JCR News Release

14-D-0755

December 10, 2014

JCR Affirmed AA-/Stable Long-term Issuer Rating and AA- Rating on Bonds of Daiwa House Residential Investment Corporation

Japan Credit Rating Agency, Ltd. (JCR) announces the following credit rating.

Rationale

Daiwa House Residential Investment Corporation ("DHI") is a J-REIT that primarily invests in

residential properties. Its asset management company, Daiwa House Asset Management Co., Ltd., is owned by Daiwa House Industry Co., Ltd.

DHI's portfolio consists of 136 properties with total acquisition price of 237.6 billion yen. Its asset size has expanded significantly by merger with New City Residence Investment Corporation. Since then it has been promoting internal growth through collaboration with Daiwa House Group, performing stably on its portfolio continually.

All of the borrowings are unsecured and unguaranteed debts under its policy to focus on establishment of bank formation centered on close financial institutions with Daiwa House Industry Co., Ltd., making the debt repayment periods longer and reduction of the debt cost. Both the ratio of long- term debts to the total debts and the ratio of fixed interest rate debts to the total debts are high. DHI plans to control the LTV on the basis of total assets at the end of fiscal period within a scope between

50% and 55% approximately. The LTV at the end of August 2014 remained unchanged from that at the end of February 2014, standing at 51.1% both.

Rating

Shigeo Sugiyama, Takanori Akiyama

Issuer: Daiwa House Residential Investment Corporation (security code: 8984)

Long-term Issuer Rating: AA-

Outlook: Stable

Issue Amount (bn)

Issue Date

Due Date

Coupon

Rating

bonds no.1 Y3

Mar. 9, 2012

Mar. 9, 2017

1.12%

AA-

Rating Assignment Date: December 5, 2014

The criteria used for identifying matters which serve as assumptions for the assessment of the credit status, and the criteria used for setting of grades indicating the results of the assessments of the credit status are published as "Types of Credit Ratings and Definitions of Rating Symbols" (January 6, 2014) in Rating Policies on JCR's website (http://www.jcr.co.jp/english/).

Outline of methodology for determination of the credit rating is shown as "J-REIT" (June 2, 2014) in Structured Finance, Rating Methodology on JCR's website (http://www.jcr.co.jp/english/).

Japan Credit Rating Agency, Ltd.

Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan

Tel. +81 3 3544 7013, Fax. +81 3 3544 7026


Information herein has been obtained by JCR from the issuers and other sources believed to be accurate and reliab le. However, because of the possibility of human or mechanical error as well as other factors, JCR makes no representation or warranty, express or implied, as to accuracy, results, adequacy, timeliness, completeness or merchantability, or fitness for any particular purpose, with respect to any such information, and is not responsible for any errors or omissions, or for results obtained from the use of such information. Under no circumstances will JCR be liable for any special, indirect, incidental or consequential damages of any kind caused by the use of any such information, including but not limited to, lost opportunity or lost money, whether in contract, tort, strict liability or otherwise, and whether such damages are foreseeable or unforeseeable. JCR's ratings and credit assessments are statements of JCR's current and comprehensive opinion regard ing redemption possibility, etc. of financial obligations assumed by the issuers or financial pro ducts, and not statements of opinion regarding any risk other than credit risk, such as market liquidity ris k or price fluctuation risk. JCR's ratings and credit assessments are statements of opinion, and not statements of fact as to credit risk decisions or recommendations regarding decisions to purchase, sell or hold any securities such as individual bonds or commercial paper. The ratings and credit assessments may be changed, suspended or withdrawn as a result of changes in or unavailability of information as well as other factors. JCR retains all rights pertaining to this document, including JCR's rating data. Any reproduction, adaptation, alteration, etc. of this document, including such rating data, is prohibited, whether or not wholly or partly, without prior consent of JCR.
JCR is registered as a "Nationally Recognized Statistical Rating Organ ization" with the U.S. Securities and Exchange Commission with respect to the following four classes. (1) Financia l institutions, brokers and dealers, (2) Insurance Companies, (3) Corporate Issuers, (4) Issuers of government securities, municipal securities and foreign government securities.

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