Daiwa House REIT Investment : Financial Results for the Fiscal Period Ended February 28, 2022

April 15, 2022

Financial Results for the Fiscal Period Ended February 28, 2022

(September 1, 2021 - February 28, 2022)

Real estate investment trust unit issuer:

Daiwa House REIT Investment Corporation ("DHR")

Listing:	Tokyo Stock Exchange
Securities code:	8984
URL:	https://www.daiwahouse-reit.co.jp/en/
Representative:	Toshiharu Asada, Executive Director
Asset manager:	Daiwa House Asset Management Co., Ltd.
Representative:	Koichi Tsuchida, President and CEO
Inquiries:	Koyu Asahina, General Manager, Fund Management Department, Daiwa House REIT
Division
TEL: [phone]

Scheduled date of submitting Securities Report:	May 27, 2022
Scheduled date of starting distribution payments:	May 16, 2022
Supplementary materials for the financial results provided:	Yes
Results briefing for the period:	Yes (for institutional investors and analysts)
(Amounts are rounded down to the nearest million yen)

1. Financial results for the fiscal period ended February 28, 2022

(September 1, 2021 - February 28, 2022)

(1) Operating results

(Percentage figures represent period-on-period changes)Operating revenuesOperating profit

Ordinary profit

ProfitMillions of yenFiscal period ended

February 28, 2022

30,264 29,571

% 2.3

Millions of yen

5.2

13,409 13,116

% 2.2

Millions of yen

4.3

11,685 11,619

% 0.6

Millions of yen

4.7

11,685 11,619

% 0.6

4.7

Basic earnings per unit	Return on equity (ROE)	Ordinary profit to total assets ratio	Ordinary profit to operating revenues ratio
Fiscal period ended February 28, 2022 Fiscal period ended August 31, 2021	Yen 5,039 5,291	% 2.3 2.4	% 1.3 1.3	% 38.6 39.3

(Note) Please refer to "Per Unit Information" on page 27 for the number of investment units used as the basis for calculating basic earnings per unit.

(2) Distributions

Distributions per unit (including distributions in excess of earnings per unit)Distributions per unit (excluding distributions in excess of earnings per unit)Distributions in excess of earnings per unit	Total distributions (including distributions in excess of earnings)Total distributions (excluding distributions in excess of earnings)Total distributions in excess of earnings	Payout ratio	Distributions to net assets ratio
Fiscal period ended February 28, 2022 Fiscal period ended August 31, 2021	Yen 5,822 6,118	Yen 5,116 5,347	Yen 706 771	Millions of yen 13,507 13,435	Millions of yen 11,869 11,742	Millions of yen 1,637 1,693	% 101.5 101.1	% 2.3 2.4

(Note) Total distributions in excess of earnings fully relate to allowance for temporary difference adjustments.

(3) Financial position

Total assets	Net assets	Equity ratio	Net assets per unit
As of February 28, 2022 As of August 31, 2021	Millions of yen 964,669 900,310	Millions of yen 524,178 489,467	% 54.3 54.4	Yen 225,938 222,890

(4) Cash flows

Net cash provided by (used in) operating activities	Net cash provided by (used in) investing activities	Net cash provided by (used in) financing activities	Cash and cash equivalents at end of period
Fiscal period ended February 28, 2022 Fiscal period ended August 31, 2021	Millions of yen 18,182 19,398	Millions of yen (75,201) (7,825)	Millions of yen 51,608 (12,877)	Millions of yen 41,912 47,322

2.

Forecasts of operating results for the fiscal period from March 1, 2022 to August 31, 2022 and for the fiscal period from September 1, 2022 to February 28, 2023

(Percentage figures represent period-on-period changes)

% Millions of yen

Fiscal period ending August 31, 2022

Millions of yen

% Millions of yen

% Millions of yen

29,125

(3.8)

12,630

(5.8)

29,121

0.0

12,656

0.2 11,012

(Reference) Forecasted basic earnings per unit

%

11,011

(5.8)

11,011

(5.8)

0.0 11,012

0.0

For the fiscal period ending August 31, 2022: ¥4,746

For the fiscal period ending February 28, 2023: ¥4,746

Yen

5,600

5,600

Yen

4,747

Yen

853

4,750

850

* Other

• (1) Changes in accounting policies, changes in accounting estimates and retrospective restatement

  a. Changes in accounting policies due to amendment of accounting standards and other regulations: Yes

  • b. Changes in accounting policies due to reasons other than a. above: None

  • c. Changes in accounting estimates: None

  • d. Retrospective restatement: None

  (Note) For details, please refer to "Notes on Changes in Accounting Policies" on page 20.

• (2) Total number of investment units issued a. Total number of investment units issued at the end of the period (including treasury investment units)As of February 28, 2022

As of August 31, 2021

2,320,000 units 2,196,000 unitsb. Number of treasury investment units at the end of the periodAs of February 28, 2022

As of August 31, 2021

0 units 0 units

(Note) Please refer to "Per Unit Information" on page 27 for the number of investment units used as the basis for calculating basic earnings per unit.

* Financial results reports are exempt from audit conducted by certified public accountants or an audit corporation.

* Special notes

The forward-looking statements, including operating results forecasts, contained in these materials are based on information currently available to DHR and on certain assumptions deemed reasonable by DHR. The actual operating and other results may differ significantly from those presented herein as a consequence of numerous factors. These forecasts also do not guarantee the amount of distributions. Please refer to "Assumptions for Forecasts of Operating Results for the Fiscal Periods Ending August 31, 2022 and February 28, 2023" on pages 7 to 8 for information on assumptions for the forecasts of operating results.

Disclaimer:

This English translation has been prepared for general reference purposes only. DHR shall not be responsible for any consequence resulting from the use of the English translation in place of the original Japanese text. In any legal matter, readers should refer to and rely upon the original Japanese text released on April 15, 2022.

Index

1. Operating Results ........................................................................................................................................ 2

(1) Operating Results ................................................................................................................................ 2

(2) Investment Risk ................................................................................................................................... 6

2. Financial Statements ................................................................................................................................... 9

• (1) Balance Sheets ..................................................................................................................................... 9

• (2) Statements of Income ........................................................................................................................ 12

• (3) Statements of Unitholders' Equity .................................................................................................... 13

• (4) Statements of Cash Distributions ...................................................................................................... 15

• (5) Statements of Cash Flows ................................................................................................................. 16

• (6) Notes on Assumption of Going Concern ........................................................................................... 18

• (7) Notes on Important Accounting Policies ........................................................................................... 18

• (8) Notes on Changes in Accounting Policies ......................................................................................... 20

• (9) Notes to Financial Statements ........................................................................................................... 21

(10) Changes in Number of Investment Units Issued ............................................................................... 29

3. Reference Information .............................................................................................................................. 30

(1) Portfolio List ..................................................................................................................................... 30

(2) Summary of Major Tenants ............................................................................................................... 42

(3) Status of Portfolio Diversification ..................................................................................................... 43

(4) Capital Expenditures for Properties Held .......................................................................................... 44

1. Operating Results

(1) Operating Results i) Summary of results for the current fiscal period

• A. Transition of the Investment Corporation

  DHR is a real estate investment trust (J-REIT) whose sponsor is Daiwa House Industry Co., Ltd. (hereinafter referred to as "Daiwa House") and whose asset manager is Daiwa House Asset Management Co., Ltd. (hereinafter referred to as the "Asset Manager"), a wholly owned subsidiary of Daiwa House.

  DHR was listed on the Real Estate Investment Trust (REIT) Market of the Tokyo Stock Exchange, Inc. (hereinafter referred to as the "Tokyo Stock Exchange") on March 22, 2006, and then later merged with New City Residence Investment Corporation (hereinafter referred to as "NCR") on April 1, 2010 (hereinafter referred to as "the merger with NCR"). Subsequently on December 1, 2011, the corporate name was changed to Daiwa House Residential Investment Corporation (the corporation prior to change of corporate name to "Daiwa House REIT Investment Corporation" is hereinafter referred to as the "former DHI"), and accordingly changed its investment targets to residential properties.

  The former Daiwa House REIT Investment Corporation (the Daiwa House REIT Investment Corporation, which was dissolved upon having merged with DHR as of September 1, 2016, is hereinafter referred to as the "former DHR") was established on September 14, 2007, whose asset manager was Daiwa House REIT Management Co., Ltd., a wholly owned subsidiary of Daiwa House. The former DHR was listed on the Tokyo Stock Exchange Real Estate Investment Trust (REIT) Market on November 28, 2012, as a REIT that targets investment in logistics and retail properties.

  On September 1, 2016, the former DHI and the former DHR (hereinafter collectively referred to as the "Investment Corporations") conducted an absorption-type merger (hereinafter referred to as the "Merger") whereby the former DHI was the surviving corporation and the former DHR was the absorbed corporation, shifted to a diversified portfolio strategy that targets investment in new asset classes such as hotel and office properties, in addition to those that the Investment Corporations had targeted for investment in the past, and changed its corporate name from Daiwa House Residential Investment Corporation to Daiwa House REIT Investment Corporation.

• B. Performance for the current fiscal period

DHR raised ¥36.2 billion of capital in its fifth public offering since the Merger and acquired four properties for a total acquisition price(Note 1) of ¥72.3 billion through the Daiwa House Group(Note 2)'s pipeline in September and October 2021 by a combination of funds raised through public offering and loans. In September 2021, DHR disposed of one residential property at a disposition price of ¥3.7 billion. Furthermore, in February 2022, as property replacement, DHR acquired one residential property for an acquisition price of ¥1.4 billion with funds in hand. As a result, DHR's portfolio as of the end of the current fiscal period consists of 230 properties with an asset value of ¥895.1 billion(Note 3) (Note 4).

(Note 1) "Acquisition price" is the purchase price stipulated in the respective purchase agreements of assets owned by

DHR (not including expenses pertaining to acquisitions, settlement money such as taxes and public dues, consumption taxes, or leasehold guarantee deposits, etc.), except as otherwise noted. However, the acquisition prices of properties previously owned by NCR have been presented as the appraisal values as of February 28, 2010, which were the prices received at the time of the merger with NCR, and the acquisition prices of properties previously owned by the former DHR have been presented as the appraisal values as of August 31, 2016, which were the prices received at the time of the merger with the former DHR. The "total acquisition price" has been rounded down to the nearest unit. The same shall apply hereinafter.

(Note 2) The Daiwa House Group comprises Daiwa House, which is the parent company, 422 consolidated subsidiaries, 59 equity-method affiliates and one non-equity-method affiliate as of December 31, 2021. The Asset Manager is a member of the group. The same shall apply hereinafter.

(Note 3) "Asset value" is the aggregate total of the acquisition prices of respective assets owned by DHR at respective points in time, except as otherwise noted. The same shall apply hereinafter.