24th

Fiscal Period Business Report(Statement of Financial Performance)

June 1, 2017 – November 30, 2017

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 24th Fiscal Period, DOI posted operating revenues of 12,735 million yen and operating income of 6,177 million yen. Our
distribution per unit for the 24th Fiscal Period is 10,957 yen, an increase of 193 yen from the 23rd Fiscal Period.
See page 4 for financial and management highlights
Average contract rent at the end of the 24th Fiscal Period increased 137 yen from the end of the previous fiscal period to 19,574
yen, indicating an increase for the sixth consecutive fiscal period. Rent revisions contributed to a 14 million yen increase inmonthly contracted rents from the end of the previous fiscal period, which was a 7.8% rate of increase for average monthly rent.
Furthermore, the rate of increase for average monthly rent stood at 8.9% due to replacement of tenants, and the occupancy rate was
98.2%. 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 24th Fiscal Period, DOI acquired the silent partnership equity interests of a godo kaisha that invests in trust beneficial
interest of CONCURRED Yokohama (75%) and along with it, was granted a preferential negotiation right concerning the acquisition of
the concerned trust beneficiary interest. During the 25th Fiscal Period, DOI improved the quality of its portfolio through the acquisitionof two properties (total acquisition price: 42,300 million yen), CONCURRED Yokohama (75% of quasi
co-ownership) and Nippon Manpower Building, and divestment of two properties (total saleprice: 70,800 million yen), Shinjuku Maynds Tower (3/7 of co-ownership interest) and Daiwa
Meieki Building. DOI will continue to selectively acquire office properties centering on 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 15 for details of financial conditions
DOI will continue to increase the competitiveness of its properties and aim toachieve its medium- to long-term goal of continuous growth through the utilizationof investment capacity from capital increase, etc., while increasing long-term
EPS (net income after deducting gain on sales of properties). We wish for thecontinued success of our unitholders and ask for your continued support of DOI.

Yoshimi Murakami 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

IV. Statements of Income and Retained Earnings…… 24
V. Statements of Changes in Net Assets……………… 25

Overview of Portfolio (Portfolio list)…………………………… 5
Overview of Portfolio (Portfolio distribution)…………………… 6
Internal Growth Measures… ………………………………… 8External Growth Measures…………………………………… 12
Financial Conditions… ……………………………………… 15
Description of Asset Manager………………………………… 16

2

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 2.2%
Greater Tokyo

Five Central
Wards of Tokyo

80.3%

17.5%

Based on acquisition price(Note) Please note that the percentages in the above graphs are as of February 28, 2018.

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

445.7 458.3
413.2

467.7 469.3 469.3

439.4

400

300

Establishment of stable revenue base・Property management
activities

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

・Maintain andimprove property
value

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

・Financial activities

Reduce refinancing risk by extending
borrowing periods and diversifying
repayment dates

Distribution per Unit

200

100

0
Fiscal period Fiscal period Fiscal period Fiscal period Fiscal period Fiscal period
As ofMedium-term
ended
ended
ended
ended
ended
ended
Februarygoal
May 2015 November 2015 May 2016 November 2016 May 2017 November 2017 28, 2018

Fiscal period ended November 2017(24th Fiscal Period)

Fiscal period ending May 2018
(Note) The forecasts on distribution are calculated based(25th Fiscal Period)on certain assumptions and may vary due tochanges in the status and other factors. Moreover,the forecasts set forth herein should not be
construed as a guarantee of distribution amounts.

Fiscal period ending November 2018
(26th Fiscal Period)

10,957 yen
11,000 yen
11,400 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)
13,000(Million yen)
7,000(Million yen)
6,000

11,837

10,00012,85312,363

12,735

12,547

5,614

5,000

6,143

6,108

6,133

5,250

6,177
4,000

5,324

5,455

5,359

4,688

7,000
3,000

2,000

4,000

0

0

0

20th Period 21st Period 22nd Period 23rd Period 24th Period

20th Period 21st Period 22nd Period 23rd Period 24th Period

20th Period 21st Period 22nd Period 23rd Period 24th Period■ Changes in Rental Revenues(Million yen)
12,00011,000External growth (acquisition/full contribution from properties sold) (Note 1)
External growth (acquisition/during-the-period contribution from properties sold) (Note 2) 228
Internal growth (increase/decrease of rents of existing properties)
229
116

268
840
282

10,000

8,000
7,000

-70
29
278

-55
261
7

77
348
190

118

28
154

0
25
239

8
0
55

-344
0
272

176
149
216

350
512
64

9,000

-42
12
14

0
15th Period 16th Period 17th Period 18th Period 19th Period 20th Period 21st Period 22nd Period 23rd Period 24th Period 25th Period 26th Period(Forecast)(Forecast)■ Distribution per Unit

Forecast from one year earlier(Yen)
12,000

Actual dividends

10,000
8,000

6,550
7,200
7,478

7,300
7,540
7,621

16th Period

17th Period

Forecast from six months earlier

8,328
8,700
9,142

7,570
7,820
8,256

9,000
9,350
9,688

(Note 1) Amount obtained by subtracting rents
and common area fees income in theprevious fiscal period of properties soldin the previous fiscal period from theamount of rents and common area
fees income increased compared tothe previous period due to full year
contribution from properties acquiredin the previous fiscal period.
(Note 2) Amount obtained by subtracting rents
and common area fees income
decreased in the current fiscal period
due to sales of properties in thecurrent fiscal period from the amountof rents and common area fees
income increased in the current fiscal
period due to acquisition of properties
in the current fiscal period.

11,4009,750
9,850
10,5089,900
10,55010,695

10,56010,70010,764

10,71010,77010,957

10,80011,00021st Period

22nd Period

23rd Period

24th Period

25th Period 26th Period(Forecast) (Forecast)

6,000
4,000
2,000
0
18th Period

19th Period

20th Period

24th Period

23rd Period

22nd Period

21st Period

20th Period(November 2017)(May 2017)(November 2016)(May 2016)(November 2015)

Operating revenues (Million yen)

12,735

12,547

12,85312,363

11,837

Operating income (Million yen)

6,177

6,133

6,143

6,108

5,614

Ordinary income (Million yen)

5,456

5,360

5,325

5,326

4,689

Net income (Million yen)

5,455

5,359

5,324

5,250

4,688

Total number of units issued (Units)497,869

497,869

497,869

484,000

484,000
511,777

Net assets per unit (Yen)

515,790

515,317515,230

511,818

Distribution per unit (Yen)

10,957

10,764

10,695

10,508

9,688

Total assets (Million yen)

483,173483,730

483,450

476,690

460,705

42.3

42.2

42.3

43.3

41.7

54

54

53

50

50

Asset size (Billion yen)

4,693

4,693

4,677

4,583

4,457

Total rentable area (m2)

338,377.31

338,436.22

336,722.04

328,027.44

325,313.01

98.2

97.7

97.7

98.7

98.3

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

Occupancy rate (%)(Note) Distribution per unit for the 21st fiscal period is calculated by dividing the amount obtained by subtracting provision for reserve for reduction entry (164 million yen) from unappropriated retained earnings by the
total number of investment units issued.

4Overview of Portfolio (Portfolio list)(As of February 28, 2018)
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
8,112.77 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
2,641.56 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
Shinbashi, Minato-ku, Tokyo
11,614.92
SRC 9F
Apr. 1973
18 Daiwa Onarimon
22,771.98 S SRC B3/34F Sept. 1995
19 Shinjuku Maynds Tower (Note 5) Yoyogi, Shibuya-ku, Tokyo
Udagawacho, Shibuya-ku, Tokyo
2,480.65 RC B1/9F
Aug. 2006
20 Daiwa SHIBUYA EDGE (Note 7)
Nihombashi-Odenmacho, Chuo-ku, Tokyo
2,379.31
SRC 8F
Mar. 1985
21 Daiwa Kodenmacho
Kanda-Jimbocho, Chiyoda-ku, Tokyo
3,164.26
S B1/8F
Mar. 199722 Daiwa Jimbocho
Nishi-Shimbashi, Minato-ku, Tokyo
4,815.84 SRC B1/10F July 1993
23 Daiwa Nishi-Shimbashi
Nihombashi-Kayabacho, Chuo-ku, Tokyo
5,899.11 S SRC B1/8F Apr. 201024 Daiwa Kayabacho Building
Kanda-Jimbocho, Chiyoda-ku, Tokyo
2,889.34
S 9F
Feb. 201025 Daiwa Jinbocho 3-chome
Maruyamacho, Shibuya-ku, Tokyo
13,960.87 S SRC B1/15F Oct. 2002
26 E SPACE TOWER
2,143.08
S 8F
May 2010
27 Daiwa Nihonbashi Hongokucho Nihombashi Hongokucho, Chuo-ku, Tokyo
Shinjuku, Shinjuku-ku, Tokyo
6,751.31 S RC B2/11F Jan. 201228 shinyon curumu
Akasaka, Minato-ku, Tokyo
8,739.17 SRC B2/7F Sept. 1990
29 Daiwa Akasaka
Shibuya, Shibuya-ku, Tokyo
6,329.00 S B1/12F
Dec. 1988
30 Daiwa Shibuya Miyamasuzaka
Minami Azabu, Minato-ku, Tokyo
13,234.39 S RC B1/6F Sept. 200931 Daiwa Azabu Terrace
Ebisu, Shibuya-ku, Tokyo
2,885.64 SRC B1/9F Dec. 1997
32 Daiwa Ebisu 4-chome
Okubo, Shinjuku-ku, Tokyo
7,498.33
S10F
Aug. 2010
33 LAQUAS Higashi Shinjuku
Jingumae, Shibuya-ku, Tokyo
4,426.10 S RC B1/7F Nov. 2001
34 Daiwa Aoyama
Shinsen-cho, Shibuya-ku, Tokyo
2,811.35 RC B1/9F
Sept. 2001
35 Shinsen Place
Nanpeidaicho, Shibuya-ku, Tokyo
8,566.73 S SRC B1/11F Feb. 2004
36 Glass City Shibuya
Nihonbashi Hakozakicho, Chuo-ku, Tokyo
32,055.85 S SRC RC B2/20F Feb. 1994
37 Daiwa River Gate
Hatchobori, Chuo-ku, Tokyo
2,622.42 S SRC B1/10F Feb. 200638 Daiwa Hatchobori ekimae
1,723.15 SRC B1/9F Feb. 1996
39 Daiwa Hatchobori ekimae West Hatchobori, Chuo-ku, Tokyo
Nishishinjuku, Shinjuku-ku, Tokyo
6,967.61 SRC RC S B2/11F Aug. 1991
40 Daiwa Nishi-Shinjuku (Note 7)
Nihonbashi Koami-cho, Chuo-ku, Tokyo
5,630.17 S SRC 7F
Feb. 1999
41 Kirin Nihonbashi Building
Higashi Nihonbashi, Chuo-ku, Tokyo
5,015.88
S 7F
Mar. 200842 Daiwa Higashi-nihonbashi
Daikanyamacho, Shibuya-ku, Tokyo
1,588.35
S 6F
Mar. 2001
43 Square Daikanyama Building
Nishishinjuku, Shinjuku-ku, Tokyo
1,120.58
RC 4F
Mar. 1989
44 Shinjuku West Building
1,719.51 SRC S B1/7F Jan. 1991
45 Daiwa Kanda Mikuracho Building (Note 7) Kanda Mikura-cho, Chiyoda-ku, Tokyo
Kanda Higashi Matsushitacho, Chiyoda-ku, Tokyo 3,717.57
S 9F
Feb. 2005
46 Nippon Manpower Building

2003
2003

14,100 3.2
3,050 0.7
8,265 1.9
4,550 1.0
3,190 0.7
2,865 0.72,800 0.6
2,578 0.6
2,346 0.5
2006
2,080 0.5
1,560 0.4
1,240 0.3
7,840 1.8
2,520 0.6
1,600 0.4
2005
3,460 0.8
2,910 0.7
2003 13,860 3.2
66,900 15.2
5,900 1.3
2,460 0.6
4,150 0.95,000 1.1
5,600 1.3
3,550 0.8
24,000 5.5
1,721 0.4
9,650 2.2
9,200 2.1
7,000 1.6
14,000 3.2
4,135 0.98,450 1.99,800 2.2
4,800 1.1
16,000 3.6
28,000 6.4
2,871 0.7
1,647 0.4
13,710 3.1
8,180 1.9
6,370 1.4
2,280 0.5
942 0.2
1,592 0.4
4,200 1.0
352,922 80.3

simple and17,200 Feeleasehold
Fee simple
3,840 Fee simple
Fee simple
7,870 Fee simple
Fee simple
4,640 Fee simple
Fee simple
3,840 Fee simple
Fee simple
3,560 Fee simple Compartmentalized
ownership
2,460 Fee simple
Fee simple
3,090 Fee simple
Fee simple
2,850 Fee simple
Fee simple
2,530 Fee simple
Fee simple
1,880 Fee simple
Fee simple
1,610 Fee simple
Fee simple
10,100 Fee simple
Fee simple
2,660 Fee simple
Fee simple
1,930 Fee simple
Fee simple
3,490 Fee simple Compartmentalized
ownership (100%)Compartmentalized
2,830 Fee simple ownership (100%)
13,900 Fee simple Compartmentalized
ownership (100%)
62,500 Co-ownership Co-ownership
5,190 Fee simple
Fee simple
simple and2,260 Feeleasehold
Fee simple
3,620 Fee simple
Fee simple
6,520 Fee simple
Fee simple
8,160 Fee simple
Fee simple
4,900 Fee simple
Fee simple
33,400 Fee simple
Fee simple
2,470 Fee simple
Fee simple
15,500 Right of site Compartmentalized
ownership (100%)
13,700 Fee simple
Fee simple
8,740 Fee simple
Fee simple
16,100 Fee simple
Fee simple
5,950 Fee simple
Fee simple
10,700 Fee simple
Fee simple
12,400 Fee simple
Fee simple
6,710 Fee simple
Fee simple
18,300 Fee simple
Fee simple
30,200 Fee simple
Fee simple
3,300 Fee simple
Fee simple
1,850 Fee simple
Fee simple
15,500 Fee simple
Fee simple
8,290 Fee simple
Fee simple
6,780 Fee simple
Fee simple
2,600 Fee simple
Fee simple
1,230 Fee simple
Fee simple
1,710 Fee simple
Fee simple
5,000 Fee simple
Fee simple
403,860

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
3.89
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

Subtotal
257,770.10
Greater Tokyo Area (Note 1)
Higashi-Ikebukuro, Toshima-ku, Tokyo
4,461.47 SRC S B1/9F June 1993
2,958 0.7
3,880 Fee simple
Fee simple
3.55
47 Daiwa Higashi-Ikebukuro
Kita-Shinagawa, Shinagawa-ku, Tokyo
6,548.17 SRC B1/11F July 1991
7,710 1.8
6,170 Fee simple
Fee simple
7.19
48 Daiwa Shinagawa North
Osaki, Shinagawa-ku, Tokyo
1,786.06 S RC B1/6F Sept. 2007
1,650 0.4
2,340 Fee simple
Fee simple
6.14
49 Daiwa Osaki 3-chome
Kamiooka Nishi, Konan-ku, Yokohama City, Kanagawa 2,630.30 S SRC B3/7F May 2011
2,000 0.52,750 Fee simple
Fee simple
6.29
50 Daiwa Kamiooka
Kamiogi, Suginami-ku, Tokyo
17,778.14 S SRC B2/18F June 1993
15,220 3.5
19,700 Fee simple
Fee simple
1.18
51 Integral Tower
Meguro, Meguro-ku, Tokyo
3,519.50
S 12F
July 2009
5,600 1.3
6,750 Fee simple
Fee simple
1.68
52 Daiwa Meguro Square
Ogikubo, Suginami-ku, Tokyo
3,849.63 S SRC B1/16F Nov. 1990
3,800 0.9
4,490 Fee simple Compartmentalized
6.41
53 Daiwa Ogikubo
ownership (100%)
Quasi
Quasi
38,100 8.7
39,300 co-ownership
0.92
54 CONCURRED Yokohama (Note 6) Kinko-cho, Kanagawa-ku, Yokohama City, Kanagawa 28,052.98 S SRC B1/20F Feb. 2008
co-ownership
Subtotal
68,626.25
77,038 17.5
85,380Major Regional Cities (Note 1)
Awaji-cho, Chuo-ku, Osaka City, Osaka
13,517.62 S SRC B1/16F Feb. 2008
9,481 2.4
11,700 Fee simple
Fee simple
3.48
55 Daiwa Kitahama
Subtotal
13,517.62
9,481 2.2
11,700
Total
339,913.97
439,441 100
500,940(Note 1) The Five Central Wards of Tokyo are Chiyoda, Chuo, Minato, Shinjuku and Shibuya Wards (or ku). The Greater Tokyo Area is Tokyo (excluding the Five Central Wards), and Kanagawa, Chiba and Saitama prefectures.
Major Regional Cities are the Osaka area (Osaka, Kyoto and Hyogo prefectures), Nagoya area (Aichi, Mie and Gifu prefectures) and ordinance designated cities and core cities set forth in the Local Autonomy Act.
(Note 2) The Rentable Area is indicated as of November 30, 2017 (end of 24th 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 December 1, 2017 for Nippon Manpower Building and
CONCURRED Yokohama, and of November 30, 2017 (end of 24th 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 figures shown for theAcquisition Price and the Appraisal Value at End of Period respectively indicates a figure equivalent to 3/7 of the property and a referential figure estimated by using 3/7 of the co-ownership interest instead of 6/7 ofthe co-ownership interest, which was so as of November 30, 2017. The figure shown for the Rentable Area is the figure equivalent to 3/7 of the total rentable area of the entire building.
(Note 6) The entrusted real estate corresponding to trust beneficiary interests that DOI owns regarding 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.
(Note 7) Concerning the names of properties, DOI changed Shin Kanda Mikuracho Building to Daiwa Kanda Mikuracho Building on September 1, 2017; Nikko Building to Daiwa Nishi-Shinjuku on October 1, 2017; andSHIBUYA EDGE to Daiwa SHIBUYA EDGE on November 1, 2017.

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

20 Daiwa SHIBUYA EDGE

30 Daiwa Shibuya Miyamasuzaka

32 Daiwa Ebisu 4-chome

47 Daiwa Higashi-Ikebukuro

Ikebukuro Sta.
47

19 Shinjuku Maynds Tower

26 E SPACE TOWER

51

34 Daiwa Aoyama

Suginami-ku

35 Shinsen Place

36 Glass City Shibuya

43 Square Daikanyama Building

Nakano Sta.

53 Ogikubo Sta.
51 Integral Tower

Toshimaku

33
HigashiShinjuku Sta.

Shinjuku-ku

Shinjuku-ku
44
40

Shinjuku Sta.
28

19

Yotsuya Sta.

Honancho Sta.
53 Daiwa Ogikubo

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

Toei Subway

28 shinyon curumu

33 LAQUAS Higashi Shinjuku

40 Daiwa Nishi-Shinjuku

44 Shinjuku West Building

Shibuya-ku

Minato-ku

34

20
26
3 Daiwa Shibaura

4 Daiwa Minami-Aoyama

35

6 Daiwa A Hamamatsucho

36

ine
hi L
Tos
n
e
Den
yu
Tok

Lin
e
To
kyu
To
yok
o

JR

8 Daiwa Shibadaimon

10 Daiwa Shimbashi 510

30
Shibuya Sta.
43

Naka-meguro Sta.

6

32
Ebisu Sta.

15 Daiwa Azabudai

52

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

Gaienmae Sta.

4

Omotesando Sta.

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

Aoyamaitchome Sta.

7

18 Daiwa Onarimon

23 Daiwa Nishi-Shimbashi

29 Daiwa Akasaka

31 Daiwa Azabu Terrace

52 Daiwa Meguro Square

Meguro Sta.

Osaki Sta.
49

(As of February 28, 2018)

Chuo-ku

1 Daiwa Ginza

37 Daiwa River Gate

2 Daiwa Ginza Annex

11 Daiwa Tsukijiekimae

12 Daiwa Tsukiji

13 Daiwa Tsukishima

14 Daiwa Nihonbashi Horidomecho

16 Daiwa Kyobashi

21 Daiwa Kodenmacho

24 Daiwa Kayabacho Building

Asakusa Sta.
Oshiage Sta.

Suidobashi Sta.

9

Akihabara Sta.

5

25 22

Kudanshita Sta.

46
45

27

21

14

Nihombashi Sta.

Tokyo Sta.
Hibiya Sta.

Akasaka Sta.

12

Toranomon Sta.

29

6

Shibakoen Sta.

24 Suitengumae37

Chuo-ku

41

16

39 38

Ginza Sta.

Shimbashi Sta.
23
10
18

15

39 Daiwa Hatchobori ekimae West

Ningyocho Sta.

Chiyoda-ku
Akasakamitsuke Sta.

27 Daiwa Nihonbashi Hongokucho 38 Daiwa Hatchobori ekimae

42

Otemachi Sta.

17

Kinshicho Sta.

12

41 Kirin Nihonbashi Building 42 Daiwa Higashi-nihonbashi

Sta.

Chiyoda-ku

Hatchobori
Sta.

11
Tsukishima Sta.

13
5 Daiwa Sarugakucho

9 Daiwa Misakicho

17 Daiwa Kojimachi 4-chome

22 Daiwa Jimbocho

25 Daiwa Jinbocho 3-chome

45 Daiwa Kanda Mikuracho Building

46 Nippon Manpower Building

54 CONCURRED Yokohama

55 Daiwa Kitahama

8

Minato-ku
31

3

ShinagawaSta.

48

Shinagawaku

48 Daiwa Shinagawa North

49 Daiwa Osaki 3-chome

55

50 54

50 Daiwa Kamiooka

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 Building Rental Market of 23 Wards of Tokyo(Yen/tsubo)
24,000(%)
10.0

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

22,000(Tsubo)400,000

8.0

20,000

6.0

18,96418,0003.02
16,00014,000300,000

7.5

200,000

6.0

100,000

4.5

0

3.0

4.0
2.0

(%)
Floor area of new supplies (Small and medium-sized buildings) 9.0

Floor area of new supplies (Large buildings)
Floor area of new demands-100,000

1.5
Vacancy rate

-200,000

0.0

Vacancy rate (Forecast as of June 2016)(Source) Miki Shoji(Source) CBRE “Mid-term Office Market Outlook 2018~2021”■ Occupancy Rate

■ Rate of New Leases and Cancellations*

(%)
100.0

(%)
20.0

95.0

96.4

95.4

95.0

96.3 96.4

97.2 97.3

98.3 98.7

97.7 97.7

98.2
97.2

98.0

97.6

13.4
10.0

96.5

9.8

7.2 7.4
3.2

94.3

8.2

3.3

5.7

4.4

6.1 6.2
2.0

4.3

1.8

2.9 3.8 4.4 3.0

0.0

92.8
92.4

-3.4
-3.9

90.0

85.7

85.0

0.0

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

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

95.9

Predicted figures

Occupancy rate (actual)
Occupancy rate (forecast)Occupancy rate (forecast)(as of disclosure in July 2017)

-10.0

-5.9

-7.3 -6.3

-5.3

-12.0

-6.1 -5.7
Rate of new leases
Rate of cancellations

-14.7

-20.0

-2.4 -1.7 -1.6

-2.8

-3.8 -3.6 -3.9 -3.2

1.0
-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
8th 9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th
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
8th 9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th 25th 26th
Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period* Transition of rate of new leases and cancellation areas to the total rentable area.

Rental Business Status■ Average Contract Rent and Market Rent

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

2,100

27,000

90

2,050

82.30
80.16
81.41

24,00080

1,950

19,4371,900

19,219 19,574 60

18,00015,000

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
4th 5th 6th 7th 8th 9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th
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

2,000

70

21,000+92
Decrease due torent revisions

+14

1,935

Increase due torent revisions

0
Increase due to
new leases–83
Decrease due totenants’cancellations

0

1,959

Increase due to
new acquisition

1,850
1,800
1,750
End of 23rd FP
monthly contract rent

End of 24th 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 was adjusted to 6/7 of the total.

Status of Contract Renewal/New Lease■ Area of which Contract Ended/Will End In and Afterthe Fiscal Period Ended November 2017 (24th fiscal period)(Based on rentable area)
(%)
30.0

Scheduled
25.0

20.4

20.0

17.1

5.0

0.0

25th Period

26th Period

27th Period■ Changes in Rent Increase/Decrease Rate of Contract
Renewal Tenants (Sections)

5.0
0.0

4.5

0.0

2.5

-5.2 -6.5-5.0-7.0 -10.2

-10.0

5.0
1.0

-7.0

-4.9

5.2
5.2
0.0

23rd Period

48.8

44.4

6.6

53.4

3.9

42.6

9.0
9.0

7.3
7.2

6.1
6.1

8.1
8.1

0.0

0.0

50.1

7.8
7.8

61.1

1.4

19th Period

26.5

70.8

2.7

18th Period 4.8

8.6

66.7

8.5

16th Period

10.0 4.6

77.1

8.2

15th Period

14.4

70.3

12.3

7.9*

14.1*

57.4

3.1

0.0

20.0
Decrease

40.0

80.0
Cancellation

100.0
（%）

* Of the increase in the 17th FP, 14.1% is due to some tenants switching from sublease agreements tomaster lease agreements and 7.9% is due to negotiations with tenants.

（%）
20.0

(Thousand yen)
100,000
New tenant (left axis)
Previous tenant (left axis)
Increase/decrease rate (right axis)

14.0

29,97029,203

Increase rate
Decrease rate

91,394

83,96275,943
69,262

59,04255,05460,00040,000

-22.7
-22.7
-25.0

12.1

60.0
Unchanged

Increase

52,58046,142

-20.0

19.9

17th Period

0.0

-5.1

-15.0

0.7

37.5

80,0000.0

49.0

20th Period■ Increase/Decrease in Monthly Rent due to New Lease andIncrease/Decrease Rate (Compared to the previous tenant
for the same section)

(%)
15.0

9.8
4.3

7.8

28th Period(Note) The ratio of areas of which lease contracts are scheduled to be renewed in each fiscal period to thetotal rentable area (332,594.35m2) as of the end of November 2017 is indicated.

10.0

40.4

21st Period

10.0

24th Period

51.7

0.2

15.9

15.0

24th Period

22nd Period

24.2

22.1

■ Changes in Ratios of Areas with Rent Increase/Decrease/
Unchanged and Cancellation upon Contract Renewal

16.0

12.0

9.6

8.9

8.0

7.2

20,000

4.0

Rent increase/decrease rate

14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th
Period Period Period Period Period Period Period Period Period Period Period(Note 1) “Increase rate” and “Decrease rate” indicate the simple average of rent increase/decrease against
contract rents before renewals for lease contracts whose contract renewal periods have arrived in
the above periods and whose rent renewals have been agreed, rounded to the first decimal place.
(Note 2) Figures for “Rent increase/decrease rate” are obtained by dividing the total of contract rents after
renewal for lease contracts whose contract renewals have been agreed by the total of contract rents
before renewal, rounded to the fist decimal place.

2.6
0

0.0

20th Period

21st Period

22nd Period

23rd Period

24th Period(Note) “New tenant” refers to the tenant who concluded a new lease contract in the respective fiscal period,and “Previous tenant” refers to the tenant, for the same section for which the new tenant concluded alease contract, which had been under a lease contract immediately before the new tenant.

Improvement in Financial Standing■ Monthly Rent Increase Due to Contract Renewal/New Lease(Financial Standing)(Thousand yen/month)
30,00025,000Contract Renewal

25,528

New Lease

6,680

20,00014,37615,00014,246

10,000

9,020

6,438

5,000

3,157
5,862

7,938

766 12,747
13,479 3,988
8,759

19th
Period20th
Period21stPeriod18,84721,804
7,432
14,3710

22nd
Period23rd
Period24th
Period16,287
4,744
11,543■ Increase in Dividend Resource Due to Improved Financial Standing
Simple19th 20th 21st 22nd 23rd
24th averageof six
Period Period Period Period Period Period fiscal
periods

Percentage of 6-month
Total Rent
conversion 0.7% 1.0% 0.8% 0.7% 1.4% 1.2% 1.0%
Revenue(rents and
12-monthcommon area conversion 1.3% 2.0% 1.7% 1.5% 2.8% 2.4% 1.9%
fees) (Note 1)
Growth rate of 6-month
conversion 1.5% 2.1% 1.8% 1.5% 2.9%
dividend
resource
12-month 3.0% 4.3% 3.6% 2.9% 5.8%
(Note 2)conversion

2.4%

2.0%

Simple4.9% 4.1%
average ofsix fiscal periods(Note 1) The figures are calculated by dividing the amount obtained by multiplying the total of net increase in monthly rents due to contract renewal and new lease by 6, by rents and common area fees income in the immediately
prior fiscal period, rounded to the first decimal place.
(Note 2) The figures are calculated by dividing the amount obtained by multiplying the total of net increase in monthly rents due to contract renewal and new lease by 6, by net income in the immediately prior fiscal period, rounded
to the first decimal place.

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
(7 members)

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

Hiroshi Udagawa Takafumi Ushiku Kotaro Ishii

Jun Arai

Chie Kamimura

Yuuki Kobatake

Jun Iwasaki

Asset management
Asset management
Asset management
Asset management
Asset management
Asset management
Asset management
work history:
work history:
work history:
work history:
work history:
work history:
work history:
11 years 4 months
13 years 2 months
11 years 7 months
11 years 7 months
11 years 5 months
5 years 1 month
1 year 1 month

Construction Management
Team (4 members)
Investment Planning Team

Engineering: Formulation and implementation of construction planning of the assets
Middle office work: Budget and performance management for the portfolio(3 members)(Note) The numbers of members are the figures as of end of November 2017. “Asset Management work history” is the number of years engaged in the relevant work (as of end of November 2017) and does not indicate thenumber of years employed at the asset management company.

Occupancy Status of Properties Subject to Leasing Improvement in the Fiscal Period Ended November 2017 (24th FP)■ Daiwa River Gate (Acquisition price: 28,000 million yen)

■ Daiwa Shibaura (Acquisition price: 8,265 million yen)

100.0(%)

100.0(%)

98.1
90.3

90.0
80.0

99.5 100.0

100.0

90.0

82.8

90.0

90.6
(Note)

80.0
’17/5

100.0

89.8

60.0
’17/2

100.0

100.0(%)

99.1

96.0

70.0

’16/11■ Daiwa Higashi-Ikebukuro (Acquisition price: 2,958 million yen)

’17/8

’17/11• Further enhanced competitiveness of the property
through renovation of common areas, etc. and also
strengthened presentations for a greater number ofbrokers across a wider range of areas through utilizationof advertisement media. As a result, the overall
occupancy rate increased to 98.1% by the end of
November. The office section’s occupancy rate at thattime was 99.6% but realized 100% occupancy inDecember.

80.0’16/11

’17/2

’17/5

’17/8

’17/11• As a result of aiming to attract companies, etc. seeking
offices not only in areas nearby but also in a wider
range of areas by capitalizing on the property’s featuresof having a certain superiority in size and grade as wellas good access to central Tokyo, an excellent client from
Chuo Ward that was considering relocation was
successfully obtained.
• Realized occupancy rate of 99.1% as well as 100% occupancy
as for the office section as of the end of November.

’16/11

’17/2

’17/5

’17/8

’17/11• Succeeded in capturing the needs for sub-offices of amajor company by showcasing the strength of leasing
under terms that are relatively cost effective comparedwith districts in central Ikebukuro. The occupancy rate
was maintained at 100% without downtime.
100 The occupancy was expected to fall to 90.6% as(Note)
there are no new tenants.
90

Leasing Highlight and Properties Subject to Leasing Improvement in the Fiscal Period ending May 2018 (25th FP)
Leasing Highlight■ Daiwa Ebisu 4-chome (Acquisition price: 4,135 million yen)
• The tenant was determinedthrough bidding, utilizing thelimited supply of single-building
cases in Ebisu. Advertised to abroad area including an area
between Ebisu and Shibuya
while striving to attract excellent
clients.
• Concluded contract withnear-zero downtime.

10

Properties Subject to Leasing
Improvement80■ Daiwa Kyobashi (Acquisition price: 3,460 million yen)
100
90
80
70
60

• Needs for relocation from a wide
range of areas as well as for nearby
sub-offices are anticipated as theproperty is near Tokyo Station andhas great accessibility with multiple
routes available for use.
• Aim for early leasing bydifferentiating the property fromnearby competitors through thesetting of an appropriate rent
considering the building age.

■ Daiwa Jinbocho 3-chome (Acquisition price: 3,550 million yen)
• Needs for relocation from a wide
range of areas as well as for nearby
sub-offices are anticipated as theproperty is near Otemachi and has
great accessibility with multiple routes
available for use.
• Aim for leasing to companies such as
those in IT which have remarkable
growth at a high unit price by utilizing theproperty’s features of superior building
age, sense of grade and convenience oftransportation in the area.

100

90

80

Environmental Efforts■ GRESB awards Daiwa Real Estate Asset Management “Green Star” for the sixth consecutive year, from 2012 to 2017
Daiwa Real Estate Asset Management participated in the 2017 “GRESB Real Estate Assessment” by Global Real Estate Sustainability Benchmark (GRESB) for the portfolio of Daiwa
Office Investment Corporation and earned the best rating of “Green Star,” marking the sixth consecutive year of receiving the award. Daiwa Real Estate Asset Management received
a high evaluation on sustainability in both the “Management and Policy” and “Implementation and Measurement” aspects.

■ Responding to ESG Investment from Overseas Investors
The Investment Corporation responded to a rating survey from a globally renowned ESG evaluation
institution, aiming to increase appraisal for ESG investment which is continuing to expand.

■ Progress in Introduction of Green Leasing at Shinjuku Maynds Tower
As part of measures to protect the environment and raise tenant satisfaction, the Investment
Corporation has taken initiatives in which it concludes a green leasing agreement with tenants
and promotes installing LED lighting in areas exclusively occupied by the tenants at Shinjuku
Maynds Tower since 2014.
Around 70% of areas exclusively occupied by tenants is expected to have LED lighting in thefiscal period ending May 2018.

(Netherlands)

Ratio of Areas with LED Lighting Installed*

Shinjuku Maynds Tower(%) 80.0(forecast) 69.1

70.0
60.0
50.0

48.7

40.0

35.6

30.0
20.0
10.0

3.4

3.4

6.9

18.2
10.3

0.0
(Fiscal period Nov. May Nov. May Nov. May Nov. May
ended/ending) 2014 2015 2015 2016 2016 2017 2017 2018

Measures to Increase Customer Satisfaction■ Strategic Tenant Attraction
Daiwa Ginza■ Tenant Support
Daiwa Onarimon

Attract tenants that will increase customers of existing
tenants open to customers. The property faces Miyuki
Dori street where there are many pedestrians and thebuilding will be better known with the increase ofvisitors.

With the opening of the new concept shop, there was tenant support such as
responding to notifications from the standpoint of the owner. It not only became apopular regional shop but also contributed to increasing the property’s notability.

<Ginza Ryokujuan Shimizu>
Kyoto’s long-established kompeito specialty store
Ryokujuan Shimizu opened its first directly managed
shop since its founding in Ginza.

Shinjuku Maynds Tower
Implemented replacement of several shops in B1F and enhanced restaurants that
increase lunch/dinner options and satisfy demand of the building’s office workers.
<Hakata Motsunabe Yamaya>
With the concept of making every visiting
customer cheerful, this shop is popular for its
Hakata motsunabe and all-you-can-eat Alaska
pollock roe lunch.

<Ueshima Coffee Lounge No. 11>
The new concept shop opened as a place
to provide new coffee value, returning once
more to Japan’s cafe culture and providing
all coffee hand dripped.

■ Coexistence with Local Communities
Shinjuku Maynds Tower
Shinjuku Maynds Tower participated in “Shinjuku Minamirumi,” an event that
decorates the Shinjuku South Exit area, together with Odakyu Electric Railway
Co., Ltd., Takashimaya Co., Ltd., East Japan Railways Company and Asahi MutualLife Insurance Company. The notability of the Shinjuku South Exit area increased
and local residents and others were provided with a space of relaxation with the
dreamy illuminations.

<Ika no Sumi>
At this popular shop from Niigata, seasonal
foods can be enjoyed with the pleasant aromaof the ocean.
Period: November 15, 2017 to February 22, 2018

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

Trading Performance in 25th Fiscal Period■ Newly Acquired Properties

JR
Tok
Yok
yu
oha
Toy
ma
oko
Lin
Lin
e/T
e
oka
ido
Ma
in L
ine
Ke
iky
uM
ain
Lin
e

CONCURRED Yokohama (Note) [Acquired on January 11, 2018]

CONCURRED
Yokohama

BAY QUARTERYOKOHAMA

Yokohama
StationSogo

Kinko-cho, Kanagawa-ku, Yokohama-shi, Kanagawa

Site Area

7,140.99m2

Structure/Floor

S/SRC B1/20F

Total Floor Area

53,772.50m²

Acquisition Price

38,100 million yen

Appraisal Value

39,300 million yen (as of December 1, 2017)

Construction Date

February 2008

Occupancy Rate

96.0% (as of acquisition)

Number of Tenants

32 (as of acquisition)

JR
Lin Nege ishiYokohama
Takashimaya

Location(Note) The real estate in trust pertaining to trust beneficial interest held by theInvestment Corporation for CONCURRED Yokohama is the quasi co-ownershipcorresponding to 75/100 of the entire property.

Located a five-minute walk from Yokohama Station where twelve lines are available such as JR Tokaido Line, JR Yokosuka Line, JR Keihin Tohoku Line,JR Negishi Line, JR Yokohama Line, Tokyu Toyoko Line, Minato Mirai Line, Keikyu Line, Sotetsu Line and Yokohama Municipal Blue Line.
A leasable area of approximately 550 tsubos per floor is secured for office use on a standard floor of the property. The property provides a minimum
office space of 30 tsubos allowing flexible building management according to market conditions and tenant demand based on the marketability of the
Yokohama area.

Nippon Manpower Building [Acquired on January 12, 2018]
JR Ya
Keihin manote Line
Tohoku/Line

Akihabara Station

Toei Shinjuku Line

Iwamotocho Station

Awajicho
StationNippon Manpower Building

Kanda Station

tro
o Me
Toky a Line
Ginz

Tokyo Metro Marunouchi Line

Kanda Station

Daiwa Kanda
Mikuracho BuildingLine
HibiyaMetro
Tokyo

JR Chuo Line

Ogawamachi
StationAkihabara Station

Location

Kanda Higashi Matsushitacho, Chiyoda-ku, Tokyo

Site Area

943.17m²

Structure/Floor

S/9F

Total Floor Area

5,285.88m²

Acquisition Price

4,200 million yen

Appraisal Value

5,000 million yen (as of December 1, 2017)

Construction Date

Feb. 2005

Occupancy Rate

100.0% (as of acquisition)

Number of Tenants

1 (as of acquisition)

Located a 5-minute walk from Kanda Station on the JR Yamanote Line, JR Keihin Tohoku Line and JR Chuo Line, a 3-minute walk from Kanda Stationon the Tokyo Metro Ginza Line and a 2-minute walk from Iwamotocho Station on the Toei Subway Shinjuku Line.
There are many cases where office buildings in the Uchi-Kanda and Kanda-Sudacho Area in which the property is located take in demand by appealing
inexpensive rent despite having great accessibility to Otemachi and other large business concentration areas as well as high traffic convenience.

■ Properties Transferred/To Be Transferred Properties
to be transferred on February 28, 2018]
Shinjuku Maynds Tower [Scheduled
3/7 of co-ownership (Note 1)
Location

Yoyogi, Shibuya-ku, Tokyo

Daiwa Meieki [Transferred on December 20, 2017]
Location

Nakamura-ku, Nagoya-shi, Aichi

Structure/Floor S/SRC B3/34F

Structure/Floor S/12F

Sale Price

62,500 million yen

Sale Price

8,300 million yen

Book Value

64,818 million yen (as of May 31, 2017) (Note 2)

Book Value

5,256 million yen (as of May 31, 2017)

Appraisal Value 62,500 million yen (as of May 31, 2017) (Note 2)

Appraisal Value 7,750 million yen (as of May 31, 2017)

Construction Date September 1995

Construction Date December 2007

(Note 1) The Investment Corporation holds 6/7 of co-ownership interest in Shinjuku Maynds Tower. Therefore, co-ownership interest in the property is scheduled to be 3/7 following the transfer of the asset to be transferred (3/7 of co-ownership interest).
(Note 2) Figures for Book Value and Appraisal Value are calculated as one for 3/7 of co-ownership interest for reference by using figure for 6/7 of coownership interest as of May 31, 2017, respectively.

12■ Effect of Portfolio Replacement in 25th FP ending May 2018
Various major indices increased with the improvement of the quality of the portfolio

Major IndicesEnd of 23rd FP ended
May 2017

End of 24th FP ended
November 2017

Number ofproperty

54 properties

Total Assets
NOI Yield

Properties Acquired
during 25th FP ending
May 2018

Properties scheduled tobe sold during 25th FP
ending May 2018

After Asset Replacement

54 properties

2 properties

2 properties

55 properties

469,341 million yen

469,341 million yen

42,300 million yen

72,200 million yen

439,441 million yen

4.0%

4.0%

4.2%

3.2%

4.2%

21.4 years

21.9 years

10.6 years

21.8 years

20.9 years

28.5%

28.5%

-

-

15.2%

620,897 yen

640,587 yen--

643,454 yen

42.2%

42.3%

-

-

-

(Note 1)

(Note 2)Average
Building Age(Note 3)

Ratio ofInvestment inShinjuku Maynds
Tower (Note 4)
NAV per unit
(Note 5)

LTV

(Note 1) The sale of Shinjuku Maynds Tower in the fiscal period ending May 2018 is a partial sale. The remaining owned portion is counted as 1 property for the 55 properties after the asset replacement.
(Note 2) NOI yield is calculated using the following formula: Numerator: Annualized NOI does not include costs related to the Investment Corporation. Annualized actual NOI of each period is used for the end of the 23rd
FP and 24th FP, annualized NOI assumed by the Asset Management Company for the period is used for NOI of assets acquired in the 25th FP, and annualized actual NOI for the 24th FP is used for NOI of
assets (scheduled) to be sold in the 25th FP. Denominator: Period-end book values are used for the book values for the end of the 23rd FP and 24th FP, and the book value as of the end of the 24th FP
adjusted to the acquired assets (acquisition price) and assets (scheduled) to be sold (book value as of the end of the 24th FP) is used for the calculation of the book value after the asset replacement.
(Note 3) The average building age for the end of the 23rd FP is as of the end of May 2017 while the other figures are as of the end of November 2017.
(Note 4) The ratio of investment in Shinjuku Maynds Tower is the ratio of Shinjuku Maynds Tower’s acquisition price to the total acquisition price.
(Note 5) NAV per unit = (Unitholders’ capital + Total appraisal value at the end of fiscal period − Total property book value at the end of fiscal period) / Number of investment units issued and outstanding. NAV per unit
after the asset replacement is calculated based on NAV per unit as of the end of the 24th FP.

■ Effective Use of Surplus Funds
Projected Scenario (Note 1)

1. Allot to acquisition of new
properties
25th FP
ending May 2018
Approx. 30 billion yen of
surplus funds generated
with the asset replacement

2. Allot to repayment of loans(Note 1) The above projected scenario is calculated with the surplus funds based on certain assumptions. As of the date of this document
there are no plans to implement the measure and there is no guarantee that the measure could be implemented.
(Note 2) Calculated with the assumption that there are 497,869 investment units issued and outstanding. Dividends are calculated byrounding to the nearest hundred yen.
(Note 3) Calculated based on the assumption that properties with NOI yield after depreciation equivalent to that of the portfolio (3.2%) are
acquired.
(Note 4) The average interest rate of loans is calculated by annualizing the following figures from the 24th FP:• Total of amortized interest expenses, interest expenses on investment corporation bonds, borrowing expenses and investment
corporation bond issuance costs: 721 million yen• Period-end interest bearing liabilities: 204.3 billion yen(Note 5) It is calculated that 29,125 units (17.3 billion yen) were acquired at the closing price of 594,000 yen on January 12 and retired,
and that loans (12.7 billion yen) were repaid with the average interest rate of loans (actual figure for the 24th FP) together withthe share buyout.

11,000 yen

LTV

800

(Note 3)42.3%

(Note 4)

38.5%

(Note 5)

42.3%

Approx.

Approx.

3. Allot to share buybacks*Loans will be repaid together with the share buybacks withthe assumption of maintaining LTV at the level as of the endof the 24th FP (42.3%)

Forecast dividends
for the 25th FP

Contribution to Dividends (Note 2)

Forecast dividends
for the 26th FP

11,400 yen

Approx.

200
700

yen

yen

yen

Comprehensive judgements
will be made in view of actual
possibilities including the
combination of the 3 projectedscenarios

Projected dividends

11,500 yen to
12,100 yen

I. Overview of Daiwa Office Investment Corporation

13

External Growth Measures

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

40• Consider replacement of properties if necessary through sale in light of properties’
future competitiveness, profitability, etc.

35
30

■ Number of Properties Reviewed for Acquisition(cases)
500

416

400
300

296

264

0

17

26

288

15

276

60

Nippon Manpower Building

10

40

31

23

15

20

80

344

289

200
100

100

393

356

25

* Number of gross proposals (cases)

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

20

19

18

12

20

5

0

0

16th Fiscal 17th Fiscal 18th Fiscal 19th Fiscal 20th Fiscal 21st Fiscal 22nd Fiscal 23rd Fiscal 24th Fiscal
PeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodPeriodDaiwa Meieki
CONCURRED Yokohama

0

1

2

3

4

5

6

11
8
9
10
Distance to station (minutes)

7

Changes in Asset Size and Trading Performance
Aim to achieve medium-term goal of an asset size of 500 billion yen
80.0 (%)(Billion yen) 550
Total Acquisition Price

LTV (based on total assets) (right axis)

500.0

500

445.7

450

350

311.3

300

265.0

25.3

100
50
0

269.1

278.1

25.5

313.2 314.9

332.0

352.7

287.3
34.0

200
150

469.3

469.3

28.1

34.2

34.4

37.5

28.9

Acquisition property

Acquisition property

Acquisition property• Daiwa Nishi-Shimbashi• Daiwa Kudan• E SPACE
TOWER• Daiwa Osaki
3-chome

364.0

40.6

60.0

387.5
50.0

43.0

44.3
40.2

41.7

43.3

Acquisition property

Acquisition property

Acquisition property• Daiwa Shibuya
Dougenzaka• Daiwa Akasaka• Daiwa Shibuya
Miyamasuzaka• Daiwa Azabu
Terrace• Daiwa Kitahama• Daiwa River Gate
• Daiwa Hatchobori
ekimae• Daiwa Hatchobori
ekimae West

Acquisition property

Acquisition property

Acquisition property

Acquisition property

Acquisition property

Acquisition property• Daiwa Jimbocho• Daiwa Kayabacho• Daiwa Jinbocho3-chome• Daiwa
Nihonbashi
Hongokucho• shinyon curumu• Daiwa Meieki• Daiwa Kamiooka• Integral Tower• Daiwa Ebisu
4-chome• LAQUAS Higashi
Shinjuku• Daiwa Aoyama• Shinsen Place• Glass City Shibuya• Daiwa Meguro
Square

42.3

42.2

42.3

40.2

40.0

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

Acquisition property

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

Acquisition property• CONCURRED
Yokohama• Nippon Manpower
Building

8th
9th
10th
11th
12th
13th
14th
15th
16th
17th
18th
19th
20th
21st
22nd
23rd
24th
25th
Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period Fiscal Period(forecast)

14

70.0

439.4

413.2

400

250

458.3

467.7

30.0

20.0

10.0

0.0
Mediumterm goalFinancial Conditions
Reduce refinancing risk by extending borrowing periods and diversifying repayment dates

Status of Interest-Bearing Liabilities (As of November 30, 2017)
During the 24th Fiscal Period, DOI refinanced matured existing loans (11.55 billion yen), 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 (%) (Years) 10.0
Interest-bearing liabilities (left axis)

240

60.0

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

200

50.0

42.3

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

160
120
80
40

40.0

8.0
7.0
6.0

5.0 (Years)

Average years remaining at the period end (right axis)
Average remaining years at the time of procurement
during the 24th Fiscal Period (left axis)
Average remaining years at thetime of procurement during the24th Fiscal Period(excluding short-termborrowings)(left axis)

4.5

4.2
4.0
7.9
7.3

3.5
3.0

5.0

2.5

30.0

4.0

2.0

20.0

3.0

1.5

2.0

1.0

1.0

0.5

10.0

0

9.0

0.0
End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of End of
7th 8th 9th 10th 11th 12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th
Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period Period

0.0

0.0
12th 13th 14th 15th 16th 17th 18th 19th 20th 21st 22nd 23rd 24th
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 24th Fiscal Period excluding short-term borrowings.

■ Diversification of Repayment Dates■ Balance of Borrowings by Financial Institution(Million yen)
20,000 11,550

Investment corporation bond

16,00012,000

8,000

4,000

0
24th 25th 26th 27th 28th 29th 30th 31st 32nd 33rd 34th 35th 36th 37th 38th 39th 40th 41st 42nd
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■ Ratio of Fixed- to
Floating-Rate Borrowings■ Ratio of Long- to
Short-Term Liabilities

End of 24th
Fiscal Period

End of 24th
Fiscal Period

20.1%

79.9%

9.5
%

90.5%

Fixed interest rates

Long-term loans payable

Floating interest rates

Short-term loans payable andcurrent portion of long-termloans payable

LenderSumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank
Development Bank of Japan
Mizuho Bank
The Bank of Tokyo-Mitsubishi UFJ
Shinsei Bank
Resona Bank
Mitsubishi UFJ Trust and Banking
Mizuho Trust and Banking
The Bank of Fukuoka
Kansai Urban Banking Corporation
Aozora Bank
Nishi-Nippon City BankORIX Bank Corporation
The Gunma Bank
The 77 Bank
The Musashino Bank
Tokio Marine & Nichido Fire Insurance
The Yamaguchi Bank
The Higashi-Nippon Bank
Nippon Life Insurance Company
The Kagawa Bank
Taiyo Life Insurance Company
Fukoku Mutual Life Insurance
Investment Corporation Bonds
Total

Balance (mm yen)

42,40024,85021,75019,40016,00014,00012,500
8,500
6,000
5,500
5,000
3,000
3,000
2,500
2,500
2,000
2,000
2,000
2,000
1,500
1,300
1,000
300
200
5,100
204,300

Share

20.8%
12.2%
10.6%
9.5%
7.8%
6.9%
6.1%
4.2%
2.9%
2.7%
2.4%
1.5%
1.5%
1.2%
1.2%
1.0%
1.0%
1.0%
1.0%
0.7%
0.6%
0.5%
0.1%
0.1%
2.5%
100.0%■ Status of Rating
Rating agency

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

Target rating

RatingRating outlook

Issuer rating

A+

StableLong-term issuer rating

AA−

StableI. Overview of Daiwa Office Investment Corporation

15

Description of Asset Manager

Organization of Asset Manager (As of December 31, 2017)■ 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
Akira Yamanouchi
10
Executive directors: 5; Executive auditor: 1
Non-executive directors: 2; Non-executive auditors: 2
63 (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
Member of The Investment Trusts Association, Japan
Member of Japan Investment Advisers Association
Member of Type II Financial Instruments Firms Association

President and Representative Director
Vice President and Representative
Director
Vice President and Representative
Director
Director
Director
Director (non-executive)
Director (non-executive)
Auditor
Auditor (non-executive)
Auditor (non-executive)■ Organizational
Chart

Akira Yamanouchi
Yuji Shinotsuka
Yoshiki Nishigaki
Toshio Fukushima
Hajime Imbe
Mikita Komatsu
Naoya Otani
Tamaki Shibayama
Morimasa Matsuda
Shinji Kiso

Shareholders’ Meeting
Corporate Auditors
Board of Directors

Compliance Committee

Compliance Officer

Investment Committee（*）
President andRepresentative Director
Acquisition and Asset Management Division
Acquisition
Department
OfficeInvestment Team
Residential
Investment Team
Healthcare
Investment Team

Origination
Department

Private Fund Division

Asset Management
Department
OfficeManagement Team
Residential
Management Team
Healthcare
Management Team
Investment
Planning Team
Construction
Management Team

Private FundManagement Department

Internal Control Office

Corporate Division
Customer Relations
Department

Administration
Department

Finance
Department

Corporate Planning
Department

Finance Team
Accounting TeamManagement Team

* Set up separately for each
investment corporation

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: Yoshimi Murakami
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

24th Period 23rd Period 22nd Period 21st Period 20th Period

June 1, 2017 From Dec. 1, 2016 From June 1, 2016 From Dec. 1, 2015 From June 1, 2015
( From
To Nov. 30,2017 )( To May 31,2017 )( To Nov. 30, 2016 )( To May 31, 2016 )( To Nov. 30, 2015 )(1) Operating Performance(Millions of yen, except per unit data or where otherwise indicated)
Operating revenues
12,735
12,547
12,85312,363
11,838
Rental revenues
12,71812,513
12,687
11,948
11,777
Operating expenses
6,558
6,414
6,710
6,255
6,223
Property-related expenses
5,279
5,151
5,433
5,014
5,026
Operating income
6,177
6,133
6,143
6,108
5,615
Ordinary income
5,456
5,360
5,325
5,327
4,690
Net income
5,455
5,359
5,325
5,250
4,689
(2) Properties, etc. (as of end of period)
Total assets
483,173483,731483,451476,690
460,706[period-on-period percentage changes][−0.1%][+0.1%][+1.4%][+3.5%][+6.6%]
Interest-bearing liabilities
204,300
204,300
204,300
206,300
192,300
Net assets
256,796
256,561
256,517
247,720
247,700[period-on-period percentage changes][+0.1%][+0.0%][+3.6%][+0.0%][+11.1%]
Unitholders’ capital
251,552
251,552
251,552
243,404
243,404(3) Distributions
Total distribution amount
5,455
5,359
5,325
5,086
4,689
Dividend payout
100.0%
100.0%
100.0%
96.9%
100.0%(4) Per Unit Information
Total number of units issued (units)497,869
497,869
497,869
484,000
484,000
Net assets per unit (yen)515,790
515,318
515,231511,819
511,778
Distribution per unit (yen)10,957
10,764
10,695
10,508
9,688
Distribution amount from earnings per unit (yen)10,957
10,764
10,695
10,508
9,688
Distribution amount in excess of earnings per unit (yen)
–
–
–
–
–
(5) Financial Indicators
1.1%
1.1%
1.1%
1.1%
1.1%
ROA
Notes 2and3[annual rate][2.3%][2.2%][2.2%][2.3%][2.1%]
2.1%
2.1%
2.1%
2.1%
2.0%
ROE
Notes 3and 4[annual rate][4.2%][4.2%][4.2%][4.2%][4.0%]
Capital ratio
53.1%
53.0%
53.1%
52.0%
53.8%
[period-on-period percentage changes][+0.1%][−0.0%][+1.1%][−1.8%][+2.2%]LTV (loan to value)
42.3%
42.2%
42.3%
43.3%
41.7%
Note 5
Property leasing cash flows (NOI)
9,208
9,133
9,004
8,660
8,455
(6) Other Referential Information
Number of investment properties
54
54
53
50
50
Note 6
580
577
558
543
558
Number of tenants
338,377.31 338,436.22 336,722.04 328,027.44 325,313.01
Total rentable area (m2)
Note
7
98.2%
97.7%
97.7%
98.7%
98.3%
Occupancy rate
Depreciation
1,769
1,771
1,750
1,726
1,704
Capital expenditures
536
824
993
517
1,087
(Note 1)
(Note 2)
(Note 3)(Note 4)(Note 5)(Note 6)(Note 7)

Operating revenues, etc. do not include consumption taxes, etc.
ROA: Ordinary income ÷ [(Total assets at beginning of period + Total assets at end of period) ÷ 2] × 100
Figures for the 20th Fiscal Period are the annualized figures calculated based on 183 days of management.
Figures for the 21st Fiscal Period are the annualized figures calculated based on 183 days of management.
Figures for the 22nd Fiscal Period are the annualized figures calculated based on 183 days of management.
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.
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 469,342 million yen as of the last day of November
2017.
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 (from June 2017 to November 2017)
The Japanese economy during the fiscal period under review continued to show a modest recovery
trend with real GDP growth rate (Second Preliminary Estimates) for July to September 2017 at an annual
rate of 2.5%, recording a positive figure for seven consecutive quarters under the ongoing quantitative/
qualitative monetary easing policy by the Bank of Japan.
In the office building leasing market in central Tokyo, with new supply having settled down, the vacancy
rate took a turn after peaking in June 2013, dropping to 3.03% at the end of November 2017. Led by
improvement in the vacancy rate for existing large buildings, the overall vacancy rate that includes smallto medium-sized buildings also continues to be on an improving trend. The drop in the vacancy rate has
led to an increase in office rent in some areas, and the market as a whole continues to see increase inrent, albeit slight.
For the office building transaction market, a strong appetite for property acquisitions continued among
real estate companies, funds (including J-REITs) and oversea investors with the continuing proactive
lending attitude by financial institutions.
(B) Management Performance
In view of increasing the long-term EPS (EPS (net income per unit) after deducting gain on sales 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 Godo kaisha Yokohama Office Management Silent
Partnership Equity Interest (acquisition price: 3,920 million yen (10% of total investment amount in thesilent partnership)). This is an acquisition of 75% quasi co-ownership in trust beneficial interest in
domestic real estate (CONCURRED Yokohama) as an asset in trust. With this acquisition, DOI acquired
preferential negotiation rights pertaining to the acquisition of the quasi co-ownership interest. As a result,
DOI’s assets under management as of the end of the 24th Fiscal Period (November 30, 2017) totaled 54
properties (sum total of acquisition prices: 469,342 million yen, excluding silent partnership equity
interest) and one silent partnership equity interest (3,920 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 24th Fiscal Period (November 30, 2017)
was 98.2%.

18

(3) Overview of Capital Procurement(A) Procurement of Capital for Repayment of Borrowings(a) In the 24th Fiscal Period, DOI made the following borrowings to fund the repayment of borrowings thatwere due for repayment.
・A total amount of 6,050 million yen was borrowed from Development Bank of Japan Inc., Sumitomo
Mitsui Banking Corporation and Mizuho Bank, Ltd. on August 31, 2017 to fund the repayment of thesame amount borrowed from Development Bank of Japan Inc., Sumitomo Mitsui Banking Corporation,
Mizuho Bank, Ltd. and The Hiroshima Bank, Ltd. due the same day.
・A total amount of 5,500 million yen was borrowed from Shinsei Bank, Limited., Development Bankof Japan Inc., Tokio Marine & Nichido Fire Insurance Co., Ltd. and The Yamaguchi Bank, Ltd. on
November 30, 2017 to fund the repayment of the same amount borrowed from the respective banks
due the same day.
(B) Status of Interest-Bearing Liabilities at End of the Fiscal Period under Review
As a result of the above, the balance of interest-bearing liabilities outstanding as of the end of the 24th
Fiscal Period (November 30, 2017) stood at 204,300 million yen (short-term debt: 2,000 million yen; longterm debt: 197,200 million yen; investment corporation bonds: 5,100 million yen). The balance of the current
portion of long-term debt stood at 17,350million yen.
The average remaining period of interest-bearing liabilities as of the end of the 24th Fiscal Period stands
at 4.2 years.
(4) Capital Expenditures during the 24th Fiscal Period
The following summarizes the primary construction work that constitutes capital expenditures implemented
during the 24th Fiscal Period. Capital expenditures for the 24th Fiscal Period amounted to 536 million yen
and, when combined with the 268 million yen in repair expenses charged to the 24th Fiscal Period expenses,
totals 804 million yen in construction work were implemented.
Name of real estate
properties(Location)
Shinjuku Maynds Tower(Shibuya-ku, Tokyo)
Daiwa Ebisu 4-chome(Shibuya-ku, Tokyo)
Daiwa River Gate
(Chuo-ku, Tokyo)
Other

PurposeRemodeling of gray water facility
Upgrading of cubicle
Upgrading of air conditioning controller

PeriodFrom: Oct. 2017
To: Nov. 2017
From: Jun. 2017
To: Aug. 2017
From: Oct. 2017
To: Nov. 2017

Construction
amount paid
(million yen)
62
39
35
400

Total

536

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 24th Fiscal Periodof 12,735 million yen in operating revenue, 6,177 million yen in operating income, 5,456 million yen in ordinary
income and 5,455 million yen in net income.
Concerning distributions, it is planned that the amount equivalent to distributions from earnings would be
included in the amount of tax-deductible expenses based on application of special provisions for taxation of
corporation tax (Article 67-15 of the Act on Special Measures Concerning Taxation (Act No. 26 of 1957;
including amendments thereto) (the “Special Taxation Measures Act”)). Accordingly, DOI decided to distributealmost the entire amount of unappropriated retained earnings (excluding fractions of the distribution amount perunit that are less than 1 yen), and declared a distribution amount per unit of 10,957 yen.

3. Outlook for the Next Fiscal Period(1) Investment Environment
The Japanese economy going forward is expected to continue expansion through solid trends in personal
spending against the backdrop of a favorable employment environment and the improved income
environment while the monetary easing policy implemented by Bank of Japan continues. However, the degreeof growth is forecasted to be moderate. In addition, factors such as policies set out by the U.S. President
Donald Trump, the downward swing of the Chinese economy, upsets in emerging markets accompanying the
U.S. “exit strategy” from the monetary easing policy and “risk off” due to geopolitical risks and political risks,pose potential risks of disrupting the Japanese real economy and financial environment, and are thus thought
to require attention.
In the Tokyo office building leasing market, factors such as improvement in employment are stimulating
demand, resulting in the vacancy rate dropping. Improvement in corporate performance is forecasted toincrease demand for office floor space and rent is expected to continue rising moderately as a consequence.
In the office building transaction market, backed by the favorable financing environment, among otherfactors, the property acquisition appetite among investors overseas, 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
Despite such strong office leasing market conditions, the tenant side is becoming more heavily selectivewith properties in the soft aspect such as security systems, efforts on environmental consideration andoperations/management in addition to location and building specifications. Consequently, DOI will carryout operational management under the following policy with an aim to enhance the competitiveness ofexisting properties and thereby increase the long-term EPS over the medium to long term.
(a)Maintain and raise occupancy rates
Concerning existing tenants, strive to reduce move-out 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.
(b)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.
(c)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 24th Fiscal Period, DOI acquired Godo kaisha Yokohama Office Management Silent
Partnership Equity Interest (acquisition price: 3,290 million yen (10% of total investment amount in thesilent partnership)). This is an acquisition of 75% quasi co-ownership in trust beneficial interest in
domestic real estate (CONCURRED Yokohama) as an asset in trust. With this acquisition, DOI acquired
preferential negotiation rights pertaining to the acquisition of the quasi co-ownership interest. DOI willcontinue to strive to acquire properties in line with the investment strategy described above.
(C) Financial Strategy
DOI will conduct disciplined financial management of the following basic content.
(a) 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 real LTV, etc., as a principle.
(b) 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.
(c) Aim to have long-term loans account for at least 70% of balance of loans as a principle.
(d) Achieve diversification of lenders, which shall mainly be Japanese financial institutions.
(e) 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
The following are the principal capital expenditures arising from renovation construction work, etc.
currently planned for existing portfolio properties. Please note that the expected construction amountincludes portions that are expensed as a separate account item of accounting costs.
Expected construction amount(million yen)
Name of real estate
properties(Location)

PurposeScheduled
implementation
periodTotalamountAmountpaid
duringcurrent
periodTotalamountalreadypaid

Daiwa Akasaka(Minato-ku, Tokyo)

Upgrading of air-conditioning
system

From: Nov. 2016
To: Jun. 2018

1,091

327

327

Integral Tower(Suginami-ku, Tokyo)

Upgrading of air-conditioning
system

From: Mar. 2017
To: Apr. 2018

935

380

277

Integral Tower(Suginami-ku, Tokyo)

Construction of power receiving
and transforming facility

From: Mar. 2017
To: Dec. 2017

178

–

–

E SPACE TOWER(Shibuya-ku, Tokyo)

Upgrading of air-conditioning
system

From: Feb. 2018
To: May 2018

160

–

–

Shinjuku Maynds Tower Changing lighting in exclusive(Shibuya-ku, Tokyo)
areas to LED (green leasing)From: Dec. 2017
To: May 2018

70

–

–

II. Asset Management Report21III. Balance Sheets
As of November 30, 2017 and May 31, 2017

(Thousands of yen)

As ofNovember 30, 2017

As of
May 31, 2017

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

15,958,480

19,978,416

Tenant receivables

222,262

145,154

Prepaid expenses

344,392

371,845

Deferred tax assets (Note 12)

4,896

2,087

Other current assets

84,12244,308

Total Current Assets

16,614,152

20,541,810

Land

12,302,227

12,302,227

Buildings and structures

3,268,095

3,259,478

Tools, furniture and fixtures

23,976

19,953

Construction in progress

3,619

773

Land in trust accounts

360,772,888

360,772,888

Buildings and structures in trust accounts

106,097,844

105,619,653

Machinery and equipment in trust accounts

998,775

968,629

Tools, furniture and fixtures in trust accounts

257,138

242,358

Construction in progress in trust accounts

1,519,315

741,404(26,673,085)(24,904,309)

2,398,276

2,398,276

306,884

306,884

461,275,952

461,728,214

3,951,142

–

433

488

113,685

113,684

Long-term prepaid expenses

1,002,821

1,071,191

Deferred tax assets (Note 12)

92,583

159,767

Derivative assets (Note 4)

63,86150,508Deferred investment corporation bond issuance costs

20,58923,543

Others38,21941,754

5,283,333

1,460,935

483,173,437

483,730,959

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:
Investment securities (Note 4)
TrademarkLease and guarantee deposits in trust accounts

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

22

(Thousands of yen)

As ofNovember 30, 2017

As of
May 31, 2017

Liabilities
Current Liabilities:
Accounts payable

814,020

1,394,961

Short-term debt (Notes 4 and 9)

2,000,000

1,000,000

Long-term debt due within one year (Notes 4 and 9)

17,350,000

19,400,000

425,557

457,360

870

943

Accrued consumption taxes

256,958

336,451

Rent received in advance

2,046,248

2,040,617

Other current liabilities

304,746

571,467

Total Current Liabilities

23,198,399

25,201,799

5,100,000

5,100,000

Long-term debt (Notes 4 and 9)

179,850,000

178,800,000

Tenant security deposits including trust accounts (Note 4)

17,632,043

17,272,308

Derivative liabilities (Note 4)

596,907796,227

Total Long-Term Liabilities

203,178,950

201,968,535

226,377,349

227,170,334

251,551,759

251,551,759

164,163

164,1635,455,378

5,359,285

257,171,300

257,075,207

Deferred gains or losses on hedges(375,212)(514,582)

Total valuation and translation adjustments(375,212)(514,582)

Total Net Assets

256,796,088

256,560,625

Total Liabilities and Net Assets

483,173,437

483,730,959

Accounts payable – other
Income taxes payable

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

Total Liabilities

Net Assets (Notes 8 and 13)
Unitholders’ Equity:
Unitholders’ capital
Units authorized: 2,000,000 units
Units issued and outstanding: 497,869 units as ofNovember 30, 2017 and May 31, 2017
Reserve for reduction entry
Retained earnings
Total Unitholders’ Equity
Valuation and translation adjustments

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

III. Balance Sheets

23

IV. Statements of Income and Retained Earnings
For the fiscal periods ended November 30, 2017 and May 31, 2017

(Thousands of yen)

For the fiscal periods
ended November 30, 2017
Operating Revenues:
Rental revenues (Note 7)
Other revenues related to property leasing (Note 7)
Total Operating Revenues
Operating Expenses:
Property-related expenses (Note 7)

For the fiscal periods
ended May 31, 201712,718,363
16,864

12,513,019
33,996

12,735,227

12,547,015

5,279,235

5,151,042

Asset management fees
Asset custody fees
Administrative service fees
Trust fees

1,048,416
24,124
75,117
18,595

1,034,063
24,10475,572
18,606

Directors’ compensation
Other operating expenses

7,200
105,292

7,200
103,259

6,557,979
6,177,248

6,413,846
6,133,169

92
480
1,589

140
603
6,549

2,161

7,292

548,020
16,708
153,931
4,708

587,969
16,892
170,991
4,434

723,367
5,456,042
5,456,042

780,286
5,360,175
5,360,175

Total Operating Expenses
Operating Income
Non-Operating Revenues:
Interest income
Reversal of distribution payable
Other non-operating revenues
Total Non-Operating Revenues
Non-Operating Expenses:
Interest expense
Interest expense on investment corporation bonds
Borrowing expenses
Other non-operating expenses
Total Non-Operating Expenses
Ordinary Income
Income Before Income Taxes
Income taxes – current
Income taxes – deferred
Total Income Taxes (Note 12)
Net Income

883
4

964
(6)

887
5,455,155

958
5,359,217

Retained Earnings Brought Forward
Retained Earnings at End of Period

223
5,455,378

68
5,359,285

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

24

IV. Statements of Income and Retained Earnings

V. Statements of Changes in Net Assets
For the fiscal periods ended November 30, 2017 and May 31, 2017
Number of
Units(Units)Balance as ofNovember 30, 2016
Cash distributions
declared
Net income
Net changes of
items other thanunitholders’ equity
Balance as of
May 31, 2017
Cash distributions
declared
Net income(Thousands of yen)

Unitholders’ Equity
Reserve forUnitholders’
Retained
Reduction
CapitalEarnings
Entry

Deferred Gains
or Losses on
HedgesTotal Net
Assets497,869

251,551,759

164,1635,324,776(523,375)

256,517,323

－

－

－

(5,324,708)－(5,324,708)

－

－

－

5,359,217－

5,359,217

－

－

－

－

8,793

8,793

497,869

251,551,759

164,1635,359,285(514,582)

256,560,625

－

－

－

(5,359,062)－(5,359,062)

－

－

－

5,455,155－

5,455,155

139,370

139,370(375,212)

256,796,088

Net changes of
items other than－－－－unitholders’ equity
Balance as of
497,869 251,551,759
164,1635,455,378
November 30, 2017
The accompanying notes are an integral part of these financial statements.

V. Statements of Changes in Net Assets

25VI. Statements of Cash Flows
For the fiscal periods ended November 30, 2017 and May 31, 2017

(Thousands of yen)

For the fiscal periods
ended
November 30, 2017

For the fiscal periods
ended
May 31, 2017

Income before income taxes

5,456,042

5,360,175

Depreciation and amortization

1,772,415

1,772,265

2,954

2,938

Interest expense

564,728

604,862

Decrease (increase) in tenant receivables(77,108)

81

Decrease in accounts payable(287,045)(183,224)

5,632

12,336(564,820)(604,769)–

55,305

Increase (Decrease) in accrued consumption taxes(79,493)247,310

Other, net(221,280)

242,952

6,572,025

7,510,231(1,610,953)(3,195,342)(31,259)–(3,951,142)–

Proceeds from tenant security deposits including trust
accounts

970,585

961,685

Refunds of tenant security deposits including trust
accounts(610,851)(641,476)(5,233,620)(2,875,133)

Proceeds from short-term debt

1,000,000

1,000,000

Repayments of short-term debt–

(1,000,000)

Proceeds from long-term debt

10,550,000

16,700,000

Repayments of long-term debt

(11,550,000)(16,700,000)

Distributions paid

(5,358,341)(5,324,547)

Net Cash Used in Financing Activities(5,358,341)(5,324,547)

Net Change in Cash and Cash Equivalents(4,019,936)(689,449)

Cash and Cash Equivalents at Beginning of Period

19,978,416

20,667,865

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

15,958,480

19,978,416

Cash Flows from Operating Activities:

Amortization of bond issuance costs

Increase in rent received in advanceInterest payments
Decrease in consumption taxes receivable

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
Payments for purchases of investment securities

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 November 30, 2017 and May 31, 2017

Note 1 – Organization and Basis of Presentation
Organization
Daiwa Office Investment Corporation (the former DA Office Investment Corporation; hereinafter referred to as“DOI”) was established on July 11, 2005 as an investment corporation under the Act on Investment Trusts andInvestment Corporations (Act No. 198 of 1951, including subsequent revisions, hereinafter referred to as the“Investment Trust Act”) by the founder (the former daVinci Select; now, Daiwa Real Estate Asset Management(hereinafter referred to as the “Asset Manager”)).
DOI is an externally managed real estate fund, established as an investment corporation. The Asset Manager,
as DOI’s asset management company, is engaged in acquiring, managing, leasing, and renovating officeproperties. Daiwa Securities Group Inc. currently owns 100% of the shares of the Asset Manager.
On October 18, 2005, DOI had raised approximately 49,498,710 thousand yen through an initial public offeringof units. Those units were listed on the J-REIT section of the Tokyo Stock Exchange.
As of November 30, 2017, DOI had ownership or trust beneficiary interests in 54 office properties withapproximately 338,377m2 of rentable office space and had leased office space to 580 tenants engaged in avariety of businesses. The occupancy rate for the office properties was approximately 98.2 %.
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.
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.

VII. Notes to Financial Statements

27

Note 2 – Summary of Significant Accounting Policies(a) Cash and Cash Equivalents
Cash and cash equivalents consist of cash, demand deposits, and short-term investments which are highly
liquid, readily convertible to cash and with insignificant risk of market value fluctuation, with maturities of threemonths or less from the date of acquisition.
(b) Investment Properties
Investment properties are recorded at cost, which includes the allocated purchase price, related costs andexpenses for acquisition of the office properties and the trust beneficiary interests in trust. Investment property
balances are depreciated using the straight-line method over the estimated useful lives as follows:
As of November 30, 2017
As of May 31, 2017
Buildings and structures
2-64 years
2-64 years
Machinery and equipment
7-23 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.
(c) Investment securities
Investment securities classified as available-for-sale securities without fair value are stated at cost determined by
the moving-average method. Equity interest in a silent partnership is accounted for using the equity method of
accounting.
(d) 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.
(e) 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.
(f) 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 periods ended
November 30, 2017–

For the fiscal periods ended
May 31, 2017
188(g) 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.
(h) 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.

28

(i) 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.

Note 3 – Cash and Cash Equivalents
Cash and cash equivalents stated on the accompanying balance sheets and statements of cash flows as ofNovember 30, 2017 and May 31, 2017 consisted of the following:(Thousands of yen)

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

As of November 30, 2017
14,289,857
1,668,623
15,958,480

As of May 31, 201718,280,634
1,697,782
19,978,416

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).
Investment securities are investments in silent partnerships and exposed to credit risk of the issuer, fluctuation riskof real estate value, etc. and interest rate fluctuation risk. DOI manages such risks by reviewing the financial status of
the issuers and the real estate values, etc. on a regular basis.
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
Book value, fair value and difference between the two as of November 30, 2017 and May 31, 2017 were as follows:(Thousands of yen)

As of November 30, 2017

As of May 31, 2017

AssetsBook value

Fair value

DifferenceBook value

Fair value

Difference

Cash and cash
equivalents
Total

15,958,480

15,958,480–

19,978,416

19,978,416–

15,958,480

15,958,480–

19,978,416

19,978,416–

2,000,000

2,000,000–

1,000,000

1,000,000–

17,350,000

17,364,932

14,932

19,400,000

19,422,668

22,6685,100,000

5,175,450

75,4505,100,000

5,178,750

78,750Long-term debt

179,850,000

179,753,467(96,533)

178,800,000

178,786,895(13,105)

Total

204,300,000

204,293,849(6,151)

204,300,000

204,388,313

88,313(548,484)(548,484)–(752,224)(752,224)–

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

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

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

30

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

Type ofderivativetransaction

Hedged item

As of November 30, 2017
Contracted amount
Fair value (*1)
Due after one year
Total

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

Long-term debt

112,600,000

105,100,000(548,484)

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

Long-term debt

14,350,000

7,000,000– (*2)

126,950,000

112,100,000(548,484)(Thousands of yen)Hedge
accounting method

Type ofderivativetransaction

Hedged item

As of May 31, 2017
Contracted amount
Fair value (*1)
Due after one year
Total

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

Long-term debt

112,600,000

110,100,000(752,224)

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

Long-term debt

19,850,000

9,000,000– (*2)

132,450,000

119,100,000(752,224)(*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
Investment securities (with a book value of 3,951,142 thousand yen as of November 30, 2017) were excluded
from the scope of fair value disclosure because they are not marketable, which in turn makes it difficult toreasonably determine the fair value.
Tenant security deposits including trust accounts (with a book value of 17,632,043 thousand yen as ofNovember 30, 2017 and 17,272,308 thousand yen as of May 31, 2017) that have been deposited by tenants
were excluded from the scope of fair value disclosure because they are not marketable, and the actual deposit
period is not estimable, which in turn makes it difficult to reasonably estimate the future cash flows.

VII. Notes to Financial Statements

31

3. Redemption schedule for monetary claims(Thousands of yen)

As of November 30, 2017

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
15,958,480––––
15,958,480––––
Due within
one year

Due after
five years––(Thousands of yen)

As of May 31, 2017

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
19,978,416––––
19,978,416––––
Due within
one year

Due after
five years––

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

As of November 30, 2017

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

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

2,000,000–––––– 3,000,000––– 2,100,000
17,350,000 22,000,000 31,600,000 24,200,000 31,600,000 70,450,000
19,350,000 25,000,000 31,600,000 24,200,000 31,600,000 72,550,000(Thousands of yen)

As of May 31, 2017

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

32

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

1,000,000
–
–
–
–
–
–
– 3,000,000–– 2,100,000
19,400,000 21,500,000 25,000,000 33,300,000 21,500,000 77,500,000
20,400,000 21,500,000 28,000,000 33,300,000 21,500,000 79,600,000Note 5 – Tangible Fixed Assets of Investment Properties
Investment properties as of November 30, 2017 and May 31, 2017 consisted of the following:
As of November 30, 2017

(Thousands of yen)

As of May 31, 2017

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

3,268,095(2,069,721)

1,198,374

3,259,478(1,985,971)

1,273,507

Tools, furnitureand fixtures

23,976(11,727)

12,24919,953(10,790)

9,163

Construction inprogress

3,619

–

3,619

773

–

773

Land in trust
accounts

360,772,888–

360,772,888

360,772,888–

360,772,888

Buildings andstructuresin trust accounts

106,097,844(23,990,228)

82,107,616

105,619,653(22,354,668)

83,264,985

Machinery andequipmentin trust accounts

998,775(475,578)

523,197

968,629(441,667)

526,962

Tools, furnitureand fixturesin trust accounts

257,138(125,831)

131,307242,358(111,213)

131,145

Construction inprogressin trust accounts

1,519,315–

1,519,315

741,404–

741,404

485,243,877(26,673,085)

458,570,792

483,927,363(24,904,309)

459,023,054

Total

VII. Notes to Financial Statements

33

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 periods ended
November 30, 2017

For the fiscal periods ended
May 31, 2017

460,986,037

460,321,339(1,233,020)

664,698

Balance at end of period

459,753,017

460,986,037

Fair value (Note 3)

527,130,000

518,560,000

Book value: (Note 1)
Balance at beginning of period
Change during the period (Note 2)(Notes)1. The book value represents the acquisition cost less accumulated depreciation.
2. Significant changes
For the fiscal period ended November 30, 2017, the major reason for the decrease is depreciation (1,768,827 thousand yen).
For the fiscal period ended May 31, 2017, the major reason for the increase is acquisition of “Daiwa Kanda Mikuracho Building” (1,592,000
thousand yen). The major reason for the decrease is depreciation (1,770,761 thousand yen).
3. The fair values as of November 30, 2017 and May 31, 2017 were determined by the sum of appraisal values provided by external real estateappraisers.

Note 7 – Rental Revenues and Expenses
Rental revenues and expenses for the fiscal periods ended November 30, 2017 and May 31, 2017 were as
follows:(Thousands of yen)

For the fiscal periods ended
November 30, 2017

For the fiscal periods ended
May 31, 201712,718,363

12,513,019

16,86433,996

12,735,227

12,547,015

969,050

980,113

Utilities expenses

1,095,648

985,941

Taxes and dues

1,110,288

1,034,434

Insurance expenses

14,771

14,657

Repair expenses

267,966

316,201

1,768,827

1,770,761

52,68548,935

Total rental expenses

5,279,235

5,151,042

Income from property leasing

7,455,992

7,395,973

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

Depreciation
Other

34

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.

Note 9 – Short-Term Debt, Long-Term Debt Due Within One Year, Long-Term Debt andInvestment Corporation Bonds
Short-term debt, long-term debt due within one year, long-term debt and investment corporation bonds as ofNovember 30, 2017 and May 31, 2017 consisted of the following:(Thousands of yen)

As of November 30, 2017
Unsecured loans due 2017 to 2026, principallyfrom banks and insurance companies with interest
rates mainly ranging from 0.2% to 0.9%

As of May 31, 2017

199,200,000

199,200,000

0.4% unsecured bond due 2019

3,000,000

3,000,000

1.0% unsecured bond due 2024

2,100,000

2,100,000

204,300,000

204,300,000

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

The annual maturities of short-term debt, long-term debt and investment corporation bonds as of November
30, 2017 were as follows:(Thousands of yen)

Due within
one year

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

Due after
five years

Short-term debt, long-term debt
19,350,000 25,000,000 31,600,000 24,200,000 31,600,000 72,550,000
and investment corporation bonds

VII. Notes to Financial Statements

35

Note 10 – Leases
As Lessor
The future minimum rental revenues under existing non-cancelable operating leases as of November 30, 2017
and May 31, 2017 were as follows:(Thousands of yen)

As of November 30, 2017

As of May 31, 2017

Due within one year

9,330,888

9,789,129

Due after one year

15,844,194

17,052,791

Total

25,175,082

26,841,920

Note 11 – Reduction of Investment Properties Purchased with Government Subsidies
Government subsidies of 32,898 thousand yen were deducted from the acquisition cost of the buildings intrust as of November 30, 2017 and May 31, 2017.

Note 12 – 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 periods ended
November 30, 2017

For the fiscal periods ended
May 31, 2017

Statutory tax rate

31.74

31.74

Deductible cash distributions(31.73)(31.73)

Others0.01

0.01

Effective tax rate

0.02

0.02

The significant components of deferred tax assets and liabilities as of November 30, 2017 and May 31, 2017
were as follows:(Thousands of yen)

As of November 30, 2017

As of May 31, 2017

Deferred tax assets:
Accrued enterprise tax

13

17

193,446

253,598

193,459

253,615

Reserve for reduction entry

75,80675,806

Deferred gains on hedges

20,174

15,955

Total deferred tax liabilities

95,98091,761

Net deferred tax assets

97,479161,854

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

36

Note 13 – Per Unit Information
Information about earnings per unit for the fiscal periods ended November 30, 2017 and May 31, 2017, net
assets per unit as of November 30, 2017 and May 31, 2017 were as follows:(Yen)

For the fiscal periods ended
November 30, 2017

For the fiscal periods ended
May 31, 2017

10,957.01

10,764.31

497,869

497,869

Earnings per Unit:
Net income per unit
Weighted average number of units outstanding (units)(Yen)

As of November 30, 2017
Net Assets per Unit

515,790

As of May 31, 2017
515,318

The computation of earnings per unit is based on the weighted average number of units outstanding during theperiod. The computation of net assets per unit is based on the number of units outstanding at each period end
as stated on the balance sheets.
The diluted net income per unit is not stated as there are no diluted investment units.
There is no amount that is not available to ordinary unitholders.

Note 14 – 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 5,455,150,633 yen for the fiscal period ended
November 30, 2017 and 5,359,061,916 yen for the fiscal period ended May 31, 2017 that are the largest integral
multiple of 497,869, the number of units outstanding as of November 30, 2017 and May 31, 2017, after
deducting provision of reserve for reduction entry as stipulated in Article 66-2 of the Special Taxation Measure
Act of Japan. 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 periods ended
November 30, 2017

For the fiscal periods ended
May 31, 2017

Ⅰ Unappropriated retained earnings

5,455,377,793

5,359,285,070

Ⅱ Cash distributions declared

5,455,150,633

5,359,061,916

227,160

223,154

Ⅲ Retained earnings brought forward

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

Cash distributions per unit
Board of directors meeting dates

For the fiscal periods ended
November 30, 2017

For the fiscal periods ended
May 31, 2017

10,957

10,764January 18, 2018

July 18, 2017

VII. Notes to Financial Statements

37

Note 15 – Related-Party Transactions
Not applicable.

Note 16 – Segment Information
For the fiscal periods ended November 30, 2017 and May 31, 2017
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.

38

Note 17 – Significant Subsequent Events(a) Acquisition of Assets(1) DOI acquired the trust beneficial interest in real estate on January 11, 2018 as described below.
Overview of the asset
Asset type
Property nameLocation
Acquisition priceAgreement date
Acquisition dateSellerTrust beneficial interest in domestic real estate (Note 1)
CONCURRED Yokohama (Note 2)
3-1 Kinko-cho, Kanagawa-ku, Yokohama-shi, Kanagawa
38,100,000 thousand yen (excluding acquisition costs, consumption tax, etc.)
December 19, 2017
January 11, 2018
Godo kaisha Yokohama Office Management(Note 1) DOI acquired 75% quasi co-ownership of trust beneficial interest in real estate.
(Note 2) DOI held preferential negotiation rights of the trust beneficial interest in real estate owned by Godo kaisha Yokohama Office Management andacquired the trust beneficial interest in real estate as a result of the negotiation.

(2) DOI acquired the trust beneficial interest in real estate on January 12, 2018 as described below.
Overview of the asset
Asset type
Property nameLocation
Acquisition priceAgreement date
Acquisition dateSellerTrust beneficial interest in domestic real estate
Nippon Manpower Building
47-1 Kanda Higashi Matsushitacho, Chiyoda-ku, Tokyo
4,200,000 thousand yen (excluding acquisition costs, consumption tax, etc.)
December 19, 2017
January 12, 2018
Non-disclosed (Note)(Note) The seller is a domestic company. Its information is not disclosed since consent for disclosure has not been obtained from the seller.

(b) Sales of Assets(1) DOI sold a trust beneficial interest in real estate on December 20, 2017 as described below.
Overview of the asset
Asset type
Property nameSale priceAgreement date
Delivery date
Purchaser

Trust beneficial interest in domestic real estate
Daiwa Meieki Building
8,300,000 thousand yen (excluding settlement amounts of fixed asset tax and city
planning tax, consumption tax, etc.)
December 19, 2017
December 20, 2017
Non-disclosed (Note)(Note) The purchaser is a domestic company. Its information is not disclosed since consent for disclosure has not been obtained from the purchaser.

(2) DOI determined to sell a trust beneficial interest in real estate on December 19, 2017 as described below.
Overview of the asset
Asset type
Property nameSale price(planned)
Agreement date
Delivery date(scheduled)
Purchaser

Trust beneficial interest in domestic real estate
Shinjuku Maynds Tower (3/7 of co-ownership interest) (Note)
62,500,000 thousand yen (excluding settlement amounts of fixed asset tax and city
planning tax, consumption tax, etc.)
December 19, 2017
February 28, 2018
MAY Tokutei Mokuteki Kaisha(Note) DOI holds 6/7 of co-ownership interest in Shinjuku Maynds Tower. Co-ownership interest in the property will become equivalent to 3/7 after DOI
sells 3/7 of co-ownership interest in the property.

VII. Notes to Financial Statements

39

(c) Borrowing of Funds
DOI borrowed funds on January 11, 2018 as described below. These funds were allocated for acquisition of theproperty described in “(a) Acquisitions of Assets (1)” and its related costs.
Details of borrowings
LenderBalance(Thousands of yen)Interest rate

Sumitomo Mitsui
Banking Corporation

12,000,000

Sumitomo Mitsui Trust
Bank, Limited

1 month
9,000,000 JapaneseyenMizuho Bank, Ltd.

9,000,000

The Bank ofTokyo-Mitsubishi
UFJ, Ltd.

9,000,000

TIBOR+0.25%(Note)

Borrowingdate

Repayment
methodNote

Maturity

January 11,
2018

Bulletpayment

Unsecured

May 31, 2018

(Note) Interest payments shall be paid at the end of every month and the repayment date. (If any such date is not a business day, it will be thefollowing business day. If such date falls within the next month, the preceding business day of the month will be the payment day.) Interest rateis calculated based on the 1 month Japanese Yen TIBOR which Japanese Bankers Association announces two business days prior to the firstday of the applicable period.

40

VIII. Independent Auditor’s Report

VIII. Independent Auditor’s Report41

IX. Investor Information
History of Investment Unit Price(Yen) 900,000

18,000 (Units)
Investment unit price (left axis)

Trading volume (right axis)

800,000

16,000700,000

14,000600,000

12,000500,000

10,000400,000

8,000

300,000

6,000

200,000

4,000

100,000

2,000

0

0

2015 2016
Dec. Jan.

Feb.

Mar.

Apr.

May

June

July

Aug. Sept. Oct.

Nov.

2017
Dec. Jan.

Feb.

Mar.

Apr.

May

June

July

Aug. Sept. Oct.

Nov.

Overview of Investment Units and Unitholders (As of November 30, 2017)■ No. of Investment Units by Investor Type
24th
Fiscal Period

Individuals/others
20,718 units (4.2%)

Financial institutions
182,502 units (36.7%)■ No. of Unitholders
by Investor Type
Foreigners 97,119 units (19.5%)

Total: 497,869 units
Other domestic corporations 191,803 units (38.5%)

23rd
Fiscal Period

Individuals/others
20,992 units (4.2%)

Financial institutions
195,705 units (39.3%)

Securities firms 5,727 units (1.2%)

Foreigners 85,322 units (17.1%)

Total: 497,869 units
Other domestic corporations 191,614 units (38.5%)

Name of Investor

1. Daiwa Investment Management Inc.

128,905 25.89%

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

61,555 12.36%

3. Daiwa Securities Group Inc.

59,321 11.91%

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

48,898The Nomura Trust and Banking Co., Ltd.
6.
(Investment Trust Account)104(1.2%)

Other domestic
corporations

149(1.8%)

Foreigners229(2.7%)

Securities firms

13(0.2%)

Total

8,479

January 18, 2018 : Announcement of financial results
24th Fiscal Period
February 14, 2018 : Sending of Japanese version Business
Report for 24th Fiscal Period(Statement of Financial Performance)
February 15, 2018 : Start paying distributions for
24th Fiscal Period

Nov.

9.82%

End offiscal periodAug.

27,996

5.62%
July

12,2892.47%

7. STATE STREET BANK AND TRUST COMPANY 505012

7,886

1.58%

8. CBLDN STICHTING PENSIOEN FONDS METAAL EN TECHNIEK

7,463

1.50%

STATE STREET BANK - WEST PENSION
9.
FUND CLIENTS - EXEMPT 505233

5,144

1.03%

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

5,021

1.01%

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

42

Financial institutions

IR Calendar
Number ofPercentage
Units Owned
Share(Units)Trust & Custody Services Bank, Ltd.
(Securities Investment Trust Account)

7,984(94.1%)

Securities firms 4,236 units (0.9%)

Top Ten Unitholders (As of November 30, 2017)5.

Individuals/others

Jan.
End offiscal period

Feb.

May
July 2018: Announcement of financial results for25th Fiscal Period
August 2018 : Sending of Japanese version Business
Report for 25th Fiscal Period(Statement of Financial Performance)
August 2018 : Start paying distributions for25th 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 publicly announced beforehand

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 (securities 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 communicatedDaiwa 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.