KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)

Translation of Japanese Original

FINANCIAL REPORT FOR THE FISCAL PERIOD ENDED JULY 31, 2013(REIT)(February 1, 2013 to July 31, 2013)
September 13, 2013
Kenedix Residential Investment Corporation is listed on the Tokyo Stock Exchange with the securities code number 3278.
(URL http://www.kdr-reit.com/english)
Representative:

Akira Tanaka, Executive Director

Asset Management Company: Kenedix Residential Partners, Inc.
Representative:

Akira Tanaka, President

Inquiries:

Akihiro Nakao, Director and CFO
TEL+81-3-3519-2623

Planned submission of semiannual securities report:

October 29, 2013

Planned start of distribution payments:

October 16, 2013

Preparing presentation material:

Yes

Hold a financial brief meeting:Yes (for analysts and institutional investors)(Amounts are rounded down to the nearest ¥million)

1. PERFORMANCE FOR THE FISCAL PERIOD ENDED JULY 31, 2013 (THIRD FISCAL PERIOD)(1) Business Results(Percentages show period-on-period changes) (Operating Revenues(Millions of Yen)

The third fiscal period ended

July 31, 2013

(1.9)

1,114

(101.3)

The third fiscal period ended(-10.1)615
Return on
Unitholders’Equity

Yen

Yen

6,145

Net Income(Millions of Yen)%

407(-12.3)(82.7)

464(81.3)[Reference](annualized)

Ordinary
Income toTotal Assets[Reference](annualized)

%

5,389

The second fiscal period ended

January 31, 2013

%

553

%

Net Income
per Unit

July 31, 2013

Ordinary Income(Millions of Yen)

%

1,135

The second fiscal period ended

January 31, 2013

Operating Income(Millions of Yen)%

406(-12.3)463(81.9)%%

Ordinary Income toOperating Revenues

%

%

%

%

%

2.9

5.8

1.2

2.5

35.9

%

%

%

%

%

3.3

6.5

1.4

2.8

41.7

(2) Distribution
Distributions per
Unit Excluding
Excess ofEarnings (Yen)

Total Distribution(Millions of Yen)Distributions in
Excess ofEarnings per Unit
(Yen)

Total Distributions
in Excess of
Earnings(Millions of Yen)

The third fiscal period ended

July 31, 2013

Distribution Ratio
to Unitholders’Equity

%

%

5,390

406

0

0

100.0

2.9

%

%

6,145

463

0

0

100.0

3.3

The second fiscal period ended

January 31, 2013

Payout Ratio

This is an English-language translation of the key financials in the original Japanese announcement on our Web site released on September 13,
2013. However, no assurance or warranties are given with respect to the accuracy or completeness of this English-language translation. The
Japanese original shall prevail in the case of discrepancies between this translation and the Japanese original.

-1-

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)(3) Financial Position
Total Assets(Millions of Yen)

Unitholders’ Equity(Millions of Yen)

Unitholders’ Equity to Total
Assets

As ofUnitholders’ Equity per
Share of Common Stock
(Yen)

%

July 31, 201333,025

14,17142.9

33,195

14,213

42.8

As of

187,847%

January 31, 2013

188,402(4) Cash Flow Position
Cash Flow from Operating
Activities(Millions of Yen)

Cash Flow from Investing
Activities(Millions of Yen)

Cash Flow from Financing
Activities(Millions of Yen)

Cash and Cash Equivalents
at the End of the Period(Millions of Yen)

The third fiscal period ended

July 31, 2013

686

-411

-632

1,144

810

-52

-315

1,502

The second fiscal period ended

January 31, 2013

2. FORECAST OF RESULTS FOR THE FISCAL PERIOD ENDING JANUARY 31, 2014 (August 1, 2013 to January 31, 2014)(Percentages show period-on-period changes)
Operating
Revenues(Millions of Yen)(%)
The fourth fiscal period ending

January 31, 2014

3,550
(212.6)

Operating Income(Millions of Yen)(%)

Ordinary Income(Millions of Yen)(%)

Net Income(Millions of Yen)
(%)

1,474
(261.9)1,473(262.5)

1,985(258.9)Distribution per
Unit Excluding
Excess of Earning(Yen)

Distribution in
Excess of Earnings
per Unit (Yen)

6,100

0

(Reference) Estimated net income per unit for the fiscal period ending January 31, 2014: ¥6,221

3. OTHER(1) Changes in Accounting Policies/Changes in Accounting Estimate/Retrospective Restatement(a) Changes concerning accounting policy accompanying amendments to accounting standards: No(b) Changes other than (a): No(c) Changes in accounting estimate: No(d) Retrospective restatement: No(2) Number of Investment Unit Issued and Outstanding (including treasury units)(a) Number of investment units issued and outstanding at the end of the period (including treasury units)
As of January 31, 2013: 75,440 units As of July 31, 2013: 75,440 units(b) Number of treasury units at the end of the period
As of January 31, 2013: 0 units As of July 31, 2013: 0 units[Provisional Translation Only]
English translation of the original Japanese document is provided solely for information purposes. Should there be any
discrepancies between this translation and the Japanese original, the latter shall prevail.

This is an English-language translation of the key financials in the original Japanese announcement on our Web site released on September 13,
2013. However, no assurance or warranties are given with respect to the accuracy or completeness of this English-language translation. The
Japanese original shall prevail in the case of discrepancies between this translation and the Japanese original.

-2-

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)

3. Financial Statements(1) Balance Sheets
Second Fiscal Period(As of January 31, 2013)
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Deferred tax assets
Other
Total current assets
Noncurrent assets
Property, plant and equipment
Land
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Total property, plant and equipment, net
Investments and other assets
Investment securities
Lease and guarantee deposits
Long-term prepaid expenses
Other
Total investments and other assets
Total noncurrent assets
Deferred assets
Deferred organization costs
Investment unit issuance costs
Total deferred assets
Total assets

*1

-3-

836,814665,818
5,503
4,235
16
384
1,512,772(in thousands of yen)
Third Fiscal Period(As of July 31, 2013)*1

507,326
637,662
4,399
9,925
16
1,159,330

2,787,376
14,715,539-275,405*1
14,440,133
118,484-5,090*1
113,393
316,923-9,702*1
307,221
3,678
-30
*1
3,648
*1
13,766,909
31,418,684

2,787,376
14,727,698-460,293*1
14,267,405
118,903-8,530*1
110,373
318,149-16,176*1
301,972
5,714
-105
*1
5,609
*1
13,766,909
31,239,647

10,156
122,671
36,318169,146
31,587,830

405,922
10,15693,43939,497549,014
31,788,662

39,84255,307
95,14933,195,752

34,62743,00977,63733,025,629

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)

Second Fiscal Period(As of January 31, 2013)
Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable
Current portion of long-term loans payable
Accounts payable-otherAccrued expenses
Income taxes payable
Accured consumption taxes
Advances received
Deposits received
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Tenant leasehold and security deposits in trust
Total noncurrent liabilities
Total liabilities
Net assets
Unitholders' equity
Unitholders' capital
Surplus
Unappropriated retained earnings (undisposed loss)
Total surplus
Total unitholders' equity
Valuation and translation adjustments
Deferred gains or losses on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets

*1
*1

*1

*2

-4-

29,9093,000,000
40,217
424
946
4,158
157,6389,390
3,242,684
15,500,000
240,015
15,740,015
18,982,699(in thousands of yen)
Third Fiscal Period(As of July 31, 2013)

*1
*1

*1

57,0952,830,000
5,500,000
49,024
405
944
1,836
160,145
9,670
8,609,122
10,000,000
245,320
10,245,320
18,854,443

13,773,456

13,773,456

463,620463,620
14,237,076

406,661
406,661
14,180,117-24,023-24,023
14,213,052
33,195,752-8,930-8,93014,171,186
33,025,629*2

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)(2) Statements of Income and Retained Earnings
Second Fiscal Period
August 1, 2012 toJanuary 31, 2013
Operating revenues
Rent revenue-real estate
Other lease business revenue
Total operating revenues
Operating expenses
Expenses related to rent business
Asset management fees
Asset custody fees
Administrative service fees
Directors' compensation
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Interest on refund
Total non-operating income
Non-operating expenses
Interest expenses
Derivatives-related expenses
Borrowing expenses
Amortization of deferred organization costs
Amortization of investment unit issuance costs
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes
Current
Deferred
Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)

*1
*1

*1

-5-

1,021,344
92,813
1,114,157
367,194
74,405
2,062
11,2204,500
39,402498,785
615,371(in thousands of yen）
Third Fiscal Period
February 1, 2013 toJuly 31, 2013

*1
*1

*1

1,018,433
117,075
1,135,509
442,618
70,886
2,074
11,0174,500
51,247582,345
553,163

17
221
239

37
37

85,743
4,308
43,2095,300
12,501
151,064
464,546464,546

74,611
11,913
41,592
5,214
12,298145,629
407,571407,571949
9958
463,58831
463,620952-0
952
406,61941
406,661

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)(3) Statements of Changes in Net Assets

Unitholders' equity
Unitholders' capital
Balance at the beginning of current period
Changes of items during the period
Total changes of items during the period
Balance at the end of current period
Surplus
Unappropriated retained earnings (undisposed loss)
Balance at the beginning of current period
Changes of items during the period
Dividends from surplus
Net income
Total changes of items during the period
Balance at the end of current period
Total Surplus
Balance at the beginning of current period
Changes of items during the period
Dividends from surplus
Net income
Total changes of items during the period
Balance at the end of current period
Total unitholders' equity
Balance at the beginning of current period
Changes of items during the period
Dividends from surplus
Net income
Total changes of items during the period
Balance at the end of current period
Valuation and translation adjustments
Deferred gains or losses on hedges
Balance at the beginning of current period
Changes of items during the period
Net change of items other than owners' equity
Total changes of items during the period
Balance at the end of current period
Total valuation and translation adjustments
Balance at the beginning of current period
Changes of items during the period
Net change of items other than owners' equity
Total changes of items during the period
Balance at the end of current period
Total net assets
Balance at the beginning of current period
Changes of items during the period
Dividends from surplus
Net income
Net change of items other than owners' equity
Total changes of items during the period
Balance at the end of current period

Second Fiscal Period
August 1, 2012 toJanuary 31, 2013

(in thousands of yen)
Third Fiscal Period
February 1, 2013 toJuly 31, 2013

13,773,456

13,773,456

13,773,456

13,773,456

*1

-6-

*1

254,868

463,620-254,836
463,588
208,751463,620-463,578
406,619-56,958
406,661

254,868

463,620-254,836
463,588
208,751463,620-463,578
406,619-56,958
406,661

14,028,324

14,237,076-254,836
463,588
208,751
14,237,076-463,578
406,619-56,958
14,180,117--24,023-24,023-24,023-24,023

15,092
15,092-8,930--24,023-24,023-24,023-24,023

15,092
15,092-8,93014,028,324

14,213,052-254,836
463,588-24,023
184,728
14,213,052-463,578
406,619
15,092-41,866
14,171,186

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)(4) Distributions
Second Fiscal Period(From August 1, 2012 to January 31, 2013)

Third Fiscal Period(From February 1, 2013 to July 31, 2013)

I. Retained earnings at the end of
period¥463,620,113¥406,661,143

II. Total distributions¥463,578,800¥406,621,600

Distributions per unit

¥6,145¥5,390III. Retained earnings brought
forward to the next period¥41,313¥39,543

In accordance with the policy described in
Article 38-1 of its Articles of Incorporation,
the Investment Corporation determines thatthe amount of distribution shall exceed theamount equivalent to 90% of its distributableprofit as stipulated in Article 67-15 of theSpecial Taxation Measures Law, and shall be
up to its profits as the maximum amount.
Following this policy, the Investment
Corporation has decided that it shall
distribute ¥463,578,800 which is the
maximum integral multiple to 75,440 units
issued and outstanding as the distribution of
earnings. Procedures for the distribution ofamounts exceeding distributable income are
outlined in Article 38-2 of the Investment
Corporation’s Articles of Incorporation. In thesecond fiscal period, the Investment
Corporation has decided not to distribute cash
in excess of distributable profit.

In accordance with the policy described in
Article 38-1 of its Articles of Incorporation,
the Investment Corporation determines thatthe amount of distribution shall exceed theamount equivalent to 90% of its distributableprofit as stipulated in Article 67-15 of theSpecial Taxation Measures Law, and shall be
up to its profits as the maximum amount.
Following this policy, the Investment
Corporation has decided that it shall
distribute ¥406,621,600 which is the
maximum integral multiple to 75,440 units
issued and outstanding as the distribution of
earnings. Procedures for the distribution ofamounts exceeding distributable income are
outlined in Article 38-2 of the Investment
Corporation’s Articles of Incorporation. In thethird fiscal period, the Investment
Corporation has decided not to distribute cash
in excess of distributable profit.

Method of calculating distribution
amount-7-

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)(5) Statements of Cash Flows(in thousands of yen)
Third Fiscal Period
February 1, 2013 toJuly 31, 2013

Second Fiscal Period
August 1, 2012 toJanuary 31, 2013
Net cash provided by (used in) operating activities
Income before income taxes

464,546

407,571

Depreciation and amortization
Amortization of deferred organization costs

194,501
5,300

194,877
5,214

Amortization of investment unit issuance costs

12,501

12,298Interest income

-17

-37

Interest expenses

85,74374,611

Derivatives-related expenses

4,308

11,913114

1,103

Decrease (increase) in consumption taxes refund receivable
Decrease (increase) in prepaid expenses

75,1959,341-5,689

Increase (decrease) in operating accounts payable-4,16023,036

Increase (decrease) in accounts payable-other

12,384

7,207

Increase (decrease) in accrued consumption taxes

4,158-2,321

Increase (decrease) in advances received

3,660

2,506

Decrease (increase) in long-term prepaid expenses
Other, net

29,717467

29,232657

Subtotal

897,762

762,181

Decrease (increase) in operating accounts receivable

Interest income received

17

37Interest expenses paid
Income taxes paid

-85,805-1,378-74,630-946

Net cash provided by (used in) operating activities

810,596686,642-16,273-32,592-11,690--405,011

Repayments of tenant leasehold and security deposits in trust-27,947-41,264

Proceeds from tenant leasehold and security deposits in trust

24,176

46,569Net cash provided by (used in) investing activities-52,636-411,396

Increase in short-term loans payable-

2,830,000

Decrease in short-term loans payable--3,000,000-250,983-462,889

Net cash provided by (used in) investing activities
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Purchase of investment securities

Net cash provided by (used in) financing activities

Dividends paid
Payments for purchase of derivatives-64,650-

Net cash provided by (used in) financing activities-315,633-632,889

Net increase (decrease) in cash and cash equivalents

442,326-357,643

Cash and cash equivalents at the beginning of period

1,060,305

1,502,632

Cash and cash equivalents at the end of period

*1

-8-

1,502,632*1

1,144,988

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)(6) Notes to the Going Concern
Not applicable(7) Important Accounting Standards
1. Evaluation standards Securities
and evaluation method of
Other securities
assetsThose with no fair value
Cost method through moving-average method
Concerning anonymous association equity interests, the method of incorporating theamount equivalent to equity interests corresponding to net amount of gain or loss
from anonymous association is adopted.
2. Depreciation of fixed (1) Property, plant and equipment (includes trust assets)
assets
The straight-line method is applied.
Useful lives of the assets ranging are as follows:
Buildings: 3 to 62 years
Structures: 3 to 25 years
Machinery and equipment: 8 to 30 years
Tools, furniture and fixtures: 30 years(2) Long-term prepaid expenses
The straight-line method is applied.
3. Accounting policies for (1) Deferred organization costs
deferred assets
Deferred organization costs are amortized over a period of 5 years under the straight-line
method.
(2) Unit issuance costs
Unit issuance costs are amortized over a period of 3 years under the straight-line method.
4. Accounting standards Property-related taxes including property taxes, city planning taxes and depreciable property
for revenues and expenses taxes are imposed on properties on a calendar year basis. These taxes are generally charged tooperating expenses for the period, for the portion of such taxes corresponding to said period.
Under Japanese tax regulations, the seller of the property is liable for these taxes on the property
from the date of disposal to the end of the calendar year in which the property is disposed. The
seller, however, is reimbursed by the purchaser for these accrued property-related tax liabilities.
When the Investment Corporation purchases properties, it typically allocates the portion of theproperty-related taxes related to the period following the purchase date of each property throughthe end of the calendar year. The amounts of those allocated portions of the property-related
taxes are capitalized as part of the acquisition costs of the related properties. There were no
capitalized property-related taxes as of January 31, 2013 and July 31, 2013.
5. Accounting for hedges(1) Hedge accounting method
The deferred hedge method is applied.
(2) Hedging instrumentsand risks hedged
Hedge instruments
The Investment Corporation enters into interest-rate cap transactions.
Risks hedged
Interest rates on debt.
(3) Hedging policy
The Investment Corporation enters into derivative transactions based on its risk management
policies with the objective of hedging risks in accordance with its Articles of Incorporation.
(4) Method of evaluating the effectiveness of hedging
As for the method of assessment of the effectiveness of the hedge in the period from theinception of the hedge to the time of judgment of its effectiveness, the cumulative changes incash flow of the hedged items and hedging instruments are compared and a judgment is madebased on changed amount, etc. Furthermore, assessment of the effectiveness of hedging
activities is omitted in the case of interest rate caps that do not meet the requirements for special
treatment as the important conditions regarding hedged items and hedging instruments are thesame and are clearly expected to have the effect of limiting the impact of interest rate volatility
within a certain range on an ongoing basis.

-9-

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)

6. The scope of cash and Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term
cash
equivalents
on investments which are highly liquid, readily convertible to cash and with insignificant risk ofstatements of cash flows
market value fluctuation, with maturities of 3 months or less from the date of purchase.
7.
Othersignificant
accounting
policies
utilized in the preparationof financial statements(1) Accounting method for trust beneficiary interests in real estate and other assets
The assets and liabilities as well as revenues and expenses of financial assets held in the form oftrust beneficiary interests in real estate and other assets are recorded in full in the Investment
Corporation’s balance sheets and statements of income.
Important line items included in accounting for financial assets and liabilities in the Investment
Corporation’s balance sheet are as follows:
1. Cash and deposits in trust
2. Buildings in trust, structures in trust, machinery and equipment in trust, tools, furniture andfixtures in trust and land in trust
3. Tenant leasehold and security deposits in trust(2) Accounting method for consumption tax
Consumption taxes are separately recorded. Non-deductible consumption taxes applicable to theacquisition of assets are included in the cost of acquisition for each asset.

- 10 -

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)(8) Notes to the Financial Statements(Notes to the Balance Sheets)* 1. Assets pledged as collateral and relevant secured liabilities as of January 31, 2013 and July 31, 2013 are as follows:(in thousands of yen)
Assets pledged as collateral

As of January 31, 2013

As of July 31, 2013

Cash and deposits in trust
Buildings in trust
Structures in trust
Machinery and equipment in trust
Tools, furniture and fixtures in trust
Land in trust

665,818
14,440,133
113,393
307,221
3,648
13,766,909

637,662
14,267,405
110,373
301,972
5,609
13,766,909

Total
Secured liabilities
Short-term loans payable
Current portion of long-term loans payable
Long-term loans payable

29,297,125

29,089,932

3,000,000
15,500,000

2,830,000
5,500,000
10,000,000

Total

18,500,000

18,330,000* 2. Minimum unitholders’equity pursuant to Article 67-4 of the Law Concerning Investment Trusts and Investment Corporations
Law(in thousands of yen)
As of January 31, 2013

As of July 31, 2013
50,00050,000- 11 -

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)(Notes to the Statements of Income and Retained Earnings)* 1. Breakdown of real estate rental business profit and loss
(in thousands of yen)
From August 1, 2012
to January 31, 2013
Rental and other operating revenues:
Rental revenues
Rental revenues from limited proprietary rights of landCommon area charges
Subtotal
Others:Parking space rental revenues
Miscellaneous
Subtotal
Total rental and other operating revenues
Property management fees and facility management fees
Utilities
Taxes
Repairs and maintenanceInsurance
Trust fees
Depreciation
OthersTotal property-related expenses
Net operating income

From February 1, 2013
to July 31, 2013

889,042
78,30953,991
1,021,344

884,944
78,31055,1781,018,433

41,472
51,34092,813
1,114,157

40,67376,402
117,075
1,135,509

79,525
16,56421
31,9872,359
8,700
194,501
33,534367,194
746,962

84,437
16,37859,69537,2432,230
8,700
194,877
39,056442,618
692,890(Notes to the Statements of Changes in Net Assets)* 1. Total number of authorized investment units and total number of investment units issued and outstanding are as follows:
From August 1, 2012
From February 1, 2013
to January 31, 2013
to July 31, 2013
Total number of authorized investment units
Total number of investment units issued and outstanding

5,000,000

5,000,000

75,44075,440(Notes to the Statements of Cash Flow)* 1. Reconciliation of balance sheet items to cash and cash equivalents at end of period in the cash flows statements(in thousands of yen)
As of January 31, 2013

As of July 31, 2013

Cash and deposits

836,814507,326

Cash and deposits in trust

665,818

637,662

Cash and cash equivalents

1,502,632

1,144,988- 12 -

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)(Notes to the Lease Transactions)Operating lease transactions (Lessor)
Unearned lease payments(in thousands of yen)
As of January 31, 2013

As of July 31, 2013

Due in 1 year

204,104

204,104

Due after 1 year
Total

5,986,425
6,190,530

5,884,373
6,088,478(Notes to the Financial Instruments)(A). Overview(1) Policy for financial instruments
The Investment Corporation procures funds for asset acquisitions, repairs, payment of distributions, repayment of loans, etc.
through loans from financial institutions, issuance of investment units and other means. With regard to the procurement ofinterest-bearing debts, the Investment Corporation ensures that it can effectively combine stable long-term funds with flexible
short-term funds. Management of surplus funds is undertaken through various bank deposits focusing on safety, liquidity andeffectiveness. The Investment Corporation uses derivatives for the purpose of hedging its exposure to changes in interest rates andother risks and does not enter into derivative transactions for speculative or trading purposes.
(2) Types of financial instruments and related risk
Bank deposits are for managing the Investment Corporation’s surplus funds and are exposed to credit risk such as the bankruptcy offinancial institutions at which funds are deposited. Investment securities represent equity investments in an anonymous association,
and are exposed to credit risk of the issuer and interest rate fluctuation risk.
Borrowings, which are made primarily for the purpose of procuring funds for the acquisition of real estate and trust beneficiaryinterests in real estate and have a repayment date of a maximum of 2 years and 9 months as of July 31, 2013, the end of the third
fiscal period, are exposed to liquidity risk where alternative funds may not be procured by the repayment date. Also, borrowings
with floating interest rates are exposed to interest rate fluctuation risk. Derivatives are used for the purpose of hedging interest rate
fluctuation risk for a certain portion of the borrowings.
(3) Risk management for financial instruments
a. Credit risk
While bank deposits are exposed to credit risk such as the bankruptcy of financial institutions at which funds are deposited, suchrisk is monitored by deposits in non-interest bearing ordinary savings accounts or with financial institutions with credit ratings
above a certain level. Investment securities represent equity investments in an anonymous association, and are exposed to credit riskof the issuer and interest rate fluctuation risk. The Investment Corporation regularly evaluates the results of operations and thefinancial condition of the issuer, etc. In utilizing derivatives, the Investment Corporation aims to mitigate counterparty risk such as
by transacting with financial institutions with favorable ratings.
b.

Market risk

While borrowings with floating rates are exposed to interest rate volatility risk, such risk is monitored by adjusting the rate of thebalance of borrowings with floating rates against the total borrowings according to the financial environment, interest rate
forecasts by continuous monitoring, etc. and by using derivatives, etc. A risk management policy is established with regard to the
execution and management of derivatives and such transactions are conducted based on this policy.
c.

Liquidity risk

Though borrowings are subject to liquidity risk, the Investment Corporation reduces such risk by spreading out payment due
dates and by diversifying financial institutions. Liquidity risk is also managed by such means as regularly checking the balanceof cash reserves.

- 13 -

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)(4) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market priceavailable, fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value,
different assumptions and factors could result in a different fair value.
(B). Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet and estimated fair value are shown in the following table.
As of January 31, 2013
(in thousands of yen)
Carrying amount
Estimated fair value
Difference(1) Cash and deposits
836,814
836,814(2) Cash and deposits in trust
665,818
665,818
Subtotal
1,502,632
1,502,632(1) Short-term loans payable
3,000,000
3,000,000(2) Long-term loans payable
15,500,000
15,500,000
Subtotal
18,500,000
18,500,000
Derivative transactions
36,31836,318
As of July 31, 2013

(1) Cash and deposits(2) Cash and deposits in trust
Subtotal(1) Short-term loans payable(2)Current portion of long-term loans payable(3) Long-term loans payable
Subtotal
Derivative transactions

Carrying amount
507,326
637,662
1,144,988
2,830,000
5,500,000
10,000,000
18,330,000
39,497(in thousands of yen)
Estimated fair value
Difference
507,326
637,662
1,144,988
2,830,000
5,500,000
10,000,000
18,330,000
39,497-Note 1: Methods to determine the estimated fair value of financial instruments and matters related to derivative transactions
Assets(1) Cash and deposits and (2) Cash and deposits in trust
Since these items are settled in a short period of time, their carrying amount approximates fair value.
Liabilities(1) Short-term loans payable
Since these items are settled in a short period of time with floating interest rates, their carrying amount approximates fair value.
(2) Current portion of long-term loans payable and (3) Long-term loans payable
Since these items have floating interest rates, market interest rates are reflected in the short term. Also, as the credit standing of theInvestment Corporation has not changed significantly since the loans were made, the fair value of the long term loans payable isbelieved to approximate the carrying amount and therefore is based on the carrying amount.

- 14 -

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)

Derivative transactions
Please refer to “Notes to the Derivative Transactions”.
Note 2: Financial instruments whose fair values are recognized to be extremely difficult to grasp(in thousands of yen)Classification
Investment securities *As of January 31, 2013-

As of July 31, 2013
405,922*Fair values of investment securities are not subject to disclosure of fair value as they have no market value and their fair values
are recognized to be extremely difficult to grasp.
Note 3: Redemption schedule for financial assets with maturities
As of January 31, 2013
Due in 1 year
or less
Cash and deposits
Cash and deposits in trust
Total

836,814665,818
1,502,632

Due after 3
years through4 years-(in thousands of yen)
Due after 4
Due after 5
years throughyears
5 years-

Due after 2
years through3 years-

Due after 3
years through4 years-(in thousands of yen)
Due after 4
Due after 5
years throughyears
5 years-

Due after 1
year through2 years
5,500,000
5,500,000

Due after 2
years through3 years
6,500,000
6,500,000

Due after 3
years through4 years
3,500,000
3,500,000(in thousands of yen)
Due after 4
Due after 5
years throughyears
5 years-

Due after 1
year through2 years
6,500,000
6,500,000

Due after 2
years through3 years
3,500,000
3,500,000

Due after 3
years through4 years-(in thousands of yen)
Due after 4
Due after 5
years throughyears
5 years-

Due after 1
year through2 years-

Due after 2
years through3 years-

As of July 31, 2013
Due in 1 year
or less
Cash and deposits
Cash and deposits in trust
Total

507,326
637,662
1,144,988

Due after 1
year through2 years-

Note 4: Redemption schedule for loans payable
As of January 31, 2013
Due in 1 year
or less
Short-term loans payable
Long-term loans payable
Total

3,000,000
3,000,000

As of July 31, 2013
Due in 1 year
or less
Short-term loans payable
Long-term loans payable
Total

2,830,000
5,500,000
8,330,000- 15 -

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)(Notes to the Derivative Transactions)(1) Transactions not subject to hedge accounting
As of January 31, 2013 and as of July 31, 2013 : Not applicable(2) Transactions subject to hedge accounting
As of January 31, 2013
Hedge
Type ofaccounting
derivative
methodtransactions

Hedged items

Contract amount(in thousands of yen)

Fair value(in thousands of yen)Calculation
method for
applicable fair value

Maturing
after 1 year
Accounting
method, inprinciple

Interest-rate cap
transaction:

Long-termloans payable

As of July 31, 2013
Hedge
Type ofaccounting
derivative
methodtransactions

Hedged items

10,000,000

10,000,000

Contract amount(in thousands of yen)

36,318Fair value(in thousands of yen)

Based
on
the
amount provided bycounterparty
financial institutions

Calculation
method for
applicable fair value

Maturing
after 1 year
Accounting
method, inprinciple

Interest-rate cap
transaction:

Long-termloans payable

10,000,000

10,000,000

39,497

Based
on
the
amount provided bycounterparty
financial institutions(Notes to the Tax-Effect Accounting)
The significant components of deferred tax assets and liabilities:(in thousands of yen)
As of January 31, 2013
Deferred tax assets:
Enterprise tax payable
Deferred gains or losses on hedges
Subtotal deferred tax assets
Valuation allowance
Total deferred tax assets

As of July 31, 2013

16
8,648
8,665
-8,648
16

16
3,855
3,872
-3,85516

The significant differences between the statutory tax rate and the effective tax rate:
From August 1, 2012
to January 31, 2013
Statutory tax rate
36.59%
Deductible cash distributions-36.51Others0.13
Effective tax rate
0.21%

From February 1, 2013
to July 31, 201336.59%-36.500.14
0.23%- 16 -

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)(Notes to the Related-Party Transactions)
1．Parent Company, major corporate unitholders and other
Second Fiscal Period (August 1, 2012 to January 31, 2013) and Third Fiscal Period (February 1, 2013 to July 31, 2013): Not
applicable
2．Affiliated companies and other
Second Fiscal Period (August 1, 2012 to January 31, 2013) and Third Fiscal Period (February 1, 2013 to July 31, 2013): Not
applicable
3．Fellow subsidiary companies and other
Second Fiscal Period (August 1, 2012 to January 31, 2013) and Third Fiscal Period (February 1, 2013 to July 31, 2013): Not
applicable
4．Directors, major individual unitholders and other
Second Fiscal Period (August 1, 2012 to January 31, 2013)
Classification

Name

Principal business /Position

Ratio ofvotingrightsheld (%)

Relationship
Position held Relation to
concurrently.
the entity

Nature of transaction

Directors
and Close
Relatives

Akira
TanakaExecutive Director
for the Investment
Corporation and
CEO and Presidentof Kenedix
Residential Partners,
Inc.

－

Executive Director for theInvestment Corporation and
CEO and President ofKenedix Residential
Partners, Inc.

Payment of asset
management fee to
Kenedix Residential
Partners, Inc(Note 1)

Transaction
amount（inthousandsof yen)(Note 2)
74,405

Account

Accounts
payableother

Balance at theend of period(in thousandsof yen)(Note 2)25,732

Note 1: Akira Tanaka serves as a representative of the third party (Kenedix Residential Partners, Inc.), and the asset management fee is establishedin the Articles of Incorporation of the Investment Corporation.
Note 2: Consumption taxes are not included in the transaction amount, but are included in the balance at the end of period.

Third Fiscal Period (February 1, 2013 to July 31, 2013)
Classification

Name

Principal business /Position

Ratio ofvotingrightsheld (%)

Relationship
Position held Relation to
concurrently
the entity

Nature of transaction

Directors
and Close
Relatives

Akira
TanakaExecutive Director
for the Investment
Corporation and
CEO and Presidentof Kenedix
Residential Partners,
Inc.

－

Executive Director for theInvestment Corporation and
CEO and President ofKenedix Residential
Partners, Inc.

Payment of asset
management fee to
Kenedix Residential
Partners, Inc.
(Note 1)

Transaction
amount （inthousands ofyen)(Note 2)
(Note 3)74,886

Account

Balance at theend of period(in thousandsof yen)(Note 3)

Accounts
payableother

22,577Note 1: Akira Tanaka serves as a representative of the third party (Kenedix Residential Partners, Inc.), and the asset management fee is establishedin the Articles of Incorporation of the Investment Corporation.
Note 2: Asset management fee includes ¥4,000 thousand related to the acquisition of investment securities and is accounted for in the book value
for the individual assets.
Note 3: Consumption taxes are not included in the transaction amount, but are included in the balance at the end of period.

- 17 -

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)(Notes to the Investment and Rental Properties)
The Investment Corporation owns real estate for rental purposes in the Tokyo Metropolitan Area and other regional areas for the
purpose of generating rental revenues.
The book value and fair value concerning the above real estate for rental purposes are as follows.
(in thousands of yen)
Second Fiscal Period
from August 1, 2012
to January 31, 2013

Third Fiscal Period
from February 1, 2013
to July 31, 2013

31,563,998-145,313
31,418,684
31,746,000

31,418,684-179,036
31,239,647
32,180,000

Book value
Balance at the beginning of period
Changes during the period
Balance at the end of period
Fair value at the end of period
Note 1: Book value excludes accumulated depreciation from acquisition costs.
Note 2: Among changes in the amount of real estate for rental purposes that occurred during the second fiscal period, the principal decrease wasdepreciation (¥194,501 thousand) and in the third fiscal period the principal decrease was depreciation (¥194,877 thousand).
Note 3: The fair value is the appraisal value or the survey value determined by outside appraisers.

Income and loss in the fiscal periods ended January 31, 2013 and July 31, 2013 for real estate for rental purposes is listed in“Notes to the Statements of Income and Retained Earnings”.

(Notes to the Segment Information)
Segment information for the period end from August 1, 2012 to January 31, 2013 and from February 1, 2013 to July 31, 2013 is
as follows:(A) Segment information
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has noreportable segment subject to disclosure.
(B) Related information(1) Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of theoperating revenue on the statement of income and retained earnings.
(2) Information about each geographic area(a) Net sales
Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenue on thestatement of income and retained earnings.
(b) Property, plant and equipment
Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts for over 90% of the amountof property, plant and equipment on the balance sheet.
(3) Information about each major customer
Disclosure is omitted because net sales to a single external customer account for less than 10% of the operating revenue on thestatement of income and retained earnings.

- 18 -

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)(Notes to the Per Unit Information)
From August 1, 2012
to January 31, 2013
Net asset value per unit
Net income per unit
Weighted average number of units (units)¥188,402¥6,14575,440From February 1, 2013
to July 31, 2013
¥187,847¥5,38975,440Note 1: The weighted average number of units outstanding of 75,440 was used for the computation of the amount of net income per unit for theperiods ended January 31, 2013 and July 31, 2013, respectively. Net income per unit after adjusting for residual units is not included
because there were no residual investment units.
Note 2: The basis for calculating net income per unit is as follows:

From August 1, 2012
to January 31, 2013

From February 1, 2013
to July 31, 2013

463,588463,588
75,440406,619
406,619
75,440Net income (in thousands of yen)
Net income not available to ordinary unitholders (in thousands of yen)
Net income available to ordinary unitholders (in thousands of yen)
Weighted average number of units during the period (units)(Notes to Important Subsequent Events)①Acquisition of Properties
On August 7, 2013, the Investment Corporation acquired the 60 properties described below (total acquisition price: ¥68,556,000
thousand ) .
In addition, the following acquisition prices do not include the acquisition costs, property taxes, city-planning taxes andconsumption taxes, etc.
Property
number

Property nameLocation(city or word, prefecture)
Minato ward, Tokyo

SellerAcquisition price(in thousands of yen)

G.K. KDX10

3,000,000

T-13

KDX Residence Shirokane I

T-14

KDX Residence Shirokane III

Minato ward, Tokyo

G.K. KDX9

2,900,000

T-15

KDX Residence Shirokane II

Minato ward, Tokyo

G.K. KDX9

2,800,000

T-16

KDX Residence Minami-aoyama

Minato ward, Tokyo

G.K. KDX10

2,230,000

T-17

KDX Residence Minami-azabu

Minato ward, Tokyo

G.K. KDX9

2,080,000

T-18

KDX Residence Shiba Koen

Minato ward, Tokyo

G.K. KDX10

1,781,000

T-19

KDX Residence Azabu East

Minato ward, Tokyo

G.K. KDX9

1,560,000

T-20

KDX Residence Takanawa

Minato ward, Tokyo

G.K. KDX9770,000

T-21

KDX Residence Nishihara

Shibuya ward, Tokyo

G.K. KDX9

1,450,000

T-22

KDX Residence Daikanyama II

Shibuya ward, Tokyo

G.K. KDX9

730,000

T-23

KDX Residence Sendagaya

Shibuya ward, Tokyo

G.K. KDX9

650,000

T-24

KDX Residence Nihombashi Suitengu

Chuo ward, Tokyo

G.K. KDX9

3,240,000

T-25

KDX Residence Nihombashi Hakozaki

Chuo ward, Tokyo

G.K. KDX10

1,147,000

T-26

KDX Residence Higashishinjuku

Shinjuku ward, Tokyo

G.K. KDX10

3,270,000

T-27

KDX Residence Yotsuya

Shinjuku ward, Tokyo

G.K. KDX9

2,260,000

T-28

KDX Residence Nishi-shinjuku

Shinjuku ward, Tokyo

G.K. KDX10

1,000,000

T-29

KDX Residence Kagurazaka

Shinjuku ward, Tokyo

G.K. KDX10

720,000

T-30

KDX Residence Futako Tamagawa

Setagaya ward, Tokyo

G.K. KDX9

1,250,000

T-31

KDX Residence Komazawa Koen

Setagaya ward, Tokyo

G.K. KDX10

920,000

T-32

KDX Residence Mishuku

Setagaya ward, Tokyo

G.K. KDX9

760,000

T-33

KDX Residence Yoga

Setagaya ward, Tokyo

G.K. KDX10

700,000

T-34

KDX Residence Shimouma

Setagaya ward, Tokyo

G.K. KDX10

600,000

T-35

Raffine Minami-magome

Ota ward, Tokyo

Y.K. KW 5th

1,250,000

T-36

KDX Residence Yukigaya Otsuka

Ota ward, Tokyo

G.K. KDX10

1,050,000

T-37

KDX Residence Denen Chofu

Ota ward, Tokyo

G.K. KDX10

1,000,000

T-38

KDX Residence Tamagawa

Ota ward, Tokyo

G.K. KDX9

776,000- 19 -

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)
T-39

KDX Residence Monzennakacho

Koto ward, Tokyo

G.K. KDX9

773,000

T-40

KDX Residence Okachimachi

Taito ward, Tokyo

G.K. KDX10

850,000

T-41

KDX Residence Moto-asakusa

Taito ward, Tokyo

G.K. KDX10

800,000

T-42

KDX Residence Itabashi Honcho

Itabashi ward, Tokyo

G.K. KDX10

620,000

T-43

KDX Residence Azusawa

Itabashi ward, Tokyo

G.K. KDX9

550,000

T-44

KDX Residence Tobu Nerima

Nerima ward, Tokyo

G.K. KDX9420,000

T-45

KDX Residence Yokohama Kannai

Yokohama, Kanagawa

G.K. KDX10

800,000

T-46

KDX Residence Miyamaedaira

Kawasaki, Kanagawa

G.K. KDX9

999,000

T-47

KDX Residence Machida

Sagamihara, Kanagawa

G.K. TSM108

1,800,000

R-9

KDX Residence Odori Koen

Sapporo, Hokkaido

G.K. KDX9

765,000

R-10

KDX Residence Kikusui Yojo

Sapporo, Hokkaido

G.K. KDX9

830,000

R-11

KDX Residence Toyohira Koen

Sapporo, Hokkaido

G.K. KDX9

445,000

R-12

KDX Residence Kamisugi

Sendai, Miyagi

G.K. KDX10

700,000

R-13

KDX Residence Ichiban-cho

Sendai, Miyagi

G.K. KDX10

530,000

R-14

KDX Residence Kotodai

Sendai, Miyagi

G.K. KDX9

520,000

R-15

KDX Residence Izumi Chuo

Sendai, Miyagi

G.K. KDX9

480,000

R-16

KDX Residence Higashi-sakura I

Nagoya, Aichi

Y.K. KW Property 7

2,350,000

R-17

KDX Residence Higashi-sakura II

Nagoya, Aichi

G.K. KDX10

900,000

R-18

KDX Residence Atsuta Jingu

Nagoya, Aichi

G.K. KDX9

840,000

R-19

KDX Residence Nishi-oji

Kyoto, Kyoto

G.K. KDX9

813,000

R-20

KDX Residence Saiin

Kyoto, Kyoto

G.K. KDX9

440,000

R-21

KDX Residence Namba

Osaka, Osaka

G.K. KDX9

1,410,000

R-22

KDX Residence Namba-minami

Osaka, Osaka

G.K. KDX9

1,350,000

R-23

KDX Residence Shin-osaka

Osaka, Osaka

G.K. KDX9

510,000

R-24

KDX Residence Ibaraki I ・II

Ibaraki, Osaka

G.K. KDX10

1,275,000

R-25

KDX Residence Toyonaka-minami

Toyonaka, Osaka

G.K. KDX9

740,000

R-26

KDX Residence Moriguchi

Moriguchi, Osaka

G.K. KDX9

551,000

R-27

KDX Residence Sannomiya

Kobe, Hyogo

G.K. KDX9

1,080,000

R-28

Ashiya Royal Homes

Ashiya, Hyogo

G.K. KDX10

1,360,000

R-29

KDX Residence Funairi Saiwai-cho

Hiroshima, Hiroshima

G.K. KDX9

588,000

R-30

KDX Residence Tenjin-higashi II

Fukuoka, Fukuoka

G.K. KDX9

680,000

R-31

KDX Residence Tenjin-higashi I

Fukuoka, Fukuoka

G.K. KDX9

370,000

R-32

KDX Residence Nishi Koen

Fukuoka, Fukuoka

G.K. KDX10

763,000

R-33

KDX Residence Hirao Josui-machi

Fukuoka, Fukuoka

G.K. KDX10

760,000－

68,556,000

－

Total

②The issue of new investment units
On July 17, 2013 and July 30, 2013 respectively, the Board of Directors of the Investment Corporation resolved to issue newinvestment units as detailed below in order to procure funds for acquisition of the above 60 properties etc. The payments werecompleted on August 6, 2013 through public offering and September 4, 2013 by way of third-party allotment. As a result of theissuance of new investment units, the Investment Corporation had total unitholders’ capital of ¥48,592,739,550 with 241,622
investment units outstanding as of September 4, 2013.
(Issuance of new investment units through public offering)
Total number of units issued：165,000 units (Domestic 122,500 units, International 42,500 units)
Issue Price (Offer Price)：¥217,327 per unit
Total Amount of the Issue Price (Offer Price)：¥35,858,955,000
Paid-in Value (Issue Value)：¥209,525 per unit
Gross Proceeds：¥34,571,625,000
Payment date：August 6, 2013- 20 -

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)(Issuance of new investment units by way of third-party allotment)
Total number of units issued：1,182 units
Paid-in Value (Issue Value)：¥209,525 per unit
Gross Proceeds：¥247,658,550
Payment date：September 4, 2013
Allottee：SMBC Nikko Securities Inc.
③Debt Financing
As of August 7, 2013, the Investment Corporation borrowed funds in order to procure funds for the acquisition of the above 60
properties, etc.
LenderSeriesAmount(in thousands of yen)Interest rate

Repayment date

Payment
methodRemarks

Sumitomo Mitsui Banking Corporation
3-A

The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Base rate (JPY TIBOR for 1-month
1,700,000 in JBA) + 0.40%
August 31, 2014

Full on
Unsecured/maturity Unguaranteed

Base rate (JPY TIBOR for 1-month
August 31, 2015
in JBA) + 0.45% (Note)

Unsecured/
Full onmaturity Unguaranteed

Base rate (JPY TIBOR for 1-month
8,500,000 in JBA) + 0.50% (Note)
August 31, 2016

Unsecured/
Full onmaturity Unguaranteed

11,000,000 Base rate (JPY TIBOR for 1-month August 31, 2017
in JBA) + 0.55% (Note)

Unsecured/
Full onmaturity Unguaranteed

Base rate (JPY TIBOR for 1-month
August 31, 2018
in JBA) + 0.60% (Note)

Unsecured/
Full onmaturity UnguaranteedAozora Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Aozora Bank, Ltd.
3-B

5,500,000

Resona Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Mizuho Trust & Banking Co., Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Aozora Bank, Ltd.

3-C

Sumitomo Mitsui Trust Bank, Limited
Resona Bank, Ltd.
Mizuho Trust & Banking Co., Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Aozora Bank, Ltd.

3-D

Resona Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Mizuho Trust & Banking Co., Ltd.
Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Aozora Bank, Ltd.

3-E

8,000,000

Resona Bank, Ltd.
Sumitomo Mitsui Trust Bank, Limited
Mizuho Trust & Banking Co., Ltd.
Mizuho Bank, Ltd.

3-F

3,000,000 1.0875% (Fixed rate)

Development Bank of Japan Inc.

August 31, 2018

Unsecured/
Full onmaturity Unguaranteed

Note: The Investment Corporation signed an interest-rate swap agreement to hedge the risk of interest rate fluctuations by converting theinterest rate payable into a fixed rate for the long-term borrowings with floating interests. (Series 3-C, 3-D, 3-E).
The interest rates are as follows:
Series 3-C

0.7870%

Series 3-D

0.9095%

Series 3-E

1.0520%(Omission of Disclosure)Notes to the Marketable Securities, the Equity-Method Income and Retained Earnings, Retirement Payment and Asset Retirement
Obligations are omitted as immaterial to disclose.

- 21 -

t0001

t0002

t0003

t0004

t0005

t0006

t0007

t0008

t0009

t0010

【Reference】

Earnings Performance for the Individual Properties for the 3rd Fiscal Period (February 1, 2013 to July 31, 2013)：181days

Location

Tokyo Metropolitan Area

Property No.

T-1

T-2

T-3

T-4

T-5

T-6

t0011

t0012

※As of July 31, 2013

T-7

T-8

T-9

T-10

T-11

T-12

Nichii Home
Tama Plaza(Limited
proprietary
rights of land)

Cosmo Heim
Motosumiyoshi(Limited
proprietary
rights of land)

Property Name

KDX
Daikanyama
Residence

KDX Yoyogi
Residence

KDX Odemma
Residence

KDX Iwamotocho Residence

KDX Bunkyo
Sengoku
Residence

KDX
Azumabashi
Residence

KDX Shimura
SakaueResidence

KDX Musashi
Nakahara
Residence

KDX Chiba Chuo
Residence

KDX Kawaguchi
Saiwai-cho
Residence

Acquisition Date

May 1, 2012 April 26, 2012 April 26, 2012 May 1, 2012

Price Information

May 1, 2012

May 1, 2012

May 1, 2012

May 1, 2012

May 1, 2012

May 1, 2012

May 1, 2012

May 1, 2012

Acquisition price ( In millions of yen )

4,700

1,320

1,775

822

1,488

650

2,830

960

1,750

637

1,480

1,150

Percentage of total portfolio

15.4%

4.3%

5.8%

2.7%

4.9%

2.1%

9.3%

3.2%

5.7%

2.1%

4.9%

3.8%

Net book value ( In millions of yen )

4,804

1,348

1,815

844

1,521

667

2,894

989

1,798

653

1,510

1,189

4,880

1,440

1,860

863

1,590

733

2,990

960

1,750

647

1,550

1,240

15.2%

4.5%

5.8%

2.7%

4.9%

2.3%

9.3%

3.0%

5.4%

2.0%

4.8%

3.9%

86

50

54

36

77

41

85

-

-

35

106

61

Leasable floor area (㎡)5,338.99

1,593.93

2,353.23

1,131.24

2,054.10

1,054.83

6,117.48--

2,123.46

3,546.91

2,491.66

Leased floor area (㎡)5,097.16

1,523.18

2,266.88

1,099.96

1,916.58

1,005.79

5,824.66--

2,123.46

3,438.51

2,406.67

Appraisal value at the end of period ( In millions of yen )Percentage of total appraisal value
Number of leasable residential units

Lease Information

Occupancy ratio

Income and Retained Earnings Information for the 3rd Fiscal Period

As of July 31, 2013

95.5%

95.6%

96.3%

97.2%

93.3%

95.4%

95.2%

-

-

100.0%

96.9%

96.6%

As of January 31, 2013

96.8%

97.0%

96.2%

100.0%

97.7%

93.1%

93.1%

-

-

88.5%

96.7%

95.2%

As of July 31, 2012

94.0%

95.7%

90.7%

100.0%

91.2%

95.5%

96.5%

-

-

97.2%

96.9%

90.1%

Operating periods

181days181days181days181days181days181days181days181days181days181days181days181days①Rental and other operating revenues ( In thousands of yen )153,268

47,15854,932

27,754

50,11424,438

101,922

34,56043,75025,32364,46749,082

Rental revenues

131,766

43,14850,623

26,328

46,106

22,60590,462

34,56043,75022,86057,92644,226

Other operating revenues

21,501

4,009

4,308

1,426

4,008

1,832

11,460

-

-

2,463

6,541

4,856

38,21910,06814,158

6,631

11,031

7,700

22,112

604

1,010

7,127

15,075

11,077

Property management fees

12,479

4,310

4,852

2,408

3,851

3,434

8,185

-

-

3,151

5,866

4,788

Taxes

9,062

2,286

2,835

1,254

2,403

1,295

5,728

598

1,010

1,575

3,909

2,800

Utilities

4,716

551

556

430

590

299

1,140

-

-

473

824

592

Repairs and maintenance

5,217

1,188

2,752

1,272

1,860

972

3,688

-

-

657

1,729

1,224

②Property-related expenses ( In thousands of yen )

240

64

88

42

79

45

215

-

-

68

143

99

6,503

1,666

3,073

1,221

2,246

1,653

3,153

6

-

1,202

2,602

1,571

③NOI（＝①-②） ( In thousands of yen )115,048

37,08940,773

21,12339,083

16,737

79,81033,95542,74018,19649,39238,005④Depreciation ( In thousands of yen )14,927

5,123

10,495

5,191

6,431

4,880

21,248

-

-

4,009

17,091

7,208⑤Rental operating income （＝③-④） ( In thousands of yen )100,12131,96530,27815,93232,651

11,85758,561

33,95542,74014,18632,30030,797

Insurance
Trust fees and other expenses

Reference⑥Capital expenditures ( In thousands of yen )

5,000

104

161

208

491

-

470

-

-

910

-

543

⑦NCF （＝③-⑥） ( In thousands of yen )110,048

36,98540,612

20,914

38,591

16,737

79,33933,95542,74017,28549,392

37,462

Expense ratio （＝②／①）

24.9%

21.4%

25.8%

23.9%

22.0%

31.5%

21.7%

1.7%

2.3%

28.1%

23.4%

22.6%

Property tax for the year 2013 ( In thousands of yen )16,892

4,563

5,667

2,508

4,804

2,588

11,455

1,196

2,015

3,147

7,817

Unsecured

Unsecured

Assets pledged as collateral

SecuredSecuredSecuredSecuredSecured‐22‐

SecuredSecuredSecuredSecured

5,594

Securedr0001

r0002

r0003

r0004

r0005

r0006

r0007

r0008

20

【Reference】

Earnings Performance for the Individual Properties for the 3rd Fiscal Period (February 1, 2013 to July 31, 2013)：181days

Location

Other Regional Areas
R-6

R-7

Property No.

R-1

R-2

R-3

R-4

R-5

Property NameKDX Toyohira
Sanjo Residence

KDX Jozenji
Dori Residence

KDX Izumi
Residence

KDX Chihaya
Residence

KDX Sakaisuji
Hommachi
Residence

KDX Shimmachi KDX Takarazuka
Residence
Residence

KDX Shimizu
Residence

Acquisition Date

R-8

May 1, 2012

May 1, 2012

May 1, 2012

May 1, 2012

May 1, 2012

May 1, 2012

May 1, 2012

582

1,015

1,120

1,080

2,910

1,015

1,510

1,680

30,474

Percentage of total portfolio

1.9%

3.3%

3.7%

3.5%

9.5%

3.3%

5.0%

5.5%

100.0%Net book value ( In millions of yen )

605

1,055

1,150

1,114

2,967

1,037

1,545

1,725

31,239Appraisal value at the end of period ( In millions of yen )

647

1,130

1,170

1,160

3,010

1,110

1,640

1,810

32,180

2.0%

3.5%

3.6%

3.6%

9.4%

3.4%

5.1%

5.6%

100.0%

63

92

40

92

160

94

80

148

1,400

Lease Information

Leasable floor area (㎡)2,868.75

3,330.15

2,798.20

2,936.40

6,385.70

2,146.02

4,631.16

6,255.16

59,157.37

Leased floor area (㎡)2,868.75

3,330.15

2,731.74

2,905.10

5,798.71

2,077.53

4,631.16

5,852.09

56,898.08

As of July 31, 2013100.0%

100.0%

97.6%

98.9%

90.8%

96.8%

100.0%

93.6%

96.2%

As of January 31, 2013

85.8%

99.1%

92.1%

100.0%

93.0%

96.8%

92.8%

99.4%

95.1%

Income and Retained Earnings Information for the 3rd Fiscal Period

Price Information

May 1, 2012

Acquisition price ( In millions of yen )Operating periods

Percentage of total appraisal value
Number of leasable residential units※As of July 31, 2013

Total of 20
Properties

Occupancy ratio

As of July 31, 2012

①Rental and other operating revenues ( In thousands of yen )Rental revenues

94.1%

96.8%

87.1%

98.9%

91.7%

96.8%

87.1%

96.1%

181days181days181days181days181days181days181days181days

94.0%
181days ※ Total: Cost-weighted average management period (days)

29,03659,202

42,78847,811

104,858

40,61260,587

73,8381,135,509

26,35044,09434,91044,08696,656

39,07254,32664,571

1,018,433

2,685

15,108

7,877

3,724

8,201

1,539

6,261

9,266

117,075

9,791

12,188

10,117

9,875

25,835

7,169

10,885

17,059247,741

Property management fees

2,743

4,432

3,830

3,564

6,088

2,219

2,765

5,464

84,437

Taxes

1,648

2,515

1,646

2,618

7,634

1,889

2,874

4,107

59,695

Other operating revenues②Property-related expenses ( In thousands of yen )Utilities
Repairs and maintenance

701

897

294

854

1,573

555

608

718

16,378

2,374

2,353

1,552

1,246

2,953

708

1,236

4,253

37,243

92

113

98

111

279

82

146

216

2,230

2,230

1,876

2,694

1,480

7,306

1,714

3,253

2,299

47,756

Insurance
Trust fees and other expenses③NOI（＝①-②） ( In thousands of yen )19,24547,01332,67037,93579,02233,44349,701

56,778887,767④Depreciation ( In thousands of yen )

5,925

10,2409,090

10,00623,451

8,916

16,462

14,174

194,877⑤Rental operating income （＝③-④） ( In thousands of yen )692,890

Reference

13,31936,772

23,58027,92855,57024,52633,23942,604⑥Capital expenditures ( In thousands of yen )

243

6,943

-

-

595

-

167

-

15,840⑦NCF （＝③-⑥） ( In thousands of yen )19,001

40,07032,67037,93578,42633,44349,53456,778871,927

Expense ratio （＝②／①）

33.7%

20.6%

23.6%

20.7%

24.6%

17.7%

18.0%

23.1%

21.8%

Property tax for the year 2013 ( In thousands of yen )

3,291

5,546

3,290

5,236

15,260

3,776

5,744

8,213

118,611

Assets pledged as collateral

SecuredSecuredSecuredSecuredSecured‐23‐

SecuredSecuredSecuredKENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)(【Reference】Borrowings)
Borrowings on a financial institution basis as of July 31, 2013 are as follows:(in thousands of yen)Classification

LenderShort-termloans payable

Sumitomo Mitsui
Banking
Corporation
The Bank ofTokyo-Mitsubishi
UFJ, Ltd.
Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Banking
Corporation
The Bank ofTokyo-Mitsubishi
UFJ, Ltd.
Sumitomo Mitsui
Banking
Corporation
Sub Total

Current
portion of
long-termloans payable

Long-termloans payable

Sumitomo Mitsui
Banking
Corporation(Note 2)
Aozora Bank,
Ltd.
(Note 2)The Bank ofTokyo-Mitsubishi
UFJ, Ltd.
(Note 2)
ResonaBank ,Ltd.
(Note 2)
Sub Total

1,000,000

Increaseduring theperiodDecreaseduring theperiodBalance atthe end of
period-1,000,000

Payment
due date(Note 3)(Note 8)Use

Remarks(Note 5)

Secured/Non-guaranteed(Note 9)(Note 5)

Secured/Non-guaranteed(Note 9)(Note 5)

Secured/Non-guaranteed(Note 9)-1,000,000-

1,000,000-

1,000,000-

1,000,000-

0.769%

April
30,2013

1.169%

April
30,2013(Note 6)-1,000,000-

1,000,000

0.650%

April
30,2014-1,000,000-

1,000,000

0.650%

April
30,2014-830,000-

830,000

1.100%

April
30,2014(Note 7)3,000,000

2,830,000

3,000,000

2,830,000

2,000,000--

2,000,000

1,500,000--

1,500,000
0.809%

April
30,20141.060%

April
30,2015--

1,000,000

1,000,000--

1,000,000

5,500,000--

5,500,000

Aozora Bank,
Ltd.

2,000,000--

2,000,000

The Bank ofTokyo-Mitsubishi
UFJ, Ltd.

2,000,000--

2,000,000

Resona Bank,
Ltd.

1,500,000

Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Banking
Corporation
The Bank ofTokyo-Mitsubishi
UFJ ,Ltd.

Averageinterest rate

(Note 4)1,000,000

Sub Total
Total

Balance atthebeginning of
period--1,500,000

1,000,000--

1,000,000

2,500,000--

2,500,000
1.053%

1,000,000--

1,000,000

10,000,000--

10,000,000

18,500,000

2,830,000

3,000,000

18,330,000- 24 -

April
30,2016

KENEDIX RESIDENTIAL INVESTMENT CORPORATION (3278)
Note 1: Annual repayments of long-term loans payable (except for current portion of long-term loans payable) scheduled for the next five years after the balance
sheet date are as follows:(in thousands of yen)
Due after 1 year
through 2 years
Long-term loans payable

Due after 2 years
through 3 years

6,500,000

Due after 3 years
through 4 years

3,500,000

Due after 4 years
through 5 years--

Note 2: Borrowings listed in the current potion of long-term payable were listed in long-term payable in the previous fiscal period.
Note 3: All debts are borrowings at a floating rate.
Note 4: Average interest rates are the weighted average during the period and figures are rounded to the nearest third decimal place. Also, with regard to borrowings
for which interest rate cap transactions were implemented in order to hedge the interest rate volatility risk, the weighted average interest rates taking into
consideration the effects of the interest rate caps are indicated.
Note 5: All debts were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate (ancillary expenses are included) andrepayment of debts.
Note 6: ¥170 million was repaid on March 31, 2013 and ¥830 million was repaid on the final principal repayment date.
Note 7: ¥100 million will be repaid on March 31, 2014 and ¥730 million will be repaid on the final principal repayment date. Also, if an early repayment is made on
the principal of the short-term borrowing before March 31, 2014, the amount of repayment of principal with March 31, 2014 as the principal repayment date
will be the amount where the total of the principal of the short-term borrowing repaid based on the said early repayment is deducted from the scheduled
principal repayment amount of ¥100 million.
Note 8: Except for the above (Note 6 and 7), all the repayment methods of debt financing are lump-sum repayments on the due date.
Note 9: The assets that are pledged as collateral are KDX Daikanyama Residence, KDX Yoyogi Residence, KDX Odemma Residence, KDX Iwamoto-cho Residence,
KDX Bunkyo Sengoku Residence, KDX Azumabashi Residence, KDX Shimura Sakaue Residence, KDX Musashi Nakahara Residence, KDX Chiba Chuo
Residence, KDX Kawaguchi Saiwai-cho Residence, KDX Toyohira Sanjo Residence, KDX Jozenji Dori Residence, KDX Izumi Residence, KDX Chihaya
Residence, KDX Sakaisuji Hommachi Residence, KDX Shimmachi Residence, KDX Takarazuka Residence and KDX Shimizu Residence, for a total of 18
properties.

- 25 -