant satisfaction levels.
(2) Investment Environment and Management Performance(A)		 Investment Environment
The Japanese economy during the fiscal period under review saw real GDP growth rate (Second
Preliminary Estimates) for January to March 2019 at an annual rate of 2.2%, falling after a temporary
standstill in the recovery trend that had continued for eight consecutive quarters under the ongoing
quantitative/qualitative monetary easing policy by the Bank of Japan.
In the office building leasing market in central Tokyo, the vacancy rate took a turn after peaking in June
2013, dropping to 1.64% at the end of May 2019. 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 increase in rent, albeit slight.
For the office building transaction market, a strong appetite for property acquisitions continued among
real estate companies, funds (including J-REITs) and overseas investors with the continuing proactive
lending attitude by financial institutions.
(B) Management Performance
In view of increasing the ordinary EPS (EPS (net income per unit) after deducting gain on sale fromproperties) over the medium to long term, DOI continued to work on “external growth,” which aims toboost revenue through acquisition of properties, and “internal growth,” which aims to maximize income
generating from owned properties.
Concerning external growth, DOI acquired “Sasazuka South Building” (acquisition price: 3,000 million
yen in total) in December 2018 and “Glass City Harumi” (acquisition price: 11,200 million yen in total) in
February 2019, while divesting “Daiwa Onarimon Building” (sale price: 13,700 million yen) in February
2019. As a result, DOI’s assets under management as of the end of the 27th Fiscal Period (May 31, 2019)
totaled 59 properties, the sum total of acquisition prices of which amounted to 460,077 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 27th Fiscal Period (May 31, 2019) was
97.1%.

18

(3) Overview of Capital Procurement(A) Procurement of Capital for the Acquisition of New Properties and Repayment of Borrowings
In the 27th Fiscal Period, DOI made the following borrowings to fund the acquisition of new properties
and the repayment of borrowings.
(i) DOI took out loans of 3,000 million yen in total from Sumitomo Mitsui Banking Corporation on December
27, 2018 to fund the acquisition of a new property (Sasazuka South Building) acquired on the sameday.
(ii) DOI took out loans of 11,000 million yen in total from Sumitomo Mitsui Trust Bank, Ltd., MUFG Bank,
Ltd., Mizuho Bank, Ltd. and Sumitomo Mitsui Banking Corporation on February 27, 2019 to fund theacquisition of a new property (Glass City Harumi) acquired on the same day.
(iii) DOI took out loans of 6,000 million yen in total from The Bank of Fukuoka, Ltd., MUFG Bank, Ltd. and
The Gunma Bank, Ltd. on March 29, 2019 to fund the repayment of 6,000 million yen in total borrowed
from the same banks for the same amount that was due for repayment on the same day.
(iv) DOI took out loans of 4,500 million yen in total from The Musashino Bank, Ltd., The Norinchukin Bank,
The Hyakugo Bank, Ltd. and The Yamanashi Chuo Bank, Ltd. on May 31, 2019 to allocate the fund to
the following.
・DOI allocated the funds to cash on hand which was used to repay 2,500 million yen in totalborrowed from ORIX Bank Corporation and The Kagawa Bank, Ltd. that was due for repayment
on February 28, 2019.
・DOI allocated the funds to the repayment of 1,500 million yen in total borrowed from Aozora Bank,
Ltd. and The Musashino Bank, Ltd. that was due for repayment on May 31, 2019.
On May 31, 2019, DOI conducted early repayment for 9,000 million yen out of 14,000 million yen in totalborrowed from Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Trust Bank, Ltd., MUFG Bank,
Ltd. and Mizuho Bank, Ltd. to acquire “Sasazuka South Building” and “Glass City Harumi,” using part ofproceeds from divestment of “Daiwa Onarimon Building.”
DOI concluded interest-rate swap agreements in the 27th Fiscal Period for 40,500 million yen of loans
with floating interest rates to hedge against interest rate risks in the future.
(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 27th
Fiscal Period (May 31, 2019) stood at 204,450 million yen in total (short-term loans payable: 5,000 million
yen, long-term loans payable: 194,350 million yen; investment corporation bonds: 5,100 million yen). Thebalance of the current portion of long-term loans payable stood at 19,500 million yen, while that ofinvestment corporation bonds stood at 3,000 million yen.
The average remaining period of interest-bearing liabilities as of the end of the 27th Fiscal Period stands
at 4.0 years.
(4) Capital Expenditures during the 27th Fiscal Period
The following summarizes the primary construction work that constitutes capital expenditures implemented
during the 27th Fiscal Period. Capital expenditures for the 27th Fiscal Period amounted to 471 million yen
and, when combined with the 395 million yen in repair expenses charged to the 27th Fiscal Period expenses,
totals 866 million yen in construction work were implemented.
Name of real estate
properties(Location)
Daiwa Shibuya
Miyamasuzaka(Shibuya-ku, Tokyo)
CONCURRED Yokohama(Yokohama-shi, Kanagawa)
Sasazuka NA Building(Shibuya-ku, Tokyo)
Other

PurposeConstruction
amount paid
(Millions of yen)

PeriodRepair of exterior walls

From: Mar. 2018
To: Feb. 2019

197

Changing lighting in common-use areas toLED
Renovation of power receiving andtransforming facility

From: Feb. 2019
To: Mar. 2019
From: Feb. 2019
To: Feb. 2019

20
16
238

Total

471

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 27th Fiscal Periodof 13,833 million yen in operating revenue, 6,979 million yen in operating income, 6,321 million yen in ordinary
income and 6,320 million yen in net income.
Concerning distributions, application of special provisions for taxation of corporation tax (Article 67-15 of the
Act on Special Measures Concerning Taxation (Act No. 26 of 1957; including amendments thereto) (the “Special
Taxation Measures Act”)) is planned. In addition, by retaining 142,474,820 yen from application of “Special
Provisions for Taxation in Cases of Repurchase of Specified Assets” (Article 65-7 of the Special Taxation
Measures Act) and 311,960 yen of correction amount (due to the change in effective statutory tax rate) for
deferred tax liabilities as reserve for reduction entry, DOI decided to distribute almost the entire amountremaining after deducting provision of reserve for reduction entry from unappropriated retained earnings(excluding fractions of the distribution amount per unit that are less than 1 yen), and declared a per unit
distribution amount of 12,559 yen.

3. Outlook for the Next Fiscal Period(1) Investment Environment
The Japanese economy going forward was expected to continue to expand backed by solid trends inpersonal spending against the backdrop of a favorable employment environment and the improved income
environment while the monetary easing policy implemented by Bank of Japan continued. However, it is more
likely that the economy will remain sluggish, falling below the potential growth rate. In addition, factors suchas policies set out by the U.S. President Donald Trump, the downward swing of the Chinese economy,
deterioration of European economy, rise of crude oil price, and consumption tax hike scheduled for October
2019 may slow down the Japanese economy, and are thus thought to require attention.
In the Tokyo office building leasing market, the vacancy rate has dropped backed due to strong corporate
performance. With demand for office floor space projected to continue increasing, rent is expected tocontinue rising moderately mainly in central Tokyo. In the office building transaction market, backed by thefavorable financing environment, among other factors, the property acquisition appetite among overseas
investors, real estate companies and funds (including J-REITs) is thought to remain strong.
(2) Future Management Policy and Tasks(A) Strategy for Managing Existing Properties
Although some have become cautious towards overall economic trends and the office market, officeleasing market conditions remain stable and strong centering on central Tokyo. Under such anenvironment, DOI intends to improve its skill in building management by constantly attempting to grasp
the latest tenant needs and market conditions, regularly reviewing management systems and such.
Consequently, DOI will carry out operational management under the following policy with an aim toenhance the competitiveness of existing properties and thereby increase the long-term EPS over the
medium to long term.
(i) Maintain and raise occupancy rates
Concerning existing tenants, strive to reduce cancellation risks by improving the quality of buildings,
equipment and management system. In addition, concerning new tenants, strive to maintain and raiseoccupancy rates through the provision of highly satisfactory services from gaining deeper
understanding of tenant needs through proactive participation in the market.
(ii) Maintain and raise profitability
Aim to secure stable revenue over the medium to long term through further strengthening good
relationships with existing tenants, as well as proactively tapping the needs of new tenants bydiscerning the market environment.
(iii) Lower operational management costs
Strive to lower operational management costs based on maintaining office environments of hightenant satisfaction levels by implementing efficient operational management and reviewing systematicconstruction work by optimally leveraging the economies of scale achieved from proactively realizing
external growth.

20(B) Strategy for New Property Investments
DOI will invest in office buildings that have a total floor area of about 2,000m2 or more based on various
external growth strategies, while maintaining a balance with the asset acquisition environment andfinancing situation. In principle, considerations will focus on Tokyo as the investment target area, but DOI
will also consider investing in competitive properties in cities other than Tokyo from a viewpoint ofterritorially-distributed investments.
As pipeline support, in addition to expanding its own information-sourcing channels, DOI will continue tosearch for properties that meet its investment criteria by proactively gathering real estate transaction
market information through greater collaboration with the Asset Manager and Sponsor Group and utilizing
the Group’s extensive network of clients, partners, etc.
Furthermore, in the 27th Fiscal Period, DOI acquired “Sasazuka South Building” and “Glass City Harumi”
located in Tokyo. DOI believes that acquisition of these properties will contribute to further stabilizationand enhancement of the portfolio. DOI will continue to strive to acquire properties in line with theinvestment strategy described above.
(C) Financial Strategy
DOI will conduct disciplined financial management of the following basic content.
(i) Control leverage by keeping the ratio of interest-bearing liabilities to total assets (LTV) within the rangeof 40% to 50% at maximum, taking into consideration also the LTV, etc. based on appraisal value, as aprinciple.
(ii) Diversify repayment deadlines, targeting 30.0 billion yen as the maximum amount of interest-bearing
liabilities that shall become due during any single fiscal period as a principle.
(iii) Aim to have long-term loans account for at least 70% of balance of loans as a principle.
(iv) Achieve diversification of lenders, which shall mainly be Japanese financial institutions.
(v) Pursuant to its fund management rules, maintain stability in its financial standing by managing
necessary funds, such as the amount equivalent to distributions paid, separately from working capital.
(D) Schedule of Capital Expenditures for the 27th 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
periodExpected construction amount(Millions of yen)TotalamountAmount paid
duringcurrent
periodTotalamountalreadypaid

From: June 2018
To: July 2019

962

431

278

From: Feb. 2019
To: June 2019

111

–

–

From: June 2019
To: Nov. 2019

82

–

–

Daiwa Kojimachi 4-chome(Chiyoda-ku, Tokyo)

Upgrading of airconditioning system(west side)
Renovation of
exclusive areas on 2nd
and 3rd floors
Renovation of
exclusive areas on 8th
floor
Upgrading of airconditioning facilities
on 3rd to 8th floors

From: June 2019
To: Nov. 2019

75

–

–

Daiwa Tsukishima(Chuo-ku, Tokyo)

Repair of exterior walls

From: Jan. 2019
To: June 2019

38

–

–

Integral Tower(Suginami-ku, Tokyo)
Daiwa Kitahama(Osaka-shi, Osaka)
Sasazuka South Building(Shibuya-ku, Tokyo)

II. Asset Management Report21III. Balance Sheets
As of May 31, 2019 and November 30, 2018

(Thousands of yen)

As of
May 31, 2019

As ofNovember 30, 2018

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

30,143,640

23,310,566

173,824

201,341–

314,285

Prepaid expenses

333,049

336,925

Other current assets

65,52040,287

Total Current Assets

30,716,033

24,203,404

Land

12,302,227

12,302,227

Buildings and structures

3,282,183

3,275,792

Tools, furniture and fixtures

19,917

19,917

Construction in progress

2,846

2,997

Land in trust accounts

352,187,043

353,252,551

Buildings and structures in trust accounts

107,676,537

105,948,878

Machinery and equipment in trust accounts

858,858

859,534

Tools, furniture and fixtures in trust accounts

266,041

259,118

Construction in progress in trust accounts

828,644

422,488(26,238,466)(25,163,878)

2,398,276

2,398,276

306,884

306,884

453,890,990

453,884,784

270

325

Lease and guarantee deposits in trust accounts

113,685

113,685

Long-term prepaid expenses

791,008

884,453

Deferred tax assets (Note 13)

63,97926,088Derivative assets (Note 4)

7,486

51,629Deferred investment corporation bond issuance costs

11,75914,697

Others40,93533,504

1,029,122

1,124,381

485,636,145

479,212,569

Tenant receivables
Consumption taxes receivable

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:
TrademarkTotal 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, 2019

As ofNovember 30, 2018

Liabilities
Current Liabilities:
Accounts payable

981,467

1,255,722

5,000,000–

3,000,000

3,000,000

19,500,000

18,000,000

567,016

583,519803

990

Accrued consumption taxes

364,985

122,293

Rent received in advance2,323,113

2,177,690

Other current liabilities

895,324

656,351

Total Current Liabilities

32,632,708

25,796,565

2,100,000

2,100,000

Long-term debt (Notes 4 and 9)

174,850,000

175,850,000

Tenant security deposits including trust accounts (Note 4)

20,989,857

20,792,631

Derivative liabilities (Note 4)

409,113349,866

Other long-term liabilities

194,298

199,228

Total Long-Term Liabilities

198,543,268

199,291,725

231,175,976

225,088,290

251,551,759

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

247,876,236

247,876,236

567,422567,422

6,320,339

5,901,266

254,763,997

254,344,924

Deferred gains or losses on hedges(303,828)(220,645)

Total valuation and translation adjustments(303,828)(220,645)

Total Net Assets

254,460,169

254,124,279

Total Liabilities and Net Assets

485,636,145

479,212,569

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

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

Total Liabilities

Net Assets (Notes 8 and 14)
Unitholders’ Equity:
Unitholders’ capital
Units authorized: 2,000,000 units
Units issued and outstanding: 491,877 units as of
May 31, 2019 and November 30, 2018
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, 2019 and November 30, 2018

(Thousands of yen)

For the fiscal period ended For the fiscal period ended
May 31, 2019
November 30, 2018
Operating Revenues:
Rental revenues (Note 7)
Other revenues related to property leasing (Note 7)
Gain on sale of investment properties (Note 11)
Total Operating Revenues
Operating Expenses:
Property-related expenses (Note 7)
Asset management fees
Asset custody fees
Administrative service fees
Trust fees
Directors’ compensation
Other operating expenses
Total Operating Expenses
Operating Income
Non-Operating Revenues:
Interest income
Reversal of distribution payable
Insurance income
Other non-operating revenues
Total Non-Operating Revenues
Non-Operating Expenses:
Interest expense
Interest expense on investment corporation bonds
Borrowing expenses
Other non-operating expenses
Total Non-Operating Expenses

13,628,609
62,035
142,475

13,164,115
29,733–

13,833,119

13,193,848

5,479,167
1,116,953
24,28874,132

5,344,992
1,068,779
23,42579,32819,671
7,200
132,497

18,3087,200
116,304

6,853,908
6,979,211

6,658,336
6,535,512

18
539
2,728
1,076

29
721
2,323
87

4,361

3,160

503,464
16,892
137,389
5,204

482,148
16,708133,109
4,458

662,949

636,423

Ordinary Income
Income Before Income Taxes
Income taxes – current
Income taxes – deferred

6,320,623
6,320,623

5,902,249
5,902,249

805
(303)

994
(11)

Total Income Taxes (Note 13)
Net Income
Retained Earnings Brought Forward

502
6,320,121
218
6,320,339

983
5,901,266–
5,901,266

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, 2019 and November 30, 2018

(Thousands of yen)

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

Deferred
Gains or
Losses on
HedgesRetained
Earnings

Total Net
Assets491,877

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

247,876,236

164,1635,887,688

–

－

－

－

－

(5,484,429)－(5,484,429)

–

－

－

－

－

5,901,266－

5,901,266

–

－

－

－

403,259(403,259)

－

－

–

－

－

－

－

－

31,27031,270491,877

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

247,876,236

567,422

5,901,266

–

－

－

－

－

(5,901,048)－(5,901,048)

–

－

－

－

－

6,320,121－

6,320,121－(83,183)(83,183)

Net changes of
items other
–
－
－
－
－
than
unitholders’equityBalance as of491,877
251,551,759(3,675,523) 247,876,236
567,422
May 31, 2019
The accompanying notes are an integral part of these financial statements.

6,320,339(251,915) 253,676,172(220,645) 254,124,279(303,828) 254,460,169

V. Statements of Changes in Net Assets

25VI. Statements of Cash Flows
For the fiscal periods ended May 31, 2019 and November 30, 2018

(Thousands of yen)

For the fiscal period
ended
May 31, 2019

For the fiscal period
endedNovember 30, 2018

Income before income taxes

6,320,623

5,902,249

Depreciation and amortization

1,816,695

1,738,044

2,938

2,954

Interest expense

520,356

498,856

Decrease (increase) in tenant receivables

27,517(20,393)

Increase in accounts payable

205,600

172,710

Increase in rent received in advance

145,423

103,890

Interest payments(520,264)(498,948)

Increase (decrease) in accrued consumption taxes

242,692(174,069)

Decrease (increase) in consumption taxes receivable
Decrease due to sale of investment properties in trust
accounts
Other, net

314,285(314,285)

13,486,544–

417,487

201,602

22,979,896

7,612,610(15,943,532)(22,176,185)–(2,500)

Proceeds from tenant security deposits including trust
accounts

1,575,417

1,938,002

Refunds of tenant security deposits including trust
accounts(1,378,190)(647,880)(15,746,305)(20,888,563)

Proceeds from short-term debt

14,000,000–

Repayments of short-term debt

(9,000,000)–

Proceeds from long-term debt

10,500,000

15,500,000

Repayments of long-term debt

(10,000,000)(5,500,000)

Distributions paid

(5,900,517)(5,484,393)

Net Cash Provided by (Used in) Financing Activities(400,517)

4,515,607

Net Change in Cash and Cash Equivalents

6,833,074(8,760,346)

Cash and Cash Equivalents at Beginning of Period

23,310,566

32,070,912

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

30,143,640

23,310,566

Cash Flows from Operating Activities:

Amortization of bond issuance costs

Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Payments for purchases of investment properties
including trust accounts
Payments for purchases of intangible assets

Net Cash Used in Investing Activities
Cash Flows from Financing Activities:

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, 2019 and November 30, 2018

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, 2019, DOI had ownership or trust beneficiary interests in 59 office properties with approximately
364,375m2 of rentable office space and had leased office space to 639 tenants engaged in a variety ofbusinesses. The occupancy rate for the office properties was approximately 97.1 %.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in theInvestment Trust Act, the Financial Instruments and Exchange Act and their related accounting regulations, andin conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different incertain respects as to application and disclosure requirements of International Financial Reporting Standards or
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been reformatted and translated into English from the financial
statements of DOI prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance
Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Act. In preparing theaccompanying financial statements, relevant notes have been expanded and certain reclassifications have been
made from the Japanese GAAP financial statements. Certain supplementary information included in the statutory
Japanese GAAP financial statements, but not required for fair presentation, is not presented in theaccompanying financial statements. Certain reclassifications have been made to the prior period’s financial
statements to conform to the presentation for the current period.
DOI maintains its accounting records in Japanese yen.
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, 2019
As of November 30, 2018
Buildings and structures
2-64 years
2-64 years
Machinery and equipment
6-23 years
7-23 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, 2019
November 30, 2018
3,316
27,275(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.
(j) 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, 2019 and November 30, 2018 consisted of the following:(Thousands of yen)

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

As of May 31, 201926,663,770
3,479,870
30,143,640

As of November 30, 2018
19,008,712
4,301,854
23,310,566

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, 2019 and November 30, 2018 were as
follows:(Thousands of yen)

As of May 31, 2019

As of November 30, 2018

AssetsBook value

Fair value

DifferenceBook value

Fair value

Difference

Cash and cash
equivalents
Total

30,143,640

30,143,640–

23,310,566

23,310,566–

30,143,640

30,143,640–

23,310,566

23,310,566–

5,000,000

5,000,000

–

–

–

–

3,000,000

3,001,500

1,500

3,000,000

3,004,200

4,200

19,500,000

19,502,615

2,615

18,000,000

18,008,126

8,126

2,100,000

2,166,780

66,7802,100,000

2,158,380

58,380Long-term debt

174,850,000

174,967,636

117,636

175,850,000

175,820,892(29,108)

Total

204,450,000

204,638,531

188,531

198,950,000

198,991,598

41,598(443,291)(443,291)–(322,521)(322,521)–

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

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

The financial instruments whose fair value is deemed extremely difficult to determine are excluded from theabove table (See Note 2 below).
Notes:
1. Methods to estimate fair value of financial instruments and derivative transactions
Assets:Cash and cash equivalents
Due to the short maturities, the book value of these assets is deemed a reasonable approximation of the fairvalue.
Liabilities:(1) Short-term debt, long-term debt due within one year and long-term debt
For short-term debt and long-term debt with floating interest rates, their fair value and book value are nearly
identical and there are no significant changes in DOI’s credit risk after borrowing. Therefore, for these items, theirbook value is assumed as their fair value. For short-term debt and long-term debt with fixed interest rates, theirfair value is calculated based on the present value of principle and interest cash flows discounted at the current
interest rate which is estimated to be applied if similar new debt is entered into. However, the fair value of certain
floating-rate long-term debt that qualifies for the special treatment of interest-rate swaps is calculated based on
the present value of principle and interest cash flows which are processed as a single unit with the interest-rate
swap.
(2) Investment corporation bonds due within one year and investment corporation bonds
The fair value of investment corporation bonds is based on their quoted market price.

30

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

Hedged item

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

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

Long-term debt

135,600,000

118,100,000(443,291)

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

Long-term debt

3,000,000

3,000,000– (*2)

138,600,000

121,100,000(443,291)(Thousands of yen)Hedge
accounting
methodType ofderivativetransaction

Hedged item

As of November 30, 2018
Contracted amount
Fair value (*1)
Due after one year
Total

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

Long-term debt

102,100,000

90,100,000(322,521)

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

Long-term debt

4,500,000

2,000,000– (*2)

106,600,000

92,100,000(322,521)(*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 20,989,857 thousand yen and
20,792,631 thousand yen as of May 31, 2019 and November 30, 2018, 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, 2019

Cash and cash equivalents
Total

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

Due after
five years––(Thousands of yen)

As of November 30, 2018

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
23,310,566––––
23,310,566––––
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, 2019

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

Due after
five years

5,000,000–––––
3,000,000–––– 2,100,000
19,500,000 33,300,000 21,500,000 30,600,000 23,700,000 65,750,000
27,500,000 33,300,000 21,500,000 30,600,000 23,700,000 67,850,000(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, 2018

Investment corporation bonds
Long-term debt
Total

Due after
five years

3,000,000–––– 2,100,000
18,000,000 28,100,000 24,200,000 31,600,000 26,200,000 65,750,000
21,000,000 28,100,000 24,200,000 31,600,000 26,200,000 67,850,000

Note 5 – Tangible Fixed Assets of Investment Properties
Investment properties as of May 31, 2019 and November 30, 2018 consisted of the following:
As of May 31, 2019

As of November 30, 2018

Acquisition
cost

Accumulated
depreciation

Book value

Acquisition
cost

Accumulated
depreciation

Book valueLand

12,302,227–

12,302,227

12,302,227–

12,302,227

Buildings andstructures

3,282,183(2,321,846)

960,337

3,275,792(2,237,768)

1,038,024

Tools, furnitureand fixtures

19,917(11,031)

8,886

19,917(9,943)

9,974

Construction inprogress

2,846

–

2,846

2,997

–

2,997

Land in trust
accounts

352,187,043–

352,187,043

353,252,551–

353,252,551

Buildings andstructuresin trust accounts

107,676,537(23,321,101)

84,355,436

105,948,878(22,376,590)

83,572,288

Machinery andequipmentin trust accounts

858,858(439,084)

419,774

859,534(408,262)

451,272

Tools, furnitureand fixturesin trust accounts

266,041(145,404)

120,637

259,118(131,315)

127,803

Construction inprogressin trust accounts

828,644–828,644

422,488–422,488

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

451,185,830

476,343,502(25,163,878)

451,179,624

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, 2019
November 30, 2018
Book value: (Note 1)
Balance at beginning of period

453,459,299

432,377,563(399,799)

21,081,736

Balance at end of period

453,059,500

453,459,299

Fair value (Note 3)

548,130,000

537,030,000

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, 2019, the major reason for the increase is acquisition of “Sasazuka South Building” and “Glass City Harumi”(14,200,000 thousand yen). The major reason for the decrease is sale of “Daiwa Onarimon Building” (13,487,619 thousand yen) and depreciation(1,813,036 thousand yen).
For the fiscal period ended November 30, 2018, the major reason for the increase is acquisition of “Prime Kanda Building,” “Kita-Shinagawa
Gotenyama Building” and “Sasazuka NA Building” (20,295,000 thousand yen). The major reason for the decrease is depreciation (1,734,275
thousand yen).
3. The fair values as of May 31, 2019 and November 30, 2018 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, 2019 and November 30, 2018 were as
follows:(Thousands of yen)

For the fiscal period ended For the fiscal period ended
May 31, 2019
November 30, 2018
Revenues from property leasing:
Rental revenues

13,628,609

13,164,115

62,03529,733

13,690,644

13,193,848

Consignment expenses

1,062,835

928,207

Utilities expenses

1,099,123

1,093,880

Taxes and dues

1,041,050

1,041,949

Insurance expenses

15,29014,086

Repair expenses

395,024472,933

1,813,036

1,734,275

52,80959,662

Total rental expenses

5,479,167

5,344,992

Income from property leasing

8,211,477

7,848,856

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

Depreciation
Other

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

34

Note 9 – Short-Term Debt, Long-Term Debt Due Within One Year, Investment Corporation
Bonds Due Within One Year, Long-Term Debt and Investment Corporation Bonds
Short-term debt, long-term debt due within one year, investment corporation bonds due within one year, longterm debt and investment corporation bonds as of May 31, 2019 and November 30, 2018 consisted of thefollowing:(Thousands of yen)

As of May 31, 2019

As of November 30, 2018

0.3% unsecured short-term loans due 2019 to2020, principally from banks

5,000,000

–

Total

5,000,000–

194,350,000

193,850,000

0.4% unsecured bond due 2019

3,000,000

3,000,000

1.0% unsecured bond due 2024

2,100,000

2,100,000

199,450,000

198,950,000

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

Total

(Note) The interest rates presented are daily weighted average interest rates. As for long-term debts which were hedged by interest-rate swaps for the
purpose of avoiding interest rate fluctuation risk, the swapped interest rates are used to calculate daily weighted average interest rates.

The annual maturities of short-term debt, long-term debt and investment corporation bonds as of May 31, 2019were 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
27,500,000 33,300,000 21,500,000 30,600,000 23,700,000 67,850,000
and investment corporation bonds

Note 10 – Leases
As Lessor
The future minimum rental revenues under existing non-cancelable operating leases as of May 31, 2019 andNovember 30, 2018 were as follows:(Thousands of yen)

As of May 31, 2019

As of November 30, 2018

Due within one year

11,742,711

11,138,859

Due after one year

21,694,279

20,667,137

Total

33,436,990

31,805,996

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, 2019 was as follows:(Thousands of yen)

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

13,700,000

Cost of selling investment property(13,486,544)

Other expenses related to sale

(70,981)Gain on sale of investment property

142,475

Note 12 – 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, 2019 and November 30, 2018.

Note 13 – 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, 2019
November 30, 201836

Statutory tax rate

31.51

31.51

Deductible cash distributions(30.80)(31.50)

Provision of reserve for reduction entry(0.71)–

Others0.01

0.01

Effective tax rate

0.01

0.02

The significant components of deferred tax assets and liabilities as of May 31, 2019 and November 30, 2018
were as follows:(Thousands of yen)

As of May 31, 2019

November 30, 2018

Deferred tax assets:
Accrued enterprise tax

10

19

141,818

118,187

141,828

118,206

Reserve for reduction entry

75,49475,806

Deferred gains on hedges

2,355

16,312

Total deferred tax liabilities

77,84992,118Net deferred tax assets

63,97926,088Deferred losses on hedges
Total deferred tax assets
Deferred tax liabilities:

Note 14 – Per Unit Information
Information about earnings per unit for the fiscal periods ended May 31, 2019 and November 30, 2018, net
assets per unit as of May 31, 2019 and November 30, 2018 were as follows:(Yen)

For the fiscal period ended For the fiscal period ended
May 31, 2019
November 30, 2018
Earnings per Unit:
Net income per unit

12,84911,997Weighted average number of units outstanding (units)491,877

491,877(Yen)

As of May 31, 2019
Net Assets per Unit

517,325

As of November 30, 2018516,641

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.

VII. Notes to Financial Statements

37

Note 15 – 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 6,177,483,243 yen for the fiscal period ended
May 31, 2019 and 5,901,048,369 yen for the fiscal period ended November 30, 2018 that are the largest integral
multiple of 491,877, the number of units outstanding as of May 31, 2019 and November 30, 2018, after
deducting provision of reserve for reduction entry as stipulated in Article 65-7 of the Special Taxation Measure
Act of Japan and adjustments to deferred tax liabilities due to a change in the statutory tax rate fromunappropriated retained earnings. Furthermore, DOI does not pay out dividends that exceed accounting profits
as outlined in Article 32-2 of DOI’s Articles of Incorporation.
(Yen)

For the fiscal period ended For the fiscal period ended
May 31, 2019
November 30, 2018
I Unappropriated retained earnings

6,320,338,406

5,901,266,172

II Cash distributions declared

6,177,483,243

5,901,048,369

142,786,780–

68,383217,803

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

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

For the fiscal period ended For the fiscal period ended
May 31, 2019
November 30, 2018
Cash distributions per unit
Board of directors meeting dates

38

12,55911,997

July 18, 2019

January 21, 2019

Note 16 – Related-Party Transactions
Related-party transactions for the fiscal periods ended May 31, 2019 and November 30, 2018 were as follows:
For the fiscal period ended May 31, 2019
Classification
Name
Location
Capital stock (Thousands of yen)
Principal business
Ratio of voting rights
Relation to the related party
Nature of transaction
Amount of transaction (Thousands of yen)Account
Balance at the end of period(Thousands of yen)

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

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

For the fiscal period ended November 30, 2018
No related-party transaction was entered into for the fiscal period ended November 30, 2018.

Note 17 – Segment Information
For the fiscal periods ended May 31, 2019 and November 30, 2018
Segment Information
Segment information has been omitted as DOI has only one segment, which is property leasing business.
Related Information
Information about Products and Services
Disclosure of this information has been omitted as operating revenues to external customers for a single
product/service category account for more than 90% of the operating revenues on the statements of income
and retained earnings.
Information about Geographic Areas(1) Operating revenues
Disclosure of this information has been omitted as domestic operating revenues account for more than 90% of
total operating revenues.
(2) Investment properties
Disclosure of this information has been omitted as domestic investment properties account for more than 90%of the book value of the total investment properties.
Information about Major Tenants
Disclosure of this information has been omitted as there is no tenant that accounts for 10% or more of theoperating revenues recorded in the statements of income and retained earnings.

VII. Notes to Financial Statements

39

Note 18 – Significant Subsequent Events
Acquisition and Divestment of Assets Through Exchange
DOI acquired and divested the trust beneficial interests in real estate through exchange on July 1, 2019 as
described below.
Overview of the exchange
Agreement date
Exchange date
Counterparty ofthe exchange
Reduction entry
Difference fromexchange ofproperty

July 1, 2019
July 1, 2019
Sumitomo Realty & Development Co., Ltd.
DOI plans to make a reduction entry for the land and building of the acquired property(provisions of the Article 50 of the Corporation Tax Act, “Inclusion in Deductible Expensesof the Amount of Advanced Depreciation of Assets Acquired by Exchange” will beapplied).
The difference from exchange of property (50,000 thousand yen), which is the difference
between the sale price of Daiwa Osaki 3-chome Building and the acquisition price of
Sumitomo Fudosan Mita 2-chome Building, has been paid to DOI by Sumitomo Realty &Development Co., Ltd., the counterparty of the exchange, on the delivery date.

Overview of the acquired asset
Property name
Asset type
Location
Acquisition price

Sumitomo Fudosan Mita 2-chome Building
Trust beneficial interest in domestic real estate
2-10-4 Mita, Minato-ku, Tokyo
2,635,000 thousand yen (excluding acquisition costs, consumption tax, etc.)

Overview of the divested asset
Property name
Asset type
Sale price40

Daiwa Osaki 3-chome Building
Trust beneficial interest in domestic real estate
2,685,000 thousand yen (excluding property taxes, city planning taxes, consumption tax,etc.)

VIII. Independent Auditor’s Report

VIII. Independent Auditor’s Report41

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

Trading volume (right axis)

800,000

4,000

700,000

3,500

600,000

3,000

500,000

2,500

400,000

2,000

300,000

1,500

200,000

1,000

100,000

500

0

0

2017
June July

Aug. Sept. Oct.

2018
Dec. Jan.

Nov.

Feb.

Mar.

Apr.

May

June

July

Aug. Sept. Oct.

Nov.

2019
Dec. Jan.

Feb.

Mar.

Apr.

May

Overview of Investment Units and Unitholders (As of May 31, 2019)■ No. of Investment Units by Investor Type
27th
Fiscal Period

Financial institutions
161,625 units (32.9%)

Individuals/others
14,092 units (2.9%)■ No. of Unitholders
by Investor Type
Foreigners 108,524 units (22.1%)

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

26th
Fiscal Period

Individuals/others
15,507 units (3.2%)

Financial institutions
170,277 units (34.6%)

Securities firms 16,893 units (3.4%)

Foreigners 109,735 units (22.3%)

Total: 491,877 units
Other domestic corporations 191,021 units (38.8%)

Financial institutions

86(1.3%)

Other domestic
corporations

110(1.7%)

Foreigners

262(4.1%)

Securities firms

20(0.3%)

Total

6,385

IR Calendar
Number ofPercentage
Units Owned
Share(Units)July 18, 2019 : Announcement of financial results for27th Fiscal Period
August 9, 2019 : Sending of Japanese version Business
Report for 27th Fiscal Period(Statement of Financial Performance)

1. Daiwa Investment Management Inc.

128,905

26.21

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

60,945

12.39

3. Daiwa Securities Group Inc.

59,32112.06

May41,9798.53

End offiscal period

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

16,752

3.41

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

12,804

2.60

7. BNYM AS AGT/CLTS 10 PERCENT

9,671

1.97

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

6,662

1.35

9. SSBTC CLIENT OMNIBUS ACCOUNT

6,240

1.27

10. Rakuten General Insurance Co., Ltd.

5,310

1.08

4. Japan Trustee Services Bank, Ltd. (Trust Account)
5.
6.

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

42

5,907
(92.5%)

Securities firms 5,337 units (1.1%)

Top Ten Unitholders (As of May 31, 2019)
Name of Investor

Individuals/others

August 13, 2019 : Start paying distributions for27th Fiscal Period

Feb.
Jan.

July
End offiscal period

Aug.

Nov.

January 2020 : Announcement of financial results for
28th Fiscal Period
February 2020 : Sending of Japanese version Business
Report for 28th Fiscal Period(Statement of Financial Performance)
February 2020 : Start paying distributions for
28th Fiscal Period

Investor Memo
End of fiscal period

May 31 and November 30 of each year

General Meeting of Unitholders

Held at least once every two years

Date for finalizing Unitholders with voting rights
for the General Meeting of Unitholders

Date prescribed in Article 15 of the Articles of Incorporation

Reference date for finalizing payment of
distributions

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

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

Newspaper in which notice is posted

Nikkei Inc.

Manager of Unitholder Registry, etc.

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

Office handling administrative affairs

Transfer Agency Department of Sumitomo Mitsui Trust Bank, Limited, 1-4-1 Marunouchi, Chiyoda-ku, Tokyo
100-8233 Phone 0120-782-031 (toll-free in Japan)

Service counter

Head Office and All branches of the Sumitomo Mitsui Trust Bank nationwide

Provision of Information via Website
Daiwa Office Investment Corporation conducts information distribution via its website as an important tool for IR activities. DOI also provides an
e-mail delivery service, “IR mail Delivery Service,” which informs the subscribers of updates in website content such as press releaseannouncements via e-mail free of charge. The website will be continually enhanced and enriched so that the current situation and future
strategies of DOI are clearly communicated.

Daiwa Office Investment Corporation

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

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

IX. Investor Information

43

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