(From April 1, 2020 to September 30, 2020)

Focused Investment in Shopping Centers for Daily Needs

Semi-annual Report for the 11th Period

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

11thHighlights

The 11th fiscal period ended September 30, 2020
Distribution per unit

Forecast DPU
for the 12th fiscal period

JPY 6,546

Forecast DPU
for the 13th fiscal period

JPY 6,785

Total assets (by acquisition price) /Number of properties

JPY 6,635

JPY 226.4bn / 62

Number of tenants

496

Occupancy rate
at the end of period

Contents
Ⅰ Overview of KRR
From the Executive Director
T op I nter v i ew
Key Characteristics
ESG Initiatives
C l ose - u p KR R V ol . 11
DCM Kahma MEGA Don Quijote UNY Omihachiman
Financial Highlights
Portfolio List
Portfolio Map
Overview of Portfolio

Summery of Investment Unit

Habikigaoka Shopping Center

Ⅱ Asset Management Report
Overview of Asset Management
Profile of KRR
Status on Investment Properties
Capital Expenditures
Expenses and Liabilities
Acquisition and Disposition
Accounting
Others99.7%

From the Executive Director
I would like to take this opportunity to express my sincere gratitude to our shareholders for your continued
support to Kenedix Retail REIT Corporation (“KRR”). I would also like to express my sympathy to those
suffering from COVID-19.
Thanks to your support, KRR has reported its results of operations for the eleventh fiscal period (from April 1,2020 to September 30, 2020).
During the eleventh fiscal period, the spread of COVID -19 and the government’s state of emergency
declaration have created unprecedented challenges to the retail industry. Despite these circumstances,
shopping centers for daily needs with grocery supermarkets as core tenants remained vital to local
communities. On the other hand, the business climate remained unstable for service -oriented tenants, withgreater impact of the pandemic. We decided to aim for co -existence by accepting temporary rent reductions
in order to sustain businesses of tenants facing a serious decline in sales due to the spread of COVID -19,
which we believed will lead to the maximization of the long -term value of our portfolio. Consequently, fixed
rent revenue in the eleventh fiscal period was affected by temporary rent reductions, and sales -linked rent
revenue also declined due to a decrease in tenant sales. However, the distributions to unitholders for theeleventh fiscal period increased by 11 yen to 6,546 yen per unit from the previous period by cost reduction
and the gain on the sale of a property. For the eleventh fiscal period, operating revenue totaled 8,398 million
yen, operating income was 4,082 million yen, ordinary income was 3,505 million yen, and net income was3,504 million yen.
In an uncertain business climate, investment unit price has fluctuated significantly. We dedicate ourselves topromote the operation of retail and logistics facilities in order to respond to the confidence and expectationsof investors.
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.

Q

Please tell us about the impact of the spread of COVID-19 in theeleventh fiscal period.

A

The eleventh fiscal period began with the state of emergency declarationby the government following the spread of COVID-19. People wererequested to refrain from going out, and some tenants, such as healthclubs, movie theaters and bowling alleys were forced to temporarilysuspend their operations. KRR focuses investing in shopping centers fordaily needs, which provides products and services essential for daily lifeand located in residential areas. As many of our retail properties containstores that handle food and other daily necessities, the maximum
percentage of tenants closed during the state of emergency declaration
was only around 12%. As for the direct impact on KRR, in addition to a
decline in sales-linked rents, rental income declined due to temporary
rent reductions/deferral to certain tenants that have faced severe sales
declines due to the spread of COVID-19.
Moyuru Watanabe

1Top Interview

Q emergency declaration?

Are tenant sales recovering after the state offorecast of 5,540 yen for the eleventh fiscal period, adecrease of 995 yen from the actual result for thetenth fiscal period. Subsequently, the state of
emergency declaration was lifted earlier than KRR had
anticipated, and tenant sales headed for recovery. We
also reached agreement with tenants to a certain
extent on temporary rent reductions/deferrals. As aresult, we revised upward our earnings forecast andannounced a distribution forecast of 6,103 in July.
However, the number of COVID-19 cases wasincreasing particularly in Tokyo around this time.
Therefore, we have assumed the impact of thepandemic in the earnings forecasts, such as anotherstate of emergency declaration in August and
September. The state of emergency declaration was
not be issued again during the period, and the
additional impact of the pandemic during this period
was limited, so the earnings forecast was revised againin October. Rent revenues in the eleventh fiscal period
were affected by temporary rent reductions, but due tocost reductions and the gain on sale of a property inconjunction with an asset reshuffle, distributions in theeleventh fiscal period were 6,546 yen per unit, an
increase of 11 yen from the previous period.

The first thing we want to clarify is that sales have

A not declined in all business categories even under
the state of emergency declaration.
Places of consumption shifted from central areas toresidential areas due to staying-at-home and the increaseof work-from-home. Consequently, sales of groceries andhome & garden, which are the core tenants of KRR's
shopping centers, increased. Approximately 60% of KRR's
tenants were in industries that were not materiallyaffected by the state of emergency declaration. Among
tenants whose sales declined due to the state of
emergency declaration, retail tenants recovered from theprevious year's level in June, helped by a reactionary
buying after the termination of the state of emergency
declaration. On the other hand, service-oriented tenants
experienced significant declines during the state of
emergency declaration period, and their subsequent
recovery is also taking time.
tell us the background to the upward revision
Q Pleaseof the forecast DPU for the eleventh fiscal period.
KRR announced its financial results for the tenthA fiscal period (October 1, 2019 to March 31, 2020) in
mid-May, in the middle of the state of emergency
declaration. At the time, it was extremely difficult toaccurately factor in the impact of the spread of COVID-19
without any forecasts of when the state of emergency
declaration would be lifted. However, based on the thenprevailing conditions, we have placed considerable stresson our earnings forecasts and announced a distribution

Q Please tell us about your future growth strategy.
A “Crisis period.” KRR aimed to coexist with

The eleventh fiscal period should be called atenants and focused on minimizing the impact ofthe pandemic. Meanwhile, in the midst of this global
crisis, we reaffirmed the stability of shopping centers
for daily needs that KRR is focusing on.

Steady AUM growth(JPY bn)

Aiming forsteady growthof AUM going
forward

300

250

204.9

206.1

5th
period6th
period

212.8

213.2

7th
period8th
period

200

158.7
150

225.8

226.4

10th
period11th
period

200.9

164.3

131.6
91.8

100

80.8

50

0

IPO

1st
period2nd
period3rd
period4th
period9th
period2

The importance of retail facilities that provide food andother daily necessities has not changed even amid the
pandemic, and these shopping centers have become alifeline for consumers. KRR is committed to achieving
sustainable growth with these shopping centers for dailyneeds at the core, and by adding retail distribution
centers, which were also stable amid the pandemic.

Assets acquired in the 11th fiscal period
T-30

Comfort Market Nishi-Magome

A n ew -br and gr o cer y s u permar ket a dj acent to N i s hi -magomes ta tion, c o nveni ent f or c o mmuti ng to c en tr al T o kyo
SMPlease tell us about the sale of Daikanyama

Q Address Dixsept announced at the start of thetwelfth fiscal period.
property is a property with a highA Thispercentage of higher end apparel tenants, asThis property is a property with a high percentage ofhigher end apparel tenants, as indicated by the locationof Daikanyama, although a grocery supermarket coexists.
As a result, it is characterized by less stable earnings thanother properties owned by KRR. In addition, due to its
location, its NOI yield is lower than other properties.
Under such circumstances, the sale was concluded, andthe gain on the sale will be enjoyed over the next threefiscal years. We do not know when the pandemic will
converge, and there may be a risk that the number ofcases will increase again in the winter. However, we
believe that this gain on sale will support KRR's
performance in the future three fiscal years. Based on
this support, we hope to recover our earnings base in
the aftermath of the pandemic and put KRR back on a
growth track.

Location

Ota ward, Tokyo Acquisition priceAppraisal value

JPY 2,000 mn

Appraisal
NOI yield

JPY 1,920 mn
4.4%

Asset disposed of in the 11th fiscal period
N-5

K’s Denki ShinMoriyama (Land)T o be di s posed o f a t a pr i c e a bove th e book va l u e a n d
a ppr aisal va l ue a s a n a s s et r es huffl ing wi th C o mfor t Ma r k et
N i s h i-Magome
SS

Location
Disposition
priceAppraisalvalue
Disposition
NOI yield

Nagoya, Aichi
JPY 1,527 mn
JPY 1,440 mn
3.9%

We respectfully look forward to your continued
support.
Asset to be disposed of in the 12th, 13th, and 14th fiscal period
Property expansion at Yokohama Kamigo Distribution Center

KRR completed the additional acquisition of a new building(“the Restaurant Building”) through property
expansion on the underutilized space of Yokohama
Kamigo Distribution Center. “Hungry Tiger Kamigo”
opened in December 2020.

T-4

Daikanyama Address Dixsept

Gains on sale will contribute to stable distributions over next threefiscal periods
Urban Station-Front SC

The newly built Restaurant Building

Location
Appraisalvalue

Shibuya ward,Tokyo
JPY 6,120 mn

Disposition priceJPY 6,644 mn

Disposition
NOI yield

3.6%

Note: “Appraisal value” indicates the appraisal value at the time of acquisition for the acquired property and the appraisal value at the time of disposition or decision of disposition for the disposed
property. “Appraisal NOI yield” is the real estate appraisal at the time of acquisition. It is calculated by dividing the net operating income stated in the evaluation report by the acquisition price.
“Disposition NOI yield” is calculated by dividing the net operating income stated in the latest real estate appraisal report by the sale price.

3

Key Characteristics
We seek sustainable growth by investing in both shopping centers for daily needs, located in densely populatedareas and highly resistant to e-commerce, and...

1

Environment recognition

Changes in retail facilities with the rise of

Challenges faced by the logistics sector

e-commercewith the rise of e-commerce■

Partnerships between online and brick-and-mortar retailers■

Delivery of products from retail facilities

Frequent small deliveries■■

Pickup of products at retail facilities

Shorter lead time■■

Integration of logistics and retail facilities

Managing to last mile issues■■

Needs for distribution centers close to consumption areas

Similar functions of retail and logistics facilities in providing customers with merchandise
Delivery of products from retail facilities

Kyorindo Net Super delivery vehicles (P-1 Plaza Tenno)

Installation of lockers to pick up products

PUDO Station (Apita Terrace Yokohama Tsunashima)● Retail facilities adapting to delivery or receipt of products ordered on

Leasing a portion of the land of retail properties tologistics operators

Cargo transfer area (Kurume-Nishi Shopping Center)● An online store opens a physicalstore in KRR property

the Internet (Note)

MONA Shin-Urayasu

Passaggio Nishiarai

Daikanyama Address Dixsept

Unicus Ina

Yorktown Kita-Kaname

Unicus Yoshikawa

K's Denki Shonan-Fujisawa(Land)

Unicus Kamisato (Land)

M-ALL+PLUS (Blumer Maitamon)

Unicus Konosu (Land)

Inageya Yokohama
Minamihonjuku (Land)

Life Kameido

Totsuka-Fukaya Shopping
Center (Land)

Yumemachi Narashinodai Mall

Kawamachi Yahagi Mall

Apita Terrace
Yokohama Tsunashima

Monenosato Mall

Blumer Maitamon

Blumer HAT Kobe

Carino Esaka

COMBOX Komyoike

Habikigaoka Shopping
CenterHomecenter Kohnan
Sunadabashi

K's Denki Aomori Honten

Ashico Town Ashikaga

Kasumi Technopark Sakura

P-1 Plaza Tenno

Note: The retail facilities have been identified by the Asset Manager as retail facilities that can receive products ordered over the Internet through the installation of delivery boxes and pickup
counters or that can deliver products ordered over the Internet.

4

...retail distribution centers that meet demand from e-commerce, in changing environment where the functions ofretail and logistics facilities are getting similar, in providing customers with merchandise.

2

Investment Policy

1. Shopping centers for daily needs (80% or more)
Retail properties located within residential districts or adjacent to major roads, which provide
daily goods and services
Well located fordaily living

Retail trade area of an approximately 1-10km radius (generally around 3-5km)
Customers predominantly from local areas surrounding the retail property

High volume ofcustomer traffic

Accommodate certain daily local retail needs
Strong customer traffic on both weekdays and weekends

Specialty store
tenant diversity

Various specialty stores to meet a range of day-to-day needs
Groceries, clothing and other daily goods and services

Primary characteristics of shopping centers for daily needs - Unicus Ina as an example
Location Located within residential areas ofa metropolitan commuter district

Grocery supermarket(anchor tenant)■ Retail trade area population
・1km radius: 10,000 people
・3km radius: 62,000 people
・5km radius: 247,000 people

Residential district

Specialty stores(small retail spaces)

Flat parking lot

Tenants

Providing primarily daily
necessities■ Housing Yaoko, a grocery
supermarket (anchor tenant), anda group of specialty stores (nonanchor tenants)

Restaurant building
expansion site
Residential district
Unicus Ina (NSC)

Facilities

Capacity to accommodate frequent customer visits and provide revenue upside potential■ Flat parking lot to accommodate approx. 480 vehicles■ Constructed a restaurant building on underutilized space

2. Logistics facilities (20% or less, combined with other retail facilities)
Major KRR investments and their positioning in the supply chain
KRR investments

Shopping centers
for daily needs

Manufacturing

Visit
Stores

Delivery

Large logistics facilities
Delivery

ImportDelivery
Retail distribution centers

5

ESG Initiatives
1

Environmental initiatives● Evaluation of Environmental Initiatives

Awarded GRESB “Green Star” Rating for five consecutive years
Awarded a “Green Star” Rating in response to high evaluations for five consecutive
years since the first participation in the GRESB Real Estate Assessment in 2016
Earned four star (out of five star) GRESB Rating in 2020 for two consecutive years

The number of certified properties and certified floor area (m 2 ) (as of September 30, 2020)
The number of certified
properties

Certified floor area (m2)

Ratio (%) (Note)

DBJ Green Building Certification

14

340,251.61

47.0

Certification for CASBEE for Real Estate

252,232.95

7.2

Note: The ratio is the percentage of certified floor area to the gross floor area of properties owned by KRR (724,800.29m 2, calculated on a pro-rata basis of ownership ratio forcompartmentalized ownership, excluding land-only properties).

DBJ Green Building Certification
The following 14 properties have been awarded the DBJ Green Building Certification for their environmental initiatives
as of September 2020.

Properties with outstanding environmental & social awareness (★★★★)
T-4 Daikanyama Address Dixept

O-1

Properties with high environmental& social awareness (★★)

Properties with excellent environmental& social awareness (★★★)
T-2 MONA Shin-Urayasu T-20 Kawamachi Yahagi Mall R -10 Ashico Town
T-3 Passaggio Nishiarai

O-4 Blumer HAT Kobe

T-5 Unicus Ina

O-5 Carino Esaka

T-7 Unicus Yoshikawa

R -1 Roseo Mito

Blumer Maitamon

T-19

Ashikaga

Yumemachi
NarashinodaiMall

N-6 Resora Obu

Shopping
TerraceR -4 Sun Street Hamakita

Certification for CASBEE for Real Estate
CASBEE is an evaluation system for rating the environmental performance of buildings,
developed under the auspices of the Ministry of Land, Infrastructure, Transport and Tourism. The
system rates the overall environmental performance of buildings from two perspectives; theevaluation of the environmental quality and performance of buildings themselves and theexternal environmental load of buildings. As of September 30, 2020, KRR has acquired CASBEE
real estate evaluation certification for the following two properties.
N-4

Homecenter Kohnan
Sunadabashi

Certification rank

S rank

L-3

Musashi Ranzan
Distribution Center

Certification rank

A rank● Solar panel installation
We installed solar panels at Unicus Ina and Kawamachi
Yahagi Mall to decrease CO 2 emissions.
Power generation results (Note)
Unicus Ina

Kawamachi Yahagi Mall

344,741kWh

67,047kWhUnicus Ina
Power generation capacity:
334.53 kW

Kawamachi Yahagi Mall
Power generation capacity:
302.40 kW

Note: The figures of Unicus Ina are for the period October 2019 to September 2020, and of Kawamachi Yahagi Mall are for the period August 2020 to September 2020.

62Social initiatives

Collaboration with local communities

Local events at our properties (Note)

Supporting Japan for UNHCR

We entered into agreements with
Yoshikawa City, Ina Town, and Konosu
City can be used as a temporary shelterat times of emergency.

We are making efforts to enliven local
communities by holding communityparticipating events at our properties.

We support the activity of Japan for UNHCR(United Nations High Commissioner for
Refugees) by providing common areas of ourproperties for their fund-raising campaign.

©Japan for UNHCR
Note: Some events are restrained or restricted due to the COVID-19 pandemic.

3

Governance structure● Decision-making process for acquisition of properties from a related party
When one of the parties involved in the purchase of a property or other transaction is a related-party, the following
independent decision-making procedures are applied.
Preparation of
proposalConfirmation of
proposal

Asset
Investment
Division of
Retail REIT
Department

Compliance
Officer

Deliberation andresolution
Related party
transaction

Compliance
Committee

Deliberation andresolution

Related party
transaction

Other transactions

Asset
Management
Committee ofRetail REIT
Division

Deliberation andresolution
Relatedpartytransaction(Note)

KRR Boardof Directors

ReportAsset
Manager's
Board ofDirectors

Other transactions

Note: Transactions within the scope of insignificance criteria are excluded from the decision-making process above.

● Kenedix Group's business model benefiting from our growth
The Kenedix Group’s J-REIT assets constitute the majority of their AUM. Because of the importance of the J-REIT business to
the Kenedix Group, we believe that our sound growth is in line with their interests.

Updated KRR’s website

Published ESG Disclosure 2020

To practice our sustainability policy through our real estate
investment management business, KRR updated our website toensure timely and appropriate disclosure of ESG-related
information to our stakeholders.

Published ESG Disclosure 2020 and posted on KRR’s
website to report stakeholders

Kenedix Retail REIT ESG

Search

https://www.krr-reit.com/en/esg/index.html
7Vol. 11

Close-up KRR

Shopping center with the reopened
double-name store between
Don Quijote and UNY

O-3 NSCDCM Kahma MEGA Don Quijote UNY Omihachiman
DCM Kahma MEGA Don Quijote UNY Omihachiman is aneighborhood shopping center (NSC) located in
Omihachiman City, known for its ruins of Azuchi Castle,
Omi merchants and Hachimanbori Canal on the east sideof Lake Biwa. It consists of two core stores, MEGA Don
Quixote UNY and DCM Karma.
Located 11 minutes on foot from Omihachiman Station on
the JR Tokaido Main Line (approximately 35 minutes byspecial rapid train from Omihachiman Station to Kyoto
Station), along the road connecting National Route 8 andOmihachiman Station, the facility secures 816 parking lotsand 259 bicycle parking lots on the premises, attracting
passengers by car, as well as those living in the vicinity. On
the back of the properties, a housing area was developed
the same time as the completion of the shopping center.
Condominium development has progressed mainly around
JR Omihachiman Station, and there are many young family
households in the 1km area of the property.

and general merchandise. Competitive give the
shopping center an advantage over competing
facilities with a combination of groceries and discountstores that are convenient for a wide range ofhouseholds as well as child-rearing families.
The addition of new families, young people, and malecustomers to the existing customers has transformed
the facility into a shopping center supported by manycustomers. Sales and customer visits have grownsignificantly. Furthermore, even in the COVID-19
pandemic, the shopping center is attracting morecustomers than in the previous year by tapping into
stay-at-home demand.
As a shopping centers for daily needs, we will continue
to work to revitalize our facilities, with a focus on
management in concert with the local community.

DCM Kama Omihachiman, a home & garden store, openedin October 2005, and Piago Omihachiman, a grocery
supermarket of the UNY Group, opened in December.
In 2019, UNY became a wholly owned subsidiary of Don
Quijote Holdings (now Pan Pacific International Holdings).
In February 2019, the Piago Omihachiman was reopened as“MEGA Don Quijote UNY Omihachiman,” a double-namestore that organically combined the know-how of the UNY
Group with the creation of time-consuming Don Quijote
stores.
Currently, these stores sell DIY, daily necessities, outdoors,building materials and other home & garden products, aswell as groceries, fresh foods (fruits, fish, meat andprepared foods), alcohol, daily consumables, household
goods, apparel, cosmetics, toys, automotive goods, brandgoods, home appliances, pet goods, general merchandise,
Acquisition
price

JPY 2,140 mn

Location

Omihachiman, Shiga

Land area

29,410.00m

2Gross floor
area
Core
tenants

12,283.85m2
UNY Co., Ltd.
DCM Kahma Co., Ltd.

DCM Kahma MEGA Don Quijote
UNY Omihachiman
8

F in an c ial H ig h ligh t s
KRR implements flexible financial strategies, aiming to produce stable profits in the medium tolong-term and to steadily grow its portfolio.

1 Financial highlights (as of September 30, 2020)
LTV

Long-term debt ratio

Fixed interest debt ratio

Weighted averagedebt maturity

Number of lenders

Average interest rate

44.8%

12

4.0 years

2

91.3%

97.6%

0.99%

Credit rating and commitment lines (as of September 30, 2020)
Credit rating (JCR)

Commitment credit lines

A+ (Stable)J P Y 3.0 b n

3 Debt maturity schedule (as of September 30, 2020)
KRR believes that diversified debt maturity schedule will contribute to a stable financing standing.

Debt outstanding JPY 112,800 mn(excluding interest-bearing tenant leasehold and security deposits)(JPY mn)

20,000Borrowings

Investment corporation bonds

Refinanced short-term debt by 8-year long-term debt amid the COVID-19 pandemic

15,00010,000

5,000

11th
12th
13th
period period period

14th
period16th
15th
period period

18th
17th
period period

19th
20th
period period

22nd
21st
23rd
period period period

26th
24th
25th
period period period

27th
period

30th
29th
28th
period period period

4 Inclusion in major indices
KRR believes that the expansion of market capitalization and inclusion in the global index will lead to expansion of theinvestor base and improvement of liquidity. KRR is incorporated into the following major indices.

FTSE EPRA／NAREIT Global Real Estate Index
Dow Jones Global Select REIT Index

GPR 250 Index

S&P Developed REIT Index
Bloomberg Asia REIT Index
MSCI Japan Small Cap Index
9

Por tfolio List as of September 30, 2020
Total acquisition price

Weighted average occupancy rateJ P Y 2 2 6 , 4 7 9 mn

99.7 %

No.

第
期
末
保
有
資
産

Name of property

Location(city / ward, prefecture)

Number of tenants496

Acquisition price Occupancy rate
(JPY mn)(%) (Note 1)

Number oftenants (Note 2)

T-2 MONA Shin-Urayasu

Urayasu, Chiba

8,063

97.6

T-3 Passaggio Nishiarai

Adachi ward, Tokyo

5,850

100.0

41

T-4 Daikanyama Address Dixsept

Shibuya ward, Tokyo

5,390

96.0

26

T-5 Unicus Ina

Kitaadachi-gun, Saitama

4,470

100.0

1

T-6 Yorktown Kita-Kaname

Hiratsuka, Kanagawa

4,000

100.0

1

55

T-7 Unicus Yoshikawa

Yoshikawa, Saitama

3,600

99.6

10

T-8 Sports Club Renaissance Fujimidai

Nerima ward, Tokyo

2,586

100.0

1

T-9 Super Viva Home Iwatsuki (Land)

Saitama, Saitama

4,815

100.0

1

T-10 K’s Denki Shonan-Fujisawa (Land)

Fujisawa, Kanagawa

3,169

100.0

1

T-11 Unicus Kamisato (Land)

Kodama-gun, Saitama

3,000

100.0

1

T-12 Unicus Konosu (Land)

Konosu, Saitama

1,700

100.0

1

T-13 Inageya Yokohama Minamihonjuku (Land)

Yokohama, Kanagawa

1,442

100.0

1

T-15 Nakamachidai Tokyu Store

Yokohama, Kanagawa

3,360

100.0

1

T-16 Central Wellness Club Nagatsuta Minamidai

Yokohama, Kanagawa

1,724

81.0

1

T-17 Life Kameido
T-18 Totsuka-Fukaya Shopping Center (Land)

Koto ward, Tokyo

1,450

100.0

1

Yokohama, Kanagawa

4,170

100.0

2

T-19 Yumemachi Narashinodai Mall
T-20 Kawamachi Yahagi Mall

Funabashi, Chiba

3,416

100.0

14

Chiba, Chiba

3,097

100.0

12

T-21 Prime Square Jiyugaoka
T-22 Round1 Ichikawa-Onitaka
T-23 Ozeki Tokiwadai

Meguro ward, Tokyo

2,820

100.0

2

Ichikawa, Chiba
Itabashi ward, Tokyo

1,880

100.0

1

T-24 Konami Sports Club Shibuya

Shibuya ward, Tokyo

1,263

100.0

1

3,400

100.0

1

T-25 Apita Terrace Yokohama Tsunashima
T-26 Kalsa Hiratsuka

Yokohama, Kanagawa

5,899

100.0

1

Hiratsuka, Kanagawa

5,980

100.0

3

T-27 Monenosato Mall
T-28 Chofu Center Building (Retail wing)

Yotsukaido, Chiba

2,410

100.0

6

T-29 Across Plaza Urayasu Higashino (Land)

Urayasu, Chiba

T-30 Comfort Market Nishi-Magome
O-1 Blumer Maitamon

Chofu, Tokyo

2,300

100.0

3

2,248

100.0

1

Ota ward, Tokyo

1,920

100.0

1

Kobe, Hyogo

8,389

99.7

50

O-2 Central Square Takadono (Land)DCM Kahma MEGA Don Quijote UNY
O-3
OmihachimanO-4 Blumer HAT Kobe

Osaka, Osaka

2,685

100.0

1

Omihachiman, Shiga

2,140

100.0

2

Kobe, Hyogo

11,00099.1

41

O-5 Carino Esaka

Suita, Osaka

6,555

97.4

28

O-6 COMBOX Komyoike
O-7 Hankyu Oasis Hirakatadeguchi

Izumi, Osaka

6,450

100.0

1

Hirakata, Osaka

1,280
1,505

100.0
100.0

1
1

O-9 Life Nishi-Tengachaya

Osaka, Osaka

O-10 Million Town Tsukaguchi (Land)
O-11 Habikigaoka Shopping Center

Amagasaki, Hyogo
Habikino, Osaka

3,723

100.0

1

2,000

100.0

2

N-1 DCM Kahma Nakagawa Tomita (Land)

Nagoya, Aichi

2,311

1

N-2 Valor Ichinomiya-Nishi

Ichinomiya, Aichi

2,174

100.0
100.0

N-4 Homecenter Kohnan Sunadabashi
N-6 Resora Obu Shopping Terrace
N-7 Valor Nakashidami (Land)

Nagoya, Aichi

7,140

100.0

1

Obu, Aichi
Nagoya, Aichi

7,911

97.2

40

2,551

100.0

1

1

F-1 Sunny Noma
F-2 Round1 Stadium Hakata-Hanmichibashi
F-3 Kurume-Nishi Shopping Center

Fukuoka, Fukuoka

1,497

100.0

1

Fukuoka, Fukuoka

5,020

100.0

1

Kurume, Fukuoka

1,515

100.0

4

R-1 Roseo Mito

Mito, Ibaraki

10,046100.0

23

R-2 K's Denki Aomori Honten

Aomori, Aomori

1,469

100.0

1

10

Por tfolio Map as of September 30, 2020
NSC

R-4
T-11

R-1

SM
Urban Station-Front SC

L-5

T-12

R-6

SS

T-5
T-9

L-3

R-9

T-7
T-23

L-6

T-3

T-8

L-1

T-16
T-18

T-6

T-10
T-26

T-22

T-21
T-15

R-3

T-27

T-2

T-4

R-2

T-19

T-17

T-28
T-24

R-11

Logistics

T-20
T-29

T-25

T-30

Comfort Market Nishi-Magome

T-13
L-4

R-5

L-2

O-3

F-2

N-2

F-1

N-7
O-4
O-1

F-3

No.

第
期
末
保
有
資
産

O-10

O-7

N-4

N-1

O-5
O-9

O-2

O-6

O-11

Name of property

N-6
R-10
R-8

Location(city / ward, prefecture)

Acquisition price Occupancy rate
(JPY mn)(%) (Note 1)

Number oftenants (Note 2)

R-3 Super Sports Xebio Aomori-Chuo
R-4 Ashico Town Ashikaga

Aomori, Aomori
Ashikaga, Tochigi

R-5 Yorktown Shinden-Higashi
R-6 Kasumi Technopark Sakura

Sendai, Miyagi
Tsukuba, Ibaraki

830

100.0

1

R-8 P-1 Plaza Tenno
R-9 Seiyu Rakuichi Moriya (Land)

Hamamatsu, Shizuoka

4,010

100.0

7

4,111

100.0

1

R-10 Sun Street Hamakita
R-11 Costco Wholesale Sapporo Warehouse

Hamamatsu, Shizuoka

10,746

99.7

53

Moriya, Ibaraki

898

100.0

1

4,180

99.4

30

3,252

100.0

2

Sapporo, Hokkaido

4,210

100.0

1

L-1

Zama Distribution Center

Zama, Kanagawa

1,400

100.0

1

L-2

Oppama Distribution Center

Yokosuka, Kanagawa

1,300

100.0

1

L-3

Musashi Ranzan Distribution Center

Hiki-gun, Saitama

3,879

100.0

1

L-4 Yokohama Kamigo Distribution Center
L-5 Gyoda Distribution Center

Yokohama, Kanagawa

909

100.0

2

Gyoda, Saitama

3,160

100.0

1

Shinjuku Nihiochiai Distribution Center
Total

Shinjuku ward, Tokyo

810

100.0

1

226,479

99.7

496

L-6

Note 1: “Occupancy rate” is as of September 30, 2020.
Note 2: “Number of tenants” indicates the number of end-tenants as of September 30, 2020.

11

Over view of por tfolio (as of September 30, 2020)
T-2

MONA Shin-Urayasu

T-3

Passaggio Nishiarai

T-4

Daikanyama Address Dixsept

T-5

Unicus Ina

T-6

Yorktown Kita-Kaname

T-7

Unicus Yoshikawa

T-8

Sports Club
Renaissance Fujimidai

T-9

Super Viva Home
Iwatsuki (Land)

T-10

K’s Denki
Shonan-Fujisawa (Land)

T-11

Unicus Kamisato (Land)

T-12

Unicus Konosu (Land)

T-13

Inageya Yokohama
Minamihonjuku (Land)

T-15

Nakamachidai
Tokyu Store

T-16

Central Wellness Club
Nagatsuta Minamidai

T-17

Life Kameido

T-18

Totsuka-Fukaya
Shopping Center (Land)

T-19

Yumemachi
Narashinodai Mall

T-20

Kawamachi Yahagi Mall

T-21

Prime Square Jiyugaoka

T-22

Round1 Ichikawa-Onitaka

T-23

Ozeki Tokiwadai

T-24

Konami Sports Club
Shibuya

T-25

Apita Terrace Yokohama Tsunashima

T-26

Kalsa Hiratsuka

T-27

Monenosato Mall

T-28

KDX Chofu Building(Retail wing)

T-29

Across Plaza Urayasu
Higashino (Land)

O-1

Blumer Maitamon

O-5

Carino Esaka

O-2

Life Takadono (Land)

O-3

DCM Kahma MEGA Don
Quijote UNY Omihachiman

Note: Please refer p.3 for the properties acquired in the eleventh fiscal period and properties to be disposed in eleventh fiscal period.

12

O-4

Blumer HAT Kobe

O-6

COMBOX Komyoike

O-7

Hankyu Oasis
Hirakatadeguchi

O-9Life Nishi-Tengachaya

O-11

Habikigaoka Shopping
CenterN-1

DCM Kahma
Nakagawa Tomita (Land)

N-2

Valor Ichinomiya-Nishi

N-6

Resora Obu Shopping Terrace

N-7

Valor Nakashidami (Land)

F-1

Sunny Noma

N-4

Homecenter Kohnan
Sunadabashi

F-2

Round1 Stadium
Hakata-Hanmichibashi

F-3

Kurume-Nishi
Shopping Center

R-1

Roseo Mito

R-2

K’s Denki Aomori Honten

R-3

Super Sports Xebio
Aomori-Chuo

R-4

Ashico Town Ashikaga

R-6

Kasumi Technopark Sakura

R-8

P-1 Plaza Tenno

R-9

Seiyu Rakuichi Moriya(Land)

R-10

Sun Street Hamakita

R-11

Costco Wholesale
Sapporo Warehouse

L-1

Zama Distribution Center

L-2

Oppama Distribution
CenterL-3

Musashi Ranzan
Distribution Center

L-5

Gyoda Distribution Center

L-6

Shinjuku Nishiochiai
Distribution Center

O-10

R-5

L-4

Million Town
Tsukaguchi (Land)

Yorktown ShindenHigashi

Yokohama Kamigo
Distribution Center

13

Summar y of Investment Unit
Unit price and trading volume(Units)
1 00 , 0 0 0
February 10, 2015
JPY 266,100

340,000

40,000
Unit price

Volume31 0, 000

35,000280,000

30,000250,000

25,000
September 30, 2020
JPY 211,100

220,000

20,000

1 90, 000

1 5,000

1 60, 000

1 0,000

1 30, 000

5,000

1 00, 000
Feb
10

Sep
30

Mar
31
2015

Mar
31

Sep
30

2016

Mar
31

Sep
30

2017

Mar
31

Sep
30

2018

Mar
31

Sep
30

Mar
31

2019

Sep
30

0

2020

General breakdown of unitholders
As of September 30, 2020

Ownership ratio by investor type

Brokerage firms
16,492 units(3.1%)

Individuals
and others
83,569 units(15.6%)

Number of unitholders by investor type
Other domestic
corporation
310

Foreign investors
252(2.2%)(1.8%)

Brokerage firms
29(0.2%)

Financial
Institutions
98(0.7%)

Foreign investors
148,551 units(27.7%)

13,941

536,177
units

Other domestic
corporation
20,742 units(3.9%)

Financial
Institutions
266,823 units

Individuals and others
13,252(95.1%)(49.8%)

14

II. ASSET MANAGEMENT REPORT
Overview of Asset Management(1) Trends in Key Indicators
Seventh fiscal period Eighth fiscal period(From April 1,2018
to September 30, 2018)(From October 1, 2018
to March 31, 2019)(From April 1, 2019
to September 30, 2019)(From October 1, 2019
to March 31, 2020)

Tenth fiscal period

Eleventh fiscal period

Millions of yen

8,577

8,415

8,609

8,291

8,398

Millions of yen

8,364

8,197

8,367

8,234

8,272

Millions of yen

4,760

4,530

4,729

4,189

4,316

Millions of yen

3,984

3,733

3,891

3,359

3,479

Operating income

Millions of yen

3,816

3,884

3,879

4,101

4,082

Ordinary income

Millions of yen

3,201

3,284

3,288

3,499

3,505

Net income

Millions of yen

3,197

3,283

3,287

3,498

3,504

Total assets

Millions of yen

238,490

237,845236,253249,246

251,655%(+3.2)(-0.3)(-0.7)(+5.5)(+1.0)

Millions of yen

116,729

116,505

116,386

124,450

124,308%(+0.1)(-0.2)(-0.1)(+6.9)(-0.1)

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

Ninth fiscal period(From April 1, 2020
to September 30, 2020)

Unitholders’ capital
Number of investment units issued andoutstanding
Net assets per unit

Millions of yen

113,399

113,399

113,399

121,183

121,183

Units

507,700

507,700

507,700

536,177

536,177

Yen

229,918

229,477

229,242

232,107

231,842

Distributions(Note 2)Millions of yen

3,198

3,288

3,292

3,503

3,509

Distributions per unit

Yen

6,299

6,477

6,486

6,535

6,546

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

Yen

6,299

6,138

6,242

6,525

6,270

Yen

-

339

244

10

276

1.4

1.4

1.4

1.4

1.4

(2.7)

(2.8)

(2.8)

(2.9)

(2.8)

2.7

2.8

2.8

2.9

2.8

(5.5)

(5.6)

(5.6)

(5.8)

(5.6)

48.9

49.0

49.3

49.9

49.4

(-1.5)(+0.0)(+0.3)(+0.7)(-0.5)

Days

183

182

183

183

183

%

100.0

94.9

96.4

100.0

95.9

53

53

55

62

62

m2

890,152.09

913,759.61

850,456.06

945,177.87

941,020.65

520

511

480

496

496

%

99.4

99.2

98.9

99.4

99.7

Depreciation expense

Millions of yen

971

990

1,019

1,024

1,040

Capital expenditures

Millions of yen

806

500

791

475

544

Rental NOI (Net operating income) (Note 9)

Millions of yen

5,352

5,454

5,494

5,899

5,833

FFO (Funds from operation) (Note 10)

Millions of yen

4,028

4,105

4,093

4,498

4,431

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

Net assets to total assets (Note 6)[Period-on-period changes]
Operating days
Payout ratio(Note 7)%%%

Number of properties
Leasable area
Number of tenants (Note 8)
Occupancy ratio

FFO per unit
Yen
7,935
8,085
8,063
8,389
8,265
Note 1: Figures above are rounded down for monetary amounts and rounded to the nearest tenth for ratios.
Note 2: Distributions in excess of earnings for the allowance for temporary difference adjustments are not considered.
Note 3: Ordinary income to total assets = Ordinary income /{(Total assets at beginning of period + Total assets at end of period) / 2} × 100
Note 4: For the first fiscal period, annualized as if the operation began from February 10, 2015, when the actual operation began.
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 fiscal period ended March 31, 2019, 100.2% for the fiscal period ended September
30, 2019, 100.2% for the fiscal period ended March 31, 2020 and 100.1% for the fiscal period ended September 30, 2020
Payout ratio = Total distributions (including excess of earnings) / Net income × 100
Note 8: As for building tenants, if a tenant leases multiple spaces in a building, each space is counted as one tenant. In a pass-through type master lease,
the number 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 expenses
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 outstanding(Note 11)15

(2) Status of Asset Management(Overview of the Fiscal Period ended September 30, 2020)i) Transition of KRR
KRR was established on October 3, 2014, under the Act on Investment Trusts and Investment Corporations of Japan (the“Investment Trust Act”). On October 30, 2014, KRR was registered with the Director-General of the Kanto Local
Finance Bureau (registration number: Director-General of the Kanto Local Finance Bureau No. 97). 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) on February 10, 2015. Subsequently, KRR raised funds through public offerings,
including an international offering. As a result, the number of investment units issued at the end of the fiscal period ended
September 30, 2020 was 536,177 units.
KRR seeks to invest primarily in neighborhood, community and other shopping centers that cater to the day-to-day needsof local area customers and have stable demand from retailers and customers, in order to provide stable investment
returns over the long term. Sponsored by Kenedix, Inc., a leading, independent real estate asset management company,
KRR entrusts its asset management and investment operations to Kenedix Real Estate Fund Management, Inc. (“KFM”),
with the following strategies.

Note: For KRR’s management purposes and ease of classification, KRR defines shopping centers for daily needs as retail properties that generally
have the following characteristics:
a. Retail trade area of approximately a one to ten kilometer radius (and generally, a three to five kilometer radius), 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 servicesii) Investment Environment
During the fiscal year under review, economic activity in Japan stagnated rapidly following the spread of COVID-19 andthe subsequent declaration of the state of emergency by the government. The preliminary real GDP for the period from
April to June 2020 was 7.9% lower than the previous year, or an annualized decline of 28.1%, the largest rate of decline
in the post-war era. As for the financial environment, the stock market continued to be unstable due to the COVID-19
pandemic.
In the financial environment, the stock market remained unstable due to the COVID-19 pandemic. Meanwhile, interest
rates in Japan have remained low and stable against the backdrop of the Bank of Japan's enhanced monetary easing policy,
the monetary easing policy of the U.S. monetary authorities and unstable global markets.
In the real estate trading market, real estate transactions are declining as investors are becoming more cautious about realestate investments in order to assess the impact of the pandemic. On the other hand, as there has been no significant
change in the lending attitude of financial institutions, there has been no rush to sell real estate, and the real estate sales
market has not deteriorated significantly.
iii) Management Performance(A) Acquisition of Assets
KRR acquired one asset (Comfort Market Nishi-Magome with acquisition price (Note 1) of 1,920 million yen). KRR
disposed of one asset (K’s Denki Shin-Moriyama (Land) with sale price of 1,527 million yen (acquisition price was
1,370 million yen)). KRR also completed additional acquisition through construction of a new building (property
expansion) (total construction cost (Note 3) of 119 million yen) at Yokohama Kamigo Distribution Center.
As a result, the portfolio at the end of the period under review (September 30, 2020) consists 62 properties with the totalacquisition price of 226,479 million yen.
Note 1:
Note 2:
Note 3:“Acquisition price” represents the amount specified in the purchase and sale agreement for the trust beneficiary interests, exclusive of thevarious expenses (acquisition expenses, property tax, city planning tax, consumption tax, etc.) required in the acquisition of the asset.
“Sale price” represents the amount specified in the purchase and sale agreement for the trust beneficiary interests, exclusive of the various
expenses (sale expenses, property tax, etc.) required in the sale of the asset.
“Total construction cost” is the sum of construction and design costs (consumption tax is not included), rounded down to the nearest
million yen.

(B) Management and Operation of Assets
KFM provides property management services for all of the properties owned by KRR at the end of the period underreview (September 30, 2020). By using the same company for both asset management and property management services,
KRR aims to build stronger relationships with tenants and increase returns from its portfolio. Furthermore, byimplementing retail property and distribution centers management that better reflects the needs of our tenants, KRR
strives to accumulate know-how and improve tenant satisfaction.
KRR invests primarily in neighborhood and community shopping centers that cater to the day-to-day needs of customers.
The portfolio is diversified in terms of properties, tenants and other characteristics with a goal to generate consistentlong-term cash flows. At the same time, a portion of the rent includes sales-linked rent to explore the upside potential(Note 1) for rental income. By using these measures, KRR aims to pursue a portfolio that achieves both stability andgrowth.
As of the end of the period under review, portfolio as a whole performed well with an overall occupancy ratio of 99.7%.
Furthermore, the portfolio is diversified in terms of tenants as there are 496 end-tenants (Note 2) in KRR’s retailproperties and distribution centers.
Note 1:
Note 2:“Upside potential” represents feasibility of rental income or cash flow growth.
The number of end-tenants is the sum of the number of end-tenants in a pass-through type master lease and the number of master lessees
in a sublease type master lease.

16(C) Financing
When financing to acquire properties, KRR seeks to achieve the proper balance between financial stability and the costof the funds with the objectives to achieve stable medium- to long-term returns and consistent growth of assets undermanagement.
(Debt Finance)
During the fiscal period under review, KRR borrowed 1,900 million yen for refinancing. KRR also issued investment
corporation bonds to partially prepay borrowings of 1,000 million yen. Consequently, borrowings totaled 104,800
million yen and interest-bearing debt including investment corporation bonds (excluding interest-bearing tenantleasehold and security deposits) totaled 112,800 million yen at the end of the fiscal period under review (September 30,2020).
When undertaking borrowings, KRR seeks to spread out repayment dates and lengthen borrowing periods. KRR may
use swaps to fix the interest payments to hedge against the risk of a rise in interest rates.
(Investment Corporation Bonds)
The status of the credit ratings as of September 30, 2020 is as follows.
Issuance
date

Bonds

Balance as of
September 30, 2020
(million yen)Interest rate(%)

Maturitydate

Redemption
methodRemarks

6th Series Unsecured
April 30,
April 30,
Full on
1,000
0.400(Note)
Investment Corporation Bonds
2020
2025
maturity
Note: Ranking pari passu among the specified investment corporation bonds and small private placement with restrictions on splits of denomination ofeeach bond

As a result, the average maturity of debt is 4.0 years, the weighted average interest rate is 0.99%, the long-term debt ratio(Note 1) is 97.6% and the LTV ratio (Note 2) is 44.8%.
Note 1:
Note 2:Long-term debt ratio = (Long-term borrowings + Investment corporation bonds) / (Borrowings + Investment corporation bonds)
LTV ratio = (Loans payable + Investment corporation bonds) / Total assets(Credit Ratings)
The status of the credit ratings as of September 30, 2020 is as follows.
Credit rating agency
Japan Credit Rating Agency, Ltd. (JCR)

Details of the ratings
Long-term issuer rating

A+ (Outlook: Stable)

Rating on bonds

A+(Shelf Registration)
KRR filed a shelf registration statement for investment corporation bonds (excluding short-term investment corporation
bonds) on October 1, 2018. Details are as follows.
Planned issue amount
Planned issuance period

100,000,000,000 yen
October 9, 2018 to October 8, 2020

Use of funds

Acquisition funds for specified assets (as defined in Article 2, Paragraph 1 of the Investment Trust Law),
repayment funds for borrowings, repayment funds for investment corporation bonds (including short-term
investment corporation bonds), refund funds for lease and guarantee deposits, funds to pay for repairs andmaintenance, working capital, etc.

KRR issued the 6th Series Unsecured Investment Corporation Bonds (1,000 million yen) based on this shelf registration
statement on April 30, 2020.
iv) Results of Operations
For this period, revenue was 8,398 million yen, operating income was 4,082 million yen, ordinary income was 3,505
million yen and net income was 3,504 million yen.
Furthermore, in accordance with the distribution policy in the KRR Articles of Incorporation, KRR made a distribution(excluding excess of earnings) of 3,361,829,790 yen which is almost equivalent to the earnings for the fiscal period. The
distribution per unit (excluding excess of earnings) was 6,270 yen, Cash distributions are paid in accordance with Article
67-15 of the Special Taxation Measures Law (Law No. 26 of 1957, including subsequent amendments).
Furthermore, in accordance with the policy for “Distribution of Money in Excess of Profits” as stated in the KRR Articles
of Incorporation, KRR made a distribution in excess of earnings for the 147,984,852 yen allowance for temporary
adjustment (as defined in Article 2-2-30 of the Ordinance on Accountings of Investment Corporations (Cabinet Office
Ordinance No.47 of 2006, including subsequent amendments.)) for the purpose of reflecting the effect on distributionsof the difference in earnings calculated under Japanese GAAP and Japanese tax laws in association with the amortizationof fixed-term land lease rights (as defined in Article 2-2-30 (a) of the Ordinance on Accountings of Investment
Corporations) and the item deduced from net asset (as defined in Article 2-2-30 (b) of the Ordinance on Accountings ofInvestment Corporations) in association with deferred losses on hedges. This resulted in a distribution in excess ofearnings per unit of 276 yen.
Consequently, the distribution per unit was 6,546 yen (of which the distribution in excess of earnings per unit was 276
yen).

17

(3) Changes in Investment Units Issued and Outstanding
Changes in the number of investment units issued and outstanding and unitholders’ capital since its incorporation aresummarized in the following table.
Date

Type of issue

Total number of units issued andoutstanding (units)
Increase

BalanceUnitholders’ capital(in million yen)
Increase

Balance

Notes

October 1, 2015

Public offering

88,750349,500

18,54776,404(Note 1)

October 21, 2015

Capital increase throughthird-party allocation

5,750

355,250

1,201

77,606(Note 2)

April 20, 2016

Public offering

64,000419,250

15,856

93,463(Note 3)

May 18, 2016

Capital increase throughthird-party allocation

3,200

422,450

792

94,256(Note 4)

April 18, 2017

Public offering

81,250503,700

18,244

112,500(Note 5)

May 17, 2017

Capital increase throughthird-party allocation

4,000

507,700

898

113,399(Note 6)

October 23, 2019

Public offering

27,300535,000

7,462

120,861(Note 7)

Capital increase through(Note 8)1,177
536,177
321
121,183
third-party allocation
Issued at issue price of 216,543 yen per unit (issue amount of 208,991 yen per unit) for acquisition of new properties.
Issued at issue amount of 208,991 yen per unit for repayment of borrowings.
Issued at issue price of 256,717 yen per unit (issue amount of 247,764 yen per unit) for acquisition of new properties.
Issued at issue amount of 247,764 yen per unit for repayment of borrowings.
Issued at issue price of 232,537 yen per unit (issue amount of 224,547 yen per unit) for acquisition of new properties.
Issued at issue amount of 224,547 yen per unit for repayment of borrowings.
Issued at issue price of 282,847 yen per unit (issue amount of 273,360 yen per unit) for acquisition of new properties.
Issued at issue amount of 273,360 yen per unit for part of future purchase funds for specified assets or repayment of borrowings.
Distributions in excess of earnings for the allowance for temporary difference adjustments are not considered.

November 14, 2019
Note 1:
Note 2:
Note 3:Note 4:Note 5:Note 6:Note 7:Note 8:Note 9:(Changes in Unit Price at Tokyo Stock Exchange)
The highest and lowest closing prices of the investment units listed on J-REIT section of the Tokyo Stock Exchange foreach fiscal period are as follows.
Fiscal period

Seventh fiscal period

Eighth fiscal period

Ninth fiscal period

Tenth fiscal period

Eleventh fiscal period

For the period ended

September 30, 2018

March 31, 2019

September 30, 2019

March 31, 2020

September 30, 2020

Highest

JPY 249,200

JPY 279,600

JPY 291,800

JPY 301,500

JPY 218,000

LowestJPY 227,600

JPY 237,200

JPY 256,300

JPY 110,900

JPY 128,300

18

(4) Distributions
The distribution of earnings for the eleventh fiscal period is 6,270 yen per unit. In order to maintain KRR’s favorable tax
treatment, which is available to J-REITs under Article 67-15 of the Special Taxation Measures Act, KRR intends todistribute most of KRR’s retained earnings.
Furthermore, KRR made a distribution in excess of earnings for the allowance for temporary adjustment for the purposeof reflecting the effect on distributions of the difference in earnings calculated under Japanese GAAP and Japanese tax
laws in association with the amortization of fixed-term land lease rights and the item deducted from net asset inassociation with deferred losses on hedges. This resulted in a distribution in excess of earnings per unit of 276 yen.
Consequently, the distribution per unit for the fiscal period, including the excess distribution, was 6,546 yen (of which
the distribution in excess of earnings per unit was 276 yen).
(in thousands of yen)
Fiscal period
For the period ended

Seventh fiscal period
September 30, 2018

Eighth fiscal period
March 31, 2019

Ninth fiscal period
September 30, 2019

Tenth fiscal period
March 31, 2020

Eleventh fiscal period
September 30, 2020

3,198,151

3,283,881

3,455,496

3,784,993

3,716,853

149

167,619

286,433

212,121355,023

3,198,002

3,288,372

3,292,942

3,503,916

3,509,814[6,299 yen]

[6,477 yen]

[6,486 yen]

[6,535 yen]

[6,546 yen]

3,198,002

3,116,262

3,169,063

3,498,554

3,361,829[6,299 yen]

[6,138 yen]

[6,242 yen]

[6,525 yen]

[6,270 yen]－

172,110

123,878

5,361

147,984[－][339 yen][244 yen][10 yen][276 yen]－

172,110

123,878

5,361

147,984[Distributions per unit][－][339 yen][244 yen][10 yen][276 yen]

Total distributions in excessof earnings from theunitholders’ capital for tax
purposes

－

－

－

－

－

[Distributions per unit]

[－]

[－]

[－]

[-]

[-]

Unappropriated retained
earnings
Retained earnings carriedforward
Total distributions[Distributions per unit]
Of which, distributions ofearnings[Distributions of earnings perunit]
Of which, distributions inexcess of retained earnings[Distributions in excess ofretained earnings per unit]
Total distributions in excessof earnings for the allowancefor temporary adjustment

19

(5) Management Policy and Issues to be Addressed
Outlook for Asset Management
It is considered necessary to pay attention to the uncertainties in the Japanese economy, such as stagnation of economic
activities and unstable trends in financial markets due to the spread of COVID-19.
As for Japan’s retail environment, sales at service-oriented stores including restaurants, and some apparel stores havedeclined due to the COVID-19 pandemic, and continued caution is needed in this environment. On the other hand, evenin an environment marked by the pandemic, specialty stores such as supermarkets, drugstores and home & garden thatcater to the day-to-day needs of customers are expected to maintain steady demand.
In the real estate market, uncertainty is rising due to a worsening business sentiment caused by the pandemic. In addition,
investors should especially keep in mind the risk of changes in banks’ lending attitude towards real estate sector, as
amount of banks’ outstanding loans towards real estate sector reached new highs.
Under these circumstances, based on the following management policies, KRR will implement appropriate managementwith the aim of securing stable rental income, steadily growing assets, and building an appropriate financial base from a
medium-to long-term perspective.
(A) Investment Strategy for New Properties and Disposition Policy
We receive a variety of support from many sources in order to achieve the steady growth of our assets and increase thevalue of our assets. One source is the Kenedix Group (Note), including Kenedix, Inc., the parent company of KFM. We
also receive support from our Alliance Companies: Sumitomo Mitsui Finance and Leasing Co., Ltd., SMFL MIRAI
Partners Co., Ltd., Nippon Commercial Development Co., Ltd., P&D Consulting Co., Ltd., and ITOCHU Corporation.
We are implementing a growth strategy that takes full advantage of the external growth opportunities created by the large
and diverse acquisition pipeline made possible by the support of these companies.
When acquiring properties, we make decisions based on all applicable factors with emphasis on four parameters: theretail property’s attractiveness, location, profitability and the tenant mix. By using this selection process, we invest inretail properties with a competitive edge, and good prospects for consistent rental revenue and growth in asset value. We
also invest in carefully selected distribution centers, which supplement retail facilities in providing goods to consumers.
In addition, we invest in land ownership interests underlying retail properties. Regarding land-only properties, we makethese investments after examining the terms of the land leasing agreement, the characteristics of the tenant, the asset
value of the land, and the proportion of land-only properties in our portfolio. We may also consider making an equity
investment in a tokumei kumiai (silent partnership) for the acquisition of preferential negotiation rights and opportunities
for additional revenues, provided that we are given an opportunity to acquire them in the future.
Regarding disposition of a portfolio property, we make decisions based primarily on the significance of these properties
in the context of the portfolio. This is assessed by comprehensive evaluation of the outlook for future profitability andasset value determined based on its current profitability and market trends.
Note:

The Kenedix Group consists of Kenedix, Inc. and its subsidiaries and affiliates.

(B) Management Strategy for Existing Properties
KRR is committed to building a portfolio that can pursue both stability and growth. KRR believes that implementing
integrated asset and property management services makes it possible to properly manage retail properties and distribution
centers and pursue internal growth. Furthermore, this integrated management framework facilitates activities to enliven
local communities where KRR’s properties are located, enabling us to aim for medium to long-term growth in asset
value.
To accomplish these goals, KFM oversees properties owned by KRR while placing priority on the following themes.
・“One-stop” asset management and property management services
・Continuously implementing a retail property management cycle through our in-house property management
services
・Pursuit of internal growth through management of retail properties
・Directing investments and management policies to enliven local communities in the medium to long-term
・Implementing distribution center management“One-stop” asset management and property management services
KRR plans to use the integrated asset management and property management services of KFM for strengthening
relationships with tenants and making the portfolio more profitable.
Continuously implementing a retail property management cycle through KRR’s in-house property management services
KFM provides property management services for all of KRR’s properties. KRR does this for the purposes of performing
retail property management that better reflects the needs of the tenants as well as accumulating know-how and improving
tenant satisfaction. Specifically, KRR uses direct contact with tenant companies at our properties in order to strengthen
tenant relationships and make properties more profitable. To this end, KRR maintains periodic communication withtenants and perform questionnaire surveys to customers for monitoring of market conditions, so that KRR can identify
the needs of tenants and the customers visiting their sites. This process makes it possible to find issues that stand in theway of achieving greater satisfaction for tenants and their customers. Once KRR has discovered points that require
attention, KRR takes actions that take full advantage of the resources and knowledge regarding retail properties within
the Kenedix Group. Solutions include measures such as the effectively utilizing capital expenditures, optimizing tenant20

mix, realizing growth in asset value by pursuing property expansions, and cutting costs, to improve tenant satisfaction
and acquire more know-how.
Pursuit of internal growth through management of retail properties
KRR seeks to improve the profitability and value of its portfolio through proper management of retail properties.
i. Effectively utilize capital expenditure
KRR will use proper and well-timed capital expenditures to increase the satisfaction of tenants and make its properties
more competitive.
ii. Optimize tenant mix
KRR will constantly work on attracting new tenants that are highly appealing to shoppers and replace tenants withothers, optimizing tenant composition, in order to seek stable revenue and higher profitability by attracting morecustomers.
iii. Realize growth in asset value by pursuing property expansions
KRR will use the extensive knowledge involving retail properties of the Kenedix Group and KRR’s Alliance Companies
to utilize the underutilized space (Note) at properties and expand properties. These measures will take into account thecompetitive position of each property, the effect on KRR’s financial position and other factors. By increasing spacethat can be leased, KRR aims to increase revenue and asset value.
Note:

The underutilized space is defined as the area that is calculated by multiplying the floor space ratio, or the ratio of total area of the building
to the site area, which is prescribed in Article 52 of the Building Standards Act (Act No.201 of 1950, including subsequent amendments.)
and applied to each retail property in accordance with the Building Standards Act, City Planning Act (Act No.100 of 1968, including
subsequent amendments.) and other laws and regulations, by the land area that is allowed to be used as a retail property site, and subtractingfrom this figure the actual gross floor area of the building.

Directing investments and management policies to enliven local communities in the medium to long-term
At KRR’s properties, KRR seeks tenants that provide services, holds community involved events and uses other measures
to help enliven the local communities where KRR’s properties are located. KRR believes these activities will contributeto the medium to long-term growth in the asset value of these properties.
Implementing distribution center management
Since tenants of distribution centers that KRR invests may belong to the same business sectors as the tenants occupying
KRR’s retail properties, KRR utilizes KRR’s relationship with KRR’s retail tenants in building up KRR’s relationshipwith tenants of distribution centers. KRR believes these tenant relationships will contribute to the long-term managementof these distribution centers.
(C) Financing
KRR will establish a suitable financial foundation by examining numerous financing methods and selecting the optimum
ones. These decisions will reflect interest rates and other elements of the financial environment. KRR’s goal is to selectfinancing methods that result in the optimum balance between financial stability and the financing cost.
(D) Disclosure of Information
KRR’s policy concerning disclosure activities is to use extensive investor relations activities to distribute a broad range
of information to investors and other related parties as well as to announce information as soon and as accurately as
possible. KRR also distribute information with awareness on ESG (Environmental, Social and Governance) for
sustainable growth of unitholder interest. KRR uses TDnet (Timely Disclosure network) and press releases to meet the
timely-disclosure requirements of the Tokyo Stock Exchange. In addition, KRR proactively posts information on its
website (https://www.krr-reit.com/en/).
(E) Conflicts of Interest
In managing KRR’s assets, KFM has established Retail REIT Department Related-party Transactions Rules, and KFM
abides by the rules in conducting related-party transactions. In addition to managing the assets of KRR, KFM provides
asset management services to other REITs, which may incur conflicts of interests in acquisition of assets. In order toprevent the improper allocation of acquisition opportunities, KFM uses a “preferential right for acquisition opportunities”
system for the property acquisition process. KFM has a pipeline committee, which includes a compliance officer, andoperates in accordance with rules. This system is structured to prevent improper allocation of acquisition opportunities,
and thus, managing conflicts of interest among the REITs managed by KFM. Through these measures, KFM is taking
suitable actions regarding conflicts of interest.

21

(6) Important Subsequent Events
Not applicable(Reference Material)i) Disposition of Assets
KRR has contracted a purchase and sale agreement on November 17, 2020 to dispose of the following asset.
Property
number

Property type

Property nameLocation

Buyer

Disposition price(million yen)
(Note 2)

Disposition date

December 1, 2020(40% quasi co-ownership interests)
Urban
Daikanyama Address Dixsept
Shibuya ward, Undisclosed
April 1, 2021
T-4
6,644
Station-Front SC(Note 1)
Tokyo
(Note 3)(30% quasi co-ownership interests)
October 1, 2021
(30% quasi co-ownership interests)
Note 1: The purchase and sale agreement with the buyer on the disposition of the asset falls under the category of forward commitment made by investment
corporations as stipulated in the “Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc.” ruled by the
Financial Service Agency of Japan. In case the agreement is terminated, either of the parties responsible for the termination shall compensate forthe damage resulted from the termination by paying a penalty corresponding to 20% of the disposition price (excluding consumption taxes andlocal consumption taxes) to the other party. However, since KRR is the seller in this transaction and there is no concern such as financing inexecuting the disposition, KRR believes that the risk of KRR paying the penalty and making an important impact on its financial condition is small.
Note 2: “Disposition price” represents the amount specified in the purchase and sale agreement for the trust beneficiary interests, exclusive of the various
expenses (disposition expenses, property tax, etc.) required in the disposition of the asset
Note 3: The name of the buyer and other information are undisclosed as KRR has not obtained the buyer’s consentii) Building under construction
In Yokohama Kamigo Distribution Center, an asset managed by KRR, a new building with a total floor area (Note 1) of
25.79 square meters is under construction by utilizing unutilized floor space (property expansion). The total construction
cost (Note 2) is assumed to be approximately 9.1 million yen (excluding consumption tax). Completion and transfer ofthe new building is scheduled to be in late February 2021.
Note 1: The total floor area indicates the planned total floor space of the new building as of the date of this material. The design and other details of thebuilding may change in the future and the total floor areamay change.
Note 2: “The total construction cost is the current estimate (excluding consumption tax), based on the current design of the building. The design and otherdetails of the building may change in the future, and the total construction costs of the buildingmay change.

22Profile of KRR(1) Status of Unitholders’ Capital
Eleventh fiscal period
Seventh fiscal period
Eighth fiscal period
Ninth fiscal period
Tenth fiscal period(From April 1, 2018 to (From October 1, 2018 (From April 1, 2019 to (From October 1, 2019 (From April 1, 2020 to
September 30, 2020)
September 30, 2018)
to March 31, 2019)
September 30, 2019)
to March 31, 2020)

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

5,000,000 units

5,000,000 units

5,000,000 units

5,000,000 units

5,000,000 units

507,700 units

507,700 units

507,700 units

536,177 units

536,177 units

Unitholders’ capital

113,399 million yen

113,399 million yen

113,399 million yen

121,183 million yen

121,183 million yen

Number of unitholders

12,261

10,931

10,907

13,558

13,941(2) Matters Concerning Investment Units
The following is a list of major unitholders as of September 30, 2020.
Name

Location

Number of units
held(Units)Ratio (%)
(Note 1)

THE MASTER TRUST BANK OF JAPAN, LTD.
(Trust Acct.)

2-11-3 Hamamatsucho, Minato-ku, Tokyo

88,383

16.48

CUSTODY BANK OF JAPAN, LTD.
(Trust Acct.) (Note 2)

1-8-12 Harumi, Chuo-ku, Tokyo

53,408

9.96

THE NOMURA TRUST AND BANKING CO.,LTD. (Investment Trust Acct.)

2-2-2 Otemachi, Chiyoda-ku, Tokyo

29,471

5.49

CUSTODY BANK OF JAPAN, LTD.
(Securities Investment Trust Account) (Note 2)

1-8-12 Harumi, Chuo-ku, Tokyo

14,291

2.66

MIZUHO TRUST & BANKING CO., LTD

1-2-1 Yaesu, Chuo-ku, Tokyo

13,717

2.55

AOZORA BANK, LTD.

6-1-1 Kojimachi, Chiyoda-ku, Tokyo

11,958

2.23

KENEDIX, INC.

2-1-6 Uchisaiwaicho, Chiyoda-ku, Tokyo

10,050

1.87

8,314

1.55

8,222

1.53

7,774

1.44

245,558

45.80

Shinagawa Intercity Tower A
2-15-1 Kohnan, Minato-ku, Tokyo
Standing proxy: Mizuho Bank, Ltd.
3-11-1 Nihonbashi, Chuo-ku, Tokyo
Standing proxy: The Hongkong and Shanghai
Banking Corporation Ltd.
Shinagawa Intercity Tower A
2-15-1 Kohnan, Minato-ku, Tokyo
Standing proxy: Mizuho Bank, Ltd.

STATE STREET BANK WEST CLIENTTREATY 505234
SSBTC CLIENT OMNIBUS ACCOUNT
J.P. MORGAN BANK LUXEMBOURG S.A.
385576
Total

Note 1: “Ratio” is the ratio to total number of units issued and outstanding, rounded down to the second decimal place.
Note 2: Japan Trustee Services Bank, Ltd. and Trust and Custody Services Bank, Ltd. merged with JTC Holdings, Inc., the parent compan y of bothcompanies, effective July 27, 2020, with Japan Trustee Services Bank, Ltd. as the surviving entity of the absorption merger, and the surviving
company changed its name to Japan Custody Bank, Ltd. as of the same date.

23

(3) Matters Concerning Directors and Auditori) Executive Director, Supervisory Director, and Independent Auditor as of September 30, 2020
Position

Name

Executive Director Moyuru Watanabe

Director & COO, Head of Retail REIT Department, KFM

1,500

Yoshitoshi Yasu

Yoshitoshi Yasu Certified Public Accountant / Tax Accountant Office
Auditor of YOKU MOKU Holdings Co., Ltd.
Auditor of YOKU MOKU Co., Ltd.
Auditor of YOKU MOKU Crea Co., Ltd.
Auditor of Fujiricoh Trading Co., Ltd.
Auditor of CLOVER Inc.
Auditor of Kabou-isshin Co., Ltd.
Director & member of Audit comittee of Looop Inc.

1,500

Akiko Yamakawa

Partner of Vanguard Lawyers Tokyo
External Audit & Supervisory Board Member of TIS Inc.

1,500

Supervisory
Director(Note)

Independent Auditor Ernst & Young ShinNihon LLC
Note:Total amount of fees
paid during the period(thousand yen)

Other concurrent title

11,800－Although supervisory directors are concurrently officers in corporations other than the ones stated above, there are no conflicts of interest
between KRR and any other corporations, including those stated above.

ii) Policy on Decisions to Terminate or not Reappoint the Accounting Auditor
The KRR Board of Directors will consider the termination of the Accounting Auditor pursuant to the provisions of theInvestment Trust Act of Japan. The directors will also consider not reappointing the Accounting Auditor after examining
the quality of audits, compensation for auditing and other applicable items.
(4) Asset Manager, the Custodian and Administrators
Asset manager, the custodian and administrators as of September 30, 2020 are as follows.
Operational role

Name

Asset Manager

Kenedix Real Estate Fund Management, Inc.

Asset Custodian

Mizuho Trust & Banking Co., Ltd.

Unitholders’ Register Agent

Mizuho Trust & Banking Co., Ltd.

General Administrator

Mizuho Trust & Banking Co., Ltd.

Financial Agent for Investment Corporation Bonds

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

24

Status on Investment Properties(1) Component of Assets
Type ofspecified asset

Areas

Property type

(Note 1)Tenth fiscal period
as of March 31, 2020
Total amount held
(Millions of yen)
(Note 2)

Shopping
centers fordaily needs
Trust beneficiaryinterest inreal estate

Note 2:
Note 3:

Total amount held
(Millions of yen)

Ratio (%)
(Note 3)(Note 2)

Ratio (%)
(Note 3)

Tokyo metropolitan
area

94,70338.0

96,613

38.4

Greater Osaka area

46,272

18.6

46,140

18.3

Greater Nagoya area

23,542

9.4

22,055

8.8

Fukuoka area

7,932

3.2

7,891

3.1

Ordinance-designatedcities, core cities andother areas

43,994

17.7

43,923

17.5

Other retailproperties

－

－

－

－

－

Distribution
centers

Tokyo metropolitan
area

7,883

3.2

7,954

3.2

Total of trust beneficiary interests in real estate

224,32890.0

224,579

89.2

Distribution
centers

3,699

1.5

3,686

1.5

Total of real estate

3,699

1.5

3,686

1.5

Bank deposits and other assets

21,218

8.5

23,389

9.3

Total assets

249,246100.0

251,655

100.0

Real estate

Note 1:Eleventh fiscal period
as of September 30, 2020

Tokyo metropolitan
area“Areas” are categorized to the Tokyo metropolitan area, the Greater Osaka area, the Greater Nagoya area, the Fukuoka area and Ordinancedesignated cities, core cities and other areas. References to “Tokyo metropolitan area” are to the area that consists of Tokyo, Kanagawa,
Saitama and Chiba prefectures. References to the “Greater Osaka area” are to the area that consists of Osaka, Kyoto, Hyogo, Nara and Shiga
prefectures. References to the “Greater Nagoya area” are to the area that consists of Aichi, Gifu and Mie prefectures. References to the“Fukuoka area” are to the area that consists of Fukuoka prefecture. “Ordinance-designated cities, core cities and other areas” refers to cities
designated by government ordinance, which have populations of 500,000 persons or more, core cities, which have populations of 200,000
persons or more, and to other areas with a population fewer than 200,000 persons, which KRR believes will have suitable customer traffic
from surrounding areas.
“Total amount held” is the amount allocated in the balance sheets as of the end of fiscal period (figures are on a net book value basis after
deducting depreciation), and is rounded down to the nearest million.
“Ratio” is the ratio of the amount allocated in the balance sheets to the total assets rounded to the nearest tenth.

25

(2) Major Assets Owned
The following are major assets owned (the ten largest properties by book value) by KRR as of September 30, 2020.
Property
numberO-4

Property nameBlumer HAT Kobe

Book value(million yen)
11,260

Leasable area(m2)
(Note 1)

Leased area(m2)
(Note 2)

23,775.88

23,562.97

48,697.29

48,560.69

Occupancy
rate(%)(Note 3)

Ratio tototal rental
revenue(%)

Primary use(Note 4)

99.1

5.8

Retail(Note 5)

99.7

6.2

RetailR-10

Sun Street Hamakita

10,661

R-1

Roseo Mito

9,718

48,296.15

48,296.15

100.0

4.6

Retail

T-2

MONA Shin-Urayasu

8,866

9,956.85

9,722.73

97.6

6.0

RetailO-1

Blumer Maitamon

8,388

30,290.85

30,187.69

99.7

5.9

Retail

N-6

Resora Obu Shopping Terrace

8,095

19,909.33

19,346.14

97.2

3.5

Retail－(Note 5)N-4

Homecenter Kohnan Sunadabashi

6,888

20,329.07

20,329.07

100.0(Note 7)RetailO-5Carino Esaka

6,762

7,540.58

7,345.26

97.4

3.4

RetailO-6

COMBOX Komyoike

6,206

25,530.44

100.0

2.7

Retail－Retail

T-26

25,530.44(Note 6)

Kalsa Hiratsuka

6,017

14,195.00

14,195.00

100.0(Note 7)

Total

82,865248,521.44

247,076.14

99.4(Note 7)－Note 1: “Leasable area” is equivalent to gross floor area of space that KRR considers to be available for lease in each property, rounded to the nearest
tenth. For land-only properties, leasable area is equivalent to land area as described in the property registry.
Note 2: “Leased area” indicates the total leased area based on the lease agreements for each property as of September 30, 2020. As for lease agreementsof buildings, the leased area of warehouses and land are excluded. As for pass-through type master leases, the leased area based on the leaseagreements between the master lessee and the end-tenants as of September 30, 2020 is shown. As for sublease type master leases, the leased
area to the master lessee is shown.
Note 3: “Occupancy rate” is calculated by dividing leased area by leasable area as of September 30, 2020, rounded to the nearest tenth.
Note 4: “Ratio to total rental revenue” is calculated by rental revenue each property divided by total rental revenue.
Note 5: The area that KRR owns exclusively as proportion to the co-ownership interest (co-ownership ratio: 90%).
Note 6: The total area that KRR owns exclusively as a compartmentalized ownership interest (retail space).
Note 7: KRR has not obtained consent from the tenant(s) to release this information.

26

(3) Overview of the Portfolio[Overview of Assets Owned]
The following summarizes the real estate or the real estate properties in trust owned by KRR as of September 30, 2020.
Area(Note1)

Property
number
T-2
T-3
T-4

Propertytype
Urban
Station-Front SC
Urban
Station-Front SC
Urban
Station-Front SC

Property nameLocation(City/ward,
prefecure)(Note 2)MONA Shin-Urayasu

Urayasu, Chiba

Passaggio Nishiarai

Adachi ward, Tokyo

Daikanyama Address
Dixsept

Shibuya ward, Tokyo

T-5

NSC

Unicus Ina

Kitaadachi-gun, Saitama

T-6

NSC

Yorktown Kita-Kaname

Hiratsuka, Kanagawa

T-7

NSC

Unicus Yoshikawa

Yoshikawa, Saitama

T-8

SS

T-9

NSC

T-10

SS

T-11

NSC

Unicus Kamisato (Land)

Kodama-gun, Saitama

T-12

NSC

Unicus Konosu (Land)

Konosu, Saitama

T-13

SM

T-15

NSC

T-16

SS

T-17

SM

T

Sports Club
Renaissance Fujimidai
Super Viva Home
Iwatsuki (Land)
K’s Denki ShonanFujisawa (Land)

Inageya Yokohama
Minamihonjuku (Land)
Nakamachidai
Tokyu Store
Central Wellness Club
Nagatsuta MinamidaiLife Kameido
Totsuka-Fukaya
Shopping Center (Land)
Yumemachi
Narashinodai Mall

Nerima ward, Tokyo
Saitama, Saitama
Fujisawa, Kanagawa

Yokohama, Kanagawa
Yokohama, Kanagawa
Yokohama, Kanagawa
Koto ward, Tokyo

T-18

NSC

T-19

NSC

T-20

NSC

Kawamachi Yahagi Mall

Chiba, Chiba

T-21

SS

Prime Square Jiyugaoka

Meguro-ku, Tokyo

T-22

SS

Round1 IchikawaOnitaka

Ichikawa, Chiba

T-23

SM

Ozeki Tokiwadai

Itabashi ward, Tokyo

T-24

SS

T-25

NSC

T-26

NSC

Kalsa Hiratsuka

Hiratsuka, Kanagawa

T-27

NSC

Monenosato Mall

Yotsukaido, Chiba

T-28

NSC

T-29

NSC

T-30

SM

Konami Sports Club
Shibuya
Apita Terrace Yokohama
Tsunashima

KDX Chofu Building(Retail wing)
Across Plaza Urayasu
Higashino (Land)
Comfort Market
Nishi-Magome

Yokohama, Kanagawa
Funabashi, Chiba

Shibuya ward, Tokyo
Yokohama, Kanagawa

Chofu, Tokyo
Urayasu, Chiba
Ota ward, Tokyo

Ownership
form
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estateBook value(in million yen)

Evaluation value(in million yen)
(Note 3)

8,866

10,000

5,695

6,620

5,363

6,120

4,404

5,240

3,881

4,350

3,518

3,860

2,457

2,750

4,890

5,470

3,210

3,470

3,043

3,050

1,726

1,780

1,462

1,390

3,351

3,750

1,740

1,780

1,481

1,490

4,228

4,320

3,380

3,520

3,125

3,240

2,979

2,820

1,843

1,970

1,273

1,340

3,593

3,390

5,924

6,170

(Note 4)(Note 4)

6,017

6,020

2,499

2,530

2,387

2,480

2,283

2,310

2,003

2,000

27

Area
(Note1)O

Property
type

O-1

NSC

Blumer Maitamon

Kobe, Hyogo

O-2

SM

Life Takadono (Land)

Osaka, Osaka

O-3

NSC

DCM Kahma MEGADon
QuijoteUNY Omihachiman, Shiga
Omihachiman

O-4

NSC

Blumer HAT Kobe

Kobe, Hyogo

Carino Esaka

Suita, Osaka

COMBOX Komyoike

Izumi, Osaka

O-5
O-6

N

F

Location(City/ward,
prefecure)

Property
numberUrban StationFront SC
Urban StationFront SC

Property name(Note 2)

O-7

SM

Hankyu Oasis
Hirakatadeguchi

Hirakata, Osaka

O-9

SM

Life Nishi-Tengachaya

Osaka, Osaka

O-10

NSC

O-11

NSC

N-1

SS

N-2

NSC

N-4

SS

N-6

NSC

N-7

SM

F-1

SM

F-2

SS

F-3

NSC

R-1

NSC

R-2

SS

R-3

SS

R-4

NSC

Million Town
Amagasaki, Hyogo
Tsukaguchi (Land)
Habikigaoka Shopping
Habikino, Osaka
Center
DCM Kahma
Nagoya, Aichi
Nakagawa Tomita (Land)
Valor Ichinomiya-Nishi
Homecenter Kohnan
Sunadabashi
Resora Obu Shopping
Terrace
Valor Nakashidami(Land)
Sunny NomaIchinomiya, Aichi
Nagoya, Aichi
Obu Aichi
Nagoya, Aichi
Fukuoka, Fukuoka

Round1 Stadium
Hakata-Hanmichibashi
Kurume-Nishi Shopping
CenterRoseo Mito

Fukuoka, Fukuoka
Kurume, Fukuoka
Mito, Ibaraki

K’s Denki Aomori
HontenSuper Sports Xebio
Aomori-Chuo
Ashico Town Ashikaga
Yorktown ShindenHigashi
Kasumi Technopark
SakuraAomori, Aomori
Aomori, Aomori
Ashikaga, Tochigi

R-5

NSC

R-6

SM

R-8

NSC

P-1 Plaza Tenno

Hamamatsu, Shizuoka

NSC

Seiyu Rakuichi Moriya(Land)Moriya, Ibaraki

R

R-9
R-10

Sendai, Miyagi
Tsukuba, Ibaraki

Ownership
form
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estateBook value(in million yen)

Evaluation value(in million yen)
(Note 3)

8,388

9,610

2,727

3,140

2,122

2,590

11,26011,000

6,762

7,190

6,206

6,490

1,295

1,330

1,535

1,690

3,772

3,980

2,069

2,020

2,351

2,690

2,133

2,360

6,888

7,280

8,095

7,050

2,587

2,560

1,390

1,640

4,950

5,760

1,550

1,840

9,718

12,000

1,436

1,520

864

912

4,441

4,660

3,237

2,610

836

879

4,135

4,350

4,320

4,260

10,661

11,160

4,271

4,420

NSC

Sun Street Hamakita

Hamamatsu, Shizuoka

R-11

SS

Costco Wholesale
Sapporo Warehouse

Sapporo, Hokkaido

L-1

L

Zama Distribution Center Zama, Kanagawa

Real estate

1,472

1,690

L-2

L

Real estate

1,357

1,600

L-3

L

4,090

L

957

970

L-5

L

Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate

3,836

L-4

3,160

3,440

L-6

L

Oppama Distribution
CenterMusashi Ranzan
Distribution Center
Yokohama Kamigo
Distribution Center
Gyoda Distribution
CenterShinjuku Nishiochiai
Distribution Center

Real estate

856

821

228,266

242,832

T

Total

Yokosuka, Kanagawa
Hiki-gun, Saitama
Yokohama, Kanagawa
Gyoda, Saitama
Shinjuku ward, Tokyo(Note 4)(Note 4)(Note 4)(Note 4)Note 1: Properties are categorized into the following six types of properties: NSC (Neighborhood Shopping Center), SM (Supermarket), CSC (Community
Shopping Center), Urban Station-Front SC (Urban Station-Front Shopping Center), SS (Specialty Store) and L (Logistics facility).
We categorize shopping centers for daily needs as follows.
Type of shopping centers for daily
Features
Trade area
needs

28

NSC (Neighborhood Shopping
Centers)

Shopping centers with a supermarket as an anchor or core tenant and several
specialty store tenants

3km-5km

SM (Supermarkets)

Stand-alone stores that primarily provide groceries, with a retail trade area

3km

CSC (Community Shopping Centers)

Larger shopping centers than NSC, which have a supermarket as an anchor or coretenant in addition to specialty store tenants

5km-10km

Shopping centers that are located in the immediate vicinity of an urban public
3km-10kmtransportation station, which take advantage of stable foot traffic
Single- or multiple-tenant shopping centers that specialize in a single type ofSS (Specialty Stores)
merchandise or service, such as drug stores, convenience stores, health clubs or
1km-10km
electronic appliance stores“T”, “O”, “N”, “F” and “R” hereinafter refers to Tokyo metropolitan area, the Greater Osaka area, the Greater Nagoya area, the Fukuoka area andOrdinance-designated cities, core cities and other areas, respectively.
Note 2: “Location” indicates the residential address. For those without a residential address, the building or land address on the registry is shown.
Note 3: “Evaluation value” shows the appraisal value stated on the real estate appraisal report created by the real estate appraisers of Daiwa Real EstateAppraisal Co., Ltd., Japan Real Estate Institute and The Tanizawa Sōgō Appraisal Co., Ltd. in accordance with the methods and standards for asset
valuation as stipulated in the KRR Articles of Incorporation as well as the regulations as stipulated by The Investment Trusts Association, Japan.
Note 4: The amount and proportion of quasi co-ownership interests that KRR owns are shown.
Urban Station-Front Shopping Centers

29

[Earnings Performance for the Individual Properties]
Property
number

Propertytype

Property nameTenth fiscal period
As of March 31, 2020
RentalNumberrevenue
Occupancyof tenants(millionrate (%)(Note 1)yen)

Eleventh fiscal period
as of September 30, 2020
RentalRatio toRatio toNumberrevenue
total rental
Occupancy
total rentalof tenants(millionrevenuerate (%)
revenue(Note 1)
yen)
(%)
(%)
(Note 2)

(Note 2)

T-2
T-3
T-4

Area

Urban
Station-Front SC
Urban
Station-Front SC
Urban
Station-Front SC

MONA Shin-Urayasu

1(57)

99.5

528

6.4

1(55)

97.6

498

6.0

Passaggio Nishiarai

1(42)

100.0

303

3.7

1(41)

100.0

279

3.4

Daikanyama Address
Dixsept

1(27)

99.1

267

3.3

1(26)

96.0

250

3.0

1.7

1

100.0

141

1.7

T-5

NSC

Unicus Ina

1

100.0

143

T-6

NSC

Yorktown KitaKaname

1

100.0

－

－

100.0

－

(Note 3)

1－(Note 3)(Note 3)(Note 3)

T-7

NSC

Unicus Yoshikawa

1(10)

99.6

132

1.6

1(10)

99.6

134

1.6

T-8

SS

1

100.0

1

100.0

T-9

NSC

1

100.0

1

100.0

T-10

SS

1

100.0

1

100.0

T-11

NSC

1

100.0

75

0.9

1

T-12

NSC

1

100.0

43

0.5

T-13

SM

1

T-15

NSC

T-16

SS

T-17

SM

T-18

NSC

T-19

NSC

T-20

NSC

T-21

SS

T-22

SS

T-23

SM

T-24

SS

T-25

NSC

T-26

NSC

T-27

NSC

T-28

NSC

T-29

NSC

T-30

SM

Sports Club
Renaissance
Fujimidai
Super Viva Home
Iwatsuki (Land)
K’s Denki ShonanFujisawa (Land)
Unicus Kamisato(Land)
Unicus Konosu(Land)
Inageya Yokohama
Minamihonjuku(Land)
Nakamachidai Tokyu
Store
Central Wellness
Club Nagatsuta
Minamidai
Life Kameido
Totsuka-Fukaya
Shopping Center(Land)
Yumemachi
Narashinodai Mall
Kawamachi Yahagi
Mall
Prime Square
Jiyugaoka
Round1 IchikawaOnitaka
Ozeki Tokiwadai
Konami Sports Club
Shibuya
Apita Terrace
Yokohama
Tsunashima－－(Note 3)(Note 3)－－(Note 3)(Note 3)

100.0

75

0.9

1

100.0

43

0.5

100.0

1

100.0

1

100.0

1

100.0

1

81.0

1

81.0

1

100.0

1

100.0

2

100.0

2

100.0

1(14)

100.0

141

1.7

1(14)

1(12)

100.0

114

1.4

2

－

－

(Note 3)(Note 3)－－(Note 3)(Note 3)

100.0

142

1.7

1(12)

100.0

112

1.4

100.0

2

100.0

1

100.0

1

100.0

1

100.0

1

100.0

1

100.0

－
(Note 3)－－－(Note 3)(Note 3)

100.0

96

1.2

3

100.0

85

1.0

1

100.0

－

－

(Note 3)(Note 3)(Note 3)

-

1

100.0

44

0.5

(Note 3)

1

100.0

1

100.0

1

100.0

Kalsa Hiratsuka

3

100.0

3

100.0

Monenosato Mall

1(6)

100.0

80

1.0

1(6)

3

100.0

75

0.9

1

100.0

－

－

(Note 3)---

KDX Chofu
Building (Retailwing)
Across Plaza Urayasu
Higashino (Land)
Comfort Market
Nishi-Magome

30

Area

Property
number

Property
type

O-1

NSC

Blumer Maitamon

50

99.7

O-2

SM

Life Takadono (Land)

1

100.0

NSC

DCM Kahma MEGADon Quijote UNY
Omihachiman

O-4

NSC

O-6

Urban StationFront SC
Urban StationFront SC

O-7

SM

O-8

SS

O-9

SM

O-10

NSC

O-11

NSC

N-1

SS

N-2

NSC

N-4

SS

N-5

SS

N-6

NSC

N

F

Property name

O-3

O-5
O

Ninth fiscal period
Tenth fiscal period
as of September 30, 2019
As of March 31, 2020
RentalRentalRatio toRatio toNumberrevenue
Numberrevenue
Occupancy
total rental
Occupancy
total rentalof tenants(millionof tenants(millionrate (%)
revenuerate (%)
revenue(Note 1)
(Note 1)
yen)
yen)
(%)
(%)
(Note 2)
(Note 2)

R-4

NSC

R-5

NSC

R

3.4

1

100.0

225

2.7

2.7

(Note 4)

Resora Obu Shopping
TerraceRound1 Stadium
HakataHanmichibashi
Kurume-Nishi
Shopping Center
Roseo Mito
K’s Denki Aomori
HontenSuper Sports Xebio
Aomori-Chuo
Ashico Town Ashikaga
Yorktown ShindenHigashi
Kasumi Technopark
Sakura
P-1 Plaza Tenno

R-9

NSC

Seiyu Rakuichi Moriya(Land)

R-10

NSC

R-11

SS

L-1

L

L-2

L

L

280

226

NSC

L-4

97.4

100.0

R-8

L

1(28)

1

SM

L-3

5.8

3.7

R-6

T

477

301

1

100.0

-

-

1

100.0

1

100.0

2

100.0

1

100.0

1

100.0

1

100.0

1

100.0

1(39)

97.1

100.0

SS

99.1

98.8

1

R-3

－
(Note 3)1(29)Hankyu Oasis
Hirakatadeguchi
WelciaKishiwadakamori(Land) (Note 4)
Life
Nishi-Tengachaya
Million Town
Tsukaguchi (Land)
Habikigaoka
Shopping Center
DCM Kahma
Nakagawa Tomita(Land)
Valor IchinomiyaNishi
Homecenter Kohnan
Sunadabashi
K’s Denki ShinMoriyama (Land)－－(Note 3)(Note 3)

44

0.5

－

－

(Note 3)(Note 3)－－(Note 3)(Note 3)

278
－

1

100.0

44

0.5

1

100.0

2

100.0

1

100.0

1

100.0

1

100.0

-

-

1(40)

97.2

1

100.0

1

100.0

－

－

(Note 3)(Note 3)

285

3.5

－

－

(Note 3)(Note 3)

－

100.0

1

100.0

0.6

4

100.0

52

0.6

4.7

1(23)

100.0

382

4.6

1

100.0

1

100.0

1(30)

99.4

2

100.0

－

－

(Note 3)(Note 3)

251

3.1

－

－

(Note 3)(Note 3)

1

100.0

1(7)

100.0

137

1

100.0

(Note 3)Sun Street Hamakita

1(51)

99.5

516

Costco Wholesale
Sapporo Warehouse
Zama Distribution
Center
Oppama Distribution
CenterMusashi Ranzan
Distribution Center
Yokohama Kamigo
Distribution Center

1

100.0

(Note 3)

1

100.0

1

100.0

100.0

-

(Note 3)

1

1

-

－

383

100.0

-

(Note 3)

100.0

1

-

(Note 3)

1(23)

100.0

(Note 3)(Note 3)52

2(Note 3)

－

100.0

95.0

100.0

－

4

1(28)

－

1

(Note 3)

100.0

100.0

－

(Note 3)

1

1

3.4
－

5.9

－

Carino Esaka
COMBOX Komyoike

485(Note 3)1(41)Sunny Noma

SS

100.0

5.6

SM

R-2

2

464

F-1

NSC

(Note 3)

100.0

99.5

100.0

R-1

(Note 3)

1

1(42)

1

NSC

－

99.7

Blumer HAT Kobe

Valor Nakashidami(Land)

F-3

－

50

100.0

SM

SS

5.8

2

N-7

F-2

478

－

－

－

－

(Note 3)(Note 3)

255

3.1

－

－

(Note 3)(Note 3)

1.7

1

100.0

1.7

1(7)

100.0

138

－

1

100.0

－

－

(Note 3)(Note 3)(Note 3)

6.3

1(53)

99.7

513

6.2

－

1

100.0

－

－

(Note 3)(Note 3)

1

100.0

1

100.0

(Note 3)－－(Note 3)(Note 3)

1

100.0

2

100.0

－

－

(Note 3)(Note 3)

31

L-5
L-6

Gyoda Distribution
CenterShinjuku Nishiochiai
Distribution Center

L
L
Total

1

100.0
－

1

100.0

－

－

－

1

100.0

－

－

(Note 3)(Note 3)(Note 3)

496

99.4

8,324

100.0

496

99.7

8,272

100.0

Note 1: Number of tenants is based upon the number of lease agreements with respect to the building(s) (or land in the case of land -only properties withleasehold interest) on each such property used mainly as stores and offices, as of September 30, 2020. Where one lessee leases more than one sectionof the property, the lessee is counted as a tenant for each section leased within the property. Where pass-through type master lease agreements areentered into, the number of master lessees is with the number of end-tenants indicated in parentheses. Where sublease type master lease agreements
are entered into, the indicated, number of master lessee is shown. As for the “Total” of “Number of tenants”, the number of end-tenants is used forpass-through type master leases and the number of master lessee is used for sublease type master leases.
Note 2: Rental revenue is based on total rental and other operating revenues of each property.
Note 3: KRR has not obtained consent from the tenant(s) to release this information.
Note 4: Welcia Kishiwadakamori (Land) was disposed of on October 31, 2019 and K’s Denki Shin-Moriyama (Land) was disposed on September 30, 2020.

32

(4) Specified Transaction
As of September 30, 2020, the contract amount and fair value of the outstanding transaction under the specified
transaction account of KRR are as follows.
Contract amount (million yen) (Note 1)
Type

Due after one year

Fair value(million yen)
(Note 2) (Note 3)(Note 1)OTC

Interest rate swaps:
Receive floating / pay fixed

71,31061,710

-354

Total

－

71,31061,710-354

Note 1: The contract amount of interest rate swaps is based on its notional principal.
Note 2: For the financial reporting purpose, the transaction is not measured at fair value but accounted for under special treatment for interest
rate swaps based on “Accounting Standards for Financial Instruments” under Japanese GAAP.
Note 3: Based on the amount provided by counterparty financial institutions.

(5) Other Assets
Real estate or beneficiary rights of real estate in trust owned by KRR are disclosed in “(3) Overview of the Portfolio”.
KRR has no other specified assets.
(6) Asset in Geographic Area
KRR owns no asset in specified area other than Japan.

33

Capital Expenditures(1) Planned Capital Expenditures
The table below shows major capital expenditures (Note) for renovations, repairs and other projects that are planned for the
Eleventh fiscal period ending March 31, 2021. These expenditures are for real estate owned by KRR and real estate intrusts in which KRR owns trust beneficiary rights. These planned projects may include some expenditure that will berecorded as expenses rather than capital expenditures for accounting purposes.
Property
number
T-2
T-2
O-1
L-5
R-4
L-2
L-1

Property name
MONA
Shin-Urayasu
MONA
Shin-Urayasu
Blumer Maitamon
Gyoda Distribution
CenterAshico Town
Ashikaga
OppamaDistribution Center
Zama Distribution
CenterLocation

Urayasu, Chiba
Urayasu, Chiba
Kobe, Hyogo

PurposeSchedule

Exterior wall repair work
(Phase 1)
Air Conditioning equipment
replacement (phase 2)
Exterior wall repair work
(phase 2)

From October 2020
to March 2021
From October 2020
to March 2021
From October 2020
to March 2021
From October 2020
to March 2021
From October 2020
to March 2021
From October 2020
to March 2021
From October 2020
to March 2021

Gyoda, Saitama Exterior wall repair work
Ashikaga,
Tochigi
Yokosuka,
Kanagawa
Zama,
Kanagawa

Solar panel installation
Water supply system
Replacement
Lighting system Replacement

Planned amount of capital expenditure(Millions of yen)
Payment for the Total amountTotal
periodalready paid
99

-

-

66

-

-

51

-

-

17

-

-

15

-

-

95
76

(2) Capital Expenditures during the Fiscal Period under Review
The table below shows major capital expenditures for renovations, repairs and other projects in the fiscal period underreview.
The amount of capital expenditures in the fiscal period under review was 544 million yen. There were also expendituresof 239 million yen that were recorded as repair expenses. In total KRR spent 783 million yen on the projects.
Property
number

Property nameLocation

PurposeSchedule

Capital expenditure(Millions of yen)

T-2

MONA ShinUrayasu

Urayasu, Chiba

Air conditioning equipment replacement(phase 1)

From April 2020
to September 2020

183

R-4

Ashico Town
Ashikaga

Ashikaga, Tochigi

Compartment division construction

From June 2020
to September 2020

89

O-1

Blumer Maitamon

Kobe, Hyogo

Exterior wall repair work (phase 1)

From April 2020
to September 2020

75

T-20

Kawamachi Yahagi
MallChiba, Chiba

Solar panel installation

From June 2020
to July 2020

41

R-10

Sun Street Hamakita

Hamamatsu,
Shizuoka

Installation of a parking lot fill-up control
systemFrom July 2020
to September 2020

26
(Note 1)Others

128

Total

544

Note 1: The amount corresponding to the quasi co-ownership interest held by the KRR is shown.
Note 2: Construction work related to the construction (property expansion) of the restaurant building at Yokohama Kamigo Distribution Center is not includedin this item (2), as it involves the acquisition of a new building and does not fall under the category of capital expenditures for renovation, etc.

(3) Reserved Amount for Long-Term Repairs, Maintenance and Renovation Plans
Not applicable34

Expenses and Liabilities(1) Expenses related to Asset Management
Tenth fiscal period(From October 1, 2019
To March 31, 2020)
Asset management fees (Note)(in thousands of yen)
Eleventh fiscal period(From April 1, 2020
To September 30, 2020)

685,500

706,110

Asset custody fees

9,643

10,098Administrative service fees

32,18932,656

Directors' compensation

4,500

4,500

Other operating expenses

98,176

83,784

Total

830,010

837,151

Note: In addition to above, the amount of asset management fees capitalized are 253,581 thousand yen for the tenth fiscal period and 20,390 thousand yen
for the eleventh fiscal period related to the acquisition of properties that entered the book value of the properties, and 2,800 thousand yen for thetenth fiscal period and 7,639 thousand yen for the eleventh fiscal period related to the disposition of properties.

35

(2) Status of Borrowings
Borrowings on a financial institution basis as of September 30, 2020 are as follows.
Classification

LenderBalance at the
Increase during the
beginning of period
period(Thousands of yen) (Thousands of yen)

Decrease during
the period(Thousands ofyen)

Balance at the endof period(Thousands of yen)

Short-Term
Loans Payable

Sumitomo Mitsui Banking Corporation

700,000－

700,000－

Sumitomo Mitsui Banking Corporation

2,750,000－－

2,750,000

3,450,000－

700,000

2,750,000

3,000,000－－

3,000,000

MUFG Bank, Ltd.

700,000－－

700,000

Sumitomo Mitsui Trust Bank, Ltd.

500,000－－

500,000

Aozora Bank, Ltd.

450,000－－

450,000

Resona Bank, Ltd.

450,000－－

450,000

Mizuho Bank, Ltd.

400,000－－

400,000

Development Bank of Japan Inc.（Note5）

1,500,000－－

1,500,000

Sumitomo Mitsui Banking Corporation

2,400,000－－

2,400,000

MUFG Bank, Ltd.

Sub Total
Sumitomo Mitsui Banking Corporation

Current Portion of Long-Term Loans Payable

1,600,000－－

1,600,000

Sumitomo Mitsui Trust Bank, Ltd.

550,000－－

550,000

Resona Bank, Ltd.

500,000－－

500,000

Aozora Bank, Ltd.

500,000－－

500,000

Mizuho Bank, Ltd.

350,000－－

350,000

Mizuho Trust & Banking Co., Ltd.

300,000－－

300,000

Averageinterest rate
(Note 1)
(Note 2)
(％)

0.459

January 31, 2021

0.865

February 10, 2021

0.925

February 10, 2021

0.459

February 28, 2021

500,000－－

500,000－－

2,600,000

Aozora Bank, Ltd.（Note6）

500,000－－

500,000

MUFG Bank, Ltd.（Note6）

400,000－－

400,000

Sumitomo Mitsui Trust Bank, Ltd. （Note6）

300,000－－

300,000

Resona Bank, Ltd.（Note6）

300,000－－

300,000

MUFG Bank, Ltd.（Note5）（Note6）600,000－－

600,000

0.400

Development Bank of Japan Inc.（Note5）（Note6）

500,000－－

500,000

0.553

Mizuho Bank, Ltd. （Note5）（Note6）

400,000－－

400,000

0.553

Mizuho Trust & Banking Co., Ltd.（Note5）（Note6）200,000－－

200,000

0.553－

1,900,000

1,000,000

900,000

0.460

19,500,000

1,900,000

1,000,000

20,400,000

Sumitomo Mitsui Banking Corporation（Note6）

Sumitomo Mitsui Banking Corporation（Note7）
Sub Total

0.485

Long-Term Loans Payable

Unsecured/
Unguaranteed(Note 4)

Unsecured/
Unguaranteed(Note 4)

Unsecured/
Unguaranteed

April 27, 2021

April 30, 2021－－

2,600,000

800,000－－

800,000

Sumitomo Mitsui Trust Bank, Ltd.

600,000－－

600,000

Aozora Bank, Ltd.

400,000－－

400,000

Mizuho Trust & Banking Co., Ltd.

400,000－－

400,000

Mizuho Bank, Ltd.

300,000－－

300,000

Resona Bank, Ltd.

300,000－－

300,000

Development Bank of Japan Inc.（Note5）

1,600,000－－

1,600,000

1.033

February 10, 2022

Sumitomo Mitsui Banking Corporation

4,600,000－－

4,600,000

1.366

April 16, 2025

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－

March 31, 2023

400,000－

0.975

Resona Bank, Ltd.

400,000

Mizuho Trust & Banking Co., Ltd.

400,000－－

400,000

400,000－－

400,000

1,500,000－－

1,500,000

MUFG Bank, Ltd.

450,000－－

450,000

Resona Bank, Ltd.

200,000－－

200,000

The Musashino Bank, Ltd.

150,000－－

150,000

Development Bank of Japan Inc.（Note5）

1,500,000－－

1,500,000

Sumitomo Mitsui Banking Corporation

3,000,000－－

3,000,000

Mizuho Bank, Ltd.

1,150,000－－

1,150,000

MUFG Bank, Ltd.

1,000,000－－

1,000,000

Mizuho Trust & Banking Co., Ltd.

700,000－－

700,000

Sumitomo Mitsui Trust Bank, Ltd.

650,000－－

650,000

Resona Bank, Ltd.

500,000－－

500,000

Development Bank of Japan Inc.（Note5）(Note 4)

April 27, 2021

2,600,000

MUFG Bank, Ltd.

Remarks

0.550 September 30, 2021

MUFG Bank, Ltd.

Sumitomo Mitsui Banking Corporation

Use

0.459 September 30, 2020

2,600,000

The Gunma Bank, Ltd.（Note5）（Note6）

Payment due date
（Note 3）0.978 February 10, 2022

0.994

March 31, 2023

0.987

March 31, 2023

1.013

March 31, 2023

1.110

March 31, 202436

1,500,000－－

1,500,000

MUFG Bank, Ltd.

400,000－－

400,000

Sumitomo Mitsui Trust Bank, Ltd.

450,000－－

450,000

0.803 September 30, 2024

Development Bank of Japan Inc.（Note5）

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

Development Bank of Japan Inc.（Note5）

2,000,000－－

2,000,000

1.049

Mizuho Trust & Banking Co., Ltd.（Note5）

1,000,000－－

1,000,000

1.049

500,000－－

500,000

1.002

Sumitomo Mitsui Banking Corporation

Sumitomo Mitsui Banking Corporation
MUFG Bank, Ltd.

Resona Bank, Ltd.

1.243

April 16, 2025

January 31, 2027

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.（Note5）

600,000－－

600,000

0.696

Mizuho Bank, Ltd. （Note5）

600,000－－

600,000

0.815

Development Bank of Japan Inc.（Note5）

500,000－－

500,000

0.814

Mizuho Trust & Banking Co., Ltd.（Note5）200,000－－

200,000

0.814

MUFG Bank, Ltd.（Note5）

500,000－－

500,000

0.903

October 31, 2026

Sumitomo Mitsui Banking Corporation

500,000－－

500,000

Sumitomo Mitsui Trust Bank, Ltd.

500,000－－

500,000

1.033

May 18, 2027

Resona Bank, Ltd.

400,000－－

400,000

Development Bank of Japan Inc.（Note5）

500,000－－

500,000

1.050

Mizuho Bank, Ltd. （Note5）

500,000－－

500,000

1.049

Mizuho Trust & Banking Co., Ltd.（Note5）

300,000－－

300,000

1.050

Sumitomo Mitsui Banking Corporation

0.772

October 31, 2024

October 31, 2024

May 18, 2027

500,000－－

500,000

0.670 September 29, 2023

1,500,000－－

1,500,000

0.918 September 30, 2026

MUFG Bank, Ltd.（Note5）

500,000－－

500,000

0.930

Mizuho Bank, Ltd. （Note5）

1,500,000－－

1,500,000

1.029

Sumitomo Mitsui Trust Bank, Ltd.

1,500,000－－

1,500,000

1.100 September 29, 2028

MUFG Bank, Ltd.（Note5）Long-Term Loans Payable

Sumitomo Mitsui Trust Bank, Ltd.

September 29, 2027
(Note 4)500,000－－

500,000

1.035

October 3, 2027

MUFG Bank, Ltd.（Note5）

1,200,000－－

1,200,000

1.000

February 10, 2028

MUFG Bank, Ltd.

1,250,000－－

1,250,000－

August 31, 2022

800,000－

0.603

Mizuho Bank, Ltd.

800,000

Sumitomo Mitsui Banking Corporation

900,000－－

900,000

0.988

April 30, 2027

Sumitomo Mitsui Banking Corporation

2,600,000－－

2,600,000

0.985

April 30, 2027

Sumitomo Mitsui Banking Corporation

2,000,000－－

2,000,000

0.902

April 30, 2026

Mizuho Bank, Ltd.

1,000,000－－

1,000,000

1.090

April 30, 2028

The Bank of Fukuoka, Ltd.

1,000,000－－

1,000,000

0.907

May 31, 2026

Sumitomo Mitsui Banking Corporation

1,500,000－－

1,500,000

0.999

MUFG Bank, Ltd.（Note5）

500,000－－

500,000

0.900

Mizuho Bank, Ltd.

500,000－－

500,000

0.999

Mizuho Trust & Banking Co., Ltd.

500,000－－

500,000

0.999

Nippon Life Insurance Company

700,000－－

700,000

0.913

Sumitomo Mitsui Trust Bank, Ltd.

700,000－－

700,000

0.726

Resona Bank, Ltd.

500,000－－

500,000

0.676

Aozora Bank, Ltd.

500,000－－

500,000

0.726

Mizuho Bank, Ltd.

400,000－－

400,000

0.726

Sumitomo Mitsui Banking Corporation

May 31, 2027

March 31, 2025

March 31, 2026

400,000－－

400,000

0.676

Sumitomo Mitsui Banking Corporation

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

August 31, 2024

Aozora Bank, Ltd.

890,000－－

890,000

0.585

August 31, 2026

Mizuho Bank, Ltd.

1,370,000－－

1,370,000

0.718

March 31, 2028

820,000－－

820,000

0.550

October 31, 2024

1,270,000－－

1,270,000

0.750

January 31, 2028

The Musashino Bank, Ltd.

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

Unsecured/
Unguaranteed

March 31, 202837

650,000－－

650,000

0.670

MUFG Bank, Ltd.（Note5）

1,500,000－－

1,500,000

0.520

Sumitomo Mitsui Banking Corporation

1,000,000－－

1,000,000

0.644Mizuho Bank, Ltd.

1,000,000－－

1,000,000

0.644Mizuho Trust & Banking Co., Ltd.（Note5）

500,000－－

500,000

0.550

Resona Bank, Ltd.

300,000－－

300,000

0.644

Development Bank of Japan Inc.（Note5）

500,000－－

500,000

0.830

October 31, 2029

The Gunma Bank, Ltd.

400,000－－

400,000

0.498

January 31, 2025

The Musashino Bank, Ltd. （Note5）

400,000－－

400,000

0.478

January 31, 2025

Sumitomo Mitsui Banking Corporation－

700,000－

700,000

0.758 September 30, 2028

Mizuho Trust & Banking Co., Ltd.（Note5）Long-Term Loans Payable

Sub Total
Total

April 30, 2028

October 31, 2026
(Note 4)80,950,000

700,000－

81,650,000

103,900,000

2,600,000

1,700,000

104,800,000

Unsecured/
Unguaranteed

Note 1:All debts except for the following Note 5 are borrowings at a floating rate.

Note 2:Average interest rates are the weighted average during the period and figures are rounded to the nearest third decimal place. Also, with regard to borrowings for which interest rate swap transactions were implemented in orderto hedge the interest rate volatility risk, the weighted average interest rates taking into consideration the effects of the interest rate swaps are indicated.

Note 3:All the repayment methods of debt financing except for the following Note 7 are lump-sum repayments on the due date.

Note 4: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 of debts.

Note 5:

Borrowings at a fixed rate.

Note 6:

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 7:

Partial prepayment of 1,000,000 thousand yen was made on April 30, 2020.

38

(3) Status of Investment Corporation Bonds
Balance as of
Balance as ofApril 1, 2020 September 30, 2020
(million yen)(million yen)Interest
rate(%)

Maturity date

1,000

0.200

October 29,
2021

1,000

1,000

0.600

October 30,
2026

August 31,
2017

1,000

1,000

0.320

August 31,
2022

4th Series Unsecured Investment
Corporation Bonds

August 31,
2017

2,000

2,000

0.700

August 31,
2027

5th Series Unsecured Investment
Corporation Bonds

April 26,
2018

2,000

2,000

0.700

April 26,
2028

6th Series Unsecured
Investment Corporation Bonds

April 30,
2020

-

1,000

0.400

April 30,
2025

7,000

7,000

Bonds

Issuance date

1st Series Unsecured Investment
Corporation Bonds

October 31,
2016

1,000

2nd Series Unsecured Investment
Corporation Bonds

October 31,
2016

3rd Series Unsecured Investment
Corporation Bonds

Total
Note 1:
Note 2:
Note 3:Note 4:

Redemption
methodUse

Remarks(Note 1)

(Note 3)Full onmaturity(Note 2)

(Note 4)“Use” is acquisition funds for specified assets, repayment funds for borrowings, etc.
“Use” is repayment funds for borrowings.
Ranking pari passu among the specified investment corporation bonds
Ranking pari passu among the specified investment corporation bonds and small private placement with restrictions on splits of denominationof each bond(4) Status of Short-Term Investment Corporation Bonds
Not applicable(5) Status of Subscription Rights to New Investment Units
Not applicable39

Acquisition and Disposition(1) Acquisition and Disposition of Real Estate Properties & Asset-Backed Securities and Infrastructure &Infrastructure Related Assets
Acquisition
Ownership
form

Property
number

Property nameAcquisition date

Trust beneficiaryinterest in real estate

T-30

Comfort Market
Nishi-Magome

April 15, 2020

Trust beneficiaryinterest in real estate

N-5

K’s Denki ShinMoriyama (Land)

-

Note:

Disposition

Acquisition price(million yen)
(Note)

1,920-

Disposition
Date

Disposition
priceBook value
Gain / loss
(million yen) (million yen) (million yen)
(Note)－－－－

September 30,
2020

1,527

1,390

126

“Acquisition price” and “Disposition price” represent the purchase price of each trust beneficiary interest specified in purchase agreement in relation
to the acquisition of each property (excluding acquisition costs, adjustment in property tax and city-planning tax, and consumption tax; and rounded
down to the nearest one million yen).

(2) Acquisition and Disposition of Other Assets
Other assets except real estate properties and asset-backed securities mentioned above mostly consist of cash and deposits
and cash and deposits in trust.

(3) Appraisal Values of Specific Assetsi) Real Estate
Acquisition/disposition

Ownership
form

Property
number

Property nameAcquisition/
disposition date

Acquisition/
Appraisal
disposition
value
price
(million yen)(million yen)
(Note 2)

Appraiser

Evaluation date

(Note 1)

Acquisition

Trust beneficiaryinterest in realestateT-30

Comfort Market
Nishi-Magome

April 15, 2020

1,920

2,000

The Tanizawa Sōgō
Appraisal Co., Ltd.

March 1, 2020

Disposition

Trust beneficiaryinterest in realestateN-5(K’s Denki ShinMoriyama (Land)

September 30,
2020

1,527

1,440

Japan Real Estate
InstituteMarch 31,2020

Note 1: “Acquisition price” represents the purchase amount (excluding acquisition costs and consumption taxes) of each property or beneficiary right ofreal estate in trust as stated in the Sales and Purchase Agreement.
Note 2: “Appraisal value” of specific assets above was calculated in accordance with the guideline of “Real Estate Appraisal Standards, Chapter 3, Appraisalof Securitized Real Estate.”ii) Others(A) Investigator regarding values of certain assets

BDO Toyo & Co.
(B) Result and method of investigation
With regard to transactions and contracts entered by KRR whose values shall be investigated based on the Article
201 of the Act on Investment Trusts and Investment Corporations, BDO Toyo & Co. performs an investigation oftransactions. For the fiscal period from April 1, 2020 to September 30, 2020, the transactions subject to suchinvestigation were one interest rate swap transaction, for which KRR received reports from BDO Toyo & Co. For
this purpose, investigation was performed with respect to details of the interest swap contracts, such as the name ofcounter parties, contract amounts, or the period of transactions. This survey is not a part of the audit for finalcial
statements, and there is no guarantee of fairness of the price and internal management system.

40

(4) Related-Party Transactionsi) Transactions
Not applicableii) Amounts of Fees Paid
Related-Party Transaction
Total amount of fee paid (A)(in million)

Ratio (B) / (A)Payment destination

Amount of fee paid (B)(%)(in million)
Brokerage

57

Kenedix, Inc.

57

100.0

(5) Transactions with Asset Manager in Connection with Concurrent Business Conducted by the Asset Manager
There is no transaction with the Asset Manager, KFM, regarding to the Type II Financial Instruments Business, andBuilding Lots and Buildings Transaction Business. Furthermore, KFM does not concurrently engage in any of Type I
Financial Instruments Business, Real Estate Specified Joint Business.

41

Accounting(1) Status on Assets, Liabilities, Principals, and Income and Losses
Please refer to the “Balance Sheets”, “Statements of Income and Retained Earnings”, “Statements of Changes in Net
Assets” and “Notes to Financial Statements” presented later in this report.
(2) Change in Calculation of Depreciation
Not applicable(3) Change in Valuation of Real Estate Properties and Infrastructure Assets
Not applicable(4) Disclosure of Beneficiary Certificates of Investment Trust Established by Selfi) Acquisition of Beneficiary Certificates of Investment Trust Established by Self
Not applicableii) Ownership of Beneficiary Certificates of Investment Trust Established by Self
Not applicable(5) Disclosure of Companies Owning Real Estate Overseas
Not applicable(6) Disclosure of Real Estate Owned by Companies Owning Real Estate Overseas
Not applicable

Others(1) Noticei) General Meeting of Unitholders
Not applicableii) Board of Directors
Date

Approved items

September 24, 2020

Entrustment of businessaffairs regarding
issuance of investment
corporation bonds

Summary
In regard to the comprehensive resolution on the issuance ofinvestment corporation bonds approved on the same day, We
approved candidate companies for the entrustment of businessaffairs regarding investment corporation bonds and discretionary
decision-making rights on other required matters to the Executive
Director.

(2) Others
In this report, any fraction is rounded down for monetary amounts and rounded off for ratios unless otherwise stated.

42

43

44

Financial Statements(11th Fiscal Period: from April 1, 2020 to September 30, 2020)
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 Statements

45

Kenedix Retail REIT Corporation

Balance Sheet
As of September 30, 2020
As of September 30, 2020

As of March 31, 2020

(in thousands of yen)
AssetsCurrent assets
Cash and deposits (Notes 9 and 11)¥9,152,961¥6,125,619

Cash and deposits in trust (Notes 9 and 11)

12,874,534

12,924,521

Operating accounts receivable

192,124

166,961

Prepaid expenses

163,279

32,902-

863,462

1,907

1,907

22,384,807

20,115,374

Consumption taxes receivable
Other
Total current assets
Non-current assets
Property, plant and equipment (Notes 17 and 20)
Buildings

745,164735,397

Accumulated depreciation(45,386)(29,574)

Buildings, net

699,778

705,823

Structures
Accumulated depreciation
Structures, net
LandConstruction in progress

38,75138,751(2,955)(1,954)35,79536,796

2,951,386

2,951,386

-

5,062

61,177,360

60,239,912

Accumulated depreciation(7,556,164)(6,621,134)

Buildings in trust, net (Note 3)

53,621,196

53,618,778

3,439,796

3,419,821

Buildings in trust

Structures in trust
Accumulated depreciation(539,341)(474,705)

Structures in trust, net (Note 3)

2,900,455

2,945,115

Machinery and equipment in trust

262,338

220,898

Accumulated depreciation(46,502)(39,592)

Machinery and equipment in trust, net

215,835

181,305

Tools, furniture and fixtures in trust

150,938

147,539

Accumulated depreciation(52,512)(40,505)

Tools, furniture and fixtures in trust, net

98,425

107,034

163,431,237

163,155,870

Land in trust (Note 3)
Construction in progress in trust
Total property, plant and equipment, net

-

4,115

223,954,110

223,711,288

4,304,826

4,308,804

Intangible assets (Note 20)
Leasehold right in trust (Note 17)
Other
Total intangible assets
Investments and other assets
Lease and guarantee deposits

9,507

9,937

4,314,334

4,318,742

10,00010,000

Lease and guarantee deposits in trust

60,23660,236Long-term prepaid expenses

743,581830,025

Long-term deposits

117,010

117,110

Other

2,258

8,339

933,086

1,025,711

229,201,531

229,055,742

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

38,532

36,615Investment unit issuance costs

30,906

38,633

Total deferred assets

69,43875,248¥251,655,777¥249,246,364

Total assets

See accompanying notes to financial statements.

46

As of September 30, 2020

As of March 31, 2020

(in thousands of yen)
Liabilities
Current liabilities
Operating accounts payable¥983,154¥692,883

Short-term loans payable (Notes 11 and 21)

2,750,000

3,450,000

Current portion of long-term loans payable (Notes 11 and 21)

20,400,000

13,200,000

Accounts payable-other474,759

463,187

Accrued expenses

33,791

32,558

Income taxes payable

1,104

956

363,159

120,675

Advances received

1,275,682

1,266,351

Deposits received

26,041

20,626

Accrued consumption taxes

291-

26,307,983

19,247,239

Investment corporation bonds (Notes 11 and 22)

8,000,000

7,000,000

Long-term loans payable (Notes 11 and 21)

81,650,000

87,250,000

Other
Total current liabilities
Non-current liabilities

148,083

148,083

10,833,263

10,878,319

Tenant leasehold and security deposits (Note 11)
Tenant leasehold and security deposits in trust (Notes 3 and 11)
Asset retirement obligations (Note 15)

24,381

24,229Other383,202247,638

101,038,930

105,548,270

127,346,914

124,795,509

121,183,494

121,183,494

Total non-current liabilities
Total liabilities
Net assets
Unitholders' equity
Unitholders' capital
Deduction from unitholders' capital
Allowance for temporary difference adjustments (Note 5)(236,788)(305,743)

Total deduction from unitholders' capital(236,788)(305,743)

120,946,706

120,877,750

3,716,853

3,784,993

Unitholders' capital, net
Surplus
Unappropriated retained earnings

3,716,853

3,784,993

124,663,559

124,662,744

Deferred gains or losses on hedges (Notes 11 and 12)(354,696)(211,889)

Total valuation and translation adjustments(354,696)(211,889)

Total surplus
Total unitholders' equity
Valuation and translation adjustments

Total net assets (Note 6)

124,308,863

124,450,854

Total liabilities and net assets¥251,655,777¥249,246,364

See accompanying notes to financial statements.

47

Kenedix Retail REIT Corporation

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

From October 1, 2019

to September 30, 2020

to March 31, 2020

(in thousands of yen)
Operating revenues
Rent revenue-real estate （Note 7)¥7,276,824¥7,238,807

995,638

996,119

Other lease business revenue (Note 7)

126,174

56,596

8,398,638

8,291,523

Gain on sales of real estate property (Note 7)
Total operating revenues
Operating expenses

3,479,410

3,359,716

Asset management fees

706,110685,500

Asset custody fees

10,0989,643

Administrative service fees

32,65632,189Directors' compensation

4,500

4,500

Other operating expenses

83,784

98,176

Total operating expenses

4,316,561

4,189,726

4,082,076

4,101,796

55

57

310

565

2,912

-

Expenses related to rent business (Note 7)

Operating income
Non-operating income
Interest income
Gain on forfeiture of unclaimed dividends
Interest on refund

10

-

3,288

622

Interest expenses

450,956

453,558

Interest expenses on investment corporation bonds

21,19919,671

Financing-related expenses

95,29898,913

Other
Total non-operating income
Non-operating expenses

Amortization of organization costs
Amortization of investment corporation bond issuance costs

-

55

4,340

3,714

7,726

26,980579,521602,893

Ordinary income

3,505,844

3,499,525

Income before income taxes

3,505,844

3,499,525

1,112

965

1,112

965

Amortization of investment unit issuance costs
Total non-operating expenses

Income taxes
Current
Total income taxes

3,504,731

3,498,560

Retained earnings brought forward

212,121286,433

Unappropriated retained earnings¥3,716,853¥3,784,993

Net income

See accompanying notes to financial statements.

48

Kenedix Retail REIT Corporation

Statement of Changes in Net Assets
For the period from April 1, 2020 to September 30, 2020
Unitholders' equity
Unitholders' capital

Surplus

Deduction from unitholders'
capitalBalance as of September 30, 2019 (Note8)

Unitholders'
capitalAllowance
for temporary
difference
adjustments¥113,399,022¥ (181,865)

Total
Unitholders'
deduction
capital, net
fromunitholders'
capital(in thousands of yen)
¥ (181,865)¥113,217,156

Unappropri
ated
retainedearnings

Total
surplusTotal
unitholders'equity¥3,455,496¥3,455,496¥116,672,653

Changes of items during the period
Issuance of new investment units

7,784,472

7,784,472

7,784,472(3,169,063)

Dividends from surplus
Distributions in excess of earnings
from allowance for temporary
difference adjustments(123,878)(123,878)(3,169,063)(123,878)

Net income
Net changes of items other thanunitholders’ equity(3,169,063)(123,878)
3,498,560

3,498,560

3,498,560

Total changes of items during the period

7,784,472(123,878)(123,878)

7,660,593

329,496

329,496

7,990,090

Balance as of March 31, 2020 (Note 8)¥121,183,494¥ (305,743)¥ (305,743)¥120,877,750¥3,784,993¥3,784,993¥124,662,744(3,498,554)(3,498,554)(3,498,554)

Changes of items during the period
Dividends from surplus
Distributions in excess of earnings
from allowance for temporary
difference adjustments
Reversal of allowance fortemporary difference
adjustments(5,361)(5,361)(5,361)

74,31774,31774,317

Net income
Net changes of items other thanunitholders’ equity
Total changes of items during the period
Balance as of September 30, 2020 (Note8)(5,361)(74,317)(74,317)-3,504,731

3,504,731

3,504,731-

68,955

68,955

68,955(68,140)(68,140)

815¥121,183,494¥ (236,788)¥(236,788)¥120,946,706¥3,716,853¥3,716,853¥124,663,559

49

Valuation and translation adjustments
Deferred gains orlosses on hedges
Balance as of September 30, 2019 (Note 8)¥(286,206)

Total net assets

Total valuation andtranslation adjustments(in thousands of yen)¥(286,206)

Changes of items during the period
Issuance of new investment units
Dividends from surplus
Distributions in excess of earnings fromallowance for temporary difference
adjustments
Net income
Net changes of items other thanunitholders’ equity¥116,386,446
7,784,472(3,169,063)(123,878)
3,498,560

Total changes of items during the period

74,31774,31774,31774,31774,317
8,064,408

Balance as of March 31, 2020 (Note 8)¥(211,889)¥(211,889)¥124,450,854

Changes of items during the period
Dividends from surplus
Distributions in excess of earnings fromallowance for temporary difference
adjustments
Reversal of allowance fortemporary difference
adjustments(3,498,554)

Net income
Net changes of items other thanunitholders’ equity

3,504,731(142,806)(142,806)(142,806)

Total changes of items during the period(142,806)(142,806)(141,991)

Balance as of September 30, 2020 (Note 8)¥(354,696)¥(354,696)¥124,308,863(5,361)-

See accompanying notes to financial statements.

50

Kenedix Retail REIT Corporation

Statement of Cash Flows
For the period from April 1, 2020 to September 30, 2020
From April 1, 2020

From October 1, 2019

to September 30, 2020

to March 31, 2020

(in thousands of yen)
Net cash provided by (used in) operating activities
Income before income taxes¥3,505,844¥3,499,525

Depreciation and amortization

1,041,266

1,025,511-

55

Amortization of investment corporation bond issuance costs

4,340

3,714

Amortization of investment unit issuance costs

7,726

26,980Interest income

(55)

(57)

Interest expenses

472,156473,230

Decrease (increase) in operating accounts receivable(25,162)

63,055Decrease (increase) in consumption taxes receivable

863,462(863,462)

Decrease (increase) in prepaid expenses(130,377)

104,132

Increase (decrease) in operating accounts payable

104,472(101,513)

Increase (decrease) in accounts payable-other

10,077(56,055)

Increase (decrease) in accrued consumption taxes

242,484(435,763)

9,330

72,761

Increase (decrease) in deposits received

5,414(50,778)

Decrease (increase) in long-term prepaid expenses

86,443(4,072)

Increase (decrease) in long-term deposits received

100

40,0001,390,848

497,568

Amortization of organization costs

Increase (decrease) in advances received

Decrease in net property, plant and equipment held in trust due to sale
Other

(3,503)(65)

Subtotal

7,584,869

4,294,767

55

57(470,942)(464,671)

Interest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities(965)(1,117)

7,113,017

3,829,036

Net cash provided by (used in) investing activities
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Purchase of intangible assets(9,767)(884,765)(2,474,133)(25,672,644)(836)(3,580)

Proceeds from lease and guarantee deposits in trust-

20

Proceeds from tenant leasehold and security deposits-

19,460

Repayments of tenant leasehold and security deposits in trust(171,871)(151,208)

Proceeds from tenant leasehold and security deposits in trust

129,316

1,093,091

Proceeds from restricted bank deposits in trust
Net cash provided by (used in) investing activities

17,50015,000(2,509,792)(25,584,626)

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

2,750,000

Repayments of short-term loans payable(700,000)(3,370,000)

Proceeds from long-term loans payable

2,600,000

14,540,000

Repayments of long-term loans payable(1,000,000)（9,120,000）

993,742--

7,738,113

Dividends paid

(3,502,111)(3,292,016)

Net cash provided by (used in) financing activities(1,608,369)

9,246,096

Net increase (decrease) in cash and cash equivalents

2,994,855(12,509,493)

Cash and cash equivalents at the beginning of the period

18,810,140

31,319,634

Cash and cash equivalents at the end of the period (Note 9)¥21,804,996¥18,810,140

Proceeds from issuance of investment corporation bonds
Proceeds from issuance of investment units

See accompanying notes to financial statements.
51

Kenedix Retail REIT Corporation

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

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 September 30, 2020 was 536,177 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
KRR acquired eight properties (Gyoda Distribution Center with acquisition price of 3,160 million yen, Monenosato Mall with acquisition price of 2,410 million
yen , Chofu Center Building with acquisition price of 2,300 million yen, Across Plaza Urayasu Higashino(Land) with acquisition price of 2,248 million yen, Apita
Terrace Yokohama Tsunashima with acquisition price of 5,899 million yen, Kalsa Hiratsuka with acquisition price of 5,980 million yen, Valor Nakashidami(Land) with acquisition price of 2,551 million yen, Shinjuku Nishiochiai Distribution Center with acquisition price of 810 million yen), and sold one property( Welcia Kishiwadakamori (Land) with sale price of 560 million yen (initial acquisition price of 487 million yen). For the period ended March 31, 2020, theportfolio of 62 properties (total acquisition price of 225,810 million yen) as a whole performed well with an overall occupancy ratio of 99.4% as of March 31,
2020.
KRR acquired one property (Comfort Market Nishi-Magome with acquisition price of 1,920 million yen). KRR disposed of one property (K’s Denki ShinMoriyama (Land) with sale price of 1,527 million yen (acquisition price was 1,370 million yen)). KRR also completed additional acquisition with construction
cost of 119 million yen) at Yokohama Kamigo Distribution Center. For the period ended September 30, 2020, the portfolio of 62 properties (total acquisition
price of 226,479 million yen) as a whole performed well with an overall occupancy ratio of 99.7% as of September 30, 2020.
Furthermore, the portfolio was diversified in terms of tenants as there were 496 and 496 end-tenants as of March 31, 2020 and September 30, 2020 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.

52

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 April 1, 2020
to September 30, 2020
2-70 years

From October 1, 2019
to March 31, 2020
2-70 years

Structures

8-59 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 ¥32,362 thousand and ¥2,495 thousand as of March 31, 2020and September 30, 2020, respectively.

53

(I)

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.

(J) Consumption Taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes. Non-deductible consumption taxes applicable tothe acquisition of assets are included in the cost of acquisition for each asset.
(K) 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.
(L) 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.
(M) 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.
( Accounting standards issued but not yet effective)・ “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (ASBJ) Statement No. 29 issued on March 31, 2020)
・ “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30 issued on March 31, 2020)(1) Overview
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) in the United States have jointly developed
comprehensive accounting standards for revenue recognition and issued “Revenue from Contracts with Customers” (IFRS 15 (IASB) and Topic 606 (FASB))
in May 2014. Given the situation where IFRS 15 will be applied from fiscal years beginning on or after January 1, 2018 and that Topic 606 will be applied fromfiscal years beginning after December 15, 2017, the ASBJ has developed comprehensive accounting standards for revenue recognition and issued them
together with the implementation guidance.
The basic policy of the ASBJ when it developed the accounting standards for revenue recognition was to specify the accounting standards, incorporating
the basic principles of IFRS 15 as a starting point, from the perspective of comparability between financial statements, which is one of the benefits ofmaintaining compatibility with IFRS 15. The basic policy also stipulates that if there is an item to which consideration should be given, such as practices thathave been conducted thus far in Japan, alternative treatments will be added to the extent to which comparability is not impaired.
(2) Scheduled date of application
The accounting standards will be applied from the beginning of the fiscal period ending September 30, 2021.
(3) Impact of applying the accounting standards
The impact of applying “Accounting Standard for Revenue Recognition” and its guidance on KRR’s financial statements is currently under evaluation.

・ “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30 issued on July 4, 2019)
・ “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31 issued on July 4, 2019)
・ “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19 issued on March 31, 2019)(1) Overview
The IASB and the FASB have established detailed guidance regarding fair value measurement (IFRS 13 “Fair Value Measurement” (IASB) and Topic 820“Fair Value Measurement” (FASB)). The ASBJ repeatedly considered the guidance regarding fair value of financial instruments and disclosure in order to54

improve the comparability with such international accounting standards, and issued “Accounting Standard for Fair Value Measurement” and “Implementation
Guidance on Accounting Standard for Fair Value Measurement.”(2) Scheduled date of application
The accounting standards will be applied from the beginning of the fiscal period ending September 30, 2021.
(3) Impact of applying the accounting standards
The impact of applying the “Accounting Standard for Fair Value Measurement” and its guidance on KRR’s financial statements is currently under evaluation.

・“Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections” (ASBJ Statement No. 24 issued on March 31, 2020)(1) Overview
The ASBJ’s Standards Advisory Council recommended that the ASBJ consider enhancing disclosures for notes relating to “accounting policies and methods
adopted in the cases where the relevant accounting standards were not clear.” In response to such recommendations, the ASBJ issued the revised “AccountingStandard for Accounting Policy Disclosures, Accounting Changes and Error Corrections.”(2) Scheduled date of application
The accounting standards will be applied from the end of the fiscal period ending March 31, 2021.
・“Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No. 31 issued on March 31, 2020)(1) Overview
Paragraph 125 of International Accounting Standard 1 (IAS 1), “Presentation of Financial Statements,” (issued by the IASB in 2003) requires disclosure of
information about the “assumptions the entity makes about the future, and other major sources of estimation uncertainty.” In this regard, there has been arequest that the major sources of estimation uncertainty should be disclosed in the notes to financial statements under Japanese GAAP to provide useful
information to users of financial statements. In response to this request, the ASBJ developed and issued “Accounting Standard for Disclosure of Accounting
Estimates.”(2) Scheduled date of application
The accounting standards will be applied from the end of the fiscal period ending March 31, 2021.

55

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

As of September 30, 2020

As of March 31, 2020
(in thousands of yen)

Buildings in trust¥658,814¥668,630

Structures in trust

22,78623,989Land in trust
Total

2,709,001

2,709,001¥3,390,602¥3,401,621

As of September 30, 2020

Secured liabilities
Tenant leasehold and security deposits in trust
Total

As of March 31, 2020

¥436,067¥460,565¥436,067¥460,565

4. COMMITMENT LINE CONTRACTSKRR has commitment line contracts with the banks with which it does business.
As of September 30, 2020

As of March 31, 2020
(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

5. ALLOWANCE FOR TEMPORARY DIFFERENCE ADJUSTMENTS
The following summarizes allowance for temporary difference adjustments as of September 30, 2020
1. Reasons, related assets, initial amount, allowance and reversal
Balance atAllowance
Reversal
the beginningduring theduring theof the period
periodperiod(in thousands of yen)

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¥24,937¥19,575¥5,361

Deferred gains or losses
on hedges

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

286,168

286,168¥311,105¥305,743

Total¥

Balance atthe end of
the period

Reason forreversal-¥24,937--(74,317)

211,851

Changes infair value ofderivativetransactions¥5,361¥ (74,317)¥236,788-

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.

The following summarizes allowance for temporary difference adjustments as of March 31, 2020
1. Reasons, related assets, initial amount, allowance and reversal
Related assets, etc.

Reason for allowance

Buildings in trust,
Leasehold right in trust
Deferred gains or losses
on hedges

Amortization ofleasehold right in trust
and the amount inexcess of depreciation
Loss on interest-rate
swaps recognized at theend of the fiscal period

Total

Initial amount

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

¥19,575¥14,324¥5,251

286,168

167,541

118,627¥305,743¥181,865¥123,878¥¥

Balance atthe end of
the period

Reason forreversal-¥19,575--

286,168-

305,743

-

-

¥

56

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.

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 April 1, 2020 to September 30, 2020 and October 1, 2019 to March
31, 2020 from consist of the following:
From April 1, 2020

From October 1, 2019

to September 30, 2020

to March 31, 2020
(in thousands of yen)

Rental and other operating revenues:
Rent revenue-real estate:
Rental revenues¥5,990,907¥5,957,213

Rental revenues from limited proprietary rights of land

1,024,012

1,014,174

Common area charges

261,904

267,419

7,276,824

7,238,807

Parking space rental revenues

197,975

204,170

Utility charge reimbursement576,777

529,178

Miscellaneous

220,885

262,770

Subtotal

995,638

996,119

8,272,463

8,234,927

Property management fees and facility management fees

685,656

675,050

Utilities

517,438

495,587

Taxes

739,968

629,029

Repairs and maintenance239,310208,221

Insurance

13,375

13,470Trust fees

24,88323,926

Depreciation

1,040,001

1,024,057

Others

218,776

290,373

Total property-related expenses

3,479,410

3,359,716

Net operating income from real estate rental business¥4,793,053¥4,875,211

Subtotal
Other lease business revenue:

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

57

Gain on sales of real estate property:
From April 1, 2020 to September 30, 2020
(in thousands of yen)
K’s Denki Shin-Moriyama (Land)
Revenue from sales of real estate property¥1,527,900

Cost of real estate property

1,390,848

Other sales expenses
Gain on sales of real estate property

10,876¥126,174

From October 1, 2019 to March 31, 2020
(in thousands of yen)

Welcia Kishiwadakamori (Land)
Revenue from sales of real estate property¥560,000Cost of real estate property

497,568

Other sales expenses
Gain on sales of real estate property

5,835¥56,596

8. UNITHOLDERS’ EQUITY
Total number of authorized investment units and total number of investment units issued and outstanding are as follows:
From April 1, 2020

From October 1, 2019

to September 30, 2020

to March 31, 2020

Total number of authorized investment units

5,000,000 units

5,000,000 units

Total number of investment units issued and outstanding

536,177 units

536,177 units

9. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following as of September 30, 2020 and March 31, 2020:
As of September 30, 2020

As of March 31, 2020

(in thousands of yen)
Cash and deposits¥9,152,961¥6,125,619

Cash and deposits in trust

12,874,534

12,924,521

Restricted bank deposits in trust *(222,500)(240,000)¥21,804,996¥18,810,140

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

58

10. LEASES(As lessee)
Future minimum lease payments under non-cancelable operating leases as of September 30, 2020 and March 31, 2020 are as follows:
As of September 30, 2020

As of March 31, 2020

(in thousands of yen)
Due within 1 year

¥10,500¥10,500

Due after 1 year

162,298

167,548

Total¥172,798¥178,048(As lessor)
Future minimum lease income under the non-cancelable operating leases as of September 30, 2020 and March 31, 2020 are as follows:
As of September 30, 2020

As of March 31, 2020

(in thousands of yen)
Due within 1 year

¥9,738,412¥9,818,120

Due after 1 year

56,344,730

59,381,345

Total¥66,083,142¥69,199,466

59

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 9 years and 1 month for loans payable and also have a redemption dateof a maximum of 7 years and 7 months for investment corporation bonds as of September 30, 2020, the end of the 11th 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
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available, fair value is reasonably
estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors could result in a different fairvalue.
(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. Items whose fair values are difficult
to determine are not included in the following table (*2).

60

As of September 30, 2020
Carrying amount

Estimated fair value

Difference(in thousands of yen)
(1) Cash and deposits¥9,152,961¥9,152,961(2) Cash and deposits in trust

12,874,534

12,874,534

-

Total

¥

-

22,027,496

22,027,496-(1) Short-term loans payable

2,750,000

2,750,000-(2) Current portion of long-term loans payable

20,400,000

20,393,446(6,553)(3) Investment corporation bonds

8,000,000

7,979,400(20,600)(4) Long-term loans payable

81,650,000

82,206,637

556,637

795,154772,848(22,305)

113,595,154

114,102,333¥(354,696)¥(354,696)(5) Tenant leasehold and security deposits in trust
Total
Derivative transactions

507,178¥-(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 March 31, 2020
Carrying amount

Estimated fair value

Difference(in thousands of yen)
(1) Cash and deposits¥6,125,619¥6,125,619(2) Cash and deposits in trust

12,924,521

12,924,521

-

Total

¥

-

19,050,140

19,050,140-(1) Short-term loans payable

3,450,000

3,450,000-(2) Current portion of long-term loans payable

13,200,000

13,223,248

23,248(3) Investment corporation bonds

7,000,000

7,003,600

3,600(4) Long-term loans payable

87,250,000

87,807,444

557,444853,538

828,393(25,145)

111,753,538

112,312,685¥(211,889)¥(211,889)(5) Tenant leasehold and security deposits in trust
Total
Derivative transactions

559,147¥-(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
Assets(1) Cash and deposits and (2) Cash and deposits in trust
Since these items are settled in a short period of time, their carrying amount approximates fair value.
Liabilities(1) Short-term loans payable
Since these items are settled in a short period of time with floating interest rates, their carrying amount approximates fair value.
(2) Current portion of long-term loans payable and (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.)61

(3) Investment corporation bonds
The fair value of investment corporation bonds is based on quoted market prices.
(5) Tenant leasehold and security deposits in trust
The fair value is determined based on the present value of contractual cash flows discounted at the discount rate into which the period to the repayment date
and the credit risk are reflected.
Derivative transactions
Please refer to Note “12. DERIVATIVE TRANSACTIONS”.
*2: Financial instruments whose fair values are extremely difficult to determineClassification

As of September 30, 2020

As of March 31, 2020

(in thousands of yen)
Tenant leasehold and security deposits (Note)¥148,083¥148,083

Tenant leasehold and security deposits in trust (Note)

10,038,109

10,024,780

Total¥10,186,192¥10,172,863(Note) It is extremely difficult to determine their fair values based on estimated future cash flows because no quoted market price is available and therepayment dates of those deposits are not certain. Therefore, these items have been excluded from fair value presentation.
*3: Redemption of monetary claims scheduled to be due after the balance sheet date
As of September 30, 2020
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)
Cash and deposits
Cash and deposits in trust
Total¥9,152,961¥-

12,874,534

¥

-

-

¥22,027,496

¥

¥

-

-

-

¥

¥

-

-

-

¥

¥

-

-

-

¥

-

-

¥

-

As of March 31, 2020
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)
Cash and deposits
Cash and deposits in trust
Total¥6,125,619¥-

12,924,521

¥

-

-

¥19,050,140

¥

¥

-

-

-

¥

¥

-

-

-

¥

¥

-

-

-

¥

-

-

¥

-

*4: Redemption of long-term loans payable and other interest-bearing debt scheduled to be due after the balance sheet date
As of September 30, 2020
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)
Short-term loans payable
Investment corporation bonds
Long-term loans payable
Tenant leasehold and security
deposits in trust
Total¥2,750,000

¥

-

¥

-

¥

-

¥

-

¥

-

-

2,000,000--

1,000,000

5,000,000

20,400,000

9,050,000

7,500,000

8,990,000

13,320,000

42,790,000

13,995

13,995

13,995

13,995

13,99568,808¥23,163,995¥11,063,995¥7,513,995¥9,003,995¥14,333,995¥47,858,808

As of March 31, 202062

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)
Short-term loans payable¥3,450,000

Investment corporation bonds
Long-term loans payable

-

¥

-

¥

-

¥

-

¥

-

-

1,000,000

1,000,000--

5,000,000

13,200,000

13,300,000

9,050,000

7,500,000

8,810,000

48,590,000

13,995

13,995

13,995

13,995

13,99575,806¥16,663,995¥14,313,995¥10,063,995¥7,513,995¥8,823,995¥53,665,806

Tenant leasehold and security
deposits in trust
Total

¥

12. DERIVATIVE TRANSACTIONS
The contract amount and the fair value of interest-rate swap transactions as of September 30, 2020 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¥39,410,000¥35,310,000

31,900,000

26,400,000¥71,310,000¥61,710,000

Fair value(in thousands of yen)¥(354,696)

Calculation method for
applicable fair value
Based on the amountprovided by counterparty
financial institutions*¥(354,696)*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 March 31, 2020 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¥38,710,000¥38,710,000

31,900,000

26,400,000¥70,610,000¥65,110,000

Fair value(in thousands of yen)¥(211,889)

Calculation method for
applicable fair value
Based on the amountprovided by counterparty
financial institutions*¥(211,889)*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 other11th Fiscal Period (April 1, 2020 to September 30, 2020) and 10th Fiscal Period (October 1, 2019 to March 31, 2020): Not applicable63

2．Affiliated companies and other11th Fiscal Period (April 1, 2020 to September 30, 2020) and 10th Fiscal Period (October 1, 2019 to March 31, 2020): Not applicable
3．Fellow subsidiary companies and other11th Fiscal Period (April 1, 2020 to September 30, 2020) and 10th Fiscal Period (October 1, 2019 to March 31, 2020): Not applicable
4．Directors, major individual unitholders and other11th Fiscal Period (April 1, 2020 to September 30, 2020) and 10th Fiscal Period (October 1, 2019 to March 31, 2020): Not applicable

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 ¥3,509 million and ¥3,503 million for the periods ended September 30, 2020 and March 31, 2020, respectively, thedistributions were treated as deductible distributions for purposes of corporate income taxes. The effective tax rate on KRR’s income was 0.03% for the periods
ended September 30, 2020 and March 31, 2020 . The following table summarizes the significant differences between the statutory tax rate and the effective
tax rate:
As of September 30, 2020

As of March 31, 2020

Statutory tax rate

31.46%

31.46%

Deductible cash distributions(31.50)(31.50)

Others0.07

0.07

Effective tax rate

0.03%

0.03%

The significant components of deferred tax assets and liabilities:
As of September 30, 2020

As of March 31, 2020

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

Amortization of leasehold right in trust

14,185

12,933

Depreciation

5,106

4,655

Asset retirement obligations

7,670

7,622

111,587

66,660

Deferred gains or losses on hedges

24

¥

17

Subtotal deferred tax assets

138,573

91,889Valuation allowance(138,573)(91,889)

Total deferred tax assets

¥

-

¥

-

64

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 April 1, 2020

From October 1, 2019

to September 30, 2020

to March 31, 2020

(in thousands of yen)
Balance at the beginning of the period
Accretion adjustment
Balance at the end of the period¥24,229¥24,077

152

151¥24,381¥24,229

16. SEGMENT INFORMATION
Segment information for the periods from April 1, 2020 to September 30, 2020 and October 1, 2019 to March 31, 2020 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.

65

17. 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 April 1, 2020

From October 1, 2019

to September 30, 2020

to March 31, 2020

(in thousands of yen)Book value
Balance at the beginning of the period¥228,027,561

Changes during the period
Balance at the end of the period
Fair value at the end of the period¥203,168,529

238,719

24,859,032

228,266,280

228,027,561¥243,356,000¥243,687,900

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 fiscal period ended September 30, 2020, the principal
increase was due to the acquisitions of real estate trust beneficiary interests in 1 property totaling 2,006,474 thousand yen and additional acquisitionof real estate trust beneficiary interest amounting to 128,651 thousand yen and the principal decrease was due to the sales of real estate trust
beneficiary interests in 1 property totaling 1,390,848 thousand yen and depreciation amounting to 1,039,848 thousand yen and during the fiscal
period ended March 31, 2020, the principal increase was due to the acquisitions of real estate and real estate trust beneficiary interests in 8
properties totaling 25,882,004 thousand yen and the principal decrease was due to the sales of real estate trust beneficiary interests in 1 property
totaling 497,568 thousand yen and depreciation amounting to 1,023,906 thousand yen.
Note 3: The fair value at the end of the period is the appraisal value determined by outside appraisers. The fair value of Daikanyama Address Dixsept as of
September 30, 2020, is based on the sales price (6,644,000 thousand yen) under the trust beneficiary interest sales contracts entered into on
November 17, 2020. In addition, the fair value of K’s Denki Shin-Moriyama (Land) as of March 31, 2020, is based on the sales price (1,527,900
thousand yen) under the trust beneficiary interest sales contracts entered into on March 31, 2020.
The profit or loss for the periods ended September 30, 2020 and March 31, 2020 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.”

18. PER UNIT INFORMATION
From April 1, 2020

From October 1, 2019

to September 30, 2020

to March 31, 2020

Net asset value per unit
Net income per unit

¥231,842¥232,107¥6,536¥6,568Net income per unit is calculated by dividing net income by the day-weighted average number of investment units outstanding during the fiscal period
ended September 30, 2020 (536,177 units) and during the fiscal period ended March 31, 2020 (532,612 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 April 1, 2020

From October 1, 2019

to September 30, 2020

to March 31, 2020

¥3,504,731¥3,498,560--¥3,504,731¥3,498,560

536,177

532,61266

19. SIGNIFICANT SUBSEQUENT EVENTS
Not applicable67

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

Balance atthebeginning of
the period

Increaseduring theperiodDecreaseduring theperiodDepreciation
for the periodNetbalance atthe end of
the period

Depreciation

Balance atthe end of
the period

Accumulated
depreciation

Remarks(in thousands of yen)
Buildings¥735,397¥9,767-¥745,164¥45,386¥15,812¥699,778

Structures

38,751--38,751

2,955

1,000

35,795Land

Property,plant andequipment

2,951,386--

2,951,386--

2,951,386

Construction inprogress

5,062

-

5,062

-

-

-

-

Subtotal

3,730,597

9,767

5,062

3,735,302

48,342

16,8133,686,960

Buildings in trust

60,239,912

937,448-

61,177,360

7,556,164935,02953,621,196

Structures in trust

3,419,821

19,975-3,439,796

539,341

64,6352,900,455

Machinery andequipment in trust

220,898

41,440-262,338

46,502

6,910

215,835

Tools, furniture andfixtures in trust

147,539

4,031

633

150,938

52,512

12,481

98,425

163,155,870

1,666,215

1,390,848

163,431,237--

163,431,237

4,115

-

4,115

-

-

-

-

227,188,158

2,669,109

1,395,597

228,461,671

8,194,520

1,019,057

220,267,150

230,918,756

2,678,876

1,400,659

232,196,973

8,242,863

1,035,870

223,954,110

4,349,916--

4,349,916

45,0903,9784,304,826

15,883836-

16,719

7,211

1,265

9,507

¥4,365,799

¥836

-

¥4,366,636¥52,302¥5,244¥4,314,334

Land in trust
Construction inprogress in trust
Subtotal
Total
Intangible
assets¥Leasehold rightin trust
Other

Total

¥

Property, plant and equipment and intangible assets consist of the following as of March 31, 2020:
Type of asset

Balance atthebeginning of
the period

Increaseduring theperiodBuildings¥692,529¥42,868

Structures
Land
Construction inprogress

Property,plant andequipment-¥735,397¥29,574¥15,020Netbalance at theend of theperiod37,947803-

38,751

1,954

985

36,796

2,115,355

836,031-2,951,386--

2,951,386

-

5,062

-

5,062

-

-

5,062

2,845,831

884,765-

3,730,597

31,52916,005

3,699,068

53,995,091

6,244,821-

60,239,912

6,621,134

922,274

53,618,778

Structures in trust

3,055,215

364,605-

3,419,821

474,705

63,884

2,945,115

Machinery andequipment in trust

220,898--

220,898

39,592

6,403

181,305

Tools, furniture andfixtures in trust

127,382

20,157-

147,539

40,505

11,359107,034

144,794,027

18,859,411

497,568

163,155,870--

163,155,870

-

4,115

-

4,115

-

-

4,115

202,192,614

25,493,112

497,568

227,188,158

7,175,938

1,003,922

220,012,220

205,038,446

26,377,878

497,568

230,918,756

7,207,467

1,019,927

223,711,288

4,349,916--

4,349,916

41,111

3,978

4,308,804

12,3033,580-

15,883

5,945

1,453

9,937

-

¥4,365,799¥47,057¥5,432¥4,318,742

progress in trust
Subtotal
Total
Leasehold rightin trust
Other¥ 4,362,219¥3,580¥Remarks¥705,823

Subtotal

Construction in

Total

¥

Depreciation
Depreciation
Accumulated
for thedepreciation
period(in thousands of yen)

Balance atthe end of theperiodBuildings in trust

Land in trust

Intangible
assetsDecreaseduring theperiod***The amount of increase during the period is primarily attributable to the acquisition of the real estate properties and capital expenditures.
6821. SHORT-TERM LOANS PAYABLE AND LONG-TERM LOANS PAYABLE
The following summarizes short-term loans payable and long-term loans payable outstanding as of September 30, 2020:
Classification
LenderBalance at the
beginning of theperiodIncreaseduring theperiodDecreaseduring theperiodAverageinterest rate
（Note 2）
（Note 3）

Balance atthe end of
the period(in thousands of yen)
Short-termloanspayableSumitomo Mitsui
Banking Corporation
Sumitomo Mitsui
Banking Corporation
Subtotal
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd.
Sumitomo Mitsui Trust
Bank, LimitedAozora Bank, Ltd.

Long-term
loans
payableLong-term
loans

¥

-

Use

Remarks

September 30,
2020
January 31,
2021(Note 5)

Unsecured/
Nonguaranteed(Note 5)

Unsecured/
Nonguaranteed(%)¥700,000

¥

-

0.459

2,750,000--

2,750,000

3,450,000-

700,000

2,750,000

3,000,000--

3,000,000

700,000--

700,000

500,000--

500,000

450,000--

450,000

Resona Bank, Limited

450,000--

450,000

Mizuho Bank, Ltd.

400,000--

400,000

1,500,000--

1,500,000

2,400,000--

2,400,000

MUFG Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Limited

1,600,000--

1,600,000

550,000--

550,000

Resona Bank, Limited

500,000--

500,000

Aozora Bank, Ltd.

500,000--

500,000

Mizuho Bank, Ltd.
Mizuho Trust &Banking Co., Ltd.
The Gunma Bank, Ltd.
(Note 6) (Note 8)
Sumitomo Mitsui
Banking
Corporation(Note 8)
Aozora Bank, Ltd.
(Note 8)MUFG Bank, Ltd.
(Note 8)
Sumitomo Mitsui Trust
Bank, Limited(Note 8)
Resona Bank,
Limited(Note 8)
MUFG Bank, Ltd.
(Note 6) (Note 8)
Development Bank ofJapan Inc.（Note 6）(Note 8)Mizuho Bank, Ltd.
(Note 6) (Note 8)
Mizuho Trust &Banking Co., Ltd.
（Note 6）(Note 8)
Sumitomo Mitsui
Banking Corporation（Note 7）
Subtotal
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd.

350,000--

350,000

300,000--

300,000

500,000--

500,000

2,600,000--

2,600,000

500,000--

500,000

400,000--

400,000

300,000--

300,000

300,000--

300,000

600,000--

600,000

0.400

500,000--

500,000

0.553

400,000--

400,000

0.553

200,000--

200,000

0.553-

1,900,000

1,000,000

900,000

0.460

April 30,2021

19,500,000

1,900,000

1,000,000

20,400,000

2,600,000--

2,600,000

800,000--

800,000

600,000--

600,000

Aozora Bank, Ltd.
Mizuho Trust &Banking Co., Ltd.

400,000--

400,000

0.978

February 10,2022(Note 5)

Unsecured/
Nonguaranteed

400,000--

400,000

Mizuho Bank, Ltd.

300,000--

300,000

Resona Bank, Limited
Development Bank ofJapan Inc. (Note 6)

300,000--

300,000

1,600,000--

1,600,000

1.033

February 10,2022(Note 5)

Unsecured/
Non-

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

Current
portion of
long-term
loans
payable¥700,000

Payment due
date（Note 4）

Sumitomo Mitsui Trust
Bank, Limited

0.459

0.865

February 10,
2021

0.925

February 10,
2021

0.459

February 28,
2021

0.550

September
30, 2021

0.485

April 27,
2021

April 27,
2021

69

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

Payment due
date（Note 4）4,600,000--

4,600,000

1,000,000--

1,000,000

600,000--

600,000

400,000--

400,000

400,000--

400,000

400,000--

400,000

1.366

April 16,
2025

0.975

March 31,
2023

0.994

March 31,
2023

0.987

March 31,
2023

1.013

March 31,
2023

1.110

March 31,
2024

1.243

April 16,2025

400,000--

400,000

1,500,000--

1,500,000

MUFG Bank, Ltd.

450,000--

450,000

Resona Bank, Limited
The Musashino Bank,Ltd.
Development Bank ofJapan Inc. (Note 6)
Sumitomo Mitsui
Banking Corporation
Mizuho Bank, Ltd.

200,000--

200,000

150,000--

150,000

1,500,000--

1,500,000

3,000,000--

3,000,000

1,150,000--

1,150,000

1,000,000--

1,000,000

700,000--

700,000

650,000--

650,000

500,000--

500,000

1,500,000--

1,500,000

400,000--

400,000

450,000--

450,000

0.803

890,000--

890,000

0.760

2,670,000--

2,670,000

0.932

890,000--

890,000

0.888

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
1.033

May 18,2027

Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Limited
Development Bank ofJapan Inc. (Note 6)
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd.
Development Bank ofJapan Inc. (Note 6)
Mizuho Trust &Banking Co., Ltd.
(Note 6)
Resona Bank, Limited
Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui Trust
Bank, LimitedAozora Bank, Ltd.
Resona Bank, Limited
MUFG Bank, Ltd.
(Note 6)
Mizuho Bank, Ltd.
(Note 6)Development Bank ofJapan Inc. (Note 6)
Mizuho Trust &Banking Co., Ltd.
(Note 6)
MUFG Bank, Ltd.
(Note 6)
Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui Trust
Bank, Limited
Resona Bank, Limited

Use

Remarks(%)

Development Bank ofJapan Inc. (Note 6)

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

Long-term
loans
payableAverageinterest rate
（Note 2）
（Note 3）500,000--

500,000

400,000--

400,000

0.772

guaranteed

September 30,
2024
September 30,
2024
April 21,2026
October 31,
2025

January 31,
2027

October 31,
2024

October 31,
2024(Note 5)

Unsecured/
Nonguaranteed70Classification
LenderBalance at the
beginning of theperiodIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)
Development Bank ofJapan Inc. (Note 6)
Mizuho Bank, Ltd.
(Note 6)
Mizuho Trust &Banking Co., Ltd.
(Note 6)
MUFG Bank, Ltd.
(Note 6)
Sumitomo Mitsui Trust
Bank, Limited
MUFG Bank, Ltd.
(Note 6)
Mizuho Bank, Ltd.
(Note 6)
Sumitomo Mitsui Trust
Bank, Limited
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd.
(Note 6)
MUFG Bank, Ltd.

-

500,000

1.050

500,000--

500,000

1.049

300,000--

300,000

1.050

500,000--

500,000

0.670

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

500,000--

500,000

1.035

1,200,000--

1,200,000

1.000

1,250,000--

1,250,000

800,000--

800,000

900,000--

900,000

0.988

2,600,000--

2,600,000

0.985

2,000,000--

2,000,000

0.902

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

Resona Bank, Limited

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
MUFG Bank, Ltd.

400,000--

400,000

0.726

400,000--

400,000

0.676

1,850,000--

1,850,000

0.910

March 31,1,300,000--

1,300,000

0.860

2028

Resona Bank, Limited.

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, Limited

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

0.644

The Bank of Fukuoka,
Ltd.
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd.
(Note 6)
Mizuho Bank, Ltd.
Mizuho Trust &Banking Co., Ltd.
Nippon Life Insurance
Company
Sumitomo Mitsui Trust
Bank, Limited

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

Use

Remarks(Note 5)

Unsecured/
Nonguaranteed(%)-

Mizuho Bank, Ltd.

loans

Payment due
date（Note 4）500,000

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

Long-term

Averageinterest rate
（Note 2）
（Note 3）0.603

May 18,2027

September
29, 2023
September
30, 2026
September
29, 2027
September
29, 2028
October 3,
2027
February 10,2028
August 31,
2022
April 30,
2027
April 30,
2027
April 30,
2026
April 30,2028
May 31,
2026

May 31,2027

March 31,2025

March 31,2026

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

October 31,
2026

71

Classification

Balance at the
beginning of theperiodLenderIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)Mizuho Trust &Banking Co., Ltd.
(Note 6)

Averageinterest rate
（Note 2）
（Note 3）--500,000

0.550

Resona Bank, Limited
Development Bank ofJapan Inc.（Note 6）

300,000--

300,000

0.644

500,000--

500,000

0.830

The Gunma Bank, Ltd.

400,000--

400,000

0.498

400,000--

400,000

0.478-

700,000-

700,000

0.758

80,950,000

700,000-

81,650,000¥103,900,000¥2,600,000¥1,700,000¥104,800,000

Total

Use

Remarks(%)

500,000

The Musashino Bank,
Ltd. （Note 6）
Sumitomo Mitsui
Banking Corporation
Subtotal

Payment due
date（Note 4）

October 31,
2029
January 31,
2025
January 31,
2025
September
30, 2028

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¥ 9,050,000

Due after 2 years
through 3 years¥ 7,500,000

Due after 3 years
through 4 years（in thousands yen）
¥ 8,990,000

Due after 4 years
through 5 years¥ 13,320,000

Due after 5 years¥ 42,790,000

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 except for the following Note 7 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: Partial prepayment of 1,000,000 thousand yen was made on April 30, 2020.
Note 8: 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.

72

The following summarizes short-term loans payable and long-term loans payable outstanding as of March 31, 2020:
Classification
LenderBalance atthe beginningof the period

Increaseduring theperiodDecreaseduring theperiodAverageinterest rate
（Note 2）
（Note 3）

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

Short-termloanspayableSumitomo Mitsui
Banking Corporation
Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui Trust
Bank, Limited(Note 7)
Sumitomo Mitsui
Banking Corporation
Subtotal
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd.

Long-term
loans
payableLong-term
loans

700,000¥-¥2,750,000

-

-

¥

-

0.473

700,000

0.471
September 30,
2020

620,000

-

0.477

-

2,750,000-

2,750,000

0.469

January 31,
2021

4,070,000

2,750,000

3,370,000

3,450,000

2,400,000-

2,400,000-

800,000-

800,000-

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

800,000-

800,000-

550,000-

550,000-

500,000-

500,000-

Resona Bank, Limited.

500,000-

500,000-

0.751

February 10,
2020

The Gunma Bank, Ltd.

400,000-

400,000-

400,000-

400,000-

350,000-

350,000-

300,000-

300,000-

1,270,000-

1,270,000-

650,000-

650,000-

0.477

August 31,
2020

200,000-

200,000-

3,000,000--

3,000,000

700,000--

700,000

500,000--

500,000

450,000--

450,000

450,000--

450,000

400,000--

400,000

1,500,000--

1,500,000-

2,400,000-

2,400,000

MUFG Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Limited
Resona Bank, Limited-

1,600,000-

1,600,000-

550,000-

550,000-

500,000-

500,000

Aozora Bank, Ltd.

-

500,000-

500,000

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

-

350,000-

350,000-

300,000-

300,000

16,120,000

6,200,000

9,120,000

13,200,000

2,600,000--

2,600,000

800,000--

800,000

600,000--

600,000

400,000--

400,000

400,000--

400,000

Mizuho Trust &Banking Co., Ltd.

Remarks(Note 5)

Unsecured/
Nonguaranteed(Note 5)

Unsecured/
Nonguaranteed

January 31,
2020-

Mizuho Trust &Banking Co., Ltd.
MUFG Bank, Ltd.
(Note 7)
Mizuho Trust &Banking Co., Ltd.
(Note 7)
Sumitomo Mitsui Trust
Bank, Limited(Note 7)
Sumitomo Mitsui
Banking Corporation(Note 8)MUFG Bank, Ltd.
(Note 8)
Sumitomo Mitsui Trust
Bank, Limited (Note 8)
Aozora Bank, Ltd.
(Note 8)Resona Bank, Limited(Note 8)Mizuho Bank, Ltd.
(Note 8)Development Bank ofJapan Inc.
(Note 6) (Note 8)
Sumitomo Mitsui
Banking Corporation

Use

(%)

620,000

The Musashino Bank,
Ltd.
Mizuho Bank, Ltd.

Current
portion of
long-term
loans
payable¥2,750,000

Payment due
date（Note 4）0.865

February 10,
2021

0.925

February 10,
2021

0.469

February 28,
2021

0.978

February 10,2022(Note 5)

Unsecured/
Nonguaranteed

0.978

February 10,2022(Note 5)

Unsecured/
Non-

73

Classification
LenderBalance atthe beginningof the period

Increaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)payable--300,000

Resona Bank, Limited
Development Bank ofJapan Inc. (Note 6)
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd.

300,000--

300,000

1,600,000--

1,600,000

1.033

4,600,000--

4,600,000

1.366

1,000,000--

1,000,000

600,000--

600,000

400,000--

400,000

Resona Bank, Limited

400,000--

400,000

Mizuho Trust &Banking Co., Ltd.

400,000--

400,000

400,000--

400,000

1,500,000--

1,500,000

MUFG Bank, Ltd.

450,000--

450,000

Resona Bank, Limited
The Musashino Bank,Ltd.
Development Bank ofJapan Inc. (Note 6)
Sumitomo Mitsui
Banking Corporation
Mizuho Bank, Ltd.

200,000--

200,000

150,000--

150,000

1,500,000--

1,500,000

3,000,000--

3,000,000

1,150,000--

1,150,000

MUFG Bank, Ltd.

1,000,000--

1,000,000

700,000--

700,000

650,000--

650,000

500,000--

500,000

1,500,000--

1,500,000

400,000--

400,000

450,000--

Mizuho Trust &Banking Co., Ltd.
Sumitomo Mitsui Trust
Bank, Limited
Resona Bank, Limited
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Limited
Development Bank ofJapan Inc.
(Note 6)
Sumitomo Mitsui
Banking Corporation

890,000-

March 31,
2023

0.994

March 31,
2023

0.987

March 31,
2023

1.013

March 31,
2023

1.110

March 31,
2024

1.110

March 31,
2024

1.243

April 16,2025

450,000

0.803

September 30,
2024-

890,000

0.760

September 30,
2024

-

-

2,670,000

0.932

890,000--

890,000

0.888

500,000--

500,000

0.550

2,000,000--

2,000,000

1.049

1,000,000--

1,000,000

1.049

500,000--

500,000

1.002

2,600,000--

2,600,000

500,000--

500,000

MUFG Bank, Ltd.

400,000--

400,000

Sumitomo Mitsui Trust
Bank, Limited

300,000--

300,000

300,000--

300,000

600,000--

600,000

0.400

500,000--

500,000

0.553

The Gunma Bank, Ltd.
(Note 6)Development Bank ofJapan Inc.
(Note 6)
Mizuho Trust &Banking Co., Ltd.
(Note 6)
Resona Bank, Limited
Sumitomo Mitsui
Banking Corporation
Aozora Bank, Ltd.

Resona Bank, Limited
MUFG Bank, Ltd. (Note6)
Development Bank ofJapan Inc.（Note 6）
Mizuho Bank, Ltd.
(Note 6)400,000-

Remarks

February 10,
2022
April 16,
2025

0.975

2,670,000

MUFG Bank, Ltd.

Use

guaranteed

300,000

MUFG Bank, Ltd.
Development Bank ofJapan Inc. (Note 6)

Payment due
date（Note 4）(%)

Mizuho Bank, Ltd.

Sumitomo Mitsui Trust
Bank, Limited
Mizuho Bank, Ltd.

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

April 21,2026
October 31,
2025
September 30,
2021

January 31,
2027

0.485

April 27,
2021

0.485

April 27,
2021

0.553

April 27,
2021
April 27,
2021
April 27,2021

(Note 5)

Unsecured/
Nonguaranteed74

Classification
LenderBalance atthe beginningof the period

Increaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)Mizuho Trust &Banking Co., Ltd.
（Note 6）
Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui Trust
Bank, LimitedAozora Bank, Ltd.

Payment due
date（Note 4）--200,000

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

500,000--

500,000

0.670

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

500,000--

500,000

1.035

1,200,000--

1,200,000

1.000

MUFG Bank, Ltd.

1,250,000--

1,250,000

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

800,000--

800,000

900,000--

900,000

0.988

2,600,000--

2,600,000

0.985

2,000,000--

2,000,000

0.902

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

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

Mizuho Bank, Ltd.
The Bank of Fukuoka,
Ltd.
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd.
(Note 6)
Mizuho Bank, Ltd.
Mizuho Trust &Banking Co., Ltd.
Nippon Life Insurance
Company
Sumitomo Mitsui Trust
Bank, Limited
Resona Bank, Limited

Use

Remarks(Note 5)

Unsecured/
Nonguaranteed(%)

200,000

Resona Bank, Limited
MUFG Bank, Ltd.
(Note 6)
Mizuho Bank, Ltd.
(Note 6)Development Bank ofJapan Inc. (Note 6)
Mizuho Trust &Banking Co., Ltd.
(Note 6)
MUFG Bank, Ltd.
(Note 6)
Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui Trust
Bank, Limited
Resona Bank, Limited

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

0.553

0.772

0.603

October 31,
2024

October 31,
2024

May 18,2027

September
29, 2023
September
30, 2026
September
29, 2027
September
29, 2028
October 3,
2027
February 10,2028
August 31,
2022
April 30,
2027
April 30,
2027
April 30,
2026
April 30,2028
May 31,
2026
May 31,
2027
May 31,2027
March 31,2025
March 31,2026

75

Classification

Balance atthe beginningof the period

LenderIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)

Averageinterest rate
（Note 2）
（Note 3）

Payment due
date（Note 4）500,000--

500,000

0.726

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

400,000--

400,000

0.726

400,000--

400,000

0.676

1,850,000--

1,850,000

0.910

March 31,1,300,000--

1,300,000

0.860

2028

Resona Bank, Limited.

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, Limited-

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

0.644

-

500,000-

500,000

0.550

Resona Bank, Limited
Development Bank ofJapan Inc.（Note 6）-

300,000-

300,000

0.644-

500,000-

500,000

0.830

The Gunma Bank, Ltd.

-

400,000-

400,000

0.498

The Musashino Bank,
Ltd. （Note 6）-

400,000-

400,000

0.478

78,910,000

8,340,000-

87,250,000¥99,100,000¥17,290,000¥12,490,000¥103,900,000

Subtotal
Total

Remarks(%)

Aozora Bank, Ltd.

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

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

October 31,
2026

October 31,
2029
January 31,
2025
January 31,
2025

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¥ 13,300,000

Due after 2 years
through 3 years¥ 9,050,000

Due after 3 years
through 4 years（in thousands yen）
¥ 7,500,000

Due after 4 years
through 5 years¥ 8,810,000

Due after 5 years¥ 48,590,000

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 except for the following Note 7 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: Prepayment was made on October 31, 2019.
Note 8: 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.

76

22. INVESTMENT CORPORATION BONDS
Outstanding investment corporation bonds as of September 30, 2020 are as follows.
SeriesDate of issue

Balance atthe beginningof period

Decreaseduring theperiodBalance at theend of period

Interest rate

(in thousands of yen)First series of unsecured
investment corporation bonds(Note 1)
Second 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)Total

October 31,
2016¥1,000,000¥

Repayment date-

¥1,000,000

0.200

October 29,
2021

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

April 26,2018

2,000,000-

2,000,000

0.700

April 26,
2028

April 30,
2020

-

-

1,000,000

0.400

April 30,2025-

¥8,000,000¥

Remarks(%)

October 31,
2016¥7,000,000

Use(Note3)

Unsecured(Note4)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: 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)

¥2,000,000¥

Due after 3 years
through 4 years-¥

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

Repayment date

Use

Outstanding investment corporation bonds as of March 31, 2020 are as follows.
SeriesDate of issue

Balance atthe beginningof period

Decreaseduring theperiodBalance at theend of period(in thousands of yen)First series of unsecured
investment corporation bonds(Note 1)
Second 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)Total

October 31,
2016¥1,000,000

October 31,
2016

Interest rate(%)-

¥1,000,000

0.200

October 29,
2021

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

April 26,2018

2,000,000-

2,000,000

0.700

April 26,2028-

¥7,000,000¥7,000,000¥¥

Remarks(Note2)

Unsecured(Note3)Note 1: Ranking pari passu among the specified investment corporation bonds.
Note 2: 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 3: Investment corporation bonds were used as the funds for repayment of debts.
Note 4: 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¥1,000,000

Due after 3 years
through 4 years¥

Due after 4 years
through 5 years-¥-

23. DISTRIBUTIONS
77

From April 1, 2020
to September 30, 2020

From October 1, 2019
to March 31, 2020

I.. Retained earnings at the end of period¥3,716,853,291¥3,784,993,657

II. Distributions in excess of earnings
Of which, allowance for temporary
difference adjustments¥147,984,852¥5,361,770¥147,984,852¥5,361,770

Ⅲ.Incorporation into unitholders’ capital-¥74,317,226

Of which, reversal of allowance fortemporary difference adjustments-¥74,317,226

Ⅳ. Total distributions¥3,509,814,642¥3,503,916,695

Distributions per unit

¥6,546¥6,535¥3,361,829,790¥3,498,554,925¥6,270¥6,525¥147,984,852¥5,361,770

¥276

¥10

Of which, distributions of earnings
Of which, distributions of earnings perunit
Of which, allowance for temporary
difference adjustments
Of which, distributions in excess ofearnings per unit (allowance fortemporary difference adjustments)
Ⅴ.Retained earnings brought forward to
the next period¥355,023,501
In accordance with the policy described in Article 39-1
of its Articles of Incorporation, KRR determines that theamount of distribution shall exceed the amountequivalent to 90% of its distributable profit as stipulated
in Article 67-15 of the Special Taxation Measures Law
and shall be up to its profits as the maximum amount.
Following this policy, KRR has decided that it shall
distribute ¥3,361,829,790 which is almost the entire
amount of income as defined in Article 136-1 of theInvestment Trust Act .
Furthermore, in accordance with the policy for“Distribution of Money in Excess of Profits” as stated in
Article 39-2 of KRR’s Articles of Incorporation, KRR
made a distribution in excess of earnings of¥147,984,852 for allowance for temporary difference
adjustments (as defined in Article 2-2-30 of theOrdinance on Accountings of Investment Corporations)for the purpose of reflecting the effect on distributions of
the difference in earnings calculated under Japanese
GAAP and Japanese tax laws (as defined in Article 2-230 (a) of the Ordinance on Accountings of Investment
Corporations) in association with the amortization of
fixed-term land leasehold rights and of the item
deducted from net asset (as defined in Article 2-2-30 (b)of the Ordinance on Accountings of Investment
Corporations) in association with deferred losses onhedges.

Method of calculating distribution amount¥212,121,506
In accordance with the policy described in Article 39-1
of its Articles of Incorporation, KRR determines that theamount of distribution shall exceed the amountequivalent to 90% of its distributable profit as stipulated
in Article 67-15 of the Special Taxation Measures Law
and shall be up to its profits as the maximum amount.
Following this policy, KRR has decided that it shall
distribute ¥3,498,554,925 which is almost the entire
amount of income as defined in Article 136-1 of theInvestment Trust Act after deduction of reversal of
allowance for temporary difference adjustments (asdefined in Article 2-2-30 of the Ordinance on
Accountings of Investment Corporations).
Furthermore, in accordance with the policy for“Distribution of Money in Excess of Profits” as stated in
Article 39-2 of KRR’s Articles of Incorporation, KRR
made a distribution in excess of earnings of ¥5,361,770
for allowance for temporary difference adjustments (asdefined in Article 2-2-30 of the Ordinance on
Accountings of Investment Corporations) for the
purpose of reflecting the effect on distributions of thedifference in earnings calculated under Japanese GAAP
and Japanese tax laws (as defined in Article 2-2-30 (a)of the Ordinance on Accountings of Investment
Corporations) in association with the amortization of
fixed-term land leasehold rights .

11th Fiscal Period (From April 1, 2020 to September 30, 2020)
1. Reasons, related assets and allowance(in thousands of yen)
Related assets, etc.

Allowance for temporary
difference adjustments

ReasonBuildings in trust,
Leasehold right in trust

Amortization of leasehold right in trust and the amount in excess ofdepreciation¥5,178Deferred gains or losses on hedges

Loss on interest-rate swaps recognized at the end of the fiscal period¥142,806

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 be reversed.

10th Fiscal Period (From October 1, 2019 to March 31, 2020)
1. Reasons, related assets and allowance78

(in thousands of yen)
Related assets, etc.
Buildings in trust,
Leasehold right in trust

Allowance for temporary
difference adjustments

ReasonAmortization of leasehold right in trust and the amount in excess ofdepreciation¥5,361

2. Reasons, related assets and reversal of allowance(in thousands of yen)
Related assets, etc.
Deferred gains or losses onhedges

Reversal of allowance for temporary
difference adjustments

ReasonChanges in the fair value of derivative instruments¥74,317

3. 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 be reversed.

79