Semiannual Report
28th Fiscal Period
November 1, 2018–April 30, 2019

Characteristics of Kenedix Office Investment Corporation
The Investment Corporation aims to maximize the profit of unitholders by investing and managing mainly in
mid-size office buildings in the Tokyo Metropolitan Area, thereby achieving stable earnings and sustainablegrowth of assets under management.

Tokyo
metropolitan
area

and

Mid-sized officebuildings

Tokyo metropolitan area investment ratio (Note1)
Tokyo
metropolitan
area

Other regional areas

18.5%(central 5 wards)

Tokyo metropolitan areaTokyo
metropolitan area

81.4%

52.8%

(As of April 30, 2019)Mid-sized office building investment ratio (Note1)
Others

Office bldgs.
(other)

0.6%

14.2%
Mid-sized office buildings

85.0%(As of April 30, 2019)(excluding central 5 wards)）

28.5%

Characteristics and attractiveness of mid-size office buildingsin the Tokyo Metropolitan Area

Abundant number of properties
The ratio of medium-sized office buildings (total floor area of 500 tsubo or more but less than 3,000 tsubo) in the 5 central
wards of Tokyo is 83.0% (Note 2) (Source 1). We believe that the number of mid-sized office buildings is larger than that of largesized office buildings, so there are many excellent investment opportunities, and that they are more efficient in operation
than small-sized office buildings.

High liquidity
Transaction prices for mid-sized office buildings range from approx. 1 billion yen to 10 billion yen, and the ratio of thesetransactions to the total number is 61.7% (Source 2) (the ratio of trading volume between 1 billion yen and 10 billion yen) while
they are relatively-actively traded.

Broad tenant base
The percentage of business establishments with fewer than 30 employees, which are the main users of mid-sized officebuildings, is high with a 92.2% (Source 3) in Tokyo. As such, we believe that even if vacancies occur, new borrowers will be relatively
easy to be found and that we will be able to maintain high occupancy rates.

Favorable supply-demand balance on leasing market
The percentage of small and mid-sized buildings built 20 years or more ago in Tokyo 23 wards (leased area basis) is
82%(Source 4), and new supply is limited compared to large-sized office buildings. Therefore, we are able to secure competitiveness by appropriately managing and operating these buildings, continuing to renew their facilities, and carrying out
value-upgrading works.
2

Table of contents

We contribute to the sustainable growth ofsociety through activities such as providing a
comfortable office environment.
Please refer to "Initiatives for ESG" on page 14 for
information on the contribution activities of the Investment
Corporation.

Image of a typical mid-sized office building

Characteristics of Kenedix Office Investment Corporation

2

Results for 28th Fiscal Period (April 2019) andFuture Initiatives

4

Message from the Management

6

External Growth

10Internal Growth12

Initiatives for ESG

14

Financial Strategy

15

Approx. 2 elevators

Financial Section

Around 100-150
tsubo per floor ofrental area

8-10 stories
Total floor area:
500-3,000 tsubo

Independent Auditor’s Report

17

Balance Sheet

18

Statement of Income and Retained Earnings

20

Statement of Changes in Net Assets

20

Statement of Cash Flows21

Notes to the Financial Statements

22

Investor and Property Information

Note 1 :Note 2 :		Unitholders’ Information

40

Portfolio

42

Shown as acquisition price ratio for each category to the total acquisition price, rounded down to the first decimal place.
Percentage of number of rental office buildings located in the 5 central wards of Tokyo that are surveyed by CBRE K.K. by building size (as of the end of
September 2016).

Source 1: Based on a survey conducted by CBRE K.K. at the request of the Asset Management Company.
Source 2: Compiled by the Asset Management Company based on “the number of office building transactions by transaction size (FY2008-FY2018)” from 		“Real Estate Transactions Study” by Urban Research Institute Corporation, a think tank specializing in real estate in Mizuho Financial Group.
Source 3: Compiled by the Asset Management Company based on “2014 Economic Census for Business Frame Tokyo (revised results) (as of March 27, 2017)”.
Source 4: Compiled by the Asset Management Company based on “Tokyo 23 Wards | Office Stock Pyramid 2019” published by XYMAX REAL ESTATE
典型的な中規模オフィスビルのイメージ
INSTITUTE Corporation on January 23, 2019.
Refer to the following for the definitions of each term used in this document.
“5 wards of central Tokyo” refer to Chiyoda, Chuo, Minato, Shinjuku and Shibuya Wards.
• エレベーター• ２基程度“Tokyo Metropolitan Area” refers to Tokyo, Kanagawa, Saitama, and Chiba prefectures.
• “Other Regional Areas” refer to regional core cities such as government ordinance-designated cities.
• Kenedix Office Investment Corporation is referred to as “the Investment Corporation” or “KDO” and Kenedix Real Estate Fund Management, Inc., “the AssetManagement Company” or “KFM”.
• “Mid-sized office buildings” as defined by the Investment Corporation refer to rental office buildings whose main use under the Building Standards Act isoffice and whose total floor area of the entire building stated in the certificate of all registered matters fulfills the criteria of 13,000 m2 or less in the 23 wardsof Tokyo and 20,000 m2 or less outside the 23 wards of Tokyo.

1フロア当たりの
貸室面積100～150坪前後

８～10 階建
延床面積
500～
3,000 坪Kenedix Office Investment Corporation3

Results for 28th Fiscal Period (April 2019) and Future Initiatives

28th fiscal period (Apr. 2019)
Distributions per unit

13,719 yen+1.9% period over period+0.7% compared with forecast (Note)
Note : As of December 12, 2018

28th fiscal period (Apr. 2019) results
Asset size

External
growthInternal
growthFinancialstrategy

Portfolio NOI yield

415.8 billion yen

560 million yen

4.9 %Continue strategic asset reshuffle
and selective investment

Frame Jinnan-zaka (quasi co-ownershipinterest of 51%) soldProfitability improved due to ongoingasset reshuffle, etc.

Occupancy rate

Unit rent increase rate
upon tenant turnover(Total monthly rent (Increase) during the 28th fiscal period

Increase in rent upon rent revision

99.2 %

20.3 %

9.0 million yen

Maintained high occupancy rates due
to strong demand from tenants

Increase in unit rent due to strategic
attraction of tenants, etc.

Extended a track record through continued
proactive negotiations for upward rent revisionInterest-bearing debt
average interest rate

Interest-bearing debt ratio (LTV)

Borrowing capacity for acquisition(Up to LTV 45%)

1.04 %

41.7%

Reduced interest costs byrefinancing

4Gain on sale of real estate

Issued KDO’s first green bonds.

Approx.

26.0 billion yen

Maintain tactfulness forselective investment

29th fiscal period (Oct. 2019)
Distribution per unit (forecast) (Note)

13,370 yen
Note : Forecast as of June 12, 2019 calculated under certain assumptions.

Future efforts■ Aim for further growth through selective investments utilizing borrowing capacity

for acquisition■ Improve portfolio quality by continuing asset reshuffle■ Continuously focus on changes in demand for office locations due to changes in working styles■ Continuously increase unit rent by maintaining high occupancy rate and tenant turnover■ Narrow the gap between rents and market rents through active negotiations for rent increases■ Property management in response to changes in work styles and advances in information andcommunications technology■ Continuous reduction of interest costs through diversification of financing methods andborrowing periods■ Fund-raise from the direct financial market using green bonds, etc.
■ Continue conservative financial management with an interest-bearing debt ratio (LTV)of up to 45%

Kenedix Office Investment Corporation

5

Message from the Management

Achieve Sustainable Growth by Building a
Robust and Profitable Portfolio

Jiro Takeda
Director & COO, Head of Office REIT Department,
Kenedix Real Estate Fund Management, Inc.

6

Completed asset reshuffle as planned and steadily extended a track record of upward rent revision in 28th fiscal period
The distribution per unit for the fiscal period underIn addition, the average unit rent increase rate due toreview (28th fiscal period (April 2019)) was 13,719 yen,tenant turnover was 20.3% in the fiscal period under

an increase of 99 yen or 0.7%, from the forecast

review. Therefore, we believe that an increase in theof 13,620 yen. The dividend growth rate for the pastvacancy rate is an opportunity to raise the unit rent by

year was 5.9% and we were able to steadily increasetenant turnover in the current situation where tenant

dividends in the fiscal period under review.

demand is strong.

In the fiscal period under review, a gain on sale of realWith regard to rent revision with existing tenants, dueestate of 565 million yen was recorded from the sale of ato further focus on negotiations for rent increases, we

51% quasi co-ownership interest in Frame Jinnan-zakasucceeded in raising the monthly rent by 9 million yen,

as planned through the mutual transaction with a groupwhich exceeded the results of the previous fiscal period,of domestic general business corporation. Of thisresulting in a significant increase against the downward

amount, 265 million yen is expected to be appropriatedrent revision.

to distributions, and 299 million yen of the remaining

With regard to our financial strategy, under our con-amount is expected to be appropriated to reserve forservative financial management, we sought to reduce

reduction entry (internal reserve) as planned, and theaverage interest rates while paying attention to long-balance of reserve for reduction entry is expected toterm fixation and diversification of maturities.

be 2,775 million yen, reaching 6,476 yen per unit. Our

The interest-bearing debt ratio remained at a con-policy is to utilize the reserve for reduction entry in orderservative level of 41.7% at the end of the fiscal period

to realize stable and sustainable growth in dividends as

under review.

always.
The occupancy rate remained at a high level of 99.2%

In the fiscal period under review, KDO issued its firstgreen bonds. Through this bond issuance, we areat the end of the fiscal period under review, reflecting

proud to have been able to contribute to thethe favorable office leasing market.

development of the domestic green bond market by

The tenant turnover ratio rose 2.3% from the previous

strengthening initiatives for sustainability of KDO and by

fiscal period (27th fiscal period (October 2018)), but theproviding investment opportunities to investors who arevacancy backfilling is proceeding smoothly.

actively investing in ESG.

Kenedix Office Investment Corporation

7

Message from the Management

Acquired suburban office buildings that meet changing office needs

In 29th fiscal period (October 2019), we acquired thetheme. At the same time, technology is evolving at ancompartmentalized ownership of Chofu Center Build-

accelerating pace. Recently, the introduction of Robotic

ing for 8.7 billion yen through negotiated transaction in

Process Automation (RPA), Artificial Intelligence (AI), andcoordination with our sponsor, Kenedix, Inc. This is a

mobile work are becoming increasingly popular.

suburban office building with good access to major sta-

Demand for office buildings in suburban major cities

tions in Tokyo and Chofu Station on the Keio Line as thein response to these changes in the social environment

nearest station, where commercial facilities are located.

is expected to grow further in the future, and we believe

With the declining birthrate, the labor shortage ofthat this property, which is surrounded by a relatively

enterprises is becoming increasingly serious. In order toquiet environment, adjoins commercial facilities for daily

overcome this problem, workers who are forced to takeneeds, will serve as a platform for such office needs forleave due to child or family care and elderly people areclose placement of residence and workplace.

being called for to participate in labor. With the emer-

In May 2019, we established a new commitment line

gence of the millennial generation in the labor market(bank credit line) for 3 megabanks as a new financing

and the penetration of the nation-wide work stylemethod. We intend to flexibly utilize this in preparation

reforms, the work-life balance through the introduction

for future fund demand.

of more flexible working styles has become a major

8Enhance unitholder value through a growth strategy centered on strong
internal growth against a backdrop of a favorable office leasing market
In terms of future external growth, we will continue toexisting tenants with the aim of continuing to increase

make selective investment by leveraging our proprietary

unit rents.

network and borrowing capacity in collaboration with
our sponsor, Kenedix, Inc.

In August this year, we will conduct our eighth customer satisfaction survey. In this survey, we will add

We intend to improve the quality of our portfolio byitems related to the concept of office life in the future,continuing to make positive efforts to reshuffle assets

such as the status of the introduction of telework bywith the aim of improving appraisal profit/loss andtenants, and we will also ascertain changes in the officeprofitability.

needs of tenants. By reflecting the opinions of tenants

In addition, we will closely monitor trends in redevelopment of urban office areas and trends in corporate

in property management, we intend to increase tenantsatisfaction and improve property profitability.

location strategies based on changes in working styles,

Under our financial strategy, we will continue toand reflect these trends in future acquisition strategies.

consider issuing green bonds while keeping an eye on

In terms of internal growth, while maintaining a highthe market environment, with the aim of reducing inter-occupancy rate, we will take advantage of the favorable

est costs by continuing to diversify our financing meth-market environment for office leases to increase unit

ods and borrowing periods.

rents by tenant turnover when tenants vacate. At thesame time, we will actively negotiate rent increases withThrough these initiatives, we aim to increase unitholder value as represented by distributions and net asset
value per unit (NAV).

Aim to be the mid-sized office building owner of choice for tenants
through management with an awareness of customer satisfaction
Recently, the risk of an economic downturn has been

In Tokyo, although the supply volume of large-scaleheightened due to factors such as the slowdown in thebuildings from 2021 to 2022 will temporarily stabilize,

global economy caused by intensifying trade frictionsome have begun to expect a gradual adjustment

between the United States and China, the increase inphase in the near future.

the consumption tax in Japan, etc. Against this back-In such an office rental market environment, we will

drop, there are signs that an increasing number of

not be satisfied with the current situation, but will in-firms, particularly in the manufacturing sector, which iscrease opportunities for dialogue with tenants. We willsusceptible to external demand, are concerned about

continue to make efforts to create an office environment

an economic downturn, and that firms are increasingly

in order to strengthen existing tenants' desire to

restraining their capital investment and hiring.

continue to occupy our building, with the aim of creat-

The office leasing market in Japan's major cities con-ing an even more satisfactory office building.

tinues to be tight due to robust demand for tenants.
Kenedix Office Investment Corporation

9External Growth

Property acquired in 29th fiscal period (Oct. 2019) and its effects
We acquired property that enhance the quality and profitability of our portfolio through negotiated transactions withsponsor support. We have increased the depth of our portfolio by incorporating an office building that can meet the­diversifying tenant needs.

Chofu Center Building (acquired on June 14, 2019)
Toho Gakuen College
Chofu Campus
Maruetsu
Chofu shop
The University ofElectro-Communications

Dentsudai-dori St.
Tenji
n-do
ri St.

Fudatenjin
ShrineKos

Acquired property
Chofu CenterB­ uilding
hu-

kaid

oS

t.

SEIYU
Chofu

Keio

Line

Chofu
PARCO

AEON Cinema
THEATUS Chofu

Line
Keio

Sag

amih

ara

AFLAC Square

Appraisal value

9,920 million yen (as of April 1, 2019)

Appraisal NOI yield (Note 1)

5.5%

Total floor area (Note 2)

31,536.86 m2

Occupancy rate

fu S

Chofu City
Green Hall

(Note 3)ta.

: Major retail property

ChofushiCentral Library
Chofu City Hall

20 Ikebukuro Station

8,700 million yen

Acquisition priceCompletion Date

Cho

Chofu
South Gate Building

minutesTachikawa Station Chuo Line
Bubaigawara
StationKichijoji Station
Meidai-mae
Station

Chofu Keio Line

15 Shinjuku Station

minutes

Nambu LineJanuary 1995

Keio Sagamihara Line

100% (as of May 31, 2019)

Odakyu Line

Noborito Station

Shinagawa Station

Medium-to long-term estimate

An office building located about 9 minutes walk from Chofu Station,
where commercial facilities are located, and is conveniently connected tomajor stations in Tokyo, and adjacent to residential area that meets needs
for close placement of residence and workplace.

Acquired at a price approx. 12% below the appraisal value due to­information provided by the ­sponsor, Kenedix, Inc.

28 TokyoStation

14 Shibuya Station
Keio Inokashira Line minutes

DPU Growth (Note 4)

Reason for acquisition

Located on the Musashino Plateau, which is relatively resistant to earthquakes and equipped with emergency power generators that can enable
operations for 72 hours even in an emergency, having the possibility tomeet the demand of tenants for BCP.

Akihabara
Stationminutes

Shimokitazawa
StationYamanote Line

Close to Chofu Interchange, the Chofu Expressway and have a parking
lot for 51 cars, making it a convenient office building for tenants who
often use cars for business purposes.

Ochanomizu Station

Chuo and Sobu Lines+390 yen/period
Increase in appraisal profit (Note 5)
Appraisal upon acquisition
Effect ofacquisition+1.2 billion yen
Improvement on portfolio NOI yield
after ­depreciation (Note 6)
End of 28th fiscal period(Apr. 2019)

Estimate after
acquisition

3.7%

3.8%

Note 1:	Calculated by dividing net operating income based on the direct capitalization method in the appraisal report as of April 1, 2019 by acquisition price(rounded to the first decimal place).
Note 2:	Total floor area of the whole building is presented. The Building is comprised of total of 3 compartments of office, parking and retail shop & pool. KDO
acquired a co-ownership interest in the land of 61.17%, a compartmentalized ownership of the entire office compartment and 20.37% of co-ownershipinterest in compartmentalized ownership of parking compartment.
The total occupied area of office compartment is 18,015.20 m2.
Note 3:	The completion date of compartmentalized ownership building of office compartment is stated.
Note 4:	Calculated by dividing the amount obtained by deducting the estimated financial cost of borrowings (3.0 billion yen) procured to fund the acquisition
from estimated NOI after depreciation of Acquired Property by the total number of investment units issued and outstanding as of the end of 28th fiscal
period (April 2019) (rounded down to the nearest 10 yen).
Note 5:	The difference between the appraisal value of Acquired Property as of April 1, 2019 and the acquisition price is stated.
Note 6:	Portfolio NOI yield after depreciation after acquisition is calculated based on portfolio NOI yield after depreciation and acquisition price as of the end of
28th fiscal period (April 2019) adding Acquired Property’s estimated NOI after depreciation and acquisition price, respectively.

10

Property sale for 28th fiscal period (Apr. 2019) and utilization of the gain on sale
A 5.9% annual increase in dividends was realized by appropriating a portion of the gain on additional sale of Frame
Jinnan-zaka (quasi co-ownership interest of 51.0%) to the dividends. A portion of the gain on sale of real estate is­transferred to reserve for reduction entry (internal reserve) and used for the payment of stable future distributions.
Reserve for
reduction entry

Frame Jinnan-zaka, gain on sale of real estate of 565 million yen(51.0% of quasi co-ownership interest)

Appropriation of dividends
Amount appropriatedto distribution

265 million yen

Amount appropriated to
distribution per unit (Note 1)

Provision of reserve for reduction entry
Provision amount ofreserve for reduction entry

299 million yen

Provision of reserve for
reduction entry per unit (Note 1)

619 yenAnnual growth of 5.9%

13,719Distributions
per unit (Note 1)(yen)

12,9606,476

619

12,960Reserve for
reduction entry
per unit (Note 2)(yen)

13,10026th
28th
fiscal period fiscal period(Apr. 2018) (Apr. 2019)

699

5,776

27th
28th
fiscal period fiscal period(Oct. 2018) (Apr. 2019)699 yen

Balance of internal
reserve transferredfrom gain on sale ofreal estate throughspecial tax measures.

In case of the following,• Temporary decline
in revenues andexpenses• Temporary increasein expenses associated with growthinvestments• Dilution of dividends
due to public offering
during the period
We intend to utilize
these funds to realize
stable and sustainablegrowth in dividends.

Note 1: Each of amount per unit is calculated using the total number of investment units issued and outstanding as of the end of each fiscal period.
Note 2:	Calculated based on the period-end balance of reserve for reduction entry on the balance sheet for each fiscal period, adding provision amount ofreserve for reduction entry stated in the Basis for Calculating Cash Distribution for the relevant fiscal period.

Asset size and number of owned properties
As real estate prices are trading in high-priced areas, we have continued to implement selective investment andasset reshuffle with an eye to improving the quality of our portfolio, growing up to a total asset size of 97 properties
and 424.5 billion yen as of June 14, 2019.
Asset size (total acquisition price) and number of properties since listing(Billions of yen)
600

72

450

Number of properties

83 84 83 85

77
68 69 67

64

(Properties)

PO Fiscal period with public offering

Office buildings
Residential
Central urban retail property
Others65

70 67 71

89

31

35

PO

PO
PO

75

PO

50

PO

PO

PO

150

100

415 424

74
PO

300

94

97 97 97 99 97 98 97 97 96 97

25

0

0
1st
fiscalperiod(Oct. 2005)

5th
fiscalperiod(Oct. 2007)

10th
fiscalperiod(Apr. 2010)

15th
fiscalperiod(Oct. 2012)

20th
fiscalperiod(Apr. 2015)

25th
fiscalperiod(Oct. 2017)28th As of
fiscal June 14,
period 2019
(Apr. 2019)

Kenedix Office Investment Corporation

11

Internal Growth

Changes in office building occupancy rate and turnover ratio
Occupancy rate remained at a high level against the backdrop of robust demand from tenants. Although turnoverratio increased due to the move-out of a tenant leasing the whole building, we believe it is an opportunity to raise
unit rent by tenant turnover.
Turnover ratio (annualized) ofoffice buildings (Note 2)

Changes in occupancy rate (Note 1)
Occupancy rate (based on contracted floor space)
Actual occupancy rate (free rent area deducted)

(%)
100

99.0
97.8

2.5

3.2

99.1

99.1

99.2

1.1

1.8

1.9

97.3

97.3

98.0

96.5

95

Over 80% of vacated areas
have been decided to be filled
by subsequent tenants

6.7

(%)

5.7
4.4

94.6

3.6

Average occupancy rate for all office buildings during the fiscal period
Averageoccupancy
rate for25th
fiscal period:

98.4%

End of 24th
fiscal period(Apr. 2017)

Averageoccupancy
rate for26th
fiscal period:

99.2%

End of 25th
fiscal period(Oct. 2017)

Averageoccupancy
rate for27th
fiscal period:

99.1%

End of 26th
fiscal period(Apr. 2018)

3.2

Averageoccupancy
rate for28th
fiscal period:

99.1%

End of 27th
fiscal period(Oct. 2018)

End of 28th
fiscal period(Apr. 2019)24th fiscal 25th fiscal 26th fiscal 27th fiscal 28th fiscal
periodperiodperiodperiodperiod(Apr. 2017) (Oct. 2017) (Apr. 2018) (Oct. 2018) (Apr. 2019)

Note 1:	Occupancy rate (contracted area based) is calculated by dividing contract based leased area by leasable area, and actual occupancy rate (excluding
free rent area) is calculated by subtracting free rent area from leased area then dividing that area by leasable area. The figures are rounded to the firstdecimal place. Average occupancy rate of office buildings during each fiscal period is a simple average of month-end occupancy rates of owned officebuildings during each period.
Note 2:	Turnover ratio is calculated and annualized as follows: (Total leased area of the end-tenants who cancelled their lease agreements during the six-month
period from the beginning to the end of each period) / (Average leasable area of all office buildings owned by KDO as of each month-end during therelevant period) x 2. Figures are rounded to the first decimal place.

Trends in rent changes upon tenant turnover for office buildings
Against the backdrop of a robust rental market, the unit rent of new tenants significantly exceeds that of existing
tenants, and rental revenue continues to increase due to higher unit rent.
Changes in monthly rent upon tenant turnover (Note 1)
Total rent increase(mn yen)Total rent decrease(mn yen)52.3

Percentage of number ofrent increased contracts upontenant turnover (%)

70.0

69.8

Changes in unit rent upon tenant turnover (Note 2)
Unit rent for new tenants (yen)Unit rent for previous tenants (yen)82.1

18,21350.8
15,752

12.1
5.3

5.0

3.5

5.5

-8.3

-1.5

-1.0

-1.0

25th fiscal
period(Oct. 2017)

26th fiscal
period(Apr. 2018)

24th fiscal
period(Apr. 2017)27th fiscal
period(Oct. 2018)14,245

14,713 14,692
15,140-1.0

28th fiscal
period(Apr. 2019)+20.3％

14,353

13,58913,65013,61224th fiscal
period(Apr. 2017)

25th fiscal
period(Oct. 2017)

26th fiscal
period(Apr. 2018)

27th fiscal
period(Oct. 2018)

28th fiscal
period(Apr. 2019)

Note 1:	Total amount of increases/decreases in monthly rent before and after rent revision for each fiscal period is respectively aggregated for the spaces
where the rents paid by new tenants and by previous tenants can be compared.
Note 2: Unit rent for new tenants is an average unit rent calculated based on aggregated rents and areas for the spaces where rents paid by new tenants andby previous tenants can be compared for each fiscal period. Unit rent for previous tenants is an average unit rent calculated based on aggregatedprevious unit rents and areas for the spaces where new unit rents are calculated.

12

Rent revision with existing tenants
The trend toward rent increase revisions began in earnest in 21st fiscal period (October 2015), and the results of rent
increase further extended. We have steadily achieved results through negotiations for rent revisions based on adetailed analysis of tenants.
Rent revision results(percentage based on leased area)

Changes in rent upon rent revision (based on monthly amount) (Note)
Rent increase

Net increase in rent

Rent decrease

Rent decrease(thousand yen)

8,560

8,492

7,924

5,071

4,274

(2 cases)Rent increase

8,648

7,034
7,427

0.6%

9,051

(83 cases)

fiscal period(Apr. 2019)

5,977

6,625

305
cases

5,505
4,795

4,341

30.4%

28th

6,826

No change

69.0%(220 cases)

1,880

12.2%

5.0%

-636

-729

-1,065-409-2,39521st fiscal 22nd fiscal 23rd fiscal
periodperiodperiod(Oct. 2015) (Apr. 2016) (Oct. 2016)-472(27 cases)(6 cases)

-402

21st

-2,03282.8%

24th fiscal 25th fiscal 26th fiscal 27th fiscal 28th fiscal
periodperiodperiodperiodperiod(Apr. 2017) (Oct. 2017) (Apr. 2018) (Oct. 2018) (Apr. 2019)(252 cases)

fiscal period(Oct. 2015)

285
cases

Note: Difference in monthly rent before and after rent revision in each fiscal period is calculated by aggregating the change amount per contract in each fiscal
period, rounded to the nearest thousand yen.

Tenant turnover at KDX Toranomon 1chome Building
At KDX Toranomon 1chome Building, we responded to changes in work styles of office employees and captured
new needs such as coworking spaces (Note), for floors where several tenants with contract rents below market rents
vacate, in order to increase rent revenue.
KDX Toranomon
1chome Building

Prospects for occupancy
11F 197.08 tsubo
10F 246.13 tsubo
9F 246.13 tsubo
8F 246.13 tsubo
7F 246.13 tsubo
6F 246.13 tsubo
5F 246.13 tsubo
4F 246.13 tsubo
3F 246.13 tsubo
2F 246.13 tsubo
1F 61.82 tsubo

8 floors out of all
11 floors received
move-out notices
from multiple tenants
and searched for
subsequent tenants

WeWork since July 1, 2019
WeWork sicne September 1, 2019
Occupied
WeWork since September 1, 2019
WeWork since April 26, 2019
OccupiedOccupied©WeWork(Reference: WeWork Marunouchi Kitaguchi)

Reasons for attracting WeWork tenants• 38.5% higher than unit rent for previous tenants so that rental revenue can beincreased.
• Flexibly capture the growing demand for coworking spaces as a leading borrower ofoffice buildings, and respond to changes in the social environment such as work stylereform and progress in telework.

Note: Coworking spaces are shared office spaces, conference rooms, meeting spaces, etc., and a shared office environment in which independent work is
carried out.
Kenedix Office Investment Corporation

13

Initiatives for ESG

Recognizing the importance of environmental, social, and governance(ESG) considerations in real estate investment management, KDO
aims to improve sustainability with the aim of realizing a sustainable
society as a corporate social responsibility.
In addition, KDO also supports efforts to achieve the SDGs
(Sustainable Development Goals) through the activities of Japan for
UNHCR and other means.

Initiatives for Environmental
Issuance of green bonds
In February 2019, KDO issued its first green bonds in order to strengthen sustainability initiatives, provide­opportunities for investors who actively invest in ESG, and contribute to the development of the domestic green
bonds market.

Use of green bonds proceeds
DBJ Green
Building
Certification

Energyconsumption

Outline of 10th unsecured investment
corporation bond (green bonds)

Certification for
BELS
CASBEE for
Certification
Real Estate

Green Building certificationsof top 3 ranks
Funds repayment of borrowings and redemption of
investment corporation bonds
for the acquisition of properties
that satisfy the above
conditions
Reduction in use by
10% or more
Expenses related tofacilities refurbishment thatare expected to have theabove effects

Other
Water
environmental
consumption
benefits

Issue dateFebruary 15, 2019

Total issued
amount2.0 billion yen

Term

5 yearInterest rate

0.390% per annum

Repayment of borrowings related
to the acquisition of KDX
Kobayashi-Doshomachi Building
Use of proceeds
and KDX Toranomon 1chome
Building, which have DBJ Green
Building Certifications of top 3 ranks

Initiatives for social
Cooperation with the UN refugee assistance campaign
As a place for UN refugee assistance activities, KDO provides a vacant space of its properties for free and supports
the a­ ctivities of Japan for UNHCR. Each time, the circle of support from local residents is e
­ xpanding.

What can be supported with this donation
Textbooks

for 1,813 people©Japan for UNHCR

Fund-raising activities

Senri Life Science
Center ­Building

KDX Karasuma
Building

Through this assistance,a total of 1,813 textbooks(1 copy per person) canbe donated to evacuation
destinations that canreceive school education.

Number of days:

7 days7 daysThose who spoke

:

206

136

©UNHCR M. Odokonyero

Number of supporting­participants

:

30

18

If monthly support is continued for 1 year (converted to US$1=113 yen)

The sponsor has become a signatory of the Principles for Responsible Investment (PRI)

14• Kenedix, Inc., the sponsor, signed the United Nations Principles for Responsible
Investment (PRI).
• KDO and KFM share the philosophy of the Kenedix Group, promote sustainability­initiatives based on a commitment to ­responsible investment, and aim to achieve bothsustainable growth and social responsibility.

Financial Strategy

Status of interest-bearing debt
While paying attention to interest rate trends, we continue to reduce financial cost at refinancing.
As a flexible financing method, we established a new commitment line (bank credit line) by 3 megabanks.
Average interest rate and average remaining period tomaturity of interest-bearing debt

Outstanding borrowings by financial institutions
as of the end of 28th fiscal period (Apr. 2019)14 lending financial institutions

Average remaining period to maturity (years)
Average interest rate (including up-front fee) (%)

4.9

4.7

5.2

5.2

5.0

4.7

MizuhoTrust & Banking

5.0

The Bank of Fukuoka
The Nishi-Nippon City Bank
The Hiroshima Bank
The 77 Bank
Higashi-Nippon Bank
The Mie Bank

4.3%

2.2%

Resona Bank

6.2%

1.25

1.19

Sumitomo Mitsui
BankingAozora Bank

6.5%

1.16 1.10

1.07

1.06

Total
borrowings fromfinancial institutions

Mizuho Bank

1.04

6.7%

26.0%

174.0

Sumitomo Mitsui
Trust Bank

billion yen

MUFG Bank

11.1%

End of 22nd End of 23rd End of 24th End of 25th End of 26th End of 27th End of 28th
fiscal period fiscal period fiscal period fiscal period fiscal period fiscal period fiscal period(Apr. 2016) (Oct. 2016) (Apr. 2017) (Oct. 2017) (Apr. 2018) (Oct. 2018) (Apr. 2019)

20.0%

Development Bank of Japan

17.0%

Outline of commitment line agreement

Commitment line

(executed on May 31, 2019)

Maximum amount

6,000 million yen

Contract period

June 3, 2,019 to April 30, 2020

Counterparty

Sumitomo Mitsui Banking Corporation,
MUFJ Bank, Ltd., Mizuho Bank, Ltd.

A commitment line is a line of credit established for companies(investment corporations) with which banks do business. Within
this line of credit after prior consultation between the bank andthe companies (investment corporations), a loan can be obtainedat any time for a certain period without being examined by banks.

Major indices related to financial stability (end of 28th fiscal period (Apr. 2019))
Interest-bearing debt ratio (LTV) (Note 1)

Ratio of fixed interest rate (Note 2)

Status of credit rating

Maintain stable financial basewith a target of 45%

Continue to hedge against a potential risein interest rates

Japan Credit Rating Agency, Ltd.

41.7%

96.6%

AA- (Stable)

Note 1:	Interest-bearing debt ratio (LTV) is the balance of interest-bearing debt at the end of the fiscal period divided by total assets at the end of the fiscal
period, rounded to the first decimal place.
Note 2:	Includes borrowings fixed by interest rate swap, rounded to the first decimal place.

Diversification of interest-bearing debt maturities
We seek to reduce refinancing risk by strategically diversifying debt maturities.
Balance of interest-bearing debt by maturity (As of April 30, 2019)

4.2 bn yen
Investment corporation bonds
8.0 bn yen
Long-term borrowings
169.8 bn yen

Short-term borrowings

Total interest-bearing debt 182.0 bn yen(bn yen)

12.7
8.2
2.0
6.2
29th
fiscal period(Oct. 2019)

2.2

10.1 9.5

11.8

9.9

8.1
1.0

10.5

31st
fiscal period(Oct. 2020)

7.1
33rd
fiscal period(Oct. 2021)

35th
fiscal period(Oct. 2022)

3.8

5.5

6.7
2.0
4.7

37th
fiscal period(Oct. 2023)

9.0
2.0

14.0
13.0 1.0

11.3 10.8 11.5
8.3

2.0

6.2

7.0

39th
fiscal period(Oct. 2024)

41stfiscal period(Oct. 2025)

43rd
fiscal period(Oct. 2026)

11.0

13.0

45th
fiscal period(Oct. 2027)

7.2
4.3

47th
fiscal period(Oct. 2028)

Kenedix Office Investment Corporation

15

Financial Section
Independent Auditor’s Report

17

Balance Sheet

18

Statement of Income and Retained Earnings

20

Statement of Changes in Net Assets

20

Statement of Cash Flows21

Notes to the Financial Statements

22

Financial Summary (Unaudited)
Historical Operating Trends
For the 24th–28th Fiscal Periods

PeriodOperating revenues(Rental revenues)
Operating expenses(Property-related expenses)
Operating income
Ordinary income
Net income (a)Total assets (b)(Period-on-period change)
Interest-bearing debt (c)(Period-on-period change)
Unitholders’ equity (d)(Period-on-period change)
Unitholders’ capital(Period-on-period change)
Number of investment units issued and outstanding (e)Unitholders’ equity per unit (d)/(e)Total distribution (f)Distribution per unit (f)/(e)(Earnings distributed per unit)(Distribution in excess of earnings per unit)
Return on assets (annualized) (Notes 1 and 2)
Return on net assets (annualized) (Notes 2 and 3)
Net assets ratio at end of period (d)/(b)(Period-on-period change)
Interest-bearing debt ratio at end of period (c)/(b)(Period-on-period change)
Payout ratio (Note 4) (f)/(a)Other references
Number of properties
Total leasable floor area
Occupancy ratio at end of period
Depreciation expenses for the period
Capital expenditures for the period
Leasing NOI (Net Operating Income) (Note 5)
FFO (Funds From Operation) (Note 6)
FFO per unit (Note 7)

Unit

millions of yen
millions of yen
millions of yen
millions of yen
millions of yen
millions of yen
millions of yen
millions of yen%
millions of yen%
millions of yen%
millions of yen
%
unit
yen
millions of yen
yen
yen
yen
%
%
%
%
%

properties
m2%
millions of yen
millions of yen
millions of yen
millions of yen
yen

28th Period
27th Period
26th Period
25th Period
24th Period(as of(as of(as of(as of(as ofApr. 30, 2017) Oct. 31, 2017) Apr. 30, 2018) Oct. 31, 2018) Apr. 30, 2019)15,03913,327
9,137
6,527
5,901
4,751
4,750
410,166(–0.7)
174,600(–2.0)
212,986(+0.1)
206,199(0.0)
404,885
526,041
4,750
11,733
11,733—
1.2 (2.3)
2.2 (4.5)
51.9(+0.4)
42.6(–0.6)
99.9

13,901
13,840
8,244
6,720
5,657
4,590
4,588
414,933(+1.2)
179,600(+2.9)
212,851(–0.1)
206,199(0.0)
404,885525,708
5,061
12,50012,500—1.1 (2.2)
2.2 (4.3)
51.3(–0.6)
43.3(+0.7)
110.2

14,823
14,222
7,974
6,977
6,848
5,829
5,828
422,993(+1.9)
185,850(+3.5)
213,642(+0.4)
206,199(0.0)
404,885
527,661
5,247
12,96012,960—1.4 (2.8)
2.7 (5.5)
50.5(–0.8)
43.9(+0.7)
90.0

15,42014,802
8,271
7,105
7,148
6,109
6,107
437,221(+3.4)
183,050(–1.5)
229,313(+7.3)
220,970(+7.2)
428,510535,141
5,766
13,45813,458—1.4 (2.8)
2.8 (5.5)
52.4(+1.9)
41.9(–2.1)
94.4

15,212
14,595
8,039
6,880
7,172
6,179
6,178
436,753(–0.1)
182,050(–0.5)
229,440(+0.1)
220,970(0.0)
428,510535,437
5,878
13,71913,719—1.4 (2.9)
2.7 (5.4)
52.5(+0.1)
41.7(–0.2)
95.1

97
459,567.57
97.9
2,288
1,018
9,088
7,034
17,37398
456,932.16
99.1
2,293
953
9,413
7,451
18,404

97
466,031.33
99.0
2,295
886
9,539
7,574
18,70897471,041.45
99.1
2,358
925
10,055
7,934
18,516

96468,528.20
99.2
2,369
1,231
10,084
7,983
18,630Notes: 1. Return on assets = Ordinary income / {(Total assets at beginning of period + Total assets at end of period) / 2} × 100
2. Annualized values for the 24th Fiscal Period are calculated based on a period of 181 days, 184 days for the 25th Fiscal Period, 181 days for the 26th Fiscal
Period, 184 days for the 27th Fiscal Period and 181 days for the 28th Fiscal Period.
3. Return on net assets = Net income / {(Total net assets at beginning of period + Total net assets at end of period) / 2} × 100
4. Payout ratio is rounded down to the first decimal place.
5. Leasing NOI = Rental revenues – Property-related expenses + Depreciation expenses for the period
6. FFO = Net income + Depreciation expenses for the period – Gain on sale of real estate properties + Loss on sale of real estate properties
7. FFO per unit = FFO / Number of investment units issued and outstanding (figures below ¥1 rounded down)

16Kenedix Office Investment Corporation17

Balance Sheet
Kenedix Office Investment Corporation
As of April 30, 2019

In thousands of yen

AssetsCurrent assets
Cash and deposits (Notes 3 and 14)
Cash and deposits in trust (Notes 3 and 14)
Operating accounts receivable
Prepaid expenses
Other
Total current assets
Non-current assets
Property, plant and equipment (Notes 4 and 16)
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Buildings in trust (Note 7)
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
Construction in progress in trust
Total property, plant and equipment, net
Intangible assets (Note 4)
Leasehold right (Note 16)
Leasehold right in trust (Note 16)
Other
Total intangible assets
Investments and other assets
Investment securities (Note 14)
Lease and guarantee deposits
Lease and guarantee deposits in trust
Long-term prepaid expenses
Other (Notes 9, 14, and 15)
Total investments and other assets
Total non-current assets
Deferred assets
Investment corporation bond issuance costs
Investment unit issuance costs
Total deferred assets
Total assets
See accompanying notes to the financial statements.

18

As of April 30, 2019

As of October 31, 2018

¥ 19,675,112
10,959,133
298,778
49,708
6,788
30,989,522¥ 14,050,532
10,973,654
360,261
111,536
14,60625,510,591

17,776,419(5,616,212)
12,160,207
32,618(14,691)
17,927424,662(247,818)
176,843
93,446(57,649)
35,79627,520,902
121,511,168(29,185,084)
92,326,083
343,278(157,234)
186,043
1,604,492(691,969)
912,523
487,000(308,088)
178,912
269,059,794
1,511
402,576,545

17,693,312(5,316,656)
12,376,655
32,618(13,848)
18,770421,857(235,745)
186,11186,586(54,482)
32,10327,520,902
122,006,776(27,897,343)
94,109,432
353,520(159,867)
193,653
1,623,898(708,259)
915,639
476,862(293,197)
183,665
272,828,051
2,933
408,367,919

285,257
350,749
2,424
638,431285,257
351,524
2,889
639,671

1,130,524
10,000122,889
1,178,564
19,4872,461,465
405,676,443

1,114,806
10,000122,889
1,256,374
113,1112,617,181
411,624,771

51,346
36,68488,031¥436,753,997

39,86045,85585,715¥437,221,079

In thousands of yen

Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable (Notes 6 and 14)
Current portion of long-term loans payable (Notes 6, 14 and 15)
Accounts payable-otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Deposits received
Total current liabilities
Non-current liabilities
Investment corporation bonds (Notes 6 and 14)
Long-term loans payable (Notes 6, 14 and 15)
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Other (Notes 14 and 15)
Total non-current liabilities
Total liabilities
Net Assets
Unitholders’ equity
Unitholders’ capital
Surplus
Voluntary retained earnings
Reserve for reduction entry
Total voluntary retained earnings
Unappropriated retained earnings
Total surplus
Total unitholders’ equity
Valuation and translation adjustments
Deferred gains or losses on hedges (Notes 14 and 15)
Total valuation and translation adjustments
Total net assets (Note 10)
Total liabilities and net assets

As of April 30, 2019

As of October 31, 2018

1,575,141
4,200,000
16,700,000
529,777
78,660794
475,104
2,368,366
3,477
25,931,323¥

8,000,000
153,150,000
1,993,121
18,035,523
203,786
181,382,431
207,313,754

6,000,000
157,300,000
1,953,387
18,150,520
12,281
183,416,189
207,907,498

220,970,508

220,970,508

2,475,385
2,475,385
6,178,677
8,654,063
229,624,572

2,134,387
2,134,387
6,107,886
8,242,273
229,212,781(184,329)(184,329)
229,440,242¥436,753,997

100,798
100,798
229,313,580¥437,221,079¥

1,341,577
6,000,000
13,750,000
775,971
62,766795
193,775
2,364,110
2,311
24,491,309

Kenedix Office Investment Corporation

19

Statement of Income and Retained Earnings
Kenedix Office Investment Corporation
For the period from November 1, 2018 to April 30, 2019

In thousands of yen

Operating revenues
Rent revenue - real estate (Note 12)
Other lease business revenue (Note 12)
Gain on sale of real estate properties (Note 12)
Dividends income
Total operating revenues
Operating expenses
Expenses related to rent business (Note 12)
Asset management fees
Directors’ compensation
Asset custody fees
Administrative service fees
Audit fees
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Dividends and redemption-prescription
Interest on refund
Total non-operating income
Non-operating expenses
Interest expenses
Interest expenses on investment corporation bonds
Financing-related expenses
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Other non-operating expenses
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes (Note 9)
Current
Deferred
Total income taxes
Net income
Unappropriated retained earnings

From November 1, 2018
to April 30, 2019

From May 1, 2018
to October 31, 2018¥12,794,187
1,801,706
565,286
51,08815,212,268¥12,730,773
2,071,972
532,490
85,21915,420,456

6,880,478
967,813
8,400
23,11657,50811,80090,167
8,039,284
7,172,984

7,105,951
978,238
8,400
22,68956,337
11,80088,304
8,271,721
7,148,734

67
664
3
736

66
788
330
1,185

808,013
25,392
124,518
3,564
9,171
23,143993,8036,179,916
6,179,916

833,92130,783
133,349
4,159
9,171
29,411
1,040,795
6,109,124
6,109,124

1,238
0
1,238
6,178,677¥ 6,178,677

1,240
(2)
1,238
6,107,886¥ 6,107,886

See accompanying notes to the financial statements.

Statement of Changes in Net Assets
Kenedix Office Investment Corporation
For the period from November 1, 2018 to April 30, 2019

In thousands of yen

Valuationandtranslation
adjustments

Unitholders’ equity

Balance as of April 30, 2018
Changes during the fiscal period
Issuance of new investment units
Provision of reserve for reduction entry
Dividends of surplus
Net income
Net changes of items otherthan unitholders’ equity
Total changes during
the fiscal period
Balance as of October 31, 2018 (Note 5)
Changes during the fiscal period
Provision of reserve for reduction entry
Dividends of surplus
Net income
Net changes of items otherthan unitholders’ equity
Total changes during
the fiscal period
Balance as of April 30, 2019 (Note 5)

Surplus
Voluntary
retained
Unappropriatedearnings
retained
Reserve for
earnings
Unitholders’reduction entry(Note 19)
capital¥206,199,945¥1,552,849¥ 5,828,847

Deferred
gains orlosses onhedges¥ 60,587

Total
net assets¥213,642,230

14,770,562————
581,538———(581,538)(5,247,309)
6,107,886——(5,247,309)
6,107,886

14,770,562—(5,247,309)
6,107,886————

14,770,562—(5,247,309)
6,107,886

—

—

—

—

—

40,211

40,211

14,770,562¥220,970,508

581,538¥2,134,387

279,038¥ 6,107,886

860,576¥ 8,242,273

15,631,139¥229,212,781

40,211¥100,798

15,671,350¥229,313,580———

340,998——(340,998)(5,766,887)
6,178,677—(5,766,887)
6,178,677—(5,766,887)
6,178,677————(5,766,887)
6,178,677

—

—

—

—

—

(285,128)(285,128)—¥220,970,508

340,998¥2,475,385

70,791¥ 6,178,677

411,790¥ 8,654,063

411,790¥229,624,572(285,128)¥(184,329)

126,662¥229,440,242

See accompanying notes to the financial statements.

20

Total
surplus¥ 7,381,696

Total
unitholders’equity¥213,581,642

Statement of Cash Flows
Kenedix Office Investment Corporation
For the period from November 1, 2018 to April 30, 2019

In thousands of yen

Cash flows from operating activities
Income before income taxes
Depreciation
Amortization of long-term prepaid expenses
Interest income
Interest expenses
Amortization of investment unit issuance costs
Amortization of investment corporation bond issuance costs
Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes receivable
Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable-other
Increase (decrease) in accrued consumption taxes
Increase (decrease) in advances received
Increase (decrease) in deposits received
Decrease in property, plant and equipment due to sale
Decrease in property, plant and equipment in trust due to sale
Decrease (increase) in long-term prepaid expenses
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Purchases of property, plant and equipment in trust
Purchases of intangible assets
Repayments of tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits
Repayments of tenant leasehold and security deposits in trust
Proceeds from tenant leasehold and security deposits in trust
Payments of restricted deposits in trust
Proceeds from restricted deposits in trust
Net cash provided by (used in) investing activities
Cash flows from financing activities
Increase in short-term loans payable
Decrease in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of investment corporation bonds
Redemption of investment corporation bonds
Proceeds of investment unit issuance
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of period (Note 3)

From November 1, 2018
to April 30, 2019

From May 1, 2018
to October 31, 2018

¥ 6,179,916
2,370,002
124,268(67)
833,406
9,171
3,564
61,483—
61,827(159,947)(246,833)
281,328
4,255
1,186
—
4,652,797(46,458)(25,452)
14,104,448
67(817,511)(805)
13,286,198¥ 6,109,124
2,358,994
133,099(66)
864,704
9,171
4,159(52,044)
166,118(34,767)(34,206)
322,777
75,19223,930(257)
2,230,835
4,483,951(82,492)(61,519)
16,516,704
66(881,064)(692)
15,635,014(91,813)(958,884)(155)(46,949)
86,145(560,271)
676,423(8,705)—(904,210)(150,523)(21,870,082)—(140,072)
55,327(213,521)
1,561,793(13,149)
2,829(20,767,399)

3,200,000(5,000,000)
6,850,000(8,050,000)
1,984,949——(5,765,583)(6,780,634)
5,601,354
23,282,416¥ 28,883,770

2,000,000(2,000,000)
8,500,000(9,500,000)—(1,800,000)
14,715,536(5,247,420)
6,668,115
1,535,730
21,746,685¥ 23,282,416

See accompanying notes to the financial statements.

Kenedix Office Investment Corporation

21

Notes to the Financial Statements
Kenedix Office Investment Corporation
For the period from November 1, 2018 to April 30, 2019

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Kenedix Office Investment Corporation (“the Investment
Corporation”) is a real estate investment corporation whose units
are listed on the Tokyo Stock Exchange. The Investment
Corporation is engaged in the ownership and operation of selected
mainly office buildings in Japan, with a focus on mid-sized officebuildings in the Tokyo metropolitan area. The Investment
Corporation was incorporated on May 6, 2005 as an investment
corporation under the Law Concerning Investment Trusts andInvestment Corporations of Japan, or the Investment Trust Law.
On July 21, 2005, the Investment Corporation was listed on theReal Estate Investment Trust Market of the Tokyo Stock Exchangewith a total of 75,400 investment units issued and outstanding(Securities Code: 8972). Subsequently, the Investment Corporation
raised funds through eight public offerings. Pursuant to theInvestment Trust Law, the Investment Corporation is externallymanaged by a registered asset management company, Kenedix
Real Estate Fund Management, Inc. (“the Asset Management
Company”), a subsidiary of Kenedix, Inc. (“Kenedix”). In concert
with the Asset Management Company, the Investment Corporation
strives to maximize cash distribution to investors by securing­stable earnings and sustainable investment growth. To this end,
the Investment Corporation adopts a dynamic and flexible investment stance that accurately reflects its environment and market
trends, and endeavors to ensure a timely response to each andevery opportunity.
During the period ended October 31, 2018, the Investment
Corporation acquired one office building (KDX Hamamatsucho
Place (*1): acquisition price of ¥20,700 million) and sold one officebuilding (KDX Hamamatsucho Dai-2 Building: initial acquisition
price of ¥2,200 million) and one central urban retail property(Frame Jinnan-zaka (49.0% of quasi co-ownership interest): initialacquisition price of ¥4,851 million (*2)) with a disposition price of¥7,297 million.
During the period ended April 30, 2019, the Investment
Corporation sold one central urban retail property (Frame­Jinnan-zaka (51.0% of quasi co-ownership interest): initial­acquisition price of ¥5,049 million (*3)) with a disposition priceof ¥5,253 m­ illion.
At the end of the twenty-seventh and twenty-eighth fiscal­periods (fiscal periods ended October 31, 2018 and April 30,2019), the Investment Corporation had total unitholders’ capital

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(A) Securities
Non-marketable securities classified as other securities are carriedat cost. Cost of securities sold is determined by the moving
average method. Concerning silent partnership (tokumei kumiai,of ¥220,970 million with 428,510 investment units outstanding,respectively. The Investment Corporation owned a portfolio of 97
properties (consisting of 95 office buildings, one central urban retailproperty and one other property) and 96 properties (consisting of
95 office buildings and one other property) with total acquisition
prices of ¥420,884 million and ¥415,835 million at the end of thetwenty-seventh and twenty-eighth fiscal periods, respectively. The
occupancy ratios were approximately 99.1% and 99.2% at theend of the twenty-seventh and twenty-eighth fiscal periods,
respectively.
(*1) The property name was changed from “CROSS PLACE Hamamatsucho” to“KDX Hamamatsucho Place” on April 1, 2019.
(*2) The acquisition price is an amount equivalent to 49.0% of quasi ­co-ownershipinterest in ¥9,900 million, which is the acquisition price of the entire building
initially acquired.
3(* ) The acquisition price is an amount equivalent to 51.0% of quasi ­co-ownershipinterest in ¥9,900 million, which is the acquisition price of the entire building
initially acquired.

Basis of Presentation
The accompanying financial statements have been prepared inaccordance with the provisions set forth in the Investment Trust
Act of Japan, the Financial Instruments and Exchange Law ofJapan and related regulations, and in conformity with accounting
principles and practices generally accepted in Japan (“Japanese
GAAP”), which are different in certain respects as to the application and disclosure requirements of the International Financial
Reporting Standards or accounting principles generally acceptedin the United States of America.
The accompanying financial statements are basically a translation of the audited financial statements that were prepared forJapanese domestic purposes from the accounts and records
maintained by the Investment Corporation and filed with the Kanto
Local Finance Bureau of the Ministry of Finance as required by the
Financial Instruments and Exchange Law. In preparing the accompanying financial statements, relevant notes have been added andcertain reclassifications have been made to the financial statements issued domestically in order to present them in a form thatis more familiar to readers outside Japan. The Investment
Corporation’s fiscal period is a six-month period that ends at theend of April and the end of October each year. The Investment
Corporation does not prepare consolidated financial statements
because it has no subsidiaries.

“TK”) interests, the method of incorporating the amount of equity
equivalent to the portion that corresponds to the net gain or lossof the TK is adopted.

(B) Property, Plant and Equipment (including trust assets)
Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment is calculated on a straight-line basis overthe estimated useful lives of the assets ranging as stated below:
Buildings
Structures
Machinery and equipment
Tools, furniture and fixtures

22

From November 1, 2018 to April 30, 2019

2– 49 years
2– 45 years
3– 17 years
3– 20 years

From May 1, 2018 to October 31, 2018

2– 49 years
2– 45 years
3– 17 years
3– 20 years

(C) Intangible Assets (including trust assets)
Intangible assets are amortized by the straight-line method.
Leasehold right: Fixed-term land leasehold is amortized over acontractual period of 48 years and 9 months under the straightline method.
(D) Long-term Prepaid Expenses
Long-term prepaid expenses are amortized by the straight-line
method.
(E) Investment Unit Issuance Costs
Investment unit issuance costs are amortized over a period of
three years under the straight-line method.
(F) Investment Corporation Bond Issuance Costs
Investment corporation bond issuance costs are amortized over amaturity period under the straight-line method.
(G)	Accounting Treatment of Trust Beneficiary Interests inReal Estate
For trust beneficiary interests in real estate, which are commonly
utilized in the ownership of commercial properties in Japan, allassets and liabilities in trust are recorded in the relevant balance
sheets and statements of income and retained earnings.
(H) Revenue Recognition
Operating revenues consist of rental revenues including baserents, common area charges and other operating revenues,
which include utility charge reimbursement, parking space rental­revenues and other miscellaneous revenues. Rental revenues are
generally recognized on an accrual basis over the life of eachlease. Utility charge reimbursements are recognized when earned
and their amounts can be reasonably estimated. Reimbursementsfrom tenants including utility charge reimbursements are recorded
on a gross basis and such amounts are recorded both as­revenues and expenses during the fiscal period.
(I) Taxes on Property, Plant and Equipment
Property-related taxes including property taxes, city planning taxes
and depreciable property taxes are imposed on properties on acalendar year basis. These taxes are generally charged to operating expenses for the period, for the portion of such taxes corresponding to the said period. Under Japanese tax rules, the sellerof property at the time of disposal is liable for these taxes on theproperty from the date of disposal to the end of the calendar year
in which the property is disposed. The seller, however, is generally
reimbursed by the purchaser for these accrued property-related
tax liabilities.
When the Investment Corporation purchases properties, it­typically allocates the portion of the property-related taxes related
to the period following the purchase date of each property throughthe end of the calendar year. The amounts of those allocatedportions of the property-related taxes are capitalized as part of theacquisition costs of the related properties. Capitalized property-­
related taxes amounted to ¥28,631 thousand as of October 31,
2018. There were no capitalized property-related taxes as ofApril 30, 2019. In subsequent calendar years, such property-­
related taxes are charged as operating expenses in the fiscal
period to which the installments of such taxes correspond.
(J) Income Taxes
Deferred tax assets and liabilities are computed based on the
difference between the financial statements and income tax basesof assets and liabilities using the statutory tax rates.
(K) Consumption Taxes
Transactions subject to consumption taxes are recorded at
amounts exclusive of consumption taxes. Non-deductible consumption taxes applicable to the acquisition of assets are includedin the cost of acquisition for each asset.
(L) Derivative Financial Instruments
The Investment Corporation utilizes interest-rate swap and­interest-rate cap contracts as derivative financial instruments only
for the purpose of hedging its exposure to changes in interest
rates. The Investment Corporation deferred recognition of gains
or losses resulting from changes in fair value of interest-rate swap
and interest-rate cap contracts because these contracts met thecriteria for deferral hedging accounting. However, the Investment
Corporation adopted special treatment for interest-swap andinterest-rate cap contracts if they met the criteria for hedging
accounting under this treatment. The hedge effectiveness forthe interest-rate swap and interest-rate cap contract is assessed
each fiscal period except for those that meet the criteria of­special treatment.
(M) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, deposits
placed with banks and short-term investments which are highly
liquid, readily convertible to cash and with insignificant risk ofmarket value fluctuation, with maturities of three months or lessfrom the date of purchase.
(N) Presentation of Amounts
Amounts of less than one thousand yen have been truncated in
the Japanese financial statements prepared in accordance withJapanese GAAP and filed with regulatory authorities in Japan.
Unless otherwise noted, amounts are rounded down and ratios
are rounded off in the accompanying financial statements.
Totals shown in the accompanying financial statements do notnecessarily agree with the sums of the individual amounts.

Kenedix Office Investment Corporation23

3. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following as of April 30, 2019 and October 31, 2018.
In thousands of yen

As of October 31, 2018

As of April 30, 2019

Cash and deposits
Cash and deposits in trust
Restricted deposits in trust (Note)
Cash and cash equivalents in trust¥14,050,532
10,973,654(1,741,770)¥23,282,416¥19,675,112
10,959,133(1,750,475)¥28,883,770

Note: Restricted deposits in trust are retained for the repayment of tenant leasehold and security deposits in trust.

4. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Property, plant and equipment and intangible assets consist of the following as of April 30, 2019.
In thousands of yen

Type of asset

Balance atthe beginningof period

Buildings
Structures
Machinery andequipment
Tools, furniture andfixtures¥ 17,693,312
32,618Land
Property,plant andequipment

Structures in trust
Machinery andequipment in trust
Tools, furniture andfixtures in trust

Other
Total intangible assets
Total

¥

83,107—— ¥ 17,776,419—
32,618¥ 5,616,212
14,691¥ 299,555 ¥ 12,160,207
842
17,927424,662

247,818

12,07293,446

57,649

3,167

—

—

6,860

—

—

—

1,623,898

60,425476,862

15,869353,520

5,952

272,828,051

2,933

397,292,042

443,047,319
290,050

363,784
6,123

659,958¥443,707,278

—

—

—

1,231,453¥

27,520,902

45,848,050¥1,552,040 ¥121,511,168
16,194343,278

79,831

1,604,492
487,000

5,731

3,768,257

1,421—
1,138,680

5,423,478

5,936,372¥29,185,084

157,234

269,059,794

1,511

393,007,244

50,007

912,523

308,088

18,617————30,342,376

2,052,968——

363,784

13,034——660,113¥5,423,478 ¥439,515,408

21,681¥36,300,430

155¥1,231,608

290,050
6,278¥

36,278,749

Note: The amount of decrease during the period is primarily attributable to the sales of the one real estate property.

24

39,911,677¥1,973,293 ¥ 92,326,083

691,969155— ¥35,79627,520,902

186,043438,855,294¥

315,639

4,792

3,854

1,511

362,664,867

402,576,545

774

350,749

— ¥

620

Note

178,912

269,059,794

2,368,608¥

Remarks

176,843

11,0505,423,478—

Netbalance atthe endof period

Depreciation
for the period

86,586

92,773

Depreciation
Accumulated
depreciation

2,805¥1,056,432¥

Balance atthe endof period

421,857

45,755,276

Subtotal
Total property, plant and equipment
Intangible
assets¥¥122,006,776

Land in trust
Construction inprogress in trust

Leasehold rightLeasehold rightin trust

Decreaseduringthe period

27,520,902

Subtotal
Buildings in trust

Increaseduringthe period

285,257
2,424

1,394
638,431¥2,370,002 ¥403,214,977

NoteProperty, plant and equipment and intangible assets consist of the following as of October 31, 2018.
In thousands of yen

Type of asset

Buildings
Structures
Machinery andequipment
Tools, furniture andfixtures¥ 17,943,798
32,618Total¥ 299,675 ¥ 12,376,655
875
18,770421,857

235,745

11,818Remarks

540

86,58654,482

2,987

32,10327,520,902——

27,520,902

47,975,686

105,275

2,325,684

45,755,276

5,620,733

315,356

40,134,543¥118,523,178¥ 4,974,504¥1,490,907 ¥122,006,776¥27,897,343

345,717

23,362

15,559353,520

159,867

10,615

193,653

1,592,359

108,240

76,701

1,623,898

708,259

51,309915,639

466,546

15,822

5,506

476,862

293,197

18,235

16,539,695

3,620,482

272,828,051——

183,665
272,828,051 Notes 1 and 2

83

2,850

—

2,933

—

—

2,933

380,836,725

21,664,475

5,209,158

397,292,042

29,058,667

2,042,251

368,233,375

21,769,751

7,534,843

443,047,319

2,357,607

408,367,919¥¥

290,050—— ¥290,050

34,679,400
¥

4,792

Note 2¥1,962,090 ¥ 94,109,432 Notes 1 and 2

259,908,839

428,812,411¥

Note 2

186,111

1,983,122

Subtotal
Total property, plant and equipment

Other
Total intangible assets—¥ 5,316,656
13,848—Land in trust
Construction inprogress in trust

Intangible
assets

10,207

Depreciation
for the period

3,532

Structures in trust
Machinery andequipment in trust
Tools, furniture andfixtures in trust

Leasehold rightLeasehold rightin trust

411,649¥ 342,022 ¥ 17,693,312—
32,618

Accumulated
depreciation

83,593

Subtotal
Buildings in trust

91,535—Netbalance atthe endof period

29,504,025

LandProperty,plant andequipment¥

Depreciation

Balance atthe endof period

Decreaseduringthe period

Increaseduringthe period

Balance atthe beginningof period¥— ¥285,257

363,784——

363,784

12,260774

351,524

6,123

—

—

6,123

3,234

612

2,889

659,958¥429,472,370—¥21,769,751—
659,958¥7,534,843 ¥443,707,278

20,287¥34,699,687

1,386
639,671¥2,358,994 ¥409,007,590

Note 1: The amount of increase during the period is primarily attributable to the acquisition of the one real estate property.
Note 2: The amount of decrease during the period is primarily attributable to the sales of the two real estate properties.

5. UNITHOLDERS’ EQUITY
Total number of authorized investment units and total number of investment units issued and outstanding are as follows:
From May 1, 2018
to October 31, 2018

From November 1, 2018
to April 30, 2019

Total number of authorized investment units
Total number of investment units issued and outstanding

2,000,000
428,5102,000,000
428,510

6. SHORT-TERM LOANS PAYABLE, LONG-TERM LOANS PAYABLE AND INVESTMENT CORPORATION BONDS
The following summarizes short-term loans payable, long-term loans payable and investment corporation bonds outstanding as ofApril 30, 2019:
Classification

Short-term loans payable

Subtotal
Current portion of long-term loans payable

Drawdown date

Last repayment dateJuly 31, 2018
August 31, 2018
November 30, 2018
November 30, 2018
January 31, 2019
January 31, 2019

July 31, 2019
August 31, 2019
November 30, 2019
November 30, 2019
January 31, 2020
January 31, 2020

July 10, 2014
July 14, 2014
July 31, 2014
August 29, 2014
September 30, 2013
September 30, 2013
November 12, 2018

July 10, 2019
July 31, 2019
July 31, 2019
July 31, 2019
September 30, 2019
September 30, 2019
November 30, 2019

Weighted-averageinterest rate

0.36%
0.31%
0.36%
0.31%
0.31%
0.31%

0.64%
0.68%
0.62%
0.65%
1.06%
1.06%
0.31%

Balance(In thousands of yen)¥¥

1,000,000
1,000,000
1,000,000
200,000
500,000
500,000
4,200,000
500,000
1,000,000
1,000,000
1,000,000
1,800,000
900,000
500,000

Kenedix Office Investment Corporation25

Classification

Current portion of long-term loans payable

SubtotalLong-term loans payable

26

Drawdown date

Last repayment date

Weighted-averageinterest rate

January 31, 2014
March 12, 2014
March 20, 2014
March 29, 2019
March 29, 2019

January 31, 2020
March 12, 2020
March 12, 2020
March 31, 2020
March 31, 2020

0.93%
0.92%
0.91%
0.36%
0.31%

August 30, 2013
November 12, 2013
November 12, 2013
November 29, 2013
November 29, 2013
January 10, 2014
January 31, 2014
March 12, 2014
March 20, 2014
March 20, 2014
March 20, 2014
April 22, 2014
July 10, 2014
July 10, 2014
July 31, 2014
July 31, 2014
July 31, 2014
September 1, 2014
September 1, 2014
September 3, 2014
September 3, 2014
September 22, 2014
September 30, 2014
October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
January 30, 2015
January 30, 2015
February 18, 2015
February 18, 2015
February 18, 2015
February 18, 2015
February 27, 2015
March 12, 2015
March 31, 2015
April 30, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
September 30, 2015
October 30, 2015
October 30, 2015
October 30, 2015
October 30, 2015
October 30, 2015
November 12, 2015
January 29, 2016

August 31, 2020
November 12, 2020
November 12, 2020
November 30, 2020
November 30, 2020
January 31, 2021
January 31, 2021
March 12, 2023
September 20, 2021
March 20, 2022
March 12, 2023
October 31, 2020
July 10, 2021
July 10, 2021
July 31, 2020
October 31, 2020
July 31, 2022
August 31, 2021
August 31, 2021
August 31, 2022
August 31, 2022
September 30, 2020
September 30, 2021
October 31, 2021
October 31, 2023
October 31, 2023
October 31, 2023
October 31, 2024
October 31, 2024
January 31, 2021
January 31, 2025
February 28, 2022
February 28, 2022
February 29, 2024
February 28, 2025
February 28, 2025
February 28, 2025
March 31, 2025
April 30, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
September 30, 2024
October 31, 2024
October 30, 2025
October 30, 2025
October 30, 2025
October 30, 2025
November 30, 2025
January 31, 2022

1.42%
1.07%
1.07%
1.12%
1.12%
1.21%
1.13%
1.36%
1.01%
1.20%
1.35%
0.95%
0.90%
0.90%
0.74%
0.76%
1.01%
0.89%
0.89%
0.98%
0.98%
0.80%
0.89%
0.80%
1.07%
1.13%
1.07%
1.26%
1.26%
0.71%
1.16%
0.91%
0.91%
1.16%
1.31%
1.15%
1.22%
1.27%
0.83%
0.87%
0.87%
0.87%
0.87%
0.87%
0.87%
1.07%
0.99%
1.11%
1.11%
1.11%
1.12%
1.17%
0.59%

Balance(In thousands of yen)¥

3,700,000
1,800,000
3,000,000
1,000,000
500,000
16,700,000¥ 1,500,000
2,000,000
500,000
1,000,000
900,000
1,300,000
2,300,000
1,800,000
4,000,000
3,000,000
2,000,000
2,900,000
2,000,000
500,000
2,700,000
300,000
2,200,000
800,000
500,000
1,000,000
950,000
2,700,000
1,000,000
3,000,000
2,000,000
1,500,000
1,000,000
2,000,000
1,000,000
1,500,000
1,500,000
1,250,000
350,000
1,700,000
1,250,000
2,100,000
1,000,000
2,500,000
2,300,000
500,000
500,000
500,000
500,000
500,000
500,000
2,000,000
1,000,000
1,500,000
2,000,000
2,500,000
2,500,000
1,000,000
2,500,000

Classification

Long-term loans payable

Subtotal

Drawdown date

Last repayment date

Weighted-averageinterest rate

January 29, 2016
January 29, 2016
January 29, 2016
February 18, 2016
February 18, 2016
March 31, 2016
April 28, 2016
April 28, 2016
April 28, 2016
July 29, 2016
August 2, 2016
October 31, 2016
October 31, 2016
October 31, 2016
October 31, 2016
October 31, 2016
December 12, 2016
December 28, 2016
January 16, 2017
January 31, 2017
March 28, 2017
June 30, 2017
August 10, 2017
August 31, 2017
September 21, 2017
September 21, 2017
September 21, 2017
September 21, 2017
September 21, 2017
October 31, 2017
November 13, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 28, 2017
December 28, 2017
December 28, 2017
March 12, 2018
March 26, 2018
March 26, 2018
July 31, 2018
August 20, 2018
August 20, 2018
August 20, 2018
August 20, 2018
August 20, 2018
August 31, 2018
August 31, 2018
August 31, 2018
October 31, 2018
October 31, 2018
October 31, 2018
March 28, 2019
March 29, 2019

January 31, 2022
January 29, 2026
January 29, 2026
February 18, 2026
February 18, 2026
March 31, 2026
April 30, 2024
April 30, 2026
April 30, 2026
July 31, 2026
July 31, 2026
October 31, 2024
October 31, 2026
October 31, 2026
October 31, 2026
October 31, 2026
November 30, 2026
December 28, 2026
January 31, 2027
January 31, 2027
March 31, 2027
June 30, 2027
July 28, 2027
August 31, 2023
March 31, 2024
September 30, 2025
March 31, 2027
September 21, 2027
September 30, 2027
October 31, 2027
November 13, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
December 28, 2025
December 28, 2026
December 28, 2027
March 31, 2028
March 31, 2027
March 31, 2028
July 31, 2028
August 31, 2025
August 31, 2028
August 31, 2028
August 31, 2028
August 31, 2028
August 31, 2025
August 31, 2025
August 31, 2028
October 31, 2028
October 31, 2028
October 31, 2028
March 31, 2029
March 31, 2029

0.64%
1.07%
1.02%
1.00%
1.00%
0.90%
0.65%
0.84%
0.87%
0.61%
0.54%
0.67%
0.88%
0.76%
0.73%
0.83%
0.98%
0.95%
0.86%
0.85%
0.85%
0.85%
0.80%
0.54%
0.56%
0.68%
0.73%
0.87%
0.85%
0.81%
0.93%
0.90%
0.82%
0.97%
0.94%
0.87%
0.90%
0.87%
0.74%
0.88%
0.86%
0.91%
0.81%
0.90%
0.99%
0.70%
1.00%
1.00%
1.00%
0.97%
0.70%
0.72%
1.01%
1.01%
0.91%
1.01%
0.84%
0.84%

Balance(In thousands of yen)¥

500,000
2,000,000
1,800,000
1,000,000
500,000
1,000,000
2,000,000
2,000,000
1,000,000
1,500,000
1,000,000
1,000,000
2,500,000
1,000,000
4,000,000
1,500,000
500,000
1,500,000
500,000
700,000
500,000
1,500,000
3,500,000
1,000,000
1,000,000
1,500,000
1,000,000
1,000,000
2,500,000
2,500,000
3,000,000
1,400,000
1,200,000
1,000,000
1,000,000
1,000,000
800,000
600,000
500,000
500,000
500,000
1,500,000
1,000,000
1,000,000
500,000
500,000
1,000,000
1,000,000
500,000
500,000
500,000
300,000
700,000
1,500,000
1,000,000
500,000
1,400,000
2,950,000
153,150,000

Kenedix Office Investment Corporation27

Classification

Investment corporation bonds

Subtotal
Total

Drawdown date

Last repayment date

Weighted-averageinterest rate

July 25, 2014
April 28, 2016
July19, 2017
July19, 2017
February 15, 2019

July 25, 2024
April 28, 2028
July 19, 2022
July 16, 2027
February 15, 2024

1.18%
0.90%
0.26%
0.64%
0.39%

Balance(In thousands of yen)¥

2,000,000
1,000,000
1,000,000
2,000,000
2,000,000
8,000,000¥182,050,000

The following summarizes short-term loans payable, long-term loans payable and investment corporation bonds outstanding as of
October 31, 2018:
Classification

Short-term loans payable

Subtotal
Current portion of long-term loans payable

SubtotalLong-term loans payable

28

November 30, 2017
January 31, 2018
January 31, 2018
March 30, 2018
July 31, 2018
August 31, 2018

Last repayment dateNovember 30, 2018
January 31, 2019
January 31, 2019
March 29, 2019
July 31, 2019
August 31, 2019

Weighted-averageinterest rate

November 12, 2013
November 29, 2013
March 28, 2012
March 28, 2012
March 12, 2014
March 31, 2014
March 30, 2016
July 10, 2014
July 14, 2014
July 31, 2014
August 29, 2014
September 30, 2013
September 30, 2013

November 12, 2018
November 30, 2018
March 28, 2019
March 28, 2019
March 31, 2019
March 31, 2019
March 31, 2019
July 10, 2019
July 31, 2019
July 31, 2019
July 31, 2019
September 30, 2019
September 30, 2019

0.82%
0.84%
1.77%
1.77%
0.78%
0.76%
0.17%
0.64%
0.68%
0.62%
0.65%
1.06%
1.06%

August 30, 2013
November 12, 2013
November 12, 2013
November 29, 2013
November 29, 2013
January 10, 2014
January 31, 2014
January 31, 2014
March 12, 2014
March 12, 2014
March 20, 2014
March 20, 2014
March 20, 2014
March 20, 2014
April 22, 2014
July 10, 2014
July 10, 2014
July 31, 2014
July 31, 2014
July 31, 2014
September 1, 2014
September 1, 2014
September 3, 2014
September 3, 2014
September 22, 2014
September 30, 2014

August 31, 2020
November 12, 2020
November 12, 2020
November 30, 2020
November 30, 2020
January 31, 2021
January 31, 2020
January 31, 2021
March 12, 2020
March 12, 2023
March 12, 2020
September 20, 2021
March 20, 2022
March 12, 2023
October 31, 2020
July 10, 2021
July 10, 2021
July 31, 2020
October 31, 2020
July 31, 2022
August 31, 2021
August 31, 2021
August 31, 2022
August 31, 2022
September 30, 2020
September 30, 2021

1.42%
1.07%
1.07%
1.12%
1.12%
1.21%
0.93%
1.13%
0.92%
1.36%
0.91%
1.01%
1.20%
1.35%
0.95%
0.90%
0.90%
0.74%
0.76%
1.01%
0.89%
0.89%
0.98%
0.98%
0.80%
0.89%

Drawdown date

0.36%
0.31%
0.36%
0.36%
0.36%
0.32%

Balance(In thousands of yen)¥

2,000,000
500,000
500,000
1,000,000
1,000,000
1,000,000
6,000,000¥ 1,000,000
200,000
1,400,000
1,000,000
450,000
2,500,000
1,000,000
500,000
1,000,000
1,000,000
1,000,000
1,800,000
900,000
13,750,000¥ 1,500,000
2,000,000
500,000
1,000,000
900,000
1,300,000
3,700,000
2,300,000
1,800,000
1,800,000
3,000,000
4,000,000
3,000,000
2,000,000
2,900,000
2,000,000
500,000
2,700,000
300,000
2,200,000
800,000
500,000
1,000,000
950,000
2,700,000
1,000,000

Classification

Long-term loans payable

Drawdown date

Last repayment date

Weighted-averageinterest rate

October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
January 30, 2015
January 30, 2015
February 18, 2015
February 18, 2015
February 18, 2015
February 18, 2015
February 27, 2015
March 12, 2015
March 31, 2015
April 30, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
September 30, 2015
October 30, 2015
October 30, 2015
October 30, 2015
October 30, 2015
October 30, 2015
November 12, 2015
January 29, 2016
January 29, 2016
January 29, 2016
January 29, 2016
February 18, 2016
February 18, 2016
March 31, 2016
April 28, 2016
April 28, 2016
April 28, 2016
July 29, 2016
August 2, 2016
October 31, 2016
October 31, 2016
October 31, 2016
October 31, 2016
October 31, 2016
December 12, 2016
December 28, 2016
January 16, 2017
January 31, 2017
March 28, 2017
June 30, 2017
August 10, 2017
August 31, 2017
September 21, 2017
September 21, 2017
September 21, 2017
September 21, 2017
September 21, 2017

October 31, 2021
October 31, 2023
October 31, 2023
October 31, 2023
October 31, 2024
October 31, 2024
January 31, 2021
January 31, 2025
February 28, 2022
February 28, 2022
February 29, 2024
February 28, 2025
February 28, 2025
February 28, 2025
March 31, 2025
April 30, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
September 30, 2024
October 31, 2024
October 30, 2025
October 30, 2025
October 30, 2025
October 30, 2025
November 30, 2025
January 31, 2022
January 31, 2022
January 29, 2026
January 29, 2026
February 18, 2026
February 18, 2026
March 31, 2026
April 30, 2024
April 30, 2026
April 30, 2026
July 31, 2026
July 31, 2026
October 31, 2024
October 31, 2026
October 31, 2026
October 31, 2026
October 31, 2026
November 30, 2026
December 28, 2026
January 31, 2027
January 31, 2027
March 31, 2027
June 30, 2027
July 28, 2027
August 31, 2023
March 31, 2024
September 30, 2025
March 31, 2027
September 21, 2027
September 30, 2027

0.80%
1.07%
1.13%
1.07%
1.26%
1.26%
0.71%
1.16%
0.91%
0.91%
1.16%
1.31%
1.15%
1.22%
1.27%
0.83%
0.87%
0.87%
0.87%
0.87%
0.87%
0.87%
1.07%
0.99%
1.11%
1.11%
1.11%
1.12%
1.17%
0.59%
0.64%
1.07%
1.02%
1.00%
1.00%
0.90%
0.65%
0.84%
0.87%
0.61%
0.54%
0.67%
0.88%
0.76%
0.73%
0.83%
0.98%
0.95%
0.86%
0.85%
0.85%
0.85%
0.80%
0.54%
0.56%
0.68%
0.73%
0.87%
0.85%

Balance(In thousands of yen)¥

3,000,000
2,000,000
1,500,000
1,000,000
2,000,000
1,000,000
1,500,000
1,500,000
1,250,000
350,000
1,700,000
1,250,000
2,100,000
1,000,000
2,500,000
2,300,000
500,000
500,000
500,000
500,000
500,000
500,000
2,000,000
1,000,000
1,500,000
2,000,000
2,500,000
2,500,000
1,000,000
2,500,000
500,000
2,000,000
1,800,000
1,000,000
500,000
1,000,000
2,000,000
2,000,000
1,000,000
1,500,000
1,000,000
1,000,000
2,500,000
1,000,000
4,000,000
1,500,000
500,000
1,500,000
500,000
700,000
500,000
1,500,000
3,500,000
1,000,000
1,000,000
1,500,000
1,000,000
1,000,000
2,500,000

Kenedix Office Investment Corporation

29

Classification

Long-term loans payable

Subtotal
Investment corporation bonds

Subtotal
Total

Drawdown date

Last repayment date

Weighted-averageinterest rate

October 31, 2017
November 13, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 28, 2017
December 28, 2017
December 28, 2017
March 12, 2018
March 26, 2018
March 26, 2018
July 31, 2018
August 20, 2018
August 20, 2018
August 20, 2018
August 20, 2018
August 20, 2018
August 31, 2018
August 31, 2018
August 31, 2018
October 31, 2018
October 31, 2018
October 31, 2018

October 31, 2027
November 13, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
December 28, 2025
December 28, 2026
December 28, 2027
March 31, 2028
March 31, 2027
March 31, 2028
July 31, 2028
August 31, 2025
August 31, 2028
August 31, 2028
August 31, 2028
August 31, 2028
August 31, 2025
August 31, 2025
August 31, 2028
October 31, 2028
October 31, 2028
October 31, 2028

0.81%
0.93%
0.90%
0.82%
0.97%
0.94%
0.87%
0.90%
0.87%
0.74%
0.88%
0.86%
0.91%
0.81%
0.90%
0.99%
0.70%
1.00%
1.00%
1.00%
0.97%
0.70%
0.72%
1.01%
1.01%
0.91%
1.01%

July 25, 2014
April 28, 2016
July 19, 2017
July 19, 2017

July 25, 2024
April 28, 2028
July 19, 2022
July 16, 2027

1.18%
0.90%
0.26%
0.64%

Balance(In thousands of yen)¥

2,500,000
3,000,000
1,400,000
1,200,000
1,000,000
1,000,000
1,000,000
800,000
600,000
500,000
500,000
500,000
1,500,000
1,000,000
1,000,000
500,000
500,000
1,000,000
1,000,000
500,000
500,000
500,000
300,000
700,000
1,500,000
1,000,000
500,000
157,300,000¥ 2,000,000
1,000,000
1,000,000
2,000,000
6,000,000¥183,050,000

7. REDUCTION ENTRY
The amount of reduction entry of property, plant and equipment acquired by government subsidy is as follows:
In thousands of yen

Buildings in trust¥26,230¥26,230

8. PER UNIT INFORMATION

Net asset value per unit
Net income per unit
Weighted-average number of units (units)

As of October 31, 2018

As of April 30, 2019

Yen

From November 1, 2018
to April 30, 2019

¥535,437¥ 14,418
428,510

From May 1, 2018
to October 31, 2018

¥535,141¥ 14,373
424,933

The weighted-average number of units outstanding of 428,510 and 424,933 as of April 30, 2019 and October 31, 2018, respectively, wasused for the computation of the amount of net income per unit. Net income per unit after adjusting for residual units is not included because
there were no residual investment units.

30

9. INCOME TAXESThe Investment Corporation is subject to corporate income taxes
at a regular statutory rate of approximately 32%. However, theInvestment Corporation may deduct from its taxable income
amounts distributed to its unitholders, provided the requirements
are met under the Special Taxation Measures Law of Japan. Under
this law, the Investment Corporation must meet a number of tax
requirements, including a requirement that it currently distributein excess of 90% of its net income for the fiscal period in order tobe able to deduct such amounts. If the Investment Corporation
does not satisfy all of the requirements, the entire taxable incomeof the Investment Corporation will be subject to regular corporate

Statutory tax rate
Deductible cash distributions
Provision of reserve for reduction entry
Others
Effective tax rateincome taxes. The Investment Corporation distributed in excessof 90% of its distributable income in the form of cash distributions
totaling ¥5,878 million and ¥5,766 million for the fiscal periods
ended April 30, 2019 and October 31, 2018, respectively. Therefore, such distributions were treated as deductible distributions forpurposes of corporate income taxes. The effective tax rate on theInvestment Corporation’s income was 0.02% for the fiscal periods
ended April 30, 2019 and October 31, 2018, respectively. The
following table summarizes the significant differences between thestatutory tax rate and the effective tax rate.

From November 1, 2018
to April 30, 201931.51%(29.97)(1.53)
0.01
0.02%

From May 1, 2018
to October 31, 201831.51%(29.74)(1.76)
0.01
0.02%

The significant components of deferred tax assets and liabilities as of April 30, 2019 and October 31, 2018 are as follows:
In thousands of yen

Deferred tax assets
Enterprise tax payable
Amortization of leasehold right
Deferred gains or losses on hedges
Subtotal
Valuation allowance
Total deferred tax assets

As of April 30, 2019

As of October 31, 2018

¥

¥

30
4,117
64,376
68,524(68,493)
¥
30

30
3,873
—
3,904
(3,873)¥30

10. NET ASSETSThe Investment Corporation issues only non-par value units in accordance with the Investment Trust Act. The entire amount of the issue
price of new units is designated as stated capital. The Investment Corporation is required to maintain net assets of at least ¥50 million as
required by the Investment Trust Act.

11. RELATED-PARTY TRANSACTIONS(A) Parent Company, Major Corporate Unitholders and Other
Twenty-eighth fiscal period (From November 1, 2018 to April 30, 2019) and Twenty-seventh fiscal period (From May 1, 2018 to
October 31, 2018):
Not applicable(B) Affiliated Companies and Other
Twenty-eighth fiscal period (From November 1, 2018 to April 30, 2019) and Twenty-seventh fiscal period (From May 1, 2018 to
October 31, 2018):
Not applicable(C) Fellow Subsidiary Companies and Other
Twenty-eighth fiscal period (From November 1, 2018 to April 30, 2019) and Twenty-seventh fiscal period (From May 1, 2018 to
October 31, 2018):
Not applicable(D) Directors, Major Individual Unitholders and Other
Twenty-eighth fiscal period (From November 1, 2018 to April 30, 2019) and Twenty-seventh fiscal period (From May 1, 2018 to
October 31, 2018):
Not applicable

Kenedix Office Investment Corporation

31

12. BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, AND GAIN AND LOSSON SALE OF REAL ESTATE PROPERTY
Rent revenue - real estate, expenses related to rent business, and gain and loss on sale of real estate property for the fiscal periods from
November 1, 2018 to April 30, 2019 and from May 1, 2018 to October 31, 2018 consist of the following:
In thousands of yen

Rental and other operating revenues
Rent revenue - real estate
Rental revenues
Common area charges
Subtotal
Others:Parking space rental revenues
Utility charge reimbursement
Miscellaneous
Subtotal
Total rent revenue - real estate
Property-related expenses
Expenses related to rent business
Property management fees and facility management fees
Utilities
Taxes
Repairs and maintenanceInsurance
Trust fees
OthersDepreciation
Total expenses related to rent business
Gain on sale of real estate properties
Revenue from sale of investment properties
Cost of investment properties
Other sales expenses
Gain on sale of real estate properties

From November 1, 2018
to April 30, 2019

From May 1, 2018
to October 31, 2018¥10,984,209
1,809,977
12,794,187¥10,893,102
1,837,671
12,730,773

509,859
1,030,420
261,426
1,801,706¥14,595,893

519,171
1,230,853
321,947
2,071,972¥14,802,746¥ 1,382,522
1,121,738
1,224,581
403,049
20,14932,642
326,404
2,369,390¥ 6,880,478¥ 1,378,278
1,241,455
1,225,685
568,517
19,88632,791
280,955
2,358,382¥ 7,105,951¥ 5,253,000
4,652,797
34,915¥ 565,286¥ 7,297,000
6,714,787
49,722¥ 532,490

13. LEASESThe Investment Corporation, as lessor, has entered into leases whose fixed monthly rents are due in advance with lease terms of generally
two years for office buildings. The future minimum rental revenues under existing non-cancelable operating leases as of April 30, 2019 andOctober 31, 2018 are as follows:
In thousands of yen

Due within one year
Due after one year
Total

32

As of April 30, 2019¥2,210,585
6,719,211¥8,929,796

As of October 31, 2018

¥1,621,774
5,956,433¥7,578,208

14. FINANCIAL INSTRUMENTS
Twenty-eighth fiscal period (from November 1, 2018 to April 30, 2019)(A) Overview(1) Policy for financial instruments
The Investment Corporation procures essential funds for acquiringproperties and undertaking the repayment of loans primarily
through bank loans and the issuance of investment corporation
bonds and new investment units. The Investment Corporation
uses derivatives for the purpose of hedging its exposure tochanges in interest rates and does not enter into derivatives for
speculative or trading purposes. Management of surplus funds isundertaken in a prudent manner that considers fully such factors
as safety, liquidity, interest rate conditions and cash flows.
(2) Types of financial instruments and related risk
Investment securities, which are Japanese silent partnership(tokumei kumiai, “TK”) interests, are exposed to credit risk of theissuer and risk of fluctuation of value of its property.
Loans payable and investment corporation bonds are usedprimarily for procuring funds necessary for the acquisition ofproperties and have a redemption date of a maximum of approximately 10 years following the accounting date. Although a certain
portion of said liabilities are subject to interest rate fluctuation risk,
the Investment Corporation utilizes derivatives (interest-rate swap
transactions) in order to reduce such risk.
Interest-rate swap transactions are used as derivative financial
instruments. Utilizing interest-rate swap transactions, theInvestment Corporation fixes its interest expense for long-termloans payable bearing interest at a variable rate. With regard tohedge accounting methods, hedging instruments and hedged
items, hedge policy, and the assessment of the effectiveness ofhedging activities, please see Note 2 (L) “Derivative Financial
Instruments.”(3) Risk management for financial instruments(a)	Monitoring of market risk (the risks arising from­fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap transactions
in order to minimize risk arising from fluctuations in interest rates
on funds procured. The Investment Corporation periodicallyreviews the value of the property and financial condition of theissuer with regard to investment securities.
(b)	Monitoring of liquidity risk (the risk that the Investment
Corporation may not be able to meet its obligations onscheduled due dates) associated with procurement offunds
Although loans and other liabilities are subject to liquidity risk,
the Investment Corporation reduces such risk by spreading out
payment due dates and by using diversified fund procurement
methods. Liquidity risk is also managed by such means as­regularly checking the balance of cash reserves.
(4)	Supplementary explanation of the estimated fair valueof 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 fairvalue. Moreover, the contract amounts, etc. of derivative transactions in “(B) Estimated Fair Value of Financial Instruments” do notindicate the market risk of derivative transactions.

(B) Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet as of April 30, 2019 and estimated fair value are shown in the following table.
The following table does not include financial instruments for which it is extremely difficult to determine the fair value (Refer to *2 below).
In thousands of yen(1) Cash and deposits(2) Cash and deposits in trust
Subtotal(1) Short-term loans payable(2) Current portion of investment corporation bonds(3) Current portion of long-term loans payable(4) Investment corporation bonds(5) Long-term loans payable
Subtotal
Derivative transactions (*)

Carrying value

Estimated fair value¥ 19,675,112
10,959,133
30,634,246
4,200,000—
16,700,000
8,000,000
153,150,000¥182,050,000(184,329)¥ 19,675,112
10,959,133
30,634,246
4,200,000—
16,737,975
8,096,200
155,121,843¥184,156,018(184,329)

Difference

¥

—
—
—
—
—
37,97596,2001,971,843¥2,106,018—(*) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing the net liability position.

Kenedix Office Investment Corporation33

*1	Methods to determine the estimated fair value of financial instruments and other matters related to securities and­derivative 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 value approximates fair value.
Liabilities(1) Short-term loans payable
Since these items are settled in a short period of time, their carrying value approximates fair value.
(2) Current portion of investment corporation bonds and (4) Investment corporation bonds
The fair value of investment corporation bonds is based on quoted market prices.
(3) Current portion of long-term loans payable and (5) Long-term loans payable
The fair value of long-term loans payable is based on the present value of the total of principal and interest discounted by the interest rate
to be applied if similar new loans were entered into. The fair value of long-term loans payable bearing interest at a variable rate, which is
subject to fixed interest rates resulting from interest-rate swaps and special treatment applied to said swaps, is based on the present valueof the total of principal and interest, which is handled together with the applicable interest-rate swaps, discounted by the interest rate to be
applied if similar loans were entered into.
Derivative Transactions
Please refer to Note 15 “DERIVATIVE TRANSACTIONS.”*2 Financial instruments for which it is extremely difficult to determine the fair value
Classification

Carrying value (In thousands of yen)

Investment securities¥1,130,524

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above TK interests are not included in
the preceding table.
*3 Redemption schedule for receivables

Due within 1 year or less
(In thousands of yen)

Cash and deposits
Cash and deposits in trust
Total¥19,675,112
10,959,133¥30,634,246*4 Redemption schedule for loans payable and investment corporation bonds
In thousands of yen

Short-term loans payable
Investment corporation bonds
Long-term loans payable
Total

Due within 1 year
or less

Due after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years¥ 4,200,000—
16,700,000¥20,900,000

¥

¥

¥

¥

—
—
19,600,000¥19,600,000——
21,700,000¥21,700,000—
1,000,000
10,950,000¥11,950,000—
2,000,000
10,200,000¥12,200,000

Due after
5 years¥—
5,000,000
90,700,000¥95,700,000

Twenty-seventh fiscal period (from May 1, 2018 to October 31, 2018)(A) Overview(1) Policy for financial instruments
The Investment Corporation procures essential funds for acquiringproperties and undertaking the repayment of loans primarily
through bank loans and the issuance of investment corporation
bonds and new investment units. The Investment Corporation
uses derivatives for the purpose of hedging its exposure tochanges in interest rates and does not enter into derivatives for
speculative or trading purposes. Management of surplus funds isundertaken in a prudent manner that considers fully such factors
as safety, liquidity, interest rate conditions and cash flows.
(2) Types of financial instruments and related risk
Investment securities, which are Japanese silent partnership(tokumei kumiai, “TK”) interests, are exposed to credit risk of theissuer and risk of fluctuation of value of its property.

34

Loans payable and investment corporation bonds are usedprimarily for procuring funds necessary for the acquisition ofproperties and have a redemption date of a maximum of approximately 10 years following the accounting date. Although a certain
portion of said liabilities are subject to interest rate fluctuation risk,
the Investment Corporation utilizes derivatives (interest-rate swap
and interest-rate cap transactions) in order to reduce such risk.
Interest-rate swap and interest-rate cap transactions are usedas derivative financial instruments. Utilizing interest-rate swap andinterest-rate cap transactions, the Investment Corporation fixes its
interest expense for long-term loans payable bearing interest at a
variable rate. With regard to hedge accounting methods, hedging
instruments and hedged items, hedge policy, and the assessmentof the effectiveness of hedging activities, please see Note 2 (L)“Derivative Financial Instruments.”

(3) Risk management for financial instruments(a)	Monitoring of market risk (the risks arising from­fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap and­interest-­rate cap transactions in order to minimize risk arising fromfluctuations in interest rates on funds procured. The Investment
Corporation periodically reviews the value of the property andfinancial condition of the issuer with regard to investment­securities.
(b)	Monitoring of liquidity risk (the risk that the Investment
Corporation may not be able to meet its obligations onscheduled due dates) associated with procurement offunds
Although loans and other liabilities are subject to liquidity risk,
the Investment Corporation reduces such risk by spreading out
payment due dates and by using diversified fund procurement
methods. Liquidity risk is also managed by such means as­regularly checking the balance of cash reserves.

(4)	Supplementary explanation of the estimated fair valueof 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 fairvalue. Moreover, the contract amounts, etc. of derivative transactions in “(B) Estimated Fair Value of Financial Instruments” do notindicate the market risk of derivative transactions.

(B) Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet as of October 31, 2018 and estimated fair value are shown in the following
table. The following table does not include financial instruments for which it is extremely difficult to determine the fair value (Refer to *2 below).
In thousands of yen(1) Cash and deposits(2) Cash and deposits in trust
Subtotal(1) Short-term loans payable(2) Current portion of investment corporation bonds(3) Current portion of long-term loans payable(4) Investment corporation bonds(5) Long-term loans payable
Subtotal
Derivative transactions (*)

Carrying value

Estimated fair value¥ 14,050,532
10,973,654
25,024,186
6,000,000—
13,750,000
6,000,000
157,300,000¥183,050,000
100,798¥ 14,050,532
10,973,654
25,024,186
6,000,000—
13,768,881
6,050,100
157,675,962¥183,494,943
100,798

Difference

¥

—
—
—
—
—
18,881
50,100375,962¥444,943—(*) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing the net liability position.

*1	Methods to determine the estimated fair value of financial instruments and other matters related to securities and­derivative 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 value approximates fair value.
Liabilities(1) Short-term loans payable
Since these items are settled in a short period of time, their carrying value approximates fair value.
(2) Current portion of investment corporation bonds and (4) Investment corporation bonds
The fair value of investment corporation bonds is based on quoted market prices.
(3) Current portion of long-term loans payable and (5) Long-term loans payable
The fair value of long-term loans payable is based on the present value of the total of principal and interest discounted by the interest rate
to be applied if similar new loans were entered into. The fair value of long-term loans payable bearing interest at a variable rate, which is
subject to fixed interest rates resulting from interest-rate swaps and special treatment applied to said swaps, is based on the present valueof the total of principal and interest, which is handled together with the applicable interest-rate swaps, discounted by the interest rate to be
applied if similar loans were entered into.
Derivative Transactions
Please refer to Note 15 “DERIVATIVE TRANSACTIONS.”

Kenedix Office Investment Corporation35

*2 Financial instruments for which it is extremely difficult to determine the fair value
Classification

Carrying value (In thousands of yen)

Investment securities¥1,114,806

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above TK interests are not included in
the preceding table.
*3 Redemption schedule for receivables

Due within 1 year or less
(In thousands of yen)

Cash and deposits
Cash and deposits in trust
Total¥14,050,532
10,973,654¥25,024,186*4 Redemption schedule for loans payable and investment corporation bonds
In thousands of yen

Short-term loans payable
Investment corporation bonds
Long-term loans payable
Total

Due within 1 year
or less¥ 6,000,000—
13,750,000¥19,750,000

Due after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

¥

¥

¥

¥

—
—
18,600,000¥18,600,000——
21,300,000¥21,300,000—
1,000,000
17,050,000¥18,050,000——
9,300,000¥9,300,000

Due after
5 years¥—
5,000,000
91,050,000¥96,050,000

15. DERIVATIVE TRANSACTIONS
The following summarizes the contracted amount and the fair value of interest-rate swap contracts as of April 30, 2019:(1) Hedge accounting not applied
Not applicable(2) Hedge accounting applied
Contracted amount (In thousands of yen)

Hedge accounting method

Type of derivative transactions

Hedged items

Principle method

Interest-rate swaps:
Receive/floating andpay/fixed

Long-term loans
payableSpecial treatment ofinterest-rate swaps

Interest-rate swaps:
Receive/floating andpay/fixed

Long-term loans
payableTotal

Maturing after
1 year¥ 28,250,000 ¥ 28,250,000

88,750,000

74,050,000¥117,000,000 ¥102,300,000

Fair value(In thousands of yen)Calculation method for
applicable fair value¥(184,329)

Based on theamount provided
by counterparty
financial institutions*¥(184,329)(*) Interest-rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fair value is included in thefair value of the hedged long-term loans payable.

36

The following summarizes the contracted amount and the fair value of interest-rate swap contracts as of October 31, 2018:(1) Hedge accounting not applied
Not applicable(2) Hedge accounting applied
Contracted amount (In thousands of yen)

Hedge accounting method

Type of derivative transactions

Hedged items

Principle method

Interest-rate swaps:
Receive/floating andpay/fixed

Long-term loans
payableSpecial treatment ofinterest-rate swaps

Interest-rate swaps:
Receive/floating andpay/fixed

Long-term loans
payableTotal

Maturing after
1 year

¥ 23,900,000 ¥ 23,900,000

93,900,000

82,550,000¥117,800,000 ¥106,450,000

Fair value(In thousands of yen)Calculation method for
applicable fair value¥100,798

Based on theamount provided
by counterparty
financial institutions*¥100,798(*) Interest-rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fair value is included in thefair value of the hedged long-term loans payable.

16. INVESTMENT AND RENTAL PROPERTIES
Twenty-eighth fiscal period (from November 1, 2018 to April 30, 2019)
The Investment Corporation owns real estate for rental purposes mainly in the Tokyo metropolitan area for the purpose of generating rental
revenues.
The carrying value in the balance sheets and corresponding fair value of those properties are as follows:

As of October 31, 2018

Net change

As of April 30, 2019

Fair value
As of April 30, 2019
(In thousands of yen)¥409,004,701¥(5,792,000)¥403,212,700¥474,257,000

Carrying value (In thousands of yen)

*1: The carrying value represents the acquisition cost less accumulated depreciation.
*2: Fair value at the end of the fiscal period is the appraisal value determined by outside appraisers.
*3: Among changes in the amount of real estate for rental purposes that occurred during the fiscal period under review, principal decrease factors were the sales of one
property totaling ¥4,652,797 thousand and depreciation amounting to ¥2,369,390 thousand.

Income and loss in the fiscal period ended April 30, 2019 for real estate for rental purposes is listed in Note 12 “BREAKDOWN OF RENTALAND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, AND GAIN AND LOSS ON SALE OF REAL ESTATEPROPERTY.”
Twenty-seventh fiscal period (from May 1, 2018 to October 31, 2018)
The Investment Corporation owns real estate for rental purposes mainly in the Tokyo metropolitan area for the purpose of generating rental
revenues.
The carrying value in the balance sheets and corresponding fair value of those properties are as follows:
Carrying value (In thousands of yen)
As of April 30, 2018

¥396,308,119

Net change¥12,696,581

As of October 31, 2018

¥409,004,701

Fair value
As of October 31, 2018
(In thousands of yen)

¥465,637,000*1: The carrying value represents the acquisition cost less accumulated depreciation.
*2: Fair value at the end of the fiscal period is the appraisal value determined by outside appraisers. Fair value at the end of the fiscal period under review of Frame
Jinnan-zaka (51.0% of quasi co-ownership interest) that was sold on November 1, 2018 is calculated based on the sale price (¥5,253,000 thousand) in the transaction
agreement on May 14, 2018.
*3: Among changes in the amount of real estate for rental purposes that occurred during the fiscal period under review, principal increase/decrease factors were theacquisition of one property totaling ¥20,841,117 thousand, the sales of two properties totaling ¥6,714,787 thousand and depreciation amounting to ¥2,358,382
thousand.

Income and loss in the fiscal period ended October 31, 2018 for real estate for rental purposes is listed in Note 12 “BREAKDOWN OFRENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, AND GAIN AND LOSS ON SALE OF REAL ESTATEPROPERTY.”

Kenedix Office Investment Corporation

37

17. SEGMENT AND RELATED INFORMATION
Twenty-eighth fiscal period (from November 1, 2018 to April 30, 2019)(A) Segment Information
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has no r­eportablesegment 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 the operating
revenues 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 revenues on the statement ofincome 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 amount ofproperty, 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 revenues on the statementof income and retained earnings.
Twenty-seventh fiscal period (from May 1, 2018 to October 31, 2018)(A) Segment Information
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has no r­eportablesegment 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 the operating
revenues 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 revenues on the statement ofincome 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 amount ofproperty, 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 revenues on the statementof income and retained earnings.

18. SIGNIFICANT SUBSEQUENT EVENTS
Not applicable38

19. DISTRIBUTIONS

I. Retained earnings at the end of period
II. Total distributions
Distributions per unit
III. Voluntary reserve (provision)
Provision of reserve for reduction entry
IV. 	Retained earnings brought forward to
the next period
Method of calculating distribution amount

Yen

Twenty-eighth fiscal period(From November 1, 2018 to April 30, 2019)¥6,178,677,968¥5,878,728,690¥
13,719Twenty-seventh fiscal period(From May 1, 2018 to October 31, 2018)¥6,107,886,067¥5,766,887,580¥
13,458¥ 299,949,278¥ 340,998,487¥—
In accordance with the policy stipulated in
Article 35 (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 the Act
on Special Measures Concerning Taxation,and shall be up to the amount of its profits
as the ceiling. Following this policy, theInvestment Corporation has decided that, of
the amount remaining after the provision ofreserve for reduction entry as stipulated in
Article 66-2 of the Act on Special Measures
Concerning Taxation is deducted from unappropriated retained earnings, it shall distribute the outstanding ¥5,878,728,690 as profit
distribution.
In addition, the Investment Corporation
decided not to distribute cash in excess of
distributable profit, stipulated in Article 35 (2)of its Articles of Incorporation.

¥—
In accordance with the policy stipulated in
Article 35 (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 the Act
on Special Measures Concerning Taxation,and shall be up to the amount of its profits
as the ceiling. Following this policy, theInvestment Corporation has decided that, of
the amount remaining after the provision ofreserve for reduction entry as stipulated in
Article 66-2 of the Act on Special Measures
Concerning Taxation is deducted from unappropriated retained earnings, it shall distribute the outstanding ¥5,766,887,580 as profit
distribution.
In addition, the Investment Corporation
decided not to distribute cash in excess of
distributable profit, stipulated in Article 35 (2)of its Articles of Incorporation.

Kenedix Office Investment Corporation

39

Unitholders’ Information

Outline of Kenedix Office Investment Corporation (as of April 30, 2019)
Structure of Investment Corporation
Property Support Line Company
Trademark Licenser

Investment Corporation❺

Kenedix, Inc.

Asset Custodian /Administrative Agent(Institutional administration)

Mizuho Trust & Banking Co., Ltd.

❷❹
Asset Management Company

Kenedix Real Estate
Fund Management, Inc.

General Meeting ofUnitholders❶❻

Board of Directors❷

Administrative Agent(accounting business)

Mitsubishi UFJ Trust andBanking Corporation

Executive Director

Jiro Takeda

Supervisory Director❼

Shiro Toba

Property Support Line Company

Supervisory Director

Kenedix Investment
Partners, Inc.

Administrator for Unitholders’ Register
Administrator for Special Accounts

Sumitomo Mitsui Trust Bank, Limited

Yoshihiro Morishima
Supervisory Director

Takahiro Seki

Property Management Company(Note)

Auditor❸❽Ernst & Young ShinNihon LLC

Kenedix Property Management, Inc.

❶ Asset management agreement

Administrative Agent for
Investment Corporation Bonds

Sumitomo Mitsui Banking Corporation
MUFG Bank, Ltd.

❺ Asset custodian agreement / Administrative agency agreement(institutional administration)❷ Memorandum of Understanding on providing
real estate information❻ Administrative agency agreement (accounting business)❸ Property management agreement❼ Unitholder registry administrator agreement/ Special accounts administration agreement❹ Trademark licensing agreement❽ Financial agency agreement

Note : Several properties are not under the property management of Kenedix Property Management, Inc.

Unitholder structure as of the end of 28th fiscal period (April 30, 2019)
Percentage of investment units
by type of unitholder
Individuals and others
12,881units(3.00%)

Foreign companies
and individuals
155,741units(36.34%)

Other domestic companies
108(2.12%)
Financial institutions(including securities companies)
123(2.42%)

428,510 units

Other domestic companies
4,098units(0.95%)

Note: Ratios rounded down to the second decimal place.

40

Percentage of number of unitholders
by type of unitholder
Foreign companies
and individuals
273(5.38%)

5,073
Financial institutions(including securities companies)
255,790units(59.69%)Individuals andothers
4,569(90.06%)

● IR schedule

ウェブサイト適宜情報開示
Fiscal period ended April

Nov.

Dec.

Jan.

Feb.

Fiscal period ended October

Mar.

Financial results
announcement

Apr.

May

Fiscal period end

Jun.

Jul.

Aug.

Sept.

Oct.

Fiscal period end

Financial results
announcement

Start of distribution payments

Start of distribution payments

Asset management report publication

Asset management report publication● Unitholder memorandum

Fiscal period ends

April 30 and October 31

General Meeting of Unitholders

In principal, at least once every two years

Unitholder fixed date for voting Prescribed in Article 16 of the Articles of Incorporation
Distribution payment dates

Ends of April and October (within three months from payment fixed date)Listing

Tokyo Stock Exchange (stock code: 8972)

Newspaper for publicannouncements

Nihon Keizai Shimbun (Nikkei)

Unitholder registry and special
account administrator

Sumitomo Mitsui Trust Bank, Limited
4-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo

Postal address and telephoneinquiries

Stock Transfer Agency Department
Sumitomo Mitsui Trust Bank, Limited
8-4 Izumi 2-chome, Suginami-ku, Tokyo
Toll-free tel: 0120 782 031● Receipt of Distribution

During receipt period

Take your distribution receipt to the head or branch offices of Japan Post Bank Co., Ltd. or post offices(bank agents).

After receipt period

Specify the receipt method on the back of the distribution receipt and mail it to the Stock Transfer
Agency Division of Sumitomo Mitsui Trust Bank, Limited, or receive distributions at a branch of thebank.

Receiving future dividends

Distributions can be paid by remittances to bank or ordinary postal savings accounts. If transfer
designations or other procedures are preferred, you should, in principle, contact the brokerage withwhich you have an account. If you do not have a brokerage account and have a special account,contact Sumitomo Mitsui Trust Bank, Limited, the institution for managing special accounts.

Exclusion

Under the Articles of Incorporation of KDO, you cannot receive distributions after three years havepassed since distribution payments start, so please receive them as soon as possible.
Kenedix Office Investment Corporation

41

Portfolio

Portfolio Map (as of June 14, 2019)
Tokyo metropolitan area (central 5 wards)

49 properties
JR Yamanote Line

Ueno

A-93

Shinjuku Ward
A-29

D-2

A-88

Suidobashi

A-71

Iidabashi

A-66

A-41

A-55

Chiyoda Ward

ne

A-21

Harajuku
山手線

A-112

Toranomon
A-115

A-7

ShibuyaMinato Ward

Ebisu

A-116

A-124
A-32

線
山手

A-119

A-91

A-17

A-89

Shinagawa

42

A-87

A-64

Tokyo

A-13

A-6

Shibuya Ward

JR Sobu Line

A-68

A-73
A-108
A-20

A-67

A-4

A-121

A-107

Shinbashi

Chuo Ward

Hamamatsucho
A-19

A-51
A-74

Nihonbashi

A-1

A-109

A-114

A-113

Kanda

A-27

A-46

JR Chuo Li

A-120

A-8

IchigayaShinjuku

A-59

A-56

A-37

A-38

A-92

Ochanomizu

A-60

A-3

A-1

A-3

A-4

A-20

A-51

A-60

A-64

A-67

KDX Nihonbashi
313 Building

Higashi-Kayabacho
Yuraku Building

KDX Hatchobori
Building

KDX Kayabacho
Building

KDX Hamacho
Nakanohashi Building

KDX Harumi
Building

KDX Nihonbashi
216 Building

KDX Ginza
1chome Building

A-68

A-73

A-74

A-87

A-107

A-108

A-113

A-114

KDX Nihonbashi
Honcho Building

KDX Hakozaki
Building

KDX Shin-Nihonbashi Building

Itopia Nihonbashi
SA Building

KDX Ginza East
Building

Pentel Building

KDX Shin-Nihonbashi
Ekimae Building

KDX Nihonbashi
Edo-dori Building

A-121

A-7

A-19

A-21

A-32

A-89

A-91

A-109

Ginza 4chome
Tower

KDX Minami
Aoyama Building

KDX Hamamatsucho
Building

KDX Shinbashi
Building

KDX Shiba-Daimon
Building

KDX Takanawadai
Building

KDX Mita Building

KDX Hamamatsucho
Center Building

A-112

A-115

A-116

A-124

A-8

A-13

A-27

A-37

KDX Toranomon
1chome Building

ARK Mori Building

KDX Nishi-Shinbashi Building

KDX Hamamatsucho
Place

Kanda Kihara
Building

KDX Kojimachi
Building

KDX Kajicho Building

KDX Ochanomizu
Building

A-46

A-56

A-59

A-92

A-29

A-38

A-41

A-55

Hiei Kudan-Kita
Building

KDX Jimbocho
Building

KDX Iwamoto-cho
Building

KDX Akihabara
Building

KDX HigashiShinjuku Building

KDX NishiShinjuku Building

KDX Shinjuku 286
Building

Shin-toshin
Maruzen Building

A-66

A-71

A-88

A-93

A-6

A-17

A-119

A-120

KDX Shinjuku
Building

KDX Iidabashi
Building

KDX Shinjuku
6-chome Building

KDX Iidabashi
SquareHarajuku F.F.
Building

KDX Ebisu Building

KDX Shibuya
Nanpeidai Building

KDX Yoyogi Building

D-2

Shinjuku 6chome
Building (Land)

Kenedix Office Investment Corporation

43

Portfolio

Portfolio Map (as of June 14, 2019)
Tokyo metropolitan area (excluding central 5 wards)

30properties

A-86

Saitama Prefecture
A-99

A-62

A-90
A-96

A-33

A-84

Tokyo
Metropolitan

A-78
A-35

A-83

A-5

A-14

Tokyo central
5 wards
A-85

A-72
A-63

A-30
A-22

Acquired in 29th fiscal period

Chofu Center Building

A-117

A-48
A-101

A-102

A-123

A-34

Chiba Prefecture

A-122

A-16

Kanagawa Prefecture

Other regional areas

18properties

A-118

Sapporo

A-53

A-12

A-82

A-42

A-100

A-54

A-104

A-69

A-110

Sendai
Utsunomiya

A-98

A-70

A-44

A-97

NagoyaTokyo
metropolitan
area

Hiroshima Osaka
Hakata

44

A-26
A-95

A-94

A-125

A-31

A-58

A-106

A-79

A-111

A-5

A-14

A-16

A-22

A-26

A-30

A-31

A-33

KDX Nakano-Sakaue
Building

KDX Funabashi
Building

Toshin 24 Building

KDX Shin-Yokohama
Building

KDX Kiba Building

KDX Nishi-Gotanda
Building

KDX Monzen-Nakacho
Building

KDX Okachimachi
Building

A-34

A-35

A-48

A-62

A-63

A-72

A-78

A-83

KDX Hon-Atsugi
Building

KDX Hachioji
Building

KDX Kawasaki-Ekimae
Hon-cho Building

Koishikawa TG
Building

KDX Gotanda
Building

KDX HigashiShinagawa Building

KDX Tachikawa
Ekimae Building

KDX Fuchu Building

A-84

A-85

A-86

A-90

A-94

A-95

A-96

A-99

KDX Kasuga
Building

KDX Nakameguro
Building

KDX Omiya
Building

KDX Ikebukuro
Building

KDX MusashiKosugi Building

KDX Toyosu Grand
SquareKDX Takadanobaba
Building

KDX IkebukuroWest Building

A-101

A-102

A-117

A-122

A-123

KDX Yokohama
Building

KDX Yokohama
Nishiguchi Building

BR Gotanda

Mitsubishijuko
Yokohama Building

KDX Yokohama
Kannai Building

Chofu Center
Building

A-12

A-42

A-44

A-53

A-54

A-58

A-69

A-70

Portus Center
Building

KDX Karasuma
Building

KDX Sendai Building

KDX Hakata-Minami
Building

KDX Kitahama
Building

KDX Nagoya
Sakae Building

KDX KobayashiDoshomachi Building

KDX Sapporo
Building

A-79

A-82

A-97

A-98

A-100

A-104

A-106

A-110

KDX Nagoya
Ekimae Building

KDX Higashi Umeda
Building

KDX Utsunomiya
Building

KDX Hiroshima
Building

Senri Life Science
Center Building

KDX Minami-Honmachi
Building

KDX Sakura-dori
Building

KDX Shin-Osaka
Building

A-111

A-118

KDX Nagoya
Nichigin-mae Building

KDX Sapporo
Kitaguchi BuildinginA-125 Acquired
29th fiscal
periodKenedix Office Investment Corporation

45

Portfolio
As of the end of 28th fiscal period (April 30, 2019)

Office Buildings (Tokyo Metropolitan Area (central 5 wards))
Type

Area

No.

Property Name

Location

KDX Nihonbashi 313 Building
Chuo-ku, Tokyo
Higashi-Kayabacho Yuraku Building
Chuo-ku, Tokyo
KDX Hatchobori Building
A-4
Chuo-ku, Tokyo
A-20
KDX Kayabacho Building
Chuo-ku, Tokyo
A-51
KDX Hamacho Nakanohashi Building Chuo-ku, Tokyo
A-60
KDX Harumi Building
Chuo-ku, Tokyo
A-64
KDX Nihonbashi 216 Building
Chuo-ku, Tokyo
A-67
KDX Ginza 1chome Building
Chuo-ku, Tokyo
A-68
KDX Nihonbashi Honcho Building
Chuo-ku, Tokyo
A-73
KDX Hakozaki Building
Chuo-ku, Tokyo
A-74
KDX Shin-Nihonbashi Building
Chuo-ku, Tokyo
A-87
Itopia Nihonbashi SA Building
Chuo-ku, Tokyo
A-107 KDX Ginza East Building
Chuo-ku, Tokyo
A-108 Pentel Building
Chuo-ku, Tokyo
A-113 KDX Shin-Nihonbashi Ekimae Building Chuo-ku, Tokyo
A-114 KDX Nihonbashi Edo-dori Building
Chuo-ku, Tokyo
A-121 Ginza 4chome Tower
Chuo-ku, Tokyo
KDX Minami Aoyama Building
Minato-ku, Tokyo
A-7
A-19
KDX Hamamatsucho Building
Minato-ku, Tokyo
A-21
KDX Shinbashi Building
Minato-ku, Tokyo
A-32
KDX Shiba-Daimon Building
Minato-ku, Tokyo
A-89
KDX Takanawadai Building
Minato-ku, Tokyo
Tokyo
A-91
KDX Mita Building
Minato-ku, Tokyo
OfficeMetropolitan
A-109 KDX Hamamatsucho Center Building Minato-ku, Tokyo
Building Area (central
A-112 KDX Toranomon 1chome Building
Minato-ku, Tokyo
5 wards)
A-115 ARK Mori Building
Minato-ku, Tokyo
A-116 KDX Nishi-Shinbashi Building
Minato-ku, Tokyo
A-124 KDX Hamamatsucho Place
Minato-ku, Tokyo
A-8
Kanda Kihara Building
Chiyoda-ku, Tokyo
A-13
KDX Kojimachi Building
Chiyoda-ku, Tokyo
A-27
KDX Kajicho Building
Chiyoda-ku, Tokyo
A-37
KDX Ochanomizu Building
Chiyoda-ku, Tokyo
A-46
Hiei Kudan-Kita Building
Chiyoda-ku, TokyoA-56
KDX Jimbocho Building
Chiyoda-ku, Tokyo
A-59
KDX Iwamoto-cho Building
Chiyoda-ku, Tokyo
A-92
KDX Akihabara Building
Chiyoda-ku, Tokyo
A-29
Shinjuku-ku, Tokyo
KDX Higashi-Shinjuku Building
A-38
KDX Nishi-Shinjuku Building
Shinjuku-ku, Tokyo
A-41
KDX Shinjuku 286 Building
Shinjuku-ku, Tokyo
A-55
Shin-toshin Maruzen Building
Shinjuku-ku, Tokyo
A-66
KDX Shinjuku Building
Shinjuku-ku, Tokyo
A-71
KDX Iidabashi Building
Shinjuku-ku, Tokyo
A-88
KDX Shinjuku 6-chome Building
Shinjuku-ku, Tokyo
A-93
KDX Iidabashi Square
Shinjuku-ku, Tokyo
A-6
Harajuku F.F. Building
Shibuya-ku, Tokyo
A-17
KDX Ebisu Building
Shibuya-ku, Tokyo
A-119 KDX Shibuya Nanpeidai Building
Shibuya-ku, Tokyo
A-120 KDX Yoyogi Building
Shibuya-ku, Tokyo
Office Buildings (Tokyo Metropolitan Area (central 5 wards)) Subtotal (48 properties)
A-1

A-3

AcquisitionPrice(mn yen) (Note 1)

5,940
4,450
3,680
2,780
2,310
10,250
2,010
4,300
4,000
2,710
2,300
2,200
3,600
3,350
3,829
1,350
9,800
2,270
3,460
3,728
6,090
5,250
3,180
3,950
15,5504,169
8,400
20,700
1,950
5,950
2,350
6,400
7,600
2,760
1,864
2,600
2,950
1,500
2,300
2,110
6,800
4,670
1,900
4,350
2,450
4,640
3,500
2,479
216,730

Year
Built (Note 2)

Occupancy
Rate (Note 3)

Apr. 1974
Jan. 1987
Jun. 1993
Oct. 1987
Sep. 1988
Feb. 2008
Oct. 2006
Nov. 1991
Jan. 1984
Nov. 1993
Nov. 2002
Jul. 1995
Aug. 1991
Nov. 1990
May 1992
Mar. 1985
Nov. 2008
Nov. 1988
Sep. 1999
Feb. 1992
Jul. 1986
Oct. 1985
Mar. 1993
Dec. 1985
Oct. 2013
Mar. 1986
Aug. 1992
Feb. 2015
May 1993
May 1994
Mar. 1990
Aug. 1982
Mar. 1988
May 1994
Mar. 2008
Dec. 1973
Jan. 1990
Oct. 1992
Aug. 1989
Jul. 1990
May 1993
Mar. 1990
Mar. 1990
Jan. 1994
Nov. 1985
Jan. 1992
Dec. 2003
Aug. 1991—

100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
98.2%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
96.4%
97.5%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
99.7%

Year
Built (Note 2)

Occupancy
Rate (Note 3)Aug. 1992
Apr. 1989
Sep. 1984
Sep. 1990
Oct. 1992
Nov. 1992
Sep. 1986
Jun. 1988
May 1995
Dec. 1985
Feb. 1985
Nov. 1989

100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
80.5%
100.0%
100.0%
100.0%

Office Buildings (Tokyo Metropolitan Area (excluding central 5 wards))
Type

OfficeBuilding

Area

Tokyo
Metropolitan
Area(excluding
central 5
wards)

No.

A-5
A-14
A-16
A-22
A-26
A-30
A-31
A-33
A-34
A-35
A-48
A-62

46

Property NameKDX Nakano-Sakaue Building
KDX Funabashi Building
Toshin 24 Building
KDX Shin-Yokohama Building
KDX Kiba Building
KDX Nishi-Gotanda Building
KDX Monzen-Nakacho Building
KDX Okachimachi Building
KDX Hon-Atsugi Building
KDX Hachioji Building
KDX Kawasaki-Ekimae Hon-cho Building
Koishikawa TG Building

Location

Nakano-ku, Tokyo
Funabashi, Chiba
Yokohama, Kanagawa
Yokohama, Kanagawa
Koto-ku, Tokyo
Shinagawa-ku, Tokyo
Koto-ku, Tokyo
Taito-ku, Tokyo
Atsugi, Kanagawa
Hachioji, Tokyo
Kawasaki, Kanagawa
Bunkyo-ku, Tokyo

AcquisitionPrice(mn yen) (Note 1)

2,533
2,252
5,300
2,520
1,580
4,200
1,400
2,000
1,305
1,155
3,760
3,080

Type

Area

No.

Property Name

AcquisitionPrice(mn yen) (Note 1)

Location

KDX Gotanda Building
Shinagawa-ku, Tokyo
KDX Higashi-Shinagawa Building
Shinagawa-ku, TokyoKDX Tachikawa Ekimae Building
Tachikawa, TokyoKDX Fuchu Building
Fuchu, TokyoKDX Kasuga Building
Bunkyo-ku, TokyoKDX Nakameguro Building
Meguro-ku, TokyoTokyoKDX Omiya Building
Saitama, Saitama
Metropolitan
KDX Ikebukuro Building
Toshima-ku, Tokyo
OfficeArea
KDX Musashi-Kosugi Building
Kawasaki, Kanagawa
Building(excluding
KDX Toyosu Grand Square
Koto-ku, Tokyo
central 5
KDX Takadanobaba Building
Toshima-ku, Tokyo
wards)KDX Ikebukuro West Building
Toshima-ku, TokyoKDX Yokohama Building
Yokohama, Kanagawa
KDX Yokohama Nishiguchi Building
Yokohama, Kanagawa
BR Gotanda
Shinagawa-ku, Tokyo
Mitsubishijuko Yokohama Building
Yokohama, Kanagawa
KDX Yokohama Kannai Building
Yokohama, Kanagawa
Office Buildings (Tokyo Metropolitan Area (excluding central 5 wards)) Subtotal (29 properties)
A-63
A-72
A-78
A-83
A-84
A-85
A-86
A-90
A-94
A-95
A-96
A-99
A-101
A-102
A-117
A-122
A-123

2,620
4,590
1,267
6,120
2,800
1,880
2,020
3,900
12,000
8,666
3,650
1,934
7,210
2,750
2,200
14,7209,500
118,912Year
Built (Note 2)

Occupancy
Rate (Note 3)

Apr. 1988
Jan. 1993
Feb. 1990
Mar. 1996
Jun. 1992
Oct. 1985
Apr. 1993
Mar. 2009
May 2013
Apr. 2008
Oct. 1988
Jul. 1988
Mar. 1994
Oct. 1988
Sep. 1991
Feb. 1994
Sep. 2007—

100.0%
85.1%
100.0%
97.2%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
98.8%

Year
Built (Note 2)

Occupancy
Rate (Note 3)

Sep.1993
Oct. 1982
Feb. 1984
Jun. 1973
Jul. 1994
Apr. 2009
Jul. 2009
Oct. 1989
Apr. 1986
Jul. 2009
Feb.1999
Jan. 1990
Jun. 1992
Dec. 2009
Aug. 1992
May 1992
Sep. 2006
Sep. 1992—
Avg. 23.4 years

94.1%
100.0%
100.0%
99.5%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
99.4%
93.7%
100.0%
100.0%
100.0%
100.0%
99.1%
99.2%

Year
Built (Note 2)

Occupancy
Rate (Note 3)

Office Buildings (Other Regional Areas)
Type

OfficeBuilding

Area

No.

Property Name

Location

Portus Center Building
Sakai, Osaka
KDX Karasuma Building
Kyoto, Kyoto
KDX Sendai Building
Sendai, Miyagi
KDX Hakata-Minami Building
Fukuoka, Fukuoka
KDX Kitahama Building
Osaka, Osaka
KDX Nagoya Sakae Building
Nagoya, Aichi
KDX Kobayashi-Doshomachi Building Osaka, Osaka
KDX Sapporo Building
Sapporo, Hokkaido
Other
KDX Nagoya Ekimae Building
Nagoya, Aichi
Regional
KDX Higashi Umeda Building
Osaka, Osaka
Areas
KDX Utsunomiya Building
Utsunomiya, Tochigi
KDX Hiroshima Building
Hiroshima, Hiroshima
Senri Life Science Center Building
Toyonaka, Osaka
KDX Minami-Honmachi Building
Osaka, Osaka
KDX Sakura-dori Building
Nagoya, Aichi
KDX Shin-Osaka Building
Osaka, Osaka
KDX Nagoya Nichigin-mae Building
Nagoya, Aichi
KDX Sapporo Kitaguchi Building
Sapporo, Hokkaido
Office Buildings (Other Regional Areas) Subtotal (18 properties)
Office Buildings Total (95 properties)
A-12
A-42
A-44
A-53
A-54
A-58
A-69
A-70
A-79
A-82
A-97
A-98
A-100
A-104
A-106
A-110
A-111
A-118

AcquisitionPrice(mn yen) (Note 1)

5,570
5,400
2,100
4,900
2,220
7,550
2,870
2,005
7,327
2,770
2,350
1,300
13,000
2,200
5,900
4,550
3,500
1,800
77,312412,955

Others
Type

Area

No.

OthersTokyo
Metropolitan
Area

D-2

Category

Investment
Security

Property Name

Shinjuku 6chome Building (Land)

Location

2,880—

100.0%

Others Subtotal (1 property)

2,880

—

100.0%

Portfolio Total (96 properties)

415,835

Avg. 23.4 years

99.2%

Investment Security Name

G.K. KRF 43 Silent Partnership Equity Interest

Underlying Asset Name
(Note 4)

Shinjuku-ku, Tokyo

AcquisitionPrice(mn yen) (Note 1)

Underlying Asset
Location

Shinjuku Sanei Building Shinjuku-ku, Tokyo

Investment Security Total (1 security)

Investment Security Price(mn yen) (Note 1)

Underlying Asset Year Built

1,107

Dec. 1979

1,107

Asset Acquired in 29th Fiscal Period (Oct. 2019)
Type

Area

No.

OfficeBuilding

Tokyo Metropolitan
Area (excluding
central 5 wards)

A-125

Property Name

Chofu Center Building

Location

Chofu, Tokyo

AcquisitionPrice(mn yen) (Note 1)

8,700

Year
Built (Note 2)

Acquisition
Date

Jan. 1995

June 14. 2019

Note 1: Acquisition price is only the acquisition (investment) price of real estate or trust beneficiary interests in real estate (excluding any expenses, taxes, etc.)
acquired by KDO. Figures are truncated to the nearest million yen.
Note 2: Year built shows the completion date recorded in the real estate register. The average value shown in the subtotal or total section is a weightedaverage number calculated based on acquisition price with a base date of April 30, 2019. Figures are truncated to the first decimal place.
Note 3: Occupancy rate is calculated by dividing leased area as of April 30, 2019 by leasable area and is rounded to the first decimal place. The subtotal
and total lines show the figures calculated by dividing the subtotal (total) of the leased area for the property associated with each subtotal and total
by the subtotal (total) of the leasable area. For the Pentel Building, this includes the leasable area associated with the land (land interest) specified in
the lease agreement. For the Shinjuku 6chome Building (Land), the calculation is based on the leasable area of the land specified in the lease agreement.
Note 4: The said maps and photographs do not include investment securities owned by KDO.
Kenedix Office Investment Corporation47

www.kdo-reit.com/en/

Disclaimer
This semiannual report includes translations of certain documents originally filed and made available inJapan in accordance with the Financial Instruments and Exchange Act of Japan.
The English-language semiannual report was prepared solely for the convenience of readers outside
Japan and is not intended to constitute a prospectus. This semiannual report should not be construed as
an offer or solicitation to buy or sell any securities of Kenedix Office Investment Corporation (KDO). English
terms for Japanese legal, accounting, tax, and business concepts used herein may not be precisely identical to the concept of the equivalent Japanese terms. With respect to any and all terms herein, if there exist
any discrepancies in the meaning or interpretation thereof between the original Japanese documents andEnglish translation contained herein, the original Japanese documents will always govern the meaning andinterpretation.
None of KDO, Kenedix Real Estate Fund Management, Inc. (KFM), any of their respective directors, officers, employees, partners, unitholders, agents, affiliates, nor their advisors shall be responsible or liable forthe completeness, appropriateness, or accuracy of English translations or the selection of the portion(s) of
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The financial statements of KDO have been prepared in accordance with generally accepted accounting principles in Japan (Japanese GAAP), which may materially differ in certain respects from generally
accepted accounting principles of other jurisdictions.
This semiannual report contains forward-looking statements. These statements appear in a number ofplaces in this semiannual report and include statements regarding the intent, belief, or current and future
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Potential risks and uncertainties also include those identified and discussed in this document. Given
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