Focused Investment in
Shopping Centers for Daily Needs

Semi-annual Reportfor the 16th Period(From October 1, 2022
to March 31, 2023)

Kenedix Retail REIT Corporation

Security code: 3453

https://www.krr-reit.com/en/

From the Executive Director r
I would like to take this opportunity to express my sincere gratitude to our shareholders for yourcontinued support to Kenedix Retail REIT Corporation (“KRR”).
Thanks to your support, KRR has reported its results of operations for the 16th fiscal period (fromOctober 1, 2022 to March 31, 2023).
During the 16th fiscal period, there was a movement toward normalization of economic activities
as restrictions on activities due to the spread of COVID-19 infection were eased. On the other
hand, the business environment remains uncertain due to the inflation in Japan including soaring
utility charges, global inflation and rising interest rates, and geopolitical risks overseas. Even
under these circumstances, shopping centers for daily needs with grocery supermarkets as coretenants have continued to act as vital retail infrastructure providing fundamental functions tomaintain day-to-day life of consumers.
We conducted the 6th public offering at the beginning of the 16th fiscal period (from October 1,
2022 to March 31, 2023) and acquired two properties. Furthermore, "Kitera Plaza Aobadai,"
which we acquired in March last year on the premise of conversion, completed construction at
the end of January this year on a commercial facility with a grocery supermarket as its coretenant, and began operations in March. As a result, KRR’s portfolio totaled 270,381 million yen for
70 properties as of March 31, 2022.
With regard to soaring utilities costs, we had expected a decrease impact on distributions in the
16th and 17th fiscal periods (April 1, 2023 to September 30, 2023). However, due to prompt
implementation of activities to minimize the impact on the KRR, such as reviewing contracts withtenants, distributions for the 16th fiscal period were 6,514 yen, an increase from 6,484 yen in the
15th fiscal period (April 1, 2022 to September 30, 2022).
We dedicate ourselves to promote the operation of retail andlogistics facilities in order to respond to the confidence andexpectations of investors even under the current environment.
We respectfully look forward to your continued support.

Moyuru Watanabe

Executive Director, Kenedix Retail REIT Corporation
Director & COO, Head of Retail REIT Department,
Kenedix Real Estate Fund Management, Inc.

Highlights
Distributions per unit

JP Y 6,514

of the 16th fiscal period ended March 31, 2023
Forecast DPU

Forecast DPU

for the 17th fiscal period

for the 18th fiscal periodJ P Y 6,570

Total assets (by acquisition price) /Number of properties
Number of tenants

608

J P Y 6,580

J P Y 270.3 bn / 70
Occupancy rate
at the end of period

99.5％

Financial Summary
12th fiscal period

Operating revenues
Of which, property-related revenues
Operating expenses

13th fiscal period

14th fiscal period

15th fiscal period

16th fiscal period(From October 1, 2020
to March 31, 2021)(From April 1, 2021
to September 30, 2021)(From October 1, 2021
to March 31, 2022)(From April 1, 2022
to September 30, 2022)(From October 1, 2022
to March 31, 2023)

Millions of yen

8,717

9,576

10,254

9,357

9,924

Millions of yen

8,263

8,901

8,956

9,357

9,924

Millions of yen

4,338

4,694

5,497

4,951

5,359

Fiscal period

Millions of yen

3,377

3,662

3,588

3,949

4,445

Operating income

Millions of yen

4,379

4,881

4,756

4,406

4,565

Ordinary income

Millions of yen

3,799

4,262

4,131

3,778

3,926

Net income

Millions of yen

3,798

4,261

4,127

3,774

3,922

Total assets

Millions of yen

251,773272,622275,833

276,699

287,569%(+0.0)(+8.3)(+1.2)(+0.3)(+3.9)

Millions of yen

124,701

137,052

137,354

137,428

142,566%(+0.3)(+9.9)(+0.2)(+0.1)(+3.7)

Unitholders’ capital (Note 2)
Number of investment units issued andoutstanding
Net assets per unit

Millions of yen

121,183

133,103

133,103

133,103

133,058

Units

536,177

582,177

582,177

582,177

602,177

Yen

232,575

235,414235,932

236,059

236,751

Distributions

Of which, property-related expenses[Period-on-period changes]
Total net assets[Period-on-period changes]

Millions of yen

3,804

4,266

4,127

3,774

3,922

Distributions per unit

Yen

7,095

7,328

7,090

6,484

6,514

Of which, distributions of earnings
Of which, distributions in excess ofretained earnings
Ordinary income to total assets (Note 3)

Yen

7,085

7,274

7,090

6,484

6,514

Yen

10

54

-

-

-

[Annualized] (Note 4)
Return on net assets (Note 5)[Annualized](Note 4)

Net assets to total assets (Note 6)[Period-on-period changes]

%

%

%

1.5

1.6

1.5

1.4

1.4

(3.0)

(3.2)

(3.0)

(2.7)

(2.8)

3.1

3.3

3.0

2.7

2.8

(6.1)

(6.5)

(6.0)

(5.5)

(5.6)

49.5

50.3

49.8

49.7

49.6

(+0.1)(+0.7)(-0.5)(-0.1)(-0.1)

Operating days

Days

182

183

182

183

182

Payout ratio (Note 7)

%

100.0

99.4

100.0

100.0

100.0

64

66

66

68

70

956,496.64

997,493.50

993,677.76

1,041,850.14

1,077,363.72

502

528

519

524

608

%

99.8

99.6

99.2

99.3

99.5

Depreciation

Millions of yen

1,068

1,166

1,189

1,244

1,351

Capital expenditures

Millions of yen

543

628

680

457

521

Rental NOI (Net operating income) (Note 9)

Millions of yen

5,954

6,405

6,557

6,652

6,830

FFO (Funds from operation) (Note 10)

Millions of yen

4,426

4,774

4,900

5,040

5,294

Yen

8,254

8,200

8,418

8,658

8,791

Number of properties
Leasable aream2

Number of tenants (Note 8)
Occupancy ratio

FFO per unit (Note 11)
Note 1:
Note 2:
Note 3:Note 4:

Figures above are rounded down for monetary amounts and rounded to the nearest tenth for ratios.
Distributions in excess of earnings for the allowance for temporary difference adjustments are not considered. The same applies hereafter.
Ordinary income to total assets = Ordinary income / {(Total assets at beginning of period + Total assets at end of period) / 2} × 100
Annualized values for the 12th fiscal period are calculated based on a period of 182 days, 183 days for the 13th fiscal period, 182 days for the 14th
fiscal period, 183 days for the 15th fiscal period and 182 days for the 16th fiscal period.
Note 5: Return on net assets = Net income / {(Net assets at beginning of period + Net assets at end of period) / 2} × 100
Note 6: Net assets to total assets = Net assets at end of period / Total assets at end of period × 100
Note 7: Payout ratio = Total distibutions (excluding excess of earnings) / Net income × 100
When calculated as follows, the payout ratio is 100.1% for the 12th fiscal period and 100.1% for the 13th fiscal period.
Payout ratio = Total distributions (including excess of earnings) / Net income × 100
Note 8: As for number of tenants, if a tenant leases multiple spaces in a building, each space is counted as one tenant. In a pass-through type master lease, thenumber of end-tenants is shown in parentheses. In a sublease type master lease, the number of master lessee is shown.
Note 9: Rental NOI = Property-related revenues - Property-related expenses + Depreciation
Note 10: FFO = Net income + Depreciation + Amortization - Gain on sale of property + Loss on sale of property
Note 11: FFO per unit = FFO / Number of investment units issued and outstanding1

Financial Statements(16th Fiscal Period: from October 1, 2022 to March 31, 2023)
Independent Auditor’s Report
Balance Sheet
Statement of Income and Retained Earnings
Statement of Changes in Net Assets
Statement of Cash Flows
Notes to Financial Statements2

Kenedix Retail REIT Corporation

Balance Sheet
As of March 31, 2023
As of March 31, 2023

As of September 30, 2022
(in thousands of yen)

AssetsCurrent assets
Cash and deposits (Notes 9)¥4,800,305¥10,003,221

Cash and deposits in trust (Notes 9)9,743,638

10,833,639

Operating accounts receivable

253,117

238,068

Prepaid expenses

36,795

149,376

Consumption taxes receivable

563,310

-

1,907

1,907

15,399,074

21,226,213

Other
Total current assets
Non-current assets
Property, plant and equipment (Notes 18 and 21)

788,457

773,703

Accumulated depreciation(126,563)(109,983)

Buildings, net

661,894

663,720

46,777

46,777

Accumulated depreciation(9,632)(8,230)

Structures, net

37,14438,547

2,956,465

2,956,465

Buildings

Structures

Land

-

20,666

79,948,559

72,000,294

Accumulated depreciation(12,636,690)(11,403,948)

Buildings in trust, net (Note 3)

67,311,868

60,596,346

3,940,441

3,646,089

Construction in progress
Buildings in trust

Structures in trust
Accumulated depreciation(846,266)(774,128)

Structures in trust, net (Note 3)

3,094,175

2,871,961

Machinery and equipment in trust

367,914339,316

Accumulated depreciation(81,196)(70,931)

Machinery and equipment in trust, net

286,718

268,384

Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust (Note 3)

200,960

191,805(114,079)(99,843)

86,881

91,961

191,218,540

181,272,334-

238,915265,653,689

249,019,303

4,709,965

4,713,944

Construction in progress in trust
Total property, plant and equipment, net
Intangible assets (Note 21)
Leasehold right in trust (Note 18)
Other
Total intangible assets
Investments and other assets
Lease and guarantee deposits

4,106

4,558

4,714,071

4,718,502

10,00010,000

Lease and guarantee deposits in trust

62,92762,927Long-term prepaid expenses

861,843

900,180

Long-term deposits

140,01098,080

Other633,129590,363

Total investments and other assets
Total non-current assets
Deferred assets
Investment corporation bond issuance costs

1,707,910

1,661,551

272,075,670

255,399,357

45,94350,674

Investment unit issuance costs

48,58723,027

Total deferred assets

94,53073,702¥287,569,276¥276,699,273

Total assets

See accompanying notes to financial statements.
3

As of March 31, 2023

As of September 30, 2022

(in thousands of yen)
Liabilities
Current liabilities
Operating accounts payable¥916,863¥823,979

Short-term loans payable (Notes 11 and 22)

3,150,000

750,000

Current portion of long-term loans payable (Notes 11 and 22)

7,500,000

8,500,000

Accounts payable-other

512,462

487,701

Accrued expenses

70,10971,705

Income taxes payable

3,599

3,705

Accrued consumption taxes

54,327

126,797

1,531,599

1,450,130

Advances received

96,051

22,708

13,835,013

12,236,728

Deposits received
Total current liabilities
Non-current liabilities
Investment corporation bonds (Notes 11 and 23)

10,000,000

10,000,000

Long-term loans payable (Notes 11 and 22)

108,650,000

105,050,000

148,083

156,083

12,315,282

11,779,677

Asset retirement obligations (Note 15)

25,15624,999Other

29,18523,554

131,167,708

127,034,315

145,002,721

139,271,043

138,058,250

133,103,750(40,522)(40,522)

Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust (Note 3)

Total non-current liabilities
Total liabilities
Net assets
Unitholders' equity
Unitholders' capital
Deduction from unitholders' capital
Allowance for temporary difference adjustments (Note 5)(40,522)(40,522)138,017,728

133,063,228

3,922,702

3,775,141

Total deduction from unitholders' capital
Unitholders' capital, net
Surplus
Unappropriated retained earnings

3,922,702

3,775,141

141,940,430

136,838,369

Deferred gains or losses on hedges (Notes 11 and 12)

626,123589,860

Total valuation and translation adjustments

626,123589,860

Total net assets (Note 6)

142,566,554

137,428,230

Total liabilities and net assets¥287,569,276¥276,699,273

Total surplus
Total unitholders' equity
Valuation and translation adjustments

See accompanying notes to financial statements.

4

Kenedix Retail REIT Corporation

Statement of Income and Retained Earnings
For the period from October 1, 2022 to March 31, 2023
From October 1, 2022

From April 1, 2022

to March 31, 2023

to September 30, 2022

(in thousands of yen)
Operating revenues
Rent revenue-real estate （Note 7)¥8,530,802¥8,011,772

Other lease business revenue (Note 7)

1,394,083

1,346,195

Total operating revenues

9,924,885

9,357,967

4,445,452

3,949,838

Asset management fees

780,079

765,048

Asset custody fees

10,992

10,964

Administrative service fees

35,77834,966

Directors' compensation

3,000

3,000

Operating expenses
Expenses related to rent business (Note 7)

Other operating expenses

83,788187,889

Total operating expenses

5,359,091

4,951,708

4,565,794

4,406,259

Operating income
Non-operating income
Interest income

44

63

Gain on forfeiture of unclaimed dividends

284

258

-

2

328

324

Interest expenses

483,162

471,585

Interest expenses on investment corporation bonds

28,61527,635

Financing-related expenses

109,287

108,498

Interest on refund
Total non-operating income
Non-operating expenses

Amortization of investment corporation bond issuance costs

4,731

4,826

Amortization of investment unit issuance costs

14,322

15,402

Total non-operating expenses

640,119

627,948

Ordinary income

3,926,003

3,778,636

Income before income taxes

3,926,003

3,778,636

3,606

3,715

3,606

3,715

Income taxes
Current
Total income taxes

3,922,396

3,774,920

Retained earnings brought forward

305

221

Unappropriated retained earnings¥3,922,702¥3,775,141

Net income

See accompanying notes to financial statements.

5

Kenedix Retail REIT Corporation

Statement of Changes in Net Assets
For the period from October 1, 2022 to March 31, 2023
Unitholders' equity
Unitholders' capital

Surplus

Deduction from unitholders'
capitalAllowance
for
temporarydifference
adjustments

Unitholders'
capitalTotal
deduction
fromunitholders'
capitalUnitholders'
capital, net

Unappropri
ated
retainedearnings

Total
surplusTotal
unitholders'equity¥4,404,711¥4,404,711¥137,191,084(4,127,634)(4,127,634)(4,127,634)(276,855)(276,855)-

3,774,920

3,774,920

3,774,920(in thousands of yen)
Balance as of March 31, 2022 (Note 8)¥133,103,750¥ (317,378)¥(317,378)¥132,786,372

Changes of items during the period
Dividends from surplus
Reversal of allowance for temporary
difference adjustments (Note 5)

276,855

276,855

276,855

Net income
Net changes of items other thanunitholders’ equity
Total changes of items during the period
Balance as of September 30, 2022 (Note 8)-

276,855

276,855

276,855(629,570)(629,570)(352,714)¥133,103,750¥(40,522)¥(40,522)¥133,063,228¥3,775,141¥3,775,141¥136,838,369

Changes of items during the period
Issuance of new investment units

4,954,500

4,954,500

4,954,500

Dividends from surplus(3,774,835)(3,774,835)(3,774,835)

Net income

3,922,396

3,922,396

3,922,396

Net changes of items other thanunitholders’ equity
Total changes of items during the period

4,954,500--

4,954,500

147,560

147,560

5,102,060

Balance as of March 31, 2023 (Note 8)¥138,058,250¥(40,522)¥(40,522)¥138,017,728¥3,922,702¥3,922,702¥141,940,430

Valuation and translation adjustments
Deferred gains orlosses on hedges
Balance as of March 31, 2022 (Note 8)
Changes of items during the period¥163,403

Total net assets

Total valuation andtranslation adjustments(in thousands of yen)
¥163,403¥137,354,487

Dividends from surplus
Reversal of allowance for temporary
difference adjustments (Note 5)(4,127,634)

Net income
Net changes of items other thanunitholders’ equity

3,774,920-

426,457

426,457

426,457

Total changes of items during the period

426,457

426,457

73,742

Balance as of September 30, 2022 (Note 8)¥589,860¥589,860¥137,428,230

Changes of items during the period
Issuance of new investment units

4,954,500

Dividends from surplus(3,774,835)

Net income
Net changes of items other thanunitholders’ equity

3,922,396
36,26336,26336,263

Total changes of items during the period

36,26336,263

5,138,324

Balance as of March 31, 2023 (Note 8)¥626,123¥626,123¥142,566,554

See accompanying notes to financial statements.
6

Kenedix Retail REIT Corporation

Statement of Cash Flows
For the period from October 1, 2022 to March 31, 2023
From October 1, 2022

From April 1, 2022

to March 31, 2023

to September 30, 2022

(in thousands of yen)
Net cash provided by (used in) operating activities
Income before income taxes¥3,926,003¥3,778,636

Depreciation and amortization

1,352,642

1,245,780

Amortization of investment corporation bond issuance costs

4,731

4,826

Amortization of investment unit issuance costs

14,322

15,402

Interest income

(44)

(63)

Interest expenses

511,777

499,221

Decrease (increase) in operating accounts receivable(15,048)(63,712)

Decrease (increase) in consumption taxes receivable(563,310)-

Decrease (increase) in prepaid expenses

112,580(124,628)

Increase (decrease) in operating accounts payable

74,87031,418

Increase (decrease) in accounts payable-other

24,929(114,574)

Increase (decrease) in accrued consumption taxes(72,470)(169,696)

Increase (decrease) in advances received

81,46936,915

Increase (decrease) in deposits received

73,343

3,999

Decrease (increase) in long-term prepaid expenses

38,337

97,970Decrease (increase) in long-term deposits(41,930)(2,400)Other(1,195)(1,089)Subtotal

5,521,009

5,238,004

44

63(513,333)(491,822)Interest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities(3,712)(4,055)5,004,007

4,742,191

Net cash provided by (used in) investing activities(19,198)(34,327)(17,944,538)(6,728,384)

(690)

-

-

(425,032)

Repayments of tenant leasehold and security deposits in trust(93,736)(177,584)

Proceeds from tenant leasehold and security deposits in trust

621,341

370,751

Proceeds from restricted bank deposits in trust

15,00015,000(17,421,822)(6,974,268)

Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Purchase of intangible assets
Purchase of intangible assets in trust
Repayments of lease and guarantee deposits in trust
Proceeds from tenant leasehold and security deposits

Net cash provided by (used in) investing activities(2,691)8,000

Net cash provided by (used in) financing activities
Proceeds of short-term loans payable

3,150,000

1,000,000

Repayments of short-term loans payable(750,000)(1,000,000)

Proceeds from long-term loans payable

10,600,000

2,050,000

Repayments of long-term loans payable(8,000,000)(2,050,000)-(1,000,000)

Proceeds from issuance of investment units

4,914,617-

Dividends paid

(3,774,720)(4,128,380)

Net cash provided by (used in) financing activities

6,139,897(3,141,554)

Net increase (decrease) in cash and cash equivalents(6,277,917)(5,373,632)

Proceeds from issuance of investment corporation bonds
Redemption of investment corporation bonds

1,986,826

Cash and cash equivalents at the beginning of the period

20,674,361

26,047,993

Cash and cash equivalents at the end of the period (Note 9)¥14,396,443¥20,674,361

See accompanying notes to financial statements.
7

Kenedix Retail REIT Corporation

Notes to Financial Statements
For the period from October 1, 2022 to March 31, 2023

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Kenedix Retail REIT Corporation (“KRR”) was established on October 3, 2014, under the Act on Investment Trusts and Investment Corporations of Japan(the “Investment Trust Act”). On February 10, 2015, KRR was listed on the Real Estate Investment Trust Securities (J-REIT) Market of Tokyo Stock Exchange,
Inc. (the Tokyo Stock Exchange) (Securities code: 3453). Subsequently, KRR raised funds through public offerings, including international offerings. As aresult, the number of investment units issued as of March 31, 2023 was 602,177 units.
KRR seeks to invest primarily in neighborhood, community and other shopping centers that cater to the day-to-day needs of local area customers and havestable demand from retailers and customers, and also seeks to invest in distribution centers, which supplement shopping centers in providing goods toconsumers, in order to provide stable investment returns over the long term. Sponsored by Kenedix, Inc., KRR entrusts its asset management and investment
operations to Kenedix Real Estate Fund Management, Inc. (“KFM”), with the following strategies.
(Note) For management purposes and ease of classification, KRR defines neighborhood, community and other shopping centers for daily needs asretail properties that generally have the following characteristics:
a. Retail trade area of an approximate radius of one to ten kilometers (and generally, a radius of three to five kilometers), with customers
predominantly from local areas surrounding the retail property
b. Operational capacity to accommodate certain daily local retail needs and strong customer traffic on both weekdays and weekends
c. Composed of various specialty stores to meet a range of day-to-day needs such as groceries, clothing and other daily goods and services
In the previous period, KRR acquired three assets (Sun Street Hamakita (10% trust beneficiary quasi co-ownership interests) with acquisition price of
1,200 million yen, Higashimatsuyama Shopping Center with acquisition price of 4,080 million yen and Prima Meat Packers Kinki Center with acquisition
price of 1,047 million yen). For the period ended September 30, 2022, the portfolio of 68 properties (total acquisition price of 253,619 million yen) as a whole
performed well with an overall occupancy ratio of 99.3% as of September 30, 2022.
In the current period, KRR acquired two assets ( iias Kasugai (70% trust beneficiary quasi co-ownership interests)with acquisition price of 14,490 million
yen, Coop Sapporo Shunko with acquisition price of 1,110 million yen. In addition, KRR completed an additional acquisition of a new building through aproperty expansion within Unicus Ina (acquisition price of 172 million yen). For the period ended March 31, 2023, the portfolio of 70 properties (totalacquisition price of 270,381 million yen) as a whole performed well with an overall occupancy ratio of 99.5% as of March 31, 2023.
Furthermore, the portfolio was diversified in terms of tenants as there were 524 and 608 end-tenants as of September 30, 2022 and March 31, 2023 in
KRR’s properties, respectively.
Basis of Presentation
KRR maintains its accounting records and prepares its financial statements in accordance with accounting principles generally accepted in Japan (JapaneseGAAP), including provisions set forth in the Investment Trust Act, the Companies Act of Japan, the Financial Instruments and Exchange Act of Japan andrelated regulations, which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are basically a translation of the financial statements of KRR, which were prepared in accordance with Japanese
GAAP and were presented in the Semiannual Securities Report of KRR filed with the Kanto Local Finance Bureau. In preparing the accompanying financial
statements, certain reclassifications and modifications have been made to the financial statements issued domestically in order to present them in a format
that is more familiar to readers outside Japan. In addition, the notes to financial statements include certain information that might not be required underJapanese GAAP but is presented herein as additional information.
KRR’s fiscal period is a six-month period which ends at the end of March or September. KRR does not prepare consolidated financial statements because
it has no subsidiaries.

82. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(A) Property, Plant and Equipment (including trust assets)
Property, plant and equipment are stated at cost. Depreciation of property and equipment is calculated on a straight-line method over the estimateduseful lives of the assets ranging as stated below:

Buildings

From October 1, 2022
to March 31, 2023
2-70 years

From April 1, 2022
to September 30, 2022
2-70 years

Structures

8-65 years

8-59 years

Machinery and equipment

2-25 years

2-25 years

Tools, furniture and fixtures

3-15 years

3-15 years(B) Intangible Assets (including trust assets)
Intangible assets are amortized by the straight-line method.
(C) Long-term Prepaid Expenses
Long-term prepaid expenses are amortized by the straight-line method.
(D) Investment Unit Issuance Costs
Investment unit issuance costs are amortized over a period of 3 years under the straight-line method.
(E) Investment Corporation Bond Issuance Costs
Investment corporation bond issuance costs are amortized over a maturity period under the straight-line method.
(F) 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 relevant assets andliabilities in trust are recorded on the balance sheets and the statements of income and retained earnings.
(G) Revenue Recognition
Operating revenues consist of rental revenues including base rents, common area charges and other operating revenues, which include utility charge
reimbursements, parking space rental revenues and other miscellaneous revenues. Rental revenues are generally recognized on an accrual basis overthe life of each lease. Utility charge reimbursements are recognized when earned and their amounts can be reasonably estimated. Reimbursementsfrom tenants including utility charge reimbursements are recorded on a gross basis and such amounts are recorded both as revenues and expenses
during the fiscal period.
(H) Taxes on Property 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 said period. Under Japanese tax
regulations, the seller of the property is liable for these taxes on the property from the date of disposal to the end of the calendar year in which theproperty is disposed. The seller, however, is generally reimbursed by the purchaser for these accrued property-related tax liabilities.
When KRR 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 property-related taxes are capitalized as part of theacquisition costs of the related properties. Capitalized property-related taxes amounted to ¥22,301 thousand and ¥24,236 thousand as of September 30,
2022 and, March 31, 2023 respectively.
(I)

Accounting for Revenues
The details of main performance obligations concerning revenue generated from contracts between KRR and its customers and the general timing of
the fulfillment of said performance obligations (general timing of revenue recognition) are as follows.
1. Sale of real estate property
Revenue from sale of real estate properties is recorded as revenue when a buyer who is a customer obtains control over a real estate property following
the seller’s fulfilment of its obligation to hand over the property which is stipulated in the contract associated with the sale of real estate property.
2. Utility charge reimbursements
Revenue from utility charge reimbursements is recorded revenue according to the supply of electric power, water, etc. to lessees who are customers
9based on lease agreements and other terms related to the real estate properties.
With regard to utility charge reimbursements which KRR deems to fall under that for an agent, the net amount after deducting the amount paid to anotherparty from the amount that is received as charges for electric power, gas, etc. which is supplied by another concerned party is recognized as revenue.
(J) Income Taxes
Deferred tax assets and liabilities are computed based on the difference between the financial statements and income tax bases of assets and liabilities
using the statutory tax rates.
(K) Non-deductible 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
KRR utilizes interest-rate swap contracts as derivative financial instruments only for the purpose of hedging its exposure to changes in interest rates.
KRR deferred recognition of gains or losses resulting from changes in fair value of interest-rate swap contracts because these contracts met the criteria
for deferral hedge accounting. However, KRR adopted the special treatment for interest-swap contracts if they met the criteria for hedge accounting
under this treatment. An assessment of the effectiveness of hedging is omitted for interest rate swaps because they fulfill the requirements for the 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 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 the accompanying financial statements. Totals shown in theaccompanying financial statements do not necessarily agree with the sums of the individual amounts.

3. COLLATERAL
Assets pledged as collateral and related secured liabilities are as follows:
Assets pledged as collateral

As of March 31, 2023

As of September 30, 2022
(in thousands of yen)

Buildings in trust¥618,238¥628,385

Structures in trust

16,76917,972

2,709,001

2,709,001¥3,344,009¥3,355,359

Land in trust
Total

As of March 31, 2023

Secured liabilities
Tenant leasehold and security deposits in trust
Total

As of September 30, 2022
¥326,080¥348,077¥326,080¥348,077

4. COMMITMENT LINE CONTRACTSKRR has commitment line contracts with the following financial institutions.
As of March 31, 2023

As of September 30, 2022
(in thousands of yen)

Total amount of commitment line contracts¥3,000,000¥3,000,000

Balance of loans payable outstanding--

Remaining amount¥3,000,000¥3,000,000

105. ALLOWANCE FOR TEMPORARY DIFFERENCE ADJUSTMENTS
The following summarizes allowance for temporary difference adjustments as of March 31, 2023
1. Reasons, related assets, initial amount, allowance and reversal
Related assets, etc.

Buildings in trust,
Leasehold right in trust

Reason for allowance

Amortization ofleasehold right in trust
and the amount inexcess of depreciation
Total

Initial amount

Balance atAllowance
Reversal
the beginningduring theduring theof the period
periodperiod(in thousands of yen)

Balance atthe end of
the period

Reason forreversal¥40,522¥40,522

¥

-

¥

-

¥40,522-¥40,522¥40,522

¥

-

¥

-

¥40,522-

2. Method of reversal
Method of reversal
Buildings in trust,
Leasehold right in trust

Upon sale, the corresponding amount is scheduled to be reversed.

The following summarizes allowance for temporary difference adjustments as of September 30, 2022
1. Reasons, related assets, initial amount, allowance and reversal
Related assets, etc.

Reason for allowance

Initial amount

Buildings in trust,
Leasehold right in trust

Amortization ofleasehold right in trust
and the amount inexcess of depreciation¥40,522

Deferred gains or losses
on hedges

Loss on interest-rate
swaps recognized at theend of the fiscal period

Total

Balance atAllowance
Reversal
the beginningduring theduring theof the period
periodperiod(in thousands of yen)
¥40,522

276,855

276,855¥317,378¥317,378

¥

¥

-

¥

Balance atthe end of
the period-

Reason forreversal¥40,522-(276,855)--¥(276,855)¥40,522

Changes infair value ofderivativetransactions-

2. Method of reversal
Method of reversal
Buildings in trust,
Leasehold right in trust

Upon sale, the corresponding amount is scheduled to be reversed.

Deferred gains or losses on hedges

Based on changes in the fair value of the hedging instruments, the corresponding amount is scheduled to bereversed.

6. NET ASSETSKRR 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 statedcapital. KRR is required to maintain net assets of at least ¥50 million as required by the Investment Trust Act.

11

7. BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATEDEXPENSES AND GAIN ON SALES OF REAL ESTATE PROPERTY
Rental and other operating revenues and property-related expenses for the periods from October 1, 2022 to March 31, 2023 and April 1, 2022 to September
30, 2022 from consist of the following:
From October 1, 2022

From April 1, 2022

to March 31, 2023

to September 30, 2022
(in thousands of yen)

Rental and other operating revenues:
Rent revenue-real estate:
Rental revenues¥7,322,312¥6,820,886

Rental revenues from limited proprietary rights of land

929,433

928,021

Common area charges

279,056

262,864

8,530,802

8,011,772

Parking space rental revenues

198,616

178,905

Utility charge reimbursement

857,547

810,240

Miscellaneous

337,919

357,049

Subtotal

1,394,083

1,346,195

9,924,885

9,357,967

Property management fees and facility management fees

808,884

687,655

Utilities

970,172

824,618

Taxes

806,828

806,828

Repairs and maintenance

134,573

104,105

Insurance

24,45822,564

Trust fees

27,301

27,351

Depreciation

1,351,499

1,244,644

Others321,733

232,070

Total property-related expenses

4,445,452

3,949,838

Net operating income from real estate rental business¥5,479,433¥5,408,129

Subtotal
Other lease business revenue:

Total rental and other operating revenues
Property-related expenses:
Expenses related to rent business:

8. UNITHOLDERS’ EQUITY
Total number of authorized investment units and total number of investment units issued and outstanding are as follows:
From October 1, 2022

From April 1, 2022

to March 31, 2023

to September 30, 2022

Total number of authorized investment units

5,000,000 units

5,000,000 units

Total number of investment units issued and outstanding

602,177 units

582,177 units

9. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following as of March 31, 2023 and September 30, 2022:
As of March 31, 2023

As of September 30, 2022

(in thousands of yen)
Cash and deposits¥4,800,305¥10,003,221

Cash and deposits in trust

9,743,638

10,833,639

Restricted bank deposits in trust *(147,500)(162,500)¥14,396,443¥20,674,361

Cash and cash equivalents*Restricted bank deposits in trust are retained for repayment of tenant leasehold and security deposits in trust.

1210. LEASES(As lessee)
Future minimum lease payments under non-cancelable operating leases as of March 31, 2023 and September 30, 2022 are as follows:
As of March 31, 2023

As of September 30, 2022

(in thousands of yen)
Due within 1 year

¥10,500¥10,500

Due after 1 year

136,048

141,298

Total¥146,548¥151,798(As lessor)
Future minimum lease income under the non-cancelable operating leases as of March 31, 2023 and September 30, 2022 are as follows:
As of March 31, 2023

As of September 30, 2022

(in thousands of yen)
Due within 1 year

¥10,838,715¥10,389,207

Due after 1 year

53,175,672

52,938,573

Total¥64,014,387¥63,327,781

13

11. FINANCIAL INSTRUMENTS(A). Overview(1) Policy for financial instruments
KRR procures funds for asset acquisitions, repairs, payment of distributions, repayment of loans, etc. through loans from financial institutions, issuance ofinvestment corporation bonds, issuance of investment units and other means. With regard to the procurement of interest-bearing debts, KRR ensures that it
can effectively combine stable long-term funds with flexible short-term funds. Management of surplus funds is undertaken through various bank deposits
focusing on safety, liquidity and effectiveness. KRR uses derivatives for the purpose of hedging its exposure to changes in interest rates and other risks anddoes not enter into derivative transactions for speculative or trading purposes.
(2) Types of financial instruments and related risk
Bank deposits are for managing KRR’s surplus funds and are exposed to credit risk such as the bankruptcy of financial institutions at which funds are deposited.
Loans payable and investment corporation bonds, which are made or issued primarily for the purpose of procuring funds for the acquisition of real estate andtrust beneficiary interests in real estate and have a repayment date of a maximum of 8 years and 1 month for loans payable and also have a redemption dateof a maximum of 8 years and 10 months for investment corporation bonds as of March 31, 2023, the end of the 16th fiscal period, are exposed to liquidity risk
where alternative funds may not be procured by the repayment date. Also, loans payable with floating interest rates are exposed to interest rate fluctuation
risk. Derivatives are used for the purpose of hedging interest rate fluctuation risk for a certain portion of the loans payable.
Tenant leasehold and security deposits are deposits received from tenants, which are exposed to liquidity risks when the tenants vacate the properties.
(3) Risk management for financial instruments
a. Credit risk
While bank deposits are exposed to credit risk such as the bankruptcy of financial institutions at which funds are deposited, such risk is monitored by deposits
in non-interest bearing ordinary savings accounts or with financial institutions with credit ratings above a certain level. In utilizing derivatives, KRR aims to
mitigate counterparty risk such as by transacting with financial institutions with favorable ratings.
b. Market risk
While loans payable with floating rates are exposed to interest rate fluctuation risk, such risk is monitored by adjusting the rate of the balance of loans payable
with floating rates against the total loans payable according to the financial environment, interest rate forecasts by continuous monitoring, etc. and by using
derivatives, etc. A risk management policy is established with regard to the execution and management of derivatives and such transactions are conductedbased on this policy.
c. Liquidity risk
Though loans payable are subject to liquidity risk, KRR reduces such risk by spreading out payment due dates and by diversifying financial institutions.
Liquidity risk is also managed by such means as regularly checking the balance of cash reserves.
Though tenant leasehold and security deposits are subject to liquidity risk, in principle, KRR reduces such risk by retaining funds that would enable KRR toreturn necessary amounts to tenants.
(4) Supplementary explanation of the estimated fair value of financial instruments
Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors could result in a different fair value.
(B). Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheets and estimated fair value are shown in the following table. Furthermore, “cash and deposits”,"cash and deposits in trust” and “short-term loans payable” are omitted as they are settled with cash and in a short span of time and are therefore similar infair value to the carrying value. Also, “tenant leasehold and security deposits in trust” is omitted as it is immaterial.
As of March 31, 2023
Carrying amount

Estimated fair value

Difference(in thousands of yen)
(1) Current portion of investment corporation bonds¥(2) Current portion of long-term loans payable

7,500,000

-

¥

-

¥

-

7,540,755

40,755(3) Investment corporation bonds

10,000,000

9,866,800(133,200)(4) Long-term loans payable

108,650,000

108,241,668(408,331)

126,150,000

125,649,223¥626,123¥626,123

Total
Derivative transactions(500,776)¥-

14

(Note) 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.
As of September 30, 2022
Carrying amount

Estimated fair value

Difference(in thousands of yen)
(1) Current portion of investment corporation bonds

¥

-

¥

-

¥

-

(2) Current portion of long-term loans payable

8,500,000

8,497,359(2,640)(3) Investment corporation bonds

10,000,000

9,874,800(125,200)(4) Long-term loans payable

105,050,000

104,897,191(152,808)

123,550,000

123,269,351(280,648)¥589,860¥589,860

Total
Derivative transactions¥-(Note) 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 matters related to derivative transactions
Liabilities(1) Current portion of investment corporation bonds and (3) Investment corporation bonds
The fair value of investment corporation bonds is based on quoted market prices.
(2) Current portion of long-term loans payable and (4) Long-term loans payable
Among these items, the fair value of loans payable with fixed interest rates is calculated based on the present value, which is the total amount of principal andinterest discounted by the estimated interest rate to be applied in the event that KRR conducts new loans of the same type. As for the fair value of loans
payable with floating interest rates, it is based on the carrying amount since market interest rates are reflected in the short term and the fair value is believed
to approximate the carrying amount as the credit standing of KRR has not changed significantly since the loans were made. (However, the fair value of longterm loans payable subject to the special treatment for interest-rate swaps is based on the present value of the total of principal and interest, accounted fortogether with the applicable interest-rate swaps, discounted by the estimated interest rate to be applied in the event that KRR conducts new loans payable ofthe same type.)
Derivative transactions
Please refer to Note “12. DERIVATIVE TRANSACTIONS”.
*2: Redemption of long-term loans payable and other interest-bearing debt scheduled to be due after the balance sheet date
As of March 31, 2023
Due in 1 year orDue after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

lessthrough 2 years

through 3 years

through 4 years

through 5 years

Due after 5 years(in thousands of yen)
Investment corporation bonds
Long-term loans payable
Total

¥

-

¥

-

¥1,000,000¥1,000,000¥4,000,000¥4,000,000

7,500,000

10,510,000

19,590,000

23,310,000

22,090,000

33,150,000¥7,500,000¥10,510,000¥20,590,000¥24,310,000¥26,090,000¥37,150,000

Due in 1 year orDue after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

lessthrough 2 years

through 3 years

through 4 years

through 5 years

As of September 30, 2022
Due after 5 years(in thousands of yen)
Investment corporation bonds¥-¥1,000,000¥-¥3,000,000¥6,000,000

Long-term loans payable

8,500,000

9,490,000

15,320,000

20,850,000

21,500,000

37,890,000¥8,500,000¥9,490,000¥16,320,000¥20,850,000¥24,500,000¥43,890,000

Total

-

¥

15

12. DERIVATIVE TRANSACTIONS
The contract amount and the fair value of interest-rate swap transactions as of March 31, 2023 are shown in the following table.
(1) Transactions not subject to hedge accounting
Not applicable(2) Transactions subject to hedge accounting
Hedge
accounting
methodType of derivativetransactions

Principle method Interest rate swap
transaction:
Receive/floating andpay/fixed
SpecialInterest rate swap
treatment oftransaction:interest-rate
Receive/floating andswaps
pay/fixed
Total

Hedged items
Long-term loans
payableLong-term loans
payableContract amount(in thousands of yen)
Maturing after 1
year¥66,560,000¥66,560,000

17,000,000

10,000,000¥83,560,000¥76,560,000

Fair value(in thousands of yen)

¥626,123

Calculation method for
applicable fair value
Based on the amountprovided by counterparty
financial institutions*¥626,123*Interest rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fair value isincluded in the fair value of the hedged long-term loans payable.（Please refer to Note “11. FINANCIAL INSTRUMENTS” (*1) Methods to determine theestimated fair value of financial instruments and matters related to derivative transactions; Liabilities (2) Current portion of long-term loans payable and (4)Long-term loans payable.）
The contract amount and the fair value of interest-rate swap transactions as of September 30, 2022 are shown in the following table.
(1) Transactions not subject to hedge accounting
Not applicable(2) Transactions subject to hedge accounting
Hedge
accounting
methodType of derivativetransactions

Principle method Interest rate swap
transaction:
Receive/floating andpay/fixed
SpecialInterest rate swap
treatment oftransaction:interest-rate
Receive/floating andswaps
pay/fixed
Total

Hedged items
Long-term loans
payableLong-term loans
payableContract amount(in thousands of yen)
Maturing after 1
year¥64,360,000¥64,360,000

21,000,000

17,000,000¥85,360,000¥81,360,000

Fair value(in thousands of yen)

¥589,860

Calculation method for
applicable fair value
Based on the amountprovided by counterparty
financial institutions*¥589,860*Interest rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fair value isincluded in the fair value of the hedged long-term loans payable.（Please refer to Note “11. FINANCIAL INSTRUMENTS” (*1) Methods to determine theestimated fair value of financial instruments and matters related to derivative transactions; Liabilities (2) Current portion of long-term loans payable and (4)Long-term loans payable.）

13. RELATED PARTY TRANSACTIONS
1．Parent Company, major corporate unitholders and other16th Fiscal Period (October 1, 2022 to March 31, 2023) and 15th Fiscal Period (April 1, 2022 to September 30, 2022) : Not applicable
2．Affiliated companies and other16th Fiscal Period (October 1, 2022 to March 31, 2023) and 15th Fiscal Period (April 1, 2022 to September 30, 2022) : Not applicable
3．Fellow subsidiary companies and other16th Fiscal Period (October 1, 2022 to March 31, 2023) and 15th Fiscal Period (April 1, 2022 to September 30, 2022) : Not applicable
4．Directors, major individual unitholders and other16th Fiscal Period (October 1, 2022 to March 31, 2023) and 15th Fiscal Period (April 1, 2022 to September 30, 2022): Not applicable1614. INCOME TAXESKRR is subject to corporate income taxes at a regular statutory rate of approximately 31%. However, KRR may deduct from its taxable income amounts
distributed to its unitholders, provided the requirements under the Special Taxation Measures Law of Japan are met, including a requirement that it currently
distributes in excess of 90% of its net income for the fiscal period in order to be able to deduct such amounts. If KRR does not satisfy all of the requirements,
the entire taxable income of KRR will be subject to regular corporate income taxes. Since KRR distributed in excess of 90% of its distributable income in theform of cash distributions totaling ¥3,922 million and ¥3,774million for the periods ended March 31, 2023 and September 30, 2022, respectively, thedistributions were treated as deductible distributions for purposes of corporate income taxes. The effective tax rates on KRR’s income were 0.09% and 0.10%
for the periods ended March 31, 2023 and September 30, 2022, respectively. The following table summarizes the significant differences between the statutory
tax rate and the effective tax rate:
As of March 31, 2023

As of September 30, 2022

Statutory tax rate

31.46%

31.46%

Deductible cash distributions(31.43)(31.43)

Others0.06

0.07

Effective tax rate

0.09%

0.10%

The significant components of deferred tax assets and liabilities:
As of March 31, 2023

As of September 30, 2022

(in thousands of yen)
Deferred tax assets:
Enterprise tax payable

¥

215

¥

224

Amortization of leasehold right in trust

20,44319,192

Depreciation

7,358

6,908

Asset retirement obligations

7,914

7,864

Subtotal deferred tax assets

35,932

34,189Valuation allowance(35,932)(34,189)¥¥

Total deferred tax assets

-

-

17

15. ASSET RETIREMENT OBLIGATIONS
Asset retirement obligations reported on balance sheets
1. Summary of the asset retirement obligations
KRR has recognized the original state restoration obligations assumed under the fixed-term business-purpose land leasehold agreement as the asset
retirement obligations in connection with Sunny Noma acquired on February 10, 2015.
2. Method of calculating asset retirement obligations
Asset retirement obligations are calculated based on a discount rate of 1.256% after the useful life has been estimated to be 22 years and 2 months basedon the time period from the date of acquisition to the expiration of the agreement.
3. Changes in the amount of applicable asset retirement obligations consisted of the following:
From October 1, 2022

From April 1, 2022

to March 31, 2023

to September 30, 2022

(in thousands of yen)
Balance at the beginning of the period¥24,999¥24,843

157

156¥25,156¥24,999

Accretion adjustment
Balance at the end of the period

16. REVENUE RECOGNITION
1. Disaggregation of revenue from contracts with customers
16th Fiscal Period (From October 1, 2022 to March 31, 2023)
Revenues generated from contracts

Sales to external customers

with customers *1(in thousands of yen)
Revenue from sale of real estate property

¥

-

¥

-

Utility charge reimbursements

857,547

857,547

Other-

9,067,337

Total¥857,547¥9,924,885*1 Rental revenues, etc. which are subject to Accounting Standard for Lease Transactions (ASBJ Statement No. 13) and the transfer of real estate properties
which is subject to the “Practical Guidelines on Accounting by Transferors for Securitization of Real Estate Using Special Purpose Companies” (Accounting
System Committee Report No.15 of the Japanese Institute of Certified Public Accountants) are not included in the above amounts as they are excluded fromrevenue recognition accounting standards. Revenue generated from contracts with major customers include of revenue from sale of real estate properties
and utility charge reimbursements.
15th Fiscal Period (From April 1, 2022 to September 30, 2022)
Revenues generated from contracts

Sales to external customers

with customers *1(in thousands of yen)
Revenue from sale of real estate property

¥

-

¥

-

Utility charge reimbursements

810,240

810,240

Other-

8,547,727

Total¥810,240¥9,357,967*1 Rental revenues, etc. which are subject to Accounting Standard for Lease Transactions (ASBJ Statement No. 13) and the transfer of real estate properties
which is subject to the “Practical Guidelines on Accounting by Transferors for Securitization of Real Estate Using Special Purpose Companies” (Accounting
System Committee Report No.15 of the Japanese Institute of Certified Public Accountants) are not included in the above amounts as they are excluded fromrevenue recognition accounting standards. Revenue generated from contracts with major customers include of revenue from sale of real estate properties
18

and utility charge reimbursements.
2. Basis for understanding revenues generated from contracts with customers
16th Fiscal Period (October 1, 2022 to March 31, 2023) and 15th Fiscal Period (April 1, 2022 to September 30, 2022)
The basis for understanding revenues generated from contracts with customers is as indicated in the Summary of Significant Accounting Policies.
3．Information on relationship of fulfillment of performance obligations based on contracts with customers and cashflow generated from said contracts alongwith amount and period of revenue expected to be recognized in the next fiscal period or thereafter from contracts with customers existing at the end of the
fiscal period.
16th Fiscal Period (From October 1, 2022 to March 31, 2023)(1) Balance of contract assets and contract liabilities, etc.
From October 1, 2022
to March 31, 2023
(in thousands of yen)
Receivables generated from contracts with customers¥192,333(balance at beginning of fiscal period)
Receivables generated from contracts with customers

167,894(balance at end of fiscal period)
Contract assets (balance at beginning of fiscal period)-

Contract assets (balance at end of fiscal period)-

Contract liabilities (balance at beginning of fiscal period)-

Contract liabilities (balance at end of fiscal period)¥-(2) Transaction price allocated to remaining performance obligations
Not applicable.
KRR does not include contracts whose terms are initially expected to be one year or less.
Also, with regard to utility charge reimbursements, as KRR has the right to receive from customers an amount directly corresponding to the value for thelessees who are customers of sections for which performance is complete by the end of the fiscal period, the amount it has the right to claim according toParagraph 19 of the Implementation Guidelines of the Accounting Standard for Revenue Recognition is recognized as revenue. Accordingly, such is notincluded in the note on transaction value allocated to remaining performance obligations through application of the provisions of Paragraph 80-22 (2) of the
Accounting Standard for Revenue Recognition.
15th Fiscal Period (From April 1, 2022 to September 30, 2022)(1) Balance of contract assets and contract liabilities, etc.
From April 1, 2022
to September 30, 2022
(in thousands of yen)
Receivables generated from contracts with customers(balance at beginning of fiscal period)
Receivables generated from contracts with customers(balance at end of fiscal period)¥124,784
192,333

Contract assets (balance at beginning of fiscal period)-

Contract assets (balance at end of fiscal period)-

Contract liabilities (balance at beginning of fiscal period)-

Contract liabilities (balance at end of fiscal period)¥-(2) Transaction price allocated to remaining performance obligations
Not applicable.
KRR does not include contracts whose terms are initially expected to be one year or less.
Also, with regard to utility charge reimbursements, as KRR has the right to receive from customers an amount directly corresponding to the value for thelessees who are customers of sections for which performance is complete by the end of the fiscal period, the amount it has the right to claim according to
19

Paragraph 19 of the Implementation Guidelines of the Accounting Standard for Revenue Recognition is recognized as revenue. Accordingly, such is notincluded in the note on transaction value allocated to remaining performance obligations through application of the provisions of Paragraph 80-22 (2) of the
Accounting Standard for Revenue Recognition.

17. SEGMENT INFORMATION
Segment information for the periods from October 1, 2022 to March 31, 2023 and April 1, 2022 to September 30, 2022 is as follows:(A) Segment information
Disclosure is omitted because the real estate leasing business is KRR’s sole business and it has no reportable segment information to disclose.
(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 revenue on thestatements of income and retained earnings.
(2) Information about each geographic area(a) Net sales
Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenue on the statements of income andretained 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, plant andequipment on the balance sheets.
(3) Information about each major customer
Disclosure is omitted because no net sales to a single external customer accounts for more than 10% of the operating revenue on the statements of income
and retained earnings.

18. INVESTMENT AND RENTAL PROPERTIESKRR owns retail properties and logistics facility for rental purposes mainly in the four major metropolitan areas and other regional areas of Japan.
The book value and fair value concerning the above real estate for rental purposes are as follows.
From October 1, 2022

From April 1, 2022

to March 31, 2023

to September 30, 2022
(in thousands of yen)Book value
Balance at the beginning of the period¥253,736,770¥247,974,742

Changes during the period

16,630,209

5,762,028

Balance at the end of the period

270,366,979

253,736,770¥291,694,000¥274,185,000

Fair value at the end of the period

Note 1: Book value is acquisition cost less accumulated depreciation.
Note 2: Among changes in the amount of real estate for rental purposes that occurred during the 15th fiscal period, the principal increase was the acquisitionof real estate trust beneficiary interest in 2 properties totaling 5,221,986 thousand yen and the additional acquisition of 1 real estate trust beneficiaryinterest amounting to 1,221,185 thousand yen and the principal decrease was the depreciation of 1,244,488 thousand yen and during the 16th fiscal
period, the principal increase was the acquisition of real estate trust beneficiary interest in 2 properties totaling 16,300,622 thousand yen andadditional acquisition of 1 real estate trust beneficiary interests amounting to 182,058 thousand yen and conversion work for 1 real estate trust
amounted to 1,238,127 thousand yen and the principal decrease was the depreciation of 1,351,341 thousand yen.
Note 3: The fair value at the end of the period is the appraisal value determined by outside appraisers.
The profit or loss for the periods ended March 31, 2023 and September 30, 2022 concerning investment and rental properties is included in Note “7.
BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES AND GAIN ON SALES OF REAL ESTATEPROPERTY.”20

19. PER UNIT INFORMATION
From October 1, 2022

From April 1, 2022

to March 31, 2023

to September 30, 2022

Net asset value per unit
Net income per unit

¥236,751¥236,059¥6,535¥6,484

Net income per unit is calculated by dividing net income by the day-weighted average number of investment units outstanding during the fiscal period
ended March 31, 2023(600,199 units) and during the fiscal period ended September 30, 2022 (582,177 units). Net income per unit after adjusting forresidual units is not included because there were no residual investment units.
The basis for calculating net income per unit is as follows:

Net income (in thousands of yen)
Net income not attributable to ordinary unitholders (in thousands of yen)
Net income attributable to ordinary unitholders (in thousands of yen)
Weighted average number of units during the period (units)

From October 1, 2022

From April 1, 2022

to March 31, 2023

to September 30, 2022

¥3,922,396¥3,774,920--¥3,922,396¥3,774,920

600,199

582,177

20. SIGNIFICANT SUBSEQUENT EVENTS
Kenedix Office Investment Corporation (“KDO”), Kenedix Residential Next Investment Corporation (“KDR”) and Kenedix Retail REIT Corporation (“KRR”;
and KRR, KDO, and KDR are collectively referred to as “Each REIT”) announced that each of them has, at Each REIT’s Board of Directors Meeting held on
June 13, 2023, resolved to undertake an absorption-type merger, with November 1, 2023 as the effective date, whereby KDO will be the surviving
corporation and KDR and KRR will be the dissolving corporations in the merger (the “Merger”), and have today also executed a merger agreement (the“Merger Agreement”) as follows.
1. Purpose of the Merger
The Japanese economy is making a moderate recovery as movement restrictions to prevent the spread of COVID-19 infections was removed, and its
economic and social activities are being normalized. However, there are uncertain factors in the economic conditions in and outside Japan such aschanges in the global affairs, emergence of geopolitical risks and effects of economic sanctions related to these risks as a result of the invasion of
Ukraine by Russia, continuous global inflation related to rising commodity prices and fuel costs, increase of the policy interest rates by majorcountries, and bankruptcies of overseas financial institutions.
In such environment, the current real estate investment trust securities market (the “J-REIT market”) is unstable and affected by the concern for rising
operational costs due to inflation and the fear for the rise in the long-term interest rates due to future changes of the monetary policies by the Bank ofJapan.
The asset management company of Each REIT, Kenedix Real Estate Fund Management, Inc. (“KFM”), was established as follows: Kenedix
Residential Partners, Inc. established in March 2011 merged with Kenedix Office Partners, Inc. and Kenedix Advisors, Inc. (both established in
November 2003) in October 2013 in an absorption-type merger, and changed its corporate name to the current name of the asset managementcompany. Each REIT has received sponsor support from Kenedix, Inc., the parent company of KFM, and its group companies and has achieved
operational results.
Each REIT has implemented various measures to ensure the acquisition of stable profits and the continued growth of investment assets by leveraging
each characteristic.
However, the real estate market’s evaluations of the mid-sized office buildings, which are KDO’s main investment target, have not changed becauseof their scarcity and liquidity. Thus, the capitalization rate remains low and it remains hard to acquire mid-sized office buildings. Moreover, recently, unit
prices of KDO are significantly below NAV per unit due to the concern for the market outlook regarding secondary vacancies and rent decline due tolarge supplies of large office buildings, and there are limited opportunities for external growth that involve public offering. Therefore, there are issues
with ensuring continued future growth. As for KDR, although KDR has conducted public offerings for five consecutive years, there is the possibility thatthe acquisition competition may escalate and the acquisition opportunities may decrease due to the relatively stable profitability of residential
properties, and recently unit price is below NAV per unit. Moreover, KDR’s LTV is relatively high in the J-REIT market, and KDR has concerns
regarding the increase in costs when interest rates are rising. As for KRR, although KRR has a rich real estate pipeline, it has been increasingly21difficult to acquire shopping centers for daily needs since the COVID-19 pandemic. In addition, there are concerns over increase in costs caused byinflation, and there are issues such as limited room for the future internal growth as a whole due to the long-term fixed rents.
Moreover, Each REIT is watching the trends of interest levels and price levels such as costs of utilities, which may have an impact on the profitabilityof their portfolios in the future, and Each REIT recognizes this situation as their common issues.
In such circumstances, Each REIT agreed to start negotiation for merger and carefully deliberated on the issues in order to deal with the issues
described above, respond flexibly to environmental changes and attain continued growth. As a result, Each REIT came to the same conclusion that
the Merger will contribute to maximize unitholders’ value by leading to the continued growth by expanding investment target sectors, improving theirpresence and stability in the market by increasing the sizes of their assets, and enabling more commitment for sustainability. Therefore, the Merger
Agreement was made and entered into by and among Each REIT today.
Each REIT considers that the Merger has the following rationale:i)

Sustainable growth driven by expansion of investment universe
The New REIT (defined below) will continue to focus on their main investment target, i.e. mid-sized office buildings, residential properties,
healthcare facilities, and shopping centers for daily needs, and it will start to additionally focus on logistics facilities and hotels, in which Each
REIT has conducted only limited investments until now, to increase opportunities for acquisitions. In addition, the Merger will enable asset
reshuffling among different asset types, disposing of properties with less competitiveness or profitability, allow flexibly to the changes of theexternal environment surrounding the real estate market, and activate the investments in the investment target sectors that are expected togrow, and thus leading to the improvement of portfolio profitability. As described above, the New REIT aims to attain continued growth beyond
the boundary of the strategic management for the existing specialized REIT through a strategic management that ensures a wide range ofopportunities for acquisitions and flexibility related to the expansion of the investment target sectors.

ii) Improvement in the market presence and ability
Through the Merger, the asset size of the investment corporation after the Merger (the “New REIT”) will be ranked third in the J-REIT
market(Note 1) and this will significantly improve the presence in the market and liquidity of investment units, and the portfolio is expected to own
a total of 350(Note2) properties after the Merger. Having the largest expected number of properties in the J-REIT market will enhancediversification and contribute to improve the stability of the portfolio. In addition, a property manager that leverages the advantage of its scale
will contribute to increase resilience against the pressure of the rising costs.

iii) Further commitment to sustainability
Each REIT has recognized sustainability as a significant issue and has taken the initiative in implementing various initiatives. Specifically, KDO
has become the first investment corporation in the J-REIT market to participate in GRESB Real Estate Assessment, KDR was the first J-REIT
to issue social bonds, and KRR was the first J-REIT to introduce investment unit performance fee. The New REIT plans to integrate andelevate expertise accumulated by Each REIT through the Merger and aims to be a leading company in the sustainability initiatives. Moreover,
the New REIT plans to further enforce the sustainability initiatives under the management system with a high degree of specialization anddiversity by introducing a new management fee structure that is linked to unitholder value and sustainability metric, improving governancethrough the enhancement of supervisory officers, and promoting diversity.
(Note 1) The amount of asset size after the Merger is calculated by totaling the asset size of Each REIT. The asset size of KDO is assumed
to be the total of acquisition price of the properties in the portfolio as of April 30, 2023, plus the acquisition (scheduled) pricereflecting the acquisitions and sales (including one that are scheduled) of the properties from May 1, 2023 to the effective date of the
Merger. The asset size of KDR and KRR is considered to be the appraisal values of the properties as of the end of the latest fiscal
period (relating to KDR, as of January 31, 2023 (provided, however, that, this includes the acquisitions of Sunny Life Tachikawa andRehabili-home Bon Sejour Minamisenzoku; relating to KRR, as of March 31, 2023). The asset sizes of the other investment
corporations in the J-REIT market are calculated based on the asset sizes including any properties that the other investment
corporations announced the acquisition and sale thereof in the J-REIT market as of April 30, 2023 (acquisition (scheduled) pricebasis). Therefore, it is not guaranteed that the New REIT after the Merger will have the third largest asset size in the J-REIT market
as of the effective date of the Merger. In regard to the asset size after the Merger, because it is planned that assets of KDR and KRR
will be succeeded at market price based on the purchase method by KDO as the acquiring corporation, the asset size will not be asimple sum of the total (scheduled) acquisition price of KDO and the total appraisal values of KDR and KRR as of the end of thelatest accounting period.
(Note 2) The number of properties of the portfolio after the Merger is based on the number of properties of KDO, KDR and KRR as of thedate hereof and reflecting the change in the number of the acquisitions and sales of the properties (including ones that arescheduled) by the effective date of the Merger. KDX Chofu Building is treated as one property in the calculation of the number of22

properties of the portfolio after the Merger though KDO owns its office tower and KRR owns its retail wing respectively as of today.
The numbers of the properties of the other investment corporations in the J-REIT market is calculated based on the number ofproperties including those that the other investment corporations announced acquisition and sale thereof in the J-REIT market as ofApril 30, 2023. Therefore, it is not guaranteed that the portfolio of the New REIT after the Merger will have the largest number ofproperties in the J-REIT market as of the effective date of the Merger.
2. Form of the Merger
KDO will be the surviving corporation under an absorption-type merger and KDR and KRR will be dissolved in the Merger.
3. Allocation of Investment Units under the Merger
KDO

KDR

KRR

(Surviving corporation in the(Dissolving corporation in the(Dissolving corporation in theabsorption-type merger)

absorption-type merger)

absorption-type merger)

1.34

1.68

Allocation of investment units
under the Merger

1(Reference)(Reference)

Before the Investment Unit Split

Before the Investment Unit Split

0.67

0.84

(Note 1) The number of new KDO investment units to be issued as a result of the Merger (the number of units taking into account the Investment Unit Split of KDO):
2,446,037(Note 2) KDO plans to split one investment unit into 2 investment units with October 31, 2023 as the record date for splitting
the investment units and November 1, 2023 as the effective date of the split; the allocation ratio shown above and the number of the New Investment units
KDO will allocate and deliver are subject to the Investment Unit Split taking effect. If 0.67 KDO investment units are allocated and delivered against 1 KDR
investment unit and 0.84 KDO investment units are allocated and delivered against 1 KRR investment unit on the basis of the merger ratio before theInvestment Unit Split, there will be many unitholders of KDR and KRR being allocated fractions of less than one KDO investment unit. To make it possible forunitholders of KDR and KRR to continue holding KDO investment units after the Merger, a split of KDO investment units will be carried out before the allocation
towards unitholders of KDR and KRR, in the ratio of two KDO investment units to one KDO investment unit for the purpose of delivering to all unitholders of
KDR and KRR at least one KDO investment unit, and 1.34 KDO investment unit post- Investment Unit Split will be allocated and delivered for every one KDR
investment unit and 1.68 KDO investment unit post- Investment Unit Split will be allocated and delivered every one KRR investment unit.

4. Delivery of Payment upon the Merger
In addition to the above mentioned investment units, KDO intends to pay unitholders of KDR and KRR (the unitholders stated or recorded in the final
unitholders’ registers of KDR and KRR on the day before the effective date of the Merger (excluding Each REIT and unitholders of KDR and KRR who
has demanded the purchase of their investment units pursuant to Article 149-3 of the Act on Investment Trusts and Investment Corporations(excluding those who have withdrawn such demand for purchase) (hereinafter referred to as the “Unitholders Subject to Allocation”))), in lieu of cash
distributions (distributions of profits) for the last fiscal period of KDR and KRR which ends the day before the effective date of the Merger, the Payment
upon the Merger in the form of cash distributions based on distributable income of KDR and KRR for that same period of an amount (disregarding
fractions of a yen) which is the quotient resulting from a division of the amount of distributable income of KDR and KRR on the date before theeffective date of the Merger by the number of issued investment units of KDR and KRR on that date as reduced by the number of investment units
held by unitholders other than the Unitholders Subject to Allocation. The Payment upon the Merger will be paid within a reasonable period from theeffective date of the Merger.

23

5. Overview of the Previous Fiscal Period for KDO and KDR
Overview of the Previous Fiscal Period (ending April 30, 2023) for KDO
Business： To invest assets mainly in specified assets as set forth in the Investment Trust Act

Operating Revenue：17,290 million yen

Net Profit：7,205 million yen

Total Assets：474,274 million yen

Total Liabilities：243,791 million yen

Net Assets：230,482 million yen

Overview of the Previous Fiscal Period (ending January 31, 2023) for KDR
Business： To invest assets mainly in specified assets as set forth in the Investment Trust Act

Operating Revenue：9,936 million yen

Net Profit：4,593 million yen

Total Assets：327,014 million yen

Total Liabilities：175,381 million yen

Net Assets：151,632 million yen

6. Time of the Merger
Effective date of the Merger： November 1, 2023 (planned)

2421. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Property, plant and equipment and intangible assets consist of the following as of March 31, 2023
Type of asset

Balance atthebeginning of
the period

Increaseduring theperiodBuildings¥773,703¥14,754

Structures

46,777

Decreaseduring theperiodDepreciation
for the periodNetbalance atthe end of
the period

Depreciation

Balance atthe end of
the period

Accumulated
depreciation

Remarks(in thousands of yen)

Land
Construction inprogress

Property,plant andequipment--¥788,457¥126,563¥16,580¥661,894--

46,777

9,632

1,402

37,144

2,956,465--

2,956,465--

2,956,465

20,666-

20,666----

Subtotal

3,797,612

14,754

20,666

3,791,700

136,195

17,982

3,655,504

Buildings in trust

72,000,294

7,948,265-

79,948,559

12,636,690

1,232,742

67,311,868

Structures in trust

3,646,089

294,351-

3,940,441

846,266

72,137

3,094,175

Machinery andequipment in trust

339,316

28,598-367,914

81,196

10,264

286,718

Tools, furniture,and fixtures in trust

191,805

9,155-

200,960

114,079

14,23586,881

181,272,334

9,946,206-

191,218,540--

191,218,540

238,915-

238,915

-

-

-

-

257,688,755

18,226,576

238,915275,676,417

13,678,232

1,329,380

261,998,184

261,486,368

18,241,331

259,582

279,468,117

13,814,428

1,347,363

265,653,689

4,774,948--

4,774,948

64,983

3,978

4,709,965

16,719690-

17,41013,303

1,143

4,106

¥4,791,668

¥690

-

¥4,792,358¥78,287¥5,121¥4,714,071

Land in trust
Construction inprogress in trust
Subtotal
Total
Leasehold right in
trust

Intangible
assets

¥

Other

Total

¥

*1

*1

*1 The amount of increase during the period is primarily attributable to the acquisition of the real estate properties and capital expenditures.

Property, plant and equipment and intangible assets consist of the following as of September 30, 2022
Type of asset

Balance atthebeginning of
the period

Increaseduring theperiodBuildings¥764,808¥8,895Structures

46,777Land
Construction inprogress

Decreaseduring theperiodBalance atthe end of
the period

Depreciation
for the periodNetbalance atthe end of
the period

Depreciation
Accumulated
depreciation

Remarks(in thousands of yen)

Property,plant andequipment-¥773,703¥109,983¥16,051¥663,720--

46,777

8,230

1,402

38,547

2,956,465--

2,956,465--

2,956,465-

20,666-

20,666--

20,666

Subtotal

3,768,051

29,561-

3,797,612

118,213

17,454

3,679,399

Buildings in trust

70,054,703

1,945,590-

72,000,294

11,403,948

1,131,721

60,596,346

Structures in trust

3,495,870

150,219-

3,646,089

774,128

68,3102,871,961

Machinery andequipment in trust

308,571

30,744-

339,316

70,931

9,367

268,384

Tools, furniture andfixtures in trust

183,5128,293-

191,805

99,843

13,656

91,961

176,940,236

4,332,098-

181,272,334--

181,272,334

153,057

92,254

6,397

238,915--

238,915251,135,951

6,559,201

6,397

257,688,755

12,348,851

1,223,055

245,339,903

254,904,002

6,588,763

6,397

261,486,368

12,467,065

1,240,509

249,019,303

4,349,916

425,032-

4,774,948

61,0043,978

4,713,944-

16,71912,160

1,136

4,558

-

¥4,791,668¥73,165¥5,114¥4,718,502

Land in trust
Construction inprogress in trust
Subtotal
Total
Intangible
assets
Total

Leasehold right in
trust
Other

16,719-¥4,366,636¥ 425,032

¥

¥

*1

*1 The amount of increase during the period is primarily attributable to the acquisition of the real estate properties.

25

22. SHORT-TERM LOANS PAYABLE AND LONG-TERM LOANS PAYABLE
The following summarizes short-term loans payable and long-term loans payable outstanding as of March 31, 2023:
Classification
LenderBalance at the
beginning of theperiodIncreaseduring theperiodDecreaseduring theperiodAverageinterest rate
（Note 2）
（Note 3）

Balance atthe end of
the period(in thousands of yen)

ShortTerm
Loans
PayableCurrent
portion of
long-term
loans
payableSumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Trust Bank, Ltd.

Payment due
date（Note 4）-750,000-

0.463

January 31,
2023-

1,000,000-

1,000,000

0.412

October 31,
2023-

750,000-

750,000

0.402

January 31,
2024-

600,000-

600,000

Mizuho Bank, Ltd.

-

400,000-

400,000

0.363

Mizuho Trust &Banking Co., Ltd.

March 31,2024-

400,000-

400,000

Sub Total

750,000

3,150,000

750,000

3,150,000

Sumitomo Mitsui
Banking
Corporation

1,000,000-

1,000,000

-

0.467

October 31,
2022

MUFG Bank, Ltd.

1,000,000-

1,000,000-

Sumitomo Mitsui
Trust Bank, Ltd.

600,000-

600,000-

Mizuho Bank, Ltd.

400,000-

400,000-

Resona Bank,
Ltd.

400,000-

400,000-

0.975

March 31,2023

Mizuho Trust &Banking Co., Ltd.

400,000-

400,000-

MUFG Bank, Ltd.

400,000-

400,000-

Development
Bank of Japan
Inc.（Note 6）

1,500,000-

1,500,000

-

0.994

March 31,2023

MUFG Bank, Ltd.

450,000-

450,000-

200,000-

200,000-

0.987

March 31,2023

Sub Total

Remarks(Note 5)

Unsecured/
Unguaranteed(Note 5)

Unsecured/
Nonguaranteed(%)

750,000

Resona Bank,Ltd.
The Musashino
Bank, Ltd.
Development
Bank of Japan
Inc.(Note 6)
MUFG Bank, Ltd.
（Note 6）
Sumitomo Mitsui
Banking
Corporation（Note 7）
Mizuho Bank, Ltd.
（Note 7）
MUFG Bank, Ltd.
（Note 7）
Mizuho Trust &Banking Co., Ltd.
（Note 7）
Sumitomo Mitsui
Trust Bank, Ltd.
（Note 7）
Resona Bank,
Ltd. （Note 7）

Use

150,000-

150,000-

1,500,000-

1,500,000

-

1.013

March 31,2023

500,000--

500,000

0.670

September
29, 2023

3,000,000--

3,000,000

1,150,000--

1,150,000

1,000,000--

1,000,000
1.110

March 31,2024

700,000--

700,000

650,000--

650,000

500,000--

500,000

15,500,000-

8,000,000

7,500,000

26

Classification
LenderBalance at the
beginning of theperiodIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)
Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Banking
Corporation
MUFG Bank, Ltd.
Sumitomo Mitsui
Trust Bank, Ltd.
Development
Bank of Japan
Inc.(Note 6)
Sumitomo Mitsui
Banking
Corporation
MUFG Bank, Ltd.
Development
Bank of Japan
Inc. (Note 6)
Mizuho Trust &Banking Co., Ltd.
(Note 6)
Resona Bank,
Ltd.
Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Trust Bank, Ltd.
Aozora Bank, Ltd.
Long-Term
Loans
PayableResona Bank,Ltd.
MUFG Bank, Ltd.
(Note 6)
Mizuho Bank, Ltd.
(Note 6)Development
Bank of Japan
Inc. (Note 6)
Mizuho Trust &Banking Co., Ltd.
(Note 6)
MUFG Bank, Ltd.
(Note 6)
Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Trust Bank, Ltd.
Resona Bank,Ltd.
Development
Bank of Japan
Inc. (Note 6)
Mizuho Bank, Ltd.
(Note 6)
Mizuho Trust &Banking Co., Ltd.
(Note 6)
Sumitomo Mitsui
Trust Bank, Ltd.
MUFG Bank, Ltd.
(Note 6)
Mizuho Bank, Ltd.
(Note 6)
Sumitomo Mitsui
Trust Bank, Ltd.

Averageinterest rate
（Note 2）
（Note 3）

Payment due
date（Note 4）Use

Remarks(Note 5)

Unsecured/
Nonguaranteed

(%)
1.366

April 16,
2025

1.243

April 16,2025

450,000

0.803

September
30, 2024-

890,000

0.760

September
30, 2024--

2,670,000

0.932

April 21,2026

890,000--

890,000

0.888

October 31,
2025

2,000,000--

2,000,000

1.049

1,000,000--

1,000,000

1.049

500,000--

500,000

1.002

1,500,000--

1,500,000

400,000--

400,000

400,000--

400,000

300,000--

300,000

600,000--

600,000

0.696

600,000--

600,000

0.815

500,000--

500,000

0.814

200,000--

200,000

0.814

500,000--

500,000

0.903

October 31,
2026

500,000--

500,000

500,000--

500,000

1.033

May 18,2027

400,000--

400,000

500,000--

500,000

1.050

500,000--

500,000

1.049

300,000--

300,000

1.050

1,500,000--

1,500,000

0.918

500,000--

500,000

0.930

1,500,000--

1,500,000

1.029

1,500,000--

1,500,000

1.100

4,600,000--

4,600,000

1,500,000--

1,500,000

400,000--

400,000

450,000--

890,000-

2,670,000

0.772January 31,
2027

October 31,
2024

October 31,
2024

May 18,2027

September
30, 2026
September
29, 2027
September
29, 2028

27

Classification
LenderBalance at the
beginning of theperiodIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)
Sumitomo Mitsui
Banking
Corporation
MUFG Bank, Ltd.
(Note 6)
Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Banking
Corporation-

500,000

1.035

October 3,
2027

1,200,000--

1,200,000

1.000

February 10,2028

900,000--

900,000

0.988

April 30,2027

2,600,000--

2,600,000

0.985

April 30,2027

2,000,000--

2,000,000

0.902

April 30,2026

1,000,000--

1,000,000

1.090

1,000,000--

1,000,000

0.907

1,500,000--

1,500,000

0.999

500,000--

500,000

0.900

500,000--

500,000

0.999

500,000--

500,000

0.999

700,000--

700,000

0.913

700,000--

700,000

0.726

500,000--

500,000

0.676

Aozora Bank, Ltd.

500,000--

500,000

0.726

Mizuho Bank, Ltd.
The Musashino
Bank, Ltd.
Sumitomo Mitsui
Banking
Corporation

400,000--

400,000

0.726

400,000--

400,000

0.676

1,850,000--

1,850,000

0.910

MUFG Bank, Ltd.
Resona Bank,
Ltd.

1,300,000--

1,300,000

0.860

650,000--

650,000

0.460

Aozora Bank, Ltd.

890,000--

890,000

0.585

Mizuho Bank, Ltd.

1,370,000--

1,370,000

0.718

Sumitomo Mitsui
Trust Bank, Ltd.

820,000--

820,000

0.550

MUFG Bank, Ltd.

1,270,000--

1,270,000

0.750

Mizuho Bank, Ltd.

payableMizuho Trust &Banking Co., Ltd.
Nippon Life
Insurance
Company
Sumitomo Mitsui
Trust Bank, Ltd.
Resona Bank,
Ltd.

Mizuho Trust &Banking Co., Ltd.
(Note 6)
MUFG Bank, Ltd.
(Note 6)
Sumitomo Mitsui
Banking
Corporation

650,000--

650,000

0.670

1,500,000--

1,500,000

0.520

1,000,000--

1,000,000

0.644Mizuho Bank, Ltd.

1,000,000--

1,000,000

0.644

500,000--

500,000

0.550

300,000--

300,000

0.644

500,000--

500,000

0.830

Mizuho Trust &Banking Co., Ltd.
(Note 6)
Resona Bank,Ltd.
Development
Bank of Japan
Inc. (Note 6)

Use

Remarks(Note 5)

Unsecured/
Nonguaranteed(%)-

The Bank ofFukuoka, Ltd.
Sumitomo Mitsui
Banking
Corporation
MUFG Bank, Ltd.
(Note 6)loans

Payment due
date（Note 4）500,000

Mizuho Bank, Ltd.

Long-term

Averageinterest rate
（Note 2）
（Note 3）

April 30,2028
May 31,
2026

May 31,2027

March 31,2025

March 31,2026

March 31,2028
August 31,
2024
August 31,
2026
March 31,2028
October 31,
2024
January 31,
2028
April 30,
2028

October 31,
2026

October 31,
2029

28

Classification
LenderBalance at the
beginning of theperiodIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)
The Gunma Bank,Ltd.
The Musashino
Bank, Ltd.(Note 6)
Sumitomo Mitsui
Banking
Corporation
Aozora Bank, Ltd.
Sumitomo Mitsui
Banking
Corporation
MUFG Bank, Ltd.
Sumitomo Mitsui
Trust Bank, Ltd.
Resona Bank,
Ltd.
Mizuho Bank, Ltd.
Development
Bank of Japan
Inc. (Note 6)
Sumitomo Mitsui
Banking
Corporation
MUFG Bank, Ltd.
Sumitomo Mitsui
Trust Bank, Ltd.
Resona Bank,
Ltd.
Aozora Bank, Ltd.

--

400,000

0.498

400,000--

400,000

0.478

700,000--

700,000

0.758

September
30, 2028

450,000--

450,000

0.725

January 31,2029

3,000,000--

3,000,000

700,000--

700,000
0.809

January 31,
2030

0.888

January 31,
2031

0.535

February 28,
2026

500,000--

500,000

450,000--

450,000

400,000--

400,000-

1,500,000

2,400,000--

2,400,000

1,600,000--

1,600,000

550,000--

550,000

500,000--

500,000

500,000--

500,000

350,000--

350,000

300,000--

300,000

600,000--

600,000

500,000--

500,000

400,000--

400,000

500,000--

500,000

500,000--

500,000

200,000--

200,000

1,000,000--

400,000-

1,600,000

Mizuho Bank, Ltd.
Sumitomo Mitsui
Trust Bank, Ltd.
Resona Bank,Ltd.
MUFG Bank, Ltd.
(Note 6)Development
Bank of Japan
Inc. (Note 6)
The 77 Bank, Ltd.
The Musashino
Bank,Ltd. (Note 6)

Mizuho Bank, Ltd.
Resona Bank,Ltd.
MUFG Bank, Ltd.
(Note 6)
Aozora Bank, Ltd.
Mizuho Trust &Banking Co., Ltd.
Sumitomo Mitsui
Banking
Corporation
MUFG Bank, Ltd.
(Note 6)
Sumitomo Mitsui
Banking
Corporation

Use

Remarks(Note 5)

Unsecured/
Nonguaranteed

January 31,
2025
January 31,
2025

400,000-

Mizuho Trust &Banking Co., Ltd.
Sumitomo Mitsui
Banking
Corporation

Payment due
date（Note 4）(%)

1,500,000

Mizuho Bank, Ltd.
Long-term
loans
payableAverageinterest rate
（Note 2）
（Note 3）0.407

April 30,
2025

0.400

April 30,
2025

0.461

April 30,2026

1,000,000

0.490

October 31,
2026-

400,000

0.475

October 31,
2026

-

-

1,600,000

400,000--

400,000

0.548

300,000--

300,000

October 31,
2027

300,000--

300,000

600,000--

600,000

0.525

October 31,
2027

500,000--

500,000

0.856

April 30,2031

500,000--

500,000

0.426

500,000--

500,000

0.350

April 30,2026

29

Classification
LenderBalance at the
beginning of theperiodIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)
Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Trust Bank, Ltd.
Mizuho Trust &Banking Co., Ltd.

--

800,000

700,000--

700,000

600,000--

600,000

Aozora Bank, Ltd.

600,000--

600,000

Mizuho Bank, Ltd.
MUFG Bank, Ltd.
(Note 6)
SUMITOMO LIFE
INSURANCECOMPANY (Note6)
Development
Bank of Japan
Inc. (Note 6)

500,000--

500,000

500,000--

500,000

0.601

0.601

Remarks

500,000

300,000--

300,000

0.824

Mizuho Bank, Ltd.

500,000--

500,000

0.357

MUFG Bank, Ltd.
(Note 6)200,000--

200,000

0.525

Aozora Bank, Ltd.

200,000--

200,000

0.601

The Gunma Bank,
Ltd. (Note 6)

500,000--

500,000

0.450

The Bank ofFukuoka, Ltd.

500,000--

500,000--

500,000

800,000--

800,000

700,000--

700,000

The Yamaguchi
Bank, Ltd.
The Higo Bank,
Ltd.
Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Trust Bank, Ltd.
Mizuho Trust &Banking Co., Ltd.

(Note 5)

Unsecured/
Nonguaranteed

500,000--

500,000

2,600,000--

2,600,000

600,000--

600,000

400,000--

400,000

Aozora Bank, Ltd.

400,000--

400,000

Mizuho Bank, Ltd.

300,000--

300,000

300,000--

300,000

800,000

-

-

2028

April 30,2031-

500,000

April 30,

April 30,2028-

1,600,000

Use

April 30,
2028

0.550
500,000

Resona Bank,Ltd.
MUFG Bank, Ltd.
(Note 6)Development
Bank of JapanInc.
Mizuho Bank, Ltd.
(Note 6)
MUFG Bank, Ltd.
(Note 6)
SUMITOMO LIFE
INSURANCECOMPANY(Note 6)
Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Trust Bank, Ltd.
Mizuho Trust &Banking Co., Ltd.
Shinkin Central
Bank

Payment due
date（Note 4）(%)

800,000

The Nishi-Nippon
City Bank, Ltd.
SBI Shinsei Bank,
Ltd. （Note 8）Long-term
loans
payableAverageinterest rate
（Note 2）
（Note 3）

April 30,
2024
October 31,
2027
April 30,2028
September
30, 2026

0.387

March 31,
2026

0.599

September
30, 2029

0.722

January 31,
2029

800,000

0.640

January 31,2029-

1,600,000

0.879

January 31,
2031
February 28,
2027

600,000--

600,000

0.604

950,000--

950,000

0.800

500,000--

500,000

0.720-

500,000-

500,000-

400,000-

400,000-

300,000-

300,000-

500,000-

500,000

August 31,
2029

0.387

April 30,
2024

0.720

September
30, 202630

Classification
LenderBalance at the
beginning of theperiodIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)
Resona Bank,Ltd.
MUFG Bank, Ltd.
（Note 6）
Sumitomo Mitsui
Banking
Corporation
Shinkin Central
Bank

SBI Shinsei Bank,
Ltd.（Note 6）（Note 8）Kansai Mirai
Bank, Ltd.（Note6）
SBI Shinsei Bank,
Ltd.（Note 6）（Note 8）MUFG Bank, Ltd.
（Note 6）Development
Bank of Japan
Inc.（Note 6）
Development
Bank of Japan
Inc.（Note 6）
Resona Bank,
Ltd.（Note 6）
The Musashino
Bank, Ltd. （Note6）
Sub Total

Total

Payment due
date（Note 4）-400,000-

400,000

0.720

September-

500,000-

500,000

0.647

30, 2026-

500,000-

500,000-

500,000-

500,000-

300,000-

300,000

0.897-

500,000-

500,000

0.790-

600,000-

600,000

0.620-

500,000-

500,000

0.430-

1,350,000-

1,350,000

0.549

-

1,500,000-

1,500,000

0.717

-

1,500,000-

1,500,000
0.840-

600,000-

600,000-

150,000-

150,000-

108,650,000

98,050,000

10,600,000¥ 114,300,000¥13,750,000

Use

Remarks(Note 5)

Unsecured/
Nonguaranteed(%)

April 30,

0.897

Mizuho Bank, Ltd.

Long-term
loans
payableAverageinterest rate
（Note 2）
（Note 3）

¥ 8,750,000

0.703

2028
April 30,
2028
October 31,
2028
September
30, 2030
March 31,2026
March 31,2027
September
30, 2028
September
30, 2029
March 31,2030

¥119,300,000

Note 1: Annual repayments of long-term loans payable (except for current portion of long-term loans payable) scheduled after the balance sheet date are as follows:
Due after 1 year
through 2 years
Long-term loans payable¥ 10,510,000

Due after 2 years
through 3 years¥19,590,000

Due after 3 years
through 4 years（in thousands yen）
¥ 23,310,000

Due after 4 years
through 5 years¥ 22,090,000

Due after 5 years¥ 33,150,000

Note 2: All debts except for the following Note 6 are loans payable at a floating rate.
Note 3: Average interest rates are the weighted average during the period and figures are rounded to the nearest third decimal place. Also, with regard to loans payable forwhich interest rate swap transactions were implemented in order to hedge the interest rate volatility risk, the weighted average interest rates taking into consideration
the effects of the interest rate swaps are indicated.
Note 4: All the repayment methods of debt financing are lump-sum repayments on the due date.
Note 5: All debts were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate (additional expenses are included) and repayment ofdebts.
Note 6: Loans payable at a fixed rate.
Note 7: Borrowings are listed in the current portion of long-term loans payable from the fiscal period under review, listed in long-term loans payable in the previous fiscal
period.
Note 8: SBI Shinsei Bank, Limited. changed its trade name from "Shinsei Bank, Limited." on January 4, 2023.

31

The following summarizes short-term loans payable and long-term loans payable outstanding as of September 30, 2022:
Classification
LenderBalance at the
beginning of theperiodIncreaseduring theperiodDecreaseduring theperiodAverageinterest rate
（Note 2）
（Note 3）

Balance atthe end of
the period(in thousands of yen)

ShortTerm
Loans
PayableSumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Banking
Corporation(Note8)
Sub Total
MUFG Bank,
Ltd．
Mizuho Bank, Ltd.
Sumitomo Mitsui
Banking
Corporation
MUFG Bank, Ltd.
Sumitomo Mitsui
Trust Bank, Ltd.
Mizuho Bank, Ltd.

Current
portion of
long-term
loans
payable--750,000-

1,000,000

1,000,000-

750,000

1,000,000

1,000,000

750,000

1,250,000-

1,250,000-

800,000-

800,000-

1,000,000--

1,000,000

1,000,000--

1,000,000

600,000--

600,000

0.477

0.425

0.603

0.467

Unsecured/
Nonguaranteed

October 31,
2022

400,000--

400,000

Mizuho Trust &Banking Co., Ltd.

400,000

MUFG Bank, Ltd.

400,000--

400,000

1,500,000--

1,500,000

450,000--

450,000

200,000
150,000--

150,000

1,500,000--

1,500,000

1.013

March 31,2023

MUFG Bank, Ltd.
(Note 6)(Note 7)

500,000--

500,000

0.670

September
29, 2023

Sub Total

10,550,000-

2,050,000

8,500,000

4,600,000--

4,600,000

1.366

April 16,2025

3,000,000--

3,000,000

Mizuho Bank, Ltd.

1,150,000--

1,150,000

MUFG Bank, Ltd.

1,000,000--

1,000,000

1.110

March 31,2024

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

(Note 5)2022

400,000

Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Banking
Corporation

Unsecured/
UnguaranteedAugust 31,-

The Musashino
Bank, Ltd.
Development
Bank of Japan
Inc.(Note 6)(Note 5)
August 31,
2022-

Development
Bank of Japan
Inc.(Note 6)
MUFG Bank, Ltd.

Remarks

January 31,
2023

400,000

-

Use

(%)

Resona Bank,
Ltd.

Resona Bank, Ltd.

Long-Term
Loans
Payable750,000

Payment due
date（Note 4）-0.975

March 31,2023

400,000

200,000

700,000--

700,000

650,000--

650,000

Resona Bank, Ltd.

500,000--

500,000

Sumitomo Mitsui
Banking
Corporation

1,500,000--

1,500,000

MUFG Bank, Ltd.

400,000--

400,000

0.994

0.987

1.243

March 31,2023
March 31,2023

(Note 5)

Unsecured/
Nonguaranteed

April 16,2025

32

Classification
LenderBalance at the
beginning of theperiodIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)
Sumitomo Mitsui
Trust Bank, Ltd.

Payment due
date（Note 4）--450,000

0.803

September
30, 2024

890,000--

890,000

0.760

September
30, 2024

2,670,000--

2,670,000

0.932

April 21,2026

890,000--

890,000

0.888

October 31,
2025

2,000,000--

2,000,000

1.049

1,000,000--

1,000,000

1.049

Resona Bank, Ltd.

500,000--

500,000

1.002

Sumitomo Mitsui
Banking
Corporation

1,500,000--

1,500,000

Sumitomo Mitsui
Trust Bank, Ltd.

400,000--

400,000

Aozora Bank, Ltd.

400,000--

400,000

Resona Bank, Ltd.

300,000--

300,000

MUFG Bank, Ltd.
(Note 6)600,000--

600,000

0.696

Mizuho Bank, Ltd.
(Note 6)600,000--

600,000

0.815

MUFG Bank, Ltd.
Development
Bank of Japan Inc.
(Note 6)
Mizuho Trust &Banking Co., Ltd.
(Note 6)Development
Bank of Japan Inc.
(Note 6)
Mizuho Trust &Banking Co., Ltd.
(Note 6)0.772

October 31,
2024-

500,000

0.814

200,000--

200,000

0.814

500,000--

500,000

0.903

October 31,
2026

500,000--

500,000

500,000--

500,000

1.033

May 18,2027

400,000--

400,000

Development
Bank of Japan Inc.
(Note 6)500,000--

500,000

1.050

Mizuho Bank, Ltd.
(Note 6)500,000--

500,000

1.049

Mizuho Trust &Banking Co., Ltd.
(Note 6)300,000--

300,000

1.050

Sumitomo Mitsui
Trust Bank, Ltd.

1,500,000--

1,500,000

0.918

500,000--

500,000

0.930

1,500,000--

1,500,000

1.029

1,500,000--

1,500,000

1.100

Resona Bank, Ltd.

MUFG Bank, Ltd.
(Note 6)
Mizuho Bank, Ltd.
(Note 6)
Sumitomo Mitsui
Trust Bank, Ltd.

(Note 5)

Unsecured/
Nonguaranteed

October 31,
2024-

Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Trust Bank, Ltd.

Remarks

January 31,
2027

500,000

MUFG Bank, Ltd.
(Note 6)Use(%)

450,000

Development
Bank of Japan
Inc.(Note 6)
Sumitomo Mitsui
Banking
Corporation

Long-Term
Loans
PayableAverageinterest rate
（Note 2）
（Note 3）

May 18,2027

September
30, 2026
September
29, 2027
September
29, 2028

33

Classification
LenderBalance at the
beginning of theperiodIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)
Sumitomo Mitsui
Banking
Corporation
MUFG Bank, Ltd.
(Note 6)
Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Banking
Corporation
Mizuho Bank, Ltd.
The Bank ofFukuoka, Ltd.
Sumitomo Mitsui
Banking
Corporation
MUFG Bank, Ltd.
(Note 6)
Mizuho Bank, Ltd.
Mizuho Trust &Banking Co., Ltd.
NipponLife
Insurance
Company
Sumitomo Mitsui
Trust Bank, Ltd.
Resona Bank, Ltd.

Long-term
loans
payablePayment due
date（Note 4）--500,000

1.035

October 3,
2027

1,200,000--

1,200,000

1.000

February 10,2028

900,000--

900,000

0.988

April 30,2027

2,600,000--

2,600,000

0.985

April 30,2027

2,000,000--

2,000,000

0.902

April 30,2026

1,000,000--

1,000,000

1.090

1,000,000--

1,000,000

0.907

1,500,000--

1,500,000

0.999

500,000--

500,000

0.900

500,000--

500,000

0.999

500,000--

500,000

0.999

700,000--

700,000

0.913

700,000--

700,000

0.726

500,000--

500,000

0.676

500,000

0.726

400,000

0.726

500,000

Mizuho Bank, Ltd.

400,000(Note 5)

Unsecured/
Nonguaranteed

May 31,2027

March 31,2025

March 31,
2026

-

-

400,000

0.676

1,850,000--

1,850,000

0.910

MUFG Bank, Ltd.

1,300,000--

1,300,000

0.860

Resona Bank, Ltd.

650,000--

650,000

0.460

Aozora Bank, Ltd.

890,000--

890,000

0.585

Mizuho Bank, Ltd.

1,370,000--

1,370,000

0.718

Sumitomo Mitsui
Trust Bank, Ltd.

820,000--

820,000

0.550

MUFG Bank, Ltd.

1,270,000--

1,270,000

0.750

650,000--

650,000

0.670

1,500,000--

1,500,000

0.520

1,000,000--

1,000,000

0.644

1,000,000--

1,000,000

0.644Mizuho Trust &Banking Co., Ltd.
(Note 6)500,000--

500,000

0.550

Resona Bank, Ltd.

300,000--

300,000

0.644

500,000--

500,000

0.830

October 31,
2029

400,000--

400,000

0.498

January 31,
2025

Development
Bank of Japan Inc.
(Note 6)
The Gunma Bank,
Ltd.

Remarks

April 30,2028
May 31,
2026

400,000

Mizuho Trust &Banking Co., Ltd.
(Note 6)
MUFG Bank, Ltd.
(Note 6)
Sumitomo Mitsui
Banking
Corporation
Mizuho Bank, Ltd.

Use

(%)

500,000

Aozora Bank, Ltd.
The Musashino
Bank, Ltd.
Sumitomo Mitsui
Banking
Corporation

Averageinterest rate
（Note 2）
（Note 3）

March 31,2028
August 31,
2024
August 31,
2026
March 31,2028
October 31,
2024
January 31,
2028
April 30,
2028

October 31,
2026

34

Classification
LenderBalance at the
beginning of theperiodIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)
The Musashino
Bank, Ltd.(Note 6)
Sumitomo Mitsui
Banking
Corporation

Payment due
date（Note 4）--400,000

0.478

January 31,
2025

700,000--

700,000

0.758

September
30, 2028

450,000--

450,000

0.725

January 31,2029

3,000,000--

3,000,000

700,000--

700,000

500,000--

500,000

0.809

January 31,
2030

450,000-

450,000

400,000-

1,500,000--

1,500,000

0.888January 31,2031

2,400,000--

2,400,000

MUFG Bank, Ltd.
Sumitomo Mitsui
Trust Bank, Ltd.

1,600,000--

1,600,000

550,000--

550,000

Resona Bank, Ltd.

500,000

0.535

February 28,
2026

500,000

Mizuho Bank, Ltd.
Mizuho Trust &Banking Co., Ltd.
Sumitomo Mitsui
Banking
Corporation

350,000-

500,000

Aozora Bank, Ltd.

-

300,000--

300,000

600,000--

600,000

Mizuho Bank, Ltd.

500,000

0.407

April 30,2025

400,000-

500,000

Resona Bank, Ltd.
MUFG Bank, Ltd.
(Note 6)-500,000--

500,000

0.400

April 30,
2025

Aozora Bank, Ltd.
Mizuho Trust &Banking Co., Ltd.
Sumitomo Mitsui
Banking
Corporation
MUFG Bank, Ltd.
(Note 6)
Sumitomo Mitsui
Banking
Corporation
Mizuho Bank, Ltd.

500,000--

500,000

200,000--

200,000

0.461

April 30,2026

1,000,000--

1,000,000

0.490

October 31,
2026

400,000--

400,000

0.475

October 31,
2026

1,600,000--

1,600,000

400,000--

400,000

0.548

300,000--

October 31,
2027

300,000

Resona Bank, Ltd.
MUFG Bank, Ltd.
(Note 6)Development
Bank of Japan Inc.
(Note 6)300,000--

300,000

600,000--

600,000

0.525

October 31,
2027

500,000--

500,000

0.856

April 30,
2031

The 77 Bank, Ltd.

500,000--

500,000

0.426

500,000--

500,000

0.350

800,000--

800,000

700,000--

700,000

600,000--

600,000

Sumitomo Mitsui
Banking
Corporation
MUFG Bank, Ltd.
Sumitomo Mitsui
Trust Bank, Ltd.
Resona Bank, Ltd.
Mizuho Bank, Ltd.
Development
Bank of Japan Inc.
(Note 6)
Sumitomo Mitsui
Banking
Corporation

Sumitomo Mitsui
Trust Bank, Ltd.

The Musashino
Bank,Ltd. (Note 6)
Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Trust Bank, Ltd.
Mizuho Trust &Banking Co., Ltd.

Use

Remarks(Note 5)

Unsecured/
Nonguaranteed(%)

400,000

Aozora Bank, Ltd.

Long-term
loans
payableAverageinterest rate
（Note 2）
（Note 3）400,000

500,000
350,000

400,000

0.601

April 30,
2026
April 30,
2026

April 30,
2028

35

Classification

Balance at the
beginning of theperiodLenderIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)

500,000--

500,000

Mizuho Bank, Ltd.
MUFG Bank, Ltd.
(Note 6)
SUMITOMO LIFE
INSURANCECOMPANY (Note6)
Development
Bank of Japan Inc.
(Note 6)500,000

0.601

April 30,
2028

0.550

April 30,
2028

April 30,2031

500,000--

500,000

300,000--

300,000

0.824

Mizuho Bank, Ltd.

500,000--

500,000

0.357

MUFG Bank, Ltd.
(Note 6)200,000--

200,000

0.525

Aozora Bank, Ltd.

200,000--

200,000

0.601

The Gunma Bank,
Ltd. (Note 6)

500,000--

500,000

0.450

The Bank
Fukuoka, Ltd.

500,000-

500,000of

The Nishi-Nippon
City Bank, Ltd.
Shinsei Bank, Ltd.

Long-term
loans
payable600,000

500,000-

600,000

The Yamaguchi
Bank, Ltd.
The Higo Bank,
Ltd.
Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Trust Bank, Ltd.
Mizuho Trust &Banking Co., Ltd.
Aozora Bank, Ltd.

500,000--

500,000

800,000-

800,000

700,000-

500,000--

500,000-

2,600,000

2,600,000

700,000

March 31,
2026

0.599

September
30, 2029

0.722

January 31,
2029

-

-

600,000

400,000--

400,000

400,000-

400,000

800,000--

800,000

0.640

1,600,000--

1,600,000

0.879

-

600,000-

600,000

0.604-

950,000-

950,000

0.800-

500,000-

500,000

0.720

103,000,000

2,050,000-

105,050,000¥114,300,000¥3,050,000¥ 3,050,000¥114,300,000

300,000

Resona Bank, Ltd.

300,000

Total

-

Use

Remarks(Note 5)

Unsecured/
Nonguaranteed

April 30,
2024
October 31,
2027
April 30,2028
September
30, 2026

0.387

600,000

Mizuho Bank, Ltd.
MUFG Bank, Ltd.
(Note 6)Development
Bank of Japan Inc.
Mizuho Bank, Ltd.
(Note 6)
MUFG Bank, Ltd.
(Note 6)
SUMITOMO LIFE
INSURANCECOMPANY (Note6)
Sub Total-

Payment due
date（Note 4）(%)-

Aozora Bank, Ltd.

Averageinterest rate
（Note 2）
（Note 3）300,000
300,000
January 31,
2029
January 31,
2031
February 28,
2027
August 31,
2029

Note 1: Annual repayments of long-term loans payable (except for current portion of long-term loans payable) scheduled after the balance sheet date are as follows:
Due after 1 year
through 2 years
Long-term loans
payable¥ 9,490,000

Due after 2 years
through 3 years¥15,320,000

Due after 3 years
through 4 years（in thousands yen）
¥20,850,000

Due after 4 years
through 5 years¥21,500,000

Due after 5 years¥ 37,890,000

Note 2: All debts except for the following Note 6 are loans payable at a floating rate.
Note 3: Average interest rates are the weighted average during the period and figures are rounded to the nearest third decimal place. Also, with regard to loans payable forwhich interest rate swap transactions were implemented in order to hedge the interest rate volatility risk, the weighted average interest rates taking into consideration
the effects of the interest rate swaps are indicated.
Note 4: All the repayment methods of debt financing are lump-sum repayments on the due date.

36

Note 5: All debts were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate (additional expenses are included) and repayment ofdebts.
Note 6: Loans payable at a fixed rate.
Note 7: Borrowings are listed in the current portion of long-term loans payable from the fiscal period under review, listed in long-term loans payable in the previous fiscal
period.
Note8: Full prepayment of 1,000,000 thousand yen was made on June 30, 2022.

37

23. INVESTMENT CORPORATION BONDS
Outstanding investment corporation bonds as of March 31, 2023 are as follows.
SeriesDate of issue

Balance atthe beginningof period

Decreaseduring theperiodBalance at theend of period(in thousands of yen)
Second series of unsecured
investment corporation bonds(Note 1)
Fourth series of unsecured
investment corporation bonds(Note 1)Fifth series of unsecured
investment corporation bonds(Note 1)
Sixth series of unsecured
investment corporation bonds(Note 2)Seventh Series Unsecured
Investment Corporation
Bonds (Green Bonds) (Note1)
Eighth Series Unsecured
Investment Corporation
Bonds (Green Bonds) (Note
1)
Total

Interest rate

Repayment date

Use

(Note3)(%)

October 31,
2016¥1,000,000-¥1,000,000

0.600

October 30,
2026

August 31,
2017

2,000,000-

2,000,000

0.700

August 31,
2027

April 26,2018

2,000,000-

2,000,000

0.700

April 26,
2028

April 30,2020

1,000,000-

1,000,000

0.400

April 30,2025

January 28,2022

2,000,000-

2,000,000

0.460

January
28, 2032(Note5)June 22,2022

2,000,000-

2,000,000

0.500

October 29,
2027(Note5)-¥10,000,000¥10,000,000¥

Remarks(Note4)
Unsecured

Note 1: Ranking pari passu among the specified investment corporation bonds.
Note 2: Ranking pari passu among the specified investment corporation bonds and small private placement with restrictions on splits of denomination of each bond.
Note 3: Investment corporation bonds were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate and repayment of debts.
Note 4: Investment corporation bonds were used as the funds for repayment of debts.
Note 5: Investment corporation bonds were used as the funds for repayment of debts that were borrowed for the purpose to acquire the eligible green assets.
Note 6: Annual repayments of investment corporation bonds scheduled for the next five years after the balance sheet date are as follows.
Due in 1 year
or less
Investment
corporation bonds¥

Due after 1 year
through 2 years-¥

Due after 2 years
through 3 years(in thousands of yen)-

Due after 3 years
through 4 years¥1,000,000

Due after 4 years
through 5 years¥1,000,000¥4,000,000

Outstanding investment corporation bonds as of September 30, 2022 are as follows.
SeriesSecond series of unsecured
investment corporation bonds(Note 1)
Third series of unsecured
investment corporation bonds(Note 1)
Fourth series of unsecured
investment corporation bonds(Note 1)Fifth series of unsecured
investment corporation bonds(Note 1)
Sixth series of unsecured
investment corporation bonds(Note 2)Seventh Series Unsecured
Investment Corporation
Bonds (Green Bonds) (Note1)
Eighth Series Unsecured
Investment Corporation
Bonds (Green Bonds) (Note
1)
Total

Date of issue

Balance atthe beginningof period

Decrease
Balance at theduring theend of period
period(in thousands of yen)Interest rate

Repayment date

Use

(Note3)(%)

October 31,
2016

1,000,000-

1,000,000

0.600

October 30,
2026

August 31,
2017

1,000,000

1,000,000

-

0.320

August 31,
2022

August 31,
2017

2,000,000-

2,000,000

0.700

August 31,
2027

0.700

April 26,
2028

April 26,2018

2,000,000-

2,000,000

Remarks(Note4)
Unsecured

April 30,2020

1,000,000-

1,000,000

0.400

April 30,2025

January 28,2022

2,000,000-

2,000,000

0.460

January
28, 2032(Note5)June 22,
2022

-

-

2,000,000

0.500

October 29,
2027(Note6)¥9,000,000¥1,000,000¥10,000,000

Note 1: Ranking pari passu among the specified investment corporation bonds.
Note 2: Ranking pari passu among the specified investment corporation bonds and small private placement with restrictions on splits of denomination of each bond.
Note 3: Investment corporation bonds were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate and repayment of debts.

38

Note 4: Investment corporation bonds were used as the funds for repayment of debts.
Note 5: Investment corporation bonds were used as the funds for repayment of debts that were borrowed for the purpose to acquire the eligible green assets.
Note 6: Investment corporation bonds were used as the funds for repayment of Investment corporation bonds and debts that were borrowed for the purpose to acquire theeligible green assets.
Note 7: Annual repayments of investment corporation bonds scheduled for the next five years after the balance sheet date are as follows.
Due in 1 year
or less
Investment
corporation bonds¥

Due after 1 year
through 2 years-¥

Due after 2 years
through 3 years(in thousands of yen)-

¥1,000,000

Due after 3 years
through 4 years¥

Due after 4 years
through 5 years-¥3,000,000

24. DISTRIBUTIONS
From October 1, 2022
to March 31, 2023

From April 1, 2022
to September 30, 2022

I.. Retained earnings at the end of period¥3,922,702,444¥3,775,141,552

Ⅱ. Total distributions¥3,922,580,978¥3,774,835,668

Distributions per unit

¥6,514¥6,484

Ⅲ.Retained earnings brought forward to
the next period¥121,466¥305,884

Method of calculating distribution amountIn accordance with the policy described in Article 39-1 of its
Articles of Incorporation, KRR determines that the amountof distribution shall exceed the amount equivalent to 90%
of its distributable profit as stipulated in Article 67-15 of theSpecial Taxation Measures Law and shall be up to its
profits as the maximum amount. Following this policy, KRR
has decided that it shall distribute 3,922,580,978 yen whichis almost the entire amount of retained earnings as the
distributions of earnings.
Procedures for the distribution of amounts exceeding
distributable income are outlined in Article 39-2 of KRR’s
Articles of Incorporation. In the15th fiscal period, KRR has
decided not to distribute cash in excess of distributableprofit.

In accordance with the policy described in Article 39-1 of its
Articles of Incorporation, KRR determines that the amountof distribution shall exceed the amount equivalent to 90%
of its distributable profit as stipulated in Article 67- 15 of theSpecial Taxation Measures Law and shall be up to its
profits as the maximum amount. Following this policy, KRR
has decided that it shall distribute ¥3,774,835,668 which isalmost the entire amount of retained earnings as the
distributions of earnings.
Procedures for the distribution of amounts exceeding
distributable income are outlined in Article 39-2 of KRR’s
Articles of Incorporation. In the15th fiscal period, KRR has
decided not to distribute cash in excess of distributableprofit.

39

Independent Auditor’s Report
The Board of Directors
Kenedix Retail REIT Corporation
OpinionWe have audited the accompanying financial statements of Kenedix Retail REIT Corporation(the Company), which comprise the balance sheet as at March 31, 2023, and the statements ofincome and retained earnings, changes in net assets, and cash flows for the six-month period
then ended, and notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects,
the financial position of the Company as at March 31, 2023, and its financial performance andits cash flows for the six-month period then ended in accordance with accounting principles
generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Financial Statements section of our report. We are independent of the Company
in accordance with the ethical requirements that are relevant to our audit of the financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance withthese requirements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Emphasis of Matter
We draw attention to Note 20. SIGNIFICANT SUBSEQUENT EVENTS to the financial
statements, which describes that the Company, at its Board of Directors meeting held on June
13, 2023, resolved to undertake an absorption-type merger, with November 1, 2023 as theeffective date, whereby Kenedix Office Investment Corporation will be the surviving
corporation and the Company and Kenedix Residential Next Investment Corporation will be
the dissolving corporations in the merger, and also executed a merger agreement on June 13,2023. Our opinion is not modified in respect of this matter.
Other Information
The other information comprises the information included in the Semi-annual Report that
contains audited financial statements but does not include the financial statements and our
auditor’s report thereon. Management is responsible for preparation and disclosure of the otherinformation. the Supervisory Director is responsible for overseeing the Company’s reporting
process of the other information.
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
40

In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and Supervisory Director for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in Japan, and for suchinternal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s
ability to continue as a going concern and disclosing, as required by accounting principles
generally accepted in Japan, matters related to going concern.
The Supervisory Director is responsible for overseeing the Company’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we
exercise professional judgment and maintain professional skepticism throughout the audit. We
also:
・ Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the financial statements is not expressing an opinion on the effectiveness of the Company’s
internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

41

・ Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Company to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation in accordance withaccounting principles generally accepted in Japan.
We communicate with the Executive Director regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide the Executive Director with a statement that we have complied with the ethicalrequirements regarding independence that are relevant to our audit of the financial statements
in Japan, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company whichis required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.
Ernst & Young ShinNihon LLC
Tokyo, Japan
June 22, 2023

/s/ Hitoshi Sakurai

Hitoshi Sakurai
Designated Engagement Partner
Certified Public Accountant/s/ Masahiro Yawata

Masahiro Yawata
Designated Engagement Partner
Certified Public Accountant

42