Statement of Financial Performancefor the 31st Fiscal Period
From: December 1, 2020
To: May 31, 2021

6-2-1 Ginza, Chuo Ward, Tokyo

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

I. Asset Management Report
1. Management Status and Other Performance Highlights Data
Fiscal Period

31st Period 30th Period 29th Period 28th Period 27th Period

Dec. 1, 2020 From June 1, 2020 From Dec. 1, 2019 From June 1, 2019 From Dec. 1, 2018
( FromTo May 31,2021 )( To Nov. 30,2020 )( To May 31,2020 )( To Nov. 30, 2019 )( To May 31, 2019 )(1) Operating Performance(Millions of yen, except per unit data or where otherwise indicated)
Operating revenues
15,054
14,84914,272
14,094
13,833
Rental revenues
13,887
14,482
14,23813,916
13,628Operating expenses
6,917
7,133
6,959
6,980
6,853
Property-related expenses
5,454
5,696
5,540
5,584
5,479
Operating income
8,137
7,715
7,312
7,114
6,979
Ordinary income
7,550
7,125
6,688
6,463
6,320
Net income
7,549
7,124
6,687
6,462
6,320
(2) Properties, etc. (as of end of period)
Total assets
484,310488,570
487,212
486,030
485,636[period-on-period percentage changes][−0.9%][+0.3%][+0.2%][+0.1%][+1.3%]
Interest-bearing liabilities
203,350
204,450
204,450
204,450
204,450
Net assets
253,522
255,511
255,127
254,892
254,460[period-on-period percentage changes][−0.8%][+0.2%][+0.1%][+0.2%][+0.1%]
Note 2245,093
247,876
247,876
247,876
247,876
Unitholders’ capital, net(3) Distributions
Total distribution amount
6,833
6,796
6,687
6,462
6,177
Dividend payout
90.5%
95.4%
100.0%
100.0%
97.8%(4) Per Unit Information
Total number of units issued (units)
488,088491,877
491,877
491,877
491,877
Net assets per unit (yen)519,419
519,462
518,681518,203517,324
Distribution per unit (yen)14,00013,817
13,595
13,13912,559Distribution amount from earnings per unit (yen)14,00013,817
13,595
13,13912,559Distribution amount in excess of earnings per unit (yen)
–
–
–
–
–
(5) Financial Indicators
1.6%
1.5%
1.4%
1.3%
1.3%
ROA
Notes 3and 4[annual rate][3.1%][2.9%][2.7%][2.7%][2.6%]
3.0%
2.8%
2.6%
2.5%
2.5%
ROE
Notes 4and 5[annual rate][5.9%][5.6%][5.2%][5.1%][5.0%]
Capital ratio
52.3%
52.3%
52.4%
52.4%
52.4%
[period-on-period percentage changes][+0.0%][−0.1%][−0.1%][+0.0%][−0.6%]LTV (loan to value)
42.0%
41.8%
42.0%
42.1%
42.1%
Note 6
Property leasing cash flows (NOI)
10,248
10,612
10,536
10,157
9,962(6) Other Referential Information
Number of investment properties
59
60
60
59
59
Note
7
625
629
645
637
639
Number of tenants
360,471.93 363,740.62 366,336.34 364,787.57 364,375.19
Total rentable area (m2)Note 8
97.5%
98.9%
99.5%
99.1%
97.1%
Occupancy rate
Depreciation
1,816
1,827
1,838
1,826
1,813
Capital expenditures
436
802
489
1,351
471
(Note 1) Operating revenues, etc. do not include consumption taxes, etc.
(Note 2) Unitholders’ capital, net: Unitholders’ capital − Deduction from Unitholders' Capital(Note 3) ROA: Ordinary income ÷ [(Total assets at beginning of period + Total assets at end of period) ÷ 2] × 100(Note 4) Figures for the 27th Fiscal Period are the annualized figures calculated based on 182 days of management.
		 Figures for the 28th Fiscal Period are the annualized figures calculated based on 183 days of management.
		 Figures for the 29th Fiscal Period are the annualized figures calculated based on 183 days of management.
		 Figures for the 30th Fiscal Period are the annualized figures calculated based on 183 days of management.
		 Figures for the 31st Fiscal Period are the annualized figures calculated based on 182 days of management.
(Note 5) ROE: Net income ÷ [(Net assets at beginning of period + Net assets at end of period) ÷ 2] × 100(Note 6) Property leasing cash flows (NOI): Rental revenues − Property-related expenses + Depreciation(Note 7)	Number of tenants is the number of end tenants. When there is a tenant occupying multiple buildings, the concerned tenant is counted
and stated for each individual building.
(Note 8) Occupancy rate: Total leased area ÷ Total rentable area2

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
Asset Management Co., Ltd. (former name K.K. daVinci Select) (the “Asset Manager”) as the organizer.
After its establishment, DOI implemented an additional issuance of investment units through a public
offering (99,600 units) on October 18, 2005 and then listed on the Tokyo Stock Exchange, Inc. (TSE) Real
Estate Investment Trust Section (stock code: 8976) on the following day.
Though initial assets under management were 79,573 million yen (sum total of acquisition price),
subsequent activities, such as additional acquisition of properties and replacement of portfolio properties,
resulted in the assets under management amounting to 461,418 million yen as of the last day of May 2021.
DOI strives to secure stable revenue and sustained growth of the investment assets based on a clear
portfolio development policy of specializing in investment in office buildings, with a particular focus on
investment in a total floor area of more than about 2,000m2 situated in downtown Tokyo, as well as throughdedicated efforts to heighten tenant satisfaction levels.
(2) Investment Environment and Management Performance(A) Investment Environment
The Japanese economy during the fiscal period under review saw the decline mainly in personal
spending and the negative growth in the real GDP growth rate (Second Preliminary Estimates) for
January to March 2021 sitting at an annual rate of -3.9% due to the impact of the Japanese
government’s repeated declaration of a state of emergency with the resurgence of COVID-19.
In the office building leasing market in central Tokyo, the vacancy rate had continued to be on an
improving trend since June 2013, but office consolidations and relocations to smaller offices due tofuture economic uncertainties and deterioration in business performance stemming from the spread of
COVID-19 and other reasons have led to contract cancellations and such, resulting in the vacancy raterising to 5.90% at the end of May 2021. Office rent had continued to rise, albeit slightly, but turned to adownward trend after peaking in July 2020.
For the office building transaction market, a strong appetite for property acquisitions continued
among real estate companies, funds (including J-REITs) and overseas investors with the continuing
proactive lending attitude by financial institutions, and there has been no material impact of COVID-19.
Nevertheless, future developments warrant close monitoring.
(B) Management Performance
In view of increasing the ordinary EPS (EPS (net income per unit) after deducting gain on sale fromproperties) over the medium to long term, DOI continued to work on “external growth,” which aims toboost revenue through acquisition of properties, and “internal growth,” which aims to maximize income
generating from owned properties.
Concerning external growth, DOI’s first development project, “Nihonbashi-Bakurocho 1-Chome
Development Project,” for which the development site was acquired in November 2020, is steadily
underway. In addition, DOI divested “Daiwa Kyobashi” (sale price: 4,200 million yen) in December
2020. As a result, DOI’s assets under management as of the end of the 31st Fiscal Period (May 31,2021) totaled 59 properties, the sum total of acquisition prices of which amounted to 461,418 million
yen.
Concerning internal growth, DOI conducted proactive leasing, such as capturing needs for floor
expansion within the same property through strengthening relationships with existing tenants andreinforcing collaboration with leasing brokers and property managers. Consequently, the occupancy
rate as of the end of the 31st Fiscal Period (May 31, 2021) was 97.5%.

I. Asset Management Report3(3) Overview of Capital Procurement(A) Procurement of Capital for Repayment of Borrowings
In the 31st Fiscal Period, DOI made the following borrowings to fund the repayment of borrowings.
(i)	DOI took out loans of 2,000 million yen in total from Sumitomo Mitsui Trust Bank, Ltd. and Momiji
Bank, Ltd. on February 26, 2021, to fund the repayment of the same amount borrowed from
Sumitomo Mitsui Trust Bank, Ltd. and The Higashi-Nippon Bank, Ltd. that was due for repaymenton the same day.
(ii)	DOI took out loans of 13,800 million yen in total from Sumitomo Mitsui Banking Corporation,
Mizuho Bank, Ltd., Resona Bank, Limited and MUFG Bank, Ltd. on March 31, 2021, to fund thefollowing:• Repayment of 12,300 million yen in total borrowed from Sumitomo Mitsui Banking Corporation,
Mizuho Bank, Ltd. and Resona Bank, Limited that was due for repayment on the same day• Early repayment of a short-term loan of 1,500 million yen borrowed from MUFG Bank, Ltd. duefor repayment on August 31, 2021(iii)	DOI took out loans of 3,400 million yen in total from Sumitomo Mitsui Banking Corporation,
Shinsei Bank, Ltd. and The 77 Bank, Ltd. on May 31, 2021 to fund the repayment of the sameamount borrowed from the same banks that was due for repayment on the same day.
DOI concluded interest-rate swap agreements in the 31st Fiscal Period for 9,400 million yen of loans
with floating interest rates. Converting the interest payable to fixed rates, these are for the purpose ofhedging against future interest rate fluctuation risks.
(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
31st Fiscal Period (May 31, 2021) stood at 203,350 million yen in total (short-term loans payable: 2,400
million yen; long-term loans payable: 191,950 million yen; investment corporation bonds: 9,000 millionyen). The balance of the current portion of long-term loans payable stood at 21,500 million yen.
The average remaining period of interest-bearing liabilities as of the end of the 31st Fiscal Period
stands at 4.2 years.
(4) Capital Expenditures during the 31st Fiscal Period
The following summarizes the primary construction work that constitutes capital expenditures
implemented during the 31st Fiscal Period for existing portfolio properties. Capital expenditures for the
31st Fiscal Period amounted to 436 million yen and, when combined with the 583 million yen in repair
expenses charged to the 31st Fiscal Period expenses, totals 1,020 million yen in construction work
implemented.
Name of real estate
properties(Location)

PurposeConstruction
amount paid
(Millions of yen)

Daiwa Tsukishima(Chuo-ku, Tokyo)

Upgrading of air-conditioning drain

From: Dec. 2020
To: Apr. 2 0 2 1

50

Daiwa Akasaka(Minato-ku, Tokyo)

Construction work for furnished office
on 1F

From: Apr. 2 0 2 1
To: May 2021

43

Daiwa River Gate
(Chuo-ku, Tokyo)

Renovation of power receiving andtransforming facility

From: May 2021
To: May 2021

23

Other

318
Total

4

Period436

(5) Overview of Financial Performance and Distributions
As a result of the management described above, DOI posted financial performance for the 31st Fiscal
Period of 15,054 million yen in operating revenue, 8,137 million yen in operating income, 7,550 million yen
in ordinary income and 7,549 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 taxationof 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, retaining 716,665,400
yen from application of “Special Provisions for Taxation in Cases of Repurchase of Specified Assets”(Article 65-7 of the Special Taxation Measures Act) as reserve for reduction entry, DOI decided to distributethe entire amount remaining after deducting provision of reserve for reduction entry from unappropriatedretained earnings (excluding fractions of the distribution amount per unit that are less than 1 yen), anddeclared a distribution amount per unit of 14,000 yen.

I. Asset Management Report53. Outlook for the Next Fiscal Period(1) Investment Environment
Although it continues to hover at low levels due to the impact of COVID-19 for the time being, theJapanese economy going forward is expected to head toward recovery with vaccinations and othermeasures to contain the spread of COVID-19 leading to normalization of economic activities. Nevertheless,since the Japanese economy may slow down due to prolongation of the COVID-19 pandemic (spread ofhighly contagious variants, delay in vaccination rollout, etc.), interest rate trends and other factors.
Accordingly, careful attention is required.
In the Tokyo office building leasing market, although recovery is expected with normalization of economic
activities going forward, developments in office consolidations and relocations to smaller offices triggeredby COVID-19 leading to the vacancy rate rising and rent dropping moderately mainly in central Tokyo
continue to warrant close monitoring.
In the office building transaction market, backed by the favorable financing environment, among otherfactors, the property acquisition appetite among overseas investors, real estate companies and funds(including J-REITs) is thought to remain strong. However, the prolongation of the COVID-19 pandemic,interest rate trends and other factors may impact future developments in the transaction market.
(2) Future Management Policy and Tasks(A) Strategy for Managing Existing Properties
As to macro trends for the office market, the impact of moves by large companies occupying prime
office buildings to consolidate to a head office by canceling contracts for surrounding medium-scale
office buildings and other increases in contract cancellations are thought to continue partly due toprolongation of the impact of COVID-19. At present, although moves for large office space are weak,
DOI is managing to proceed with leasing by setting flexible terms and conditions and secure slightincreases in rent upon tenant replacement. Going forward, needs for offices are likely to vary forcompanies in line with the diversification of work styles and places. Therefore, DOI considers thatmaintaining/improving competitiveness of buildings to qualify as prime offices that can increase theproductivity of employees and accommodate needs of the times and environment will be the futureissue, and is determined to continue carrying out operational management under the following policy.
(i) Maintain and raise occupancy rates
	Concerning existing tenants, strive to reduce cancellation risks by improving the quality ofbuildings, equipment and management system. In addition, concerning new tenants, strive tomaintain and raise occupancy rates through the provision of highly satisfactory services fromgaining deeper understanding of tenant needs through proactive involvement in the market.
(ii) Maintain and raise profitability
	Aim to secure stable revenue over the medium to long term through further strengthening good
relationships with existing tenants, as well as proactively tapping the needs of new tenants bydiscerning the market environment.
(iii) Control operational management costs
	Strive to control operational management costs based on maintaining office environments withhigh tenant satisfaction levels by implementing efficient operational management and reviewing
systematic construction work through optimal leveraging of economies of scale achieved fromproactively realizing external growth.

6

(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
and financing 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 viewpointof territorially-distributed investments.
As pipeline support, in addition to expanding its own information-sourcing channels, DOI will continue
to search 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 andutilizing the Group’s extensive network of clients, partners, etc.
(C) Financial Strategy
DOI will conduct disciplined financial management of the following basic content.
(i)	Control leverage by keeping the ratio of interest-bearing liabilities to total assets (LTV) within therange of 40% to 50% at maximum, taking into consideration also the LTV, etc. based on appraisal
value, as a principle.
(ii)	Diversify repayment deadlines, targeting 30.0 billion yen as the maximum amount of interestbearing liabilities that shall become due during any single fiscal period as a principle.
(iii) Aim to have long-term loans account for at least 70% of balance of loans as a principle.
(iv) Achieve diversification of lenders, which shall mainly be Japanese financial institutions.
(v)	Pursuant to its fund management rules, maintain stability in its financial standing by managing
necessary funds, such as the amount equivalent to distributions paid, separately from working
capital.
(D) Schedule of Capital Expenditures for the 31st Fiscal Period
The following are the principal capital expenditures arising from renovation construction work, etc.
currently planned for existing portfolio properties. Please note that the expected construction amountincludes portions that are expensed as a separate account item of accounting costs.
Expected construction amount(Millions of yen)
Name of real estate
properties(Location)

PurposeScheduled
implementation
periodShinjuku Maynds Tower(Shibuya-ku, Tokyo)

Renovation of airconditioning facilities

From: June 2021
To: Nov. 2021

51

–

–

Daiwa Kayabacho(Chuo-ku, Tokyo)

Addition of humidifiers

From: June 2021
To: Nov. 2021

48

–

–

Daiwa Minami-Aoyama(Minato-ku, Tokyo)

Upgrading of airconditioning facilities

From: June 2021
To: Nov. 2021

33

–

–

CONCURRED Yokohama
Renovation of exterior(Yokohama-shi,walls
Kanagawa)

From: June 2021
To: Nov. 2021

29

–

–

Upgrading of private
power generation
facilities

From: June 2021
To: Nov. 2021

21

–

–

Daiwa Ginza(Chuo-ku, Tokyo)

TotalamountAmountpaid
duringcurrent
periodTotalamountalreadypaid

I. Asset Management Report7II. Balance Sheets
As of May 31, 2021 and November 30, 2020

(Thousands of yen)

As of
May 31, 2021

As ofNovember 30, 2020

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

32,211,634

31,850,409

Tenant receivables

195,627

367,681

Prepaid expenses

357,076

334,706

Other current assets

83,50970,120Total Current Assets

32,847,848

32,622,918

Land

12,302,226

12,302,226

Buildings and structures

3,312,516

3,302,055

Tools, furniture and fixtures

20,847

20,207

Construction in progress

3,786

4,555

Land in trust accounts (Note 14)353,434,357

356,251,046

Buildings and structures in trust accounts (Note 13 and 14)

109,268,116

109,697,467

Machinery and equipment in trust accounts

884,250

893,239

Tools, furniture and fixtures in trust accounts

333,390

315,131

Construction in progress in trust accounts

50,08133,446(32,219,362)(30,924,452)

2,398,275

2,398,275

306,884

306,884

450,095,371

454,600,083

52

107

113,684

113,684

Long-term prepaid expenses

1,098,268

1,051,039

Deferred tax assets (Note 15)–

16,150Derivative assets (Note 4)

3,956

–

Deferred investment corporation bond issuance costs

54,391

59,395

Others96,758107,144

1,367,112

1,347,522

484,310,332

488,570,524

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

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

Total Investments and Other Assets
Total Assets

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

8

(Thousands of yen)

As of
May 31, 2021

As ofNovember 30, 2020

Liabilities
Current Liabilities:
Accounts payable

924,290

1,673,045

Short-term debt (Notes 4 and 10)

2,400,000

3,600,000

Long-term debt due within one year (Notes 4 and 10)

21,500,000

24,200,000

634,448

672,515888

723

Accrued consumption taxes

335,635

312,827

Rent received in advance

2,366,227

2,453,412

Other current liabilities

573,944608,779

Total Current Liabilities

28,735,434

33,521,303

9,000,000

9,000,000

Long-term debt (Notes 4 and 10)

170,450,000

167,650,000

Tenant security deposits including trust accounts (Note 4)

22,215,041

22,450,275

2,240

–

Derivative liabilities (Note 4)

210,647

257,802

Other long-term liabilities

174,578

179,599

Total Long-Term Liabilities

202,052,507

199,537,677

230,787,942

233,058,980

251,551,759

251,551,759(6,458,395)(3,675,523)

245,093,364

247,876,236

Reserve for reduction entry

1,038,691

710,209

Retained earnings

7,549,897

7,124,746

253,681,953

255,711,192

Deferred gains or losses on hedges(159,563)(199,648)

Total valuation and translation adjustments(159,563)(199,648)

Total Net Assets

253,522,389

255,511,543

Total Liabilities and Net Assets

484,310,332

488,570,524

Accounts payable – other
Income taxes payable

Long-Term Liabilities:
Investment corporation bonds (Notes 4 and 10)

Deferred tax liabilities (Note 15)

Total Liabilities
Net Assets (Notes 8 and 16)
Unitholders’ Equity:
Unitholders’ capital
Units authorized: 2,000,000 units
Units issued and outstanding: 488,088 units as of May
31, 2021 and 491,877 units as of November 30, 2020
Deduction from unitholders’ capital
Unitholders’ capital, net

Total Unitholders’ Equity
Valuation and translation adjustments

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

9III. Statements of Income and Retained Earnings
For the fiscal periods ended May 31, 2021 and November 30, 2020

(Thousands of yen)

For the fiscal period
ended
May 31, 2021

For the fiscal period
endedNovember 30, 2020

13,887,151

14,482,210

140,695

31,325

1,026,965

336,387

15,054,812

14,849,922

Property-related expenses (Note 7)

5,454,733

5,696,598

Asset management fees

1,188,807

1,199,825

Asset custody fees

24,30324,324

Administrative service fees

73,34379,286

Trust fees

18,786

19,536

Directors’ compensation

7,200

7,200

Other operating expenses

150,049

107,151

Total Operating Expenses

6,917,224

7,133,923

Operating Income

8,137,588

7,715,998

Interest income

15

17

Reversal of distribution payable

624

623

Insurance income

2,622

14,706

Other non-operating revenues

2,042

220

5,304

15,567

Interest expense

419,271

450,182

Interest expense on investment corporation bonds

26,276

20,796

Borrowing expenses

135,066

130,096

Other non-operating expenses

11,4995,319

592,113606,394

Ordinary Income

7,550,779

7,125,172

Income Before Income Taxes

7,550,779

7,125,172

Income taxes – current

889

725

Income taxes – deferred

(7)

13

Total Income Taxes (Note 15)

882

738

7,549,897

7,124,433

Retained Earnings Brought Forward–

313

Retained Earnings at End of Period

7,549,897

7,124,746

Operating Revenues:
Rental revenues (Note 7)
Other revenues related to property leasing (Note 7)
Gain on sale of investment properties (Note 12)
Total Operating Revenues
Operating Expenses:

Non-Operating Revenues:

Total Non-Operating Revenues
Non-Operating Expenses:

Total Non-Operating Expenses

Net Income

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

10

III. Statements of Income and Retained Earnings

IV. Statements of Changes in Net Assets
For the fiscal periods ended May 31, 2021 and November 30, 2020

(Thousands of yen)

Unitholders’ Equity
Number of
Units(Units)Balance as of
May 31, 2020

Deduction
Reserve forUnitholders’fromUnitholders’
Reduction
Unitholders’ Capital, Net
Capital
Entry
Capital491,877 251,551,759(3,675,523) 247,876,236

Retained
Earnings

Treasury
Investment
Units

710,2096,687,380–

Deferred
Gains or
Losses on
HedgesTotal Net
Assets(146,523) 255,127,303

Cashdistributions
declared

–

–

–

–

–

(6,687,067)––(6,687,067)

Net income

–

–

–

–

–

7,124,433––

7,124,433

Net changesof items otherthanunitholders’equity

–

–

–

–

–

–

–

(53,125)(53,125)(3,675,523) 247,876,236

710,209

7,124,746–(199,648) 255,511,543

Balance as ofNovember30, 2020

491,877 251,551,759

Cashdistributions
declared

–

–

–

–

–

(6,796,264)––(6,796,264)

Net income

–

–

–

–

–

7,549,897––

7,549,897

Provision ofreserve for
reduction
entry

–

–

–

–

328,482(328,482)–––

Acquisition oftreasury
investment
units

–

–

–

–

–

–

(2,782,872)–(2,782,872)

Cancellationoftreasury
investment
units(Note 9)(3,789)-(2,782,872)(2,782,872)––

2,782,872––

Net changesof items otherthanunitholders’equity

–

–

–

–

–

–

–

40,08540,085(6,458,395) 245,093,364

1,038,691

7,549,897–(159,563) 253,522,389

Balance as of
May 31, 2021

488,088 251,551,759

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

IV. Statements of Changes in Net Assets

11

V. Statements of Cash Flows
For the fiscal periods ended May 31, 2021 and November 30, 2020

(Thousands of yen)

For the fiscal period
ended
May 31, 2021

For the fiscal period
endedNovember 30, 2020

Income before income taxes

7,550,779

7,125,172

Depreciation and amortization

1,819,933

1,830,601

5,003

3,818

Interest expense

445,547

470,979

Decrease (increase) in tenant receivables

172,053(102,235)(Decrease) increase in accounts payable(274,083)

413,565(Decrease) increase in rent received in advance(87,185)

112,238

Interest payments(445,419)(471,840)

22,808(80,541)

3,130,260

2,103,922

1,154

91,707

12,340,850

11,497,387(1,066,094)(4,337,926)

932,619

780,704(1,167,853)(722,354)(1,301,328)(4,279,576)

Proceeds from short-term debt

2,400,000

2,500,000

Repayments of short-term debt

(3,600,000)(3,900,000)

Proceeds from long-term debt

16,800,000

14,100,000

Repayments of long-term debt

(16,700,000)(16,600,000)–

3,868,783

Payments for acquisition of treasury investment units(2,782,872)–

Distributions paid

(6,795,425)(6,685,886)(10,678,297)(6,717,103)

361,225

500,707

Cash and Cash Equivalents at Beginning of Period

31,850,409

31,349,701

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

32,211,634

31,850,409

Cash Flows from Operating Activities:

Amortization of bond issuance costs

Increase (decrease) in accrued consumption taxes
Decrease due to sale of investment properties in trust
accounts
Other, net
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities:
Payments for purchases of investment properties
including trust accounts
Proceeds from tenant security deposits including trust
accounts
Refunds of tenant security deposits including trust
accounts
Net Cash Used in Investing Activities
Cash Flows from Financing Activities:

Proceeds from issuance of investment corporation
bonds

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

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

12

V. Statements of Cash FlowsVI. Notes to Financial Statements
For the fiscal periods ended May 31, 2021 and November 30, 2020

Note 1 – Organization and Basis of Presentation
Organization
Daiwa Office Investment Corporation (the former DA Office Investment Corporation; hereinafter referred toas “DOI”) was established on July 11, 2005 as an investment corporation under the Act on Investment Trusts
and Investment 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 AssetManagement (hereinafter referred to as the “Asset Manager”)).
DOI is an externally managed real estate fund, established as an investment corporation. The AssetManager, as DOI’s asset management company, is engaged in acquiring, managing, leasing, and renovating
office properties. 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
offering of units. Those units were listed on the J-REIT section of the Tokyo Stock Exchange.
As of May 31, 2021, DOI had ownership or trust beneficiary interests in 59 office properties withapproximately 360,471m2 of rentable office space and had leased office space to 625 tenants engaged in avariety of businesses. The occupancy rate for the office properties was approximately 97.5 %.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in
the Investment Trust Act, the Financial Instruments and Exchange Act and their related accounting regulations,and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are
different in certain respects as to application and disclosure requirements of International Financial ReportingStandards 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 havebeen made from the Japanese GAAP financial statements. Certain supplementary information included in thestatutory Japanese GAAP financial statements, but not required for fair presentation, is not presented in theaccompanying financial statements. Certain reclassifications have been made to the prior period’s financial
statements to conform to the presentation for the current period.
DOI maintains its accounting records in Japanese yen. Amounts less than 1 thousand yen have beenrounded down. As a result, the total shown in the financial statements and notes does not necessarily agree
to sum of individual account balances.
DOI’s fiscal period is a six-month period ending at the end of May and November of each year.

VI. Notes to Financial Statements

13

Note 2 – Summary of Significant Accounting Policies(a) Cash and Cash Equivalents
Cash and cash equivalents consist of cash, demand deposits, and short-term investments which are highly
liquid, readily convertible to cash and with insignificant risk of market value fluctuation, with maturities of threemonths or less from the date of acquisition.
(b) Investment Properties
Investment properties are recorded at cost, which includes the allocated purchase price, related costs andexpenses for acquisition of the office properties and the trust beneficiary interests in trust. Investment property
balances are depreciated using the straight-line method over the estimated useful lives as follows:
As of May 31, 2021

As of November 30, 2020

Buildings and structures

2-64 years

2-64 years

Machinery and equipment

10-23 years

10-23 years

Tools, furniture and fixtures

4-15 years

4-15 years

Cost related to the renovation, construction improvement of properties is capitalized. Expenditures forrepairs and maintenance which do not add to the value or prolong the useful life of property, are expensed as
incurred.
(c) Deferred Investment Corporation Bond Issuance Costs
Deferred investment corporation bond issuance costs are amortized on a straight-line basis over therespective terms of the bonds.
(d) Income Taxes
Deferred tax assets and liabilities are computed based on the difference between the financial statements
and income tax bases of assets and liabilities using the statutory rate.
(e) Real Estate Taxes
Investment properties are subject to various taxes, such as property taxes and city planning taxes. Ownersof the properties are registered by records maintained in each jurisdiction by the local government. The taxes
are imposed on 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
imposed on the seller. DOI pays the seller the corresponding amount of the taxes for the period from property
acquisition date to December 31 of the calendar year and capitalizes these amounts as acquisition costs ofthe property, rather than expensing them. In subsequent calendar years, such taxes on investment propertiesare charged as operating expenses in each fiscal period.
The following is a summary of capitalized real estate taxes.
(Thousands of yen)

For the fiscal period ended For the fiscal period ended
May 31, 2021
November 30, 2020
Capitalized real estate taxes

–

1,113

(f) Consumption Taxes
Consumption taxes are excluded from transaction amounts. Generally, consumption taxes paid are offset
against the balance of consumption taxes withheld. As such, the excess of payments over amounts withheld
is included in the current assets while the excess of amounts withheld over payments is included in thecurrent liabilities. Non-deductible consumption taxes relating to investment properties are amortized equally
over five years.

14(g) Hedge Accounting
DOI enters into derivative transactions for the purpose of hedging risks in the Articles of Incorporation of DOI in
accordance with its general risk management policy. DOI uses interest-rate swaps as hedging instruments inorder to hedge 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 suchswap contracts can be recognized and included in interest expense or income of the hedged assets or liabilities,
and the interest-rate swaps are not required to be measured at fair value separately. The assessment of hedge
effectiveness has been made each fiscal period except for interest-rate swaps which meet the special criteria.
(h) Revenue Recognition
Operating revenues consist of rental revenues including base rents and common area charges, and otheroperating 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 recognized when earned and their amounts can be reasonably estimated.
(i) Accounting Treatment of Trust Beneficiary Interests in Real Estate
For trust beneficiary interests in real estate, all assets and liabilities with respect to assets in trust, as well as
all income generated and expenses incurred with respect to assets in trust, are recorded in the relevantbalance sheet and income statement accounts of the accompanying financial statements.
(j) Changes in Presentation“Accounting Standard for Disclosure of Accounting Estimates” (Accounting Standards Board of Japan(“ASBJ”) Statement No. 31, March 31, 2020) has been applied from the fiscal period ended May 31, 2021.
Notes regarding accounting estimates are disclosed in “Notes to Financial Statements.” However, in
accordance with the transitional treatment as stipulated in the proviso of Paragraph 11 of the AccountingStandard, there is no information to be disclosed for the six months ended November 30, 2020.
(k) Accounting Estimates
Impairment of long-lived assets
Amount of investment properties recorded on the financial statements were as follows:(Thousands of yen)

As of May 31, 2021
Tangible fixed assets

447,390,211

Intangible fixed assets

2,711,464

DOI reviews investment properties for impairment whenever events or changes in circumstances indicate
the carrying amount of an asset or asset group may not be recoverable in conformity with the accounting
standard for impairment of long-lived assets. The book value of investment properties has been reduced to its
recoverable amount when the invested amount may not be recoverable due to decrease in profitability.
DOI’s investment properties are grouped on an individual asset basis. DOI reviews the investment properties
for impairment when factors such as consecutive operating losses, significant decline in the market price,
deteriorated business environment and others related to investment properties indicate the carrying amount ofan asset may not be recoverable.
An impairment loss is recognized if the carrying amount of an asset exceeds the sum of the undiscounted
future cash flows expected from the asset. In such case, the book value of the asset is reduced to therespective recoverable amount and the difference between the book value and recoverable amount isrecorded as an impairment loss.
Future cash flows used in determining recoverable amounts are measured by comprehensive judgement on
estimates based on market trends on rental revenues, occupancy rates, rental expenses and other factors aswell as transaction information of similar properties.
Operating results and market price of each investment property may be affected by trends in property
leasing market and property trading market. It is possible to have impact on DOI’s financial position and resultof operations in the next fiscal period if assumptions used in estimates change.
VI. Notes to Financial Statements

15

(l) New Accounting Standards Issued But Not Yet Effective“Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, revised on March 31, 2020)“Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30,
revised on March 26, 2021)“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No.
19, revised on March 31, 2020)(a) Overview
The International Accounting Standard Board (“IASB”) and the Financial Accounting Standards Board(“FASB”) jointly developed a comprehensive accounting standard for revenue recognition, and issued“Revenue from Contracts with Customers” (IFRS 15, issued by IASB and Topic 606, issued by FASB) in
May 2014.
Considering the situation that IFRS 15 is effective for the fiscal periods beginning on or after January 1,
2018 and Topic 606 is effective for the fiscal periods beginning after December 15, 2017, ASBJ developed
a comprehensive accounting standard for revenue recognition and issued it together with theimplementation guidance. ASBJ’s basic policy developing the accounting standard for revenue recognition
was to establish accounting standards as a starting point by incorporating the basic principles of IFRS 15
from the viewpoint of comparability of financial statements which is one of benefits of maintaining
consistency with IFRS 15, and to add alternative treatments to the extent that they do not impair
comparability in cases where previous practices and others in Japan should be considered.
(b) Date of adoption
DOI will adopt the accounting standard and the implementation guidance from the beginning of thesix-month period ending November 30, 2021.
(c) Impact of the adoption of the respective accounting standard
DOI is currently evaluating the impact of the adoption of the standard and guidance on financial
statements.
“Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30, issued on July 4, 2019)“Accounting Standard for Financial Instruments” (ASBJ Statement No. 10, revised on July 4, 2019)“Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31,
issued on July 4, 2019)“Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No.
19, revised on March 31, 2020)(a) Overview
Given the fact that the IASB and the FASB have issued detailed guidance providing substantially similar
requirements (IFRS 13 Fair Value Measurement and US Accounting Standards Codification Topic 820 Fair
Value Measurement) for the measurement of fair value, the ASBJ has made efforts to achieve theconsistency of Japanese accounting standards related to the measurement of fair value of financial
instruments and related disclosures with such global accounting standards, which resulted in the issuanceof ASBJ Statement No. 30 Accounting Standards for Fair Value Measurement, etc. The ASBJ has decided
to incorporate all of the requirements provided by IFRS 13 in order to improve the comparability of financial
statements of entities in and out of Japan by adopting consistent methods as part of its basic policy indeveloping accounting standards for the measurement of fair value. Also, the standards are designed toprovide interpretations for certain individual issues and topics in light of the practices implemented inJapan to date, provided that the comparability of financial statements is not significantly reduced.
(b) Date of adoption
DOI will adopt the accounting standards and the implementation guidance from the beginning of thesix-month period ending November 30, 2021.
(c) Impact of the adoption of the respective accounting standard
DOI is currently evaluating the impact of the adoption of the standards and guidance on financial
statements.

16

Note 3 – Cash and Cash Equivalents
Cash and cash equivalents stated on the accompanying balance sheets and statements of cash flows as of
May 31, 2021 and November 30, 2020 consisted of the following:(Thousands of yen)

As of May 31, 2021

As of November 30, 2020

Cash and deposits

28,515,172

28,137,822

Cash and deposits in trust accounts

3,696,461

3,712,586

Cash and cash equivalents

32,211,634

31,850,409

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 ofbank borrowings. In financing through interest-bearing debt, DOI raises funds with longer term, fixed-rate andwell-diversified 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 andsecurities (in principle, deposits).
DOI enters into derivative transactions only for the purpose of hedging interest rate risks arising fromliabilities.
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 and repay or redeem outstanding borrowings and bonds. These borrowings and bonds are
exposed to liquidity risk. Such risk 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 the risk of future interest rate fluctuations, DOI uses derivativetransactions (interest-rate swap) as hedging instruments, in order 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 ofcash 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 the event 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 shortterm deposit and setting a minimum credit rating requirement for the depository financial institutions(excluding deposits for settlement purposes).
Supplemental Explanation regarding Fair Value of Financial Instruments
The fair value of financial instruments is based on their quoted market price. When there is no quoted market
price available, fair value is reasonably estimated. Since certain assumptions and factors are reflected inestimating the fair value, different assumptions and factors could result in a different value. Also, thecontractual amounts of derivative transactions do not represent the market risk involved in these derivativetransactions.

VI. Notes to Financial Statements

17

(b) Estimated Fair Value of Financial Instruments
The book value, fair value and difference between the two as of May 31, 2021 and November 30, 2020 wereas follows:(Thousands of yen)

As of May 31, 2021

As of November 30, 2020

AssetsBook value

Fair value

DifferenceBook value

Fair value

Difference

Cash and cash
equivalents

32,211,634

32,211,634–

31,850,409

31,850,409

–

Total

32,211,634

32,211,634–

31,850,409

31,850,409–

Short-term debt

2,400,000

2,400,000–

3,600,000

3,600,060

60

Long-term debt
due within one year

21,500,000

21,523,879

23,87924,200,000

24,203,301

3,301

Investment
corporation bonds

9,000,000

8,979,070(20,930)

9,000,000

8,974,990(25,010)Long-term debt

170,450,000

170,268,022(181,977)

167,650,000

167,717,967

67,967

Total

203,350,000

203,170,972(179,027)

204,450,000

204,496,319

46,319(232,803)(232,803)–(291,287)(291,287)–

Liabilities

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

The financial instruments whose fair value is deemed extremely difficult to determine are excluded from theabove table (See Note 2 below).
Notes:
1. Methods to estimate fair value of financial instruments and derivative transactions
Assets:Cash and cash equivalents
Due to the short maturities, the book value of these assets is deemed a reasonable approximation of the fairvalue.
Liabilities:(1) Short-term debt, long-term debt due within one year and long-term debt
For short-term debt and long-term debt with floating interest rates, their fair value and book value are nearly
identical and there are no significant changes in DOI’s credit risk after borrowing. Therefore, for these items,
their book value is assumed as their fair value. For short-term debt and long-term debt with fixed interest
rates, their fair 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, thefair 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.

18

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

As of May 31, 2021
Hedged item

Contracted amount

Fair value (*1)

Total

Due after one year

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

Long-term debt

99,800,000

82,800,000(232,803)

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

Long-term debt

20,500,000

20,500,000– (*2)

120,300,000

103,300,000(232,803)(Thousands of yen)Hedge
accounting
methodType ofderivativetransaction

As of November 30, 2020
Hedged item

Contracted amount

Fair value (*1)

Total

Due after one year

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

Long-term debt

116,500,000

93,300,000(291,287)

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

Long-term debt

11,100,000

11,100,000– (*2)

127,600,000

104,400,000(291,287)(*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 are processed as a single unit with the hedged long-term debt.

2. Financial instruments whose fair value is deemed extremely difficult to determine
Tenant security deposits including trust accounts (whose book values were 22,215,041 thousand yen and22,450,275 thousand yen as of May 31, 2021 and November 30, 2020, respectively) that have been depositedby 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.
3. Redemption schedule for monetary claims(Thousands of yen)

As of May 31, 2021

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

Cash and cash equivalents

32,211,634

–

–

–

–

–

Total

32,211,634

–

–

–

–

–

(Thousands of yen)

As of November 30, 2020

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

Cash and cash equivalents

31,850,409

–

–

–

–

–

Total

31,850,409

–

–

–

–

–

VI. Notes to Financial Statements

19

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

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

As of May 31, 2021
Short-term debt
Investment corporation bonds

2,400,000

–

–

–

–

–

–

–

–

3,800,000

1,500,000

3,700,000

Long-term debt

21,500,000 30,600,000 25,600,000 27,350,000 20,700,000 66,200,000

Total

23,900,000 30,600,000 25,600,000 31,150,000 22,200,000 69,900,000(Thousands of yen)

As of November 30, 2020

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

Short-term debt
Investment corporation bonds

3,600,000

–

–

–

–

–

–

–

–

3,800,000

1,500,000

3,700,000

Long-term debt

24,200,000 31,600,000 26,200,000 24,300,000 20,550,000 65,000,000

Total

27,800,000 31,600,000 26,200,000 28,100,000 22,050,000 68,700,000

Note 5 – Tangible Fixed Assets of Investment Properties
Investment properties as of May 31, 2021 and November 30, 2020 consisted of the following:(Thousands of yen)

As of May 31, 2021

As of November 30, 2020

Acquisition AccumulatedBook value
cost
depreciation

Acquisition AccumulatedBook value
cost
depreciationLand

12,302,226–

12,302,226

12,302,226–

12,302,226

Buildings andstructures

3,312,516(2,617,068)

695,448

3,302,055(2,543,896)

758,158

Tools, furniture andfixtures20,847(15,075)

5,771

20,207(14,149)

6,057

Construction inprogress

3,786

–

3,786

4,555

–

4,555

Land in trust
accounts

353,434,357–

353,434,357

356,251,046–

356,251,046

Buildings andstructuresin trust accounts

109,268,116(28,874,659)

80,393,456

109,697,467(27,665,151)

82,032,316

Machinery andequipmentin trust accounts

884,250(512,570)

371,680

893,239(509,450)

383,788

Tools, furnitureand fixturesin trust accounts

333,390(199,989)

133,400

315,131(191,804)

123,326

Construction inprogressin trust accounts

50,081–50,08133,446–33,446(32,219,362) 447,390,211

482,819,375

Total

20

479,609,573(30,924,452) 451,894,923

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
were as follows:(Thousands of yen)

For the fiscal period ended For the fiscal period ended
May 31, 2021
November 30, 2020
Book value: (Note 1)
Balance at beginning of period

454,562,081

453,876,951(4,520,578)

685,129

Balance at end of period

450,041,503

454,562,081

Fair value (Note 3)

572,160,000

573,850,000

Change during the period (Note 2)(Note 1) The book value represents the acquisition cost less accumulated depreciation.
(Note 2)	Significant changes
		For the fiscal period ended May 31, 2021, the major reason for the decrease is disposition of “Daiwa Kyobashi Building” (3,130,260
thousand yen) and depreciation (1,816,503 thousand yen). For the fiscal period ended November 30, 2020, the major reason for theincrease is acquisition of “Nihonbashi-Bakurocho 1-Chome Development Site (land)” (3,775,000 thousand yen). The major reason
for the decrease is disposition of “Daiwa Shimbashi 510 Building” (2,103,922 thousand yen) and depreciation (1,827,171 thousandyen).
(Note 3)	The fair values as of May 31, 2021 and November 30, 2020 were determined by the sum of appraisal values provided by external
real estate appraisers.

Note 7 – Rental Revenues and Expenses
Rental revenues and expenses for the fiscal periods ended May 31, 2021 and November 30, 2020 were as
follows:(Thousands of yen)

For the fiscal period ended For the fiscal period ended
May 31, 2021
November 30, 2020
Revenues from property leasing:
Rental revenues

13,887,151

14,482,210

140,695

31,325

14,027,847

14,513,535

1,036,453

1,019,499

Utilities expenses

774,452

915,742

Taxes and dues

1,145,554

1,169,520

Insurance expenses

19,94019,990

Repair expenses

583,977

670,253

1,816,503

1,827,171

77,85074,421

Total rental expenses

5,454,733

5,696,598

Income from property leasing

8,573,113

8,816,936

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

Depreciation
Other

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

21

Note 9 – Treasury Investment Units
Cancellation of treasury investment units as of May 31, 2021 and November 30, 2020 were as follows.
(Thousands of yen)

As of May 31, 2021
Total number of treasury investment units
cancelled (units)
Total amount of cancellation

As of November 30, 2020

9,781

5,992

6,458,395

3,675,523

Total number of treasury investment units cancelled and total amount of cancellation during the fiscal period
ended May 31, 2021 were 3,789 units and 2,782,872 thousand yen, respectively.

Note 10 – Short-Term Debt, Long-Term Debt Due Within One Year,
Long-Term Debt and Investment Corporation Bonds
Short-term debt, long-term debt due within one year, long-term debt and investment corporation bonds asof May 31, 2021 and November 30, 2020 consisted of the following:(Thousands of yen)

As of May 31, 2021

As of November 30, 2020

0.3% unsecured short-term loans due 2022,
principally from banks

2,400,000

3,600,000

Total

2,400,000

3,600,000

191,950,000

191,850,000

1.0% unsecured bond due 2024

2,100,000

2,100,000

0.2% unsecured bond due 2024

1,700,000

1,700,000

0.3% unsecured bond due 2025

1,500,000

1,500,000

0.6% unsecured bond due 2030

2,400,000

2,400,000

0.7% unsecured bond due 2031

1,300,000

1,300,000

200,950,000

200,850,000

Unsecured loans due 2021 to 2031, principallyfrom banks and insurance companies withinterest rates mainly ranging from 0.1% to
0.8%

Total

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

The annual maturities of short-term debt, long-term debt and investment corporation bonds as of May 31,
2021 were as follows:(Thousands of yen)

Due after Due after Due after Due after Due after
Due within
one to two two to three three to four to five
five
one year
years
years
four years
years
years
Short-term debt,
long-term debt and investment 23,900,000 30,600,000 25,600,000 31,150,000 22,200,000 69,900,000
corporation bonds

22

Note 11 – Leases
As Lessor
The future minimum rental revenues under existing non-cancelable operating leases as of May 31, 2021 andNovember 30, 2020 were as follows:(Thousands of yen)

As of May 31, 2021

As of November 30, 2020

Due within one year

9,486,733

9,404,348

Due after one year

17,694,040

15,085,262

Total

27,180,774

24,489,611

Note 12 – Gain on Sale of Investment Properties
Gain on sale of investment properties for the fiscal period ended May 31, 2021 was as follows:(Thousands of yen)

For the fiscal period ended
May 31, 2021
Daiwa Kyobashi Building:
Proceeds from sale of investment property

4,200,000

Cost of selling investment property(3,130,260)

Other expenses related to sale
Gain on sale of investment property(42,774)
1,026,965

Gain on sale of investment properties for the fiscal period ended November 30, 2020 was as follows:(Thousands of yen)

For the fiscal period ended
November 30, 2020
Daiwa Shimbashi 510 Building:
Proceeds from sale of investment property

2,530,000

Cost of selling investment property(2,103,922)

Other expenses related to sale(89,690)

Gain on sale of investment property

336,387

Note 13 – Reduction of Investment Properties Purchased with Government Subsidies
Government subsidies of 32,898 thousand yen were deducted from the acquisition cost of the buildings intrust as of May 31, 2021 and November 30, 2020.

VI. Notes to Financial Statements

23

Note 14 – Reduction of Investment Properties Acquired through Exchange
The following amounts were deducted from the acquisition cost of the investment property in trust acquired
through exchange as of May 31, 2021 and November 30, 2020.
(Thousands of yen)

As of May 31, 2021

As of November 30, 2020

Buildings and structures in trust accounts

182,846

182,846

Land in trust accounts

887,074

887,074

1,069,921

1,069,921

Total

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

For the fiscal period ended For the fiscal period ended
May 31, 2021
November 30, 2020
Statutory tax rate

31.46

31.46

Deductible cash distributions(28.47)(30.01)

Provision of reserve for reduction entry(2.99)(1.45)

Others0.01

0.01

Effective tax rate

0.01

0.01

The significant components of deferred tax assets and liabilities as of May 31, 2021 and November 30, 2020
were as follows:(Thousands of yen)

As of May 31, 2021

As of November 30, 2020

Deferred tax assets:
Accrued enterprise tax

13

5

74,484

91,63974,49891,644

Reserve for reduction entry

75,49475,494

Deferred gains on hedges

1,244

–

Total deferred tax liabilities

76,73875,494

Net deferred tax (liabilities) assets(2,240)16,150

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

24

Note 16 – Per Unit Information
Information about earnings per unit for the fiscal periods ended May 31, 2021 and November 30, 2020, net
assets per unit as of May 31, 2021 and November 30, 2020 were as follows:(Yen)

For the fiscal period ended For the fiscal period ended
May 31, 2021
November 30, 2020
Earnings per Unit:
Net income per unit

15,412

14,484Weighted average number of units
outstanding (units)489,860

491,877(Yen)

As of May 31, 2021
Net Assets per Unit

As of November 30, 2020

519,419

519,462

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

Note 17 – Distribution Information
DOI’s Articles of Incorporation stipulate that DOI is required to make cash distribution in excess of 90% of
distributable profit as defined in the Special Taxation Measure Act of Japan for each fiscal period. Therefore,
the total amount of dividends that DOI has determined to pay out is 6,833,232,000 yen for the fiscal period
ended May 31, 2021 and 6,796,264,509 yen for the fiscal period ended November 30, 2020 that are thelargest integral multiple of 488,088, the number of units outstanding as of May 31, 2021 and 491,877 as ofNovember 30, 2020, after deducting provision of reserve for reduction entry as stipulated in Article 65-7 of theSpecial Taxation Measure Act of Japan from unappropriated retained earnings. Furthermore, DOI does not
pay out dividends that exceed accounting profits as outlined in Article 32-2 of DOI’s Articles of Incorporation.
(Yen)

For the fiscal period ended For the fiscal period ended
May 31, 2021
November 30, 2020
I

Unappropriated retained earnings

II Cash distributions declared
III

Voluntary reserves
Provision of reserve for reduction entry

IV Retained earnings brought forward

7,549,897,400

7,124,746,976

6,833,232,000

6,796,264,509

716,665,400

328,482,467––

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

For the fiscal period ended For the fiscal period ended
May 31, 2021
November 30, 2020
Cash distributions per unit
Board of directors meeting dates

14,00013,817

July 19, 2021

January 20, 2021

VI. Notes to Financial Statements

25

Note 18 – Related-Party Transactions
No related-party transaction was entered into for the fiscal periods ended May 31, 2021 and November 30,
2020.
DOI became a consolidated subsidiary of Daiwa Securities Group Inc., which is listed in Tokyo Stock
Exchange, Inc. and Nagoya Stock Exchange, Inc. during the fiscal period ended May 31, 2021.

Note 19 – Segment Information
For the fiscal periods ended May 31, 2021 and November 30, 2020
Segment Information
Segment information has been omitted as DOI has only one segment, which is property leasing business.
Related Information
Information about Products and Services
Disclosure of this information has been omitted as operating revenues to external customers for a single
product/service category account for more than 90% of the operating revenues on the statements of income
and retained earnings.
Information about Geographic Areas(1) Operating revenues
Disclosure of this information has been omitted as domestic operating revenues account for more than 90%
of total operating revenues.
(2) Investment properties
Disclosure of this information has been omitted as domestic investment properties account for more than
90% of the book value of the total investment properties.
Information about Major Tenants
Disclosure of this information has been omitted as there is no tenant that accounts for 10% or more of theoperating revenues recorded in the statements of income and retained earnings.

Note 20 – Significant Subsequent Events
Not applicable.

26

VI. Notes to Financial Statements27

VII. Independent Auditor’s Report28VII. Independent Auditor’s Report

29

30

VII. Independent Auditor’s Report

31

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

Trading volume (right axis)

900,000

9,000

800,000

8,000

700,000

7,000

600,000

6,000

500,000

5,000

400,000

4,000

300,000

3,000

200,000

2,000

100,000

1,000
0

0

2019
Jun. Jul.

Aug.

Sept. Oct.

Nov.

Dec.

2020
Jan. Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sept. Oct.

Nov.

Dec.

2021
Jan. Feb.

Apr.

Mar.

May

Overview of Investment Units and Unitholders (As of May 31, 2021)■ No. of Investment Units by Investor Type
31st
Fiscal Period

Individuals/others
13,618 units (2.8%)

Financial institutions
148,266 units (30.4%)■ No. of Unitholders
by Investor Type
Foreigners 110,543 units (22.6%)

Total: 488,088 units
Other domestic corporations 200,346 units (41.0%)

30th
Fiscal Period

Individuals/others
13,756 units (2.8%)

Financial institutions
149,436 units (30.4%)

Securities firms 15,315 units (3.1%)

Foreigners 112,223 units (22.8%)

Total: 491,877 units
Other domestic corporations 200,338 units (40.7%)

Financial institutions

99(1.8%)

Other domestic
corporations

104(1.9%)

Foreigners272(4.9%)

Securities firms

23(0.4%)

Total

5,561

IR Calendar
Number ofPercentage
Units Owned
Share(Units)July 19, 2021: Announcement of financial results for
31st Fiscal Period

1. Daiwa Investment Management Inc.

128,905

26.4

August 12, 2021: Sending of Japanese version of Business
Report for 31st Fiscal Period(Statement of Financial Performance)

2. Daiwa Securities Group Inc.

67,321

13.8

August 13, 2021: Start paying distributions for
31st Fiscal Period

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

53,50311.0

4. Custody Bank of Japan, Ltd. (Trust Account)

39,011

8.0

5.

STICHTING PGGM DEPOSITARY PGGM
LISTED REAL ESTATE PF FUND

26,688

5.5

6.

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

13,391

2.7

7.

Custody Bank of Japan, Ltd.
(Securities Investment Trust Account)

10,385

2.1

8. BNYM AS AGT/CLTS 10 PERCENT

6,914

1.4

9. JAPAN SECURITIES FINANCE CO., LTD.

5,602

1.1

10. SSBTC CLIENT OMNIBUS ACCOUNT

4,828

1.0

May
End offiscal period

Feb.
Jan.

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

32

5,063
(91.0%)

Securities firms 16,124 units (3.3%)

Top Ten Unitholders (As of May 31, 2021)
Name of Investor

Individuals/others

July
End offiscal period

Aug.

Nov.

January 2022: Announcement of financial resultsfor 32nd Fiscal Period
February 2022: Sending of Japanese version of Business
Report for 32nd Fiscal Period(Statement of Financial Performance)
February 2022: Start paying distributions for
32nd Fiscal Period

Investor Memo
End of fiscal period

May 31 and November 30 of each year

General Meeting of Unitholders

Held at least once every two years

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

Date prescribed in Article 15 of the Articles of Incorporation

Reference date for finalizing payment of
distributions

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

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

Newspaper in which notice is posted

Nikkei Inc.

Manager of Unitholder Registry, etc.

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

Office handling administrative affairs

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

Service counter

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

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

Daiwa Office Investment Corporation

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

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

VIII. Investor Information

33