Daiwa Office Investment Corporationetc., operating revenue in the 14th Fiscal Period is estimated to...

Daiwa Office Investment Corporation

2012/7/17

Earnings Announcement

for the 13th Fiscal Period(Fiscal Period ended May 2012)

1This document is not material disclosed in compliance with the Financial Instruments and Exchange Law or any regulation of similar nature, nor is it intended for the purposes of solicitation. Daiwa Office Investment Corporation advises reader to make investment decisions at their own judgment.

The 13th Fiscal Period TopicsHighlights of the 13th Fiscal PeriodHighlights of Forecasts for the 14th and 15th Fiscal PeriodIssue and Activities of the Investment Corporation

Contents

The Real Estate Market and Trading PerformanceAcquisition of Properties Under ReviewRecent Property AcquisitionPortfolio and Acquisition Policy Properties Acquired after The Sponsor Change

Leasing Market of Tokyo Office BuildingPortfolio MapAnalyses of Leasing IncomePerformance of Shinjuku Maynds Tower & E SPACE TOWER Internal Growth StrategiesProperties Focused on Leasing in the 13th FPProperties Subject to Leasing Improvement in the 14th FPStrategic Renewals Aimed at Improving in Building CompetitivenessActions Taken for Environmental Efforts

2122232425

4567

91011141516171819

Status of Interest-bearing LiabilitiesUnitholdersActivities in the 14th Fiscal Period

273132

Performance Highlights and ForecastsSection 1

External GrowthSection 3

Internal GrowthSection 2

Financial StrategySection 4

AppendixSection 5


This document is provided for informational purposes and should not be construed as an offer or solicitation of an offer to buy or sell any specific product, including investment units. We advise you to inquire with each securities company with regards to the purchase of Daiwa Office Investment Corporation’s investment units.

This document is not intended to provide information meeting the requirements of Japan’s new Financial Instruments and Exchange Law or Investment Trust and Investment Corporation Law, or by the associated cabinet orders, cabinet office ordinances, or rules, or by the rules governing companies listed on the Tokyo Stock Exchange, or any other applicable rules, nor is it a disclosure document or statement of financial performance prepared in accordance with the provisions of any of the foregoing.

This document contains forward-looking statements. However, these forward-looking statements are based on certain assumptions and judgments made using currently available information, and there are a number of known and unknown risks and uncertainties. These forward-looking statements are not a guarantee of future performance or management results, and actual results may differ materially from any explicit or implicit forecasts contained herein.

Although the information contained in this document is the best available at the time of publication, no assurances can be given regarding the accuracy and certainty of this information. The content of this document can be modified or withdrawn without prior notice.

Performance Highlights and ForecastsSection 1

The 13th Fiscal Period (December 1, 2011 ~ May 31, 2012)


The 13th Fiscal Period Topics

█ Properties Acquisition

“Nihonbashi Hongokucho Tosei Building” (Date of Delivery: 2012/5/11 Acquisition Price: 1,721 million yen)

The land ownership of “Daiwa Sarugakucho” (Date of Delivery: 2012/3/30 Acquisition Price: 190 million yen)

█ Property Management and Management Situation

Occupancy Rate at the end of the 13th FP : 94.3% (the 13th Expected Occupancy Rate estimated in Jan. 2012 : 90.8% / Occupancy Rate at the end of the 12th FP: 92.4%)

Average Contract Rent at the end of May. 2012 : 19,480 yen (% change from the end of Nov. 2011: -3.7%)

█ Financial Situation

Interest-bearing liabilities at the end of May 2012 : 111,391.25 million yen ( LTV (based on acquisition price) : 35.6%)

Refinanced 19.6 billion yen in May 2012 and improved the debt cost dramatically

As the result of concluding the swap agreements, the rate of loans with fixed interests rate increased from 28.2% to 84.3%.


Highlights of the 13th Fiscal Period

+2542,0221,767Ordinary Income

－

+1.9%

+643yen

+254

▲ 480

▲ 226

+52

▲ 174

Change

94.3%92.4%Occupancy Rate

3.4%

5,107 yen

2,021

1,080

3,090

4,341

7,431

13th Fiscal Period(ended May. 2012)

(37 properties)

3.6%NOI Yield (annualized)

4,464 yenDividend per Unit

1,766Net Income

1,560Non-operating expenses

3,317Operating Income

4,288Operating Expenses

7,605Operating Revenue

12th Fiscal Period(ended Nov. 2011)

(36properties)

+3.5%

+257 yen

+101

+77

+162

Change

94.3%

5,107 yen

2,021

4,341

7,431

13th Fiscal Period(ended May. 2012)

(37 properties)


90.8%Occupancy Rate

1,919Net Income

4,264Operating Expenses


Previous Forecast of 13th Fiscal Period

(36 properties)

█ Results of the 13th Fiscal Period

(Reference)

(million yen)Due to increase in the full contribution of E SPACE TOWER acquired in the 12th FP (+138 mil yen) but decrease in the operating revenue by the tenants’ moving out from Daiwa Jimbocho, Daiwa Onarimon and Daiwa Sarugakucho, total operating revenue in the 13th FP is 7,431 mil yen （▲174mil yen）

Increase in outsourcing expenses (+63mil yen) (of them, the agent fee: +49mil yen)

Without expenses for attaining unsecured status for borrowings and decrease in debt cost accompanying the refinancing of borrowings. (▲480mil yen)

Increase in the rent revenue (rent and common area charge) (+25 mil yen), utilities revenue (+90mil yen) and other lease business revenue including restoring the original condition.

Increase in the utilities expenses (+71mil yen) and decrease in the repair expenses excluding restoring the original condition.

(million yen)


Highlights of Forecasts for the 14th and 15th Fiscal Period

█ the 15th Fiscal Period(Forecast)

█ the 14th Fiscal Period (Forecast)

▲ 285794Non-Operating expenses

－

0.0%

+393yen

+155

▲ 116

+98

▲ 18

Difference compared to 13th

FP

3.2%

94.3%

5,500yen

2,177

2,973

4,439

7,413

14th FP Forecast Ending Nov. 2012

(37 properties)

Operating Expenses

Expected Occupancy Rate

Expected NOI Yield (annualized)

Dividend per Unit

Net-Income

Operating Income

Operating Revenue

▲ 49744Non-Operating expenses

▲ 2834,156Operating Expenses

－

▲ 0.6%

0yen

0

▲ 49

▲ 333

Difference compared to 14th

FP

93.5%Expected Occupancy Rate

3.2%Expected NOI Yield (annualized)


2,177Net-Income

2,923Operating Income


15th FP Forecast Ending May. 2013

(37 properties)

Because of increase in rent revenue of Daiwa Sarugakucho but decrease in rent revenue of Daiwa Jimbocho and Daiwa Kudan, etc., operating revenue in the 14th Fiscal Period is estimated to be 7,413 mil yen (▲18mil yen)

Because of increase in taxes and dues of Daiwa Kayabacho Building, Jimbocho Place and E SPACE TOWER, operating expenses in the 14th Fiscal Period is estimated to be 4,439 mil yen (+98mil yen)

Due to cost reductions by refinancing loans, non-operating expenses is estimated to be 794 mil yen. (▲285mil yen)

Because of decrease in utilities revenue, other lease business revenue and rent revenue by assuming tenants’ moving out from Shinjuku Maynds Tower, operating revenue in the 15th

Fiscal Period is estimated to be 7,080mil yen (▲333mil yen)

Due to decrease in utilities expenses, repair expenses and depreciation, operating expenses in the 15th Fiscal Period is estimated to be 4,156mil yen (▲283mil yen)

Due to cost reductions by refinancing loans, non-operating expenses is estimated to be 744mil yen. (▲49mil yen)

(million yen)

(million yen)


Leasing Improvement

Issues and Activities of the Investment Corporation

5,500 yen

Net Assets200,800

Balance Sheet of the 13th Fiscal Period(Fiscal Period ended May, 2012)

Balance Sheet of the 13th Fiscal Period(Fiscal Period ended May, 2012)

Assets325,315

Liabilities124,515

（Unit：million yen）

5,500 yen

Forecast EPS for the 14th Fiscal PeriodForecast EPS for the 14th Fiscal PeriodForecast EPS for the 14th Fiscal Period

Status of interest-bearing liabilities

Financial Strategy

P27~30

Growth through asset acquisitions

External Growth

P9~19

Internal Growth

P21~25Forecast EPS for the 15th Fiscal PeriodForecast EPS for the 15th Fiscal PeriodForecast EPS for the 15th Fiscal Period

Selective Purchases of PropertiesInvest aggressively for the competitive properties screened carefullyAmend the Asset Management Guideline and clarify the criteria to acquire properties

Asset Issues and ActivitiesAsset Issues and ActivitiesMeasures to Improve Profitability

Improve occupancy rate through lease-upPrevent cancellations by strengthening relations with existing tenantsImplement strategic renewals aimed at boosting competitiveness

Strengthen Collaboration with GroupStrengthen leasing through collaboration with Daiwa Securities Group

Liability Issues and ActivitiesLiability Issues and ActivitiesReduction in Risk of Rising Interest Rate

Increase in the rate of fixed interest rate loans and reduce in risk of rising interest rate

Decrease in Interest Rate CostsContinually strive to reduce financial costs

Measures to Reduce CostsReduce energy consumption costsIndividualize some heat sources for air-conditioning systemsEnsure appropriate construction costs

Internal GrowthSection 2


15,000

17,000

19,000

21,000

23,000

25,000'01

/01

'02/01

'03/01

'04/01

'05/01

'06/01

'07/01

'08/01

'09/01

'10/01

'11/01

'12/01

'13/01

'14/01

'15/01

'16/01

0

2

4

6

8

10

Existing Building Average Rent (left axis)Existing Building Vacancy Rate (right axis)

Supply of large scale office buildings

91125

216

12177

154119

65 86 85117

181

5787 90

050

100150200250

'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

28,000

0％ 1％ 2％ 3％ 4％ 5％ 6％ 7％ 8％ 9％ 10％

Leasing Market of Tokyo Office Building

(%)

（10 thousand㎡/year）

Construction Completion Construction Incompletion(Data): Miki Shoji and Mori Building

2011/12

2003/10

2001/62007/9

2008/9

2000/1

2001/62007/9

2008/9

2000/1

2011/12

2003/10

2012/6

2012/6

Large-scale Buildings increased by 17,600tsubo between 2011/12 and 2012/6(by 4% in total rent area)

Leasing Market of Tokyo Office MarketLeasing Market of Tokyo Office MarketLeasing Market of Tokyo Office Market

(Vacancy Rate)

Rent (yen/tsubo) Trend of Office Rent and Vacancy Rate of 5 Central Wards of Tokyo

Trend of Office Rent and Vacancy Rate Trend of Office Rent and Vacancy Rate of 5 Central Wards of Tokyoof 5 Central Wards of Tokyo

(Data) Sanko Estate compiled by Daiwa Real Estate Asset Management

（Rent）

（Vacancy Rate）

Rental Market Clock(conceptual chart)

A Class Bldg.

Ｂ Class Bldg.

Large-scale Buildings of 5 Central Wards of Tokyo

Office Buildings of 5 Central Wards of Tokyo

(yen/tsubo)


Portfolio Map ~ Up or down in occupancy rate compared with previous Fiscal Period ~

Daiwa Minami-SenbaBenex S-3

As of May. 31, 2012

Up : 12 buildings

Down : 8 buildings

Unchanged : 17 buildings

Occupancy rate compared with previous Fiscal Period

Regional CitiesRegional CitiesRegional Cities

ShibuyaWard

Minato Ward

Chuo Ward

Chiyoda Ward

Shinjuku Ward

Shibuya Station

TokyoStation

Tokyo

Daiwa Misakicho Daiwa Sarugakucho

Nihonbashi MS Bld.

Daiwa Tsukiji616

Daiwa Ginza

Daiwa Tsukishima

Daiwa Shibaura

Daiwa Shibadaimon

Daiwa AzabudaiDaiwa A Hamamatsucho

Daiwa Shinbashi510

Daiwa Ginza Annex

Daiwa TsukijiBPS Square

Daiwa Jingumae

Daiwa Minami Aoyama

Daiwa Shibuya SS

Daiwa Nihonbashi Honcho

Daiwa KyobashiDaiwa Ginza 1-chome

Sunline Bldg. No.7

Daiwa Onarimon

SHIBUYAEDGE

Daiwa Shinagawa North

Shinjuku Maynds Tower

Daiwa Kodenmacho

Daiwa Jimbocho

Daiwa Kudan

Daiwa Nishi shimbashi

5 Central Wards of Tokyo and Tokyo Metropolitan Area 5 Central Wards of Tokyo and Tokyo Metropolitan Area 5 Central Wards of Tokyo and Tokyo Metropolitan Area

Jimbocho Place

Daiwa Kayabacho Build.

E SPACE TOWER

•The occupancy rate of Nihonbashi Hongokucho Tosei Building maintained compared to the occupancy rate at the time of acquisition

Daiwa Higashi Ikebukuro

Nihonbashi Hongokucho Tosei Building *

Daiwa Kinshicho

Shinjuku Station

Shinagawa Station

Ikebukuro Station


Analyses of Leasing Income (1)

Occupancy RateOccupancy RateOccupancy Rate

Rate of Move In / OutRate of Move In / OutRate of Move In / Out

The occupancy rate at the end of the 13th Fiscal Period recovered from 90.8%(F)* to 94.3%.

Occupancy rate of Daiwa Sarugkucho recovered to 100.0%.

Occupancy rate of Daiwa Onarimon recovered to 100.0%.

Occupancy rate of Nishishinbashi was up to 79.6%.

94.3％(1) The 13h Fiscal Period (Actual)(1) The 13(1) The 13hh Fiscal Period (Actual)Fiscal Period (Actual)

The expected occupancy rate at the end of the 14th Fiscal Period is estimated to recover from 90.7%(F)* to 94.3%.

Major tenant of Daiwa Kudan is scheduled to leave.

Meanwhile the occupancy rates of Ｄａｉｗａ Jimbocho and Daiwa Kudan are estimated to recover early.

94.3％(2) The 14th Fiscal Period (Forecast)(2) The 14(2) The 14thth Fiscal Period (Forecast)Fiscal Period (Forecast)

The expected occupancy rate at the end of the 15th Fiscal Period is estimated to be 93.5%.

Tenants of Shinjuku Maynds Tower are estimated to move out.

The occupancy rate of the 15th Fiscal Period is estimated conservatively because of large supply of office buildings and uncertain outlook of economy.

93.5％(3) The 15th Fiscal Period (Forecast)(3) The 15(3) The 15thth Fiscal Period (Forecast)Fiscal Period (Forecast)

97.4% 97.7%

92.8%

85.7%

92.4%

97.0%

99.0%

98.2%

98.3%

97.6%95.4%

95.9%

93.5%94.3%94.3%

90.7%90.8%

85.0%

90.0%

95.0%

100.0%

1th FP 2th FP 3th FP 4th FP 5th FP 6th FP 7th FP 8th FP 9th FP 10thFP

11thFP

12thFP

13thFP

14thFP

15thFP

Occupancy Rate (Actual)

Expected Occupancy Rate (in Jul. 2012)

Expected Occupancy Rate (in Jan. 2012)

█ Occupancy Rate and Forecast

(F)* : expected on January,13 2012* Rate of Moving-in and Moving-out to Rentable Area

3.9%

7.2% 7.4%

13.4%

9.8%

5.9%

2.5%

-12.0%

-14.7%

3.2%

-5.9%-3.9%-3.4%-3.9%

3.3%

-6.0%-7.3%

-3.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

7th FP 8th FP 9th FP 10th FP 11th FP 12th FP 13th FP 14th FP 15th FP

Rate of Moving-in

Expected Rate of Moving-in

Rate of Moving-out

Expected Rate of Moving-out



Number of New Leases and Cancellations *Number of New Leases and Cancellations *Number of New Leases and Cancellations *

（Case)

* Excluding residence and warehouse

Diversification of Tenants Rent AreaDiversification of Tenants Rent AreaDiversification of Tenants Rent Area

97 105 108 106 113

115129 129 134

146

31

37 37 3434

1

4 5 76

0

100

200

300

400

500

2010/5 2010/11 2011/5 2011/11 2012/5

50

60

70

80

90

100

1,000㎡~(Acquired properties)(left ax is)

1,000㎡~(Excluding Acuired properties)(left ax is)

300㎡~1,000㎡(left ax is)

~300㎡(left ax is)

Occupancy Rate (right ax is)

13Fiscal PeriodCost

ReductionSpace

ExpansionConsolidation

SpaceReduction

BetterLocation

Other Total

New Leases 11 13 3 2 4 5 38Cancellations 4 3 5 6 2 5 25

(%)（Case)

* After changing the sponsor.

*24

33 30 31

16 18

38

-19-24

-14 -12

-20-25

-53

-20

6

17

4-2

13

5

-60

-40

-20

0

20

40

60

7th FP 8th FP 9th FP 10th FP 11th FP 12th FP 13th FP

New Leases Cancellations Net New Leases


53.9%

40.8%

28.4%

64.5%

34.0%

45.0%

48.4%

30.7%

12.1%

9.5%

19.6%

0.8%

4.7%

3.5%

4.0%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

10th FP

11th FP

12th FP

13th FP

Decrease Increase Unchanged Cancell

1,000

1,050

1,100

1,150

1,200

1,250


Average Contract Rent and Market RentAverageAverage Contract Rent and Market RentContract Rent and Market Rent(yen/tsubo)

(Million yen)

Contract RenewalContract RenewalContract Renewal

* Average of rent that tenants contracted by the end of each Period pay

The rate of Contract Renewal Target Area to total rentable are(195,541.63㎡) at the end of 13th Fiscal Period

The rate of Contract Renewal Area during 13th Fiscal Period to total rentable are (189,755.60㎡) at the end of 12th Period

█ The 14th Fiscal Period Contract Renewal Target

█ The 13th Fiscal Period Contract Renewal

Attribution Analysis / Monthly Contract Rent*Attribution Analysis / Monthly Contract Rent*Attribution Analysis / Monthly Contract Rent*

End of May 2012 Monthly Contract Rent

Increase by New Leases Decrease by

Tenants’Cancellations

Decrease by Rent

Revisions

Increase by New

Acquisition

End of Nov. 2011 Monthly Contract Rent

* Monthly Contact Rent means a total final ret from tenants who contracted by the end of the Fiscal Period.

15,000

20,000

25,000

4th FP 5th FP 6th FP 7th FP 8th FP 9th FP 10th FP 11th FP 12th FP 13th FP

Average Contract Rent*

Miki Shoj i Tokyo 5 Central Wards Office RentRevision Target Area,

22.3%

Revision Target Area,12.3%

Non-Revision TargetArea, 69.7%

Non-Revision TargetArea, 87.7%

Cancelled Area (RevisionTarget ), 1 .0%

Cancelled Area (Non-Revision Target), 7.0%


100,000

102,000

104,000

106,000

108,000

110,000

11th FP 12th FP 13th FP23,000

24,000

25,000

26,000

27,000

12th FP 13th FP

Performance of Shinjuku Maynds Tower & E SPACE TOWER

%Share of Maynds Tower & E Space Tower% Share of Maynds Tower & E Space Tower

E SPACE TOWER Occupancy RateE SPACE TOWER Occupancy RateAppraisal Value of Shinjuku Maynds Tower and E SPACE TOWERAppraisal Value of Shinjuku Maynds Tower and E SPACE TOWER

Shinjuku Maynds Tower& E SPACE TOWER：50.4％

Other Properties:49.6％

Shinjuku Maynds Tower Occupancy RateShinjuku Maynds Tower Occupancy Rate

Shinjuku Maynds Tower E SPACE TOWER(mil yen)(mil yen)

Cap:4.0％ Cap:4.0％

Cap:4.3％ Cap:4.3％

Cap:4.0％

Cap:4.4％

+2.0Bil yen +0.1Bil yen

+1.8Bil yen

Acquisitionprice

94.0%99.9%99.9%

78.1%

99.1%99.9%96.6%100.0%99.4% 99.9% 98.3%99.9%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

4th FP 5th FP 6th FP 7th FP 8th FP 9th FP 10th FP 11th FP 12th FP 13th FP 14th FP 15th FP

Shinjuku May nds Tow er Occupancy Rate

Shinjuku May nds Tow er Ex pected Occupancy Rate

100.0% 92.8% 100.0% 100.0% 100.0% 100.0% 100.0% 96.5% 100.0% 100.0%100.0% 100.0%89.60%

0%

20%

40%

60%

80%

100%

4th FP 5th FP 6th FP 7th FP 8th FP 9th FP 10th FP 11th FP 12th FP 13th FP 14th FP 15th FP

E SPACE TOWER Occupancy Rate

E SPACE TOWER Ex pected Occupancy Rate


Internal Growth Strategies

█ Improve occupancy rate through lease-up

█ Prevent cancellations by strengthening relations with existing tenants

Strengthen collaboration with agents.Hold regular meetings and regular visits with various agents.Implement prompt and smooth leasing.Person in charge of asset management to be present at time of property viewing, and establish a point of contact and collaboration and means of communication with the property management company.Enhance property recognition with up-to-date information.Implement face-to-face leasing by visiting with regularly-updated vacancy information and property information.

Reinforce leasing by utilizing Daiwa Securities’ branch network.Implement leasing that utilizes Daiwa Securities Group’s network of corporate clients.

Maintain the fair cost and price level by introducing the principle of competition and continue to look into the construction cost of heat light and water and management cost.

Enhance tenant satisfaction by strengthening communication with existing tenants.Visit all tenants on a regular basis and ensure timely response by deepening interaction among people and respond to tenants face-to-face.

Scrutinize construction content and ensure appropriate construction costs.Implement environmentally friendly construction and equipments for existing properties.

█ Implement strategic renewals aimed at boosting competitiveness

█ Strengthen collaboration with Daiwa Securities Group

█Measures to reduce costs

“Bonji-Tettei”Accomplishing ordinary tasks thoroughly and carefully enables us to achieve extraordinary results

Strengthen collaboration with leasing agentsStrengthenStrengthen collaboration with leasing agentscollaboration with leasing agents

Furthermore, reinforce the collaboration with other new 100 agents

Leasing ActivitiesLeasing ActivitiesLeasing Activities

Currently work with about 100 agents

（Case)

0

25

50

75

100

2011/12 2012/01 2012/02 2012/03 2012/04 2012/05

80%

85%

90%

95%

100%Number of Inquiries from potential tenants(left ax is)

Number of new contracts(left ax is)

Occupancy Rate (right ax is)


100.0 100.0

20.6

0.0

50.0

100.0

2011/5 2011/11 2012/5

Properties Focused on Leasing in the 13th FP

█ Daiwa Sarugakucho █ Daiwa Kyobashi

█ Sunline No.7 █ Daiwa Jimbocho

100.0

0.0

100.0

0.0

50.0

100.0

2011/5 2011/11 2012/5

42.153.7

88.6

0.0

50.0

100.0

2011/5 2011/11 2012/5

79.768.1

88.4

0.0

50.0

100.0

2011/5 2011/11 2012/5

(%) (%)

(%)(%)

Former tenant, to whom the entire building was being leased, vacated the property in September 2011.Occupancy rate was down to 0.0%.

The new tenant who meets the characteristics of local area, moved in Daiwa Sarugakucho on March 2012 and the occupancy rate of Daiwa Sarugakucho recovered to 100%.

This occupancy rate had remained low due to its ages after the Great East Japan Earthquake, but Daiwa Kyobashi started to recover by appealing the convenient location and high aseismic capacity.

The occupancy rate is expected to be up to 100% in the near future.

7.4

The tenant, subsidiary of foreign company, vacated in June 2011 due to withdrawal of its business from the Japanese market.

The occupancy rate recovered by appealing the convenient location and its property design.

Main tenant vacated in January 2012 due to improvement of its business efficiency and the occupancy rate was down to 7.4%.

The occupancy rate is recovering by appealing the convenient location and property design and expected to be up to more.


Properties Subject to Leasing Improvement

88.0%⇒39.6% (June 2012)Occupancy Rate

March 1987Completion

3,679.70m2Total Floor Area

Office / Parking / StoreUse

9FFloorSRCStructure540.67m2Site Area

Kudan Minami 1chome, Chiyoda-ku, TokyoAddress

20.6%Occupancy Rate

March 1997Completion


Office / ParkingUse

B1/8FFloor

SStructure

598.04m2Site Area

Kanda Jimbocho 2chome, Chiyoda-ku, TokyoAddress

█ Daiwa Kudan

1-minute walk from Kudan Station on the Tokyo Metro Tozai, HanzomonLine ,Toei Subway Shinjuku Line.Located in the area with high demand for office buildings due to the convenient access using 3 subways.

The main tenant vacated the property during the 14th

Fiscal Period due to improvement of its business efficiency and the occupancy rate is expected to be down to 39.6%.

DOI has appealed the convenient access using 3 subways, and implemented renewal construction. DOI aims to recover the occupancy rate as soon as possible.

1-minute walk from Jinbocho Station on the Tokyo Metro HanzomonLine ,Toei Subway Mita Line and Toei Subway Shinjuku Line.The convenient access to Otemachi, Shinjuku and ShibuyaLocated in the area with middle offices, many universities, various types of schools and

The main tenant vacated the property during the 13th

Fiscal Period due to improvement of its business efficiency and the occupancy rate fell considerably.

DOI has appealed the convenient access using 3 subways. DOI aims to recover the occupancy rate as soon as possible.

█ Daiwa Jimbocho █ BPS Square

1-minute walk from Tsukiji Station on the Tokyo Metro Hibiya Line.Located in the affiliated companies whose head quarter is in the area of “Around Tokyo Station” or “Ginza”

The tenant, occupied 100% of this bldg, vacated the property during the 13th Fiscal Period due to its business slump.

DOI has appealed easy access to “Tokyo Station” and “Ginza”. DOI aims to recover the occupancy rate as soon as possible.

0.0%Occupancy Rate

January 1996Completion


OfficeUse

10FFloor

SRCStructure

464.81m2Site Area

Tsukiji 2chome,Chuo-ku, TokyoAddress


Strategic Renewals Aimed at Improving in Building Competitiveness

322012/7～2012/11Updating package air conditionersDaiwa A Hamamatsucho

362012/6～2012/8Construction work for

installation of CT soundproof wall


402012/9～2012/11Construction work for iron parts paint of roof (east side)Shinjuku Maynds Tower

752012/7～2012/9Construction work for updating package air conditioners BPS square

1872012/3～2012/6Renovation work for common areaDaiwa Sarugakucho

Total Amount(million yen)

Scheduled implementation

periodPurposeName of properties

█ Capital Expenditures for the 14th Fiscal Period

102011/12～2012/1Construction work for value-up on 5FNihonbashi MS building

402012/1～2012/2Renovation work for common areaDaiwa Jinbocho

1312011/8～2011/12Construction work for energy conservationDaiwa Nishi-Shinbashi

2452011/12～2012/5Construction work of Introduction of heat

sourceShinjuku Maynds Tower

Total Amount(million yen)

Implementation periodPurposeName of real estate

properties

(Before) (After)

■ Introduction of heat source

■ Construction work for energy conservation■ Construction work for Value-up on 5F

■ Entrance Renovation

■ Installation of CT soundproof wall

■ Common area Renovation

█ Capital Expenditures implemented in the 13th Fiscal Period

Daiwa Jimbocho

Shinjuku Maynds Tower Shinjuku Maynds Tower

Nihonbashi MS building Daiwa Nishi-Shinbashi

Daiwa Sarugakucho Daiwa Sarugakucho

■ Common area Renovation


█ E SPACE TOWER : Achievement of the certification of SMBC Sustainable Building Assessment LoanDOI achieved the ranking of “Silver” in the evaluation of SMBC Sustainable Building Assessment Loan because of the high evaluation for the implementation of sustainable management policy, the sustainable utilization of the site, the interior environment and water-saving. SMBC Sustainable Building Assessment Loan is a financing product based on the assessment of buildings owned or constructed by companies for such as 1) the environmental performance on energy, water and materials and other issues, 2) initiatives on riskmanagement necessary for securing sustainability, including earthquake resistance, BCP and BCM,

and 3) management policy and implementation to promote 1) and 2).

Actions Taken for Environmental Efforts

█ Shinjuku Maynds Tower: Introduction of heat source

(Photo) Shinjuku Maynd Tower / Heat source

█ Daiwa Real Estate Asset Management : Joining Green Purchasing Network etc.

Daiwa Real Estate Asset Management to which DOI entrust its asset management operations joined Green Purchasing Network to

reduce stress on the environment by promoting green purchasing, i.e. buying the least environmentally-impacting products available. And Daiwa Real Estate Asset Management established “Green Purchasing Guideline”.

Daiwa Real Estate Asset Management is a member of Green Purchasing Network

DOI introduced the individual heat source in Shinjuku Maynds Tower in order to get its cool water for air-conditioning by itself ,which is provided by the distinct heating and cooling corporation. The heat source started to work in June 2012. Concerning introduction of heat source DOI uses the ESCO service so that the installer maintains the equipments and guarantees the saving cost. As a result, Shinjuku Maynds Tower is estimated to cut approximately 833t-CO2/ year. Additionally Shinjuku Maynds Tower is expected to achieve the goal of CO2 emission reduction based on Tokyo environment protection ordinance for Shinjuku Maynds Tower.

Image of CO2 emission reductionafter introduction of heat source

8,0008,5009,0009,500

10,00010,50011,00011,500

Bofore After

CO

2 E

mm

isio

n(t-C

O2)

Gurantee reductionof 833t-CO2/year

(Photo) E SPACE TOWER

External GrowthSection 3


79.5

265.0 265.0 265.0 269.1 278.1 287.3311.3 313.3

350.0

138.4130.4110.8

283.4287.0

54.4% 54.4%59.0% 60.8%

54.0% 52.2%

22.6%26.4% 27.4% 26.9%

29.8% 30.0%35.3% 35.6%

42.3%

0

50

100

150

200

250

300

350

400

Listed 1st

Period

2nd

Period

3rd

Period

4th

Period

5th

Period

6th

Period

7th

Period

8th

Period

9th

Period

10th

Period

11th

Period

12th

Period

13th

Period

（Billion yen）

0%

10%

20%

30%

40%

50%

60%

70%

80%

Total Acquisition Price

Estimated LTV（AcquisitionPrice）LTV（Acquisition Price）

The Real Estate Market and Trading Performance

The Real Estate Market and Trading PerformanceThe Real Estate Market and Trading PerformanceThe Real Estate Market and Trading Performance

Number of Transactions

Source: Compiled by the Investment Corporation based on data from the “Real Estate Transaction Survey” of the Urban Research Institute (Mizuho Trust and Banking’s think tank) and information from the Bank of Japan’s website

DI=Diffusion Index (Above

0is easy (accommodating),whereas below

0is severe)

Invest competitive propertiesscreened carefully

0100

200300400

500600

700800

2005 2ndHalf

2006 1stHalf

2006 2ndHalf

2007 1stHalf

2007 2ndHalf

2008 1stHalf

2008 2ndHalf

2009 1stHalf

2009 2ndHalf

2010 1stHalf

2010 2ndHalf

2011 1stHalf

2011 2ndHalf

2012 1stHalf

2012 2ndHalf

2013 1stHalf

（Number）

-50-40

-30-20-10

010

2030

Number of Transactions

Lending Stance DI (Real Estate)

Lending Stance DI (All Industries)


Acquisition of Properties Under Review

█ Property Selling stance by industries█ Number of Property Acquisition under review

（case）

Potentiality to change the selling stanceExpecting to sell properties in the core area depending on the price and proposal

Mainly selling regional propertiesDeciding at the bid price in many cases

Insurance

Expansion of demands for decreasing in risk asset (by the impact of Basel regulations etc.)Potentiality to sell properties from the senior lender stageChance to close the sell by gradual low price

Continuing refinanceSelling some properties by senior lenders and servicer stages after default

CMBS

Chance to sell properties from individuals who need to gain cash

Relatively low demand for selling propertiesFew appropriate properties for REIT

Individuals, and Small- to Medium-

sized Business Companies

Possibility to sell the properties by changing the lenders’ stancePotentiality to sell properties by confirming the loss of equity investors

Continuing refinancePostpone the term of equity and senior loan due to expensive book value

FundsFunds

Expansion of demands for decreasing in risk asset (by the impact of Basel regulations etc.)Continuing refinanceLenders, etc.

Expecting to sell developed properties by recovering occupancy rateExpecting to sell properties after booking of impairment lossPossibility to sell properties to improve cash flow for future developments

Delay in recovering occupancy rate of the developed propertiesWithout sales due to expensive book value

Developers

Expecting to sell properties by business recoveringChance to sell properties to focus on core business

Decrease in needs for off-balancedDecrease in needs to sell properties of expensive book value due to the slump

General Business Companies

FutureCurrent

* The number of gross proposals

（case）

3235

44

30

0

100

200

300

400

500

600

10th FP 11th FP 12th FP 13th FP0

50

100

Number of properties under review（left axis）

Number of properties under detailed review（right axis）


Recent Property Acquisition

Traffic AccessibilityA 4-minute walk to “ Kanda” Station on the JR Chuo, Yamanote, Keihin-Tohoku Lines and Tokyo Metro Ginza LineA 6-minute walk to “Otemachi” Station on Tokyo Metro Marunouchi, Chiyoda, Tozai and Hanzomon Lines and Toei Mita Line.CharacteristicsLocated in the area building relatively small offices and many SME offices and keeping a high office demand for a long term.

Nihonbashi Hongokucho Tosei BuildingAcquisition Price :1,721million yen (Settlement Date: May 11,2012)

100.0％ (ended May 2012)

4-2-16 Nihonbashi Hongokucho Chuo-ku, Tokyo

393.01㎡

Steel construction with 8 stories above ground

8F

2,386.51㎡

1,810 million yen (at the time of Acquisition)

May 25,2010

Location

Site Area

Structure

Floor

Total Floor Area

Appraisal Value

Construction Date

Occupancy Rate

The Site of Daiwa SarugakuchoAcquisition Price :190million yen ( Settlement Date: March 30,2012)

2-13-10 Sarugakucho Chiyoda-ku, Tokyo

858.47㎡

Real Estate

Ownership

269million yen（ at the time of Acquisition）

Location

Site Area

Type of Specified Assets

Ownership Form

Appraisal Value

Traffic AccessibilityA 6-minute walk to Suidobashi” Station on the JR Sobu Line and a 7 walk to “Jimbocho” Station on the Tokyo Metro Hanzomon, and Toei Mita and Shinjuku Lines.Reason for the acquisitionThe aim of acquisition of the site in Daiwa Sarugakucho is to raise the asset value. As the reslut, its appraisal value increased by 600 million yen because of acquiring the site and recovering the occupancy rate. By owning both Daiwa Sarugakucho and its site, the liquidity of Daiwa Sarugakucho is considered to be improved.


Portfolio and Acquisition Policy

█ Acquisition Policy

A Class Buildings

B Class Buildings

(1)

(2)


Portfolio Properties

Investment RatioInvestment RatioInvestment Ratio

1.5%6.2%

92.3%AreaArea

5 Central Wards5 Central WardsTokyo

MetropolitanTokyo

MetropolitanRegional CitiesRegional Cities

RatioRatio

57.3%42.7%

ClassificationClassification RatioRatio

Ａ ClassＡ Class

Ｂ ClassＢ Class

Investment Target

Distribution Chart of Portfolio PropertiesDistribution Chart of Portfolio PropertiesDistribution Chart of Portfolio PropertiesInvesting heavily in the five central wards of Tokyo and equivalent area.For the time being, invest heavily in younger A class buildings and younger B class buildings (1) within 20 years of building age. Aim to improve stability and profitability of our portfolio by achieving new buildingsConsider property replacement, such as selling Zone (2) properties and purchasing Zone (1) properties.

*A class buildings: Total floor area is over 30,000㎡

** B class buildings: Total floor area over 2,000㎡ but less than 30,000㎡

(Building Age)

(Total Floor Area (㎡)

E SPACE TOWER

█ Amendent of the Asset Management Guidelines

( Clarification of Investment Target Asset)In the case of those intended for other uses but readily convertible to office (like educational institution and data center), such properties may be set as a target of investment as those used as offices.In cases where several real estate can be used an integrated manner in socioeconomic terms, properties with leasable floor area of the office portion accounting for over 50% of the total leasable floor area shall be set as a target of investment

(Review of Investment Target Area)The ratio of investment in 5 Central Wards of Tokyo continues to be over 60%The ratio of Tokyo Metropolitan will be changed from under 20% to under 40% to enhance the flexibility of investment in Tokyo Metropolitan

(Clarification of investment in Silent partnership equity interests or Real Estate Backed Securities, etc.) By clarifying the investment in silent partnership equity interests or real estate backed securities, etc., the chances to acquire properties shall be expanded

0

20,000

40,000

60,000

80,000

100,000

120,000

0.0 10.0 20.0 30.0 40.0 50.0 60.0


Properties Acquired after Sponsor Change

4.8％

8.7years

July 8, 2011

Endeavor Realty Fund Ltd.

24,000million yen

MaruyamachoShibuya-ku, Tokyo

E SPACE TOWER

12th Fiscal Period

－Tosei CorporationTokyu Land Corporation

Daiwa Property Co., Ltd.

Shining Nova the Fifth B TMK

Japan Core Asset II Ltd.ORIX JREIT Inc.Seller

Total

Nihonbashi-HongokuchoTosei Build

Jimbocho PlaceDaiwa Kayabacho BuildingDaiwa KudanDaiwa Nishi-

ShimbashiDaiwa JimbochoProperty name

NOI yield at the time of acquisition

Building ageat the time of acquisition

Acquisition date

Acquisition Price

Address

Acquisition time

5.3％

2.0years

May11,2012

1,721million yen

Nihonbashi-Hongokucho, Chuo-ku, Tokyo

13th Fiscal Period

－March 29, 2011March 25, 2011September. 2, 2010August 13, 2010March 10, 2010

5.3％

23.4years

4,000million yen

Kudan Minami, Chiyoda-ku, Tokyo

9.4years*1.1years0.9years17.0years13.0years

48,021million yen

3,550million yen

5,600million yen

5,000million yen

4,150 million yen

5.1％*5.1％5.1％5.5％6.0％

－Kanda Jimcocho, Chiyoda-ku, Tokyo

Nihonbashi-Kayabacho, Chuo-ku, Tokyo

Nishi-Shimbashi,Minato-ku, Tokyo

Kanda Jimbocho, Chiyoda-ku, Tokyo

11th Fiscal Period10th Fiscal Period9th Fiscal Period

* Building age and NOI yield at the time of acquisition is calculated by the weighted average acquisition price

Financial Strategy

Section 4


Upper limit range LTV in the medium-term target

0

40

80

120

160

200

240

280

1st P

erio

d2n

d Pe

riod

3rd

Perio

d4t

h Pe

riod

5th

Perio

d6t

h Pe

riod

7th

Perio

d8t

h Pe

riod

9th

Perio

d10

th P

erio

d11

th P

erio

d12

th P

erio

d13

th P

erio

d

0%

10%

20%

30%

40%

50%

60%

70%

Interest-bearing Liabilities

LTV (based on acquisiton price)

Status of Interest-bearing Liabilities (1)

Ratio of Long-to Short-Term BorrowingsRatio of Long-to Short-Term Borrowings

Ratio of Fixed – to Floating BorrowingsRatio of Fixed – to Floating Borrowings

Loan to Value TrendLoan to Value Trend

12th Fiscal Period 13th Fiscal Period

Fixed interest Floating interest* LTV( based on acquisition price) ＝Total interest-bearing liabilities / Total acquisition price of properties held at the end the Fiscal Period

12th Fiscal Period 13th Fiscal Period

Expected LTV

（Billion yen）

67.7%

32.3%

20.0%

80.0%

Current position of long-term borrowingsLong-term borrowings

71.8%

28.2%15.7%

84.3%

※By swap transactions, loans of more than 1.5 years remaining period becomes all fixed interest


0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

1st P

eriod

2nd P

eriod

3rd Peri

od4th

Peri

od5th

Peri

od6th

Peri

od7th

Peri

od8th

Peri

od9th

Peri

od10

th Peri

od11

th Peri

od12

th Peri

od13

th Peri

od14

th Peri

od15

th Peri

odStatus of Interest-bearing Liabilities (2)

Repayment DatesRepayment DatesRepayment Dates(Million yen）

Debt Cost Rate* (annualized)Debt Cost Rate* (annualized)Debt Cost Rate* (annualized)

* Debt Cost Rate (annualized): (Interest Expense + Financial Related Expenses)/ Interest-bearing Liabilities)

Debt Cost Rate

Expected Debt Cost Rate◆

◆

11,843

5,0004,000

3,0002,000

6,500

3,500

19,600

3,925

2,0005,000

8,500

41

6,000

8,900

1,700

1,000

1,000

19,000

5,481

5,000

2,500

2,000

3,500

0

5,000

10,000

15,000

20,000

25,000

13th FPMay2012

14th FPNov.2012

15th FPMay.2013

16th FPNov.2013

17th FPMay.2014

18th FPNov.2014

19th FPMay.2015

20th FPNov.2015

21th FPMay.2016

22th FPNov.2016

23st FPMay.2017

28th FPNov.2019



█ List of Interest-bearing Liabilities

█ Investment Corporation Bonds

Note: Fixed Interest Rate is rounded to the second decimal. （*）The interest rate of this loan was changed from floating rate to fixed rate by concluding the swap agreement and described as fixed interest rate.

(As of May 31, 2012)

(As of May 31, 2012)

Term LenderBalance

(million yen)Type

Interest

Rate (%)

Date of

advanceDue date

Shinsei Bank, Ltd.(*) 1,000.00 Fixed 0.97% 11/7/8 14/7/8

Resona Bank, Limited.(*) 3,000.00 Fixed 0.88% 11/8/31 15/2/27

Dev elopment Bank of Japan, Inc. 3,000.00 Fixed 1.09% 11/9/30 15/3/31




Sumitomo Mitsui Banking Corporation.(*) 4,000.00 Fixed 0.86% 12/5/21 17/5/31

Sumitomo Mitsui Trust Bank, Ltd.(*) 3,000.00 Fixed 0.85% 12/5/21 17/5/31

Mizuho Trust and Banking Co., Ltd.(*) 1,500.00 Fixed 0.85% 12/5/21 17/5/31


Mizuho Corporate Bank, Ltd. (*) 2,000.00 Fixed 0.67% 12/5/21 15/5/29

The Bank of Yokohama,Ltd.(*) 500.00 Fixed 0.67% 12/5/21 15/5/29

80,600.00

102,891.25Total borrow ings

Total long-term borrow ings

Long

term

bor

rowi

ngs

Term LenderBalance

(million yen)Type

Interest

Rate

(%)

Date of

advanceDue date

Long-termNo. 1 Unsecured and Subordinated 3,500.00 Float T+2.40% 09/9/17 19/9/17

Long-termNo. 2 Unsecured Inv estment Corporation 5,000.00 Fixed 1.87% 10/6/24 13/6/24

8,500.00Total inv estment corporate bonds

Term LenderBalance

(million yen)Type

Interest

Rate (%)

Date of

advanceDue date

Sumitomo Mitsui Banking Corporation. 4,887.50 Fixed 1.81% 09/9/18 12/9/18

Sumitomo Mitsui Trust Bank, Ltd. 3,421.25 Fixed 1.81% 09/9/18 12/9/18


The 77 Bank Ltd. 985.00 Fixed 1.81% 09/9/18 12/9/18

Sumitomo Mitsui Trust Bank, Ltd. 1,962.50 Fixed 1.79% 09/11/30 12/11/30

Taiy o Life Insurance Company . 981.25 Fixed 1.79% 09/11/30 12/11/30

The Gunma Bank, Ltd. 981.25 Float T+1.00% 09/11/30 12/11/30

ORIX Bank Corporation. 1,000.00 Float T+0.40% 11/7/8 13/1/10

Aozora Bank, Ltd. 3,500.00 Float T+1.00% 10/2/26 13/2/28

The Shizuoka Bank, Ltd 1,000.00 Float T+1.00% 10/2/26 13/2/28

The Kagaw a Bank Ltd. 985.00 Float T+1.00% 10/2/26 13/2/28

22,291.25

Kansai Urban Banking Corporation. 5,000.00 Fixed 0.98% 11/6/30 13/6/28

Sumitomo Mitsui Trust Bank, Ltd.(*) 5,000.00 Fixed 0.87% 11/7/8 13/7/8

The Bank of Fukuoka, Ltd.(*) 1,000.00 Fixed 0.87% 11/7/8 13/7/8

Shinsei Bank, Ltd. 2,000.00 Float T+0.90% 10/9/2 13/7/31

The Bank of Fukuoka, Ltd. 2,000.00 Float T+0.85% 10/9/30 13/9/30

ORIX Bank Corporation. 1,500.00 Float T+0.85% 10/9/30 13/9/30

Shinsei Bank, Ltd. 1,000.00 Float T+0.55% 11/5/25 13/11/29




Mizuho Corporate Bank, Ltd. (*) 4,900.00 Fixed 0.77% 11/9/30 14/3/31

Mitsubishi UFJ Trust and Banking Corporation. 3,000.00 Fixed 0.96% 11/9/30 14/3/31

The Gunma Bank, Ltd.(*) 1,000.00 Fixed 0.77% 11/9/30 14/3/31


Mizuho Trust and Banking Co., Ltd.(*) 3,000.00 Fixed 0.97% 11/7/8 14/7/8

Aozora Bank, Ltd.(*) 1,500.00 Fixed 0.97% 11/7/8 14/7/8

Curre

nt m

atur

ities

of lo

ng te

rm b

orro

wing

sLo

ng te

rm b

orro

wing

s

Total current maturities of long term borrow ings



100.0%70,022Total0.8%570Century Tokyo Leasing Corporation.0.8%570The Iyo Bank, Ltd.3.5%2,470Sompo Japan Insurance Inc.4.1%2,850UBS Securities Japan Ltd.7.0%4,925Mizuho Bank, Ltd.7.1%5,000Resona Bank, Limited.7.1%5,000American Life Insurance Company7.9%5,500Kansai Urban Banking Corporation.8.5%5,937GE Japan Corporation.

17.3%12,100Shinsei Bank, Ltd.35.8%25,100Aozora Bank, Ltd.

ShareBalance

(million yen)Name of Financial Institution

+1.3%100.0%111,391Total

0.0%7.6%8,500Investment corporation bonds.―0.4%500The Bank of Yokohama, Ltd.

-0.4%0.9%981Taiyo Life Insurance Company.

0.0%0.9%985The 77 Bank Ltd.

-0.4%0.9%985The Kagawa Bank Ltd.0.0%0.9%1,000The Shizuoka Bank, Ltd

-0.2%1.8%1,981The Gunma Bank, Ltd.

0.0%2.2%2,500ORIX Bank Corporation.

0.0%2.7%3,000The Bank of Fukuoka, Ltd.

0.0%2.7%3,000Mitsubishi UFJ Trust and Banking Corporation.

+50.0%4.0%4,500Mizuho Trust and Banking Co., Ltd.0.0%4.5%5,000Kansai Urban Banking Corporation.

-79.7%4.5%5,000Aozora Bank, Ltd.

+40.8%6.2%6,900Mizuho Corporate Bank, Ltd.

0.0%6.3%7,000Resona Bank, Limited.

+33.3%7.2%8,000Shinsei Bank, Ltd.

+28.6%12.0%13,383Sumitomo Mitsui Trust Bank, Ltd.

+143.5%12.4%13,787Development Bank of Japan.

+19.5%21.9%24,387Sumitomo Mitsui Banking Corporation.

Period over Period

ShareBalance(million yen)Name of Financial Institution

The 7th Fiscal Period (ended May 2009)The The 77thth Fiscal Period (ended May 2009)Fiscal Period (ended May 2009)

The 13th Fiscal Period (ended May 2012)The The 1313thth Fiscal Period (ended May 2012)Fiscal Period (ended May 2012)

（*） Balance is rounded down to less than million yen.

（Before Change of Sponser）

█ Borrowing Total by Financial Institution


Unitholders

0.64%372,5152,478The Bank of New York, Treaty JasdecAccount

10

0.74%-92,9172,926Individuals9

1.12%-2,1204,4286,548Nomura Bank (Luxembourg) S.A.8

2.12%8,3928,3920JP Morgan Chase Bank 3801807

2.71%2,86210,7407,878The Master Trust Bank of Japan, Ltd. (Investment Trust Account)6

5.98%1,01623,67422,658Trust & Custody Services Bank, Ltd. (Securities Investment Trust Account)5

6.21%-3,21424,57427,788The Nomura Trust and Banking Co,. Ltd. (Investment Trust Account)4

13.11%051,89351,893Daiwa Securities Group Inc.3

17.73%11,64570,15958,514Japan Trustee Services Bank, Ltd. (Trust Account)2

32.57%128,905128,9050Daiwa Investment Management Inc1

Rate*Change of Unit

13th Fiscal Period

Number of Unit

12th Fiscal Period

Number of Unit

Investor NameNo.

Other Financial Institutions

Non-life Insurance

Life Insurance

Trust Bank

Regional Bank

Commercial Bank 0.00%000

33.72%7,174133,482126,308Financial Institutions

100.00%0395,798395,798Total

13.70%-78554,24255,027Securities

9.81%-5,74438,83344,577Foreigner

33.31%-728131,832132,560Other Domestic Corporation

0.12%41484443

0.00%-5,36905,369

0.15%169607438

33.04%12,265130,789118,524

0.40%681,6021,534

9.45%8337,40937,326Individuals

Rate*Change of Unit

13th Fiscal Period

Number of Unit

12th Fiscal Period

Number of Unit

Investor Type

█ List of Top 10 Investors █ Unitholders’ Share by Investor Type

（*）Rounded to the second decimal. （*）Rounded to the second decimal.


█ External Growth → Proactively invest in competitive properties after thorough considerationLTV (based on acquisition price) at the end of the 13th Fiscal Period was 35.6%. By taking advantage of the low LTV, expeditiously acquire highly-competitive properties.Aim for early achievement of the medium-term target total acquisition price of 350 billion yen (expected LTV (based on acquisition price): 42.3%).Strive to improve the existing portfolio by acquiring relatively-new and highly-competitive properties.

Activities in the 14th Fiscal Period

█ Internal Growth → “Bonji-Tettei”「Accomplishing ordinary tasks thoroughly and carefully enables us to achieve extraordinary results.」

█ Financial Strategy → Continue to strengthen financial structure and reduce debt costs

Strengthen ties with our financial institutions for further reduction of debt costs.

Increasingly build on bank formation.

Reduce in risk of rising interest rates by controlling debt cost and borrowing a long-term loan

Increasingly strengthen collaboration with various agents to improve occupancy rate through lease-up, implement prompt and smooth leasing and enhance property recognition with up-to-date information .Prevent cancellations by strengthening relations with existing tentans.Implement strategic renewal investments aimed at enhancing property value , reduce cost and strengthen collaboration with Daiwa Securities Group.

AppendixSection 5


Summary of Results for the 13th Fiscal Period (1) ~Balance Sheet~

█ Comparison with Results of the 12th Fiscal Period

Million Yen (% ) Million Yen (% ) Million Yen (% ) Million Yen (% )16,966 5.2% 17,432 5.4% 37,437 11.6% 24,785 7.6%

10,818 11,504 546 911

5,416 5,296 35,535 22,291

84 － 309 261

646 631 862 876

306,217 94.7% 307,858 94.6% 183 443

300,926 93.1% 304,634 93.6% 85,232 26.4% 99,730 30.7%

Building and Others (including Trust Property ) 56,731 56,829 8,500 8,500

Land and Others (including Trust Property) 244,177 247,785 65,881 80,600

Other Tangible Fixed Assets 17 24 6,250 6,024

4,977 1.5% 2,720 0.8% 4,598 4,592

Leasehold Rights and Leasehold Rights in Trust 4,970 2,713 1 13

Other Intangible Fixed Assets 6 6 122,669 38.0% 124,515 38.3%

314 0.1% 502 0.2% 198,780 198,780

Leasehold and Security Deposits Paid in Trust 113 113 1,767 2,021

Long-term Prepaid Expenses 190 368 － -2

Other Investments and Other Assets 10 21 200,548 62.0% 200,800 61.7%

33 0.0% 25 0.0% 323,217 100.0% 325,315 100.0%

33 25

323,217 100.0% 325,315 100.0%

Total Liabilities and Net Assets

Investments and Other Assets

Valuation, Translation Adjustments and Others

Net A

sset

s

Unitholders' equity

Unappropriated Retained Earnings

Total Net Assets

Other Fixed Liabilities

Total Liabilities

Liabil

ities

Advances Received

Fixed Assets

Fixed Liabilities

Investment Corporation Bonds

Consumption Taxes Receivable Accounts Payables-Other

Other Current Liabilities

Tenant Leasehold and Security Deposits in Trust

13th Fiscal PeriodAs of May.31, 2012

Current Assets Current Liabilities

12th Fiscal PeriodAs of Nov.30, 2011


Tangible Fixed Assets

Intangible Fixed Assets


Long-term Loans Payable

Tenant Leasehold and Security Deposits

Operating Accounts Payables

Cash and Deposits in Trust Current Portion of Long-term Loans Payable

Investment Corporation Bond Issuance Costs

Total Assets

Asse

ts

Other Current Assets

Deferred Assets

Cash and Deposits


Summary of Results for the 13th Fiscal Period (2) ~Income Statement~

█ Comparison with Results of the 12th Fiscal Period █ Comparison with the 13 Fiscal Period Forecasts

Unit: Million Yen (excluding the number of investment units and cash dividends) Unit: Million Yen (excluding the number of investment units and cash dividends)



36 37183 183

7,605 7,431 -174

Gain on Sale ― ― ―

4,288 4,341 + 52

Expenses related to Rental Business(excluding depreciation) 2,123 2,165 + 41

Depreciation 1,347 1,367 + 19

4,134 3,898 -235

Operating Income (A-B) 3,317 3,090 -226

1,560 1,080 -480

Interest Expense (including cap amortization) 858 800 -58

Borrowing expenses 692 266 -426

1,767 2,022 +254

― 32 +32

― 32 +32

1,766 2,021 +254

395,798口 395,798口 ―

4,464 5,107 + 643

Extraordinary Expenses

Change

Investment Units Issued and Outstanding

Dividend per Unit (Unit: Yen)

Ordinary Income

Extraordinary Income

Net Income

Operating Expenses (B)

Gain and Loss from Rental Operations(excluding gain on sale)

Non-operating Expenses

Number of Properties (at period-end)Effective Number of Days of Investment

Operating Revenues (A)

13th Period Forecast( Jan. 13, 2012)

13th Period(May. 31, 2012)

36 37183 183

7,269 7,431 +162


4,264 4,341 +77

Expenses related to Rental Business(excluding depreciation) 2,085 2,165 +79

Depreciation 1,376 1,367 -9

3,806 3,898 +92

Operating Income (A-B) 3,004 3,090 +85

1,082 1,080 -2

Interest Expense 806 800 -6

Borrowing expenses 266 266 +0

1,921 2,022 +100

― 32 +32

― 32 +32

1,919 2,021 +101

395,798口 395,798口 ―

4,850 5,107 + 257

Change


Number of Properties (at period-end)Effective Number of Days of Investment





Ordinary Income


Net Income


Dividend per Unit (Unit: Yen)


Forecasts (the 14th and 15th Fiscal Period)

█ Forecast for the 14th and 15th Fiscal Period

* Although we assume that rents will remain at the current level, actual rents may differ from the assumption depending on the status of assets under management.

Unit: Million Yen (excluding the number of investment units and cash dividends)

13th Period(May 31, 2012)

14th Period Forecast(Nov. 30, 2012)

15th Period Forecast(May. 31, 2013)

37 37 37183 183 182

7,431 7,413 7,080


4,341 4,439 4,156

Expenses related to Rental Business(excluding depreciation)

2,165 2,314 2,132

Depreciation 1,367 1,304 1,229

3,898 3,794 3,717

Operating Income (A-B) 3,090 2,973 2,923

1,080 794 744

Interest Expense 800 645 612

Borrowing expenses 266 135 120

2,022 2,179 2,179

32 ― ―

32 ― ―

2,021 2,177 2,177

395,798口 395,798口 395,798口

5,107 5,500 5,500Dividend per Unit (Unit: Yen)

Net Income

Ordinary Income




Effective Number of Days of Investment

Number of Properties (at period-end)






NOIRent revenue + Other lease business revenue –Expenses related to rent business + Depreciation

FFONet Income + Depreciation – Gain on Sale

ROAAnnualized Net Income / Total Assets

ROEAnnualized Net Income / Total Investments

Loan-to-Value (LTV) at end of Fiscal PeriodInterest-bearing liabilities at end of Fiscal Period / Total assets at end of Fiscal Period

Major Financial Data

Item Unit 9th Period 10th Period 11th Period 12th Period 13th Period

Number of days of investment Day 182 183 182 183 183

Number of properties at end of period Property 31 33 35 36 37

Occupancy rate at end of period % 85.7 95.9 95.4 92.4 94.3

Average acquisition price Million yen 266,937 274,167 281,535 306,492 311,607

NOI (after deduction of gain on sale) Million yen 4,922 4,465 4,873 5,482 5,265

Funds from operation (FFO) Million yen 3,261 2,518 2,734 3,114 3,388

Return on asset (ROA) % 1.3 0.9 1.1 1.1 1.2

Return on equity (ROE) % 2.1 1.3 1.5 1.8 2.0

Capital adequacy ratio at end of period % 70.8 67.9 67.1 62.0 61.7

Loan-to-Value (LTV) at end of period % 25.5 28.1 28.9 34.0 34.2


Analyses of Tenants

Major Tenants Top 10 ListMajor Tenants Top 10 ListMajor Tenants Top 10 List % Share of Industries of Top 100 Tenant % Share of Industries of Top % Share of Industries of Top 100100 Tenant Tenant

3.0%5,899.11Daiwa Kayabacho Build.Not disclosed *

3.2%6,309.84Shinjuku Maynds TowerTrend Micro Incorporated

26.3%51,593.33-Total

1.8%3,657.43Daiwa SarugakuchoNot disclosed *

2.1%4,114.50Shinjuku Maynds TowerNot disclosed *

2.2%4,316.90Shinjuku Maynds TowerNot disclosed *

2.3%4,498.57Shinjuku Maynds TowerSekisui House, Ltd.

2.5%4,980.78Shinjuku Maynds TowerEMC Japan

2.6%5,100.06Daiwa OnarimonUCC Holdings Co., Ltd.

3.2%6,336.26E SPACE TOWERFields Corporation

3.2%6,379.88Daiwa TsukishimaNot disclosed *

% of Total Leased Space ***

Leased Space ** (m2)PropertyTenant Name

* The leased space of top 100 tenant covers 73.0% of total leased space as of the end of the 13th Fiscal Period.

** Industries are categorized according to TSE’s 33 industry group.

* Not disclosed due to tenant's request.*** Leased spaces of the tenants in Shinjuku Maynds Tower are described as the figure equivalent to 6/7, ownership % of the Investment Corporation.*** Rounded down to first decimal place.

Other16.2%

Foods3.6%

Construction3.7%

Retail Trade4.0%Precision

Instruments4.4%Banks5.0%

wholesale7.4% Real Estate

8.6%

Information &Communication

17.4%

Services29.8%

(As of May 31, 2012)


Appraisal Value at End of Fiscal Period (1)(Unit: Million yen)

(*) Major Reason : (1) Decrease in market rent (2) Increase in cap-rate (3) Increase in cancellation notices(**) As the occupancy rate of Daiwa Sarugakucho recovered due to tenant’s moving-in and DOI acquired the site of Daiwa Sarugakucho for 190 million yen, the appraisal value at

the end of 13th Fiscal Period increased.

Appraisal Value atEnd of 12th Period


Compared toEnd of 12th Period

Compared toAcquisition Price Cap Rate

(Nov.30, 2011) (May 31, 2012) Difference Change Difference Change 12th Period 13th Period

Daiwa Ginza 13,900 14,000 +100 0.7% 14,100 -100 -0.7% 4.6% 4.5%

Daiwa Ginza Annex 2,860 2,960 +100 3.5% 3,050 -90 -3.0% 4.5% 4.4%

Daiwa Shibaura 7,380 7,400 +20 0.3% 8,265 -865 -10.5% 5.1% 5.1%

Daiwa Minami Aoyama 3,970 3,930 -40 -1.0% 4,550 -620 -13.6% 4.9% 4.8%

Daiwa Sarugakucho 2,120 2,720 +600 28.3% 3,190 -470 -14.7% 5.3% 5.3%

Daiwa A Hamamatsucho 2,870 2,870 - 0.0% 2,865 +5 0.2% 4.8% 4.8%

Daiwa Jingumae 2,010 1,930 -80 -4.0% 2,800 -870 -31.1% 4.7% 4.7%

Daiwa Shibadaimon 2,730 2,620 -110 -4.0% 2,578 +42 1.6% 4.7% 4.7%

Daiwa Misakicho 2,470 2,470 - 0.0% 2,346 +124 5.3% 5.1% 5.1%

Daiwa Shimbashi 510 2,250 2,320 +70 3.1% 2,080 +240 11.5% 5.2% 5.0%

BPS Square 1,560 1,510 -50 -3.2% 1,560 -50 -3.2% 5.3% 5.2%

Daiwa Tsukiji 1,370 1,420 +50 3.6% 1,240 +180 14.5% 5.2% 5.1%

Daiwa Tsukiji 616 2,400 2,400 - 0.0% 2,440 -40 -1.6% 5.0% 5.0%

Daiwa Tsukishima Bldg. 7,870 7,660 -210 -2.7% 7,840 -180 -2.3% 5.2% 5.2%

Nihombashi MS Bldg. 2,330 2,340 +10 0.4% 2,520 -180 -7.1% 5.0% 4.9%

Daiwa Azabudai 1,760 1,740 -20 -1.1% 1,600 +140 8.8% 5.0% 4.8%

Daiwa Shibuya SS 3,810 3,790 -20 -0.5% 3,930 -140 -3.6% 5.0% 4.8%

Daiwa Nihombashi Honcho 6,740 6,780 +40 0.6% 7,420 -640 -8.6% 5.1% 4.9%

Daiwa Ginza 1-chome 4,190 4,270 +80 1.9% 4,620 -350 -7.6% 4.8% 4.7%

AcquisitionPriceProperty Name Major

Reason*

**


Appraisal Value at End of Fiscal Period (2)

* Major Reason : (1) Decrease in market rent (2) Increase in cap-rate (3) Increase in cancellation notices.** Total of Compared to End of 12th Period excludes the properties acquired in 13th Period.

(Unit: Million yen)

**



Compared toEnd of 12th Period

Compared toAcquisition Price Cap Rate

(Nov.30, 2011) (May 31, 2012) Difference Change Difference Change 12th Period 13th Period

Daiwa Kyobashi 2,880 2,900 +20 0.7% 3,460 -560 -16.2% 5.0% 4.9%

Sunline Building No. 7 2,250 2,170 -80 -3.6% 2,680 -510 -19.0% 5.0% 4.8%

Daiwa Onarimon 14,400 13,000 -1,400 -9.7% 13,860 -860 -6.2% 4.9% 4.7%

Shinjyuku Maynds Tower 106,000 108,000 +2,000 1.9% 133,800 -25,800 -19.3% 4.0% 4.0%

SHIBUYA EDGE 4,060 3,940 -120 -3.0% 5,900 -1,960 -33.2% 4.6% 4.6%

Daiwa Kodemmacho 1,920 1,900 -20 -1.0% 2,460 -560 -22.8% 5.3% 5.2%

Daiwa Jimbocho 2,930 2,760 -170 -5.8% 4,150 -1,390 -33.5% 5.2% 5.1%

Daiwa Nishishimbashi 5,600 4,860 -740 -13.2% ① 5,000 -140 -2.8% 4.9% 4.9%

Daiwa Kudan 2,960 2,820 -140 -4.7% 4,000 -1,180 -29.5% 5.0% 4.9%

Daiwa Kayabacho Building 6,110 6,110 - 0.0% 5,600 +510 9.1% 4.5% 4.5%

Jimbocho Place 3,640 3,660 +20 0.5% 3,550 +110 3.1% 4.5% 4.5%

E SPACE TOWER 25,900 26,000 +100 0.4% 24,000 +2,000 8.3% 4.3% 4.3%

Nihonbashi Hongokucho Tosei Build - 1,810 - - 1,721 +89 5.2% - 5.1%

Daiwa Kinshicho 3,540 3,220 -320 -9.0% 3,653 -433 -11.9% 5.4% 5.4%

Daiwa Higashi-Ikebukuro 3,500 3,510 +10 0.3% 2,958 +552 18.7% 5.2% 5.2%

Benex S-3 3,410 3,200 -210 -6.2% 4,950 -1,750 -35.4% 5.8% 5.8%

Daiwa Shinagawa North 5,670 5,690 +20 0.4% 7,710 -2,020 -26.2% 5.3% 5.2%

Daiwa Minami-Senba 2,940 2,850 -90 -3.1% 4,810 -1,960 -40.7% 5.5% 5.5%

Total 272,300 273,530 -580 -0.2% 313,256 -39,726 -12.7% - -

AcquisitionPriceProperty Name Major

Reason*

**


12th Period 13th Period 12th Period 13th Period 12th Period 13th Period 12th Period 13th Period 12th Period 13th Period 12th Period 13th Period13,571 13,722 2,920 2,933 8,145 8,132 4,497 4,487 2,953 3,172 2,810 2,80813,900 14,000 2,860 2,960 7,380 7,400 3,970 3,930 2,120 2,720 2,870 2,870

84.9 86.9 100.0 100.0 99.1 98.3 100.0 100.0 0.0 100.0 100.0 100.09.17 9.17 7.46 7.46 5.09 5.09 12.79 12.79 9.79 9.79 6.03 6.03

183 183 183 183 183 183 183 183 183 183 183 183313,360 322,919 85,170 64,448 259,030 264,257 128,889 105,122 - (※7) - (※7) 141,900 137,785

Rent (incl. common service fees) 313,360 322,919 85,170 64,448 258,115 261,958 128,889 105,122 - (※7) - (※7) 141,900 137,785Other Revenues (*2) 0 0 0 0 915 2,299 0 0 - (※7) - (※7) 0 0

86,723 90,511 24,157 22,480 65,249 64,925 30,560 29,367 - (※7) - (※7) 62,864 59,427Administrative Expenses 13,399 15,090 5,556 3,863 12,922 12,373 4,054 3,974 - (※7) - (※7) 8,726 8,791Utility Charges 26,634 26,993 4,677 5,204 21,076 22,410 7,821 7,306 - (※7) - (※7) 9,041 9,110Property Management Fees 5,206 4,349 1,238 1,230 3,855 3,859 2,034 1,756 - (※7) - (※7) 2,117 2,036Property-related Taxes (*3) 26,357 26,361 8,806 8,810 20,588 20,588 11,883 11,883 - (※7) - (※7) 9,207 9,208Non-life Insurance Costs 509 456 122 111 497 455 181 165 - (※7) - (※7) 229 210Repair Expenses 2,548 5,247 3,483 3,260 6,309 5,237 4,585 4,281 - (※7) - (※7) 4,141 668Other Expenses 12,067 12,011 272 0 0 0 0 0 - (※7) - (※7) 29,400 29,400

226,636 232,407 61,012 41,968 193,780 199,332 98,328 75,754 61,788 -20,696 79,036 78,358452,035 463,545 121,692 83,708 386,503 397,575 196,120 151,095 123,238 -41,280 157,641 156,289

3.2% 3.3% 4.0% 2.7% 4.7% 4.8% 4.3% 3.3% 4.1% -1.3% 5.5% 5.5%Depreciation and Amortization 67,934 68,889 17,731 18,023 24,342 25,061 11,343 11,377 - (※7) - (※7) 11,418 11,569Proceeds for Restoration and Repair Work 0 0 0 0 602 501 0 0 - (※7) - (※7) 0 0Proceeds from Amortization of Leashold and Security Deposits 0 0 0 0 0 0 0 0 - (※7) - (※7) 0 0

Property Partners Best PropertyBest Property Best Property Xymax Axis Best Property

Daiwa Sarugakucho Daiwa A Hamamatsucho Daiwa Ginza Daiwa Ginza Annex Daiwa Shibaura Daiwa Minami Aoyama

3,190 2,86514,100 3,050 8,265 4,550

Appraisal Value (million yen)Occupancy Rate (%)

PML (%) (*6)Property Management Company

Property Name

Acquisition Price (million yen)

Book Value (million yen)

Profi

ts fro

m pr

oper

ty-re

lated

activ

ities (

*1)

Number of operating days(1) Property-related Revenues

(2) Property-related Expenses

(3) NOI (＝(1)-(2)) (*5)Annualized NOI

NOI Yield (*4)

(Reference)

12th Period 13th Period2,755 2,7462,010 1,930

78.5 100.012.01 12.01

183 18345,017 56,15145,017 56,151

0 016,588 19,292

2,625 6,0504,800 4,7641,200 1,2006,601 6,602

89 811,180 503

89 8928,429 36,85856,703 73,515

2.0% 2.6%9,901 10,080

0 00 0

Best Property

Daiwa Jingumae

2,800

Portfolio Performance Summary (1) (12th-13th Fiscal Period Results by Property)

(*1) For profits from property-related activities, actual results (excluding Other Revenues and Property-related Taxes) are used and displayed by rounding down to the nearest thousand yen.(*2) Other Revenues does not include Proceeds for Restoration and Repair Work or Proceeds from Amortization of Leasehold and Security Deposits.(*3) Fixed property taxes, city planning taxes and depreciable asset taxes recorded in Property-related Taxes are calculated by converting the actual amount to the number of operating days. (*4) NOI Yield is calculated by dividing annualized NOI in (3) on the table by the acquisition price.(*5) NOI in this table is calculated by accounting for Property-related Taxes for “NOI (after deduction of gain on sale)” found on p.37 and so does not equal that figure.(*6) NKSJ Risk Management, Inc. has prepared for the PML. The figures entered for PML are the figures in the Portfolio Earthquake PML Assessment Report (May 2012).(*’7) Not disclosed due to tenant's request.


12th Period 13th Period 12th Period 13th Period 12th Period 13th Period 12th Period 13th Period 12th Period 13th Period 12th Period 13th Period2,460 2,447 2,233 2,219 2,139 2,134 1,384 1,368 1,217 1,212 2,323 2,3092,730 2,620 2,470 2,470 2,250 2,320 1,560 1,510 1,370 1,420 2,400 2,400100.0 78.0 100.0 100.0 97.4 99.7 100.0 0.0 100.0 100.0 100.0 89.7

2.99 2.99 6.68 6.68 8.13 8.13 7.67 7.67 9.70 9.70 7.69 7.69Best Property Best Property Property Partners Best Property Xymax Axis Property Partners

183 183 183 183 183 183 183 183 183 183 183 18386,083 64,147 - (※7) - (※7) 94,338 86,138 - (※7) - (※7) 48,653 51,634 83,399 77,720

Rent (incl. common service fees) 86,083 64,147 - (※7) - (※7) 94,338 86,138 - (※7) - (※7) 48,653 51,634 83,399 77,720Other Revenues (*2) 0 0 - (※7) - (※7) 0 0 - (※7) - (※7) 0 0 0 0

21,705 21,776 - (※7) - (※7) 17,916 53,020 - (※7) - (※7) 11,227 12,687 22,118 21,947Administrative Expenses 5,861 8,879 - (※7) - (※7) 3,801 6,005 - (※7) - (※7) 2,346 2,326 4,850 4,944Utility Charges 6,752 5,209 - (※7) - (※7) 5,828 5,612 - (※7) - (※7) 3,104 3,192 7,627 6,790Property Management Fees 1,303 1,225 - (※7) - (※7) 1,391 1,289 - (※7) - (※7) 1,200 1,200 1,501 1,394Property-related Taxes (*3) 6,295 6,297 - (※7) - (※7) 5,667 5,667 - (※7) - (※7) 4,143 4,150 7,214 7,214Non-life Insurance Costs 139 128 - (※7) - (※7) 136 125 - (※7) - (※7) 68 62 152 139Repair Expenses 1,354 36 - (※7) - (※7) 1,030 34,259 - (※7) - (※7) 365 1,756 773 1,433Other Expenses 0 0 - (※7) - (※7) 61 61 - (※7) - (※7) 0 0 0 31

64,377 42,371 68,849 65,521 76,422 33,118 41,638 14,250 37,425 38,946 61,280 55,773128,403 84,510 137,322 130,685 152,427 66,055 83,049 28,422 74,647 77,680 122,226 111,241

5.0% 3.3% 5.9% 5.6% 7.3% 3.2% 5.3% 1.8% 6.0% 6.3% 5.0% 4.6%Depreciation and Amortization 14,542 14,859 - (※7) - (※7) 6,430 6,484 - (※7) - (※7) 7,039 7,048 20,288 20,484Proceeds for Restoration and Repair Work 0 0 - (※7) - (※7) 0 0 - (※7) - (※7) 0 0 0 0Proceeds from Amortization of Leashold and Security Deposits 0 0 - (※7) - (※7) 0 0 - (※7) - (※7) 0 0 0 0

BPS SquareDaiwa Shibadaimon Daiwa Misakicho Daiwa Shimbashi 510

1,240 2,4402,578 2,346 2,080 1,560

Daiwa Tsukiji Daiwa Tsukiji 616

Property Name


Book Value (million yen)Appraisal Value (million yen)

Occupancy Rate (% )PML (% ) (*6)

Property Management Company

Profi

ts fro

m pr

oper

ty-re

lated

activ

ities (

*1)




NOI Yield (*4)

(Reference)

12th Period 13th Period7,282 7,2147,870 7,660100.0 100.010.89 10.89

Property Partners183 183

286,383 286,370286,383 286,370

0 058,394 52,997

8,485 10,20526,264 24,117

4,295 4,20113,802 13,802

367 3385,178 331

0 0227,988 233,373454,732 465,472

5.8% 5.9%67,835 67,912

0 00 0

7,840

Daiwa Tsukishima Bldg.




12th Period 13th Period 12th Period 13th Period 12th Period 13th Period 12th Period 13th Period 12th Period 13th Period 12th Period 13th Period2,503 2,502 1,570 1,563 3,837 3,829 7,197 7,168 4,545 4,545 3,381 3,3692,330 2,340 1,760 1,740 3,810 3,790 6,740 6,780 4,190 4,270 2,880 2,900100.0 100.0 100.0 100.0 100.0 87.0 73.5 85.2 88.1 96.9 53.7 88.6

7.84 7.84 9.57 9.57 8.67 8.67 8.49 8.49 10.16 10.16 10.04 10.04Best Property Best Property Best Property Xymax Axis Xymax Axis Best Property

183 183 183 183 183 183 183 183 183 183 183 18383,401 75,368 65,863 61,415 128,490 113,120 140,378 143,954 116,578 98,017 49,375 56,681

Rent (incl. common service fees) 83,401 75,368 65,863 60,034 128,490 112,332 140,378 143,954 111,947 97,902 49,375 56,681Other Revenues (*2) 0 0 0 1,380 0 788 0 0 4,631 114 0 0

18,593 21,225 12,479 12,761 28,121 41,364 60,616 37,907 36,224 31,175 41,021 30,872Administrative Expenses 3,819 5,018 2,433 2,501 5,086 6,530 6,037 8,502 7,395 8,556 4,806 13,672Utility Charges 5,303 5,597 3,171 3,404 9,143 8,721 12,969 13,327 7,573 7,326 5,311 5,894Property Management Fees 1,257 1,223 1,200 1,200 1,684 1,794 2,069 2,221 1,794 1,514 1,200 1,200Property-related Taxes (*3) 7,059 7,036 5,199 5,199 10,658 10,659 12,089 12,085 8,390 8,390 7,176 7,177Non-life Insurance Costs 155 142 100 92 166 152 348 315 170 155 161 146Repair Expenses 998 2,207 373 362 1,382 13,506 27,101 1,456 10,900 5,157 22,366 2,783Other Expenses 0 0 0 0 0 0 0 0 0 74 0 0

64,808 54,142 53,384 48,653 100,369 71,755 79,762 106,046 80,354 66,841 8,354 25,806129,262 107,988 106,477 97,041 200,190 143,119 159,088 211,514 160,269 133,318 16,662 51,471

5.1% 4.3% 6.7% 6.1% 5.1% 3.6% 2.1% 2.9% 3.5% 2.9% 0.5% 1.5%Depreciation and Amortization 11,365 11,963 7,736 7,796 15,948 16,103 28,608 28,947 18,536 19,095 16,903 17,116Proceeds for Restoration and Repair Work 0 0 0 0 570 10,230 0 0 13,666 8,630 0 0Proceeds from Amortization of Leashold and Security Deposits 0 0 0 0 0 0 0 0 0 0 0 0

3,4603,930 4,6202,520 1,600

Daiwa KyobashiDaiwa Nihombashi Honcho

7,420

Daiwa Ginza 1-chomeNihombashi MS Bldg. Daiwa Azabudai Daiwa Shibuya SS

Property Name



Occupancy Rate (%)PML (%) (*6)


Profi

ts fro

m pr

oper

ty-re

lated

activ

ities (

*1)




NOI Yield (*4)

(Reference)

12th Period 13th Period2,646 2,6432,250 2,170

68.1 88.48.62 8.62

Best Property183 183

70,373 63,66861,553 63,668

8,819 029,098 29,744

4,468 6,5075,220 5,5031,209 1,200

14,341 14,341155 142

3,702 2,0510 0

41,274 33,92282,324 67,659

3.1% 2.5%9,592 9,721

0 00 0

2,680

Sunline Building No. 7




12th Period 13th Period 12th Period 13th Period 12th Period 13th Period 12th Period 13th Period 12th Period 13th Period 12th Period 13th Period13,680 13,651 131,775 131,543 5,835 5,822 2,446 2,440 4,140 4,165 5,072 5,12814,400 13,000 106,000 108,000 4,060 3,940 1,920 1,900 2,930 2,760 5,600 4,860

87.1 100.0 99.9 99.9 100.0 100.0 100.0 100.0 100.0 20.6 55.0 79.65.45 5.45 6.42 6.42 3.14 3.14 7.71 7.71 5.58 5.58 6.76 6.76

Xymax Axis Xymax Axis Xymax Axis Property Partners Mitsui Fudosan Building Management

183 183 183 183 183 183 183 183 183 183 183 183417,593 358,681 2,541,293 2,554,873 115,806 115,182 64,935 64,684 161,481 57,150 137,671 113,237

Rent (incl. common service fees) 417,593 358,681 2,538,947 2,546,329 115,806 115,182 64,935 64,684 161,481 57,150 137,671 113,237Other Revenues (*2) 0 0 2,346 8,543 0 0 0 0 0 0 0 0

77,904 85,279 829,826 742,907 21,707 20,884 13,288 13,671 33,630 68,427 88,298 53,361Administrative Expenses 13,743 22,008 133,528 130,990 4,962 4,382 2,775 2,813 6,274 13,282 12,307 17,884Utility Charges 19,873 20,993 292,440 288,990 6,080 6,296 4,248 4,258 11,627 6,109 10,830 9,301Property Management Fees 4,073 3,497 17,826 17,624 1,733 1,712 1,200 1,200 1,614 1,209 1,743 1,433Property-related Taxes (*3) 36,682 36,682 263,549 269,849 7,456 7,448 3,824 3,824 11,212 11,212 17,040 16,957Non-life Insurance Costs 518 475 4,463 4,099 130 118 93 86 181 164 303 277Repair Expenses 3,013 1,624 113,960 27,597 1,344 928 323 668 2,678 36,213 46,070 7,506Other Expenses 0 0 4,057 3,758 0 0 822 822 40 238 3 3

339,688 273,400 1,711,466 1,811,961 94,098 94,295 51,647 51,009 127,850 -11,280 49,372 59,873677,521 545,307 3,413,581 3,614,022 187,683 188,076 103,013 101,740 255,003 -22,500 98,475 119,419

4.9% 3.9% 2.6% 2.7% 3.2% 3.2% 4.2% 4.1% 6.1% -0.5% 2.0% 2.4%Depreciation and Amortization 29,443 29,462 528,283 532,827 16,662 16,693 8,177 8,247 23,062 23,920 46,976 50,334Proceeds for Restoration and Repair Work 0 0 0 14,742 0 0 0 0 0 35,000 0 0Proceeds from Amortization of Leashold and Security Deposits 0 0 0 0 0 0 0 0 0 0 0 0

NOI Yield (*4)

(Reference)


Prof

its fr

om pr

oper

ty-re

lated

activ

ities (

*1)





Occupancy Rate (%)

Property Name


Daiwa Onarimon Shinjyuku Maynds Tower SHIBUYA EDGE Daiwa Kodemmacho Daiwa Jimbocho Daiwa Nishishimbashi

5,900 2,460 5,000

Xymax Axis

13,860 133,800 4,15012th Period 13th Period

3,993 3,9722,960 2,82088.1 88.07.96 7.96

Mitsui Fudosan Building Management

183 183127,697 115,311127,697 115,311

0 023,511 54,143

4,684 9,6777,166 6,7961,868 1,8338,987 8,990

153 138652 26,709

0 0104,185 61,164207,802 121,995

5.2% 3.0%23,961 24,134

0 00 0

Daiwa Kudan

4,000




12th Period 13th Period 12th Period 13th Period 12th Period 13th Period 12th Period 13th Period 12th Period 13th Period 12th Period 13th Period5,618 5,590 3,626 3,606 24,141 24,094 1,740 3,470 3,445 2,840 2,8196,110 6,110 3,640 3,660 25,900 26,000 1,810 3,540 3,220 3,500 3,510100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 97.9 90.15.58 5.58 6.13 6.13 5.78 5.78 6.93 7.42 7.42 5.56 5.56

Property Partners Mitsui Fudosan Building Management Xymax Axis MS Building Support Best Property Best Property183 183 183 183 146 183 21 183 183 183 183

- (※7) - (※7) 90,942 108,730 539,461 677,807 4,816 151,854 148,409 151,083 130,753Rent (incl. common service fees) - (※7) - (※7) 90,942 108,730 539,461 677,807 4,816 151,854 148,409 145,311 129,122Other Revenues (*2) - (※7) - (※7) 0 0 0 0 0 0 0 5,771 1,630

- (※7) - (※7) 13,798 14,146 83,124 95,604 668 41,272 61,403 45,439 39,222Administrative Expenses - (※7) - (※7) 6,315 5,913 47,104 40,741 523 12,937 17,360 10,221 9,821Utility Charges - (※7) - (※7) 5,814 6,394 28,500 42,218 0 11,643 11,574 15,590 15,017Property Management Fees - (※7) - (※7) 1,388 1,680 6,248 6,854 135 2,272 2,219 2,123 1,885Property-related Taxes (*3) - (※7) - (※7) 6 17 13 15 0 13,067 13,069 9,632 9,630Non-life Insurance Costs - (※7) - (※7) 155 142 632 724 10 303 280 292 269Repair Expenses - (※7) - (※7) 118 0 490 4,934 0 1,049 16,901 7,579 2,600Other Expenses - (※7) - (※7) 0 0 135 118 0 0 0 0 0

159,796 160,502 77,144 94,581 456,336 582,201 4,146 110,582 87,003 105,643 91,528318,719 320,127 153,866 188,646 1,140,841 1,161,221 72,062 220,560 173,531 210,710 182,556

5.7% 5.7% 4.3% 5.3% 4.8% 4.8% 4.2% 6.0% 4.8% 7.1% 6.2%Depreciation and Amortization - (※7) - (※7) 19,708 19,708 52,078 62,738 2,185 28,286 28,377 22,254 22,303Proceeds for Restoration and Repair Work - (※7) - (※7) 0 0 0 0 0 0 0 4,900 5,000Proceeds from Amortization of Leashold and Security Deposits - (※7) - (※7) 0 0 0 0 0 0 0 0 0

5,600 3,550


NOI Yield (*4)

(Reference)

Profi

ts fro

m pr

oper

ty-re

lated

activ

ities (

*1)



Appraisal Value (million yen)Occupancy Rate (%)


1,721

Book Value (million yen)

Daiwa KinshichoDaiwa Kayabacho Build. Jimbocho Place E Space Tower Nihonbashi Hongokucho Tosei Build Daiwa Higashi-Ikebukuro

Property Name

Acquisition Price (million yen) 3,65324,000 2,95812th Period 13th Period

4,469 4,4333,410 3,20089.5 96.65.66 5.66

Xymax Axis183 183

163,025 155,494160,166 155,494

2,858 056,940 55,86615,637 16,90216,983 18,7492,423 2,354

16,320 15,970455 419

5,120 1,4720 0

106,084 99,626211,589 198,709

4.3% 4.0%45,202 39,290

0 00 0

Benex S-3

4,950




12th Period 13th Period 12th Period 13th Period7,508 7,480 4,879 4,8585,670 5,690 2,940 2,850100.0 100.0 91.7 100.0

5.56 5.56 11.56 11.56Best Property Mitsui Fudosan Building Management

183 183 183 183180,917 192,421 108,522 108,185

Rent (incl. common service fees) 180,917 192,421 108,522 108,185Other Revenues (*2) 0 0 0 0

52,976 56,085 36,766 37,140Administrative Expenses 12,219 12,436 12,228 13,217Utility Charges 15,155 15,766 10,501 9,480Property Management Fees 2,742 2,877 1,643 1,622Property-related Taxes (*3) 19,645 19,644 11,622 11,373Non-life Insurance Costs 409 377 273 250Repair Expenses 2,805 4,985 497 1,198Other Expenses 0 0 0 0

127,940 136,334 71,756 71,042255,182 271,923 143,119 141,696

3.3% 3.5% 3.0% 2.9%Depreciation and Amortization 33,332 33,159 31,871 30,998Proceeds for Restoration and Repair Work 0 4,500 0 0Proceeds from Amortization of Leashold and Security Deposits 0 0 0 0

Annualized NOI(3) NOI (＝(1)-(2)) (*5)



(Reference)

Occupancy Rate (% )PML (% ) (*6)


Profi

ts fro

m pr

oper

ty-re

lated

activ

ities (

*1)



NOI Yield (*4)

7,710

Daiwa Shinagawa North Daiwa Minami-Senba

4,810

Property Name




Matters relating to advisory concerning managements for customers’ assets

Matters relating to operation concerning discretionary funds

Matters relating to managementfor customers

Organization of the Asset Management Company

█ Company Overview█ Organization Chart

Board of Directors and AuditorsShareholders’ MeetingShareholders’ Meeting

Board of DirectorsBoard of Directors

Representative Director

Representative Director

AuditorsAuditors

ComplianceCommittee

ComplianceCommittee

Investment CommitteeInvestment Committee

Internal Control OfficeInternal Control Office

Compliance OfficerCompliance Officer

Finance Department General AdministrativeDepartment

Business Planning Department

Finance and IR Team

Accounting Team

Investment Management Department

Acquisitions Team

Private Fund ManagementDepartment

Matters relating to the operation of the general meeting of investors and the executive officers of the Investment CorporationMatters relating to the operation of the general meeting of shareholders, the board of directors and committees of the Asset ManagerSubmission of applications for various permits, licenses, approvals, registrations, etc. stipulated by laws and regulations Storage and management of the important documents and information Matters relating to human resources and labor service

Formulation of investment policiesMatters relating to the acquisition and disposal of assets

Analysis of real estate market, retail industry trends and the real estate investment trust marketResearch and analysis of the business challenge of the Investment CorporationMatters relating to the development of annual asset management plans and medium-term assetmanagement plansDevelopment and revision of the Investment GuidelinesMatters relating to the provision of new businessesGeneral risk management of the Investment Corporation

Matters relating to financing, asset liability management and management of surplus fundMatters relating to disclosure, IR activities, formulation of the IR strategy and Public Relations

Matters relating to financial results and accounting, cash allotment, accounting audit, budget and performance managementMatters concerting accounting and finance of the Asst Manager

Asset Management Team

Investment Planning Team

Formulation of policies on leasing and management of assetsMatters relating to the leasing and management of assets

Budget and performance management of the portfolio

Yoshiki Nishigaki(Head of Private Fund Management)Yuji Shinotsuka(Head of Finance & Business Planning)

Naoyuki Owa(Head of Administration)

Akira Yamanouchi

Toshihiro Matsui

Mikita Komatsu

Toshihiko Onishi

Vice President and Representative Director

Vice President and Representative Director

Director

President and Representative Director

Director (non-executive)

Director (non-executive)

Auditor

Marketing Department

Marketing activities concerning commissioned businessesRelation with tenants whose the Investment Corporation owns the properties

Daiwa Real Estate Asset Management Co. Ltd. Company Name

6-2-1 Ginza, Chuo-ku, TokyoAddress October 21, 2004Established200 million yenCapitalizationAkira YamanouchiRepresentative Director7 ( 4 executive, 2 non-executive, 1 auditor)Directors

43Employees

No. (2)-83920, Governor of TokyoBuilding Lots and Buildings Transaction Business License

No. 34, Minister of Land, Infrastructure, Transport and TourismDiscretionary Agent for Real Estate Transaction Approval

A member of the Investment Trusts Association of JapanA member of Japan Securities Investment Advisers Association

No. 355 (Financial Instruments), Director, Kanto Local Finance Bureau

Registered Financial Instruments Firm

Construction Manager

Formulation and Implementation of construction project of the properties.

(As of July 13. 2012)

Advisory Team

Operational Team

Management Team


Daiwa Securities Group Inc.

Retail Global Markets

Daiwa AssetManagement

Daiwa SB Investments

Daiwa Real Estate Asset Management

Asset Management

Daiwa CorporateInvestment

Investment

Daiwa Securities SMBC Principal

Investments

Daiwa PI Partners

Daiwa Securities

Global IB

Daiwa Institute ofResearch

DIR Business Innovations

Others

Daiwa Next Bank, Ltd.

Daiwa Institute ofResearch Holdings

Daiwa SecuritiesBusiness Center Co. Ltd.

Daiwa Property Co., Ltd.

Collaboration with Daiwa Securities Group

Wealth Management

Branch Office

Wholly owned

Collaboration

Sourcing PropertiesTenants Leasing

FinanceFee

Real Estate Agency Business (Reinforce Leasing)IR Activities (Domestic and Overseas)

Sourcing Properties and Tenants Leasing

Real Estate Agency Business (Reinforce Leasing)


(2012/05)(2011/11)(2011/5)(2010/11)(2010/5)(2009/11)(2009/07)Future

13th Period12th Period11th Period10th Period9th Period8th PeriodSponsor Change

Unitholders’Composition

Leasing

Acquisition

Finance

Made all loanuncollateralized

(Sep.2011)

Acquired E SPACE TOWER (Jul. 2011)

Daiwa PIP purchased Additional 68,905 units

(Feb. - Mar. 2012)

Rating A- → A (R&I) (Sep. 2009)

Daiwa Securities started a RE brokerage

business (Sep.2011)

Issued investment corporate bond underwritten by Daiwa CM(5.0Bil yen) (Jun.2010)

Acquired Daiwa Kayabacho Building (Mar.2011)

Issued subordinated corporate bond to DSGI(3.5Bil yen) (Sep.2009)

Daiwa PIP acquired 60,000 units (Jul. 2010)

Daiwa Securities Group Inc. Acquired 51,893 units throughPrivate Allotment (Jul. 2009)

Allotted new units to DSGI (DSGI :10Bil yen)(Jul.2009)

Achievements / Synergy with Daiwa Securities Group

Construct optimal debt structure

Keep stable bank formation

Keep good communication with lenders

Accelerate Acquisition utilizing Daiwa’s Network

Take advantage of low LTV

Accelerate leasing activities utilizing Daiwa’s network

Construct more stable unitholders’ composition with IR activities

Increase in the rate of fixed interest rate loan

(May 2012)

Daiwa InvestmentManagement purchased

128,905 units (May. 2012)


Competitive Edge

Strictly control conflicts of interest with sponsor

Introduce financial institutions’ rigorous compliance framework

Ensure high transparency and establish disciplined investment process

Develop team of outstanding professional staff by capitalizing on the human resources of the Daiwa Securities Group

Employ excellent human resources from outside by drawing on the Daiwa Securities Group’s brand power

Increase number of employees with a high level of motivation to challenge new business stages

█ Secure well-experienced, highly-professional human resources

█ Establish highly-transparent business structure

Remarkably expand financing capacity by capitalizing on the credit capability of the Daiwa Securities Group

Reinforce leasing activities by capitalizing on the network of the Daiwa Securities Group

Reinforce sourcing activities by capitalizing on the network of the Daiwa Securities Group

█ Expand net work of collaboration with the Daiwa Securities Group

51This document is not material disclosed in compliance with the Financial Instruments and Exchange Law or any regulation of similar nature, nor is it intended for the purposes of solicitation. Daiwa Office Investment Corporation advises reader to make investment decisions at their own judgment. 51

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