Disclaimers
This document has been prepared solely for the purpose of providing U.K. and Dutch
investors with certain information under Article 23 of the European Alternative
Investment Fund Managers Directive (European Directive 2011/61/EU) (the “AIFMD”) as
implemented in their respective jurisdictions. Accordingly, you should not use thisdocument for any other purpose.
Netherlands
The units of Daiwa Office Investment Corporation (“Daiwa Office” or the “AIF”) arebeing marketed in the Netherlands under Section 1:13b of the Netherlands Financial
Supervision Act (Wet op het financieel toezicht, or the “Wft”). In accordance with thisprovision, Daiwa Real Estate Asset Management Co., Ltd. (the “AIFM”) has submitted a
notification with the Dutch Authority for the Financial Markets (Authoriteit Financiële
Markten, the “AFM”) of its intention to offer these units in the Netherlands. The units of
Daiwa Office will not, directly or indirectly, be offered, sold, transferred or delivered in
the Netherlands, except to or by individuals or entities that qualify as qualified investors(gekwalificeerde beleggers) within the meaning of Article 1:1 of the Wft. As aconsequence, neither the AIFM nor Daiwa Office is subject to the license requirement
pursuant to the Wft. Consequently, the AIFM and Daiwa Office are only subject to limited
supervision of the AFM and the Netherlands Central Bank (De Nederlandsche Bank,“DNB”) for the compliance with the ongoing regulatory requirements as referred to in the
Netherlands law implementation of Article 42 of the AIFMD. This Article 23 AIFMD
Prospectus is not subject to approval by the AFM. No approved prospectus is required tobe published in the Netherlands pursuant to Article 3 of the Regulation (EU) 2017/1129(the “Prospectus Regulation”) as amended and applicable in the Netherlands.
United Kingdom
Units of Daiwa Office are being marketed in the United Kingdom pursuant to Article 59 of
the United Kingdom Alternative Investment Fund Managers Regulations 2013. In
accordance with this provision, the AIFM has notified the Financial Conduct Authority(the “FCA”) of its intention to offer these units in the United Kingdom.
For the purposes of the United Kingdom Financial Services and Markets Act 2000(“FSMA”) Daiwa Office is an unregulated collective investment scheme which has notbeen authorized by the FCA.

TK-895970

Accordingly, any communication of an invitation or inducement to invest in Daiwa Office
may only be made to (i) investment professionals falling within Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended,or “the Order”; or (ii) high net worth companies falling within Articles 49(2)(a) to (d) of
the Order and other persons to whom it may lawfully be communicated (all such persons
referred to under (i) and (ii) of this paragraph, together being referred to as “Relevant
Persons”).
In the United Kingdom, this document and its contents are directed only at Relevant
Persons and must not be acted on or relied on by persons who are not Relevant Persons.
The transmission of this document and its contents in the United Kingdom to any person
other than a Relevant Person is unauthorized and may contravene the FSMA and other
United Kingdom securities laws and regulations.
European Economic Area and United Kingdom
In addition to the restrictions under the AIFMD, the units of Daiwa Office are not intended
to be offered, sold or otherwise made available to and should not be offered, sold orotherwise made available to any retail investor in the European Economic Area (“EEA”)
or the United Kingdom. For these purposes, a retail investor means a person who is one(or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive
2014/65/EU, as amended, (the “MiFID II”) including any client, beneficiary, principal, or
similar of any person acting as a trustee, agent, nominee, or similar; (ii) a customer within
the meaning of Directive (EU) 2016/97, where that customer would not qualify as aprofessional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not aqualified investor as defined in the Prospectus Regulation, as amended. Consequently,
no key information document required by Regulation (EU) No 1286/2014 (the “PRIIPs
Regulation”) for offering or selling the units of Daiwa Office or otherwise making themavailable to retail investors in the EEA or the United Kingdom has been prepared andtherefore, offering or selling the units of Daiwa Office or otherwise making them available
to any retail investor in the EEA or the United Kingdom may be unlawful under the
PRIIPs Regulation.

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2

Article 23 (1)(a)Objectives of the AIF

Daiwa Office’s investment objective is to maximize unitholder value by continuing to
improve the quality of its portfolio through acquisitions of select office buildings. In
accordance with the guidelines set by the Asset Manager, Daiwa Office targets officebuildings that have a total floor space generally in excess of 2,000 m2 and are locatedmostly in the five central wards of Tokyo, but these target properties also can be locatedin the greater Tokyo area or major regional cities.

Investment strategy

Daiwa Office seeks to maximize unitholder value by improving the quality of its portfolio
through selective acquisitions of office buildings while utilizing its experienced asset
management team and its disciplined management structure to continue to enhance its
assets and provide stable income over the long term. Its principal growth strategies are as
follows:•

Grow its portfolio through selective acquisitions. In line with its investment
policies, Daiwa Office will continue to focus on acquiring select office buildingsthat will improve the stability and profitability of its portfolio. Daiwa Office willcontinue to principally focus on office buildings built within the last 25 years at thetime of acquisition, located mostly in the greater Tokyo area, particularly in thefive central wards of Tokyo, and located in areas with consistent demand for officebuildings at appealing locations.

•

Diversify risk by reducing dependence on its flagship property. Daiwa Office’s
portfolio is composed of medium to large-scale office buildings and is able to meetthe needs of a wide variety of tenants. However, historically, its portfolio haslargely been dominated, in terms of contribution to its portfolio size and rental
revenues, by Shinjuku Maynds Tower. Over time Daiwa Office has diversified its
portfolio by reducing the concentration risk arising from this property.

•

Improve portfolio quality through property replacement. Daiwa Office willcontinue to improve the overall quality of its portfolio by replacing certain
properties that are relatively less attractive from the perspective of long-term
operating revenues and expenses.

Types of assets the AIF

Real estate, trust beneficiary interests in real estate, real estate securities, specified assets

may invest in

and other assets.

Techniques it may

Daiwa Office intends to achieve its objective by leveraging its experienced asset

employ and all

management team and its disciplined management structure to continue to enhance its

associated risks

assets and provide stable income over the long term.

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The principal risks with respect to investment in Daiwa Office are as follows:•

any adverse conditions in the Japanese economy could adversely affect Daiwa
Office;•Daiwa Office may not be able to acquire properties to execute the growth andinvestment strategy in a manner that is accretive to earnings;•

Daiwa Office relies on certain properties for a significant portion of its rental
revenues;•

increases in prevailing market interest rates, including as a result of growing
inflationary pressures and tightening monetary policies in response by the UnitedStates, Japan and other major countries, may increase the interest expense andmay result in a decline in the market price of the units;•

Daiwa Office’s reliance on Daiwa Securities Group Inc. could have a material
adverse effect on its business;•there are potential conflicts of interest between Daiwa Office and Daiwa
Securities Group Inc., including the AIFM;•

Daiwa Office faces significant competition in seeking tenants and it may bedifficult to find replacement tenants;•

most of the properties in Daiwa Office’s portfolio are concentrated in the five
central wards of Tokyo; and•Daiwa Office’s policy of investing solely in office buildings could have a material
adverse effect on its business.

In addition, Daiwa Office is subject to the following risks:•

risks associated with the COVID-19 pandemic;•risks associated with heightened geopolitical instability, including increases incommodity prices such as electricity, caused by regional conflicts including theRussian invasion of Ukraine;•risks related to impairment losses relating to its properties;•risks related to loss of rental revenues;•

risks related to unitholders’ limited control over changes in Daiwa Office’s
investment policies;•

risks related to dependence on the performance of service providers to which
Daiwa Office is required to assign various key functions;•

Daiwa Office’s ownership rights in some of its properties may be declared invalid
or limited;•risks related to loss of rights in a property due to the recharacterization ofpurchase of the property as a secured financing;•

TK-895970

risks related to leasehold or subleasehold rights;

4•risks related to dilution as a result of further issuances of units;•risks related to inability to obtain financing for future acquisitions;•risks related to downgrading of credit rating;•risks related to illiquidity in the real estate market;•

risks related to lack of control over operating costs;•

risks related to decreases in tenant leasehold deposits and/or security deposits;•risks related to property defect;•risks related to the environmental assessments of Daiwa Office’s properties madeprior to its ownership;•

risks related to insolvency of master lessees;•

risks related to damage from a natural or man-made disaster;•

regulatory and financial risks related to climate change;•risks related to a high loan-to-value, or LTV, ratio;•risks related to the restrictive covenants under debt financing arrangement;•risks related to entering into forward commitment contracts and contracts topurchase properties under development;•risks related to the insider trading regulations;•risks related to tight supervision by the regulatory authorities;•risks related to relying on expert appraisals and engineering, environmental andseismic reports;•

risks related to relying on industry and market data;•risks related to cost of complying with regulations applicable to the properties;•risks related to violation of earthquake resistance standards;•

risks related to Daiwa Office’s dependence on the efforts of the AIFM’s key
personnel;•risks related to holding the property in the form of stratified ownership (kubunshoyū) interests or co-ownership interests (kyōyū-mochibun);•risks related to relying on expert appraisals and engineering, environmental andseismic reports as well as industry and market data;•risks related to holding Japanese anonymous association (tokumei kumiai)interests;•

risks related to investment in Japanese special purpose companies or real estate
investment funds;•

risks related to investments in trust beneficiary interest;•

risks related to the tax authority disagreement with the AIFM’s interpretations of
the Japanese tax laws and regulations;•risks related to being unable to benefit from reductions in certain real estatetaxes enjoyed by qualified J-REITs;

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5•risks related to failure to satisfy a complex series of requirements pursuant toJapanese tax regulations; and•risks related to changes in Japanese tax laws.

Any applicable

Daiwa Office is subject to investment restrictions under Japanese laws and regulations

investment restrictions(e.g., the Act on Investment Trusts and Investment Corporations (the “ITA”), the Financial
Instruments and Exchange Act (the “FIEA”)) as well as its articles of incorporation.
Daiwa Office must invest primarily in specified assets as defined in the ITA. Specified
assets include, but are not limited to, securities, real estate, leaseholds of real estate,surface rights (chijō-ken) (i.e., right to use land for the purpose of having a structure on it)
or trust beneficiary interests for securities or real estate, leaseholds of real estate or
surface rights.
Furthermore, a listed J-REIT must invest substantially all of its assets in real estate, realestate-related assets and liquid assets as provided by the listing requirements. Real estatein this context includes, but is not limited to, real estate, leaseholds of real estate, surface
rights, and trust beneficiary interests for these assets, and real estate-related assets in thiscontext include, but are not limited to, anonymous association (tokumei kumiai) interests
for investment in real estate.
Pursuant to the ITA, investment corporations may not independently develop land for
housing or to construct buildings, but may outsource such activities in certain
circumstances.
Investment restrictions Daiwa Office places in its articles of incorporation are as follows:(1) Daiwa Office may invest in securities other than real estate-backed securities and inmonetary claims, for the purpose of ensuring stability of investment in real estate andreal estate-backed securities.
(2) Daiwa Office may enter into derivative transactions for the purpose of hedging interest
volatility risk stemming from its debt.

Circumstances in which Daiwa Office may take out loans or issue long-term or short-term investment corporation
the AIF may use

bonds for the purpose of investing in properties, conducting repairs, paying cash

leverage

distributions, repaying obligations (including repayment of tenant leasehold or security
deposits, and obligations related to loans or long-term or short-term investment
corporation bonds) and other activities.

The types and sources

Loans or investment corporation bonds. Daiwa Office currently does not have anyof leverage permitted

outstanding guarantees, but may be subject to restrictive covenants in connection withand associated risks

any future indebtedness that may restrict the operations and limit the ability to make cash

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6

distributions to unitholders, to dispose of the properties or to acquire additional
properties. Furthermore, Daiwa Office may violate restrictive covenants contained in theloan agreements Daiwa Office executes, such as the maintenance of debt service coverageor loan-to-value ratios, which may entitle the lenders to require Daiwa Office tocollateralize the properties or demand that the entire outstanding balance be paid.
Further, in the event of an increase in interest rates, to the extent that Daiwa Office has
any debt with unhedged floating rates of interest or Daiwa Office incurs new debt, interest
payments may increase, which in turn could reduce the amount of cash available for
distributions to unitholders. Higher interest rates may also limit the capacity for short- andlong-term borrowings, which would in turn limit the ability to acquire properties, andcould cause the market price of the units to decline.
Any restrictions on

The maximum amount of each loan and investment corporation bond issuance will be one

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

Any restrictions on

No applicable arrangements.

collateral and asset
reuse arrangements
Maximum level of

Daiwa Office has set an upper limit of 60% as a general rule for its loan-to-value, or LTV,

leverage which theratio in order to operate with a stable financial condition. Additionally, Daiwa Office

AIFM is entitled to

strives to maintain its LTV within a conservative range of 40 – 50%. Daiwa Office may,

employ on behalf of

however, temporarily exceed any such levels as a result of property acquisitions or other

the AIF

events.

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Article 23(1) (b)Procedure by which

Amendment of the articles of incorporation. Amendment requires a quorum of a majority of

the AIF may change

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

meeting. Unitholders should note, however, that under the ITA and Daiwa Office’s articles ofstrategy /incorporation, unitholders who do not attend and exercise their voting rights at a generalinvestment policy

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

Article 23(1) (c)Description of the

Daiwa Office is a corporate-type investment trust in the form of investment corporation

main legal(toshi hojin) provided for under the ITA. Therefore, the relationship between Daiwa Office

implications of theand its unitholders is governed by Daiwa Office’s articles of incorporation (as opposed tocontractual

individual agreements), which can be amended from time to time upon resolution of a

relationship enteredgeneral unitholders’ meeting. Daiwa Office’s articles of incorporation stipulate rules relating

into for the purposeto general unitholders meetings, including the convocation, setting of record date, exercise

of investment,of voting rights, resolutions, and election of Daiwa Office’s directors.

includingjurisdiction,
applicable law, andthe existence or notof any legal
instruments
providing for therecognition andenforcement of
judgments in the
territory where the
AIF is establishedThe relationship between Daiwa Office and its unitholders is also governed by, and is subject
to the provisions of, Japanese law, including the ITA.
The courts in Japan would recognize as a valid judgment any final and conclusive civil
judgment for monetary claims (which, for this purpose, are limited to those of a purely civil
nature and do not include monetary claims of the nature of criminal or administrative
sanction, such as punitive damages, even though they take the form of civil claims) against
Daiwa Office obtained in a foreign court provided that (i) the jurisdiction of such foreign
court is admitted under the laws of Japan, (ii) Daiwa Office has received service of process
for the commencement of the relevant proceedings, otherwise than by a public notice or any
method comparable thereto, or has appeared without any reservation before such foreign
court, (iii) neither such judgment nor the relevant proceeding is repugnant to public policy as
applied in Japan, (iv) there exists reciprocity as to the recognition by such foreign court of a
final judgment obtained in a Japanese court and (v) there is no conflicting judgement on thesubject matter by any Japanese court.
Daiwa Securities Group Inc., the sponsor of Daiwa Office, has entered into a sponsor support
agreement with the AIFM dated as of June 17, 2009, which is governed by Japanese law.
Pursuant to the sponsor support agreement, Daiwa Securities Group Inc. has agreed toprovide support to the AIFM in the following areas:

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•

Information provision
Daiwa Securities Group Inc. has agreed to provide information to the AIFM at any
time regarding real estate, real estate trust beneficiary interests and other relevant
assets or matters related to the management of the AIFM that, in the discretion of
Daiwa Securities Group Inc., is helpful to Daiwa Office or the AIFM. Daiwa
Securities Group Inc. shall provide such information in a manner that Daiwa
Securities Group Inc. considers appropriate, unless prohibited by law, internal
regulation or contracts to which Daiwa Securities Group Inc. is a party.

•

Support in securing personnel
Daiwa Securities Group Inc. has agreed to support the AIFM in a commerciallyreasonable manner in its efforts to secure personnel as directors and employees. In
the event that the personnel of Daiwa Securities Group Inc. are seconded ortransferred to the AIFM, the AIFM shall bear the wages and any other expenses
associated with such personnel.

•

Sponsor Support Agreement
In addition, Daiwa Securities Group Inc. has agreed to support, at its discretion, theAIFM in other areas such as establishment of bridge funds. In addition, as part ofsponsor support under the sponsor support agreement, a wholly owned subsidiary of
Daiwa Securities Group Inc., Daiwa Securities Realty Co. Ltd. (“DRT”), and the AIFM
entered into a basic warehousing agreement as of July 1, 2021, which was amended
and restated as a basic agreement on pipeline support, etc. dated as of April 1, 2022.
Under the terms of this agreement, if DRT independently obtains information on acertain property which DRT determines that the property meets the investment
criteria of the investment corporations managed by the AIFM (including Daiwa
Office), DRT shall notify the AIFM of the information on such property without delay,
except in cases where providing the information on such property would result in
DRT being in breach of its contractual obligations to a third party or in certain othercircumstances. In addition, this agreement allows the AIFM to propose DRT toprovide warehousing (i.e., investing in and temporary holding of a property with agoal of selling the property to Daiwa Office after a certain amount of time) in
accordance with the terms of this agreement, and DRT shall, upon receipt of suchproposal, hold discussions with the AIFM in good faith regarding such proposal for
warehousing.

Daiwa Office is not involved in or threatened by any legal arbitration, administrative or otherproceedings, the results of which might, individually or in the aggregate, be material.
Article 23(1) (d)TK-895970

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The identity of the
AIFM, AIF's
depositary, auditor• AIFM (Asset Manager): Daiwa Real Estate Asset Management Co., Ltd.
The AIFM manages and operates portfolio assets.
• Auditor: KPMG AZSA LLC

and any other

The auditor audits financial statements and prepare audit reports.

service providers• Custodian and Transfer Agent: Sumitomo Mitsui Trust Bank, Limited

and a description of

The custodian provides administrative services related to custody of assets. The transfer

their duties and theagent provides administrative services related to unitholders’ register, issuance ofinvestors' rights

investment securities, cash payment to unitholders, and addressing unitholders’ claims,

theretooffers and notices.
• General Administrators: Sumitomo Mitsui Trust Bank, Limited
The general administrator provides administrative services including the services related
to accounting and tax payment and preparation of accounting books.
Service providers owe contractual obligations under their respective agreements with the AIF
or AIFM, as the case may be. In addition, the FIEA provides that the Asset Manager owes the
AIF a fiduciary duty and must conduct its activities as the asset manager in good faith.
The FIEA also prohibits the Asset Manager from engaging in certain specified conduct,
including entering into transactions outside the ordinary course of business or with relatedparties of the Asset Manager that are contrary to or violate the AIF’s interests.
Pursuant to the ITA, the unitholders have the right to approve the execution or terminationof the asset management agreement at a general meeting of unitholders.

Article 23(1) (e)Description of how

Not applicable.

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

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

portfolio

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management or risk
management and of
any safekeeping
function delegatedby the depositary,
the identification of
the delegate andany conflicts ofinterest that may
arise from suchdelegations
Article 23(1) (g)Description of the

Daiwa Office makes investment decisions based on the valuation of properties, upon

AIF’s valuationconsideration of the property appraisal value.

procedure andpricing
methodology,
including themethods used in
valuing hard-tovalue assets

Daiwa Office shall evaluate assets in accordance with its Article of Incorporation. The
methods and standards that Daiwa Office uses for the evaluation of assets shall be based on
the Regulations Concerning the Calculations of Investment Corporations, as well as theRegulations Concerning Real Estate Investment Trusts and Real Estate Investment
Corporations and other regulations stipulated by ITA, in addition to Japanese GAAP.
J-REITs may only use the valuation methods prescribed in the rules of the Investment Trusts
Association, Japan, which emphasize market price valuation.

Article 23(1) (h)Description of the
AIF’s liquidity risk
management,
includingredemption rights innormal andexceptional
circumstances andexisting redemption
arrangements with

The AIFM stipulates basic provisions of risk management in its risk management rules.
Additionally, the AIF uses various financing methods, including investment corporation bonds
and long-term loans, to finance acquisitions and repayment obligations. Daiwa Officecontrols related risk by maintaining the ratio of interest-bearing debt to total assets under acertain percentage, diversifying repayment deadlines, and retaining a certain amount ofhighly liquid cash and deposits.
For floating rate borrowings exposed to the risk of interest rate fluctuations, Daiwa Officeclosely monitors the movement of interest rates, and intends to increase the proportion of
its obligations subject to fixed rate loans and similar instruments.
Risks related to deposits are managed through the use of liquid deposits.

investors

As Daiwa Office is a closed-end investment corporation, unitholders are not entitled torequest the redemption of their investment.
Article 23(1) (i)TK-895970

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Description of allCompensation: The articles of incorporation provide that Daiwa Office may pay its executive

fees, charges andofficer up to 800 thousand yen per month and each of its supervisory officers up to 500

expenses and athousand yen per month. The board of officers is responsible for determining a reasonablemaximum amountcompensation amount for the executive officer and each of the supervisory officers.

which is directly /indirectly borne by

Asset Manager:

the investors• Asset Management Fee: Daiwa Office will pay the Asset Manager an asset management
fee as follows:oType 1 management fee: Asset-based fee. Daiwa Office pays to the Asset Managera type 1 management fee for each month. The amount of the type 1 management
fee is calculated by multiplying the total evaluated value of the operated assets asof the end of each month (excluding national and local consumption taxes andexpenses) by 0.05%, and then dividing by 12. The fee is paid by the end of thefollowing month.

oType 2 management fee: Leasing profit-based fee. Daiwa Office pays to the AssetManager a type 2 management fee for each month. This type 2 management fee ispayable within each month for 80% of the fee calculated based on the total property
leasing profit prescribed in the annual asset management plan provided by the AssetManager at the beginning of each fiscal period, and any amount remaining or
overpaid is payable or receivable, respectively, after the settlement date for eachfiscal period without delay. The amount of the fee is equal to 5.5% of leasing profit.

oType 3 management fee: Distributable amount-based fee. The Asset Manager
receives a type 3 management fee, which is equal to 3.5% of the distributableamount payable within one month after the approval of the financial statements foreach fiscal period.

oType 4 management fee: Acquisition fee. For each new property Daiwa Officeacquires, the Asset Manager receives an acquisition fee, which is equal to up to
0.75%, or 0.5% in a case where the property is acquired from a related party in its
rules regarding related-party transactions, of the purchase price (excluding national
and local consumption taxes and expenses), payable by the end of the month
immediately following the month of such acquisition.

oType 5 management fee: Disposition fee. For each property Daiwa Office disposesof, the Asset Manager receives a disposition fee, which is equal to 0.5% of thedisposition price (excluding national and local consumption taxes and expenses)
payable by the end of the month immediately following the month of suchdisposition.

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Custodian:• Custodian Fee: Daiwa Office will pay the Custodian a fee per operational period
calculated as follows:
The amount of total assets for the prior period x 0.03% p.a.
General Administrators:• General Administrators Fee: Daiwa Office will pay the General Administrators a fee per
operational period calculated as follows:
The amount of total assets for the prior period x 0.09% p.a.
Transfer Agent:• Transfer Agent Fee (Standard Fee):
Standard transfer agent fees are for services such as preparation, maintenance andstorage of Daiwa Office’s unitholder register; preparation and reporting of the end-ofperiod unitholders register and unitholder statistical data.
The monthly standard fees will be the total of the amount calculated using thefollowing table divided by 6, with a minimum monthly fee of 200,000 yen.
Number of Unitholders

Fees per Unitholder

first 5,000 unitholders

480 yenover 5,000 to 10,000

420 yenover 10,000 to 30,000

360 yenover 30,000 to 50,000

300 yenover 50,000 to 100,000

260 yenover 100,000

225 yen• Other fees:
Daiwa Office pays the transfer agent other fees for various other services, including inconnection with the issuance of dividends.
Auditor:• Auditor Fee:

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Daiwa Office may pay the independent auditor up to 20 million yen per fiscal period.
The board of officers is responsible for determining the actual compensation amount.
The AIF may also incur other miscellaneous fees in connection with the issuance of units,
investment corporation bonds and the operation, acquisition or disposition of properties.
Article 23(1) (j)Description of theUnder Article 77 paragraph 4 of the Act on the ITA, which applies the requirements of Article

AIFM's procedure to

109 paragraph 1 of the Companies Act to investment corporations, investment corporations

ensure fairare required to treat unitholders equally depending on the number and content of units

treatment ofheld. In addition, upon liquidation, the allotment of residual assets to unitholders is required

investors and details

to be made equally depending on the number of units held under Article 77 paragraph 2 itemof any preferential

2 and Article 158 of the ITA.

treatment received
by investors,
including detailingthe type of investors
and their legal or
economic links with
the AIF or AIFM
Article 23(1) (k)The latest annual

Not applicable. (The semiannual reports of Daiwa Office are, however, available atreport referred to in

https://www.daiwa-office.co.jp/en/ir/disclosure.html.)

Article 22(1)Article 23(1) (l)The procedure andDaiwa Office is authorized under the articles of incorporation to issue up to 2,000,000 units.

conditions for theIts units have been listed on the Tokyo Stock Exchange since October 19, 2005.

issue and sale of theSecondary market sales and transfers of units will be conducted in accordance with the rules

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

Article 23(1) (m)Latest net asset
value of the AIF or
latest market priceof the unit or share

Daiwa Office’s unit’s latest market price is publicly available at the Tokyo Stock Exchange orfrom financial information venders (including Reuters, which can be viewed athttps://www.reuters.com/companies/8976.T.)of the AIF

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Article 23(1) (n)Details of the

The units of Daiwa Office were listed on the Tokyo Stock Exchange on October 19, 2005.

historical

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

performance of theAIF, where available

Fiscal period

Total Assets

Total Net Assets(JPY million)(JPY million)

Total unitholders’equity per unit
(base value) (JPY)

30th Fiscal Period(June 1, 2020 to

488,570

255,511

519,462484,310

253,522

519,419483,279

253,637

519,655

483,461

250,538

519,220

481,049

247,491

517,484

November 30, 2020)
31st Fiscal Period(December 1, 2020 to
May 31, 2021)
32nd Fiscal Period(June 1, 2021 toNovember 30, 2021)
33rd Fiscal Period(December 1, 2021 to
May 31, 2022)
34th Fiscal Period(June 1, 2022 toNovember 30, 2022)
Article 23(1) (o)Identity of the prime No applicable prime broker.
broker, any material
arrangements of the
AIF with its prime
brokers, howconflicts of interest
are managed withthe prime broker
and the provision in
the contract withthe depositary on
the possibility oftransfer and reuseof AIF assets, andTK-895970

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information about
any transfer of
liability to the prime
broker that may
exist
Article 23(1) (p)Description of how

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

the AIF website and fiscal report.

disclosures will bemade in relation toleverage, liquidity
and risk profile of
the assets, pursuant
to Articles 23(4) and23(5)Article 23(2)The AIFM shallNot applicable.

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

Not applicable.

inform investors of
any changes withrespect todepositary liability
without delay
Article 23(4)(a)Percentage of the AIF's assets which

There are no assets that are subject to special arrangements arising fromare subject to special arrangements

their illiquid nature.

arising from their illiquid nature. The

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percentage shall be calculated as the
net value of those assets subject tospecial arrangements divided by the
net asset value of the AIF concerned
Overview of any special

There are no such special arrangements.

arrangements, including whether
they relate to side pockets, gates, orother arrangements
Valuation methodology applied to

There are no such special arrangements.

assets which are subject to sucharrangements
How management and performance

There are no such special arrangements.

fees apply to such assets
Article 23(4)(b)Any new arrangements for managing

Any new arrangements or change in applicable arrangements will be

the liquidity of the AIF

disclosed at an appropriate time.

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For each AIF that the AIFM manages

Any new arrangements or change in applicable arrangements will bethat is not an unleveraged closed-end

disclosed at an appropriate time.

AIF, notify to investors whenever they
make changes to its liquidity
management systems (which enable
an AIFM to monitor the liquidity riskof the AIF and to ensure the liquidity
profile of the investments of the AIF
complies with its underlying
obligations) that are material inaccordance with Article 106(1) ofRegulation (EU) No 231/2013 (i.e.
there is a substantial likelihood that areasonable investor, becoming awareof such information, would reconsider
its investment in the AIF, including
because such information could
impact an investor’s ability to
exercise its rights in relation to its
investment, or otherwise prejudice
the interests of one or more investors
in the AIF).
Immediately notify investors where

Any new arrangements or change in applicable arrangements will bethey activate gates, side pockets ordisclosed at an appropriate time.

similar special arrangements or
where they decide to suspend
redemptions
Overview of changes to liquidity

Any new arrangements or change in applicable arrangements will bearrangements, even if not special

disclosed at an appropriate time.

arrangements
Terms of redemption andDaiwa Office is a closed-end investment corporation, and unitholders are

circumstances where management

not entitled to request the redemption of their investment.

discretion applies, where relevant

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Also, any voting or other restrictions

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

exercisable, the length of any lock-up
or any provision concerning ‘first inline’ or ‘pro-rating’ on gates andsuspensions shall be included
Article 23(4)(c)
The current risk profile of the AIF and

The AIFM stipulates basic provisions of risk management in their risk

the risk management systems

management rules.

employed by the AIFM to manage
those risks

Investment corporation bonds and long-term loans are used to financerehabilitation obligations, acquisition of real estate and repayment of loans.
These financial instruments are exposed to liquidity risk. Daiwa Officecontrols such risk by maintaining the ratio of interest-bearing debt to total
assets under a certain percentage, diversifying repayment deadlines, andretaining a certain amount of highly liquid cash and deposits.
For floating rate borrowings exposed to the risk of interest rate
fluctuations, Daiwa Office, in order to reduce the impact caused by risinginterest rates, closely monitors the movement of interest rates, and intends
to increase the ratio of fixed rate loans compared to floating rate loans.
Deposits are exposed to credit risks, including collapse of the financial
institutions where deposits are made, and, thus, are managed through theuse of liquid deposits.

Measures to assess the sensitivity of

No such measures have been implemented.

the AIF’s portfolio to the most
relevant risks to which the AIF is or
could be exposed
If risk limits set by the AIFM have

No such situation has occurred.

been or are likely to be exceeded andwhere these risk limits have been
exceeded a description of thecircumstances and the remedial
measures taken
Article 23(5)(a)Any changes to the maximum amountAny new arrangements or change in applicable arrangements will beof leverage which the AIFM may

disclosed at an appropriate time.

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employ on behalf of the AIF,
calculated in accordance with thegross and commitment methods. This
shall include the original and revised
maximum level of leverage calculated
in accordance with Articles 7 and 8 ofRegulation (EU) No 231/2013,
whereby the level of leverage shall becalculated as the relevant exposure
divided by the net asset value of the
AIF.
Any right of the reuse of collateral or

No such right or guarantee exists.

any guarantee granted under theleveraging agreement, including thenature of the rights granted for thereuse of collateral and the nature of
the guarantees granted
Details of any change in service

Any new arrangements or change in applicable arrangements will be

providers relating to the above.

disclosed at an appropriate time.

Article 23(5)(b)Information on the total amount of

The aggregate amount of debt with interest (including bonds) was JPY

leverage employed by the AIF

205,800 million as of November 30, 2022.

calculated in accordance with thegross and commitment methods

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