Financial Results
for the 1st Financial Period ended Sep. 2015
November 13, 2015

Contents
Section 1

Increasing importance of shopping centers for daily needs

3

Section 2

Summary of financial results for the fiscal period ended
Sep. 30, 2015
Section 3

Our growth strategies
Appendix1

Key characteristics of Kenedix Retail REIT Corporation
Appendix2

Detailed financial results and portfolio information

9

27

37

45

Section 1

Increasing importance of shopping centers for daily needs

Conforming to changes in the macroeconomic environment

Shrinking retail tradearea due to aging
population and concentrated
population in the four major
metropolitan areas

Domestic consumption
led by the elderly

Stable demand fordaily necessities

Increasing importanceof neighborhood, communityand other shopping centers thatcater to the day-to-day needs

Increase in
specialty supermarket
market share

Decrease in size ofretail properties

Government promotionof "Compact City"

4

Strong social needs for shopping centers for daily needs
Shopping centers for daily needs

Domestic consumption led
by the elderly

Consumer behavior

Demographic shift in the elderly (65 and over)

1990

2015

2040

14.89 mn

33.95 mn

38.67 mn

Aging rate in 2040

36.1%

% of monetary assets owned by 60 and over

60's・・・33%
70 and over ・・・28%

60 and over

2009

61%

(Source： Cabinet Office, Government of Japan,
National Institute of Population and Social Security Research)

Increase in household income driven bymore female participation in the workforce
Total female income (annual)

1990

2013

+50%

JPY34 tn

JPY51 tn

Total number of female salaried workers(annual)

1990

2013

+38%

13.7 mn

18.9 mn(Source： National Tax Agency "Results of statistical surveys on thereality of private sector income ")Quick shopping for daily needs% of consumers who goes
shopping "almost everyday"or "3-4 times a week"

・・・50.0%% of consumers who
recognize supermarkets as"most used type of stores forbuying groceries"

・・・69.4%% of consumers who goes to"most frequently used stores"
on foot or by bicycle

・・・72.7%

1. Large parking area
Blumer Maitamon(Source： Bureau of Industrial and Labor Affairs "Reports on shopping
trends of the elderly") (Report on Tokyo Metropolis)

2. Low-rise buliding
Sunny Noma

Consumer behavior% of household with wife
as final decision maker forfamily budget

・・・69.4%% of people who goes
shopping "almost every day"or "3-4 times a week"

・・・71.7%% of people who goes
shopping mainly by private
cars・・・63.5%

3. Easy access by foot or bicycles
Unicus Yoshikawa(Source(upper row)：Cabinet Office, Government of Japan "International
comparison on gender-equal society")(Source(middle and lower row)：Saitama Prefecture Department of Industry andLabor "Saitama Prefecture consumption trends")(Households with a second-year student studying at Saitama public elementary school)5

Investments focusing on retail properties focused on daily needs"Daily / Neighborhood" type

VS

"Weekend / Destination" type

Small

Trade area

Large

High

Frequency of customer visits

Low

Neighborhood, community andother shopping centers for daily needs

Property types

Characteristics

The majority of portfolio properties of other listed
retail-focused J-REITs

Trade
area

RSC (Regional Shopping Center)

NSC

Neighborhood
Shopping
Centers

Shopping centers with asupermarket as an anchor or coretenant3~5km

SMSupermarkets

Stand-alone stores that primarily
provide groceries

3km

CSC

Community
Shopping
Centers

Larger Shopping centers than NSC,
with a supermarket as an anchor orcore tenant

5~10km

Shopping centers in the immediate
vicinity of an urban public
transportation station

3~5km

Specialty stores such as drug stores,
convenience stores, health clubs orelectronic appliance stores

1~10kmUrban Station-FrontSS

Specialty
Stores

Large-scale suburban retail properties

GMS (General Merchandise Store)
Outlet malls

Urban retail properties featuring
High-end brand shops

6

Primary geographic target areas
Point

More population is expected to concentrate in the 4 major
metropolitan areasDowntown workers tend to live in suburban areasPeople live in suburban areas use cars more often for transportation

Four major metropolitan areas
Central area(note 1)
Population density

Difference between
daytime/night-time
population('000 people)

Modal shares on
weekdays

Suburban area

2040

1.6%

2040

57.8%

2040

40.6%

2010

1.4%

2010

55.2%

2010

43.4%

Night

1,735

Night

70,203

Night

56,119

Day

5,594

Day

66,509Day

55,957

Modal shares of residents who live
within 2 km from the nearest
station in the Three metropolitan
areas(note 2)

Source:Population density:
National Institute of Population and Social Security Research
Difference between daytime/night-time population:
Ministry of Internal Affairs and Communications "Consensus 2010"
Modal shares on weekdays:
Ministry of Land, Infrastructure, Transport and Tourism"Movement of people in city areas:

Other cities

Car / motor cycle
Train / bus
Walk / others

64%
20%
16%

Local cities(note 3)
Car / motor cycle
Train / bus
Walk / others

75%
7%
18%

Note 1: "Central area" refers toTokyo-to (Chiyoda-ward, Chuo-ward, Minato-ward, Shinjuku-ward, Shibuya-ward), Osaka-fu(Kita-ward,Chuo-ward,Fukushima-ward,Nishi-ward,Naniwa-ward,Tennoji-ward) andNagoya-shi(Nishi-ward, Chu-ward, Nakamura-ward)
Note 2: "Three metropolitan areas" refers to Saitama-shi, Chiba-shi, Tokyo 23 wards, Yokohama-shi, Kawasaki-shi, Nagoya-shi, Kyoto-shi, Osaka-shi, Kobe-shi, Toride-shi, Tokorozawa-shi, Matsudo-shi,
Inagishi-shi, Sakai-shi, Toyonaka-shi, Nara-shi, Aomi-shi, Odawara-shi, Gifu-shi, Toyohashi-shi, Kasugai-shi, Tsushima-shi, Tokai-shi, Yotsuka-shi, Kameyama-shi, Uji-shi, Izumisano-shi, Akasi-shi
Note 3: "Local cities " refers to Sapporo-shi, Sendai-shi, Hiroshima-shi, Kitakyushu-shi, Fukuoka-shi, Otaru-shi, Chitose-shi, Shiogama-shi, Kure-shi, Otake-shi, Dazaifu-shi, Utsunomiya-shi, Kanazawa-shi,
Shizuoka-shi, Matsuyama-shi, Kagoshima-shi, Oyabe-shi, Komatsu-shi, Iwata-shi, Soja-shi, Isahaya-shi, usuki-shi, Hirosaki-shi, Morioka-shi, Koriyama-shi, Matsue-shi, Tokushima-shi, Kochi-shi,Joetsu-shi, Nagato-shi, Imabari-shi, Hitoyoshi-shi

7

memo

8

Section 2

Summary of financial results for the fiscal period ended Sep. 30, 2015

Summary of post-IPO performance
DPU
forecast

1st period

JPY6,542

JPY7,127

1st period

JPY7,204

2nd period

JPY5,434

JPY5,912

2nd period

JPY6,605

Stabilized DPU(note 1)

JPY4,600

JPY5,100

3rd period

JPY5,555

Feb

External
growthListed as the first J-REIT specialized inneighborhood, community and othershopping centers for daily needs
Oct.3, 2014 – Establishment ofKenedix Retail REIT

Financialstrategy

Feb.10, 2015 –Listed on Tokyo Stock
Exchange.
Started with an AUM of JPY80.8 bn
after acquiring 18 properties from theSponsor and Alliance Companies.

May

Apr

Mar

Jun

Jul

AUM increased from
JPY80.8 bn to JPY 91.8 bn

Achieved 60.5% AUM increase
8 months after the listing

Acquired Blumer HAT
Kobe from the market

Resolved the issuance of new
investment units as of August27, 2015 and acquired 13
properties as of October 2, 2015

The proportion of top 10
tenants declined from
45% to 40%
Flexible use of additionalborrowing capacity
created at listing

IPO price: JPY230,000
Total offerings size: JPY59.8 bn.
Conservative initial LTV: 33.4%

Seek internal growth opportunities uponmaturities of lease contracts
Enlivening local communities by promoting local
events

Decided to execute building
expansion at Roseo MIto
Enhance portfolio profitability andasset value (anticipated investment
return of 11.5%)
Construction on going aiming forcompletion ahead of schedule

JPY7,414

Sep

AUM grew from JPY91.8 bn to
JPY129.7 bn
Progress in the distribution of
portfolio. Succeeded instrengthening foundation of
profits as well as the DPU
growth(as of Mar. 31, 2015)

Internal
growthAug

Actual DPU

5 properties acquired "DBJGreen Building certificate"Achieved certificates forhigh environmental andsocial awareness

Extended maturities andincreased fixed-interest
rate of debt
Extended debt maturity
through refinancing JPY6.9
bn of short-term debt, inconnection with acquisitionof Blumer HAT Kobe

Successfully raised/maintained rent levelwith more than 80% of tenants upon rent
revisions or tenant replacements
Establishment of Environmental Policies asa course of conduct for environment andsocietyNote 1: "Stabilized DPU" refers to the adjusted DPU after accounting for the impact of factors such as property-related tax, which was stated in the presentation material "Interim Financial Results Presentation for the Fiscal Period Ending
September 30, 2015" released on the company website as of May 26, 201510

External growth strategies

Our portfolio after acquisition of new properties
At listing

End of the 1st period

New properties(Feb. 10, 2015)(Sep. 30, 2015)(13 properties)

After acquisition of
new properties

Improving portfolio profitability and stability

Number of properties

18

19

13

32

Total acquisition price (JPY bn)

80.8

91.8

37.9

129.7

Total appraisal value (JPY bn)

82.3

95.7

40.0

135.7

Portfolio appraisal NOI yield(Note 1)

5.5%

5.4%

5.4%

5.4%

NOI yield after depreciation(Note 1)

4.3%

4.3%

4.6%

4.4%

Weighted average occupancy rate(Note 2)

98.6%

99.6%

98.4%

99.0%

286

321

67

388

% of properties in the four major
metropolitan areas

85.1%

86.9%

78.2 %

84.4%

Weight of the top 10 tenants(Note 2)

45.0%

40.3%

---

38.9%

33.4%

40.6%

---

43.0%

227,886

237,472---

235,826

Number of tenants(Note 2)

Leveraging acquisition capacity and increase in NAV

LTV(Note 3)
NAV per unit(Note 4)

Note 1: “Appraisal NOI yield” refers to the annual net operating income assumed by the appraiser of the relevant property for the direct capitalization analysis in the latest appraisal reports at the acquisition date. “NOI yield after depreciation” based on the forecast for fiscal period
ending September 30, 2016. Those figures above are rounded to the 1st decimal place.
Note 2: The figures at listing are as of September 30, 2014 and others are as of September 30, 2015. The figures for "Weighted average occupancy rate" are rounded to the 1st decimal place.
Note 3: “LTV” refers to "loan-to-value ratio", which is calculated as the ratio of the total amount of short-term debt, long-term debt, corporate bonds and tenant leasehold and security deposits (net amounts reserved for return of tenant leasehold and security deposits) divided by total
assets as of the end of the previous fiscal period minus amounts reserved for return of tenant leasehold and security deposits.
Note 4: NAV per unit at listing = (Unitholder’s equity + unrealized profit / loss of the portfolio at listing)/(Number of units outstanding as of February 10, 2015).
Note 4: NAV per unit as of the end of 1st period = (Total net assets as of September 30, 2015 + unrealized profit / loss of the portfolio as of September 30, 2015) / (Number of units outstanding as of September 30, 2015)
Note 4: NAV per unit after acquisition of new properties = (Total net assets as of September 30, 2015 + net proceeds from PO in 2015 + unrealized profit / loss of the portfolio as of October 2, 2015) / (Number of units outstanding as of October 30, 2015)

11

Properties acquired since IPO
Acquisition

Acquisition methods

channels

Property overview
Acquisition
price(JPY mn)

Appraisal
NOI yield

Carino Esaka

6,555

5.3%

COMBOX Komyoike

6,450

Largest retail property in the Komyoike Station
6.0% area, housing multiple large-scale specialty
stores

Ashico Town Ashikaga

Ashico Town Ashikaga

4,180

6.4%

P&D Consulting

Property nameAcquisition
price(JPY mn)

Appraisal
NOI yield

Super Viva Home Iwatsuki(Land)

4,815

4.3%

Underlying land with strong value growthpotential, in the proximity to a national road

K’s Denki Shonan-Fujisawa(Land)

3,169

5.0%

Easy car access and more than ten years
remaining on a long-term fixed business lease

Unicus Kamisato (Land)

3,000

4.6%

Underlying land of a shopping center with acinema complex in the Kamisato area

Unicus Konosu (Land)

1,700

4.6%

Underlying land of one of the largest shopping
centers in the Konosu area

Inageya Yokohama
Minamihonjuku (Land)

1,442

4.5%

Underlying land of a March 2015-opened
supermarket in a highly populated trade area

Welcia Kishiwadakamori(Land)

487

4.5%

Underlying land of a leading domestic drug store
brand newly opened in 2015

Property nameAcquisition
price(JPY mn)

Appraisal
NOI yield

Blumer HAT Kobe

11,0005.3%

Landmark NSC in “HAT Kobe District”, a revival
symbol project from the Kobe earthquake

Yorktown Shinden-Higashi

3,252

6.0%

Located in a rapidly-growing commuting
neighborhood close to central Sendai

Hankyu Oasis Hirakatadeguchi

1,280

5.9%

Supermarket located in a highly populated area,with 10,000 residents within a 500m radius

Kasumi Technopark Sakura

830

5.6%

A 24-hour operated store of a leading
supermarket brand headquartered in Tsukuba

Gourmet City Chiba-Chuo

760

5.7%

A 24-hour supermarket housing a clinic in thecomplex

Acquisitions through Kenedix Group
Sponsor3 properties/
JPY17.1 bn

Property name

Carino Esaka

COMBOX Komyoike

6 properties / JPY14.6 bn

Alliance Companies

Sumitomo Mitsui
Finance and Leasing

Nippon Commercial
Development

Inageya Yokohama
Minamihonjuku(Land)

Super Viva Home Iwatsuki (Land)

K’s Denki Shonan-Fujisawa (Land)

Unicus Kamisato(Land)

Welcia Kishiwadakamori (Land)

Unicus Konosu (Land)

5 properties / JPY17.1 bn

External sources

Acquisitions through third parties

Blumer HAT Kobe

Yorktown
Shinden-Higashi

Hankyu Oasis
Hirakatadeguchi

Kasumi Technopark
SakuraGourmet City
Chiba-Chuo

Acquisition highlights
Attractively located near Esaka Station, only 5
stops/10 minutes away from Umeda Station

Cinema complex wing is scheduled to re-open,with P&D Consulting as sub-PM

Acquisition highlights

Acquisition highlights

12External growthCharacteristics of our portfolio
Generating stable cash flow through portfolio diversification
Property distribution

Location

Fululu Garden Yachiyo
11.4%
Blmer HAT Kobe
8.5%

Top 5
properties
Others
59.9%

40.1%

Roseo Mito
7.5%

Fukuokaarea
1.2%

Four major
metropolitan
四大都市圏
areas

D
5.2%

Top 10tenantsTokyo
metropolitan
area
49.0%

others
61.1%

E
2.7%

38.9%

Restaurants
4.8%

I
2.5%

Clothing andaccessories
7.6%

H
2.5%

Consumerelectronics
7.8%

Lease types that secure stability and enable growth potential
Remaining lease term

15 to lessthan 20years
6.7%

10 to lessthan 15
years
36.7%

20 years or
more
7.2%

Fixed-term landlease 17.2%

5 to lessthan 10
years
19.0%

Servicebusinesses
10.7%

Tenants with e-commerce
resistant business

Others0.0%d. (Note 5)
5.9%

2 to lessthan 5 years
17.0%

c. (Note 4)
10.7%
Regular building
lease
20.7%

Other productsale shops
11.3%

E-commerce resistance

Lease types

Less than 2
years 13.4%

Hardwarestores
12.4%

GMS
7.3%

G
2.5%

J
2.4%

Groceries
20.2%

Sporting goods
3.3%

F
2.5%

Greater
Osaka area
30.0%

Other
11.3%

Health clubs
3.2%

B
5.6%
C
5.5%

85.1%%
84.4

Blumer Maitamon
6.5%

Tenant categories
A
7.3%

Tokureishi
and other
areas
15.6%

Greater
Nagoya area
4.1%

MONA Shin-Urayasu
6.2%

Tenants

Fixed-term building
lease
62.1%

Others10.8%

a. (Note 3)
18.7%

E-commerce
resistant

89.2%

b. (Note 4)
53.8%

a: Businesses difficult to be replaced by e-commerce
b: Businesses where customers show preference in purchasing products at
physical stores
c: P&D Consulting Co., Ltd. and Daiwa Royal Co., Ltd.
d: Businesses that require physical visits to stores or handle products that
consumers highly desire to evaluate in person

Note 1: The figures are as of September 30, 2015 for the 32 properties acquired by the date of this material.
Note 2: Property distribution and location data are by acquisition price, tenants, tenant categories, remaining lease term and lease type are by annual fixed rent determined in the lease contract.
Note 3: "a" refers to businesses including medical services, hair salons, photography studios, for-profit schools and study centers, restaurants and health clubs that cannot be replaced by e-commerce.
Note 4: “b” refers to businesses where 50% or more of the respondents to the survey conducted by the Ministry of Internal Affairs and Communications titled “Product types for online shopping or physical stores” indicated their preference for purchasing products at a physical store andwhere 15% or fewer indicated their preference for purchasing such products on the internet. “c” refers to P&D Consulting Co., Ltd. and Daiwa Royal Co., Ltd, whose main sub-lessees fall under category “a” or “b”.
Note 5: “d” refers to businesses that require physical visits to stores or handle products that consumers highly desire to evaluate in person (sporting goods, prescription eyewear, second-hand products, shoes, musical instruments and interior products).

13External growthHighlights of properties acquired upon PO (1)Urban Station-Front
Shopping Center

Carino Esaka

Attractively located near Esaka Station, only 5 stops/10 minutes away from Umeda Station

Growth Potential
The largest shopping center in the neighborhood of Esaka Station, and expected to capture inboundtourism demand as well
Large shopping center with a hotel on top
Growth Potential
 The property is able to capture various consumer
demands with 30 tenants, including its core tenants (ageneral lifestyle store and a major clothing retailer) as
well as restaurants and service businesses

Relations of rights

 Expected to indirectly enjoy the benefit of inboundtourism demand with a hotel on the upper floors

Change in the Number of Foreign Visitors to Japan(million people)
16

12

The number of
訪日旅行者数
foreign visitors

13.4

14.5

10.4

8.6

8.4

6.2

8
4

OverviewThe retail portion of a multi-use shopping complex with shopping centers on its lower floors and a hotel inthe upper floors
One of the landmark shopping centers in the neighborhood of Esaka Station
The retail trade area is popular among families with young children due to its accessibility to the city
center and high-quality living environment

Acquisition price JPY6,555 mn

Land area
GFA

Suita, Osaka
5,830.66 m2
42,681.56 m

2011

2012

2013

2014

2015

Value as Property

Cover a significant population in the trade area with convenient accessExcellent access to the urban central areas

Location Located one-minute by foot from Esaka Station

When the sponsor acquired the property, it was compartmentalized into shopping center on the lower
floors and a hotel on the upper floors. KRR acquired the shopping center on the lower floors. Kenedix
Group continues to own the hotel on the upper floors
Aim for aggressive internal growth by renovating the property regularly such as at the time of expiry of
fixed-term lease contracts

Location

2010

Location

Acquisition Highlights
0

Source: Japan National Tourism Organization2

 Excellent access. Five stops or ten minutes by train to
Umeda Station
Building

Trade area population with high growth potential

Population in the Trade Area千Fully-equipped parking lot for easy car access Parking lot: 355 vehicles
 Attract visitors from a highly-convenient traffic networks
linking the northern and southern parts and the surrounding
areas where families with young children reside(thousand people)
2005
1,000
750
500
250
38
41
0
11km商圏km area

2010
923
362

365

33km商圏km area

Tokyu Hands Inc.

Appraisal NOI

JPY344 mn

Appraisal NOI
yield

5.3%

5 5km商圏
km area

Population Ratio by Age Toyotsu-cho, Suita (The property is located)

20%
15%
10%
5%
0%

15.0%

16.5%

18.7%

9.8%

Under
20 20歳代
20’s
20歳未満
25%
20%
15%
10%
5%
0%

30’s and below:
50.2%

16.5%

30’s
30歳代

40’s
40歳代

 Whole Suita

Core tenant

921

11.0%

50’s
50歳代

12.5%

60’s 70歳以上
Over 7060歳代

30’s and below:
43.3%

19.3%
10.4%

13.6%

16.7%

11.7%

12.4%

Under
20 20歳代
20’s
20歳未満

30’s
30歳代

40’s
40歳代

50’s
50歳代

60’s 70歳以上
Over 70
60歳代

15.9%

14

External growthHighlights of properties acquired upon PO (2)NSC Neighborhood
Shopping Center

Ashico Town Ashikaga

Cinema complex wing is scheduled to re-open, with P&D Consulting as sub-property manager

Profitability/Growth Potential

Improvement in profitability after reopening of cinema complex
Profitability

Improvement in profitability after reopening of cinema complex

 Reopening of the cinema complex provides visitors with additional motives
 P&D with a wide experience of running an NSC acts as sub-property manager, to execute new business plans including
proper capex

Track Record of P&D– Develop and manage “UNICUS”, its own brand (10 locations)
Develop other commercial facilities (8 locations) (as of Sep. 30, 2015)– UNICUS with cinema complex

UNICUS Kamisato

UNICUS Minami Furuya

Cinemacomplex

 Business: Development and management of retail facilities,
retail consulting

Improvement of Flow Lines
Parking lot

Newly-constructed
escalators
Parking lot↓MallPlan to install escalators linking
the second floor of the cinema
complex with the shopping malland the parking lot in order toimprove access to the entrance
to the cinema

Schedule

UNICUS Kamisato

October 2, 2015 Acquisition of the property

November 2015 Commencement of construction

OverviewA large-scale multi-tenant NSC with thorough renovation conducted in November 2014, consisting ofmultiple wings, including wings for the shopping mall and cinema complex
Easily accessibly by car due to its location along a major local avenue. Also highly accessible from distantregions with IC of Expressway

March 2016 Opening of United Cinema

Value as Property

Excellent location and facilities, highly accessible from distant regions
Acquisition HighlightsConcluded a lease agreement with P&D Consulting Co., Ltd. (hereinafter “P&D”), a sub PM, which
outsources the operation of the cinema building to United Cinemas Co., Ltd.
Sales-linked rent for cinema. Aim for internal growth with reopening of cinema complex by attracting awide range of customers, with ripple effects on other tenants

Location

Building

Excellent access from the main road and a vast parking lot

Shopping complex with multiple wings

 Located 3 km south of Ashikaga Interchange for Kita-Kanto Expressway– All routes of Kita-Kanto Expressway connecting Kanetsu Expressway,
Tohoku Expressway and Joban Expressway were opened in March2011 and Ashikaga Interchange was developed Excellent continuity of roads with a prefectural road on the west of theproperty Vast and convenient parking space

Acquisition price

JPY4,180 mn

Location

Ashikaga, Tochigi

Land area

101,808.44 m2

GFA

Shopping mall: 18,101.06m2 ; Expansion: 430.74m2
Cinema complex: 7,200.15m2 ; Road-side wing: 698.31m2

Core tenant

Cainz Corporation

Appraisal NOI

JPY269 mn

Appraisal NOI
yield

6.4%

Parking Facilities Parking space: 2,000 vehicles (24 hour parking is also available) 3 entrances on the front of the facilities– One entrance with a traffic light, making right-turn entry easy Other entrances and parking lots on the back side of the facilities

 Shopping complex consist of a two-story mallbuilding and multiple independent buildings
surround parking lots for convenient access bycar The largest shopping complex in the region withmany well-known national chain stores invarious categories including casual fashion,large home electrical appliance, large sporting
equipment store, fitness club, etc.

(2D diagram is excerpted from the website of Ashico Town Ashikaga)

15External growthHighlights of properties acquired upon PO (3)NSC Neighborhood
Shopping Center

Super Viva Home Iwatsuki (Land)

Underlying land with strong value growth potential, in the proximity to a national route

Stability

Tenant is likely to remain for long term, yielding stable cash flows
Stability

Outline of lease contract

Lease type

Fixed-term land lease

Lease term

More than 30

Rent
renewalBased on a calculation
formula, every several
years

Early
cancellation

Not cancellable until Nov.
30, 2032

Stability

Overview of fixed-term land lease
Building is owned
by LIXIL Viva

Land
rent

Building

Stability

Advantage of land acquisition
 The ownership of the building by thetenant restrains the tenant fromvacating the premise. Setting
limitations on early cancellation
secures stable revenue
 Without building depreciation, yield
after depreciation can be secured,
which will contribute to an
improvement in the payout ratio

Land
Land is owned by KRR

LIXIL Viva Corp. and its hardware store business
Hardware stores in the Trade Area (Floor Space of 5,000 m 2 or more) ”Super Viva Home” is the main business of LIXIL
 Viva Home is dominant within a 10 km radius. This property has the largest floor
Viva with the sales of 168.1 billion yen in FY2014
space in the trade area
 “One of the largest next-generation hard ware store
Area
Store Name
Floor Space (m2)in the region” offering community-based services
The property Super Viva Home Iwatsuki
17,247 The number of stores is 84 in Japan, with the
5 km radius Cainz Home Urawamisono
16,210dominant area developed in Saitama. Stable sales isSuper Viva Home Kasukabe
13,342
expected
Super Viva Home Saitama Shin-toshin
12,404

Overview

Underlying land of an NSC which opened in February 2013
The NSC comprises a large hardware store, a grocery supermarket and a food court
The target trade areas include adjacent cities, as the property is within a short distance to a number ofmajor routes

Acquisition HighlightsStable revenue under a long-term lease contract with the tenant who owns the building, and no
depreciation costs contribute to an improvement in the payout ratio
The price of land (as a vacant lot) is 6.84 billion yen in the appraisal report, which is 40% higher than theacquisition price, because of its excellent location for logistics facilities

10 km radius

Cainz Home Matsubushi
Shimachu Homes Miyahara

6,138
5,000

Value as Property
Growth potential as a vacant lot and a high rate of motorization in the surrounding area
Location

Location

Growth potential as a vacant lot Adjacent to National Route 16 with Prefectural Road 325 in thenortheast and Prefectural road 45 in the south. Also in proximity
to Iwatsuki Interchange A part of the district is a quasi-industrial district. The land has avast ground floor area with accessibility from distant regions.
The property is an excellent location for logistics facilities

Steady population and a high rate of car ownership 20 minute drive covers the 5km radius trade area. Steady
population in the trade area is large enough to support
hardware store business High rate of motorization in the surrounding area

Change in Population by Driving Hour
Wide-Area Traffic(thousand people)

Acquisition price JPY4,815 mn
Location

Saitama, Saitama

Land area

67,325.95 m2

GFA-Core tenant

LIXIL Viva Corporation

Appraisal NOI

JPY207 mn
4.3%

百

2010
2,616

2,000
1,000

67

0
TohokuExpressway

386

2,654

389

10 10分圏
minutes

2020分圏
minutes

Automobile Ownership per Household
Super Viva Home Iwatsuki

Iwatsuki-ku
岩槻区
Prefectural
Road 325
Iwatsuki IC

67

5 5分圏
minutesRoute 16

Appraisal NOI
yield

2005

3,000

Prefecturalroad 45

さいたま市
Saitama-shi

埼玉県
Saitama-ken
0%

Ordinary car, small car
Includes light car
普通車・小型車
含軽自動車
85.4%
117.5%
66.7%
83.4%
75.3%
102.1%

20%

40%

60%
80%
100%
120%
(Prepared by the Asset Management Company)

16

External growthHighlights of properties acquired upon PO (4)SM

Supermarket

Gourmet City Chiba-Chuo (Land)A 24-hour supermarket housing a clinic in the complex

Stability
Capture a wide range of customer base as a community-based 24-hour supermarket in a public and private complex
Stability

Stability

Public and private complex as a community base

Overview of Qiball Designed to generate synergy between public facilities
and private facilities
 The property is expected to attract local residents who
visit “Child Care Support Center” and “Central HealthWelfare Center” as well as businessmen who visit“Business Support Center”

Synergy with the clinic on the second floor

 Synergy from patients of the clinic on the second floor
 Clinic advocates a contribution to community
healthcare. It is expected that local residents,
particularly elderly people who come for rehabilitation,
will use the property
 Tenants include orthopedist, dentist and pharmacy

Synergy between community-based tenants

Business Support Center

Local residents

Central Health Welfare Center

2F
Clinic facilities

Elderly people
Science Museum
Planetarium

Mutual use
Child Care Support Center

Overview
Acquisition Highlights


1F
Gourmet City Chiba-Chuo

Child Interchange Center

The retail portion of Qiball, a joint public and private facility located near the Chiba Prefectural Office,comprising Gourmet City, a 24-hour supermarket, on the first floor, and a clinic on the second floor
Large daytime population given the concentration of government offices in the area
The population in the east areas rapidly increasing due to development of large-scale condominiumsParking lot

A clinic with rehabilitation facilities grows in importance with the further growing aging population. The
property aims to generate stable cash flows over the medium to long-term with its synergistic effectbetween supermarket and the clinic. The property also works as a flagship infrastructure in the local
community

AtriumShops & Restaurant

Value as Property
Center of the urban function linking shopping district and administrative district. Located in the area with a substantial
growth in population
Areas for shopping , business and residence, and the demographics
Location The property is located in a retail trade area. “Chiba Ginza Shopping Street” is in the north with other stores, offices andresidential complexes. Government offices including local government buildings and courts are in the south. This property is
located in the center of the urban function
 An expansive residential district with high-rise condominiums including “Chiba Central Tower”
 The population in the trade area is remarkably increasing. Expected to capture demand at lunch time and on the way homewith large daytime population as well
Kasumigawa-park Station

Change in Population of the Trade Area

Monorail(million people)

Location

Chiba, Chiba

Land area

6,614.13 m2

GFA

49,829.47 m2

Core tenantDaiei, Inc.

Appraisal NOI

JPY43 mn

Appraisal NOI
yield

5.7%

百

Acquisition price JPY760 mn
Chiba Central Tower

2005

1,000
800
600
400
200
0

2010

866
63

233 283

0.5 km area
0.5km商圏

1.0 km area
1.0km商圏

39973

2.0 km area
2.0km商圏

Change in Daytime Population

Gourmet City Chiba-Chuo

百(million people)

Chiba District Public
千葉地方検察庁
Prosecutors Office

2,000
1,600
1,200
800
400
0

2005

2010

1,407
177 214639 770

0.5 km area
0.5km商圏

1.0 km area
1.0km商圏

1,609

2.0 km area
2.0km商圏

17

Internal growthInternal growth through building expansion (Roseo Mito) Enhance asset value and profitability through property expansion

Anticipated timeline
May 1, 2015

Agreement on, and implementing
and executing the succession of,contractual status / rights

June 15, 2015

Commencement of construction

 Completion and delivery to be ahead of schedule, late Nov. 2015 New!

▼▼

Improving asset value
Total construction cost

371mn

JPY

42mn

Late November, 2015

NOI yield(Note 2)(Investment return)

11.5%

Completion of construction and delivery

Perspective drawing(Note 3)

JPY

Assumed increase in NOI(Note 1)

Improving profitability
Appraisal value
before property expansion JPY

9,780mn

Appraisal value
after property expansion

10,500mn

JPY(As of Oct. 1, 2014)+JPY720mn
1. Construction starts…
(photographed on June 20, 2015)

2. Construction continues…
(photographed on August 22, 2015)

3. Almost there…
(photographed on November 6, 2015)

Note 1: Assumed increase in NOI is calculated by deducting assumed annual operating expenses (excluding depreciation) from assumed annual operating revenue of the New Building; however, special items for the first year are excluded, and maintenance expenses, taxes and dues,
insurance premium, etc. are included in expenses; as for operating revenue, since the lease contract with the tenant includes a step-up clause for the rent, the average rent for the lease term is used for the calculation.
Note 2: Assumed increase in NOI of the New Building to the construction cost.
Note 3: Perspective drawing is provided for illustrative purposes, and thus, the actual building may differ from the drawing.

18

Internal growth

Leasing overview
Internal growth strategy:
optimization of tenant composition

Rent revisions

Weight of large-scale multi-tenant properties(based on number of revisions)(based on acquisition prices)

Stabilize revenues and improve
profitability through optimizing tenantcomposition

Number ofcontracts

Seek to raise rents at both re-contract
and renewal by taking advantage of thematurities of fixed-term leases as anopportunity for upward rent revisions
With the tenants hoping for downward
rent revisions, reduce rents only in
exchange for additional contract terms,
such as the extension of leasing and/or
irrevocability period

Downward
revision
17.2%
Upward or
no revisionNo
revision
34.5%

82.8%

Upwardrevision
48.3%

Re-contract(fixed-termbuilding lease)21

Move-in15

Move-out

10# of tenants and % of lease contract for rent revision in each period(Note 1)
20 tenants

2.8%
1.2%
2nd period

3rd period

22 tenants

2.2%

4th period

9 tenants

2.9%

5th period

83 tenants

Large-scale
multi-tenant
properties

63.9%
Other
Multi-tenants
10.2%

7.4%

Roseo Mito
7.5%
Blumer Maitamon
6.5%
MONA
Shin-Urayasu
6.2%
Carino Esaka
5.1%
Passaggio
Nishiarai
4.5%

Occupancy (Multi-tenant properties(Note 2))
Property name33 tenants

Blumer HAT
Kobe
8.5%

Others36.1%

Daikanyama
Address Dlxsept
4.2%

Anticipated timing of rent revisions (based on rent for Fixed-term building lease)33 tenants

Fululu Garden
Yachiyo11.4%(February 10, 2015 – September 30. 2015)

Mar. 2015

Sep. 2015

Fululu Garden Yachiyo

99.7%

99.5%

MONA Shin-Urayasu

99.5%

98.0%

Passaggio Nishiarai

98.7%

98.3%

Daikanyama Address
Dixsept

92.6%

93.9%

Blumer Maitamon

97.2%

99.5%

Blumer HAT Kobe

99.5%

99.5%

-

100.0%

100.0%

100.0%

2.5%

6th period

7th period(Ending Mar. 2016) (Ending Sep. 2016) (Ending Mar. 2017) (Ending Sep. 2017) (Ending Mar. 2018) (Ending Sep. 2018)
MONA Shin-Urayasu
Passagio Nishiarai
Blumer HAT Kobe
Carino Esaka

Passaggio Nishiarai

Blumer Maitamon

Fululu Garden Yachiyo
MONA Shin-Urayasu
Blumer HAT Kobe

Blumer Maitamon

Properties with high potential for rent growth through effective utilization of CAPEX and
optimization of tenant composition

Carino Esaka
Roseo Mito

Note 2: "Large-scale multi-tenant properties" refers to multi-tenant properties withacquisition prices more than JPY 5 billion

Note 1: Based on the contractual rent determined in the lease contract, including regular building leases.

19Internal growth

Optimization of sales-linked rent and effective utilization of CAPEXPortfolio breakdown by rent type(based on actual rent) (Note 1)
Total sales-linked rent(Note 5) 7.6%

Effective utilization of CAPEX
Installation of LED lights (Passaggio Nishiarai)

Sales-linked rent (Note 4)
6.6%

Fixed and saleslinked rent (Note 3)
16.2%

BeforeFixed rent
77.2%

(Note 2)CAPEX

JPY26 mn

Aim

Profitability: Improve NOI by reduction in utility costs
CSR: Reduce environmental burden by energy conservation
Renovation of restroom area (MONA Shin-Urayasu)

Properties with sales-linked rent
T-1

O-1

Fululu Garden Yachiyo

Blumer Maitamon

T-2

O-4

MONA Shin-Urayasu

Blumer HAT Kobe

T-3

O-5

Passaggio Nishiarai

Carino Esaka

After

T-4

R-1

Daikanyama
Address Dixsept

Ashico Town Ashikaga

Replacement of babychanging stations and setting
up of powder room (shownright) for female users
Powder room

Note 1: “Actual rent” refers to the actual rent from January 1, 2015 to September 30, 2015 for the 32 properties KRR owns as of the date of thismaterial. However, as for Unicus Kamisato (Land), Unicus Kososu (Land) and Super Viva Home Iwatsuki (Land), the rent is based on
the lease contract as of October 2, 2015.
Note 2: "Fixed rent "refers to predetermined rent in the leasing contract, which is not linked to the total sales volume of tenants.
Note 3: "Fixed and sales-linked rent" refers to contractual rent with both fixed rent portion and sales-linked rent portion.
Note 4: "Sales-linked rent" refers to contractual rent whose amount is directly linked to tenants' sales volume.
Note 5: “Total sales-linked rent” refers to the sales-linked rent and the sales-linked portion of the “fixed and sales-linked rent”.

CAPEX

JPY41 mn

Aim

Profitability: Attracting female customers may lead to
improvement in tenant sales
Attractiveness: Improve convenience for female customers

20Internal growth

CSR and environmental initiatives
 We proactively participate in local-community-enlivening activities and take environmental initiatives
Establishment of “Environmental Policies”

New!

■Environmental Policies
The officers and employees of Kenedix Real Estate Fund Management, Inc. ("KFM") will
undertake investment management operations in accordance with the following environmental
policies.
1. Compliance with Environmental Laws and Regulations
KFM will promote environment-friendly investment management operations by adhering toenvironmental laws and regulations.
2. Promotion of Energy Conservation Measures
KFM will systematically advance energy conservation measures at its managed properties,
maintaining a strong awareness of the importance of natural and energy resources.
3. Reduction of Environmental Burden
KFM will undertake initiatives to reduce CO2 and waste emissions as well as promote recycling
at its managed properties, underscoring its commitment to alleviating its environmental burden.
In addition, KFM will take sufficient care when handling harmful substances and environmental
pollutants.
4. Disclosure of Environmental Information
KFM will work to disclose necessary information to a variety of concerned parties, including
investors, tenants and business partners, in such areas as its environmental policies andmeasures.
5. Environmental Education
KFM will take steps to improve the environmental consciousness of its officers and employees
through internal education.

Rating on our environmental intiatives
The following properties have been awarded the “DBJ Green
Building Certification” for their environmental initiatives

T-1 Fululu Garden Yachiyo
T-2 MONA Shin-Urayasu

Example of CSR initiatives

New!

We signed an agreement with the City of Yoshikawa to provide partof Unicus Yoshikawa as a temporary gathering area in cases ofdisaster such as floods

Unicus Yoshikawa(aerial photo)

Signing of agreement for providing
temporary gathering area in casesof disaster

Help enliven local communities
We seek to enhance the medium to long term asset value of ourretail properties by attracting tenants engaged in service
businesses and holding local events at our properties to enliven thelocal community

O-1 Blumer Maitamon
T-5

Unicus Ina

T-7

Unicus Yoshikawa
Minna no Concert(Fululu Garden Yachiyo)

Roseo Festival(Roseo Mito)

21

Financial Strategy

Financial highlights
Breakdown of debt outstanding by lender(as of October 30, 2015)

Summary of interest-bearing debt•••

The Bank ofTokyo-Mitsubishi
UFJ, Ltd.
12.6%

Conducted debt financing with consideration of the balance between borrowing costs and maturities
Realized steady growth while maintaining financial health through adequate management of LTV
Extended maturities and increased the proportion of fixed-interest debt

Breakdown ofborrowings

End of the 1st Period(Feb. 10, 2015)(Sep. 30, 2015)

New debt(Note1)(as of Oct. 30, 2015)

28,172.5

38,350.0

19,150.0

57,500.0

Long-term debt ratio

88.2%

94.8%

76.5%

88.7%

Fixed-interest debt
ratio

88.2%

94.8%

76.5%

88.7%

---

1.07%

---

1.06%

Average years to debt
repayment dates

5.0 years

5.5 years

5.7 years

5.5 years

Number of lenders
Total interest-bearing
debt (JPY mn)

11

11

9

11

---

41,30060,414LTV(Note3)

---

40.6%

43.0%

(Note2)Development
Bank of Japan Inc.
10.6%

After acquisition of
New properties

Total debt outstanding(JPY mn)

Average debt cost

Status ofinterest-bearingdebt

As of IPO date

Note 1: New debt excludes the amount of 1,200 million yen that was prepaid on October 30, 2015.
Note 2: "Average debt cost" is calculated as the weighted average interest of debt with upfront cost included, based on the amount outstanding. For variable-interest debt, the debt cost is calculated using the interest
rate fixed through interest swap. In the case that there is no interest swap, TIBOR rate for each specific date above is adapted in the calculation.
Note 3: “LTV” refers to "loan-to-value ratio", which is calculated as the ratio of the total amount of short-term debt, long-term debt, corporate bonds and tenant leasehold and security deposits (net amounts reserved
for return of tenant leasehold and security deposits) divided by total assets as of the end of the previous fiscal period minus amounts reserved for return of tenant leasehold and security deposits.

Staggered maturities of interest-bearing debts (as of October 30, 2015)

Debt
outstanding

57,500Sumitomo Mitsui
Trust Bank, Ltd.
6.6%

mn JPY

Mizuho Bank, Ltd.
6.6%

The Gunma
Bank,Ltd.
0.7%
The Musashino
Mitsubishi UFJ
Bank,Ltd.
Trust and Banking
1.7%
Corporation
2.9%

Resona Bank, Ltd.
5.4%
Mizuho Trust &Banking Co.,Ltd.
3.7%
Aozora Bank, Ltd.
3.7%

Optimum use of security/guarantee deposits(JPY mn)

The longest maturity: 10 years

8,000

Sumitomo Mitsui
Banking
Corporation
45.6%

7,000

Total amount of security/guarantee deposits
JPY8.7bn(as of Sep. 30, 2015)
JPY5.1bn(Amount kept as cash for deposit repayment)

6,000

After acquisition of New properties

5,000(Amount kept as cash for deposit repayment)

4,000
3,000

7,000

6,500

7,000

7,000

7,000

7,000

5,650

2,000

JPY10.5bn
JPY7.0bn

6,500
Rating（JCR）

3,850

1,000

(Long-term issuer rating as of Sep. 30, 2015)

0Japan Credit Rating Agency, Ltd. (JCR)

0
2016

2017

2018

2019

2020

2021

2022

2023

2024

A

2025

22

Summary of financial results
 Summary of financial result of the 363-day period from Oct. 3, 2014 through Sep. 30, 2015

 Actual operating period: 233 days from Feb. 10, 2015 to Sep. 30, 2015
Balance Sheet (in JPY mn)

Statement of Income and Retained Earnings (in JPY mn)
Track
recordCurrent assets

14,043

Total property, plant andequipment, net

93,404

Intangible assets

TrackrecordRental revenues
Other rental revenues

Total noncurrent assets

Changes

4,128

---

---

•

One-time revenue fromdeparting tenants

975

---

---

•

5,103

+30

+0.6%

Extra revenue fromproviding space for
exhibitions

2,639

-15

-0.6%

2,463

+46

+1.9%

173
Operating revenue

Investments and other assets

Factors for increase inoperating revenue

Difference
from forecast

558
94,136

Operating expenses

Factors for increase inoperating profit•

108,382

Non-operating income

1

---

---

Decrease operating
expenses due todecrease in forecasted
utility costs

Current Liabilities

3,476

Non-operating expenses

524

---

---

Factors for increase inordinary income

Current Liabilities

45,115

Ordinary income

1,939

+56

+3.0%

Net income

1,933

+54

+2.9%

Total distribution

1,933

---

---

DPU (yen)

7,414

+210

+2.9%

Deferred assets
Total assets

Total liabilities

202

48,591

Total net assets

59,790Total liabilities and net assets

108,382

LTV

Operating profit

40.6%

•

Decrease in nonoperating expenses
due to decrease inforecasted debt-related
expenses forrefinancing of shortterm debt and financing
for new properties

23

Financial forecasts: 2nd financial period (Mar. 2016)
1st Period(Sep. 2015)(Actual)2nd Period(Mar. 2016)(Forecast)

Changes

Key financial results (JPY mn)

Operating revenue

5,103

5,522

+419

Operating expense

2,639

2,753

+113

560

555

-5

Operating income

2,463

2,769

+306

Non-operating expense

524

426

-98

(Major operating expense)

Depreciation(Major non-operating expense)

Financing-related expense(include interest expense)

470

335

-133

Amortization of investment unit
issuance and organization expense

53

67

+13

Ordinary income

1,939

2,343

+403

Net income

1,933

2,342

+408

3,417

3,786

+369

6.0%

5.8%

---

Related information (JPY mn)

NOI
NOI yield (%)(Note1)

NOI after depreciation

2,856

3,231

+374

5.1%

5.0%

---

FFO(Note2)

2,548

2,964

+415

LTV

40.6%

42.8%

---

NOI yield after depreciation(%)(Note1)

Note1: Property taxes for the owned properties are not expensed in the 1st and 2nd fiscal periods.
Note2: FFO = Net income + Depreciation + Amortization - Gain on sale of property + Loss on sale of property*Primary factor
Decrease inoperating days
(233 to 183)

Factors for changes from previous period
Operating revenue
Existing assets
New assets
Operating expense(exclude depreciation)

Property-related expenses (existing assets)(exclude depreciation)
Property-related expenses (New assets)

AM fees
Others・・・・・・-1,043 mn+1,463 mn

・・・
・・・
・・・
・・・

-327 mn+378 mn+69 mn-6 mn

Breakdown of operating income
Operating revenue (A)Rental revenues
・・・
Utility charge reimbursement
・・・
Other revenues
・・・
Property-related expenses (B) (exclude depreciation)
PM fees / facility management fees
・・・
Utility
・・・
Taxes
・・・
Repairs and maintenance・・・
Sales and promotion
・・・
Others・・・
NOI (A-B)
・・・

4,593 mn
491 mn438 mn628 mn566 mn0 mn
149 mn
195 mn196 mn3,786 mn

Factors for changes in net income
1,933

(1)

1st
Period(Actual)+1,084

-62

+133

-35

+5

(2)

(3)

(4)

(5)

(6)

2,342

-715

(1) Decrease NOI due tooperating days(2) Increase NOI due to
new asset acquisition(3)Other expense(4) Increase in financing
cost(5) Other non-operating
expense(6)Taxes and other

2nd
Period(Forecast)24

Financial forecasts: 3rd financial period (Sep. 2016)
2nd Period(Mar. 2016)(Forecast)

3rd Period(Sep. 2016)(Forecast)

Factors for changes from previous period

Changes

Key financial results (JPY mn)

Operating revenue

5,522

5,577

+54

Operating expense

2,753

3,192

+438

Depreciation

555

566

+11

Operating income

2,769

2,385

-384

426

416

-10

(Major operating expense)

Non-operating expense(Major non-operating expense)

Financing-related expense(include interest expense)

335

334

-1

Amortization of investment unit
issuance and organization expense

67

67

0

Ordinary income

2,343

1,969

-373

Net income

2,342

1,968

-373

3,786

3,411

-375

5.8%

5.2%

---

3,231

2,844

-387

5.0%

4.4%

---

FFO(Note2)

2,964

2,601

-362

LTV

42.8%

42.9%

---

Related information (JPY mn)

NOI
NOI yield (%)(Note1)

Operating revenue
Increase in utility charge reimbursement
OthersOperating expense
Expensing real estate tax (32 properties)
Increase in utility
Decrease in repairs and maintenanceDecrease in sales and promotion
OthersNOI yield after depreciation (%)(Note1)+55 mn
-1 mn

・・・
・・・
・・・
・・・
・・・

+477 mn+43 mn-72 mn-16 mn+6 mn

Breakdown of operating income
Operating revenue (A)Rental revenues
Utility charge reimbursement
OthersProperty-related expenses (B) (exclude depreciation)
PM fees / facility management fees
Utility
Taxes
Repairs and maintenance
Sales and promotion
OthersNOI (A-B)

・・・ 4,594 mn
546 mn・・・
437 mn・・・
630 mn・・・
609 mn・・・
478 mn
・・・
77 mn
・・・
178 mn・・・
193 mn・・・・・・ 3,411 mn

Factors for changes in net income
2,342

NOI after depreciation

・・・
・・・

-477

(1)

2nd
Period(Forecast)

+102

-11

+10

-3

(2)

(3)

(4)

(5)

(1) Expensing real estate tax (32 properties)(2) Other factors for NOI changes(3) Decrease in depreciation(4) Decrease in asset management fee(5) Other factors for net income

1,968

3rd
Period(Forecast)Note1: Property taxes for the owned properties are not expensed in the 2nd fiscal periods.
Note2: FFO = Net income + Depreciation + Amortization - Gain on sale of property + Loss on sale of property

25

Actual DPU for the 1st period and DPU forecast
Key
achievements

Feb. 10, 2015
Listed on Tokyo
Stock Exchange
AUM: JPY80.8 bn

Feb

Mar

Mar. 31, 2015
Resolved acquisitionof Blumer HAT Kobe
with debt financing

Apr

Apr. 30, 2015
Resolved building
expansion at Rose
Mito

May

第1期
第3期
1st period 第2期2nd period
3rd period (Stabilized DPU)
（巡航ベース）
JPY7,127

Jun

Jul

Aug

JPY5,912

1st Period(Actual)

JPY7,204

JPY7,414

2nd

Period(Forecast)

JPY6,605

3rd Period(Forecast)

JPY5,555

Sep

JPY7,414

JPY6,605

JPY6,542

DPUs

Aug. 27, 2015
Resolved 1st follow-on equity offering
AUM: Increased to JPY129.7 bn(Note 1)

Targets further
DPU growth(Note 3)(Note 3)

JPY5,555

JPY5,434

JPY5,100 (Note 2)
JPY4,600 (Note 2)Atlisting
上場時

After the acquisition of
ブルメールHAT神戸取得後
Blumer HAT Kobe

After 公募増資発表後
the announcement of
the public offering

Actual 実績
Target(Note 4)

Note 1： AUM of JPY129.7 bn as of October 2, 2015
Note 2： "Stabilized DPU" refers to the adjusted DPU after accounting for the impact of factors such as property-related tax, which was stated in the presentation material "Interim Financial Results Presentation for the Fiscal Period Ending September 30, 2015" released on thecompany website as of May 26, 2015
Note 3： Distribution per unit in excess of earnings of JPY13 and JPY15 are included in the DPU forecast for the 2 nd period(ending March 31, 2016) and the 3 rd period(ending September 30, 2016), respectively
Note 4： Targets DPU growth does not mean we promise the revision up of DPU forecast reported on August 27, 201526

Section 3

Our growth strategies

Significant growth potential underpinned by solid track record

External growth

Pipeline from Sponsor andAlliance Companies
Track record
IPO: 18 properties for JPY80.8 bn
PO: 9 properties for JPY31.7 bn

Strategy
Continue acquiring properties
from the solid pipelines from thesponsor and support companies

Proprietary sourcing
capability

Financing capacity forproperty acquisitions

Track record

Track record
Assumed LTV at end of 2nd fiscal
period is 42.8%, within the 40% to
45% target level

Acquisition of Blumer HAT Kobe
Acquisition of 4 properties for
JPY6.1 bn at the PO

Strategy

Strategy
Secure borrowing capacity for
future acquisitions and soundfinancial base as well

Continue sourcing properties
based on extensive property
information

Internal growth

Improve asset value through property
expansion and other CAPEX
Track record
Property expansion at Roseo Mito (new building to becompleted late Nov. 2015)

Strategy
Improve the value of assets to target rent increase foraged properties or the properties with underutilized
space

Improve rent levels attenant replacement
Track record
Over 80% of the rent revisions after the IPO were either
increased or unchanged

Strategy
Seek rent increase through optimizing rent levels

28External growth strategies

1

Selective investments in attractive retail properties through the expertise of ourAsset Manager

2

Strong acquisition pipeline through opportunities from our Sponsor andAlliance Companies

3

Proprietary opportunities leveraging support from our Sponsor and Alliance Companies,
including preferential negotiation rights with our Alliance Companies

4

Leverage multiple acquisition channels to maximize potential acquisition opportunities

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Strong acquisition pipeline and preferential negotiation rights
 We seek to achieve external growth by utilizing pipelines from the Kenedix Group, our Sponsor, andtaking advantage of preferential negotiation rights with Alliance Companies
Examples of properties owned by our Sponsor and Alliance Companies(Note)
SS

SM

Home Center Kohnan Sunadabashi
Location: Nagoya, Aichi
SM[Mandai Tsukaguchi]
Location: Amagasaki, Hyogo

SS

Life Nishi-Tengachaya
Location: Osaka, Osaka

SM

Royal Home Center Totsuka-Fukaya
Location: Yokohama, Kanagawa

SM[Nishi, Osaka Project]
Location: Osaka, Osaka

Yorkmart Totsuka-Fukayacho
Location: Yokohama, Kanagawa

SM[Chuo, Osaka Project]
Location: Osaka, Osaka

Note : As of November 13, 2015, we have no plans to acquire these properties and there is no guarantee that we can acquire these properties in the future.
The illustrations above are only completion images based on design drawings and may differ from actual buildings after completion.

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Our growth roadmap
AUM(Note)

PurposeTargets AUM of JPY200.0 bn
within 3 years after the listing

Achieve steady DPU growth
Enhance portfolio stability
Improve in liquidity of investment units

JPY 200 bn

JPY129.7 bn

JPY91.8 bn

Annual acquisition
target of JPY 40 bn

JPY80.8 bn

At listing

After the acquisitionof Blumer HAT Kobe

After the acquisitions
in connection withthe follow-on offering

Abundant external growth opportunities

Note:



Size of acquisition universe

Increasing proportion of our investment
target among domestic retail facilities

Within 3 years after listing

Promotion of external growth strategies
 Solid pipelines from sponsor andsupport companies Diverse acquisition routes and methods
 Selective investments by professionals"AUM" represents the total acquisition price of all properties in the portfolio.

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Internal growth strategies

1

Pursue a portfolio composition that achieves both stability and growth2

Enhance tenant relationships and profitability through value-added "one-stop"
asset management and property management services

3

Continuously implement a retail property management cycle through our inhouse property management services

4

Direct investments and management policies to enliven local communities

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Tenant-oriented retail property management"One-stop" AM and PM services
Strengthen relationships with tenants and enhance portfolio profitability through "one-stop" AM and PM services.

AM services
Build and manage a stable/consistentportfolio

Strengthened
collaboration

PM services
Interact directly with tenants

Tenant-oriented retail property management
Seek to realize tenant-oriented property management, accumulate knowhow and improve tenant satisfaction level by entering into property
management agreements for our entire portfolio.
Monitoroperational
status oftenants

Accumulateknowhow
Identify
issuesExecutesolutions

Enhance tenantsatisfaction

33

Pursuit of internal growth through management of retail properties

Management approaches

Seek to achieve internal growth through management of retail properties

Effective utilization of capital expenditureby the Asset Manager

Optimize tenant composition

Value growth through property expansion

Post-listing example of renovation(Passaggio Nishiarai)

Attractive new tenants

Before property expansion

Installation of LED lights to
reduce utility cost andenvironmental load

Proactive
efforts toreshuffle
tenants

Optimization

Proactive
efforts tofind newtenants

Building expansion
throughadditional investments

After property expansion
Departure

Broad tenant relationships

Expected effects

Unused/underutilizedspace

Stabilize income

Enhance profitability

Extended
space

Enhance asset value

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Disclaimer
The contents in this document are provided solely for informational purposes and not intended for the purpose ofsoliciting investment in, or as a recommendation to purchase or sell, any specific products.
This document contains charts/diagrams/tables/data and others Kenedix Real Estate Fund Management ("the AssetManager") created based on data, indices, etc. published by third parties, in addition to the information related toKenedix Retail REIT Corporation ("the Investment Corporation"). This document also contains the current
analyses/judgments/other opinions of the Asset Manager.
The Asset Manager is a financial instruments business operator under the Financial Instruments and Exchange Act.
The information provided herein is unaudited and hence no assurance or warranties are given with respect to theaccuracy or completeness thereof. Also, please be aware that the analyses/judgments/other opinions provided by the
Asset Manager may change or cease to exist without prior notice of any kind as they are based on current assumptions
and beliefs of the Asset Manager.
Neither the Investment Corporation nor the Asset Manager shall be liable for any errors/inaccuracies of thedata/indices/other information published by third parties (including the data based on the appraisal report).
This document also contains forward-looking statements and anticipation of future results for the Investment
Corporation. However, no guarantees are given with respect to the accuracy of these statements/anticipation.
Revised editions of this document will be posted on our website (http://www.krr-reit.com/) should there be majorcorrections going forward.

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