Daiwa Office Investment Corporation
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As of January 23, 2017 Daiwa Office Investment Corporation Earnings Announcement for the 22nd Fiscal Period (Fiscal Period ended November 2016) Contents Section 3 Overview of Daiwa Office Investment Corporation External Growth Topics of the Fiscal Period ended November 2016 (22nd FP)・・ 3 Properties Acquired in the Fiscal Period ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ Changes in Rent Revenue ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 4 ending May 2017 (23rd FP) 23 Changes in Dividends ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 5 Properties Acquired in the Fiscal Period ended November 2016 (22nd FP) ・・・・・・・・・・・・・・・・・・・・・・・・・・・ 24 Section 1 Changes in Asset Size and Trading Performance・・・・・・・・・・・・・・ 26 Fiscal Period ended November 2016 (22nd Fiscal Properties Acquired after Sponsor Change・・・・・・・・・・・・・・・・・・・・ 27 Period) Performance Highlights and Forecasts Acquisition/Sale Policy and Status of Deliberation Highlights of the Fiscal Period ended November 2016 (22nd FP) ・・ 7 for Property Acquisitions ・・・・・・・・・・・・・・ ・・・・・・・・・・・・・・・・・・・・・ 29 Highlights of Forecasts for the Fiscal Periods ending May 2017 and November 2017 (23rd and 24th FP)・・・・ 8 Section 2 Section 4 Internal Growth Financial Strategy Leasing Market of Tokyo Office Buildings ・・・・・・・・・・・・・・・・・ 10 Status of Interest-bearing Liabilities ・・・・・・・・・・・・・・・・・・・・・・・・・・ 32 Analyses of Leasing Income ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 11 Unitholders as of the end of the November 2016 Portfolio Map: Increase and Decrease in Unit (22nd) Fiscal Period ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 35 Contract Rent Compared with Previous Fiscal Period ・・・・・・・ 15 Change in Investment Unit Price and Dividend Yield Forecasts ・・ 36 Performance of Shinjuku Maynds Tower & Future Initiatives・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 37 E SPACE TOWER ・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 16 Internal Growth Strategies・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 17 Appendix Measures to Increase Portfolio Value・・・・・・・・・・・・・・・・・・・・・ 18 Environmental Efforts・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 19 Occupancy Status of Properties Subject to Leasing Improvement in the Fiscal Period ended November 2016 (22nd FP) ・・・・・・・・・・・ 20 Properties Subject to Leasing Improvement in the Fiscal Period ending May 2017 (23rd FP)・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ 21 This 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 readers to make investment decisions at their own judgment. 1 Disclaimer This material is solely for the purpose of providing information and is not intended for the purpose of offering or soliciting investment, or as a recommendation to purchase or sell any specific product. Please refer any inquiries on potential purchases of the investment units of Daiwa Office Investment Corporation to a securities dealer. This document is not intended to provide information to meet the requirements of Japan’s new Financial Instruments and Exchange Act or Act on Investment Trusts and Investment Corporations, or any associated cabinet orders, cabinet office ordinances, rules, or any 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 of Daiwa Office Investment Corporation, and actual results may materially differ 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 may be modified or withdrawn without prior notice. Reproduction or use of the contents included in this document without prior approval is prohibited. This 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 readers to make investment decisions at their own judgment. 2 Topics of the Fiscal Period ended November 2016 (22nd FP) █ Domestic capital increase through public offering conducted in August 2016 Offering for the third consecutive year, Offering investment units: 12,700 units (primary offering), 1,169 units (third-party allotment), Issue price: 607,425 yen, Issue value: 587,489 yen, Total issue price: 7,461 million yen (primary offering), 686 million yen (third-party allotment), Total: 8,147 million yen; Acquired 4 properties (total acquisition price: 13,392 million yen) █ Results of continuous internal growth Average Contract Rent at the end of November 2016 (Note 1): 19,219 yen (% and amount of change from the end of May 2015: +114yen, +0.6%) <Average Contract Rent of the existing 49 properties (Note 2) at the end of November 2016: 19,331 yen (Note 1) (% and amount of change from the end of May 2016: +209 yen,+1.1%)> Occupancy Rate at end of the 22nd FP: 97.7% (22nd FP Expected Occupancy Rate estimated in July 2016: 97.5%) (Occupancy Rate at the end of the 21st FP: 98.7%) █ Property Acquisition Acquired 4 properties during the 22nd FP Heiwa Higashi-nihonbashi Building (Acquisition date: June 1, 2016; Acquisition price: 6,370 million yen), Square Daikanyama Building (Acquisition date: June 29, 2016; Acquisition price: 2,280 million yen), Shinjuku West Building (Acquisition date: July 21, 2016; Acquisition price: 942 million yen), Ogikubo TM Building (Acquisition date: July 21, 2016; Acquisition price: 3,800 million yen) Acquired 1 property during the 23rd FP Shin Kanda Mikuracho Building (Acquisition date: December 21, 2016; Acquisition price: 1,592 million yen) █ Financial Situation LTV (based on total assets): 42.3% (end of 21st FP: 43.3%) Average remaining debt years at the end of the Fiscal Period: 4.1 years (end of 21st FP: 4.5 years) Ratio of fixed interest: 80.4 % (end of 21st FP: 70.8%) (Note 1) Average contract rent is, as a rule, calculated after excluding all non-office uses such as retail, residence and warehouse. (Note 2) Excluding properties acquired/sold in 22nd FP This 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 readers to make investment decisions at their own judgment. 3 Changes in Rent Revenue Changes in increase/decrease of period-on-period rents and common area fees (Million Yen) (external growth/internal growth) 11,000 227 ■ External growth (contribution by properties acquired/disposed excluding the during-the-period 229 contribution in the previous FP) ■ External growth (during-the-period contribution by properties acquired/disposed) 115 117 ■ Internal growth (increase/decrease of rents of existing properties) 154 27 10,000 267 839 9,000 282 176 148 215 8,000 349 511 77 261 6 64 7,000 347 -55 29 190 278 -70 6,000 5,000 15th FPFP 16th FPFP 17th FPFP 18th18th FPFP 19th19th FPFP 20th20th FPFP 21st21st FPFP 22nd22nd FP (Note) External growth (full contribution by properties acquired/disposed) indicates the full contribution to the revenue of current fiscal period by the change in rents and common area fees of properties acquired or disposed in the previous fiscal period. External growth (During-the-period contribution by properties acquired/disposed) indicates the full contribution to the revenue of current fiscal period by the change in rents and common area fees of properties acquired or disposed in the current fiscal period. Internal growth (increase/decrease of rents of existing properties) indicates the period-on-period change in rents and common area fees of existing properties. This 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 readers to make investment decisions at their own judgment. 4 Changes in Dividends Changes in Dividends per Unit (Forecast/Actual) (Yen) (Yen) 595,860 14,000 569,585 600,000 545,661 10,560 10,710 506,681 9,900 9,750 10,700 12,000 10,550 478,051 9,000 9,850 500,000 459,893 10,695 449,764 8,328 9,350 10,508 467,984 422,993 417,390 421,941 7,570 8,700 10,000 9,688 7,400 445,466 6,550 7,300 7,820 9,142 428,435 419,285 416,844 400,000 6,009 5,500 7,200 7,540 8,256 5,350 7,478 7,621 8,000 6,847 6,250 4,154 5,500 4,850 6,542 3,903 300,000 3,600 4,850 5,986 6,000 5,246 3,180 4,100 5,107 2,843 3,280 4,464 3,176 3,671 200,000 4,000 3,240 100,000 2,000 0 0 '09/118th FP期9th'10/5 FP期10th'10/11 FP期 11th'11/5 FP期12th'11/11 FP期 13th'12/5 FP期 14th'12/11 FP期 15th'13/5 FP期 16th'13/11 FP期 17th'14/5 FP期 18th'14/11 FP期 19th'15/5 FP期 20th'15/11 FP期 21st'16/5 FP期 22nd'16/11 FP期 23rd'17/5 FP期 '17/11 24th FP期 1年前予想(左軸)Forecast from 半年前予想(左軸)Forecast from 分配金実績(左軸)Actual dividends (left axis) NAV1口当たり per unitNAV (right(右軸) axis) a year earlier (left axis) six months earlier (left axis) This 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 readers to make investment decisions at their own judgment. 5 Section 1 Fiscal Period ended November 2016 (22nd Fiscal Period) Performance Highlights and Forecasts Highlights of the Fiscal Period ended November 2016 (22nd FP) █ Results of the 22nd Fiscal Period (Million Yen) Increase factors(Unit: Yen): 21st Fiscal Period 22nd Fiscal Period Full contribution of revenue (rents and common area fees) Difference (ended May 2016) (ended Nov.