Daiwa House REIT Investment : Financial Report for the 30th Fiscal Period Ended February 2021

April 20, 2021

Financial Results for the Fiscal Period Ended February 28, 2021

(September 1, 2020 - February 28, 2021)

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:	Yoshikazu Tamura, General Manager, Fund Management Department, Daiwa House REIT
	Division
	TEL: [phone]

Scheduled date of submitting Securities Report:	May 28, 2021
Scheduled date of starting distribution payments:	May 10, 2021
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, 2021 (September 1, 2020 - February 28, 2021)

(1)

Operating results

(Percentage figures represent period-on-period changes)

Operating revenues

Operating profit

Ordinary profit

Profit

Millions of yen

%

Millions of yen

%

Millions of yen

%

Millions of yen

%

Fiscal period ended

28,097

5.6

12,571

8.6

11,099

11.7

11,098

11.7

February 28, 2021

Fiscal period ended

26,613

6.4

11,574

9.6

9,936

8.9

9,936

8.9

August 31, 2020

Basic earnings

Return on equity

Ordinary profit to

Ordinary profit to

per unit

(ROE)

total assets ratio

operating revenues ratio

Yen

%

%

%

Fiscal period ended

5,054

2.3

1.2

39.5

February 28, 2021

Fiscal period ended

4,525

2.1

1.1

37.3

August 31, 2020

(Note)

Please refer to "Per Unit Information" on page 28 for the number of investment units used as the basis for calculating

basic earnings per unit.

(2)

Distributions

Distributions

Distributions

Total

Total

per unit

per unit

Total

Distributions

distributions

distributions

(including

(excluding

Distributions

in excess of

(including

(excluding

distributions

distributions

distributions

earnings

distributions

distributions

in excess of

Payout ratio

to net assets

in excess of

in excess of

per unit

in excess of

in excess of

earnings

ratio

earnings per

earnings per

earnings)

earnings)

unit)

unit)

Yen

Yen

Yen

Millions of

Millions of

Millions of

%

%

yen

yen

yen

Fiscal period

5,856

5,101

755

12,859

11,201

1,657

100.9

2.3

ended February

28, 2021

Fiscal period

5,427

5,404

23

11,917

11,867

50

119.4

2.4

ended August

31, 2020

(Note)

Total

distributions in

excess of earnings fully relate to allowance for temporary difference adjustments.

Daiwa House REIT Investment Corporation (8984)

Financial Results for the Fiscal Period Ended February 28, 2021

(3) Financial position
		Total assets	Net assets	Equity ratio	Net assets per unit
		Millions of yen	Millions of yen	%	Yen
As of February 28, 2021		901,386	490,586	54.4	223,400
As of August 31, 2020		899,579	491,302	54.6	223,725

(4) Cash flows

	Net cash provided by	Net cash provided by	Net cash provided by	Cash and
	(used in) operating	(used in) investing	(used in) financing	cash equivalents
	activities	activities	activities	at end of period
	Millions of yen	Millions of yen	Millions of yen	Millions of yen
Fiscal period ended	24,776	(5,600)	(9,932)	48,626
February 28, 2021
Fiscal period ended	13,661	(73,052)	48,345	39,382
August 31, 2020

2. Forecasts of operating results for the fiscal period from March 1, 2021 to August 31, 2021 and for the fiscal period from September 1, 2021 to February 28, 2022

(Percentage figures represent period-on-period changes)

											Distributions	Distributions	Distributions
	Operating	Operating	Ordinary			per unit	per unit
	Profit	(including	(excluding	in excess of
	revenues	profit		profit		distributions in	distributions in	earnings
											excess of earnings	excess of earnings	per unit
											per unit)	per unit)
	Millions	%	Millions		%	Millions		%	Millions	%	Yen	Yen	Yen
Fiscal period	of yen		of yen			of yen			of yen
ending	29,411	4.7	12,978		3.2	11,466		3.3	11,465	3.3	6,050	5,243	807
August 31,
2021
Fiscal period
ending	27,210	(7.5)	11,621		7.9	10,098	(11.9)	10,097	(11.9)	5,500	4,598	902
February 28,
2022
(Reference) Forecasted basic earnings per unit
For the fiscal period ending August 31, 2021:		¥5,221
For the fiscal period ending February 28, 2022:	¥4,598

Daiwa House REIT Investment Corporation (8984)

Financial Results for the Fiscal Period Ended February 28, 2021

• Other

1. Changes in accounting policies, changes in accounting estimates and retrospective restatement
2. 1. Changes in accounting policies due to amendment of accounting standards and other regulations: None
   2. Changes in accounting policies due to reasons other than a. above: None
   3. Changes in accounting estimates: None
   4. Retrospective restatement: None
3. 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, 2021	2,196,000 units
As of August 31, 2020	2,196,000 units

b. Number of treasury investment units at the end of the period

As of February 28, 2021	0 units
As of August 31, 2020	0 units

(Note) Please refer to "Per Unit Information" on page 28 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, 2021 and February 28, 2022" on pages 8 to 10 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 20, 2021.

		Daiwa House REIT Investment Corporation (8984)
	Financial Results for the Fiscal Period Ended February 28, 2021
Index
1. Operating Results........................................................................................................................................	2
(1)	Operating Results ................................................................................................................................	2
(2)	Investment Risk...................................................................................................................................	7
2. Financial Statements .................................................................................................................................	11
(1)	Balance Sheets...................................................................................................................................	11
(2)	Statements of Income ........................................................................................................................	14
(3)	Statements of Unitholders' Equity ....................................................................................................	15
(4)	Statements of Cash Distributions ......................................................................................................	18
(5)	Statements of Cash Flows .................................................................................................................	20
(6)	Notes on Assumption of Going Concern...........................................................................................	22
(7)	Notes on Important Accounting Policies...........................................................................................	22
(8)	Notes to Financial Statements ...........................................................................................................	24
(9)	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

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Daiwa House REIT Investment Corporation (8984)

Financial Results for the Fiscal Period Ended February 28, 2021

1. Operating Results

1. Operating Results

1. 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 acquired one hotel property for an acquisition price(Note 1) of ¥3.1 billion through the Daiwa House Group(Note 2)'s pipeline in September 2020 by a combination of loans and funds in hand. Furthermore, in December 2020 and January 2021, DHR sold two residential properties at a total disposition price of ¥2.7 billion. As a result, DHR's portfolio as of the end of the current fiscal period consists of 227 properties with an asset value of ¥820.1 billion(Note 3).

(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, 361 consolidated subsidiaries, 61 equity-method affiliates and one non-equity-method affiliate as of December 31, 2020. 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.

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