Semiannual Report
29th Fiscal Period
May 1, 2019–October 31, 2019

Characteristics of Kenedix Office Investment Corporation
We seek to maximize unitholder returns by focusing on investing in and managing mid-sized office buildingsin the Tokyo metropolitan area to generate stable profits and sustainably expand assets under management.

Tokyo
metropolitan
area

and

Mid-sized officebuildings

Mid-sized officebuilding investment
ratio (Note 1)

Tokyo metropolitan area
investment ratio (Note1)

81.7%

83.3 %

Maximizing unitholder returns
Table of contents

Image of a typical mid-sized office building

Characteristics of Kenedix Office Investment Corporation

2

Results for the 29th Fiscal Period (October 2019) andFuture Initiatives

4

Message from the Management

6

External Growth

10Internal Growth12

Initiatives for ESG

14

Financial Strategy

16

Approx. 2 elevators

Financial Section
Financial Summary (Unaudited)

17

Balance Sheet

18

Statement of Income and Retained Earnings

20

Statement of Changes in Net Assets

21

Statement of Cash Flows

22

Notes to the Financial Statements

23

Independent Auditor’s Report

45

Investor and Property Information

2

Unitholders’ Information

46

Portfolio

48

Around 100 –150
tsubo per floor ofrental area

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

83.0

%

61.7

%

Ratio of mid-sized office buildings (total floor area of
500 tsubo or more but less than 3,000 tsubo) in the 5central wards of Tokyo is 83.0% (Source 1) (Note 2)

Mid-sized office buildings (between 1 billion yen and10 billion yen) as percentage of sales transactions (Source 2)Abundant number of properties

High liquidity

The ratio of mid-sized office buildings (total floor area of 500
tsubo or more but less than 3,000 tsubo) in the 5 central wardsof Tokyo is 83.0%. We believe that the number of mid-sized
office buildings is larger than that of large-sized office buildings,
so there are many excellent investment opportunities, andthat they are more efficient in operation than small-sized officebuildings.

Transaction prices for mid-sized office buildings range fromapproximately 1 billion yen to 10 billion yen, and the ratio ofthese transactions to the total number is 61.7% (the ratio oftrading volume between 1 billion yen and 10 billion yen) while
they are relatively actively traded.

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

92.2

%

Percentage of offices in Tokyo with fewer than 30 employees (Source 3)

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

Note 1:
		Note 2:
		

82%

Percentage of small– and mid-sized buildings built 20 years
or more ago in Tokyo’s 23 wards (leased area basis) (Source 4)

Favorable supply–demandbalance on leasing market
The percentage of small– and mid-sized buildings built 20
years or more ago in Tokyo’s 23 wards (leased area basis) is
82%, and new supply is limited compared to large-sized officebuildings. Therefore, we are able to secure competitivenessby appropriately managing and operating these buildings,
continuing to renew their facilities, and carrying out valueupgrading works.

Shown as acquisition price ratio for each category to the total acquisition price, rounded down to the first decimal place (as of the end of 29th fiscal
period (October 31, 2019)).
Percentage of number of rental office buildings located in the 5 central wards of Tokyo that are surveyed by CBRE K.K. by building size (as of the end of
September 2016).

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

3

K e n e d i x O f f i c e I n v e s t m e n t C o r p o r at i o n

Results for the 29th Fiscal Period (October 2019) and Future Initiatives

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

13,639yen- 0.6% period over period+2.0% compared with forecast (Note)
Note: As of June 12, 201929th fiscal period (Oct. 2019) results

Asset size

Portfolio NOI yield

Percentage of total floor area ofgreen certified properties

424.5 billion yen

4.8 ％51.3 ％

Acquired Chofu Center Building throughnegotiated transaction supported by thesponsor

Focus on continuous asset reshuffle andinternal growth

Green certified properties exceeded the
majority of the portfolio through active andcontinuous efforts (based on total floor area)

Increase in monthly rent upontenant turnover

Increase in monthly rent uponrent revision

Occupancy rate

99.5 ％

21.5 million yen

9.8 million yen

Maintained high occupancy rates
due to strong demand from tenants

Ratio of the number of rent increase
contracts upon tenant turnover roseto 85.1%

No downward rent revisions in the 29th fiscal period,
and ratio of rent increase contracts increased to36.6%, more than the result of previous fiscal period

Interest-bearing debt
average interest rate

Interest-bearing debt ratio (LTV)

Correspondent financial institutions

1.02 ％

42.1％

16 institutions

Reduced interest costs by refinancing

4

Maintained stable financial base bykeeping LTV at a conservative level

Further diversified and increased lending
financial institutions following borrowings
from two new institutions

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

13,910yen

Note: Forecast as of December 13, 2019 calculated under certain assumptions.

Future efforts

1

Continue selective investment through diversified
acquisition methods such as joint investment utilizing
the Kenedix Group’s capabilities and asset reshuffle bymutual transactions

2

Focus on further raising unit rent byconducting value-upgrading works based on
CS survey results

3Work on financial cost reduction through diversifying
borrowing periods while maintaining stable financial base4

Aim for compatibility between sustainable growth andsocial responsibility through continuous initiatives for
improving sustainability

Kenedix Office Investment Corporation

5

K e n e d i x O f f i c e I n v e s t m e n t C o r p o r at i o n

Message from the Management

Achieve Sustainable Growth by Building
a Robust and Profitable Portfolio
Jiro Takeda
Executive Director,
Kenedix Office Investment Corporation
Director & COO, Head of Office REIT Department,
Kenedix Real Estate Fund Management, Inc.
6

In its 29th fiscal period, KDO acquired Chofu Center Building in its firstjoint investment with KRR and steadily increased rents.
In its 29th fiscal period, the six months ended

period in filling vacancies, so the increase in monthly

October 31, 2019, distribution per unit for the term

rents from tenant turnover was 21.5 million yen in theincreased 269 yen, or 2.0%, to 13,639 yen, exceed-

period under review. Rents rose in 85.1% of cases ofing the forecast of 13,370 yen.

tenant turnover. Both figures were higher than in the

During the period under review, we acquired Chofu
Center Building through negotiated transaction inprevious term.
We continued to focus on negotiating higher rents

coordination with our sponsor, Kenedix, Inc., for 8.7

with existing tenants, and the increase attributablebillion yen. This suburban office building is locatedto revised rents for the period under review was 9.8

in a relatively quiet environment, but is also next to amillion yen monthly, up from the previous term.

lifestyle-oriented commercial facility, and should thus

We have maintained a stable financial position as

cater to what should be increasing demand in thepart of our financial strategies. In the period underyears ahead for offices near residences.

review, we refinanced to cut the average interest rate

As a result of this acquisition, our portfolio encompassed 97 properties valued at 424.5 billion yen at
the end of October 2019.
In October 2019, Kenedix Retail REIT Corporation(KRR) purchased the commercial building to the northon interest-bearing debt to 1.02%.
During the term, we obtained loans for the first timefrom two financial institutions, lifting the total of such
entities with which we secure funding to 16.
We also continued with our efforts in ESG-relatedof the property as the first joint investment by two

initiatives. In 2019, we received a GRESB Real Estate

listed REITs with the same sponsor. The Group will

Assessment Green Star for the eighth consecutive

harness its collective strengths to undertake initiatives

year, securing GRESB’s highest “A” rating. As well,in collaboration with KRR and generate added value.

during the period under review Chofu Center Build-

In a robust office leasing market, the office building

ing received DBJ Green Building certification. KDX

occupancy rate at the end of the period under review

Kawasaki-Ekimae Hon-cho Building and five otherwas 99.5%, up 0.3 percentage point from the 28th

properties obtained Certification for CASBEE for Realfiscal period (April 2019).

Estate. By the end of the period, more than 50% of

Although the turnover ratio rose temporarily on
vacancies by major tenants at some properties,

the floor area of properties in our portfolio had
obtained environmental certification.

we made steady progress from the previous fiscal

Kenedix Office Investment Corporation

7

Message from the Management

We conduct CS surveys as part of our efforts to become a preferred
mid-sized office building manager.
We conducted our eighth customer satisfaction (CS)survey in August 2019.
The biennial poll solicits the views of tenants (gen-and competitiveness of our properties.
The survey found that 95% of tenants wished toremain with us.

eral affairs officers and workers), primarily regarding

We believe that this result stemmed from ourour facilities and responsiveness. In light of findings,

attentive building management and timely efforts to

we upgrade air conditioning, renovate common

upgrade facilities and improve the value of ourareas, and otherwise improve our facilities toproperties, which is vital to staying competitive asenhance CS and maintain and enhance the value

properties age.

We seek to optimize unitholder returns by steadily deploying our growthstrategies while undertaking ESG initiatives to earn a robust investor reputation among REITs.
We will drive external growth by continuing to use

value so we can lift unit rents and the profitability ofsponsor support lines and our own network while

our properties.

again investing selectively, harnessing diverse
acquisition techniques, notably joint investments andfinancial position and lower interest costs by diversi-

asset reshuffle through mutual transactions. We will

fying borrowing periods.

further reshuffle assets to improve unrealized gains

On the ESG front, we will keep endeavoring toand profitability, thereby enhancing our portfolio.

boost sustainability while balancing sustainable

We will pursue internal growth by continuing to8

Our financial strategy is to maintain a stable

growth and social responsibility. We will also continue

negotiate higher rents with existing tenants. At theto implement ESG initiatives as part of efforts tosame time, we will solicit tenant feedback throughsecure a strong reputation among tenants for our

CS surveys and undertake construction to increase

office buildings and among investors as a REIT.

We will work to identify diversifying tenant needs and further enhancetenant satisfaction through originality and ingenuity.
The Japanese economy faces downside risks fromWe will accordingly avoid resting on our laurels,a range of factors. These include prolonged tradeidentifying and intelligently addressing the diversify-

friction between the United States and China anding office building needs of tenants to increase theirsignificantly deteriorating corporate earnings.

satisfaction through originality and ingenuity.

More companies are accordingly concerned about

We seek to enhance unitholder value in terms ofprospects of an economic downturn, and moves are

distributions and net asset value through suchafoot to constrain capital investment and hiring.

initiatives.

While supply in office markets in key cities inJapan remains tight amid buoyant tenant demand,the supply of large A-grade buildings in Tokyo in2020 will be heavy. While leasing is progressing well,there may be secondary vacancies from tenants
relocating to new buildings and existing tenants
being unable to fill shortfalls by occupying more
space, fueling efforts to solicit more tenants.
On top of that, enactments of work practicereform-related bills have made it crucial for companies to improve business efficiency and productivity.
Companies increasingly need to seek ways tosecure diverse human resources in view of worsening
labor shortages, so office strategies are increasingly
part of the solution to such a challenge.
To date, large corporations and IT firms have led
the way in embracing the flexibility of telework. Smalland medium-sized enterprises will probably become
more proactive in this respect.

Kenedix Office Investment Corporation

9

K e n e d i x O f f i c e I n v e s t m e n t C o r p o r at i o nExternal Growth

Portfolio Growth Strategy
The Asset Investment Division primarily acquires and transfers assets to expand our asset
scale and enhance our portfolio.
Property prices have rocketed in recent years, limiting opportunities to invest in officebuildings.
The stances on work practice of companies as prime office renters and officeenvironment requirements have changed dramatically, and will likely keep evolving in theyears ahead.
We will naturally do more to leverage the support of the Kenedix Group and the AssetManagement Company’s own network and draw on the outstanding property stock that
we have amassed to date to strategically reshuffle assets. We will thereby endeavor toenhance profitability even under the currently challenging operating climate. I believe that
this and our efforts to drive further growth by investing selectively in high-quality officebuildings are our strengths.

Hiroshi Sato

Head of Asset Investment Division, Office REIT Department,
Kenedix Real Estate Fund Management, Inc.

Joint acquisition with Kenedix Retail REIT Corporation
Acquired the property with relatively high profitability through negotiated transaction supported by
the sponsor. Kenedix Retail REIT Corporation (KRR) thereafter purchased a commercial building in what
was its first joint acquisition.
Chofu Center Building(Acquired on June 14, 2019)

Chofu Center Building(Retail wing)(Acquired on October 24, 2019)
Toho Gakuen College
Chofu Campus

KDO

KRR

The University ofElectro-Communications

DentsudaTenji i-dori St.
n-do
ri St.

Fudatenjin
Shrine

Kos

hu-k

aido

St.

SEIYU
Chofu

Office compartment
800

6,500

Chofu
PARCO

Line

Retail compartment

RFL

4,000

Keio

7FL
4,150

AEON Cinema
THEATUS Chofu

5FL

Keio

Sag

ChofushiCentral Library

Chofu City Hall

Chofu City
Green Hall

4,150

3FL

fu S

4,150

2FL

ta.

1FL
GL
3,900

AFLAC Square

Cho

4,150

4FL

Chofu
South Gate Building

B1FL
3,000

ami

hara

Line

4,150

36,200
4,150

6FL

4,800

6,400

12,80035,200

6,400

4,800

6,000

7,000

8,400

8,400

8,400

8,400
85,860

2,700

7,000

6,000

4,000

22,260

キープラインX-X断面図

X

Parking compartment
X● Focused on changes in office building demand and acquired Chofu Center
道路側

Location

Chofu, Tokyo

Acquisition price8,700 million yen

Appraisal value

9,920 million yen

Appraisal NOI yield (Note)

5.5%

Occupancy rate

100% (as of October 31, 2019)(as of April 1, 2019)

Building in the Chofu area, where new supply is limited, at a reasonable pricethrough negotiated transaction.

● KRR acquired the other compartment (retail wing) supported by Kenedix, Inc.,

our sponsor.

● The first joint acquisition of complex asset by the Kenedix Group’s listed investment

corporations that further expands the external growth strategy of KDO characterized
by diversified acquisition methods.

Note:	Calculated by dividing net operating income based on the direct capitalization method in the appraisal report as of April 1, 2019 by acquisition price(rounded to the first decimal place).

10Asset size and number of owned properties
Keep investing selectively and reshuffling assets to enhance portfolio and keep tabs on real estatemarket trends, maintaining our investment approach and pursuing further growth.
Asset size (total acquisition price) and number of properties since listing(Billion yen)

Office buildings
Residential
Central urban retail property
Others600(Properties)

PO Fiscal period with public offering

96 97

100

Number of properties

424

450

PO
PO

PO

415

75

PO

300
PO

50

PO

PO

31
PO

150

25

69
0

0
1st
fiscalperiod(Oct. 2005)

5th
fiscalperiod(Oct. 2007)

25th
fiscalperiod(Oct. 2017)

20th
fiscalperiod(Apr. 2015)

15th
fiscalperiod(Oct. 2012)

10th
fiscalperiod(Apr. 2010)29th
fiscalperiod(Oct. 2019)

Characteristics of KDO office buildings (as of the end of 29th fiscal period (October 2019))
Invest selectively in properties that are outstanding in terms of location, specifications, earthquake
resistance, and other respects to become the provider of choice in mid-sized office buildings.
Breakdown by distance from the nearest station on foot(based on acquisition price, office buildings)

Breakdown by acquisition price(based on acquisition price, office buildings)
Less than 2.5 billion yen

6 mins or more (15 properties)

1 min (20 properties)

5 mins (6 properties)

18.8 billion yen
4.5%
4 mins (15 properties)

61.0 billion yen
14.5%

86.2 billion yen
20.4%

82.2 ％

located within
5 minutes
on foot

64.3 billion yen
15.3%

More than 10.0 billion yen

92.5 billion yen
21.9%

74.8 billion yen
17.8%

2 mins (18 properties)

56.5 billion yen
13.4%

More than 7.5 billion yen andless than 10.0 billion yen

60.2 billion yen
14.3%

Average

4.3 billion yen /propertyMore than 5.0 billion yen andless than 7.5 billion yen

3 mins (22 properties)

79.2 billion yen
18.8%

117.8 billion yen
27.9%

More than
2.5 billion yen
and less than
5.0 billion yen

131.6 billion yen
31.2%

Percentage share of our properties that comply withnew earthquake resistance standard (Note 1) (Note 2)
Equivalent to new earthquake resistance standard

3 properties (3.8%)

New earthquake resistance standard

93 properties (96.2%)

New earthquake
resistance standard
and equivalent levels

100.0 %

Note 1:	"New Earthquake Resistance Standard" was formulated based on the revision of enforcement order of Building Standard Law in 1981 (cabinet orderNo. 144 on April 24, 1981). The anti-seismic performance of buildings has been greatly improved since the enforcement of the law due to the newly
added provisions including the following: New provision on tie-hoop ratio of reinforced concrete pillars (0.2% or more); Resetting of horizontal
seismic coefficient to elastic shear modulus; and New requirement on secondary design in seismic calculation.
Note 2: Percentage share is calculated based on leasable area as of the end of 29th fiscal period (October 2019). For the properties owned through quasi
co-ownership interest, leasable area for such portion is used in calculation.

Kenedix Office Investment Corporation

11

K e n e d i x O f f i c e I n v e s t m e n t C o r p o r at i o n

Internal Growth
Changes in office building occupancy rate and turnover ratio
The occupancy rate remained high. Despite a temporary decline owing mainly to a turnover among large
tenants, the rate should recover as rent-free periods gradually expire during the fiscal period ending April 2020.
Turnover ratio (annualized) of office buildings (Note 2)

Changes in occupancy rate (Note 1)

Turnover among large tenants
at Toranomon 1-chome Building
accounted for 2.0% of 6.3%

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

(%)

100

1.8

1.9

2.8

97.3

97.3

1.1

2.5

95

99.1

99.5

99.1

99.0

98.0

96.5

（%）

99.2

6.7

4.4

96.7

3.6

Average occupancy rate for all office buildings during the fiscal period
Averageoccupancy
rate for26th
fiscal period:

99.2%

End of 25th
fiscal period(Oct. 2017)

Averageoccupancy
rate for27th
fiscal period:

Averageoccupancy
rate for28th
fiscal period:

99.1%

End of 26th
fiscal period(Apr. 2018)

99.1%

End of 27th
fiscal period(Oct. 2018)

6.3

3.2

Averageoccupancy
rate for29th
fiscal period:

99.1%

End of 28th
fiscal period(Apr. 2019)

End of 29th
fiscal period(Oct. 2019)

25th fiscal 26th fiscal 27th fiscal 28th fiscal 29th fiscal
periodperiodperiodperiodperiod(Oct. 2017) (Apr. 2018) (Oct. 2018) (Apr. 2019) (Oct. 2019)

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

Trends in rent changes upon tenant turnover for office buildings
Monthly rents rose significantly in the 29th fiscal period owing to turnover among large tenants amidrobust tenant demand. Also, new unit rents continued to surge.
Changes in monthly rent upon tenant turnover (Note 1)
Total rent increase(Million yen)
Total rent decrease(Million yen)

50.8

70.0

Percentage of number ofrent increased contracts upontenant turnover (%)

69.8

5.0
-1.5
-8.3

3.5
-1.0

5.5
-1.0

25th fiscal
period(Oct. 2017)

26th fiscal
period(Apr. 2018)

27th fiscal
period(Oct. 2018)

82.1

12.1

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

85.1

21.5

-1.0

-0.4

28th fiscal
period(Apr. 2019)29th fiscal
period(Oct. 2019)18,213

17,77815,752
14,713 14,692
13,65013,612

25th fiscal
period(Oct. 2017)

26th fiscal
period(Apr. 2018)

14,35327th fiscal
period(Oct. 2018)+20.7％

15,14028th fiscal
period(Apr. 2019)29th fiscal
period(Oct. 2019)

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

12

Rent revision with existing tenants
The amount of rent increase upon rent revisions in the 29th fiscal period exceeded the high level in theprevious fiscal period, and the trend for upward rent revisions is expected to continue in the next fiscal
period as well. Careful building management boosted the ratio of rent increase upon rent revisions.
Rent revision results (percentage based on leased area)

Changes in rent upon rent revision (based on monthly amount) (Note 1)
Rent increase
Rent decrease(Thousand yen)

7,034

9,051

No change(94 cases)

329
cases

(235 cases)

5,977

36.6%

fiscal period(Oct. 2019)

63.4%

6,826

Rent increase

29th

9,885

Changes in the number of rent increase contracts andrent increase rate

(Cases)Tokyo’s 5 central wards

100

-409

-472

50

-402

-2,032
25th fiscal
period(Oct. 2017)

26th fiscal
period(Apr. 2018)

27th fiscal
period(Oct. 2018)

28th fiscal
period(Apr. 2019)0

29th fiscal
period(Oct. 2019)

Rent increase rate
(incremental average)

83

72
51
25

Other areas

62

41

94

42

64

41

30

38

26

31

24

25th fiscal
period(Oct. 2017)

26th fiscal
period(Apr. 2018)

27th fiscal
period(Oct. 2018)

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

7.8%

6.2%

5.8%

5.7%

6.7%

(Note 2)

Note 1:	Difference in monthly rent before and after rent revision in each fiscal period is calculated by aggregating the change amount per contract in each fiscal
period, rounded to the nearest thousand yen.
Note 2: Rent increase rate is calculated by dividing the sum of increase in monthly rent by the sum of monthly rent before revision (rounded to the first decimal place).

Leverage CS surveys to enhance satisfaction levels and improve property competitivenessIn light of survey findings, we undertook construction to effectively enhance value, thereby maintaining
and lifting tenant satisfaction and property competitiveness, confirming great interest among companies
in remaining tenants.
Operations cycle based on CS surveys
Improve property competitivenessConstruction andresponses to tenantsin light of CS surveys

Maintain and improve
rent levels andasset values
Provide office environmentsthat greatly satisfy tenants

Identify tenantneeds

The 8th CS survey results (August 2019)4% 1%

95% of tenants showed intention
for continuous occupancy

33%

62%

Enhance
profitability

Definitely want to stay
Rather would stay
Rather not stay
Do not want to stay

CS survey

Overview of value-upgrading works
Periodic CS surveys found that appropriate replacement and valueの向競争力etc.,上improve tenant satisfaction.
upgrading works of restrooms,
物件

収益性
の改
善

把
の
ズ
ニー
テ ナ ントOut of relatively-old owned properties that have become
deteriorated and obsolete, select those that are considered
possible to raise rents because of highly competitive potential andvalue-upgrading works.
Establish a track recordof unit rent increase upon tenant turnover握and upward rent revision, and restore and enhance profitability.

KDX Nakameguro Building(a portion of floors)

BeforeRestrooms
After

Ratio of unit rent increase upontenant turnover (Note)

44.8%

Note: Compared to the rents in the same space paid by new tenants that moved in the 29th fiscal period (October 2019) and by previous tenants (rounded to
the first decimal place).
Kenedix Office Investment Corporation

13

K e n e d i x O f f i c e I n v e s t m e n t C o r p o r at i o n

Initiatives for ESG

Initiatives for Environment

E

n

v

i

r

o

n

m

e

n

t

Environmental certifications and assessments
GRESB Real Estate Assessment• We have received a Green Star rating for eight consecutive years in recognition of efforts to improve oursustainability performance.
• We have earned 4 Stars in the GRESB ratings, the second-highest level.
• We received an A, the highest rank for ESG disclosure.

DBJ Green Building Certification• Chofu Center Building obtained two stars in the 29th fiscal period.
• 25 properties have obtained the certification, including KDX Toranomon 1-chome Building which hasearned five stars, the top rating.

Certification for CASBEE for Real Estate• Three properties were newly ranked the highest S, while another three were ranked A, bringing to 12 thenumber with these rankings.
S rank: KDX Kawasaki-Ekimae Hon-cho Building, KDX Utsunomiya Building, and KDX Hiroshima Building
A rank: KDX Funabashi Building, KDX Shin-Yokohama Building, and KDX Shin-Osaka Building

BELS Certification• In October 2014, KDX Musashi-Kosugi Building became the first J-REIT property to receive a BELS
Certification (three stars).
• In April 2016, KDX Iidabashi Square became our second BELS-certified property, with three stars.

2019

Environment-related efforts
Acquisition of environmental certification• As KDO has been actively and continuously promoting green buildings, the properties that acquired
DBJ Green Building Certification, Certification for CASBEE for Real Estate, and BELS Certification
exceed a majority of the portfolio in terms of ratio of floor area to total floor area.
Note: The number of properties is counted without duplication in case a property has multiple certification andevaluation.Total floor area ratio is calculated without duplication by dividing certified floor area by total floorarea of the portfolio.

LED lighting installation in rental spaces• Installation of LED lighting in common area is roughly completed, installing LED lighting in rental
spaces in a planned way.
• Already installed in 5 properties in the 28th fiscal period (April 2019) and 3 properties in the 29th
fiscal period (October 2019), and will be gradually introduced in the future.

Activities for energy conservation• Post posters promoting the activities for energy conservation in summer (July to September) andwinter (December to February) in the properties.
• Eco-friendly paper including limestone materials are used for the posters.

14

End of the 29th fiscal period(Oct. 2019)
Acquisition of environmental certification (Note)
Total floor area ratio

33 properties 51.3%

S

Initiatives for Social

o

c

i

a

l

Promoting initiatives for sustainability• Recognizing the importance of environmental, social, and governance (ESG)
considerations in real estate investment management, KDO is working to improve sustainability
with the aim of realizing a sustainable society as a corporate social responsibility.
• KDO continues to support efforts to achieve the Sustainable Development Goals (SDGs) as
part of its social contribution through the activities of Japan for UNHCR and other means.

Installing monitors to help support Japan for UNHCR• Newly installed monitors in elevator halls and elevators, which show UNHCR activities’ videos
for free.
• Installed the monitors in 24 properties as of December 1, 2019 to ease the stress of tenants’
employees and visitors while waiting for an elevator.

Signing on to the Principles for Financial Action for the 21st Century by the Asset Management Company• Kenedix Real Estate Fund Management, Inc. (“the Asset Management Company”)
became a signatory to the Principles for Financial Action towards a Sustainable Society(Principles for Financial Action for the 21st Century (“the PFA21”)).
• Further promote initiatives for sustainability, being aware of responsibility and role needed
toward a sustainable society.

G

Initiatives for Corporate Governance

o

v

e

r

n

a

n

c

e

Transparent and closely monitored decision-making processes• The Asset Management Company creates management guidelines, and sets forth basic investment management guidelines, including
investment policy, related-party transaction rules, distribution policy, and disclosure policy.
• Furthermore, the Asset Management Company creates asset management plans (including asset management plans, medium-termbusiness plans, and annual business plans). It also selects and makes decisions to acquire properties, according to investment policy set
forth in the management guidelines and related-party transaction rules.
• The decision-making flow for establishing and revising the management guidelines and asset management plans and the decision-making
flow pertaining to acquisition and sale of assets are shown below.

Proposal

Office REIT
Department

Deliberation andresolution

Preview

Compliance
Officer

Related-party
transactions,etc.

Compliance
Committee

Other transactions

Deliberation andresolution

Deliberation andresolution

AssetManagement
Committee of
Office REIT
Department

Investment
Related-party
Corporation'stransactions,Board of Directors
etc.

ReportBoard ofDirectors

Other transactions

Kenedix Office Investment Corporation

15

K e n e d i x O f f i c e I n v e s t m e n t C o r p o r at i o n

Financial Strategy
Status of interest-bearing debt
We continue to decrease financial cost at refinancing while paying attention to the trend of interest
rates and balancing borrowing periods. Also, we seek to reduce refinancing risk through strategic
diversification of debt maturities.
Outstanding borrowings by financial institutions as of theend of 29th fiscal period (Oct. 2019)16 lending financial institutions

Average interest rate and average remaining period tomaturity of interest-bearing debt
Average remaining period to maturity (Years)
Average interest rate (including up-front fee) (%)

4.9

5.0

4.7

5.2

5.2

MizuhoTrust & Banking

5.0

5.3%

2.1%

4.8

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

Aozora Bank

6.0%

1.19

1.16 1.10

Resona Bank

1.07

1.06

6.4%

1.04 1.02

Mizuho Bank

6.6%

26.1%

177.0

Sumitomo Mitsui
Trust Bank

billion yen

MUFG Bank

11.2%

End of 23rd End of 24th End of 25th End of 26th End of 27th End of 28th End of 29th
fiscal period fiscal period fiscal period fiscal period fiscal period fiscal period fiscal period(Oct. 2016) (Apr. 2017) (Oct. 2017) (Apr. 2018) (Oct. 2018) (Apr. 2019) (Oct. 2019)

Sumitomo Mitsui Banking

Totalborrowings fromfinancial institutions

19.7%

Development Bank of Japan

16.7%

Outline of commitment line agreement(executed on May 31, 2019)

Commitment line

Maximum amount

6,000 million yen

Contract period

June 3, 2019 to April 30, 2020

Counterparty

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

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

Major indices related to financial stability (end of 29th fiscal period (Oct. 2019))
Interest-bearing debt ratio (LTV) (Note 1)

Ratio of fixed interest rate (Note 2)

Status of credit rating

Maintain stable financial basewith a target of 45%

Continue to hedge against a potential risein interest rates

Japan Credit Rating Agency, Ltd.

42.1%

97.7%

AA- (Stable)

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

Diversification of interest-bearing debt maturities
We seek to reduce refinancing risk by strategically diversifying debt maturities.
Balance of interest-bearing debt by maturity (As of October 31, 2019)177.0 billion yen
8.0 billion yen

Borrowings

Investment corporation bonds

Total interest-bearing debt 185.0 billion yen(Billion yen)

12.7

11.1

9.5

11.8

9.9

9.1

7.5

1.0

8.1

30th
fiscal period(Apr. 2020)

16

32nd
fiscal period(Apr. 2021)

34th
fiscal period(Apr. 2022)

3.8

36th
fiscal period(Apr. 2023)

6.7

9.0 8.3

2.0
4.7
38th
fiscal period(Apr. 2024)

11.3 10.8

12.5

13.0

11.4 2.0

2.0

11.0

7.0
40th
fiscal period(Apr. 2025)

42nd
fiscal period(Apr. 2026)

44th
fiscal period(Apr. 2027)

14.0
1.0

13.0

7.2

46th
fiscal period(Apr. 2028)

5.3

48th
fiscal period(Apr. 2029)

Financial Summary (Unaudited)
Historical Operating Trends
For the 25th–29th Fiscal Periods

29th Period
28th Period
27th Period
26th Period
25th Period(as of(as of(as of(as of(as ofOct. 31, 2017) Apr. 30, 2018) Oct. 31, 2018) Apr. 30, 2019) Oct. 31, 2019)

PeriodUnit

Operating revenues

millions of yen

13,901

14,823

15,42015,212

15,027(Rental revenues)

millions of yen

13,84014,22214,802

14,595

14,959Operating expenses

millions of yen

8,244

7,974

8,271

8,039

8,199

(Property-related expenses)

millions of yen

6,720

6,977

7,105

6,880

7,092

Operating income

millions of yen

5,657

6,848

7,148

7,172

6,828

Ordinary income

millions of yen

4,590

5,829

6,109

6,179

5,845

Net income (a)millions of yen

4,588

5,828

6,107

6,178

5,844

Total assets (b)millions of yen

414,933

422,993437,221436,753439,773(Period-on-period change)%(+1.2)(+1.9)(+3.4)(–0.1)(+0.7)

Interest-bearing debt (c)millions of yen

179,600

185,850

183,050

182,050

185,050(Period-on-period change)%

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

Unitholders’ capitalmillions of yen(Period-on-period change)(+2.9)(+3.5)(–1.5)(–0.5)(+1.6)

212,851

213,642229,313229,440

229,276(–0.1)(+0.4)(+7.3)(+0.1)(–0.1)

206,199

206,199

220,970

220,970

220,970

%

(0.0)

(0.0)

(+7.2)

(0.0)

(0.0)

Number of investment units issued and outstanding (e)unit

404,885

404,885

428,510428,510428,510Unitholders’ equity per unit (d)/(e)yen525,708

527,661

535,141

535,437

535,054

Total distribution (f)millions of yen

5,061

5,247

5,766

5,878

5,844

Distribution per unit (f)/(e)yen

12,50012,96013,45813,71913,639(Earnings distributed per unit)

yen

12,50012,96013,45813,71913,639(Distribution in excess of earnings per unit)

yen

—

—

—

—

—

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

1.1 (2.2)

1.4 (2.8)

1.4 (2.8)

1.4 (2.9)

1.3 (2.6)

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

2.2 (4.3)

2.7 (5.5)

2.8 (5.5)

2.7 (5.4)

2.5 (5.1)

51.3

50.5

52.4

52.5

52.1

(–0.6)(–0.8)(+1.9)(+0.1)(–0.4)

43.3

43.9

41.9

41.7

(42.1)(+0.7)(+0.7)(–2.1)(–0.2)(+0.4)

110.2

90.0

94.4

95.1

99.9

Net assets ratio at end of period (d)/(b)(Period-on-period change)
Interest-bearing debt ratio at end of period (c)/(b)(Period-on-period change)
Payout ratio (Note 4) (f)/(a)%%%Other references
Number of properties

properties

98

97

97

96

97

Total leasable floor area2m

456,932.16

466,031.33

471,041.45

468,528.20

480,328.18

Occupancy rate at end of period

%

99.1

99.0

99.1

99.2

99.5

Depreciation expenses for the period

millions of yen

2,293

2,295

2,358

2,369

2,419

Capital expenditures for the period

millions of yen

953

886

925

1,231

1,426

Leasing NOI (Net Operating Income) (Note 5)

millions of yen

9,413

9,539

10,055

10,084

10,287

FFO (Funds From Operation) (Note 6)

millions of yen

7,451

7,574

7,934

7,983

8,265

FFO per unit (Note 7)

yen

18,40418,70818,516

18,63019,287

Notes: 1. Return on assets = Ordinary income / {(Total assets at beginning of period + Total assets at end of period) / 2} × 100
2. Annualized values for the 25th Fiscal Period are calculated based on a period of 184 days, 181 days for the 26th Fiscal Period, 184 days for the 27th Fiscal
Period, 181 days for the 28th Fiscal Period, and 184 days for the 29th Fiscal Period.
3. Return on net assets = Net income / {(Total net assets at beginning of period + Total net assets at end of period) / 2} × 100
4. Payout ratio is rounded down to the first decimal place.
5. Leasing NOI = Rental revenues – Property-related expenses + Depreciation expenses for the period
6. FFO = Net income + Depreciation expenses for the period – Gain on sale of real estate properties + Loss on sale of real estate properties
7. FFO per unit = FFO / Number of investment units issued and outstanding (figures below ¥1 rounded down)
Kenedix Office Investment Corporation17

Kenedix Office Investment Corporation

Balance Sheet
As of October 31, 2019
As of October 31, 2019
AssetsCurrent assets
Cash and deposits (Notes 3 and 15)
Cash and deposits in trust (Notes 3 and 15)
Operating accounts receivable
Prepaid expenses
Consumption taxes receivable
Other
Total current assets
Non-current assets
Property, plant and equipment (Notes 4 and 17)
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Buildings in trust (Note 7)
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Total property, plant and equipment, net
Intangible assets (Note 4)
Leasehold right (Note 17)
Leasehold right in trust (Note 17)
Other
Total intangible assets
Investments and other assets
Investment securities (Note 15)
Lease and guarantee deposits
Lease and guarantee deposits in trust
Long-term prepaid expenses
Other (Notes 10,15 and 16)
Total investments and other assets
Total non-current assets
Deferred assets
Investment corporation bond issuance costs
Investment unit issuance costs
Total deferred assets
Total assets

KENEDIX Office Investment Corporation

18

As of April 30, 2019

In thousands of yen¥

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

¥

-

6,788
30,989,522

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

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

285,257
349,975
1,796
637,029285,257
350,749
2,424
638,431

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

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

46,83527,51374,348439,773,203

51,346
36,68488,031
436,753,997-¥

19,675,112
10,959,133
298,778
49,708¥

As of October 31, 2019
Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable (Notes 6 and 15)
Current portion of long-term loans payable (Notes 6,15 and 16)
Accounts payable-otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Deposits received
Other (Notes 15 and 16)
Total current liabilities
Non-current liabilities
Investment corporation bonds (Notes 6 and 15)
Long-term loans payable (Notes 6, 15 and 16)
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Other (Notes 15 and 16)
Total non-current liabilities
Total liabilities
Net Assets
Unitholders' equity
Unitholders' capital
Surplus
Voluntary retained earnings
Reserve for reduction entry
Total voluntary retained earnings
Unappropriated retained earnings
Total surplus
Total unitholders' equity
Valuation and translation adjustments
Deferred gains or losses on hedges (Notes 15 and 16)
Total valuation and translation adjustments
Total net assets (Note 11)
Total liabilities and net assets
See accompanying notes to the financial statements.

As of April 30, 2019

In thousands of yen¥¥

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

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

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

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

220,970,508

220,970,508

2,775,335
2,775,335
5,844,500
8,619,835
229,590,343

2,475,385
2,475,385
6,178,677
8,654,063
229,624,572(314,241)(314,241)
229,276,102
439,773,203(184,329)(184,329)
229,440,242
436,753,997¥

Kenedix Office Investment Corporation

19

Kenedix Office Investment Corporation

Statement of Income and Retained Earnings
For the period from May 1, 2019 to October 31, 2019
From May 1, 2019

From November 1, 2018

to October 31, 2019

to April 30, 2019

In thousands of yen
Operating revenues
Rent revenue - real estate (Note 13)¥

Other lease business revenue (Note 13)

12,976,033¥

12,794,187

1,983,471

1,801,706-

565,286

68,38951,08815,027,894

15,212,268

Expenses related to rent business (Note 13)

7,092,170

6,880,478

Asset management fees

899,348

967,813

Directors' compensation

8,400

8,400

Asset custody fees

23,102

23,116

Administrative service fees

57,26457,508

Audit fees

12,80011,800Gain on sale of real estate properties (Note 13)
Dividends income
Total operating revenues
Operating expenses

106,412

90,167

Total operating expenses

8,199,497

8,039,284

Operating income

6,828,396

7,172,984

Other operating expenses

Non-operating income
Interest income

68

67

Dividends and redemption-prescription

403

664

2

3

473

736

Interest expenses

810,689

808,013Interest expenses on investment corporation bonds

28,12825,392Financing-related expenses

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

127,833

124,518

Amortization of investment corporation bond issuance costs

4,511

3,564

Amortization of investment unit issuance costs

9,171

9,171

Other non-operating expenses

2,772

23,143

Total non-operating expenses

983,106

993,803

Ordinary income

5,845,764

6,179,916

Income before income taxes

5,845,764

6,179,916

Current

1,264

1,238

Deferred(1)0

Total income taxes

1,263

1,238

Income taxes (Note 10)

5,844,500

Net income
Unappropriated retained earnings
See accompanying notes to the financial statements.

KENEDIX Office Investment Corporation
20¥

5,844,500

6,178,677¥

6,178,677

Kenedix Office Investment Corporation

Statement of Changes in Net Assets
For the period from May 1, 2019 to October 31, 2019
Valuationandtranslation
adjustments

Unitholders' equity

Surplus
Voluntary
retainedearnings

Deferred
UnappropriatedUnitholders'

Reserve forcapitalreduction entry

gains orretained earnings

Total

Total unitholders'losses on

Total net

(Note 20)

surplusequityhedgesassetsIn thousands of yen
Balance as of
October 31, 2018¥

220,970,508¥

2,134,387¥

6,107,886¥

8,242,273¥

229,212,781¥

100,798¥

229,313,580

Changes during the fiscal period
Provision of reserve for reduction-

340,998（340,998）

-

-

-

-

Dividends of surplus--（5,766,887）（5,766,887）（5,766,887）-（5,766,887）

Net income--

6,178,677

6,178,677

6,178,677-

6,178,677

-

-

-

-

-

(285,128)(285,128)-

340,998

70,791

411,790411,790(285,128)

126,662

entry

Net changes of items other thanunitholders’ equity
Total changes during
the fiscal period
Balance as ofApril 30, 2019 (Note 5)¥

220,970,508¥

2,475,385¥

6,178,677¥

8,654,063¥

229,624,572¥(184,329)¥

229,440,242

Changes during the fiscal period
Provision of reserve for reduction-

299,949（299,949）

-

-

-

-

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

Net income--

5,844,500

5,844,500

5,844,500-

5,844,500

-

-

-

-

-

(129,911)(129,911)-

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

entry

Net changes of items other thanunitholders’ equity
Total changes during
the fiscal period
Balance as of
October 31, 2019 (Note 5)¥

220,970,508¥

2,775,335¥

5,844,500¥

8,619,835¥

229,590,343¥(314,241)¥

229,276,102

See accompanying notes to the financial statements.

Kenedix Office Investment Corporation21

Kenedix Office Investment Corporation
Statement of Cash Flows
For the period from May 1, 2019 to October 31, 2019

From May 1, 2019
to October 31, 2019

From November 1, 2018
to April 30, 2019

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

5,845,764¥

6,179,916

Depreciation

2,420,535

2,370,002

Amortization of long-term prepaid expenses

120,778

124,268

Interest income

(68)

(67)

838,818

833,406

Amortization of investment unit issuance costs

9,171

9,171

Amortization of investment corporation bond issuance costs

4,511

3,564

Decrease (increase) in operating accounts receivable(62,429)

61,483

Decrease (increase) in consumption taxes receivable(61,789)-

Decrease (increase) in prepaid expenses(60,068)

61,827

Increase (decrease) in operating accounts payable

56,398(159,947)

Increase (decrease) in accounts payable-other(53,110)(246,833)

Increase (decrease) in accrued consumption taxes(342,749)

281,328

Increase (decrease) in advances received

196,680

4,255

Increase (decrease) in deposits received

19,583

1,186-

4,652,797

Decrease (increase) in long-term prepaid expenses(174,437)(46,458)

Other, net(12,220)(25,452)

8,745,367

14,104,448

Interest expenses

Decrease in property, plant and equipment in trust due to sale

SubtotalInterest income received

68

67

Interest expenses paid

(847,538)(817,511)

Income taxes paid

(805)

(805)

7,897,092

13,286,198(59,029)(91,813)(10,577,896)(958,884)

-

(155)

Repayments of tenant leasehold and security deposits(20,533)(46,949)

Proceeds from tenant leasehold and security deposits

36,145

86,145

Repayments of tenant leasehold and security deposits in trust(1,122,394)(560,271)

Proceeds from tenant leasehold and security deposits in trust

1,477,344

676,423

Payments of restricted deposits in trust(30,740)(8,705)

Proceeds from restricted deposits in trust

8,362

-

(10,288,741)(904,210)

Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Purchases of property, plant and equipment in trust
Purchases of intangible assets

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

3,200,000

Decrease in short-term loans payable(2,000,000)(5,000,000)

Proceeds from long-term loans payable

11,200,000

6,850,000

Repayments of long-term loans payable(6,200,000)(8,050,000)-

1,984,949

Dividends paid

(5,879,350)(5,765,583)

Net cash provided by (used in) financing activities(2,879,350)(6,780,634)

Net increase (decrease) in cash and cash equivalents(5,270,999)

5,601,354

Proceeds from issuance of investment corporation bonds

Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of period (Note 3)
See accompanying notes to the financial statements.

22
KENEDIX Office Investment Corporation

28,883,770¥

23,612,771

23,282,416¥

28,883,770

Kenedix Office Investment Corporation

Notes to the Financial Statements
For the period from May 1, 2019 to October 31, 2019

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Kenedix Office Investment Corporation (“the Investment Corporation”) is a real estate investment corporation whose units are listed on the Tokyo
Stock Exchange. The Investment Corporation is engaged in the ownership and operation of selected mainly office buildings in Japan, with a focus
on mid-sized office buildings in the Tokyo metropolitan area. The Investment Corporation was incorporated on May 6, 2005 as an investment
corporation under the Law Concerning Investment Trusts and Investment Corporations of Japan, or the Investment Trust Law. On July 21, 2005, theInvestment Corporation was listed on the Real Estate Investment Trust Market of the Tokyo Stock Exchange with a total of 75,400 investment units
issued and outstanding (Securities Code: 8972). Subsequently, the Investment Corporation raised funds through eight public offerings. Pursuant to
the Investment Trust Law, the Investment Corporation is externally managed by a registered asset management company, Kenedix Real Estate
Fund Management, Inc. (“the Asset Management Company”), a subsidiary of Kenedix, Inc. (“Kenedix”). In concert with the Asset Management
Company, the Investment Corporation strives to maximize cash distribution to investors by securing stable earnings and sustainable investment
growth. To this end, the Investment Corporation adopts a dynamic and flexible investment stance that accurately reflects its environment and market
trends, and endeavors to ensure a timely response to each and every opportunity.
During the period ended April 30, 2019, the Investment Corporation sold one central urban retail property (Frame Jinnan-zaka (51.0% of quasi
co-ownership interest): initial acquisition price of ¥5,049 million (*3)) with a disposition price of ¥5,253 million.
During the period ended October 31, 2019, the Investment Corporation acquired one office building (Chofu Center Building: acquisition price of¥8,700 million).
At the end of the twenty-eighth and twenty-ninth fiscal periods (fiscal periods ended April 30, 2019 and October 31, 2019), the Investment
Corporation had total unitholders’ capital of ¥220,970 million with 428,510 investment units outstanding, respectively. The Investment Corporation
owned a portfolio of 96 properties (consisting of 95 office buildings and one other property) and 97 properties (consisting of 96 office buildings andone other property) with total acquisition prices of ¥415,835 million and ¥424,535 million at the end of the twenty-eighth and twenty-ninth fiscal
periods, respectively. The occupancy ratios were approximately 99.2% and 99.5% at the end of the twenty-eighth and twenty-ninth fiscal periods,
respectively.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in the Investment Trust Act of Japan, theFinancial Instruments and Exchange Law of Japan and related regulations, and in conformity with accounting principles and practices generally
accepted in Japan (“Japanese GAAP”), which are different in certain respects as to the application and disclosure requirements of the International
Financial Reporting Standards or accounting principles generally accepted in the United States of America.
The accompanying financial statements are basically a translation of the audited financial statements that were prepared for Japanese domestic
purposes from the accounts and records maintained by the Investment Corporation and filed with the Kanto Local Finance Bureau of the Ministry of
Finance as required by the Financial Instruments and Exchange Law. In preparing the accompanying financial statements, relevant notes have been
added and certain reclassifications have been made to the financial statements issued domestically in order to present them in a form that is morefamiliar to readers outside Japan. The Investment Corporation’s fiscal period is a six-month period that ends at the end of April and the end of
October each year. The Investment Corporation does not prepare consolidated financial statements because it has no subsidiaries.

Kenedix Office Investment Corporation23

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(A) Securities
Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving average method.
Concerning silent partnership (tokumei kumiai, “TK”) interests, the method of incorporating the amount of equity equivalent to the portion that
corresponds to the net gain or loss of the TK is adopted.
(B) Property, Plant and Equipment (including trust assets)
Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment is calculated on a straight-line basis over theestimated useful lives of the assets ranging as stated below:

Buildings

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

From November 1, 2018
to April 30, 20192-49 years

Structures

2-45 years

2-45 years

Machinery and equipment

3-17 years

3-17 years

Tools, furniture and fixtures

3-20 years

3-20 years(C) Intangible Assets (including trust assets)
Intangible assets are amortized by the straight-line method.
Leasehold right: Fixed-term land leasehold is amortized over a contractual period of 48 years and 9 months under the straight-line method.
(D) Long-term Prepaid Expenses
Long-term prepaid expenses are amortized by the straight-line method.
(E) Investment Unit Issuance Costs
Investment unit issuance costs are amortized over a period of three years under the straight-line method.
(F) Investment Corporation Bond Issuance Costs
Investment corporation bond issuance costs are amortized over a maturity period under the straight-line method.
(G) Accounting Treatment of Trust Beneficiary Interests in Real Estate
For trust beneficiary interests in real estate, which are commonly utilized in the ownership of commercial properties in Japan, all assets andliabilities in trust are recorded in the relevant balance sheets and statements of income and retained earnings.
(H) Revenue Recognition
Operating revenues consist of rental revenues including base rents, common area charges and other operating revenues, which include utility
charge reimbursement, parking space rental revenues and other miscellaneous revenues. Rental revenues are generally recognized on an
accrual basis over the life of each lease. Utility charge reimbursements are recognized when earned and their amounts can be reasonably
estimated. Reimbursements from tenants including utility charge reimbursements are recorded on a gross basis and such amounts arerecorded both as revenues and expenses during the fiscal period.

24

KENEDIX Office Investment Corporation

(I)Taxes on Property, Plant and Equipment
Property-related taxes including property taxes, city planning taxes and depreciable property taxes are imposed on properties on a calendar
year basis. These taxes are generally charged to operating expenses for the period, for the portion of such taxes corresponding to the said
period. Under Japanese tax rules, the seller of property at the time of disposal is liable for these taxes on the property from the date of disposal
to the end of the calendar year in which the property is disposed. The seller, however, is generally reimbursed by the purchaser for these accrued
property-related tax liabilities.
When the Investment Corporation purchases properties, it typically allocates the portion of the property-related taxes related to the period
following the purchase date of each property through the end of the calendar year. The amounts of those allocated portions of the propertyrelated taxes are capitalized as part of the acquisition costs of the related properties. There were no capitalized property-related taxes as of April
30, 2019. Capitalized property-related taxes amounted to ¥29,256 thousand as of October 31, 2019. In subsequent calendar years, suchproperty-related taxes are charged as operating expenses in the fiscal period to which the installments of such taxes correspond.

(J) Income Taxes
Deferred tax assets and liabilities are computed based on the difference between the financial statements and income tax bases of assets andliabilities using the statutory tax rates.
(K) Consumption Taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes. Non-deductible consumption taxes
applicable to the acquisition of assets are included in the cost of acquisition for each asset.
(L) Derivative Financial Instruments
The Investment Corporation utilizes interest-rate swap contracts as derivative financial instruments only for the purpose of hedging its exposure
to changes in interest rates. The Investment Corporation deferred recognition of gains or losses resulting from changes in fair value of interestrate swap contracts because these contracts met the criteria for deferral hedging accounting. However, the Investment Corporation adopted
special treatment for interest-swap contracts if they met the criteria for hedging accounting under this treatment. The hedge effectiveness forthe interest-rate swap contract is assessed each fiscal period except for those that meet the criteria of special treatment.
(M) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments which are highly liquid, readily
convertible to cash and with insignificant risk of market value fluctuation, with maturities of three months or less from the date of purchase.
(N) Presentation of Amounts
Amounts of less than one thousand yen have been truncated in the Japanese financial statements prepared in accordance with Japanese
GAAP and filed with regulatory authorities in Japan. Unless otherwise noted, amounts are rounded down and ratios are rounded off in theaccompanying financial statements.
Totals shown in the accompanying financial statements do not necessarily agree with the sums of the individual amounts.

Kenedix Office Investment Corporation25

3. CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of the following as of October 31, 2019 and April 30, 2019.
As of October 31, 2019

As of April 30, 2019

In thousands of yen
Cash and deposits¥ 14,019,313¥ 19,675,112

Cash and deposits in trust

11,366,312

10,959,133

Restricted deposits in trust (Note)(1,772,854)(1,750,475)

Cash and cash equivalents in trust¥ 23,612,771¥ 28,883,770

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

4. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Property, plant and equipment and intangible assets consist of the following as of October 31, 2019.
Type of asset

Balance atthe beginningof period

Increase during
the period

Depreciation

Balance atthe end of
periodDecreaseduring theperiodAccumulated
depreciation

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

Structures

32,618

Machinery andequipment
Tools, furnitureand fixtures
Land
Property,plant andequipment-¥ 17,834,390¥ 5,917,165¥ 300,953¥ 11,917,224

2,344

-

34,963

15,551860

19,411

424,6627,547-

432,209

260,033

12,214

172,176

93,446670-

94,116

61,1483,499

32,967

27,520,902--

27,520,902--

27,520,902

Subtotal

45,848,050

68,532

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

Structures in trust

343,278

Machinery andequipment in trust
Tools, furnitureand fixtures in
trust

¥

-

45,916,582

6,253,899

317,527

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

16,398-359,676

168,392

11,158191,284

1,604,492

52,386-

1,656,878

743,824

51,855913,054

487,000

18,189-505,190326,879

18,791

178,310Land in trust
Construction inprogress in trust

269,059,794

7,398,999-

276,458,793--

276,458,793

1,511

-

1,511

-

-

-

-

¥

Subtotal

393,007,244

10,399,933

1,511

403,405,666

32,443,982

2,101,605

370,961,684

Total property, plant andequipment

438,855,294

10,468,465

1,511

449,322,249

38,697,882

2,419,133

410,624,366

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

Leasehold right in
trust

363,784--

363,784

13,809774

349,975

Other

6,278

-

-

6,278

4,482

627

1,796

Total intangible assets

660,113--660,11323,084

1,402

637,029¥439,515,408¥ 10,468,465

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

Intangible
assets

Total

-

¥

¥

¥

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

26

KENEDIX Office Investment Corporation

Note

Note

Property, plant and equipment and intangible assets consist of the following as of April 30, 2019.
Type of asset

Balance atthe beginningof period

Increase during
the period

Depreciation

Balance atthe end of
periodDecreaseduring theperiodAccumulated
depreciation

Depreciation
for the periodNetbalance atthe end of
periodRemarks(in thousands of yen)
Buildings
Structures
Machinery andequipment
Tools, furnitureand fixturesLand¥ 17,693,312¥ 83,107¥-

32,618421,857

2,805

86,586

6,860

27,520,902-¥ 17,776,419¥ 5,616,212¥ 299,555¥ 12,160,207-

32,618

14,691

842

17,927424,662

247,818

12,072

176,843

93,446

57,6493,167

35,79627,520,902--

27,520,902--

Subtotal

45,755,276

92,773-45,848,050

5,936,372

315,639

39,911,677

Buildings in trust¥ 122,006,776¥ 1,056,432¥ 1,552,040¥ 121,511,168¥ 29,185,084¥ 1,973,293¥ 92,326,083

Structures in trust

353,520

5,952

16,194343,278

157,234

11,050186,043

Machinery andequipment in trust

1,623,898

60,42579,831

1,604,492

691,969

50,007

912,523

Tools, furnitureand fixtures intrust

476,862

15,8695,731

487,000

308,088

18,617

178,912272,828,051-

3,768,257

269,059,794--

269,059,794

2,933

-

1,421

1,511

-

-

1,511

Subtotal

397,292,042

1,138,680

5,423,478

393,007,244

30,342,376

2,052,968

362,664,867

Total property, plant andequipment

443,047,319

1,231,453

5,423,478

438,855,294

36,278,749

2,368,608

402,576,545

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

Leasehold right in
trust

363,784--

363,784

13,034774

350,749

Other

6,123

155

-

6,278

3,854

620

2,424

Total intangible assets

659,958155-

660,113

21,681

1,394

638,431¥443,707,278¥ 1,231,608¥ 5,423,478¥439,515,408¥36,300,430¥2,370,002¥403,214,977

Property,plant andequipment

Land in trust
Construction inprogress in trust

Intangible
assets

Total

¥

-

¥

¥

Note

Note

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

5. UNITHOLDERS’ EQUITY

Total number of authorized investment units and total number of investment units issued and outstanding are as follows:
From May 1, 2019
to October 31, 2019
Total number of authorized investment units

2,000,000

From November 1, 2018
to April 30, 2019
2,000,000

Total number of investment units issued and outstanding

428,510428,510

Kenedix Office Investment Corporation27

6. SHORT-TERM LOANS PAYABLE, LONG-TERM LOANS PAYABLE AND INVESTMENTCORPORATION BONDS
The following summarizes short-term loans payable, long-term loans payable and investment corporation bonds outstanding as of October 31, 2019:
Classification
Short-term loans payable

Drawdown date

Last repayment date

Weighted-average

Balanceinterest rate

(In thousands of yen)¥

November 30, 2018

November 30, 2019

0.37%

November 30, 2018

November 30, 2019

0.32%

200,000

January 31, 2019

January 31, 2020

0.32%

500,000

January 31, 2019

January 31, 2020

0.32%

500,000

Subtotal
Current portion of long-term loans payable

2,200,000¥

November 12, 2018

November 30, 2019

0.32%

January 31, 2014

January 31, 2020

0.93%

3,700,000

March 12, 2014

March 12, 2020

0.92%

1,800,000

March 20, 2014

March 12, 2020

0.91%

3,000,000

March 29, 2019

March 31, 2020

0.37%

1,000,000

March 29, 2019

March 31, 2020

0.32%

500,000

July 31, 2014

July 31, 2020

0.74%

2,700,000

August 30, 2013

August 31, 2020

1.42%

1,500,000

28

KENEDIX Office Investment Corporation

500,000

August 30, 2019

August 31, 2020

0.27%

1,000,000

September 22, 2014

September 30, 2020

0.80%

2,700,000

April 22, 2014

October 31, 2020

0.95%

2,900,000

July 31, 2014

October 31, 2020

0.76%

300,000

SubtotalLong-term loans payable

1,000,000

21,600,000¥

November 12, 2013

November 12, 2020

1.07%

November 12, 2013

November 12, 2020

1.07%

500,000

November 29, 2013

November 30, 2020

1.12%

1,000,000

November 29, 2013

November 30, 2020

1.12%

900,000

January 10, 2014

January 31, 2021

1.21%

1,300,000

January 31, 2014

January 31, 2021

1.13%

2,300,000

March 12, 2014

March 12, 2023

1.36%

1,800,000

March 20, 2014

September 20, 2021

1.01%

4,000,000

March 20, 2014

March 20, 2022

1.20%

3,000,000

March 20, 2014

March 12, 2023

1.35%

2,000,000

July 10, 2014

July 10, 2021

0.90%

2,000,000

July 10, 2014

July 10, 2021

0.90%

500,000

July 31, 2014

July 31, 2022

1.01%

2,200,000

September 1, 2014

August 31, 2021

0.89%

800,000

September 1, 2014

August 31, 2021

0.89%

500,000

September 3, 2014

August 31, 2022

0.98%

1,000,000

2,000,000

September 3, 2014

August 31, 2022

0.98%

950,000

September 30, 2014

September 30, 2021

0.89%

1,000,000

October 31, 2014

October 31, 2021

0.80%

3,000,000
2,000,000

October 31, 2014

October 31, 2023

1.07%

October 31, 2014

October 31, 2023

1.13%

1,500,000

October 31, 2014

October 31, 2023

1.07%

1,000,000

October 31, 2014

October 31, 2024

1.26%

2,000,000

October 31, 2014

October 31, 2024

1.26%

1,000,000

January 30, 2015

January 31, 2021

0.71%

1,500,000

January 30, 2015

January 31, 2025

1.16%

1,500,000

February 18, 2015

February 28, 2022

0.91%

1,250,000

February 18, 2015

February 28, 2022

0.91%

350,000

February 18, 2015

February 29, 2024

1.16%

1,700,000

February 18, 2015

February 28, 2025

1.31%

1,250,000

Classification
Long-term loans payable

Drawdown date

Last repayment date

Weighted-average

Balanceinterest rate

(In thousands of yen)February 27, 2015

February 28, 2025

1.15%

March 12, 2015

February 28, 2025

1.22%

1,000,000

March 31, 2015

March 31, 2025

1.27%

2,500,000¥

2,100,000

April 30, 2015

April 30, 2022

0.83%

2,300,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

September 30, 2015

September 30, 2024

1.07%

2,000,000

October 30, 2015

October 31, 2024

0.99%

1,000,000

October 30, 2015

October 30, 2025

1.11%

1,500,000

October 30, 2015

October 30, 2025

1.11%

2,000,000

October 30, 2015

October 30, 2025

1.11%

2,500,000

October 30, 2015

October 30, 2025

1.12%

2,500,000

November 12, 2015

November 30, 2025

1.17%

1,000,000

January 29, 2016

January 31, 2022

0.59%

2,500,000

January 29, 2016

January 31, 2022

0.64%

500,000

January 29, 2016

January 29, 2026

1.07%

2,000,000

January 29, 2016

January 29, 2026

1.02%

1,800,000

February 18, 2016

February 18, 2026

1.00%

1,000,000

February 18, 2016

February 18, 2026

1.00%

500,000

March 31, 2016

March 31, 2026

0.90%

1,000,000

April 28, 2016

April 30, 2024

0.65%

2,000,000

April 28, 2016

April 30, 2026

0.84%

2,000,000

April 28, 2016

April 30, 2026

0.87%

1,000,000

July 29, 2016

July 31, 2026

0.61%

1,500,000

August 2, 2016

July 31, 2026

0.54%

1,000,000

October 31, 2016

October 31, 2024

0.67%

1,000,000

October 31, 2016

October 31, 2026

0.88%

2,500,000

October 31, 2016

October 31, 2026

0.76%

1,000,000

October 31, 2016

October 31, 2026

0.73%

4,000,000

October 31, 2016

October 31, 2026

0.83%

1,500,000

December 12, 2016

November 30, 2026

0.98%

500,000

December 28, 2016

December 28, 2026

0.95%

1,500,000

January 16, 2017

January 31, 2027

0.86%

500,000

January 31, 2017

January 31, 2027

0.85%

700,000

March 28, 2017

March 31, 2027

0.85%

500,000

June 30, 2017

June 30, 2027

0.85%

1,500,000

August 10, 2017

July 28, 2027

0.80%

3,500,000

August 31, 2017

August 31, 2023

0.54%

1,000,000

September 21, 2017

March 31, 2024

0.56%

1,000,000

September 21, 2017

September 30, 2025

0.68%

1,500,000

September 21, 2017

March 31, 2027

0.73%

1,000,000

September 21, 2017

September 21, 2027

0.87%

1,000,000

September 21, 2017

September 30, 2027

0.85%

2,500,000

October 31, 2017

October 31, 2027

0.81%

2,500,000

November 13, 2017

November 13, 2027

0.93%

3,000,000

December 7, 2017

November 30, 2027

0.90%

1,400,000

Kenedix Office Investment Corporation

29

Classification
Long-term loans payable

Drawdown date

Last repayment date

Weighted-average

Balanceinterest rate

(In thousands of yen)

December 7, 2017

November 30, 2027

0.82%

December 7, 2017

November 30, 2027

0.97%

1,000,000

December 7, 2017

November 30, 2027

0.94%

1,000,000

December 7, 2017

November 30, 2027

0.87%

1,000,000

December 7, 2017

November 30, 2027

0.90%

800,000

December 7, 2017

November 30, 2027

0.87%

600,000

December 28, 2017

December 28, 2025

0.74%

500,000

December 28, 2017

December 28, 2026

0.88%

500,000

December 28, 2017

December 28, 2027

0.86%

500,000

March 12, 2018

March 31, 2028

0.91%

1,500,000

March 26, 2018

March 31, 2027

0.81%

1,000,000

March 26, 2018

March 31, 2028

0.90%

1,000,000

July 31, 2018

July 31, 2028

0.99%

500,000

August 20, 2018

August 31, 2025

0.70%

500,000

August 20, 2018

August 31, 2028

1.00%

1,000,000

August 20, 2018

August 31, 2028

1.00%

1,000,000

August 20, 2018

August 31, 2028

1.00%

500,000

August 20, 2018

August 31, 2028

0.97%

500,000

August 31, 2018

August 31, 2025

0.70%

500,000

August 31, 2018

August 31, 2025

0.72%

300,000¥

August 31, 2018

August 31, 2028

1.01%

700,000

October 31, 2018

October 31, 2028

1.01%

1,500,000

October 31, 2018

October 31, 2028

0.91%

1,000,000

October 31, 2018

October 31, 2028

1.01%

500,000

March 28, 2019

March 31, 2029

0.84%

1,400,000

March 29, 2019

March 31, 2029

0.84%

2,950,000

June 14, 2019

June 30, 2023

0.25%

500,000

June 14, 2019

December 28, 2026

0.52%

500,000

June 14, 2019

April 30, 2027

0.61%

1,000,000

June 14, 2019

March 31, 2029

0.72%

1,000,000

July 10, 2019

July 31, 2023

0.23%

500,000

July 31, 2019

July 31, 2022

0.29%

1,000,000

July 31, 2019

July 31, 2023

0.29%

1,000,000

July 31, 2019

April 30, 2027

0.55%

1,000,000

July 31, 2019

April 30, 2027

0.55%

1,000,000

September 30, 2019

September 30, 2026

0.49%

1,000,000

September 30, 2019

March 31, 2027

0.53%

900,000

September 30, 2019

March 31, 2027

0.43%

800,000

Subtotal
Investment corporation bonds

153,250,000¥

July 25, 2014

July 25, 2024

1.18%

April 28, 2016

April 28, 2028

0.90%

1,000,000

July19, 2017

July 19, 2022

0.26%

1,000,000

July19, 2017

July 16, 2027

0.64%

2,000,000

February 15, 2019

February 15, 2024

0.39%

2,000,000

Subtotal
Total

30

1,200,000

2,000,000

8,000,000¥

185,050,000

The following summarizes short-term loans payable, long-term loans payable and investment corporation bonds outstanding as of April 30, 2019:
Classification
Short-term loans payable

Drawdown date

Last repayment date

Weighted-average

Balanceinterest rate

(In thousands of yen)¥

July 31, 2018

July 31, 20190.36%

August 31, 2018

August 31, 2019

0.31%

1,000,000

November 30, 2018

November 30, 2019

0.36%

1,000,000

November 30, 2018

November 30, 20190.31%

200,000

January 31, 2019

January 31, 2020

0.31%

500,000

January 31, 2019

January 31, 2020

0.31%

500,000

Subtotal
Current portion of long-term loans payable

4,200,000¥

July 10, 2014

July 10, 2019

0.64%

July 14, 2014

July 31, 2019

0.68%

1,000,000

July 31, 2014

July 31, 2019

0.62%

1,000,000

500,000

August 29, 2014

July 31, 2019

0.65%

1,000,000

September 30, 2013

September 30, 2019

1.06%

1,800,000

September 30, 2013

September 30, 2019

1.06%

900,000

November 12, 2018

November 30, 20190.31%

500,000

January 31, 2014

January 31, 2020

0.93%

3,700,000

March 12, 2014

March 12, 2020

0.92%

1,800,000

March 20, 2014

March 12, 2020

0.91%

3,000,000

March 29, 2019

March 31, 2020

0.36%

1,000,000

March 29, 2019

March 31, 2020

0.31%

500,000

SubtotalLong-term loans payable

1,000,000

16,700,000¥

August 30, 2013

August 31, 2020

1.42%

November 12, 2013

November 12, 2020

1.07%

November 12, 2013

November 12, 2020

1.07%

500,000

November 29, 2013

November 30, 2020

1.12%

1,000,000

November 29, 2013

November 30, 2020

1.12%

900,000

January 10, 2014

January 31, 2021

1.21%

1,300,000

January 31, 2014

January 31, 2021

1.13%

2,300,000

March 12, 2014

March 12, 2023

1.36%

1,800,000

March 20, 2014

September 20, 2021

1.01%

4,000,000

1,500,000
2,000,000

March 20, 2014

March 20, 2022

1.20%

3,000,000

March 20, 2014

March 12, 2023

1.35%

2,000,000

April 22, 2014

October 31, 2020

0.95%

2,900,000

July 10, 2014

July 10, 2021

0.90%

2,000,000

July 10, 2014

July 10, 2021

0.90%

500,000

July 31, 2014

July 31, 2020

0.74%

2,700,000

July 31, 2014

October 31, 2020

0.76%

300,000

July 31, 2014

July 31, 2022

1.01%

2,200,000

September 1, 2014

August 31, 2021

0.89%

800,000

September 1, 2014

August 31, 2021

0.89%

500,000

September 3, 2014

August 31, 2022

0.98%

1,000,000

September 3, 2014

August 31, 2022

0.98%

950,000

September 22, 2014

September 30, 2020

0.80%

2,700,000

September 30, 2014

September 30, 2021

0.89%

1,000,000

October 31, 2014

October 31, 2021

0.80%

3,000,000

October 31, 2014

October 31, 2023

1.07%

2,000,000

October 31, 2014

October 31, 2023

1.13%

1,500,000

October 31, 2014

October 31, 2023

1.07%

1,000,000

October 31, 2014

October 31, 2024

1.26%

2,000,000

Kenedix Office Investment Corporation

31

Classification
Long-term loans payable

32

KENEDIX Office Investment Corporation

Drawdown date

Last repayment date

Weighted-average

Balanceinterest rate

(In thousands of yen)

October 31, 2014

October 31, 2024

1.26%

¥

1,000,000

January 30, 2015

January 31, 2021

0.71%

1,500,000

January 30, 2015

January 31, 2025

1.16%

1,500,000

February 18, 2015

February 28, 2022

0.91%

1,250,000

February 18, 2015

February 28, 2022

0.91%

350,000

February 18, 2015

February 29, 2024

1.16%

1,700,000

February 18, 2015

February 28, 2025

1.31%

1,250,000

February 27, 2015

February 28, 2025

1.15%

2,100,000

March 12, 2015

February 28, 2025

1.22%

1,000,000

March 31, 2015

March 31, 2025

1.27%

2,500,000

April 30, 2015

April 30, 2022

0.83%

2,300,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

August 31, 2015

August 31, 2022

0.87%

500,000

September 30, 2015

September 30, 2024

1.07%

2,000,000

October 30, 2015

October 31, 2024

0.99%

1,000,000

October 30, 2015

October 30, 2025

1.11%

1,500,000

October 30, 2015

October 30, 2025

1.11%

2,000,000

October 30, 2015

October 30, 2025

1.11%

2,500,000

October 30, 2015

October 30, 2025

1.12%

2,500,000

November 12, 2015

November 30, 2025

1.17%

1,000,000

January 29, 2016

January 31, 2022

0.59%

2,500,000

January 29, 2016

January 31, 2022

0.64%

500,000

January 29, 2016

January 29, 2026

1.07%

2,000,000

January 29, 2016

January 29, 2026

1.02%

1,800,000

February 18, 2016

February 18, 2026

1.00%

1,000,000

February 18, 2016

February 18, 2026

1.00%

500,000

March 31, 2016

March 31, 2026

0.90%

1,000,000

April 28, 2016

April 30, 2024

0.65%

2,000,000

April 28, 2016

April 30, 2026

0.84%

2,000,000

April 28, 2016

April 30, 2026

0.87%

1,000,000

July 29, 2016

July 31, 2026

0.61%

1,500,000

August 2, 2016

July 31, 2026

0.54%

1,000,000

October 31, 2016

October 31, 2024

0.67%

1,000,000

October 31, 2016

October 31, 2026

0.88%

2,500,000

October 31, 2016

October 31, 2026

0.76%

1,000,000

October 31, 2016

October 31, 2026

0.73%

4,000,000

October 31, 2016

October 31, 2026

0.83%

1,500,000

December 12, 2016

November 30, 2026

0.98%

500,000

December 28, 2016

December 28, 2026

0.95%

1,500,000

January 16, 2017

January 31, 2027

0.86%

500,000

January 31, 2017

January 31, 2027

0.85%

700,000

March 28, 2017

March 31, 2027

0.85%

500,000

June 30, 2017

June 30, 2027

0.85%

1,500,000

August 10, 2017

July 28, 2027

0.80%

3,500,000

August 31, 2017

August 31, 2023

0.54%

1,000,000

September 21, 2017

March 31, 2024

0.56%

1,000,000

September 21, 2017

September 30, 2025

0.68%

1,500,000

September 21, 2017

March 31, 2027

0.73%

1,000,000

Classification
Long-term loans payable

Drawdown date

Last repayment date

Weighted-average

Balanceinterest rate

(In thousands of yen)

September 21, 2017

September 21, 2027

0.87%

September 21, 2017

September 30, 2027

0.85%

¥

2,500,000

October 31, 2017

October 31, 2027

0.81%

2,500,000

November 13, 2017

November 13, 2027

0.93%

3,000,000

December 7, 2017

November 30, 2027

0.90%

1,400,000

December 7, 2017

November 30, 2027

0.82%

1,200,000

December 7, 2017

November 30, 2027

0.97%

1,000,000

December 7, 2017

November 30, 2027

0.94%

1,000,000

December 7, 2017

November 30, 2027

0.87%

1,000,000

December 7, 2017

November 30, 2027

0.90%

800,000

December 7, 2017

November 30, 2027

0.87%

600,000

December 28, 2017

December 28, 2025

0.74%

500,000

December 28, 2017

December 28, 2026

0.88%

500,000

December 28, 2017

December 28, 2027

0.86%

500,000

March 12, 2018

March 31, 2028

0.91%

1,500,000

March 26, 2018

March 31, 2027

0.81%

1,000,000

March 26, 2018

March 31, 2028

0.90%

1,000,000

July 31, 2018

July 31, 2028

0.99%

500,000

August 20, 2018

August 31, 2025

0.70%

500,000

August 20, 2018

August 31, 2028

1.00%

1,000,000

August 20, 2018

August 31, 2028

1.00%

1,000,000

August 20, 2018

August 31, 2028

1.00%

500,000

August 20, 2018

August 31, 2028

0.97%

500,000

August 31, 2018

August 31, 2025

0.70%

500,000

August 31, 2018

August 31, 2025

0.72%

300,000

August 31, 2018

August 31, 2028

1.01%

700,000

October 31, 2018

October 31, 2028

1.01%

1,500,000

October 31, 2018

October 31, 2028

0.91%

1,000,000

October 31, 2018

October 31, 2028

1.01%

500,000

March 28, 2019

March 31, 2029

0.84%

1,400,000

March 29, 2019

March 31, 2029

0.84%

2,950,000

Subtotal
Investment corporation bonds

153,150,000¥

July 25, 2014

July 25, 2024

1.18%

April 28, 2016

April 28, 2028

0.90%

1,000,000

July19, 2017

July 19, 2022

0.26%

1,000,000

July19, 2017

July 16, 2027

0.64%

2,000,000

February 15, 2019

February 15, 2024

0.39%

2,000,000

Subtotal
Total

1,000,000

2,000,000

8,000,000¥

182,050,000

Kenedix Office Investment Corporation

33

7．REDUCTION ENTRY
The amount of reduction entry of property, plant and equipment acquired by government subsidy is as follows:
As of October 31, 2019

As of April 30, 2019

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

8. COMMITMENT LINE AGREEMENTThe Investment Corporation has concluded a commitment line agreement with bank of account, etc.
As of October 31, 2019

As of April 30, 2019

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

Drawn credit facility-

Balance-¥-¥ 6,000,000-¥

9. PER UNIT INFORMATION
From May 1, 2019
to October 31, 2019

From November 1, 2018
to April 30, 2019
Yen

Net asset value per unit¥

535,054¥

535,437

Net income per unit¥

13,639¥14,418Weighted-average number of units (units)

428,510428,510

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

34

KENEDIX Office Investment Corporation

10. INCOME TAXESThe Investment Corporation is subject to corporate income taxes at a regular statutory rate of approximately 32%. However, the Investment
Corporation may deduct from its taxable income amounts distributed to its unitholders, provided the requirements are met under the Special
Taxation Measures Law of Japan. Under this law, the Investment Corporation must meet a number of tax requirements, including a requirementthat it currently distribute in excess of 90% of its net income for the fiscal period in order to be able to deduct such amounts. If the Investment
Corporation does not satisfy all of the requirements, the entire taxable income of the Investment Corporation will be subject to regular corporate
income taxes. The Investment Corporation distributed in excess of 90% of its distributable income in the form of cash distributions totaling ¥5,844
million and ¥5,878 million for the fiscal periods ended October 31, 2019 and April 30, 2019, respectively. Therefore, such distributions were treatedas deductible distributions for purposes of corporate income taxes. The effective tax rate on the Investment Corporation’s income was 0.02% for
the fiscal periods ended October 31, 2019 and April 30, 2019, respectively. The following table summarizes the significant differences between thestatutory tax rate and the effective tax rate.

From November 1, 2018
to April 30, 2019

From May 1, 2019
to October 31, 2019
Statutory tax rate

31.51%

31.51%

Deductible cash distributions(31.50)(29.97)-(1.53)

Provision of reserve for reduction entry
Others0.01

0.01

Effective tax rate

0.02%

0.02%

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

As of April 30, 2019

In thousands of yen
Deferred tax assets
Enterprise tax payable

¥ 32

¥ 30

Amortization of leasehold right

4,344

4,117

101,608

64,376

105,985

68,524

Valuation allowance(105,952)(68,493)

Total deferred tax assets

¥ 32

¥ 30

Deferred gains or losses on hedges
Subtotal

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

12. RELATED-PARTY TRANSACTIONS(1) Parent Company, Major Corporate Unitholders and Other
Twenty-ninth fiscal period (From May 1, 2019 to October 31, 2019) and Twenty-eighth fiscal period (From November 1, 2018 to April 30, 2019): Not applicable(2) Affiliated Companies and Other
Twenty-ninth fiscal period (From May 1, 2019 to October 31, 2019) and Twenty-eighth fiscal period (From November 1, 2018 to April 30, 2019): Not applicable(3) Fellow Subsidiary Companies and Other
Twenty-ninth fiscal period (From May 1, 2019 to October 31, 2019) and Twenty-eighth fiscal period (From November 1, 2018 to April 30, 2019): Not applicable(4) Directors, Major Individual Unitholders and Other
Twenty-ninth fiscal period (From May 1, 2019 to October 31, 2019) and Twenty-eighth fiscal period (From November 1, 2018 to April 30, 2019): Not applicable

Kenedix Office Investment Corporation

35

13. BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATEDEXPENSES, AND GAIN AND LOSS ON SALE OF REAL ESTATE PROPERTY
Rent revenue - real estate, expenses related to rent business, and gain and loss on sale of real estate property for the fiscal periods fromMay 1, 2019 to October 31, 2019 and from November 1, 2018 to April 30, 2019 consist of the following:
From May 1, 2019

From November 1, 2018

to October 31, 2019

to April 30, 2019

In thousands of yen
Rental and other operating revenues
Rent revenue - real estate
Rental revenues¥11,216,006¥10,984,209

1,760,026

1,809,977

12,976,033

12,794,187

Parking space rental revenues

523,855

509,859

Utility charge reimbursement

1,190,161

1,030,420

Miscellaneous

269,454

261,426

Subtotal

1,983,471

1,801,706¥14,959,504¥14,595,893

Property management fees and facility management fees

¥1,392,326¥1,382,522

Utilities

1,203,041

1,121,738

Taxes

1,280,309

1,224,581

Repairs and maintenance409,464

403,049

Insurance

19,46920,149Common area charges
Subtotal
Others:Total rent revenue - real estate
Property-related expenses
Expenses related to rent business

Trust fees

32,94632,642Others334,688326,404

Depreciation

2,419,923

2,369,390¥7,092,170¥6,880,478¥-¥5,253,000

Cost of investment properties-

4,652,797

Other sales expenses-

34,915-¥565,286

Total expenses related to rent business
Gain on sale of real estate properties
Revenue from sale of investment properties

Gain on sale of real estate properties

KENEDIX Office Investment Corporation
36¥

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

As of April 30, 2019
In thousands of yen

Due within one year¥

Due after one year
Total

2,797,748¥

9,191,310

2,210,585
6,719,211¥ 11,989,058¥

8,929,796

15. FINANCIAL INSTRUMENTS
Twenty-ninth fiscal period (from May 1, 2019 to October 31, 2019)(A) Overview(1) Policy for financial instruments
The Investment Corporation procures essential funds for acquiring properties and undertaking the repayment of loans primarily through bank loans
and the issuance of investment corporation bonds and new investment units. The Investment Corporation uses derivatives for the purpose ofhedging its exposure to changes in interest rates and does not enter into derivatives for speculative or trading purposes. Management of surplus
funds is undertaken in a prudent manner that considers fully such factors as safety, liquidity, interest rate conditions and cash flows.
(2) Types of financial instruments and related risk
Investment securities, which are Japanese silent partnership (tokumei kumiai, “TK”) interests, are exposed to credit risk of the issuer and risk offluctuation of value of its property.
Loans payable and investment corporation bonds are used primarily for procuring funds necessary for the acquisition of properties and have aredemption date of a maximum of approximately 9 years and 5 months following the accounting date. Although a certain portion of said liabilities
are subject to interest rate fluctuation risk, the Investment Corporation utilizes derivatives (interest-rate swap transactions) in order to reduce such
risk.
Interest-rate swap transactions are used as derivative financial instruments. Utilizing interest-rate swap transactions, the Investment Corporation
fixes its interest expense for long-term loans payable bearing interest at a variable rate. With regard to hedge accounting methods, hedging
instruments and hedged items, hedge policy, and the assessment of the effectiveness of hedging activities, please see Note 2(L) “Derivative
Financial Instruments.”(3) Risk management for financial instruments(a) Monitoring of market risk (the risks arising from fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap transactions in order to minimize risk arising from fluctuations in interest rates on funds
procured. The Investment Corporation periodically reviews the value of the property and financial condition of the issuer with regard to investment
securities.
(b) Monitoring of liquidity risk (the risk that the Investment Corporation may not be able to meet its obligations on scheduled due dates)
associated with procurement of funds
Although loans and other liabilities are subject to liquidity risk, the Investment Corporation reduces such risk by spreading out payment due dates
and by using diversified fund procurement methods. Liquidity risk is also managed by such means as regularly checking the balance of cash
reserves.
(4) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available, fair value
is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors could
result in a different fair value. Moreover, the contract amounts, etc. of derivative transactions in “(B) Estimated Fair Value of Financial Instruments” do not indicate the market risk of derivative transactions.

Kenedix Office Investment Corporation

37

(B) Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet as of October 31, 2019 and estimated fair value are shown in the following table.
The following table does not include financial instruments for which it is extremely difficult to determine the fair value (Refer to *2 below).
Carrying value
Estimated fair value
Difference
In thousands of yen(1) Cash and deposits¥ 14,019,313¥ 14,019,313

11,366,312

11,366,312-

25,385,625

25,385,625-

2,200,000

2,200,000-(2) Cash and deposits in trust
Subtotal(1) Short-term loans payable(2) Current portion of investment corporation bonds(3) Current portion of long-term loans payable(4) Investment corporation bonds

-

-

-

-

21,600,000

21,661,969

61,9698,000,000

8,099,900

99,900153,250,000

156,160,213

2,910,213¥ 185,050,000¥ 188,122,082¥ 3,072,082(314,241)(314,241)-(5) Long-term loans payable
Subtotal¥

Derivative transactions(*)(*)The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing the net liability
position.
*1 Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivative transactions
Assets(1) Cash and deposits and (2)Cash and deposits in trust

Since these items are settled in a short period of time, their carrying value approximates fair value.
Liabilities(1) Short-term loans payable
Since these items are settled in a short period of time, their carrying value approximates fair value.
(2) Current portion of investment corporation bonds and (4)Investment corporation bonds

The fair value of investment corporation bonds is based on quoted market prices.
(3) Current portion of long-term loans payable and (5)Long-term loans payable

The fair value of long-term loans payable is based on the present value of the total of principal and interest discounted by the interest rate to be
applied if similar new loans were entered into. The fair value of long-term loans payable bearing interest at a variable rate, which is subject to fixedinterest rates resulting from interest-rate swaps and special treatment applied to said swaps, is based on the present value of the total of principal
and interest, which is handled together with the applicable interest-rate swaps, discounted by the interest rate to be applied if similar loans wereentered into.
Derivative Transactions
Please refer to Note 16 “DERIVATIVE TRANSACTIONS.”*2 Financial instruments for which it is extremely difficult to determine the fair value
Classification
Investment securities

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

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above TK interests are not included in thepreceding table.
*3 Redemption schedule for receivables
Due within 1 year or less
(In thousands of yen)
Cash and deposits
Cash and deposits in trust
Total

38

KENEDIX Office Investment Corporation¥ 14,019,313
11,366,312¥ 25,385,625

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

Due after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

Due after 5

year or lessthrough 2 years

through 3 years

through 4 years

through 5 years

years

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

¥

-

-

¥

-

Long-term loans payable

21,600,000

21,300,000

Total¥ 23,800,000¥ 21,300,000-¥

1,000,000-

18,050,000¥

19,050,000

-

¥

¥

-

¥

-

4,000,000

3,000,000

11,300,000

11,700,000

90,900,000

11,300,000¥ 15,700,000¥ 93,900,000

Twenty-eighth fiscal period (from November 1, 2018 to April 30, 2019)(A) Overview(1) Policy for financial instruments
The Investment Corporation procures essential funds for acquiring properties and undertaking the repayment of loans primarily through bank loans
and the issuance of investment corporation bonds and new investment units. The Investment Corporation uses derivatives for the purpose ofhedging its exposure to changes in interest rates and does not enter into derivatives for speculative or trading purposes. Management of surplus
funds is undertaken in a prudent manner that considers fully such factors as safety, liquidity, interest rate conditions and cash flows.
(2) Types of financial instruments and related risk
Investment securities, which are Japanese silent partnership (tokumei kumiai, “TK”) interests, are exposed to credit risk of the issuer and risk offluctuation of value of its property.
Loans payable and investment corporation bonds are used primarily for procuring funds necessary for the acquisition of properties and have aredemption date of a maximum of approximately 10 years following the accounting date. Although a certain portion of said liabilities are subject tointerest rate fluctuation risk, the Investment Corporation utilizes derivatives (interest-rate swap transactions) in order to reduce such risk.
Interest-rate swap transactions are used as derivative financial instruments. Utilizing interest-rate swap transactions, the Investment Corporation
fixes its interest expense for long-term loans payable bearing interest at a variable rate. With regard to hedge accounting methods, hedging
instruments and hedged items, hedge policy, and the assessment of the effectiveness of hedging activities, please see Note 2(L) “Derivative
Financial Instruments.”(3) Risk management for financial instruments(a) Monitoring of market risk (the risks arising from fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap transactions in order to minimize risk arising from fluctuations in interest rates on funds
procured. The Investment Corporation periodically reviews the value of the property and financial condition of the issuer with regard to investment
securities.
(b) Monitoring of liquidity risk (the risk that the Investment Corporation may not be able to meet its obligations on scheduled due dates)
associated with procurement of funds
Although loans and other liabilities are subject to liquidity risk, the Investment Corporation reduces such risk by spreading out payment due dates
and by using diversified fund procurement methods. Liquidity risk is also managed by such means as regularly checking the balance of cash
reserves.
(4) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available, fair value
is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors could
result in a different fair value. Moreover, the contract amounts, etc. of derivative transactions in “(B) Estimated Fair Value of Financial Instruments” do not indicate the market risk of derivative transactions.

Kenedix Office Investment Corporation

39

(B) Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet as of April 30, 2019 and estimated fair value are shown in the following table. The
following table does not include financial instruments for which it is extremely difficult to determine the fair value (Refer to *2 below).
Carrying value
Estimated fair value
Difference
In thousands of yen(1) Cash and deposits¥ 19,675,112¥ 19,675,112

10,959,133

10,959,133-

30,634,246

30,634,246-

4,200,000

4,200,000

-

-

-

-

(3) Current portion of long-term loans payable

16,700,000

16,737,975

37,975(4) Investment corporation bonds

8,000,000

8,096,200

96,200(2) Cash and deposits in trust
Subtotal(1) Short-term loans payable(2) Current portion of investment corporation bonds(5) Long-term loans payable
Subtotal¥-

153,150,000

155,121,843

1,971,843¥ 182,050,000¥ 184,156,018¥ 2,106,018(184,329)(184,329)-

Derivative transactions(*)(*)The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing the net liability
position.
*1 Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivative transactions
Assets(1) Cash and deposits and (2)Cash and deposits in trust

Since these items are settled in a short period of time, their carrying value approximates fair value.
Liabilities(1) Short-term loans payable
Since these items are settled in a short period of time, their carrying value approximates fair value.
(2) Current portion of investment corporation bonds and (4)Investment corporation bonds

The fair value of investment corporation bonds is based on quoted market prices.
(3) Current portion of long-term loans payable and (5)Long-term loans payable

The fair value of long-term loans payable is based on the present value of the total of principal and interest discounted by the interest rate to be
applied if similar new loans were entered into. The fair value of long-term loans payable bearing interest at a variable rate, which is subject to fixedinterest rates resulting from interest-rate swaps and special treatment applied to said swaps, is based on the present value of the total of principal
and interest, which is handled together with the applicable interest-rate swaps, discounted by the interest rate to be applied if similar loans wereentered into.
Derivative Transactions
Please refer to Note 16 “DERIVATIVE TRANSACTIONS.”*2 Financial instruments for which it is extremely difficult to determine the fair value
Classification
Investment securities

Carrying value (In thousands of yen)
¥ 1,130,524

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above TK interests are not included in thepreceding table.
*3 Redemption schedule for receivables
Due within 1 year or less
(In thousands of yen)
Cash and deposits
Cash and deposits in trust
Total

40

KENEDIX Office Investment Corporation¥ 19,675,112
10,959,133¥ 30,634,246

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

Due after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

Due after 5

year or lessthrough 2 years

through 3 years

through 4 years

through 5 years

years

In thousands of yen
Short-term loans payable¥ 4,200,000

Investment corporation bonds

-

¥

-

¥

-

-

Long-term loans payable

16,700,000

19,600,000

Total¥ 20,900,000¥ 19,600,000¥

21,700,000¥

21,700,000-¥

1,000,000¥

2,000,000¥

5,000,000

10,950,000

10,200,000

90,700,000

11,950,000¥ 12,200,000¥ 95,700,000

16. DERIVATIVE TRANSACTIONS

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

Type of derivativetransactions

Hedgeditems

Interest-rate swaps:

Long-term

Receive/floatingloans

and pay/fixedpayableSpecial treatment

Interest-rate swaps:

Long-termof interest-rate

Receive/floating

loans

swaps

and pay/fixedpayableTotal

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

Fair value

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

provided by counterparty
financial institutions

82,550,000

65,450,000¥ 119,700,000¥ 101,600,000*¥ (341,241)(*)Interest-rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fairvalue is included in the fair value of the hedged long-term loans payable.
The following summarizes the contracted amount and the fair value of interest-rate swap contracts as of April 30, 2019:(1) Hedge accounting not applied
Not applicable(2) Hedge accounting applied
Hedge

Type of derivativetransactions

Hedgeditems

Interest-rate swaps:

Long-term

Receive/floatingloans

and pay/fixedpayableSpecial treatment

Interest-rate swaps:

Long-termof interest-rate

Receive/floating

loans

swaps

and pay/fixedpayableaccounting
methodPrinciple method

Total

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

Fair value(In thousandsof yen)Calculation method for
applicable fair value
Based on the amount¥ 28,250,000¥ 28,250,000¥ (184,329)

provided by counterparty
financial institutions

88,750,000

74,050,000¥ 117,000,000¥ 102,300,000*¥ (184,329)(*)Interest-rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fairvalue is included in the fair value of the hedged long-term loans payable.

Kenedix Office Investment Corporation

41

17. INVESTMENT AND RENTAL PROPERTIES
Twenty-ninth fiscal period (from May 1, 2019 to October 31, 2019)

The Investment Corporation owns real estate for rental purposes mainly in the Tokyo metropolitan area for the purpose of generating rental revenues.
The carrying value in the balance sheets and corresponding fair value of those properties are as follows:
Carrying value (In thousands of yen)
As of April 30, 2019

Net change

As of October 31, 2019

Fair value
As of October 31, 2019
(In thousands of yen)
¥ 496,331,000¥ 403,212,700¥ 8,047,031¥ 411,259,731*1: The carrying value represents the acquisition cost less accumulated depreciation.
*2: Fair value at the end of the fiscal period is the appraisal value determined by outside appraisers.
*3: Among changes in the amount of real estate for rental purposes that occurred during the fiscal period under review, principal increase/decrease
factors were the acquisition of one property totaling ¥9,042,398 thousand and depreciation amounting to ¥2,419,923 thousand.
Income and loss in the fiscal period ended October 31, 2019 for real estate for rental purposes is listed in Note 13 “BREAKDOWN OF RENTAL AND
OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, AND GAIN AND LOSS ON SALE OF REAL ESTATE PROPERTY.”

Twenty-eighth fiscal period (from November 1, 2018 to April 30, 2019)
The Investment Corporation owns real estate for rental purposes mainly in the Tokyo metropolitan area for the purpose of generating rental revenues.
The carrying value in the balance sheets and corresponding fair value of those properties are as follows:
Carrying value (In thousands of yen)
As of October 31, 2018

Net change

As of April 30, 2019

Fair value
As of April 30, 2019
(In thousands of yen)
¥ 474,257,000¥ 409,004,701¥ (5,792,000)¥ 403,212,700*1: The carrying value represents the acquisition cost less accumulated depreciation.
*2: Fair value at the end of the fiscal period is the appraisal value determined by outside appraisers.
*3: Among changes in the amount of real estate for rental purposes that occurred during the fiscal period under review, principal decrease factors
were the sale of one property totaling ¥4,652,797 thousand and depreciation amounting to ¥2,369,390 thousand.

Income and loss in the fiscal period ended April 30, 2019 for real estate for rental purposes is listed in Note 13 “BREAKDOWN OF RENTAL AND
OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, AND GAIN AND LOSS ON SALE OF REAL ESTATE PROPERTY.”

42
KENEDIX Office Investment Corporation

18. SEGMENT AND RELATED INFORMATION
Twenty-ninth fiscal period (from May 1, 2019 to October 31, 2019)(A) Segment Information
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has no reportable segment
subject to disclosure.
(B) Related Information(1)

Information about each product and service

Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of the operating revenues
on the statement of income and retained earnings.
(2)

Information about each geographic area(a)

Net sales

Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenues on the statement of income
and retained earnings.
(b)

Property, plant and equipment

Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts for over 90% of the amount of property, plantand equipment on the balance sheet.
(3)

Information about each major customer

Disclosure is omitted because net sales to a single external customer account for less than 10% of the operating revenues on the statement ofincome and retained earnings.
Twenty-eighth fiscal period (from November 1, 2018 to April 30, 2019)(A) Segment Information
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has no reportable segment
subject to disclosure.
(B) Related Information(1)

Information about each product and service

Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of the operating revenues
on the statement of income and retained earnings.
(2)

Information about each geographic area(a)

Net sales

Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenues on the statement of income
and retained earnings.
(b)

Property, plant and equipment

Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts for over 90% of the amount of property, plantand equipment on the balance sheet.
(3)

Information about each major customer

Disclosure is omitted because net sales to a single external customer account for less than 10% of the operating revenues on the statement ofincome and retained earnings.

19. SIGNIFICANT SUBSEQUENT EVENTS
Not applicable

Kenedix Office Investment Corporation

43

20. DISTRIBUTIONSTwenty-ninth fiscal period(From May 1, 2019 to October 31, 2019)

Twenty-eighth fiscal period(From November 1, 2018 to April 30, 2019)
(Yen)

(Yen)

I. Retained earnings at the end of period¥5,844,500,609¥6,178,677,968

II. Total distributions¥5,844,447,890¥5,878,728,690

Distributions per unit

¥13,639¥13,719

III. Voluntary reserve (provision)
Provision of reserve for reduction entry¥

IV. Retained earnings brought forward to
the next period¥52,719

Method of calculating distribution amountIn accordance with the policy stipulated in Article 35 (1)of its Articles of Incorporation, the Investment
Corporation determines that the amount of distribution
shall exceed the amount equivalent to 90% of its
distributable profit as stipulated in Article 67-15 of the Act
on Special Measures Concerning Taxation, and shall be
up to the amount of its profits as the ceiling. Following
this policy, the Investment Corporation has decided to
distribute ¥5,844,447,890, the maximum integral
multiple amount of investment units issued andoutstanding of 428,510 units, up to the amount of
unappropriated retained earnings for the fiscal period
under review.
In addition, the Investment Corporation decided not to
distribute cash in excess of distributable profit, stipulated
in Article 35 (2) of its Articles of Incorporation.

44
KENEDIX Office Investment Corporation-¥299,949,278¥-

In accordance with the policy stipulated in Article 35 (1)of its Articles of Incorporation, the Investment
Corporation determines that the amount of distribution
shall exceed the amount equivalent to 90% of its
distributable profit as stipulated in Article 67-15 of the Act
on Special Measures Concerning Taxation, and shall be
up to the amount of its profits as the ceiling. Following
this policy, the Investment Corporation has decided that,of the amount remaining after the provision of reserve for
reduction entry as stipulated in Article 66-2 of the Act on
Special Measures Concerning Taxation is deducted fromunappropriated retained earnings, it shall distribute theoutstanding ¥5,878,728,690 as profit distribution.
In addition, the Investment Corporation decided not to
distribute cash in excess of distributable profit, stipulated
in Article 35 (2) of its Articles of Incorporation.

Kenedix Office Investment Corporation

45

K e n e d i x O f f i c e I n v e s t m e n t C o r p o r at i o nUnitholders’ Information

Outline of Kenedix Office Investment Corporation (as of October 31, 2019)
Structure of Investment Corporation
Property Support Line Company
Trademark Licenser

Investment Corporation❺

Kenedix, Inc.

Asset Custodian /Administrative Agent(Institutional administration)

Mizuho Trust & Banking Co., Ltd.

❷❹
Asset Management Company

Kenedix Real Estate
Fund Management, Inc.

General Meeting ofUnitholders❶❻

Board of Directors❷

Administrative Agent(accounting business)

Mitsubishi UFJ Trust andBanking Corporation

Executive Director

Jiro Takeda

Supervisory Director❼

Shiro Toba

Property Support Line Company

Supervisory Director

Kenedix Investment
Partners, Inc.

Administrator for Unitholders’ Register
Administrator for Special Accounts

Sumitomo Mitsui Trust Bank, Limited

Yoshihiro Morishima
Supervisory Director

Takahiro Seki

Property Management Company(Note)

Auditor❸Kenedix Property Management, Inc.

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

Ernst & Young ShinNihon LLC

Administrative Agent for
Investment Corporation Bonds

Sumitomo Mitsui Banking Corporation
MUFG Bank, Ltd.

❺ Asset custodian agreement / Administrative agency agreement(institutional administration)❻ Administrative agency agreement (accounting business)❼ Unitholder registry administrator agreement/ Special accounts administration agreement❽ Financial agency agreement

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

Unitholder structure as of the end of 29th fiscal period (October 31, 2019)
Percentage of investment units
by type of unitholder
Individuals and others
13,156 units(3.07%)

Foreign companies
and individuals
150,751 units(35.18%)Other domestic companies
97(1.98%)
Financial institutions(including securities companies)
125(2.55%)

428,510 units

Other domestic companies
5,313 units(1.23%)
Note: Ratios rounded down to the second decimal place.

46

Percentage of number of unitholders
by type of unitholder
Foreign companies
and individuals
283(5.78%)

4,888
Financial institutions(including securities companies)
259,290 units(60.50%)Individuals andothers4,383(89.66%)

ウェブサイト適宜情報開示● IR schedule

Fiscal period ended April

May

Jun.

Jul.

Aug.

Sept.

Oct.

Nov.

Fiscal period end

Financial results
announcement

Dec.

Jan.

Feb.

Mar.

Financial results
announcement

Apr.

Fiscal period end

Start of distribution payments

Start of distribution payments

Asset management report publication

Asset management report publication● Unitholder memorandum

Fiscal period ends

April 30 and October 31

General Meeting of Unitholders

In principal, at least once every two years

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

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

Tokyo Stock Exchange (stock code: 8972)

Newspaper for publicannouncements

Nihon Keizai Shimbun (Nikkei)

Unitholder registry and special
account administrator

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

Postal address and telephoneinquiries

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

During receipt period

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

After receipt period

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

Receiving future dividends

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

Exclusion

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

Kenedix Office Investment Corporation47

K e n e d i x O f f i c e I n v e s t m e n t C o r p o r at i o n

Portfolio
Portfolio Map (as of October 31, 2019)49 properties

Tokyo metropolitan area (central 5 wards)

JR Yamanote Line

Ueno

Shinjuku Ward

A-93

A-29

A-71

D-2

A-88

Suidobashi
Ochanomizu
Iidabashi

Shinjuku

A-66

A-41

A-55

A-27

A-46

ne

A-6
A-21

Harajuku

A-112

Shibuya Ward

Toranomon
A-115

A-7

ShibuyaA-116

Minato Ward A-124
A-32

A-119

Ebisu

A-91

A-17

A-89

Shinagawa

48

A-87
A-68

A-20

A-67

Shinbashi
A-109

Hamamatsucho
A-19

A-73
A-108

A-1

A-121

A-51
A-74

Nihonbashi

Tokyo

A-13

JR Sobu Line

A-114

A-113

Kanda

Chiyoda Ward A-64

JR Chuo Li

A-120

A-8

Ichigaya

A-59

A-56

A-37

A-38

A-92

A-3

A-4
A-107

Chuo Ward
A-60

A-1

A-3

A-4

A-20

A-51

A-60

A-64

A-67

KDX Nihonbashi
313 Building

Higashi-Kayabacho
Yuraku Building

KDX Hatchobori
Building

KDX Kayabacho
Building

KDX Hamacho
Nakanohashi Building

KDX Harumi
Building

KDX Nihonbashi
216 Building

KDX Ginza
1chome Building

A-68

A-73

A-74

A-87

A-107

A-108

A-113

A-114

KDX Nihonbashi
Honcho Building

KDX Hakozaki
Building

KDX Shin-Nihonbashi Building

Itopia Nihonbashi
SA Building

KDX Ginza East
Building

Pentel Building

KDX Shin-Nihonbashi
Ekimae Building

KDX Nihonbashi
Edo-dori Building

A-121

A-7

A-19

A-21

A-32

A-89

A-91

A-109

Ginza 4chome
Tower

KDX Minami
Aoyama Building

KDX Hamamatsucho
Building

KDX Shinbashi
Building

KDX Shiba-Daimon
Building

KDX Takanawadai
Building

KDX Mita Building

KDX Hamamatsucho
Center Building

A-112

A-115

A-116

A-124

A-8

A-13

A-27

A-37

KDX Toranomon
1chome Building

ARK Mori Building

KDX Nishi-Shinbashi Building

KDX Hamamatsucho
Place

KDX Kanda
Kitaguchi Building

KDX Kojimachi
Building

KDX Kajicho Building

KDX Ochanomizu
Building

A-46

A-56

A-59

A-92

A-29

A-38

A-41

A-55

Hiei Kudan-Kita
Building

KDX Jimbocho
Building

KDX Iwamoto-cho
Building

KDX Akihabara
Building

KDX HigashiShinjuku Building

KDX NishiShinjuku Building

KDX Shinjuku 286
Building

Shin-toshin
Maruzen Building

A-66

A-71

A-88

A-93

A-6

A-17

A-119

A-120

KDX Shinjuku
Building

KDX Iidabashi
Building

KDX Shinjuku
6-chome Building

KDX Iidabashi
SquareHarajuku F.F.
Building

KDX Ebisu Building

KDX Shibuya
Nanpeidai Building

KDX Yoyogi Building

D-2

Shinjuku 6chome
Building (Land)
Kenedix Office Investment Corporation

49

Portfolio

Portfolio Map (as of October 31, 2019)30properties

Tokyo metropolitan area (excluding central 5 wards)

Saitama Prefecture

A-86

A-99

A-62

A-90

A-84

A-33

A-96
A-5

Tokyo
Metropolitan Tokyo central

A-78
A-35

A-31
A-26

5 wards

A-83

A-85

A-95
A-72

A-94

A-125

A-30

A-22

Acquired in 29th fiscal period

Chofu Center Building

A-63

A-117

A-48

A-102

A-101
A-123

A-34

Kanagawa Prefecture

Chiba Prefecture

A-122

A-16

Other regional areas

18properties
A-118

Sapporo

A-53

A-12

A-82

A-42

A-100

A-54

A-104

A-69

A-110

Sendai
Utsunomiya

A-98

A-70

A-44

A-97

NagoyaTokyo
metropolitan
area

Hiroshima Osaka
Hakata

50

A-14

A-58

A-106

A-79

A-111

A-5

A-14

A-16

A-22

A-26

A-30

A-31

A-33

KDX Nakano-Sakaue
Building

KDX Funabashi
Building

Toshin 24 Building

KDX Shin-Yokohama
Building

KDX Kiba Building

KDX Nishi-Gotanda
Building

KDX Monzen-Nakacho
Building

KDX Okachimachi
Building

A-34

A-35

A-48

A-62

A-63

A-72

A-78

A-83

KDX Hon-Atsugi
Building

KDX Hachioji
Building

KDX Kawasaki-Ekimae
Hon-cho Building

Koishikawa TG
Building

KDX Gotanda
Building

KDX HigashiShinagawa Building

KDX Tachikawa
Ekimae Building

KDX Fuchu Building

A-84

A-85

A-86

A-90

A-94

A-95

A-96

A-99

KDX Kasuga
Building

KDX Nakameguro
Building

KDX Omiya
Building

KDX Ikebukuro
Building

KDX MusashiKosugi Building

KDX Toyosu Grand
SquareKDX Takadanobaba
Building

KDX IkebukuroWest Building

A-101

A-102

A-117

A-122

A-123

KDX Yokohama
Building

KDX Yokohama
Nishiguchi Building

BR Gotanda

Mitsubishijuko
Yokohama Building

KDX Yokohama
Kannai Building

Chofu Center
Building

A-12

A-42

A-44

A-53

A-54

A-58

A-69

A-70

Portus Center
Building

KDX Karasuma
Building

KDX Sendai Building

KDX Hakata-Minami
Building

KDX Kitahama
Building

KDX Nagoya
Sakae Building

KDX KobayashiDoshomachi Building

KDX Sapporo
Building

A-79

A-82

A-97

A-98

A-100

A-104

A-106

A-110

KDX Nagoya
Ekimae Building

KDX Higashi Umeda
Building

KDX Utsunomiya
Building

KDX Hiroshima
Building

Senri Life Science
Center Building

KDX Minami-Honmachi
Building

KDX Sakura-dori
Building

KDX Shin-Osaka
Building

A-111

A-118

KDX Nagoya
Nichigin-mae Building

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

51

Portfolio
As of the end of 29th fiscal period (October 31, 2019)

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

Area

No.

Property Name

Location

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

A-3

AcquisitionPrice(mn yen) (Note 1)

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

Year
Built (Note 2)

Occupancy
Rate (Note 3)

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

100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
98.2%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
99.9%

Year
Built (Note 2)

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

98.2%
100.0%
100.0%
95.0%
100.0%
100.0%
100.0%
100.0%
70.6%
100.0%
100.0%
100.0%

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

OfficeBuilding

Area

Tokyo
Metropolitan
Area(excluding
central 5
wards)

No.

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

52

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

Location

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

AcquisitionPrice(mn yen) (Note 1)

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

Type

Area

No.

Property Name

AcquisitionPrice(mn yen) (Note 1)

Location

KDX Gotanda Building
Shinagawa-ku, Tokyo
KDX Higashi-Shinagawa Building
Shinagawa-ku, TokyoKDX Tachikawa Ekimae Building
Tachikawa, TokyoKDX Fuchu Building
Fuchu, TokyoKDX Kasuga Building
Bunkyo-ku, TokyoKDX Nakameguro Building
Meguro-ku, TokyoKDX Omiya Building
Saitama, SaitamaTokyo
KDX Ikebukuro Building
Toshima-ku, Tokyo
Metropolitan
OfficeKDX Musashi-Kosugi Building
Kawasaki, Kanagawa
Area
Building(excluding
KDX Toyosu Grand Square
Koto-ku, Tokyo
central 5
KDX Takadanobaba Building
Toshima-ku, Tokyo
wards)KDX Ikebukuro West Building
Toshima-ku, TokyoKDX Yokohama Building
Yokohama, Kanagawa
KDX Yokohama Nishiguchi Building
Yokohama, Kanagawa
BR Gotanda
Shinagawa-ku, Tokyo
Mitsubishijuko Yokohama Building
Yokohama, Kanagawa
KDX Yokohama Kannai Building
Yokohama, Kanagawa
Chofu Center Building
Chofu, Tokyo
Office Buildings (Tokyo Metropolitan Area (excluding central 5 wards)) Subtotal (30 properties)
A-63
A-72
A-78
A-83
A-84
A-85
A-86
A-90
A-94
A-95
A-96
A-99
A-101
A-102
A-117
A-122
A-123
A-125

2,620
4,590
1,267
6,120
2,800
1,880
2,020
3,900
12,000
8,666
3,650
1,934
7,210
2,750
2,200
14,7209,500
8,700
127,612Year
Built (Note 2)

Occupancy
Rate (Note 3)

Apr. 1988
Jan. 1993
Feb. 1990
Mar. 1996
Jun. 1992
Oct. 1985
Apr. 1993
Mar. 2009
May 2013
Apr. 2008
Oct. 1988
Jul. 1988
Mar. 1994
Oct. 1988
Sep. 1991
Feb. 1994
Sep. 2007
Jan. 1995—

100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
99.3%

Year
Built (Note 2)

Occupancy
Rate (Note 3)

Sep.1993
Oct. 1982
Feb. 1984
Jun. 1973
Jul. 1994
Apr. 2009
Jul. 2009
Oct. 1989
Apr. 1986
Jul. 2009
Feb.1999
Jan. 1990
Jun. 1992
Dec. 2009
Aug. 1992
May 1992
Sep. 2006
Sep. 1992—
Avg. 23.9 years

97.3%
100.0%
100.0%
98.5%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
96.6%
99.0%
96.1%
100.0%
100.0%
100.0%
100.0%
99.2%
99.5%

Year
Built (Note 2)

Occupancy
Rate (Note 3)

Office Buildings (Other Regional Areas)
Type

OfficeBuilding

Area

No.

Property Name

Location

Portus Center Building
Sakai, Osaka
KDX Karasuma Building
Kyoto, Kyoto
KDX Sendai Building
Sendai, Miyagi
KDX Hakata-Minami Building
Fukuoka, Fukuoka
KDX Kitahama Building
Osaka, Osaka
KDX Nagoya Sakae Building
Nagoya, Aichi
KDX Kobayashi-Doshomachi Building Osaka, Osaka
KDX Sapporo Building
Sapporo, Hokkaido
Other
KDX Nagoya Ekimae Building
Nagoya, Aichi
Regional
KDX Higashi Umeda Building
Osaka, Osaka
Areas
KDX Utsunomiya Building
Utsunomiya, Tochigi
KDX Hiroshima Building
Hiroshima, Hiroshima
Senri Life Science Center Building
Toyonaka, Osaka
KDX Minami-Honmachi Building
Osaka, Osaka
KDX Sakura-dori Building
Nagoya, Aichi
KDX Shin-Osaka Building
Osaka, Osaka
KDX Nagoya Nichigin-mae Building
Nagoya, Aichi
KDX Sapporo Kitaguchi Building
Sapporo, Hokkaido
Office Buildings (Other Regional Areas) Subtotal (18 properties)
Office Buildings Total (96 properties)
A-12
A-42
A-44
A-53
A-54
A-58
A-69
A-70
A-79
A-82
A-97
A-98
A-100
A-104
A-106
A-110
A-111
A-118

AcquisitionPrice(mn yen) (Note 1)

5,570
5,400
2,100
4,900
2,220
7,550
2,870
2,005
7,327
2,770
2,350
1,300
13,000
2,200
5,900
4,550
3,500
1,800
77,312421,655

Others
Type

Area

No.

OthersTokyo
Metropolitan
Area

D-2

Property Name

Shinjuku 6chome Building (Land)

Location

Shinjuku-ku, Tokyo

AcquisitionPrice(mn yen) (Note 1)

2,880

—

100.0%

Others Subtotal (1 property)

2,880

—

100.0%

Portfolio Total (97 properties)

424,535

Avg. 23.9 years

99.5%

Investment Security
Category

Investment
Security

Investment Security Name

Underlying Asset Name

Underlying Asset
Location

G.K. KRF 43 Silent Partnership Equity Interest (Note 4) Shinjuku Sanei Building Shinjuku-ku, Tokyo
Investment Security Total (1 security)

Investment Security Price(mn yen) (Note 1)

Underlying Asset Year Built

1,107

Dec. 1979

1,107

Note 1: Acquisition price is only the acquisition (investment) price of real estate or trust beneficiary interests in real estate (excluding any expenses, taxes, etc.)
acquired by KDO. Figures are truncated to the nearest million yen.
Note 2: Year built shows the completion date recorded in the real estate register. The average value shown in the subtotal or total section is a weightedaverage number calculated based on acquisition price with a base date of October 31, 2019. Figures are truncated to the first decimal place.
Note 3: Occupancy rate is calculated by dividing leased area as of October 31, 2019 by leasable area and is rounded to the first decimal place. The subtotal
and total lines show the figures calculated by dividing the subtotal (total) of the leased area for the property associated with each subtotal and total
by the subtotal (total) of the leasable area. For the Pentel Building, this includes the leasable area associated with the land (land interest) specified in
the lease agreement. For the Shinjuku 6chome Building (Land), the calculation is based on the leasable area of the land specified in the lease agreement.
Note 4: The said maps and photographs do not include investment securities owned by KDO.
Kenedix Office Investment Corporation53

www.kdo-reit.com/en/

Disclaimer
This semiannual report includes translations of certain documents originally filed and made available inJapan in accordance with the Financial Instruments and Exchange Act of Japan.
The English-language semiannual report was prepared solely for the convenience of readers outside
Japan and is not intended to constitute a prospectus. This semiannual report should not be construed as
an offer or solicitation to buy or sell any securities of Kenedix Office Investment Corporation (KDO). English
terms for Japanese legal, accounting, tax, and business concepts used herein may not be precisely identical to the concept of the equivalent Japanese terms. With respect to any and all terms herein, if there exist
any discrepancies in the meaning or interpretation thereof between the original Japanese documents andEnglish translation contained herein, the original Japanese documents will always govern the meaning andinterpretation.
None of KDO, Kenedix Real Estate Fund Management, Inc. (KFM), any of their respective directors, officers, employees, partners, unitholders, agents, affiliates, nor their advisors shall be responsible or liable forthe completeness, appropriateness, or accuracy of English translations or the selection of the portion(s) of
any document(s) translated into English.
The financial statements of KDO have been prepared in accordance with generally accepted accounting principles in Japan (Japanese GAAP), which may materially differ in certain respects from generally
accepted accounting principles of other jurisdictions.
This semiannual report contains forward-looking statements. These statements appear in a number ofplaces in this semiannual report and include statements regarding the intent, belief, or current and future
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some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,”“expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or the negative of these terms orother similar terminology. These statements are not guarantees of future performance and are subject tovarious risks and uncertainties. Actual results, performance, or achievements, or those of the industries inwhich we operate, may differ materially from any future results, performance, or achievements expressedor implied by these forward-looking statements. In addition, these forward-looking statements are necessarily dependent upon assumptions, estimates, and data that may be incorrect or imprecise and involve
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Potential risks and uncertainties also include those identified and discussed in this document. Given
these risks and uncertainties, readers of this document are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of information produced herein. We disclaim
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announce publicly any revisions to any of the forward-looking statements contained in this document.