Daiwa Office Investment : Notice Concerning Asset Replacement and Conclusion of Agreements Concerning Development Project with World Holdings Group (Kandasudacho 2-Chome Development Project)(PDF：2.7MB)

I. Summary of the Acquisition

(Note)

The Counterparty of the Replacement

World Residential Co., Ltd. Nichimo Real Estate Co., Ltd.

World Residential Co., Ltd. and Nichimo Real Estate Co., Ltd., which are the counterparty of the replacement, are the consolidated subsidiaries of World Holdings Co., Ltd.

Scheduled Delivery Date

October 20, 2021

December 16, 2021

1. Summary of the Replacement

Scheduled Date of Conclusion of Replacement Agreement

This translation of the original Japanese notice is provided solely for information purposes. Should there be any discrepancy between this translation and the Japanese original, the latter shall prevail.

October 20, 2021

REIT Issuer: Daiwa Office Investment Corporation (Stock Code No.: 8976)

Representative: Seiya Miyamoto, Executive Director

Asset Manager: Daiwa Real Estate Asset Management Co. Ltd.

Representative: Toshio Fukushima, President and Representative Director

Inquiries to: Kentaro Azumi, General Manager, Corporate Division (Tel: [phone])

Notice Concerning Asset Replacement and Conclusion of Agreements Concerning Development

Project with World Holdings Group (Kandasudacho 2-ChomeDevelopment Project)

Daiwa Office Investment Corporation (the "Investment Corporation") hereby announces that Daiwa Real Estate Asset Management Co. Ltd. (the "Asset Manager"), to which the Investment Corporation entrusts management of its assets, has determined today to acquire domestic real estate trust beneficiary rights (the "Acquisition") related to the development site of the development project (the "Property to Be Acquired") and transfer 2 domestic real estate trust beneficiary rights (the "Properties to Be Transferred") (the "Transfer", and the Acquisition and the Transfer are collectively referred to as the "Replacement") with the World Holdings Group (Note). In addition, we are pleased to inform you that we have decided to conclude various contracts related to the office building development project (the "Project") on the Property to Be Acquired.

(Note) World Holdings Group refers to World Holdings Co., Ltd., which is listed on the First Section of the Tokyo Stock Exchange and is engaged in a wide range of businesses, including the real estate business, human resources and education business, and the information and communications business and its consolidated subsidiaries,.

Asset Name	Kandasudacho 2-Chome Development Site (land)
Type of Specified Asset	Trust beneficial interest in domestic real estate
Location	19-19, and 17 other parcels of land, Kanda Suda-cho2-chome,Chiyoda-ku, Tokyo
Acquisition Price	10,600 million yen
(excluding acquisition expenses and consumption tax, etc.) (Note 1)
Seller	World Residential Co., Ltd. and Nichimo Real Estate Co., Ltd. (Note 2)
Funding for Acquisition	Appropriation based on proceeds from the Transfer and cash on hand
Payment Method	Lump-sum payment at the time of delivery

(Note 1) The acquisition price is only for the Property to Be Acquired.

(Note 2) The Investment Corporation will acquire a quasi-co-ownership interest in the trust beneficiary interest (1,978,232 of 10,600,000 of the equity interest) from World Residential Co., Ltd. and a quasi-co-ownership interest in the trust beneficiary interest (8,621,768 of 10,600,000 of the equity interest) from Nichimo Real Estate Co., Ltd..

(Note 3) The intermediary is neither an interested person, etc., as stipulated in the Order for Enforcement of the Act on Investment Trusts and Investment Corporations nor a related party as stipulated in "Rules on Conflicts of Interest," the Asset Manager's internal regulations.

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Ⅱ. Summary of the Transfer

					Difference
			Plannde	Book Value	between the
Asset Name		Type of	Sale Price	(million yen)	Sale Price and	Purchaser	Payment
	Asset	(million yen)	(Note 2)	the Book Value	Method
			(Note 1)		(million yen)
					(Note 3)
Daiwa Minami		Trust	4,990	4,390	599		Lump-sum
-Aoyama		beneficial	World Residential	payment at
		interest in				the time of
Daiwa					Co., Ltd.
	domestic				delivery
Kojimachi		3,200	2,822	377
	real estate		(Note 4)
4-chome
Total		8,190	7,213	976

(Note1) The planned sale price excludes settlement amounts of fixed asset tax and city planning tax, and consumption tax. (Note2) Book Value is as of May 31, 2021.

(Note3) The figure differs from a capital gain from the Transfer. It is a simple calculation of difference between the sale price and the book value for reference.

(Note4) The funds obtained through the Transfer will be used for the acquisition of the Property to Be Acquired.

(Note5) The intermediary for the Transfer is neither an interested person, etc. as stipulated in the Order for Enforcement of the Act on Investment Trusts and Investment Corporations nor a related party as stipulated in the "rules on conflicts of interest," the Asset Manager's internal regulations.

2. Reason for the Replacement and the Project

The Investment Corporation decided to conduct the Replacement and the Project based on the basic policy for asset management set forth in the Articles of Incorporation and the management policy of the Investment Corporation as rejuvenation of the portfolio in terms of building age and improvement in medium- to long-term profitability can be expected.

Please refer to the following for further details.

1. Acquisition

1. Location
   This property is located 4 minutes on foot from Kanda Station on the JR Yamanote Line and Tokyo Metro Ginza Line, 5 minutes on foot from Akihabara Station on the JR Yamanote Line and Tokyo Metro Hibiya Line, and 4 minutes on foot from Iwamoto-cho Station on the Toei Subway Shinjuku Line. It takes 2 minutes from Kanda Station to Tokyo Station, which has good access to the city center.
   The Kanda area, where the Property to Be Acquired is located, is close to Marunouchi and Otemachi, etc., which are large business clusters, and has a high level of traffic convenience, and maintains relatively cheap rent levels. As a result, tenant demand is expected from small and medium-sized manufacturers, wholesalers, and other industries.
2. Project Highlight

In October 2020, the Investment Corporation decided on the first development project for the Nihonbashi Bakurocho 1-Chome Development Project (Note) and is promoting the project. The Project is the second development project for the Investment Corporation. In the situation where competition in the real estate transaction market remains fierce, the Project will carry out the development of a new office property on development site to be acquired in central Tokyo, and the Project is deemed important as it is expected to rejuvenate the portfolio and improve its medium- to long-term profitability.

In addition to the fact that the Asset Manager has created an in-house real estate development team with expertise, by outsourcing project management to THE SANKEI BUILDING CO., LTD., which has a wealth of experience in office development, risks concerning development such as excessive development costs, schedule delays, and quality of the property developed are reduced. Moreover, by outsourcing design and construction to Taisei Corporation, which has produced many results and has extensive experience in a wide range of fields along completion risks are reduced.

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Furthermore, the Asset Manager's asset management department will aim to lease up the building as soon as possible after construction is completed, leveraging its past leasing experience and tenant networks.

（Note）For details of the Nihonbashi Bakurocho 1-Chome Development Project, please refer to the "Notice of Acquisition and Conclusion of Agreements Concerning Development Project (Nihonbashi Bakurocho 1-Chome Development Project)" announced on October 21, 2020 and the "Notice of Nihonbashi Bakurocho 1-Chome Development Project (Follow-Up)" announced on May 20, 2021.

Summary of the Property to Be Acquired

Asset Name	Kandasudacho 2-Chome Development Site (land)
Type of Specified Asset	Trust beneficial interest in real estate
Trustee	Mizuho Trust & Banking Co., Ltd. (planned)
Trust Period	December 16, 2021 through December 15, 2031 (planned)
Location (Lot Number)	19-19, and 17 other parcels of land, Kanda Suda-cho2-chome,Chiyoda-ku,
Tokyo
Ownership Form	Ownership
Area	1,346.71 ㎡
Soil Contamination Risk	Earth-Appraisal Co., Ltd.
Survey Company
Acquisition Price	10,600 million yen (Excluding acquisition costs, consumption tax, etc.)
Appraisal Value	11,500 million yen
(Appraisal Date)	（as of September 30, 2021）
Appraiser	JLL Morii Valuation & Advisory K.K.
Collateral	None
Other Matters of Special Note	Not Applicable

Ⅱ. Summary of the Properties to Be Transferred （1）Daiwa Minami-Aoyama

Asset Name	Daiwa Minami-Aoyama
Type of Specified Asset	Trust beneficial interest in domestic real estate
Trustee	Sumitomo Mitsui Trust Bank, Limited
Maturity of Trust Period	October 31, 2025
Location (Address)	2-31-8,Minami-Aoyama,Minato-ku, Tokyo
Use (Real Property Registry)	Office and parking
Ownership Form	(i) Land: Ownership (ii) Building: Ownership
Site Area (Real Property Registry)	963.12 m2
Total Floor Area	4,379.34 m2 (total floor area of the whole building)
(Real Property Registry)
Structure (Real Property Registry)	Steel-framed and steel-framed reinforced concrete structure, 5-story building
with 2 basement floors
Construction Date	September 21, 1990
(Real Property Registry)
Book Value	4,390 million yen (As of May 31, 2021)
Appraisal Value	4,740 million yen
(Date of Valuation)	(as of May 31, 2021)
Appraiser	JLL Morii Valuation & Advisory K.K.
Summary of Tenants (as of August 31, 2021)
	Total Number of Tenants	5
	Rent Revenue	131 million yen (Note)
	Security Deposit and	176 million yen
	Guaranty
	Total Leased Floor Space	2,715.54 m2
	Total Leasable Floor Space	2,715.54 m2
	Occupancy Rate	100.0%

(Note) Rent revenue is for the fiscal period ended May 31, 2021 (from December 1, 2020, to May 31, 2021).

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（2）Daiwa Kojimachi 4-chome

Asset Name	Daiwa Kojimachi 4-chome
Type of Specified Asset	Trust beneficial interest in domestic real estate
Trustee	Mitsubishi UFJ Trust and Banking Corporation
Maturity of Trust Period	October 31, 2026
Location (Address)	4-7-2 other, Kojimachi, Chiyoda-ku, Tokyo
Use (Real Property Registry)	Office, store, residence and parking
Ownership Form	(i) Land: Ownership (ii) Building: Unit ownership (unit ownership: 100%)
Site Area (Real Property Registry)	608.42 m2
Total Floor Area	3,942.61 m2
(Real Property Registry)
Structure (Real Property Registry)	Steel-framed reinforced concrete structure 9-story building with 2 basement
floors
Construction Date	October 8, 1987
(Real Property Registry)
Book Value	2,822 million yen (As of May 31, 2021)
Appraisal Value	2,920million yen
(Date of Valuation)	(as of May 31, 2021)
Appraiser	JLL Morii Valuation & Advisory K.K.
Summary of Tenants (as of August 31, 2021)
	Total Number of Tenants	7
	Rent Revenue	90 million yen (Note)
	Security Deposit and	110 million yen
	Guaranty
	Total Leased Floor Space	2,695.31 m2
	Total Leasable Floor Space	2,695.31 m2
	Occupancy Rate	100.0%

(Note) Rent revenue is for the fiscal period ended May 31, 2021 (from December 1, 2020, to May 31, 2021).

3. Summary of the Seller

In the Replacement, the Investment Corporation will acquire a quasi-co-ownership interest (1,978,232 of 10,600,000 shares of the equity interest) in the trust beneficiary right from World Residential Co., Ltd. and a quasi-co-ownership interest (8,621,768 of 10,600,000 shares of the equity interest) in the trust beneficiary right from Nichimo Real Estate Co., Ltd., each of which is a trust asset for the Kandasudacho 2-Chome Development Site (Land). In addition, the Investment Corporation shall transfer beneficial interest in trust with the land and buildings of the Daiwa Minami-Aoyama and Daiwa Kojimachi 4-chome to World Residential Co., Ltd.

(1)	Name	World Residential Co., Ltd.
(2)	Address	2-14-1,Higashi-Shimbashi,Minato-ku, Tokyo
(3)	Job Title/Name	Representative Director and President Hitoshi Yukawa
of Representative
		1.Operations with respect to the buying and selling, leasing, brokerage, appraisal,
		management and consulting of real estate
		2.Operations with respect to the development and development of land
		3.Operations with respect to the planning, design, construction, supervision,
		contracting, and consulting of construction and civil engineering works
	Description	4.Money lending operations relating to real estate
(4)	5.Non-life insurance agent
of Businesses	6.Operations with respect to general leases and general rentals
		7.Operations with respect to the manufacture, sale, sales agency, brokerage, and
		import and export of building materials, furniture, household electrical
		appliances, interior decorations, air-conditioning and air-conditioning
		equipment, kitchen equipment, and water supply and drainage equipment
		8.Operations related to the management of theme parks, sightseeing farms,
		amusement parks, sports facilities, accommodation facilities, retail outlets,

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		eating and drinking places, agricultural and livestock processing facilities,
		pastures, etc., and entrusted operations related thereto
		9.Operations with respect to the holding, sale and purchase of beneficial interest
		in trust, and intermediation
		10.Security services, etc.
(5)	Paid-in Capital	300 million yen
(6)	Net sales	We have not disclosed the sales because we have not obtained consent from the
replacement company to disclose the sales amount.
(7)	Date	April 6, 2010
of establishment
(8)	Net assets	Net assets have not been disclosed because consent to disclosure has not been
obtained from the replacement company.
(9)	Total assets	We have not disclosed the total assets since we have not obtained consent from
the replacement company to disclose the total assets.
(10)	Major Shareholders	Replacement is a consolidated subsidiary of World Holdings Co., Ltd.

1. Relationship between the relevant company and the Investment Corporation/Asset Management Company

		There is no capital relationship between the Company and the Investment
		Corporation or the Asset Management Company. In addition, there is no
	Capital relationship	noteworthy capital relationship between the relevant company's affiliates and the
		affiliates of the Investment Corporation and the Asset Management Company and
		their affiliates.
		There is no human relationship that should be stated between the Company and
	Human relations	the Investment Corporation or the Asset Management Company. In addition,
	there is no noteworthy personal relationship between the relevant company's
		affiliates or affiliates and the relevant persons or affiliates of the Investment
		Corporation or the Asset Management Company.
	Business	The Investment Corporation and the Asset Management Company have no
	relationship	business relationship with the Company.
	Status of
	classification as	The Company is not a related party.
	related party
(1)	Name	Nichimo Real Estate Co., Ltd.
(2)	Address	2-14-1,Higashi-Shimbashi,Minato-ku, Tokyo
(3)	Job Title/Name	Representative Director Yukitaka Takahashi
of Representative
		1.Purchase and sale, rental, and agency and brokerage of land and buildings
		2.Design, construction, supervision and contracting of buildings
		3.Control of land, buildings and facilities incidental thereto
		4.Consulting services such as building surveys and diagnostics and long-term
		building repair plans
		5.Projects based on Act on Specified Joint Real Estate Ventues
	Description of	6.Loans secured by real estate and other money
(4)	7.Investment in, and the sale and purchase, brokerage, and management of
Businesses
	equity investments in, a Specific Purpose Company, a Special Purpose
		Company (a company specified in the Rules on Terminology, Forms, and
		Preparation Methods of Financial Statements, etc.), and a Real Estate
		Investment Trust;
		8.Holding, trading, brokerage and management of securities and receivables
		9.Sales, agency and brokerage of construction materials, etc.
		10.Front service and security services in apartment houses, etc.
(5)	Paid-in Capital	160 million yen
(6)	Net sales	We have not disclosed the sales because we have not obtained consent from the
replacement company to disclose the sales amount.
(7)	Date of	June 12, 2009
establishment

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