Semiannual Report
30th Fiscal Period
November 1, 2019–April 30, 2020

Characteristics of Kenedix Office Investment Corporation
We seek to maximize unitholder returns by focusing on investing in and managing mid-sized office buildings in theTokyo metropolitan area to generate stable profits and sustainably expand assets under management.
We recognize the importance of factoring environmental, social, and governance (ESG) consideration into real estate
investment management. Strengthening efforts to help realize social sustainability is a key management priority.

and
Tokyo
metropolitan
areaTokyo metropolitan area
investment ratio (Note 1)

80.9 %

Mid-sized officebuildings

Securing environmental
certifications andassessments

Number ofcertified and assessed
properties (Note 2)

Mid-sized officebuilding investment
ratio (Note 1)

39

83.6 %

Percentage of total
floor area

54.2 %

Contributing to asustainable environment

Maximizing unitholder returns

Financial Section

Table of contents
Semiannual Report
30th Fiscal Period>> Characteristics of Kenedix Office Investment Corporation 2>> Results for the 30th Fiscal Period (Apr. 2020) and Future Initiatives 4>> The Impacts of and Responses to the COVID-19 Pandemic 6
7>> Message from the Management
10>> External Growth
12>> Internal Growth
14>> Initiatives for ESG
15>> Financial Strategy
2

Financial Summary (Unaudited)

16

Balance Sheet

17

Statement of Income and Retained Earnings

19

Statement of Changes in Net Assets

20

Statement of Cash Flows21

Notes to the Financial Statements

22

Independent Auditor’s Report

45

Investor and Property Information>> Unitholders’ Information>> Portfolio

47
49

Characteristics and attractiveness of mid-size office buildingsin the Tokyo metropolitan area

83.0 %

61.8%

Abundant number of properties

High liquidity

The ratio of mid-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%. (Source 1) (Note 3) We believe that the
number of mid-sized office buildings is larger than that oflarge-sized office buildings, so there are many excellent
investment opportunities, and that they are more efficient in
operation than small-sized office buildings.

Transaction prices for mid-sized office buildings range fromapproximately 1 billion yen to 10 billion yen, and the ratio ofthese transactions to the total number is 61.8% (the ratioof trading volume between 1 billion yen and 10 billion yen)while they are relatively actively traded. (Source 2)

Image of a typical mid-sized
office building
Approx. 2 elevators

Around 100 –150
tsubo per floor ofrental area

92.2 %

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 92.2% in Tokyo. (Source 3) As such, we
believe that even if vacancies occur, new borrowers will
be relatively easy to be found and that we will be able tomaintain high occupancy rates.

Note 1:
		Note 2:
		Note 3:		

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

82 %Favorable supply–demandbalance on leasing market
The percentage of small and mid-sized buildings built 20
years or more ago in Tokyo’s 23 wards (leased area basis)is 82%, and new supply is limited compared to large-sized
office buildings. (Source 4) Therefore, we are able to securecompetitiveness by appropriately managing and operatingthese buildings, continuing to renew their facilities, andcarrying out value-upgrading works.

Shown as acquisition price ratio for each category to the total acquisition price, rounded down to the first decimal place (as of the end of 30th fiscal
period (April 30, 2020)).
The number of properties is counted without duplication in case a property has multiple certification and evaluation. Total floor area ratio is calculated
without duplication by dividing certified floor area by total floor area of the portfolio.
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 endof 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-FY2019)” from “RealEstate 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 2020” published by XYMAX REAL ESTATE
INSTITUTE Corporation on January 10, 2020.
Refer to the following for the definitions of each term used in this document.
• “5 central wards of Tokyo” refers to Chiyoda, Chuo, Minato, Shinjuku, and Shibuya wards.
• “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 refers 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.
Kenedix Office Investment Corporation3

Results for 30th Fiscal Period (Apr. 2020) and Future Initiatives

30th fiscal period (Apr. 2020)
Distribution per unit

14,412 yen+5.7% period over period+3.6% compared with forecast (Note)
Note: As of December 13, 201930th fiscal period (Apr. 2020) results
Asset size

Increase in monthly rent uponrent revision

432.8 billion yen

99.5 %

14.0 million yen

Acquired two properties through the AssetManagement Company’s unique network

Maintained high occupancy rate backed
by the tight office leasing market

Higher than in the previous fiscal period
owing to early upward rent negotiations

Office building ratio

Number of tenants

The balance of reserve for
reduction entry

99.3%

1,142

2.77billion yen

There are numerous office applications,and the direct impact of the COVID-19
pandemic has been limited

Portfolio with advanced tenant
diversification without focusing on
specific industries

Utilize to stabilize dividends inanticipation of temporary revenue
declineInterest-bearing debt
average interest rate

Interest-bearing debt ratio (LTV)

Percentage of total floor area ofgreen certified properties

0.97％

42.9％

Reduced interest rate costs when negotiatingrefinancing terms with financial institutions

4

Occupancy rate

Maintained stable financial base bykeeping LTV at a conservative level

54.2％
Acquired Certification for CASBEE forReal Estate for six properties

31st fiscal period (Oct. 2020)
Distribution per unit (forecast) (Note)

15,080 yen
Note: Forecast as of June 26, 2020 calculated undercertain assumptions.

Future efforts

1

2

Aim for sustainable growth through asset reshuffle andPay attention to changes in office needs with a focus

explore quality property acquisition opportunities

on “With COVID-19” and “After COVID-19,” and makewhile keeping an eye on the real estate trading market

a management to meet the needs of a new era

3

4
Aim for compatibility between sustainable growth andMaintain a stable financial base while taking into
account liquidity on handsocial responsibility through continuous initiatives for
improving sustainability

Kenedix Office Investment Corporation

5

The Impacts of and Responses to the COVID-19 Pandemic
We wish to express our deepest sympathy to everyone whom the COVID-19 pandemic has affected.
Infections have abated in Japan since the government declared a state of emergency
on April 7, 2020
Requests from131
tenants(11.9%) (Note 1)
but the situation remains unpredictable.
As we invest in and operate mid-sized office buildings primarily in the Tokyo metropolitan area, wewill continue to monitor the scope and duration of this situation, taking
the steps necessary based on
End of 30th
fiscalperiodour assessments.
(Apr. 2020)

1,142
tenants

Tenant requests for rent reductions and other assistance• Some tenants have sought reduced rents or payment exemptions because their revenues have declined owing to the pandemic.
Requests from
131 tenants (11.9%) (Note 1)

Dining10.5％Service provider

10.5％

End of 30th
fiscal period(Apr. 2020)

Office

1,142

54.1％

tenants

Type of tenants
requesting
rent reduction or
exemption (Note 2)

School

8.1％
Clinic

6.8％
Retail store

5.8％
Note 1: The ratio is based on contracted rents up to May 31, 2020.
Note 2: The ratio is based on contracted rents
classified and aggregated according toDiningactual usage, etc. under the judgment of the Asset Management Company.

Gym

2.0％

Rental conference room

2.3％

10.5％

Service provider

Response
Officepolicy
54.1％

10.5％

• Discuss with tenants to understand their financial situations as best we canType of tenants
School• Negotiate conditions
for recovering reduced rents or exemptions after a certain time if reasonable
requesting
8.1competitiveness％		 in orview of theof properties and revenues lost during vacancy periods
rent reduction
exemption (Note 2)
Clinic

6.8％

Retail store

Impact on leasing activities
Gym

5.8％

Rental conference room

• We expect that prospective tenants will constrain preliminary inspections and suspend transfers or floor increase plans. Also likely is a

2.0％

2.3％

slowdown in filling vacancies and an increase in prospective tenants seeking free rents and other more lenient terms.

Response
policy• Although we need to negotiate certain terms, we do not expect the supply-demand balance		 to deteriorate significantly, and will not excessively ease lease terms

Infection prevention initiatives• Raise awareness of safety measures and place disinfectants at all properties to prevent infections fromspreading through building tenants and visitors• The Asset Management Company had all employees generally work from home from April 6, 2020
to safeguard their health and maintain business continuity• With the state of emergency lifted, keep office attendance rates at around 50%(As of June 30, 2020)6

Message from the Management

Achieve Sustainable Growth by
Building a Robust and Profitable
Portfolio
Jiro Takeda
Executive Director,
Kenedix Office Investment Corporation
Director & COO, Head of Office REIT Department,
Kenedix Real Estate Fund Management, Inc.

In our 30th fiscal period, revenues andearnings increased, with distribution perunit climbing 773 yen from the previous
term, key drivers being property acquisitions and internal growth.

Tosabori Prime is in Osaka, where the supply-demandof offices is tight. The office building offers outstanding
access to Umeda, which has experienced remarkablechanges in recent years, and Nakanoshima, which is on
track to becoming an international hub for regenerative
medicine. Also nearby is the Naniwasuji Line, which

KDO made a distribution per unit of 14,412 yen for thewill connect Umeda and Kansai International Airport interm, which was 502 yen, or 3.6%, higher than the

future.

projected 13,910 yen (note). We acquired Tosabori

KDX Kanda Ekimae Building is near JR Kanda

Prime in January 2020 and KDX Kanda Ekimae

Station and Tokyo Metro Kanda Station, whose

Building in February. These purchases stemmed frommultiple lines offer outstanding access to major

leveraging the Asset Management Company’s unique
network while focusing on quality locations.

Note: As of December 13, 2019

Kenedix Office Investment Corporation

7

Message from the Management

stations in Tokyo. Rent levels are relatively low,
attracting many small and mid-sized enterprises.
As a result of these two acquisitions, our portfolio
encompassed 99 properties valued at 432.8 billion
yen at April 30, 2020.
Tight conditions in the office leasing market

While some tenants sought temporary
rent reductions or payment exemptions/deferrals, the impact of COVID-19 on
business has been limited.
Office buildings account for 99.3% of our asset

resulted in an office building occupancy rate of 99.5%

portfolio. While the impact of the COVID-19

at the end of the period. The actual occupancy rate,

pandemic on our performance has been limited, we

which excludes free rent area, increased from 96.7%

have noted the following effects.

at the end of the 29th fiscal period (October 2019) toIn response to the government requesting

98.6%. This reflected the gradual elimination of freebusinesses to reduce operations and people to stayrent area at KDX Toranomon 1chome Building withhome, restaurants, schools, and other tenants whose

the replacement of major tenants. The turnover ratio

sales plummeted sought temporary rent reductions

shrank amid tight office leasing market conditions,or payment exemptions/deferrals.

from 6.3% at the end of the previous term to 3.3%.

By the end of May, the ratio of tenants requestingThis led to decrease opportunities for rent increase

temporary rent reductions or payment exemptions/through tenant reshuffle. The increase in monthly

deferrals was 11.9% of our portfolio. There wererents from tenant turnover was 3.7 million yen in the

numerous requests from stores on the ground floor

period under review. Notwithstanding the impact ofor basement levels, and from some office tenants

the COVID-19 pandemic from March 2020, we

whose core revenues had deteriorated rapidly.

succeeded in negotiating higher rents with tenants

We engaged in discussions with tenants to assess

who were about to renew contracts from the second

their financial circumstances. This was in keeping

half of the term. The rise in monthly rents from rentwith a March 31 request to realtors from the Ministry

revisions during the term was approximately 14 million yen.

of Land, Infrastructure, Transport and Tourism thatOn the financial strategy front, we continued to fo-

related to dealing with the COVID-19 pandemic,cus on lowering interest rate costs when refinancing,

and another request on May 8, which the Financial

and maintained borrowing periods while reducing

Services Agency issued to asset managers on rentinterest. After refinancing 12.7 billion yen in loans

payment considerations for businesses.

during the term, the average interest rate on these

We comprehensively took into account the versatil-loans was 0.50%, for an average borrowing period of

ity of property sections, the difficulty of attracting new

4.1 years. The average interest rate on interest-bearing

tenants after existing ones shift out, and impacts on

debt at the close of the term thus dropped to 0.97%.

portfolio returns. We also pursued a basic policy of

Our interest-bearing debt ratio remained stable, atdealing with individual cases, and then took a finan-

42.9% at the end of the period.

cially rational approach of lowering rents for certain

ESG-related initiatives remained a key priority during
the term. We acquired certification for CASBEE forReal Estate at six properties, including KDX Sendai

periods, seeking to recoup the reductions in addition
to normal rents over roughly 6 to 12 months.
On the leasing front, many companies have had

Building. By the close of the period, 54.2% of the floor

employees work from home since the Japanese gov-

area of properties in our portfolio had secured envi-

ernment issued its emergency declaration in April toronmental certification.

stem the COVID-19 pandemic. We thus expect thatwith a decrease in vacant space viewings it will takemore time than anticipated to refill vacancies.
A slight increase in market vacancy rates could

8Message from the Management

prompt more tenants to seek free rentals or otherwhich will likely diversify and become more dis-beneficial revisions to terms.

persed. Instead of being in during fixed hours and at

While we need to negotiate terms to an extent, we

fixed places, work will probably be more than simply

do not expect that the supply-demand balance will

choices about being at home or at the office and en-

deteriorate and will accordingly not excessively ease

compass choosing times and places that match therental terms.

lifestyle requirements of individuals.
As the numbers of nomad and gig workers and of

We will focus on changing office needs,
carefully manage our portfolio, andpursue sustainable growth while
meeting our social responsibilities.

people with side jobs increase and work practices
diversify, it will become important to monitor changes
in lifestyles.
In considering the office market of tomorrow, we
believe it will be important to go beyond merely mul-

While keeping tabs on transaction market trends,

tiplying space per capita by employee numbers to

our priorities for driving external growth are initially toenvision how companies engineer work environments

replace assets and cultivate outstanding acquisitionand determine their space requirements.

opportunities.

Japan’s working population is declining with the

To foster internal growth, we will closely monitor

birth rate, so work environments will become es-

how office requirements change during and after

sential to attracting new talent, which will ultimately

the COVID-19 pandemic and will operate in line withshape corporate competitiveness.

prevailing circumstances.
We will strive to maintain a stable financial position
while ensuring sufficient liquidity.
Our ESG approach is to continue striving to enhance sustainability and secure high regard among

We are on the cusp of a transformation in the functionality companies demand of office buildings. With
work practices diversifying, we consider it vital toidentify changes in such functional requirements andmanage investments accordingly.

tenants for our office buildings and among investors
as a REIT.
It is through such endeavors that we seek to improve unitholder value in terms of distributions andnet asset value.

Changing office needs（Images）
The expansion of teleworking has led to a shift toflexible working styles that are not tied to location ortime, even before the COVID-19 pandemic.

With work patterns diversifying, it will
be vital to pinpoint functional changes
in office buildings and properly manage
investments.

The pandemic has accelerated the change anddiversification of working styles and locations.

COVID-19 has resulted in countless corporate em-

The working environment becomes an importantfactor attracting people and influences corporate
competitiveness itself.

ployees working from home.
The implementation of teleworking began before
the pandemic, owing to the flexibility of time andplace that it offers. COVID-19 has further accelerated
the adoption of teleworking and more diverse work
practices.

It is important to accurately understand the changes
in functions required for office buildings amid thediversifying ways of working and to invest appropriately in response.

Homes are clearly becoming parts of workplaces,
Kenedix Office Investment Corporation

9

30th
FiscalPeriodExternal Growth
Acquired two properties in 30th fiscal period (Apr. 2020)

External
GrowthUtilized the Asset Management Company’s unique network to invest in properties selectively focusing
on location characteristics.
Acquired mid-sized office buildings in the area with future demand growth potential and close to train
stations in central Tokyo.

Tosabori Prime (Acquired on January 31, 2020)
Property overview
Location

Osaka, Osaka

Acquisition
price

5,000 million yen

Appraisalvalue

5,100 million yen

Appraisal NOI
yield (Note 1)

4.5%

AccessApproximately 5 minutes
on foot from Higobashi
Station on the Osaka
Metro Yotsubashi Line
Approximately 9 minutes
on foot from Nakanoshima
Station on the Keihan
Nakanoshima Line(As of January 1, 2020)● Excellent access to Umeda, which has experienced remarkable changes in recent

years and Nakanoshima, where regenerative medicine is planned to be established as
an international hub.
● In the future, the Naniwasuji Line linking Umeda and Kansai International Airport isplanned to open in the neighborhood of the property.
● The entrance, common corridors, and elevator halls were renovated on a large-scalebasis in 2018.

KDX Kanda Ekimae Building (Note 2) (Acquired on February 7, 2020)
Property overview
Location

Chiyoda-ku, Tokyo

Acquisition
price3,300 million yen

Appraisalvalue

3,510 million yen

Appraisal NOI
yield (Note 1)

3.9%

AccessApproximately 1minute on foot fromthe Kanda Station on
the JR Yamanote Lineand on the Tokyo Metro
Ginza Line(As of January 1, 2020)● Multiple lines are available and access to major stations in Tokyo is excellent.
● The rent level is relatively low, and mid-sized enterprises are concentrated in this area,

where the property is located.

● The property has excellent visibility in a location facing a large street, and is relatively

competitive because of its stately appearance due to glass-walled and black granite finish.

Note 1: Calculated by dividing net operating income based on the direct capitalization method in the appraisal report as of January 1, 2020 by acquisition price.
Note 2: As the name of the property is slated to be changed, the new name is used.

10

Asset size and number of owned properties

External
GrowthClosely follow real estate trading market conditions while maintaining a stable financial base.
Aim for sustainable growth through asset reshuffle and explore quality property acquisition opportunities
as a basic policy.

Asset size (total acquisition price) and number of properties since listing(Properties)(Billion yen)

600

Office buildings
Residential
Central urban retail property
Others

97 99

PO Fiscal period with public offering

Number of properties

432
PO

450
PO

300

100

PO

PO

424

75

50

PO

PO
PO

31
PO

150

25

69.1
0

0
1st
fiscalperiod(Oct. 2005)

25th
fiscalperiod(Oct. 2017)

20th
fiscalperiod(Apr. 2015)

15th
fiscalperiod(Oct. 2012)

10th
fiscalperiod(Apr. 2010)

5th
fiscalperiod(Oct. 2007)

29th
fiscalperiod(Oct. 2019)30th
fiscalperiod(Apr. 2020)

Asset replacements and impacts after the 31st fiscal period (Oct. 31, 2020)
External
GrowthWe collaborated with sponsors to acquire a rarely available, recently constructed building incentral Tokyo.
We transferred three relatively old properties to lower the risk of higher renovation and other costs
down the track.
Acquired in 31st fiscal
period (Oct. 2020)

To be transferred in
32nd fiscal period(Apr. 2021)

Transferred in 31st fiscal period(Oct. 2020)

KDX Nihonbashi
Honcho Building

Shinbashi
M-SQUARE Bright

KDX Nihonbashi
Edo-dori Building

KDX Shin-Nihonbashi
Building

Asset
reshuffle

Location
Acquisition priceOccupancy rate
(As of May 31, 2020)
Appraisal value(As of May 1, 2020)
Acquisition dateYear built

Minato-ku, Tokyo

Location

Chuo-ku, Tokyo

16,300 million yen(Planned) Transfer prices

100.0%

Assumed book values (Note 1)

5,000 million yen
3,905 million yen

1,550 million yen
1,381 million yen

3,200 million yen
1,970 million yen

Appraisal values(As of April 30, 2020)

4,950 million yen

1,510 million yen

3,140 million yen

20,500 million yen
June 30, 2020
September 2018

June 30, 2020

(Planned) Transfer dates

January 1984

Years built

November 2, 2020

March 1985

November 2002

Impacts
Average age decreases (Note 2)−28.8 years

Securing gains on sales of real estate (Note 3)

Accumulated retained earnings (Note 4)

31st fiscal period(Oct. 2020)

31st fiscal period(Oct. 2020)

32nd fiscal period(Apr. 2021)+1.0 billion +1.1 billion

32nd fiscal period(Apr. 2021)+0.7 billion +0.6 billion

Note 1:	Assumed book value on (planned) transfer date.
Note 2: The value is the ages of acquired properties as of June 30, 2020, less the weighted average age of properties transferred and slated for transfer.
Note 3:	The figures for gains on sales of real estate property are estimates based on assumed book values and selling and other expenses.
Note 4: This is the provision of reserve for reduction entry for each period as of June 26, 2020.

Kenedix Office Investment Corporation 11

30thInternal GrowthFiscalPeriodChanges in office building occupancy rate and turnover ratio

Internal
GrowthThe difference between the occupancy and actual occupancy rates declined with the gradualelimination of free rent areas from influxes of major tenants.
In a tight office leasing market, the tenant turnover rate dropped to 3.3% for the term.

Changes in occupancy rate (Note 1))

Turnover ratio (annualized) of office buildings (Note 2)

Occupancy rate (based on contracted floor space)
Actual occupancy rate (excluding free rent area)

100

99.1

99.1

99.2

1.1

1.8

1.9

97.3

97.3

98.0
95

6.7

（%）

（%）

99.5
2.8

99.5
0.9
98.6

96.7

99.1%

End of 26th
fiscal period(Apr. 2018)

Averageoccupancy
rate for29th
fiscal period:

Averageoccupancy
rate for28th
fiscal period:

99.1%

99.1%

End of 27th
fiscal period(Oct. 2018)

End of 28th
fiscal period(Apr. 2019)

4.4
3.3

3.2

Average occupancy rate for all office buildings during the fiscal period
Averageoccupancy
rate for27th
fiscal period:

6.3

Averageoccupancy
rate for30th
fiscal period:

99.4%

End of 29th
fiscal period(Oct. 2019)

End of 30th
fiscal period(Apr. 2020)

26th fiscal 27th fiscal 28th fiscal 29th fiscal 30th fiscal
periodperiodperiodperiodperiod(Apr. 2018) (Oct. 2018) (Apr. 2019) (Oct. 2019) (Apr. 2020)

Note 1:	Occupancy rate (based on contracted floor space) 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. Figures are rounded to
the first decimal place. Average occupancy rate of office buildings during each fiscal period is a simple average of month-end occupancy rates ofowned office buildings 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 sixmonth 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 the relevant period) x 2. Figures are rounded to the first decimal place.

Trends in rent changes upon tenant turnover for office buildingsInternal
GrowthDecreased opportunities for rent increase through tenant reshuffle due to decrease in tenant move-out
resulting from tightened supply and demand for office buildings.
No significant decrease has been seen in new rent levels, and aim to increase operating revenue after
the impact of the COVID-19 pandemic.

Changes in monthly rent upon tenant turnover (Note 1)
Total rent increase (Million yen)
Total rent decrease (Million yen)

70.0

3.5
-1.0
-8.3

26th fiscal
period(Apr. 2018)

69.8

Percentage of number ofrent increased contracts upontenant turnover (%)

82.1

12.1

5.5
-1.0

-1.0

27th fiscal
period(Oct. 2018)

28th fiscal
period(Apr. 2019)

85.1

Changes in unit rent upon tenant turnover (Note 2)
Unit rent for new tenants (Yen)
Unit rent for previous tenants (Yen)21,453

72.7

18,213
16,61315,752
14,692

21.5
-0.4

3.7
-0.8

13,61229th fiscal
period(Oct. 2019)30th fiscal
period(Apr. 2020)

26th fiscal
period(Apr. 2018)

14,35327th fiscal
period(Oct. 2018)

17,77815,13615,14028th fiscal
period(Apr. 2019)29th fiscal
period(Oct. 2019)30th fiscal
period(Apr. 2020)

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 aggregated12
previous unit rents and areas for the spaces where new unit rents are calculated.

Rent revision with existing tenants

Internal
GrowthAchieve early rent increase from 30th fiscal period owing to successful early negotiations.
Although the pace of negotiations slowed down, plan to maintain proactive stance in negotiations andachieve a certain level of results.
Rent revision results (percentage based on leased area)

Changes in rent upon rent revision (based on monthly amount) (Note 1)

14,017

Rent increase
Rent decrease

Rent decrease

0.3%(1 case)(Thousand yen)

6,826

No change

9,885

9,051

30th

(219 cases)(103 cases)

Changes in the number of rent increase contracts andrent increase rate
Tokyo’s 5 central wards(Cases)

72
41

-111

-402

-472
-2,032
26th fiscal
period(Apr. 2018)

33.8%

323
cases

65.9%

5,977

Rent increasefiscal period(Apr. 2020)

27th fiscal
period(Oct. 2018)

28th fiscal
period(Apr. 2019)29th fiscal
period(Oct. 2019)30th fiscal
period(Apr. 2020)

Other areas

62

103

94

83

52

42

64

41

30

38

51

31

24

26th fiscal
period(Apr. 2018)

27th fiscal
period(Oct. 2018)

28th fiscal
period(Apr. 2019)29th fiscal
period(Oct. 2019)30th fiscal
period(Apr. 2020)

5.8%

5.7%

6.7%

7.7%

Rent increase rate
(incremental average)

6.2%(Note 2)

Note 1:	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.
Note 2: Rent increase rate is calculated by dividing the sum of increase in monthly rent by the sum of monthly rent before revision (rounded to the first decimal place).

Construction and budgets

Internal
GrowthLook to review construction plans and temporarily lower construction budgets in view of the COVID-19 pandemic.
Conduct timely and suitable work to lift property values and keep taking steps to maintain and improve
properties values down the track.

Changes in depreciation and construction expense(actual/budget)
Depreciation

Repair/maintenanceCapital expenditure(Million yen)

1,634
403

1,835
409

Items

Description of works

1,960
474

1,806
485

Estimated amount(Million yen)

Value-upgrading works

Tenant and common areas

221

Replacement works

Air-conditioning facilities

382

Other major facilities

452

2,519

2,470

2,419

2,369

Repair/renovation work budget for 31st fiscal period (Oct. 2020) (Note)

Eco-friendly works(Installation of LED lightings, etc.)
Outer wall repair

299

Maintenance/repair works

430

22

Note: Figures are approximate estimates as of the date in which repair plan was prepared. Total 1,806

Results of previous construction to boost values
KDX Yokohama Building

1,231

1,426

1,485

1,320

28th fiscal
period(Apr. 2019)
Results

29th fiscal
period(Oct. 2019)
Results

30th fiscal
period(Apr. 2020)
Results

31st fiscal
period(Oct. 2020)
Budgets

Before construction (smoking area)

After construction (rest area)
Kenedix Office Investment Corporation 13

30th
FiscalPeriodInitiatives for ESG

Certification for CASBEE for Real Estate• One property was newly ranked “S,” the highest rating, and another five properties “A” by CASBEE in
30th fiscal period (Apr. 2020), in addition to six properties that were already acquired in the previous
fiscal period.
		

S rank: KDX Sendai Building		

A rank: Harajuku F.F. Building, KDX Hamacho Nakanohashi Building, KDX Nakameguro Building,			
KDX Hamamatsucho Center Building, and BR Gotanda• A total of 18 properties in our portfolio have been awarded certification.

Acquisition of environmental certification• As KDO has been actively and continuously promoting green buildings, the properties that
acquired DBJ Green Building Certification, Certification for CASBEE for Real Estate, and BELS
Certification exceed a majority of the portfolio in terms of ratio of floor area to total floor area.

End of the 30th fiscal period(Apr. 2020)
Acquisition of environmental
certification (Note)

Note: The number of properties is counted without duplication in case a property has multiple certificationand evaluation. Total floor area ratio is calculated without duplication by dividing certified floor area by
total floor area of the portfolio.

Total floor area ratio

39 properties 54.2%

GRESB Real Estate Assessment

DBJ Green Building Certification

BELS Certification• We have received a Green Star rating foreight consecutive years.
• We have earned 4 Stars in the GRESB
ratings, the second-highest level.

• 25 properties have obtained the certification,
including KDX Toranomon 1chome Building
which has earned five stars, the top rating.

• In 2014, KDX Musashi-Kosugi Building
became the first J-REIT property toreceive a BELS Certification (three stars).
• Two properties have obtained the certification.

New installation of fundraising vending machines• KDO installed fund-raising vending machines in April 2020 in which a portion of the proceedsfrom the sales of the vending machines is used to support tree-planting activities througha public-interest foundation.
• We will continue to expand these new initiatives and deepen our active involvement to broaden
the scope of our support in the future.

Support from the Asset Management Company for infectious disease control• In May 2020, in response to concerns about the COVID-19 pandemic among the elderly and theincreasing severity of symptoms, the Asset Management Company distributed a total of 16,500
masks for free to residents and others at 24 healthcare-related facilities owned by Kenedix Residential
NEXT Investment Corporation, which is managed by the Asset Management Company.
• We received many words of appreciation for this initiative at a time of widespread anxiety concerning
the COVID-19 pandemic.

14

30th

Financial Strategy

FiscalPeriodStatus of interest-bearing debt

Financial
Strategy

We continue to decrease financial cost at refinancing while paying attention to the trend of interest
rates.
Outstanding borrowings by financial institutions as of theend of 30th fiscal period (Apr. 2020)

Average interest rate and average remaining period tomaturity of interest-bearing debt

16 lending financial institutions

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

5.0

4.7

5.2

5.2

5.0

4.8

The Bank of Fukuoka
The Nishi-Nippon City Bank
The Hiroshima Bank
The 77 Bank
Sumitomo Life Insurance Company
Higashi-Nippon Bank
The Norinchukin Bank
The Mie Bank

5.1%

MizuhoTrust & Banking

2.5%

4.5

Aozora Bank

5.8%

Resona Bank

6.2%

1.16

1.10

1.07

1.06 1.04

Mizuho Bank

1.02

8.7%

0.97

Sumitomo Mitsui Banking

Totalborrowings fromfinancial institutions

25.4%

182.0

Sumitomo Mitsui
Trust Bank

billion yen

MUFG Bank

10.9%

End of 24th End of 25th End of 26th End of 27th End of 28th End of 29th End of 30th
fiscal period fiscal period fiscal period fiscal period fiscal period fiscal period fiscal period(Apr. 2017) (Oct. 2017) (Apr. 2018) (Oct. 2018) (Apr. 2019) (Oct. 2019) (Apr. 2020)

19.1%

Development Bank of Japan

16.2%

Major indices related to financial stability (end of 30th fiscal period (Apr. 2020))

Financial
Strategy

We will maintain a stable financial position by engaging in conservative management practices while
ensuring sufficient liquidity.

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.

42.9%

94.2%

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

Financial
Strategy

We seek to reduce refinancing risk by strategically diversifying debt maturities.

Balance of interest-bearing debt by maturity (As of April 30, 2020)

172.5 billion yen
9.5 billion yen
Investment corporation bonds 10.0 billion yen

Long-term debt

Short-term debt
(Billion yen)

Total interest-bearing debt

In January 2020, we raised 2.0 billion yen
through an issuance of the 11th
unsecured investment corporation bond.

20.7
9.5

11.1

11.8

9.9

1.0

11.2
31st
fiscal period(Oct. 2020)

9.1
8.1

33rd
fiscal period(Oct. 2021)

35th
fiscal period(Oct. 2022)

7.5
3.8
37th
fiscal period(Oct. 2023)

192.0 billion yen

6.7
2.0

4.7

9.0

15.0
12.6 12.5 12.9 13.0 1.0
11.0 11.3
2.0

2.0

7.0
39th
fiscal period(Oct. 2024)

2.0

11.0

9.0
41st
fiscal period(Oct. 2025)

43rd
fiscal period(Oct. 2026)

14.0

45th
fiscal period(Oct. 2027)

7.2

6.8

47th
fiscal period(Oct. 2028)

Kenedix Office Investment Corporation 15

Financial Summary (Unaudited)
Historical Operating Trends
For the 26th–30th Fiscal Periods

30th Period
29th Period
28th Period
27th Period
26th Period(as of(as of(as of(as of(as ofApr. 30, 2018) Oct. 31, 2018) Apr. 30, 2019) Oct. 31, 2019) Apr. 30, 2020)

PeriodUnit

Operating revenues

millions of yen

14,823

15,42015,212

15,027

15,272(Rental revenues)

millions of yen

14,22214,802

14,595

14,95915,215

Operating expenses

millions of yen

7,974

8,271

8,039

8,199

8,132

(Property-related expenses)

millions of yen

6,977

7,105

6,880

7,092

7,008

Operating income

millions of yen

6,848

7,148

7,172

6,828

7,140

Ordinary income

millions of yen

5,829

6,109

6,179

5,845

6,177

Net income (a)millions of yen

5,828

6,107

6,178

5,844

6,175

Total assets (b)millions of yen

422,993437,221436,753439,773447,707(Period-on-period change)%(+1.9)(+3.4)(–0.1)(+0.7)(+1.8)

Interest-bearing debt (c)millions of yen

185,850

183,050

182,050

185,050

192,050(Period-on-period change)%

Unitholders’ equity (d)millions of yen(Period-on-period change)%

Unitholders’ capitalmillions of yen(Period-on-period change)(+3.5)(–1.5)(–0.5)(+1.6)(+3.8)

213,642229,313229,440

229,276

229,589(+0.4)(+7.3)(+0.1)(–0.1)(+0.1)

206,199

220,970

220,970

220,970

220,970%(0.0)(+7.2)

(0.0)

(0.0)

(0.0)

Number of investment units issued and outstanding (e)unit

404,885

428,510428,510428,510428,510Unitholders’ equity per unit (d)/(e)yen527,661

535,141

535,437

535,054535,786

Total distribution (f)millions of yen

5,247

5,766

5,878

5,844

6,175

Distribution per unit (f)/(e)yen

12,96013,45813,71913,63914,412(Earnings distributed per unit)

yen

12,96013,45813,71913,63914,412(Distribution in excess of earnings per unit)

yen

—

—

—

—

—

Return on assets (annualized) (Notes 1 and 2)%

1.4 (2.8)

1.4 (2.8)

1.4 (2.9)

1.3 (2.6)

1.4 (2.8)

Return on net assets (annualized) (Notes 2 and 3)%

2.7 (5.5)

2.8 (5.5)

2.7 (5.4)

2.5 (5.1)

2.7 (5.4)

50.5

52.4

52.5

52.1

51.3

(–0.8)(+1.9)(+0.1)(–0.4)(–0.9)

43.9

41.9

41.7

42.1

42.9

(+0.7)(–2.1)(–0.2)(+0.4)(+0.8)

90.0

94.4

95.1

99.9

99.9

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

properties

97

97

96

97

99

Total leasable floor area2m

466,031.33

471,041.45

468,528.20

480,328.18

488,127.53

Occupancy rate at end of period

%

99.0

99.1

99.2

99.5

99.5

Depreciation expenses for the period

millions of yen

2,295

2,358

2,369

2,419

2,470

Capital expenditures for the period

millions of yen

886

925

1,231

1,426

1,485

Leasing NOI (Net Operating Income) (Note 5)

millions of yen

9,539

10,055

10,084

10,287

10,676

FFO (Funds From Operation) (Note 6)

millions of yen

7,574

7,934

7,983

8,265

8,646

FFO per unit (Note 7)

yen

18,70818,516

18,63019,287

20,178Notes: 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 26th Fiscal Period are calculated based on a period of 181 days, 184 days for the 27th Fiscal Period, 181 days for the 28th Fiscal
Period, 184 days for the 29th Fiscal Period, and 182 days for the 30th 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 Corporation

Balance Sheet
As of April 30, 2020
As of April 30, 2020
AssetsCurrent assets
Cash and deposits (Notes 4 and 16)
Cash and deposits in trust (Notes 4 and 16)
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Other
Total current assets
Non-current assets
Property, plant and equipment (Notes 5 and 18)
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 8)
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Total property, plant and equipment, net
Intangible assets (Note 5)
Leasehold right (Note 18)
Leasehold right in trust (Note 18)
Other
Total intangible assets
Investments and other assets
Investment securities (Note 16)
Lease and guarantee deposits
Lease and guarantee deposits in trust
Long-term prepaid expenses
Other (Notes 11,16 and 17)
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

KENEDIX Office Investment Corporation

As of October 31, 2019

In thousands of yen¥¥

14,699,777
11,470,987
277,457
74,600–12,394
26,535,218¥

14,019,313
11,366,312
361,207
109,777
61,78913,22325,931,623

17,951,815(6,221,158)
11,730,656
43,564(16,589)
26,974432,209(272,362)
159,847
96,841(64,691)
32,15027,520,902
126,874,865(33,269,306)
93,605,558
362,902(179,886)
183,016
1,741,678(796,661)
945,017528,530(346,706)
181,824
283,648,781
418,034,728

17,834,390(5,917,165)
11,917,224
34,963(15,551)
19,411
432,209(260,033)
172,176
94,116(61,148)
32,967
27,520,902
124,425,127(31,204,886)
93,220,241
359,676(168,392)
191,284
1,656,878(743,824)
913,054505,190(326,879)
178,310
276,458,793
410,624,366

285,257
349,201
728366
1,168
635,627

285,257
349,975
1,796
637,029

1,127,724
10,000122,889
1,150,151
20,501
2,431,266
421,101,622

1,131,953
10,000122,889
1,232,222
8,768
2,505,834
413,767,231

51,84018,34270,182447,707,022

46,83527,51374,348439,773,203¥

Kenedix Office Investment Corporation17

As of April 30, 2020
Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable (Notes 7 and 16)
Current portion of long-term loans payable (Notes 7,16 and 17)
Accounts payable–otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Deposits received
Other (Notes 16 and 17)
Total current liabilities
Non-current liabilities
Investment corporation bonds (Notes 7 and 16)
Long-term loans payable (Notes 7, 16 and 17)
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Other (Notes 16 and 17)
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 16 and 17)
Total valuation and translation adjustments
Total net assets (Note 12)
Total liabilities and net assets
See accompanying notes to the financial statements.

18

As of October 31, 2019

In thousands of yen¥

829,804
9,500,000
22,300,000
486,379
71,983825
378,113
2,821,477
7,225¥

36,395,810

1,119,767
2,200,000
21,600,000
475,642
69,940802
132,3542,565,047
16,312
123
28,179,990

10,000,000
150,250,000
2,005,687
19,113,024
352,748
181,721,460
218,117,270

8,000,000
153,250,000
2,002,385
18,741,871
322,853
182,317,110
210,497,100

220,970,508

220,970,508

2,775,335
2,775,335
6,175,926
8,951,261
229,921,769

2,775,335
2,775,335
5,844,500
8,619,835
229,590,343(332,017)(332,017)
229,589,752
447,707,022(314,241)(314,241)
229,276,102
439,773,203

–

¥

¥

Kenedix Office Investment Corporation

Statement of Income and Retained Earnings
For the period from November 1, 2019 to April 30, 2020
From November 1, 2019

From May 1, 2019

to April 30, 2020

to October 31, 2019

In thousands of yen
Operating revenues
Rent revenue – real estate (Note 14)¥

Other lease business revenue (Note 14)

13,429,120¥

12,976,033

1,785,979

1,983,471

57,60068,38915,272,699

15,027,894

Expenses related to rent business (Note 14)

7,008,903

7,092,170

Asset management fees

929,882

899,348

Directors' compensation

8,400

8,400

Asset custody fees

23,193

23,102Administrative service fees

57,59557,264

Audit fees

12,80012,800

Dividends income
Total operating revenues
Operating expenses

91,860106,412

Total operating expenses

8,132,635

8,199,497

Operating income

7,140,064

6,828,396

Other operating expenses

Non-operating income
Interest income

68

68

Dividends and redemption-prescription

353

403

Interest on refund

109

2

531

473

Interest expenses

792,200

810,689

Interest expenses on investment corporation bonds

29,03828,128Financing-related expenses

Total non-operating income
Non-operating expenses

125,667

127,833

Amortization of investment corporation bond issuance costs

4,963

4,511

Amortization of investment unit issuance costs

9,171

9,171

Other non-operating expenses

2,352

2,772

Total non-operating expenses

963,393983,106

Ordinary income

6,177,202

5,845,764

Income before income taxes

6,177,202

5,845,764

Current

1,332

1,264

Deferred(4)(1)

Income taxes (Note 11)

Total income taxes
Net income
Retained earnings brought forward
Unappropriated retained earnings

¥

1,328

1,263

6,175,873

5,844,500

52–

6,175,926¥

5,844,500

See accompanying notes to the financial statements.

KENEDIX Office Investment Corporation

Kenedix Office Investment Corporation

19

Kenedix Office Investment Corporation

Statement of Changes in Net Assets
For the period from November 1, 2019 to April 30, 2020
Valuationandtranslation
adjustments

Unitholders' equity

Surplus
Voluntary
retainedearnings

Deferred
UnappropriatedUnitholders'

Reserve forcapitalreduction entry

gains orretained earnings

Total

Total unitholders'losses on

Total net

(Note 21)

surplusequityhedgesassetsIn thousands of yen
Balance as ofApril 30, 2019¥

220,970,508¥

2,475,385¥

6,178,677¥

8,654,063¥

229,624,572¥(184,329)¥

229,440,242

Changes during the fiscal period
Provision of reserve for reduction–

299,949（299,949）

–

–

–

–

Dividends of surplus––（5,878,728）（5,878,728）（5,878,728）–（5,878,728）

Net income––

5,844,500

5,844,500

5,844,500–

5,844,500

–

–

–

–

–

(129,911)(129,911)–

299,949(334,177)(34,228)(34,228)(129,911)(164,139)

entry

Net changes of items other thanunitholders’ equity
Total changes during
the fiscal period
Balance as of
October 31, 2019 (Note 6)¥

220,970,508¥

2,775,335¥

5,844,500¥

8,619,835¥

229,590,343¥(314,241)¥

229,276,102

Changes during the fiscal period
Dividends of surplus––（5,844,447）（5,844,447）（5,844,447）–（5,844,447）

Net income––

6,175,873

6,175,873

6,175,873–

6,175,873

–

–

–

–

–

(17,776)(17,776)––

331,425

331,425

331,425(17,776)

313,649

Net changes of items other thanunitholders’ equity
Total changes during
the fiscal period
Balance as ofApril 30, 2020 (Note 6)¥

220,970,508¥

See accompanying notes to the financial statements.

20

2,775,335¥

6,175,926¥

8,951,261¥

229,921,769¥(332,017)¥

229,589,752

Kenedix Office Investment Corporation
Statement of Cash Flows
For the period from November 1, 2019 to April 30, 2020

From November 1, 2019
to April 30, 2020

From May 1, 2019
to October 31, 2019

In thousands of yen
Cash flows from operating activities
Income before income taxes¥

Depreciation
Amortization of long-term prepaid expenses
Interest income

6,177,202¥

5,845,764

2,470,882

2,420,535

117,317

120,778

(68)

(68)

821,239

838,818

Amortization of investment unit issuance costs

9,171

9,171

Amortization of investment corporation bond issuance costs

4,963

4,511

Decrease (increase) in operating accounts receivable

83,749(62,429)

Decrease (increase) in consumption taxes receivable

61,789(61,789)

35,176(60,068)(194,273)

56,398Interest expenses

Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable–other

10,954(53,110)

Increase (decrease) in accrued consumption taxes

245,758(342,749)

Increase (decrease) in advances received

256,430

196,680

Increase (decrease) in deposits received(9,087)

19,583

Decrease (increase) in long-term prepaid expenses(35,245)(174,437)

1,953(12,220)

Other, net
Subtotal

10,057,914

8,745,367

Interest income received

68

68Interest expenses paid

(819,195)(847,538)

(812)

(805)

9,237,974

7,897,092

Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchases of property, plant and equipment(143,355)(59,029)

Purchases of property, plant and equipment in trust(9,814,320)(10,577,896)

Repayments of tenant leasehold and security deposits(28,690)(20,533)

Proceeds from tenant leasehold and security deposits

29,04036,145

Repayments of tenant leasehold and security deposits in trust(317,128)(1,122,394)

Proceeds from tenant leasehold and security deposits in trust

675,899

1,477,344

Payments of restricted deposits in trust(74,775)(30,740)

Proceeds from restricted deposits in trust

21,551

8,362(9,651,778)(10,288,741)

Net cash provided by (used in) investing activities
Cash flows from financing activities
Increase in short-term loans payable

9,500,000–

Decrease in short-term loans payable(2,200,000)(2,000,000)

Proceeds from long-term loans payable

8,200,000

11,200,000

Repayments of long-term loans payable(10,500,000)(6,200,000)

Proceeds from issuance of investment corporation bonds

1,990,031–

Dividends paid

(5,844,312)(5,879,350)

Net cash provided by (used in) financing activities

1,145,719(2,879,350)

Net increase (decrease) in cash and cash equivalents

731,914(5,270,999)

Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of period (Note 4)

23,612,771¥

24,344,686

28,883,770¥

23,612,771

See accompanying notes to the financial statements.

Kenedix Office Investment Corporation

KENEDIX Office Investment Corporation21

Kenedix Office Investment Corporation

Notes to the Financial Statements
For the period from November 1, 2019 to April 30, 2020

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 office buildings in the Tokyo metropolitan area. The Investment Corporation was incorporated on May 6, 2005 as an investment
corporation under the Law Concerning Investment Trusts and Investment Corporations of Japan, or “the Investment Trust Law.” On July 21, 2005,
the Investment Corporation was listed on the Real Estate Investment Trust Market of the Tokyo Stock Exchange with 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 the Investment Trust Law, the Investment Corporation is externally managed 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 securing stable 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 and every opportunity.
During the period ended October 31, 2019, the Investment Corporation acquired one office building (Chofu Center Building: acquisition price of¥8,700 million).
During the period ended April 30, 2020, the Investment Corporation acquired two office buildings (Tosabori Prime: acquisition price of ¥5,000
million, and KDX Kanda Ekimae Building: acquisition price of ¥3,300 million).
At the end of the twenty-ninth and thirtieth fiscal periods (fiscal periods ended October 31, 2019 and April 30, 2020), the Investment Corporation
had total unitholders’ capital of ¥220,970 million with 428,510 investment units outstanding, respectively. The Investment Corporation owned aportfolio of 97 properties (consisting of 96 office buildings and one other property) and 99 properties (consisting of 98 office buildings and one otherproperty) with total acquisition prices of ¥424,535 million and ¥432,835 million at the end of the twenty-ninth and thirtieth fiscal periods, respectively.
The occupancy ratios were approximately 99.5% at the end of the twenty-ninth and thirtieth fiscal periods, respectively.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in the Investment Trust Act of Japan, theFinancial Instruments and Exchange Law of Japan 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 accepted in the United States of America.
The accompanying financial statements are basically a translation of the audited financial statements that were prepared for Japanese 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 and certain reclassifications have been made to the financial statements issued domestically in order to present them in a form that is morefamiliar to readers outside Japan. The Investment Corporation’s fiscal period is a six-month period that ends at the end of April and the end of
October each year. The Investment Corporation does not prepare consolidated financial statements because it has no subsidiaries.

222. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(A) Securities
Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving average method.
Concerning silent partnership (tokumei kumiai, “TK”) interests, the method of incorporating the amount of equity equivalent to the portion that
corresponds to the net gain or loss of 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 over theestimated useful lives of the assets ranging as stated below:

Buildings

From November 1, 2019
to April 30, 2020
2–49 years

From May 1, 2019
to October 31, 20192–49 years

Structures

2–45 years

2–45 years

Machinery and equipment

3–17 years

3–17 years

Tools, furniture and fixtures

3–20 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 a contractual period of 48 years and 9 months under the straight-line 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 a maturity period under the straight-line method.
(G) Accounting Treatment of Trust Beneficiary Interests in Real Estate
For trust beneficiary interests in real estate, which are commonly utilized in the ownership of commercial properties in Japan, all assets andliabilities 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 base rents, common area charges and other operating revenues, which include utility
charge reimbursement, parking space rental revenues and other miscellaneous revenues. Rental revenues are generally recognized on an
accrual basis over the life of each lease. Utility charge reimbursements are recognized when earned and their amounts can be reasonably
estimated. Reimbursements from tenants including utility charge reimbursements are recorded on a gross basis and such amounts arerecorded both as revenues and expenses during the fiscal period.

Kenedix Office Investment Corporation

23

(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 a calendar
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 seller of property at the time of disposal is liable for these taxes on the property from the date of disposal
to the end of the calendar year in which the property is disposed. The seller, however, is generally reimbursed by the purchaser for these accrued
property-related tax liabilities.
When the Investment Corporation purchases properties, it typically allocates the portion of the property-related taxes related to the period
following the purchase date of each property through the end of the calendar year. The amounts of those allocated portions of the propertyrelated taxes are capitalized as part of the acquisition costs of the related properties. Capitalized property-related taxes amounted to ¥35,360
thousand and ¥29,256 thousand as of April 30, 2020 and October 31, 2019, respectively. 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 bases of assets andliabilities 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 included in the cost of acquisition for each asset.
(L) Derivative Financial Instruments
The Investment Corporation utilizes interest-rate swap 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 interestrate swap contracts because these contracts met the criteria for deferral hedging accounting. However, the Investment Corporation adopted
special treatment for interest-rate swap contracts if they met the criteria for hedging accounting under this treatment. The hedge effectivenessfor the interest-rate swap contracts is assessed each fiscal period except for those that meet the criteria of special 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 of market value fluctuation, with maturities of three months or less from 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 with Japanese
GAAP and filed with regulatory authorities in Japan. Unless otherwise noted, amounts are rounded down and ratios are rounded off in theaccompanying financial statements.
Totals shown in the accompanying financial statements do not necessarily agree with the sums of the individual amounts.

24

3. ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE
New accounting standards and implementation guidance issued but not yet effective are as follows:・ “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (ASBJ) Statement No. 29 issued on March 31,
2020)・ “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30 issued on March 31, 2020)(1) Overview
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) in the United States have jointly
developed comprehensive accounting standards for revenue recognition and issued “Revenue from Contracts with Customers” (IFRS 15(IASB) and Topic 606 (FASB)) in May 2014. Given the situation where IFRS 15 is applied from fiscal years beginning on or after January 1,
2018 and that Topic 606 is applied from fiscal years beginning after December 15, 2017, the ASBJ has developed comprehensive accounting
standards for revenue recognition and issued them together with the implementation guidance.
The basic policy of the ASBJ when it developed the accounting standards for revenue recognition was to specify the accounting standards,
incorporating the basic principles of IFRS 15 as a starting point, from the perspective of comparability between financial statements, which isone of the benefits of maintaining compatibility with IFRS 15. The basic policy also stipulates that if there is an item to which consideration
should be given, such as practices that have been conducted thus far in Japan, alternative treatments will be added to the extent to which
comparability is not impaired.
(2) Scheduled date of application
The accounting standards will be applied from the beginning of the fiscal period ending October 31, 2021.
(3) Impact of applying the accounting standards
The impact of applying “Accounting Standard for Revenue Recognition” and its guidance on the financial statements is currently underevaluation.
・ “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30 issued on July 4, 2019)
・ “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31 issued on July 4, 2019)
・ “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19 issued on March 31, 2020)(1) Overview
The IASB and the FASB have established detailed guidance regarding fair value measurement (IFRS 13 “Fair Value Measurement” (IASB) and
Topic 820 “Fair Value Measurement” (FASB)). The ASBJ repeatedly considered the guidance regarding fair value of financial instruments anddisclosure in order to improve the comparability with such international accounting standards, and issued “Accounting Standard for Fair Value
Measurement” and “Implementation Guidance on Accounting Standard for Fair Value Measurement.”(2) Scheduled date of application
The accounting standards will be applied from the beginning of the fiscal period ending October 31, 2021.
(3) Impact of applying the accounting standards
The impact of applying the “Accounting Standard for Fair Value Measurement” and its guidance on the financial statements is currently underevaluation.
・“Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No. 31 issued on March 31, 2020)(1) Overview
Paragraph 125 of International Accounting Standard 1 (IAS 1), “Presentation of Financial Statements,” (issued by the IASB in 2003) requires
disclosure of information about the “assumptions the entity makes about the future, and other major sources of estimation uncertainty.” In thisregard, there has been a request that the major sources of estimation uncertainty should be disclosed in the notes to financial statements
under Japanese GAAP to provide useful information to users of financial statements. In response to this request, the ASBJ developed andissued “Accounting Standard for Disclosure of Accounting Estimates.”(2) Scheduled date of application
The accounting standard will be applied from the end of the fiscal period ending April 30, 2021.
KENEDIX Office Investment Corporation

Kenedix Office Investment Corporation

25

・“Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections” (ASBJ Statement No. 24 issued on
March 31, 2020)(1) Overview
The ASBJ’s Standards Advisory Council recommended that the ASBJ consider enhancing disclosures for notes relating to “accounting policies
and methods adopted in the cases where the relevant accounting standards were not clear.” In response to such recommendations, the ASBJ
issued the revised “Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections.”(2) Scheduled date of application
The accounting standard will be applied from the end of the fiscal period ending April 30, 2021.

4. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following as of April 30, 2020 and October 31, 2019.
As of April 30, 2020

As of October 31, 2019

In thousands of yen
Cash and deposits¥ 14,699,777¥ 14,019,313

Cash and deposits in trust

11,470,987

11,366,312

Restricted deposits in trust (Note)(1,826,078)(1,772,854)

Cash and cash equivalents in trust¥ 24,344,686¥ 23,612,771

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

5. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Property, plant and equipment and intangible assets consist of the following as of April 30, 2020.
Type of asset

Balance atthe beginningof period

Increase during
the period

Balance atthe end of
periodDecreaseduring theperiodDepreciation
Accumulated
depreciation

Depreciation
for the periodNetbalance atthe end of
periodRemarks(in thousands of yen)
Buildings¥ 17,834,390¥ 117,424

Structures

34,963–¥ 17,951,815¥ 6,221,158¥ 303,993¥ 11,730,656

8,601

–

43,564

16,5891,038

26,974432,209––432,209272,362

12,328

159,847

94,116

2,725–

96,84164,691

3,542

32,15027,520,902––

27,520,902––

27,520,902

Subtotal

45,916,582

128,751–

46,045,333

6,574,802

320,90239,470,531

Buildings in trust¥ 124,425,127¥ 2,449,737–¥ 126,874,865¥ 33,269,306¥ 2,064,420¥ 93,605,558

Structures in trust

359,676

3,225–

362,902179,886

11,493

183,016

Machinery andequipment in trust

1,656,878

84,799–1,741,678

796,661

52,836

945,017

Tools, furnitureand fixtures in
trust

505,190

23,340–528,530

346,706

19,826

181,824

Land in trust

276,458,793

7,189,987–

283,648,781––

283,648,781

Subtotal

403,405,666

9,751,091–

413,156,757

34,592,560

2,148,577

378,564,197

Total property, plant andequipment

449,322,249

9,879,842–

459,202,091

41,167,362

2,469,480

418,034,728

Leasehold right¥ 290,050–¥ 290,050¥ 4,792–¥ 285,257

Leasehold right in
trust

363,784––

363,784

14,583

774

349,201

Other

6,278

–

–

6,278

5,110

627

1,168

Total intangible assets

660,113––660,113

24,486

1,402

635,627¥449,982,362¥9,879,842–¥459,862,205¥41,191,849¥2,470,882¥418,670,356

Machinery andequipment
Tools, furnitureand fixtures
Land
Property,plant andequipment

Intangible
assets

Total

¥

–

¥

¥

¥

¥

¥

Note: The amount of increase during the period is primarily attributable to the acquisition of the two real estate properties.
26

Note

Note

Property, plant and equipment and intangible assets consist of the following as of October 31, 2019.
Type of asset

Balance atthe beginningof period

Increase during
the period

Decreaseduring theperiodDepreciation

Balance atthe end of
periodAccumulated
depreciation

Depreciation
for the periodNetbalance atthe end of
periodRemarks(in thousands of yen)
Buildings¥ 17,776,419¥ 57,970

Structures

32,618

Machinery andequipment
Tools, furnitureand fixturesLand–¥ 17,834,390¥ 5,917,165¥ 300,953¥ 11,917,224

2,344

–

34,963

15,551860

19,411

424,6627,547–

432,209

260,033

12,214

172,176

93,446670–

94,116

61,1483,499

32,967

27,520,902––

27,520,902––

27,520,902

Subtotal

45,848,050

68,532

Buildings in trust¥ 121,511,168¥ 2,913,959

Structures in trust

343,278

Machinery andequipment in trust
Tools, furnitureand fixtures in
trust

¥

–

45,916,582

6,253,899

317,527

39,662,682–¥ 124,425,127¥ 31,204,886¥ 2,019,801¥ 93,220,241

16,398–359,676

168,392

11,158191,284

1,604,492

52,386–

1,656,878

743,824

51,855913,054

487,000

18,189–505,190326,879

18,791

178,310Land in trust
Construction inprogress in trust

269,059,794

7,398,999–

276,458,793––

276,458,793

1,511

–

1,511

–

–

–

–

Subtotal

393,007,244

10,399,933

1,511

403,405,666

32,443,982

2,101,605

370,961,684

Total property, plant andequipment

438,855,294

10,468,465

1,511

449,322,249

38,697,882

2,419,133

410,624,366

Leasehold right¥ 290,050¥–¥ 290,050¥ 4,792–¥ 285,257

Leasehold right in
trust

363,784––

363,784

13,809774

349,975

Other

6,278

–

–

6,278

4,482

627

1,796

Total intangible assets

660,113––660,11323,084

1,402

637,029¥439,515,408¥ 10,468,465

1,511¥449,982,362¥38,720,966¥2,420,535¥411,261,396

Property,plant andequipment

Intangible
assets

Total

–

¥

¥

¥

¥

Note

Note

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

6. UNITHOLDERS’ EQUITY
Total number of authorized investment units and total number of investment units issued and outstanding are as follows:

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

KENEDIX Office Investment Corporation

From November 1, 2019
to April 30, 2020
2,000,000

From May 1, 2019
to October 31, 2019
2,000,000

428,510428,510

Kenedix Office Investment Corporation27

7. SHORT-TERM LOANS PAYABLE, LONG-TERM LOANS PAYABLE AND INVESTMENTCORPORATION BONDS
The following summarizes short-term loans payable, long-term loans payable and investment corporation bonds outstanding as of April 30, 2020:
Classification
Short-term loans payable

Drawdown date

Last repayment date

Weighted-average

Balanceinterest rate

(In thousands of yen)

January 31, 2020

January 31, 2021

0.32%

January 31, 2020

January 31, 2021

0.32%

500,000

January 31, 2020

January 31, 2021

0.27%

4,200,000

January 31, 2020

January 31, 2021

0.27%

800,000

March 12, 2020

February 28, 2021

0.38%

3,000,000

March 31, 2020

March 31, 2021

0.33%

¥

500,000

Subtotal
Current portion of long-term loans payable

9,500,000
July 31, 2014

July 31, 2020

0.74%

August 30, 2013

August 31, 2020

1.42%

¥

1,500,000

August 30, 2019

August 31, 2020

0.27%

1,000,000

September 22, 2014

September 30, 2020

0.80%

2,700,000

28

2,700,000

April 22, 2014

October 31, 2020

0.95%

2,900,000

July 31, 2014

October 31, 2020

0.76%

300,000

November 12, 2013

November 12, 2020

1.07%

2,000,000

November 12, 2013

November 12, 2020

1.07%

500,000

November 29, 2013

November 30, 2020

1.12%

1,000,000

November 29, 2013

November 30, 2020

1.12%

900,000

November 29, 2019

November 30, 2020

0.37%

1,000,000

November 29, 2019

November 30, 2020

0.32%

500,000

November 29, 2019

November 30, 2020

0.32%

200,000

January 10, 2014

January 31, 2021

1.21%

1,300,000

January 31, 2014

January 31, 2021

1.13%

2,300,000

January 30, 2015

January 31, 2021

0.71%

1,500,000

March 12, 2014

March 12, 2023

1.36%

March 20, 2014

September 20, 2021

1.01%

4,000,000

March 20, 2014

March 20, 2022

1.20%

3,000,000

March 20, 2014

March 12, 2023

1.35%

2,000,000

July 10, 2014

July 10, 2021

0.90%

2,000,000

July 10, 2014

July 10, 2021

0.90%

500,000

July 31, 2014

July 31, 2022

1.01%

2,200,000

SubtotalLong-term loans payable

500,000

22,300,000¥

1,800,000

September 1, 2014

August 31, 2021

0.89%

800,000

September 1, 2014

August 31, 2021

0.89%

500,000

September 3, 2014

August 31, 2022

0.98%

1,000,000

September 3, 2014

August 31, 2022

0.98%

950,000

September 30, 2014

September 30, 2021

0.89%

1,000,000

October 31, 2014

October 31, 2021

0.80%

3,000,000

October 31, 2014

October 31, 2023

1.07%

2,000,000

October 31, 2014

October 31, 2023

1.13%

1,500,000

October 31, 2014

October 31, 2023

1.07%

1,000,000

October 31, 2014

October 31, 2024

1.26%

2,000,000

October 31, 2014

October 31, 2024

1.26%

1,000,000

January 30, 2015

January 31, 2025

1.16%

1,500,000

February 18, 2015

February 28, 2022

0.91%

1,250,000

February 18, 2015

February 28, 2022

0.91%

350,000

February 18, 2015

February 29, 2024

1.16%

1,700,000

February 18, 2015

February 28, 2025

1.31%

1,250,000

Classification
Long-term loans payable

Drawdown date

Last repayment date

Weighted-average

Balanceinterest rate

(In thousands of yen)February 27, 2015

February 28, 2025

1.15%

March 12, 2015

February 28, 2025

1.22%

1,000,000

March 31, 2015

March 31, 2025

1.27%

2,500,000¥

2,100,000

April 30, 2015

April 30, 2022

0.83%

2,300,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

September 30, 2015

September 30, 2024

1.07%

2,000,000

October 30, 2015

October 31, 2024

0.99%

1,000,000

October 30, 2015

October 30, 2025

1.11%

1,500,000

October 30, 2015

October 30, 2025

1.11%

2,000,000

October 30, 2015

October 30, 2025

1.11%

2,500,000

October 30, 2015

October 30, 2025

1.12%

2,500,000

November 12, 2015

November 30, 2025

1.17%

1,000,000

January 29, 2016

January 31, 2022

0.59%

2,500,000

January 29, 2016

January 31, 2022

0.64%

500,000

January 29, 2016

January 29, 2026

1.07%

2,000,000

January 29, 2016

January 29, 2026

1.02%

1,800,000

February 18, 2016

February 18, 2026

1.00%

1,000,000

February 18, 2016

February 18, 2026

1.00%

500,000

March 31, 2016

March 31, 2026

0.90%

1,000,000

April 28, 2016

April 30, 2024

0.65%

2,000,000

April 28, 2016

April 30, 2026

0.84%

2,000,000

April 28, 2016

April 30, 2026

0.87%

1,000,000

July 29, 2016

July 31, 2026

0.61%

1,500,000

August 2, 2016

July 31, 2026

0.54%

1,000,000

October 31, 2016

October 31, 2024

0.67%

1,000,000

October 31, 2016

October 31, 2026

0.88%

2,500,000

October 31, 2016

October 31, 2026

0.76%

1,000,000

October 31, 2016

October 31, 2026

0.73%

4,000,000

October 31, 2016

October 31, 2026

0.83%

1,500,000

December 12, 2016

November 30, 2026

0.98%

500,000

December 28, 2016

December 28, 2026

0.95%

1,500,000

January 16, 2017

January 31, 2027

0.86%

500,000

January 31, 2017

January 31, 2027

0.85%

700,000

March 28, 2017

March 31, 2027

0.85%

500,000

June 30, 2017

June 30, 2027

0.85%

1,500,000

August 10, 2017

July 28, 2027

0.80%

3,500,000

August 31, 2017

August 31, 2023

0.54%

1,000,000

September 21, 2017

March 31, 2024

0.56%

1,000,000

September 21, 2017

September 30, 2025

0.68%

1,500,000

September 21, 2017

March 31, 2027

0.73%

1,000,000

September 21, 2017

September 21, 2027

0.87%

1,000,000

September 21, 2017

September 30, 2027

0.85%

2,500,000

October 31, 2017

October 31, 2027

0.81%

2,500,000

November 13, 2017

November 13, 2027

0.93%

3,000,000

December 7, 2017

November 30, 2027

0.90%

1,400,000

December 7, 2017

November 30, 2027

0.82%

1,200,000

December 7, 2017

November 30, 2027

0.97%

1,000,000

December 7, 2017

November 30, 2027

0.94%

1,000,000

Kenedix Office Investment Corporation

KENEDIX Office Investment Corporation

29

Classification
Long-term loans payable

Drawdown date

Last repayment date

Balance

Weighted-averageinterest rate

(In thousands of yen)¥

November 30, 2027

0.87%

December 7, 2017

November 30, 2027

0.90%

800,000

December 7, 2017

November 30, 2027

0.87%

600,000

December 28, 2017

December 28, 2025

0.74%

500,000

December 28, 2017

December 28, 2026

0.88%

500,000

December 28, 2017

December 28, 2027

0.86%

500,000

March 12, 2018

March 31, 2028

0.91%

1,500,000

March 26, 2018

March 31, 2027

0.81%

1,000,000

March 26, 2018

March 31, 2028

0.90%

1,000,000

July 31, 2018

July 31, 2028

0.99%

500,000

August 20, 2018

August 31, 2025

0.70%

500,000

August 20, 2018

August 31, 2028

1.00%

1,000,000

August 20, 2018

August 31, 2028

1.00%

1,000,000

August 20, 2018

August 31, 2028

1.00%

500,000

August 20, 2018

August 31, 2028

0.97%

500,000

August 31, 2018

August 31, 2025

0.70%

500,000

August 31, 2018

August 31, 2025

0.72%

300,000

August 31, 2018

August 31, 2028

1.01%

700,000

October 31, 2018

October 31, 2028

1.01%

1,500,000

October 31, 2018

October 31, 2028

0.91%

1,000,000

October 31, 2018

October 31, 2028

1.01%

500,000

March 28, 2019

March 31, 2029

0.84%

1,400,000

March 29, 2019

March 31, 2029

0.84%

2,950,000

June 14, 2019

June 30, 2023

0.25%

500,000

June 14, 2019

December 28, 2026

0.52%

500,000

June 14, 2019

April 30, 2027

0.61%

1,000,000

June 14, 2019

March 31, 2029

0.72%

1,000,000

July 10, 2019

July 31, 2023

0.23%

500,000

July 31, 2019

July 31, 2022

0.29%

1,000,000

July 31, 2019

July 31, 2023

0.29%

1,000,000

July 31, 2019

April 30, 2027

0.55%

1,000,000

July 31, 2019

April 30, 2027

0.55%

1,000,000

September 30, 2019

September 30, 2026

0.49%

1,000,000

September 30, 2019

March 31, 2027

0.53%

900,000

September 30, 2019

March 31, 2027

0.43%

800,000

January 31, 2020

January 31, 2025

0.41%

700,000

January 31, 2020

January 31, 2027

0.53%

1,500,000

January 31, 2020

January 31, 2029

0.68%

1,500,000

March 12, 2020

February 28, 2026

0.36%

1,800,000

March 31, 2020

March 31, 2028

0.64%

1,000,000

July 25, 2014

July 25, 2024

1.18%

April 28, 2016

April 28, 2028

0.90%

1,000,000

July 19, 2017

July 19, 2022

0.26%

1,000,000

Subtotal
Investment corporation bonds

150,250,000¥

30

2,000,000

July 19, 2017

July 16, 2027

0.64%

2,000,000

February 15, 2019

February 15, 2024

0.39%

2,000,000

January 30, 2020

January 30, 2025

0.25%

2,000,000

Subtotal
Total

1,000,000

December 7, 2017

10,000,000¥

192,050,000

The following summarizes short-term loans payable, long-term loans payable and investment corporation bonds outstanding as of October 31, 2019:
Classification
Short-term loans payable

Drawdown date

Last repayment date

Weighted-average

Balanceinterest rate

(In thousands of yen)¥

November 30, 2018

November 30, 2019

0.37%

November 30, 2018

November 30, 2019

0.32%

200,000

January 31, 2019

January 31, 2020

0.32%

500,000

January 31, 2019

January 31, 2020

0.32%

500,000

November 12, 2018

November 30, 2019

0.32%

January 31, 2014

January 31, 2020

0.93%

3,700,000

March 12, 2014

March 12, 2020

0.92%

1,800,000

March 20, 2014

March 12, 2020

0.91%

3,000,000

March 29, 2019

March 31, 2020

0.37%

1,000,000

March 29, 2019

March 31, 2020

0.32%

500,000

July 31, 2014

July 31, 2020

0.74%

2,700,000

August 30, 2013

August 31, 2020

1.42%

1,500,000

Subtotal
Current portion of long-term loans payable

2,200,000¥

500,000

August 30, 2019

August 31, 2020

0.27%

1,000,000

September 22, 2014

September 30, 2020

0.80%

2,700,000

April 22, 2014

October 31, 2020

0.95%

2,900,000

July 31, 2014

October 31, 2020

0.76%

300,000

SubtotalLong-term loans payable

1,000,000

21,600,000¥

November 12, 2013

November 12, 2020

1.07%

November 12, 2013

November 12, 2020

1.07%

500,000

November 29, 2013

November 30, 2020

1.12%

1,000,000

November 29, 2013

November 30, 2020

1.12%

900,000

January 10, 2014

January 31, 2021

1.21%

1,300,000

January 31, 2014

January 31, 2021

1.13%

2,300,000

March 12, 2014

March 12, 2023

1.36%

1,800,000

March 20, 2014

September 20, 2021

1.01%

4,000,000

March 20, 2014

March 20, 2022

1.20%

3,000,000

March 20, 2014

March 12, 2023

1.35%

2,000,000

July 10, 2014

July 10, 2021

0.90%

2,000,000

July 10, 2014

July 10, 2021

0.90%

500,000

July 31, 2014

July 31, 2022

1.01%

2,200,000

2,000,000

September 1, 2014

August 31, 2021

0.89%

800,000

September 1, 2014

August 31, 2021

0.89%

500,000

September 3, 2014

August 31, 2022

0.98%

1,000,000

September 3, 2014

August 31, 2022

0.98%

950,000

September 30, 2014

September 30, 2021

0.89%

1,000,000

October 31, 2014

October 31, 2021

0.80%

3,000,000

October 31, 2014

October 31, 2023

1.07%

2,000,000

October 31, 2014

October 31, 2023

1.13%

1,500,000

October 31, 2014

October 31, 2023

1.07%

1,000,000

October 31, 2014

October 31, 2024

1.26%

2,000,000

October 31, 2014

October 31, 2024

1.26%

1,000,000

January 30, 2015

January 31, 2021

0.71%

1,500,000

January 30, 2015

January 31, 2025

1.16%

1,500,000

February 18, 2015

February 28, 2022

0.91%

1,250,000

February 18, 2015

February 28, 2022

0.91%

350,000

February 18, 2015

February 29, 2024

1.16%

1,700,000

February 18, 2015

February 28, 2025

1.31%

1,250,000

February 27, 2015

February 28, 2025

1.15%

2,100,000

March 12, 2015

February 28, 2025

1.22%

1,000,000

March 31, 2015

March 31, 2025

1.27%

2,500,000

Kenedix Office Investment Corporation

KENEDIX Office Investment Corporation

31

Classification
Long-term loans payable

32

Drawdown date

Last repayment date

Weighted-average

Balanceinterest rate

(In thousands of yen)¥

2,300,000

April 30, 2015

April 30, 2022

0.83%

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

September 30, 2015

September 30, 2024

1.07%

2,000,000

October 30, 2015

October 31, 2024

0.99%

1,000,000

October 30, 2015

October 30, 2025

1.11%

1,500,000

October 30, 2015

October 30, 2025

1.11%

2,000,000

October 30, 2015

October 30, 2025

1.11%

2,500,000

October 30, 2015

October 30, 2025

1.12%

2,500,000

November 12, 2015

November 30, 2025

1.17%

1,000,000

January 29, 2016

January 31, 2022

0.59%

2,500,000

January 29, 2016

January 31, 2022

0.64%

500,000

January 29, 2016

January 29, 2026

1.07%

2,000,000

January 29, 2016

January 29, 2026

1.02%

1,800,000

February 18, 2016

February 18, 2026

1.00%

1,000,000

February 18, 2016

February 18, 2026

1.00%

500,000

March 31, 2016

March 31, 2026

0.90%

1,000,000

April 28, 2016

April 30, 2024

0.65%

2,000,000

April 28, 2016

April 30, 2026

0.84%

2,000,000

April 28, 2016

April 30, 2026

0.87%

1,000,000

July 29, 2016

July 31, 2026

0.61%

1,500,000

August 2, 2016

July 31, 2026

0.54%

1,000,000

October 31, 2016

October 31, 2024

0.67%

1,000,000

October 31, 2016

October 31, 2026

0.88%

2,500,000

October 31, 2016

October 31, 2026

0.76%

1,000,000

October 31, 2016

October 31, 2026

0.73%

4,000,000
1,500,000

October 31, 2016

October 31, 2026

0.83%

December 12, 2016

November 30, 2026

0.98%

500,000

December 28, 2016

December 28, 2026

0.95%

1,500,000

January 16, 2017

January 31, 2027

0.86%

500,000

January 31, 2017

January 31, 2027

0.85%

700,000

March 28, 2017

March 31, 2027

0.85%

500,000

June 30, 2017

June 30, 2027

0.85%

1,500,000

August 10, 2017

July 28, 2027

0.80%

3,500,000

August 31, 2017

August 31, 2023

0.54%

1,000,000

September 21, 2017

March 31, 2024

0.56%

1,000,000

September 21, 2017

September 30, 2025

0.68%

1,500,000

September 21, 2017

March 31, 2027

0.73%

1,000,000

September 21, 2017

September 21, 2027

0.87%

1,000,000

September 21, 2017

September 30, 2027

0.85%

2,500,000

October 31, 2017

October 31, 2027

0.81%

2,500,000

November 13, 2017

November 13, 2027

0.93%

3,000,000

December 7, 2017

November 30, 2027

0.90%

1,400,000

December 7, 2017

November 30, 2027

0.82%

1,200,000

December 7, 2017

November 30, 2027

0.97%

1,000,000

December 7, 2017

November 30, 2027

0.94%

1,000,000

December 7, 2017

November 30, 2027

0.87%

1,000,000

Classification
Long-term loans payable

Drawdown date

Last repayment date

Weighted-average

Balanceinterest rate

(In thousands of yen)

December 7, 2017

November 30, 2027

0.90%

¥

December 7, 2017

November 30, 2027

0.87%

600,000

December 28, 2017

December 28, 2025

0.74%

500,000

December 28, 2017

December 28, 2026

0.88%

500,000

December 28, 2017

December 28, 2027

0.86%

500,000

March 12, 2018

March 31, 2028

0.91%

1,500,000

March 26, 2018

March 31, 2027

0.81%

1,000,000

March 26, 2018

March 31, 2028

0.90%

1,000,000

July 31, 2018

July 31, 2028

0.99%

500,000

August 20, 2018

August 31, 2025

0.70%

500,000

August 20, 2018

August 31, 2028

1.00%

1,000,000

August 20, 2018

August 31, 2028

1.00%

1,000,000

August 20, 2018

August 31, 2028

1.00%

500,000

August 20, 2018

August 31, 2028

0.97%

500,000

August 31, 2018

August 31, 2025

0.70%

500,000

August 31, 2018

August 31, 2025

0.72%

300,000

August 31, 2018

August 31, 2028

1.01%

700,000

October 31, 2018

October 31, 2028

1.01%

1,500,000

October 31, 2018

October 31, 2028

0.91%

1,000,000

October 31, 2018

October 31, 2028

1.01%

500,000

March 28, 2019

March 31, 2029

0.84%

1,400,000

March 29, 2019

March 31, 2029

0.84%

2,950,000

June 14, 2019

June 30, 2023

0.25%

500,000

June 14, 2019

December 28, 2026

0.52%

500,000

June 14, 2019

April 30, 2027

0.61%

1,000,000

June 14, 2019

March 31, 2029

0.72%

1,000,000

July 10, 2019

July 31, 2023

0.23%

500,000

July 31, 2019

July 31, 2022

0.29%

1,000,000

July 31, 2019

July 31, 2023

0.29%

1,000,000

July 31, 2019

April 30, 2027

0.55%

1,000,000

July 31, 2019

April 30, 2027

0.55%

1,000,000

September 30, 2019

September 30, 2026

0.49%

1,000,000

September 30, 2019

March 31, 2027

0.53%

900,000

September 30, 2019

March 31, 2027

0.43%

800,000

July 25, 2014

July 25, 2024

1.18%

April 28, 2016

April 28, 2028

0.90%

1,000,000

July 19, 2017

July 19, 2022

0.26%

1,000,000

July 19, 2017

July 16, 2027

0.64%

2,000,000

February 15, 2019

February 15, 2024

0.39%

2,000,000

Subtotal
Investment corporation bonds

153,250,000¥

Subtotal
Total

800,000

2,000,000

8,000,000¥

185,050,000

Kenedix Office Investment Corporation

KENEDIX Office Investment Corporation

33

8．
．REDUCTION ENTRY
The amount of reduction entry of property, plant and equipment acquired by government subsidy is as follows:
As of April 30, 2020

As of October 31, 2019

In thousands of yen
Buildings in trust¥ 26,230¥ 26,230

9. COMMITMENT LINE AGREEMENTThe Investment Corporation has concluded a commitment line agreement with bank of account, etc.
As of April 30, 2020

As of October 31, 2019

In thousands of yen
Maximum amount¥ 6,000,000––¥ 6,000,000¥ 6,000,000

Drawn credit facility
Balance¥ 6,000,000

10. PER UNIT INFORMATION
From November 1, 2019
to April 30, 2020

From May 1, 2019
to October 31, 2019
Yen

Net asset value per unit¥

535,786¥

535,054

Net income per unit¥

14,412¥

13,639Weighted-average number of units (units)

428,510428,510

The weighted-average number of units outstanding of 428,510 as of April 30, 2020 and October 31, 2019, respectively, was used for the computationof 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.

34

11. INCOME TAXESThe Investment Corporation is subject to corporate income taxes at a regular statutory rate of approximately 32%. However, the Investment
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 requirementthat it currently distribute in excess of 90% of its net income for the fiscal period in order to be able to deduct such amounts. If the Investment
Corporation does not satisfy all of the requirements, the entire taxable income of the Investment Corporation will be subject to regular corporate
income taxes. The Investment Corporation distributed in excess of 90% of its distributable income in the form of cash distributions totaling ¥6,175
million and ¥5,844 million for the fiscal periods ended April 30, 2020 and October 31, 2019, respectively. Therefore, such distributions were treatedas deductible distributions for purposes of corporate income taxes. The effective tax rate on the Investment Corporation’s income was 0.02% for
the fiscal periods ended April 30, 2020 and October 31, 2019, respectively. The following table summarizes the significant differences between thestatutory tax rate and the effective tax rate.
From November 1, 2019
to April 30, 2020

From May 1, 2019
to October 31, 2019

Statutory tax rate

31.46%

31.51%

Deductible cash distributions(31.45)(31.50)

Others 0.01

 0.01

Effective tax rate

0.02%

0.02%

The significant components of deferred tax assets and liabilities as of April 30, 2020 and October 31, 2019 are as follows:
As of April 30, 2020

As of October 31, 2019

In thousands of yen
Deferred tax assets
Enterprise tax payable

¥ 36

¥ 32

Amortization of leasehold right

4,587

4,344

Deferred gains or losses on hedges

110,974

101,608

115,598

105,985

Valuation allowance(115,562)(105,952)

Total deferred tax assets

¥ 36

¥ 32

Subtotal

12. 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 theInvestment Trust Act.

13. RELATED-PARTY TRANSACTIONS(1) Parent Company, Major Corporate Unitholders and Other
Thirtieth fiscal period (From November 1, 2019 to April 30, 2020) and Twenty-ninth fiscal period (From May 1, 2019 to October 31, 2019): Not applicable(2) Affiliated Companies and Other
Thirtieth fiscal period (From November 1, 2019 to April 30, 2020) and Twenty-ninth fiscal period (From May 1, 2019 to October 31, 2019): Not applicable(3) Fellow Subsidiary Companies and Other
Thirtieth fiscal period (From November 1, 2019 to April 30, 2020) and Twenty-ninth fiscal period (From May 1, 2019 to October 31, 2019): Not applicable(4) Directors, Major Individual Unitholders and Other
Thirtieth fiscal period (From November 1, 2019 to April 30, 2020) and Twenty-ninth fiscal period (From May 1, 2019 to October 31, 2019): Not applicable

Kenedix Office Investment Corporation

KENEDIX Office Investment Corporation

35

14. BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATEDEXPENSES, AND GAIN AND LOSS ON 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, 2019 to April 30, 2020 and from May 1, 2019 to October 31, 2019 consist of the following:
From November 1, 2019

From May 1, 2019

to April 30, 2020

to October 31, 2019

In thousands of yen
Rental and other operating revenues
Rent revenue – real estate
Rental revenues
Common area charges
Subtotal¥11,698,824¥11,216,006

1,730,295

1,760,026

13,429,120

12,976,033

Others:Parking space rental revenues

510,017523,855

Utility charge reimbursement

981,703

1,190,161

Miscellaneous

294,258

269,454

1,785,979

1,983,471¥15,215,099¥14,959,504

Property management fees and facility management fees

¥1,440,554¥1,392,326

Utilities

1,020,457

1,203,041

Taxes

1,283,557

1,280,309

Repairs and maintenance474,879

409,464

Insurance

18,656

19,469Subtotal
Total rent revenue – real estate
Property-related expenses
Expenses related to rent business

Trust fees

33,41632,946

Others267,111334,688

Depreciation
Total expenses related to rent business

36

2,470,270

2,419,923¥7,008,903¥7,092,170

15. 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, 2020 and October 31,
2019 are as follows:
As of April 30, 2020

As of October 31, 2019
In thousands of yen

Due within one year¥

Due after one year
Total

2,673,596¥

2,797,748

8,393,119

9,191,310¥ 11,066,716¥ 11,989,058

16. FINANCIAL INSTRUMENTS
Thirtieth fiscal period (From November 1, 2019 to April 30, 2020)(A) Overview(1) Policy for financial instruments
The Investment Corporation procures essential funds for acquiring properties 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 ofhedging its exposure to changes in interest rates and does not enter into derivatives for speculative or trading purposes. Management of surplus
funds is undertaken 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 the issuer and risk offluctuation of value of its property.
Loans payable and investment corporation bonds are used primarily for procuring funds necessary for the acquisition of properties and have aredemption date of a maximum of approximately 9 years following the accounting date. Although a certain portion of said liabilities are subject tointerest-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, 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 assessment of 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 from fluctuations 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 periodically reviews the value of the property and financial condition of the issuer with regard to investment
securities.
(b) Monitoring of liquidity risk (the risk that the Investment Corporation may not be able to meet its obligations on scheduled due dates)
associated with procurement of funds
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 as regularly checking the balance of cash
reserves.
(4) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available, fair value
is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors could
result in a different fair value. Moreover, the contract amounts, etc. of derivative transactions in “(B) Estimated Fair Value of Financial Instruments”
do not indicate the market risk of derivative transactions.

Kenedix Office Investment Corporation

KENEDIX Office Investment Corporation

37

(B) Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet as of April 30, 2020 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).
Carrying value
Estimated fair value
Difference
In thousands of yen(1) Cash and deposits(2) Cash and deposits in trust
Subtotal(1) Short-term loans payable¥ 14,699,777¥ 14,699,777

11,470,987

11,470,987

26,170,764

26,170,764–

9,500,000

9,500,000–(2) Current portion of investment corporation bonds(3) Current portion of long-term loans payable

¥

–
–

–

–

–

22,300,000

22,345,163

45,163(4) Investment corporation bonds

10,000,000

10,033,200

33,200(5) Long-term loans payable

150,250,000

152,628,904

2,378,904¥ 192,050,000¥ 194,507,267¥ 2,457,267(332,017)(332,017)–

Subtotal
Derivative transactions(*)(*)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 and derivative transactions
Assets(1) Cash and deposits and (2) Cash and deposits in trust
Since these items are settled in a short period of time, their carrying 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. The fair value of those for which no market price is available isbased on the quoted price obtained from counterparty financial institutions, etc.
(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 fixedinterest rates resulting from interest-rate swaps and special treatment applied to said swaps, is based on the present value of 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 wereentered into.
Derivative Transactions
Please refer to Note 17 “DERIVATIVE TRANSACTIONS.”*2 Financial instruments for which it is extremely difficult to determine the fair value
Classification
Investment securities

Carrying value (In thousands of yen)
¥ 1,127,724

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 thepreceding 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

38

¥ 14,699,777
11,470,987¥ 26,170,764

*4 Redemption schedule for loans payable and investment corporation bonds
Due within 1

Due after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

Due after 5

year or lessthrough 2 years

through 3 years

through 4 years

through 5 years

years

In thousands of yen
Short-term loans payable¥

9,500,000

Investment corporation bonds
Long-term loans payable
Total

¥

–

–

–

¥

–

¥

1,000,000–
2,000,000

¥

–

¥

–

4,000,000

3,000,000

22,300,000

21,700,000

11,950,000

12,200,000

16,050,000

88,350,000¥ 31,800,000¥ 21,700,000¥ 12,950,000¥ 14,200,000¥ 20,050,000¥ 91,350,000

Twenty-ninth fiscal period (From May 1, 2019 to October 31, 2019)(A) Overview(1) Policy for financial instruments
The Investment Corporation procures essential funds for acquiring properties 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 ofhedging its exposure to changes in interest rates and does not enter into derivatives for speculative or trading purposes. Management of surplus
funds is undertaken 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 the issuer and risk offluctuation of value of its property.
Loans payable and investment corporation bonds are used primarily for procuring funds necessary for the acquisition of properties and have aredemption date of a maximum of approximately 9 years and 5 months 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, 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 assessment of 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 from fluctuations 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 periodically reviews the value of the property and financial condition of the issuer with regard to investment
securities.
(b) Monitoring of liquidity risk (the risk that the Investment Corporation may not be able to meet its obligations on scheduled due dates)
associated with procurement of funds
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 as regularly checking the balance of cash
reserves.
(4) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available, fair value
is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors could
result in a different fair value. Moreover, the contract amounts, etc. of derivative transactions in “(B) Estimated Fair Value of Financial Instruments”
do not indicate the market risk of derivative transactions.

KENEDIX Office Investment Corporation

Kenedix Office Investment Corporation

39

(B) Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet as of October 31, 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).
Carrying value
Estimated fair value
Difference
In thousands of yen(1) Cash and deposits¥ 14,019,313¥ 14,019,313

11,366,312

11,366,312–

25,385,625

25,385,625–

2,200,000

2,200,000

–

–

–

–

(3) Current portion of long-term loans payable

21,600,000

21,661,969

61,969(4) Investment corporation bonds

8,000,000

8,099,900

99,900(2) Cash and deposits in trust
Subtotal(1) Short-term loans payable(2) Current portion of investment corporation bonds(5) Long-term loans payable
Subtotal
Derivative transactions(*)¥–

153,250,000

156,160,213

2,910,213¥ 185,050,000¥ 188,122,082¥ 3,072,082(314,241)(314,241)–(*)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 and derivative transactions
Assets(1) Cash and deposits and (2) Cash and deposits in trust
Since these items are settled in a short period of time, their carrying 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 fixedinterest rates resulting from interest-rate swaps and special treatment applied to said swaps, is based on the present value of 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 wereentered into.
Derivative Transactions
Please refer to Note 17 “DERIVATIVE TRANSACTIONS.”*2 Financial instruments for which it is extremely difficult to determine the fair value
Classification
Investment securities

Carrying value (In thousands of yen)
¥ 1,131,953

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 thepreceding 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

40

¥ 14,019,313
11,366,312¥ 25,385,625

*4 Redemption schedule for loans payable and investment corporation bonds
Due within 1

Due after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

Due after 5

year or lessthrough 2 years

through 3 years

through 4 years

through 5 years

years

In thousands of yen
Short-term loans payable¥ 2,200,000

Investment corporation bonds

–

¥

–

¥

–

¥

–

¥

–

–

–

1,000,000–

4,000,000

3,000,000

21,600,000

21,300,000

18,050,000

11,300,000

11,700,000

90,900,000¥ 23,800,000¥ 21,300,000

11,300,000¥ 15,700,000¥ 93,900,000

Long-term loans payable
Total

¥

¥

19,050,000¥

17. DERIVATIVE TRANSACTIONS
The following summarizes the contracted amount and the fair value of interest-rate swap contracts as of April 30, 2020:(1) Hedge accounting not applied
Not applicable(2) Hedge accounting applied
Hedge
accounting
methodPrinciple method

Type of derivativetransactions

Hedgeditems

Interest-rate swaps:

Long-term

Receive/floatingloans

and pay/fixedpayableSpecial treatment

Interest-rate swaps:

Long-termof interest-rate

Receive/floating

loans

swaps

and pay/fixedpayableTotal

Contracted amount(In thousands of yen)
Maturing
after 1 year

Fair value(In thousandsof yen)Calculation method for
applicable fair value
Based on the amount¥ 43,650,000¥ 42,650,000¥ (332,017)

provided by counterparty
financial institutions

74,050,000

55,950,000*¥ 117,700,000¥ 98,600,000¥ (332,017)(*)Interest-rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fairvalue is included in the fair value of the hedged long-term loans payable.

The following summarizes the contracted amount and the fair value of interest-rate swap contracts as of October 31, 2019:(1) Hedge accounting not applied
Not applicable(2) Hedge accounting applied
Hedge
accounting
methodPrinciple method

Type of derivativetransactions

Hedgeditems

Interest-rate swaps:

Long-term

Receive/floatingloans

and pay/fixedpayableSpecial treatment

Interest-rate swaps:

Long-termof interest-rate

Receive/floating

loans

swaps

and pay/fixedpayableTotal

Contracted amount(In thousands of yen)
Maturing
after 1 year

Fair value(In thousandsof yen)Calculation method for
applicable fair value
Based on the amount¥ 37,150,000¥ 36,150,000¥ (314,241)

provided by counterparty
financial institutions

82,550,000

65,450,000¥ 119,700,000¥ 101,600,000*¥ (314,241)(*)Interest-rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fairvalue is included in the fair value of the hedged long-term loans payable.

KENEDIX Office Investment Corporation

Kenedix Office Investment Corporation

41

18. INVESTMENT AND RENTAL PROPERTIES
Thirtieth fiscal period (From November 1, 2019 to April 30, 2020)
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 October 31, 2019

Net change

As of April 30, 2020

Fair value
As of April 30, 2020
In thousands of yen ¥ 506,912,000¥ 411,259,731¥ 7,409,572¥ 418,669,303*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 increase/decrease
factors were the acquisition of two properties totaling ¥8,394,455 thousand and depreciation amounting to ¥2,470,270 thousand.
Income and loss in the fiscal period ended April 30, 2020 for real estate for rental purposes is listed in Note 14 “BREAKDOWN OF RENTAL AND
OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, AND GAIN AND LOSS ON SALE OF REAL ESTATE PROPERTY.”

Twenty-ninth fiscal period (From May 1, 2019 to October 31, 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:
Carrying value In thousands of yen 
As of April 30, 2019

Net change

As of October 31, 2019

Fair value
As of October 31, 2019
In thousands of yen ¥ 496,331,000¥ 403,212,700¥ 8,047,031¥ 411,259,731*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 increase/decrease
factors were the acquisition of one property totaling ¥9,042,398 thousand and depreciation amounting to ¥2,419,923 thousand.
Income and loss in the fiscal period ended October 31, 2019 for real estate for rental purposes is listed in Note 14 “BREAKDOWN OF RENTAL AND
OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, AND GAIN AND LOSS ON SALE OF REAL ESTATE PROPERTY.”42

19. SEGMENT AND RELATED INFORMATION
Thirtieth fiscal period (From November 1, 2019 to April 30, 2020)(A) Segment Information
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has no reportable segment
subject to disclosure.
(B) Related Information(1)

Information about each product and service

Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of 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 of income
and retained earnings.
(b)

Property, plant and equipment

Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts for over 90% of the amount of property, plantand 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 statement ofincome and retained earnings.
Twenty-ninth fiscal period (From May 1, 2019 to October 31, 2019)(A) Segment Information
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has no reportable segment
subject to disclosure.
(B) Related Information(1)

Information about each product and service

Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of 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 of income
and retained earnings.
(b)

Property, plant and equipment

Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts for over 90% of the amount of property, plantand 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 statement ofincome and retained earnings.

20. SIGNIFICANT SUBSEQUENT EVENTS
Not applicable

KENEDIX Office Investment Corporation

Kenedix Office Investment Corporation

43

21. DISTRIBUTIONS

44

Thirtieth fiscal period(From November 1, 2019 to April 30, 2020)

Twenty-ninth fiscal period(From May 1, 2019 to October 31, 2019)
(Yen)

(Yen)

I. Retained earnings at the end of period¥6,175,926,413¥5,844,500,609

II. Total distributions¥6,175,686,120¥5,844,447,890

Distributions per unit

¥14,412¥13,639

III . Retained earnings brought forward to
the next period¥240,293¥52,719

Method of calculating distribution amountIn accordance with the policy stipulated in Article 35 (1)of its Articles of Incorporation, the Investment
Corporation determines that the amount of distribution
shall exceed the amount equivalent to 90% of its
distributable profit 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, the Investment Corporation has decided to
distribute ¥6,175,686,120, the maximum integral
multiple amount of investment units issued andoutstanding of 428,510 units, up to the amount of
unappropriated retained earnings for the fiscal period
under review.
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 that the amount of distribution
shall exceed the amount equivalent to 90% of its
distributable profit 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, the Investment Corporation has decided to
distribute ¥5,844,447,890, the maximum integral
multiple amount of investment units issued andoutstanding of 428,510 units, up to the amount of
unappropriated retained earnings for the fiscal period
under review.
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

45

46

30th
FiscalPeriodUnitholders’ Information

Outline of Kenedix Office Investment Corporation (as of April 30, 2020)
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)

Auditor❸Kenedix Property Management, Inc.

❶ Asset management agreement❷ Memorandum of Understanding on providing
real estate information❸ Property management agreement❹ Trademark licensing agreement❽

Ernst & Young ShinNihon LLC

Administrative Agent for
Investment Corporation Bonds

Sumitomo Mitsui Banking Corporation
MUFG Bank, Ltd.

❺ Asset custodian agreement / Administrative agency agreement(institutional administration)❻ Administrative agency agreement (accounting business)❼ Unitholder registry administrator agreement/Special accounts administration 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 30th fiscal period (April 30, 2020)
Percentage of investment units
by type of unitholder
Individuals and others
14,812 units(3.45%)

Foreign companies
and individuals
144,357 units(33.68%)Percentage of number of unitholders
by type of unitholder
Other domestic companies
101(2.04%)
Financial institutions(including securities companies)
118(2.39%)

428,510 units

Other domestic companies
5,338 units(1.24%)

Foreign companies
and individuals
281(5.69%)

4,930

Individuals andothers4,430(89.85%)

Financial institutions(including securities companies)
264,003 units(61.60%)Note: Ratios rounded down to the second decimal place.
Kenedix Office Investment Corporation

47

May

Jun.

Jul.

Aug.

Sept.

Oct.

Nov.

Fiscal period end

Financial results
announcement

Dec.

Jan.

Feb.

Mar.

Financial results
announcement

Apr.

Fiscal period end

Start of distribution payments

Start of distribution payments

Asset management report publication

Asset management report publication● IR schedule

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.

Financial results
announcement

Start of distribution payments

Start of distribution payments

Asset management report publication

Asset management report publication

Oct.

Fiscal period end● 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.

48

30th
FiscalPeriodPortfolio

Portfolio Map (as of April 30, 2020)

50

Tokyo metropolitan area (central 5 wards)

properties

JR Yamanote Line

上野

A-127

Acquired in 30th fiscal period

KDX Kanda Ekimae Building
A-93

Shinjuku Ward
A-29

D-2

Suidobashi

A-71

A-88

Iidabashi
A-8

IchigayaShinjuku

A-66

A-41

A-55

Chiyoda Ward

JR Chuo Li

ne

A-120

A-64

Tokyo

A-13

A-6

Shibuya Ward

A-112

A-21

A-115

Toranomon
A-116

A-7

ShibuyaMinato Ward
Ebisu

A-124
A-32

線
山手

A-119

A-109

A-19

A-87

A-68

A-51
A-74

Nihonbashi

A-73
A-108

A-1

Harajuku

JR Sobu Line

A-114

A-113

Kanda

A-27

A-46

A-59

A-56

A-37

A-38

A-92

Ochanomizu

A-20

A-67

A-3

A-4

A-121

Shinbashi

A-107

Chuo Ward

Hamamatsucho

A-60

A-91

A-17

A-89

Shinagawa

Kenedix Office Investment Corporation

49

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

Nihonbashi
Horidomecho FirstKDX 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

KDX Kanda
Kitaguchi Building

KDX Kojimachi
Building

KDX Kajicho Building

KDX Ochanomizu
Building

A-46

A-56

A-59

A-92

A-127

A-29

A-38

A-41

Hiei Kudan-Kita
Building

KDX Jimbocho
Building

KDX Iwamoto-cho
Building

KDX Akihabara
Building

KDX Kanda
Ekimae Building

KDX HigashiShinjuku Building

KDX NishiShinjuku Building

KDX Shinjuku 286
Building

A-55

A-66

A-71

A-88

A-93

A-6

A-17

A-119

Shin-toshin
Maruzen Building

KDX Shinjuku
Building

KDX Iidabashi
Building

KDX Shinjuku
6-chome Building

KDX Iidabashi
SquareHarajuku F.F.
Building

KDX Ebisu Building

KDX Shibuya
Nanpeidai Building

A-120

D-2

KDX Yoyogi Building

Shinjuku 6chome
Building (Land)

50

Acquired in30th fiscal
periodPortfolio

Portfolio Map (as of April 30, 2020)
Tokyo metropolitan area (excluding central 5 wards)

30

Saitama Prefecture

properties

A-86
A-99

A-62

A-90

A-84

A-33

A-96

A-78

Tokyo
Metropolitan

A-125

A-35

A-83

A-5

Tokyo central
5 wards

A-95
A-72

A-30

A-22

A-117

A-101
A-123

A-34

19

A-63

A-48

A-102

Other regional areas

A-26

A-85
A-94

Kanagawa Prefecture

A-122

A-16

Chiba Prefecture

properties
A-118

Sapporo
A-12

A-82

A-42

A-100

A-54

A-104

A-69

A-110

A-70

A-126
Acquired in 30th fiscal period

Tosabori Prime

Sendai

A-53

A-14

A-31

Utsunomiya

A-98

A-44

A-97

NagoyaTokyo
metropolitan
area

Hiroshima Osaka
Hakata
A-58

A-106

A-79

A-111

Kenedix Office Investment Corporation

51

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

A-125

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 Building

52

Acquired in30th fiscal
periodA-126

Tosabori Prime

Portfolio
As of the end of 30th fiscal period (April 30, 2020)

The properties acquired during the 30th fiscal period are marked with a red box.
The properties sold and slated to be sold during the 31st and the 32nd fiscal periods are marked witha yellow box.

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, TokyoKDX Nihonbashi Honcho Building (Note 4) Chuo-ku, Tokyo
A-68
A-73
KDX Hakozaki Building
Chuo-ku, Tokyo
A-74
KDX Shin-Nihonbashi Building (Note 4)
Chuo-ku, Tokyo
A-87
Nihonbashi Horidomecho First
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 (Note 4) 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
A-91
KDX Mita Building
Minato-ku, Tokyo
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
KDX Kanda Kitaguchi 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-127 KDX Kanda Ekimae 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 (49 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
3,300
2,950
1,500
2,300
2,110
6,800
4,670
1,900
4,350
2,450
4,640
3,500
2,479
220,030

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
Feb. 1991
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%
100.0%
100.0%
100.0%
90.1%
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%
99.9%

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
Apr. 1988

98.2%
100.0%
100.0%
99.6%
100.0%
100.0%
100.0%
100.0%
70.9%
100.0%
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
A-63

53

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
KDX Gotanda 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
Shinagawa-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
2,620

Type

Area

No.

Property Name

AcquisitionPrice(mn yen) (Note 1)

Location

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, TokyoKDX Omiya Building
Saitama, SaitamaTokyo
KDX Ikebukuro Building
Toshima-ku, Tokyo
Metropolitan
KDX Musashi-Kosugi Building
Kawasaki, Kanagawa
OfficeArea
KDX Toyosu Grand Square
Koto-ku, Tokyo
Building(excluding
KDX Takadanobaba Building
Toshima-ku, Tokyo
central 5
KDX Ikebukuro West Building
Toshima-ku, Tokyo
wards)KDX 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
Chofu Center Building
Chofu, Tokyo
Office Buildings (Tokyo Metropolitan Area (excluding central 5 wards)) Subtotal (30 properties)
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
A-125

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
8,700
127,612Year
Built (Note 2)

Occupancy
Rate (Note 3)

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
Jan. 1995—

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%
100.0%
99.5%

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
Oct. 1987—
Avg. 24.6 years

92.8%
100.0%
100.0%
99.0%
100.0%
93.2%
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%
98.9%
99.5%

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
KDX Nagoya Ekimae Building
Nagoya, Aichi
Other
KDX Higashi Umeda Building
Osaka, Osaka
Regional
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
Tosabori Prime
Osaka, Osaka
Office Buildings (Other Regional Areas) Subtotal (19 properties)
Office Buildings Total (98 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
A-126

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
5,000
82,312429,955

Others
Type

Area

No.

OthersTokyo
Metropolitan
Area

D-2

Property Name

Shinjuku 6chome Building (Land)

Location

Shinjuku-ku, Tokyo

AcquisitionPrice(mn yen) (Note 1)

2,880

—

100.0%

Others Subtotal (1 property)

2,880

—

100.0%

Portfolio Total (99 properties)

432,835

Avg. 24.6 years

99.5%

Investment Security
Category

Investment
Security

Investment Security Name

Underlying Asset Name

Underlying Asset
Location

G.K. KRF 43 Silent Partnership Equity Interest (Note 5) 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 31st Fiscal Period (Oct. 2020)
Type

Area

No.

OfficeBuilding

Tokyo Metropolitan
Area (central 5
wards)

A-128

Property Name

Shinbashi M-SQUARE Bright

Location

Minato-ku, Tokyo

AcquisitionPrice(mn yen) (Note 1)

16,300Year
Built (Note 2)

Acquisition
Date

Sep. 2018

Jun. 30, 2020

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, 2020. Figures are truncated to the first decimal place.
Note 3: Occupancy rate is calculated by dividing leased area as of April 30, 2020 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: KDX Nihonbashi Honcho Building and KDX Nihonbashi Edo-dori Building were transferred as of June 30, 2020. KDX Shin-Nihonbashi Building is slated
to be transferred as of November 2, 2020.
Note 5: The said maps and photographs do not include investment securities owned by KDO.
Kenedix Office Investment Corporation54

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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some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,”“expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or the negative of these terms orother similar terminology. These statements are not guarantees of future performance and are subject tovarious risks and uncertainties. Actual results, performance, or achievements, or those of the industries inwhich we operate, may differ materially from any future results, performance, or achievements expressedor implied by these forward-looking statements. In addition, these forward-looking statements are necessarily dependent upon assumptions, estimates, and data that may be incorrect or imprecise and involve
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Potential risks and uncertainties also include those identified and discussed in this document. Given
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