Kenedix Realty Investment Corporation
5th Period Results (ending October 2007)
March 2008
Kenedix REIT Management, Inc.
http://www.kdx-reit.com/eng/index.html

Updated and added new information in the Financial
Strategies section(page 15-18).
Updated Organaizational chart on page 40.

SECTION 1

Stronger Focus on Office Buildings

Increase in asset size and the ratio of office buildings
Portfolio development focused on office buildings

Acquistion of 9 office buildings
buildings (¥(¥32.0B
32.0B)
Sale of 23 residential properties (¥(¥31.5B
31.5B)*1(¥B)
Central Urban Retails
Retails

Offices

Residentials

200
64 properties¥146.7B
146.7B150

72 properties¥175.1B
175.1B

77 properties¥197.1B
197.1B

64 properties¥202.0B
202.0B

43.1

12.7

43.1

44.5
173.2

100

31 properties¥69.1B

35 properties¥81.4B
81.4B

138.0

20.8
19.0
50
37.8

0

New investments in
25 office buildings
buildings worth2¥87.1B
87.1B* since wereviewed our portfolio
development policy inDec. 2006

115.9
86.2

48.3

12.4

12.4

16.1

16.1

16.1

16.1

End of 1st period(2005/10)

End of 2nd period(2006/4)

End of 3rd period(2006/10)

End of 4th period(2007/4)

End of 5th period(2007/10)

After crosscross-deal(2008/2/(2008/2/1)

Announced increaseof office buildings
ratio and make no
new investments inresidential properties

Announcement ofour policy to change
asset composition
through replacement
based on type of
properties

Announced the saleof 23 residentials
and acquisition of 9
offices
offices (cross(cross-deal)

Realization of anan
officeoffice-focused
portfolio throughcrosscross-deal*1 Initial acquisition price was ¥30.3B*2 Acquired 1 property （KDX Roppongi 228 Building), ¥3.3B as of Jan.10, 2008
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

2

Overview of the cross-deal of offices and residentials
Development of a portfolio that focuses on midid-sized offices
offices

Overview of the crosscross-deal with Kenedix
Kenedix Realty Investment Corporation,

Strong portfolio focusing on
MidMid-sized office buildings
buildings

End of 2006/10
2006/1070%

After thecrosscross-deal in 2008/2
2008/2End of 2007/10
2007/10

78%

30%

94%

22%

6%

Acquisition of
offices
offices

9 properties

Sale ofresidentials

Offices etc.

Residentials

Note: Offices includes 3 central urban retails# of properties 23 properties
Future policy¥31.98B
31.98B

Trading price(Total)¥31.49B
31.49B¥31.98B
31.98B

Appraisal value(Total)¥31.49B
31.49B

Continue to increase the ratio of offices and aim
strong portfolio focusing on midmid-sized offices.

Outline of the residentials to be sold and their ratio within the portfolio
As of end of 2007/10 Period (5th period)¥1.70B
1.70B

Appraised NOI(Total)¥1.63B
1.63B# of properties
Initial acquisition price

Kenedix Inc (Sponsor)

Creation of a fund that focuses onprime residential properties
CrossCross-deal through collaboration
with the sponsor

Appraisal value at endof period
Differences between
Appraisal value andAcquisition price
Average acquisition
price
Other regional areas
(%)

(¥M)

Residentials tobe sold

Residentials
that are notsubject to the
sale

Total
residentials

Total portfolio

Ratio within
totalresidentials

Ratio within
total
portfolio

23 properties

7 properties

30 properties

77 properties

76.7%

29.9%

30,343

12,70943,052

197,090

74.4%

15.4%

31,49012,86844,358

218,626

71.0%

14.4%

1,147

159

1,306

21,536

87.8%

5.3%

1,319

1,815

1,435

2,560

Sale of small-sized residentials

7 properties(25.6%)

1 property
property(14.2%)

8 properties(22.2%)

17 properties(17.5%)

Sale of 7 out of 8 properties in
Other regional areas

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

3

Office buildings acquired through cross-deal
New investment in 9 office buildings (approx. ¥31.98B acquisition value )Anticipated acquisitions (Date of acquisition: February 1, 2008)

Comparison of average
average acquisition price
(¥B)

3.2
3.0
2.8
Hiei Kudan-Kita
Building

KDX Shin-Yokohama
381Building

KDX Kawasaki-Ekimae
Hon-cho Building

2.6

Ikejiri-Oohashi
Building

Nissou Dai-17
Building

2.4
2.2

Tokyo metropolitan
area

2.0

Other regional areas
KDX Hamacho
Nakanohashi Building

KDX Kanda
Misaki-cho Building

KDX Hakata-Minami
Building

End of 5th Period After the crossdeal(77 properties)

KDX Kitahama
Building(64 properties)**Acquired 1 property （KDX Roppongi 228 Building), ¥3.3B
as of Jan.10, 2008

AppraisalAppraisal-value based yield for properties acquired

Portfolio change through crosscross-deal
As of end of 5th period

Hiei Kudan-Kita Building

Total

OfficeOffice properties
acquired

Number of properties

77

44

9

Acquisition price (¥M)

197,090

137,979

31,980

Average acquisition price
(¥M)

2,560

3,135

3,553

Tokyo metropolitan area/
Other regional areas

60/17

36/8

7/2

KDX Shin-Yokohama 381 Building
KDX Kawasaki-Ekimae Hon-cho Building
Nissou Dai-17 Building
Ikejiri-Oohashi Building
KDX Hamacho Nakanohashi Building
KDX Kanda Misaki-cho Building
KDX Hakata-Minami Building
KDX Kitahama Building4

4.2 4.4 4.6 4.8

5

5.2 5.4 5.6 5.8(%)

Note: Yield based on appraisal value that were calculated by data available from property
appraisal reports and should not be understood as data indicating actual or future
profitability (NCF under direct capitalization method/Appraisal value)
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

4

“KENEDIX Selection” —Office buildings acquired
Hiei Kudan-Kita Building

KDX Hakata-Minami Building♦ Location: Chiyoda-ku, Tokyo♦ Location: Hakata-ku, Fukuoka♦ Site area

: 1,844.83m2♦ Site area

: 1,826.25m2♦ GFA: 11,425.31m2♦ GFA: 13,238.16m2♦ Year built: Mar. 1988

♦ Year built: Jun. 1973

♦ Acquisition price: ¥7,600M♦ Acquisition date : Feb.1, 2008

♦ 2 minutes on foot from “Ichigaya”station of Shinjuku Subway
Line, and 6 minutes from “Ichigaya” station of JR Chuo
Line/Sobu Line and Tokyo Metro Nanboku Line/Yurakucho Line.
Strong visibility facing Yasukuni Dori
♦ Upscale residential, with many schools and embassies♦ Commodious space in front of the building and muted colors of
the exterior provide a relaxed atmosphere. Sufficient leasable
floor area (typical floor of c.813m2) for leasing a floor as awhole or in parts♦ Acquisition price : ¥4,900M♦ Acquisition date : Feb.1, 2008

♦ 6 minutes on foot from “Hakata” station of JR Kagoshima
Line/Airport Line (municipal subway). Located in the business
district south from Hakata Station♦ Excellent access to Hakata Station and Fukuoka Airport andcompanies and large companies having sale offices in the area
♦ Leasable floor area on typical floor of c.1,047m2 can be divided
into multiple areas to comply with the needs of tenants looking
for various-sized properties

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

5Asset size growth and future growth (acquisition by pipeline)
Track record of tapping different acquisition pipelines

Strong portfolio focusing
focusing on
midmid-sized office buildings
buildings

Revised memorandum of understanding(2007/4)

Kenedix Group
Proprietary investment properties(incl. development projects)/
projects)/
Brokerage deals
deals

Priority information

Growth throughthe original
network of the Assetmanagement
management Company

Growth based on
Kenedix,
Kenedix, Inc’
Inc’s supportsupport-line
including development
projects

Achieve portfolio size of¥400B
400B in the midmid-toto-longterm

Kenedix Realty Investment Corporation,
Corporation,

77 properties¥197.0B
197.0B
64 properties¥146.7B
146.7BKDX Proprietary investment(Development projects)

Pension funds
funds/
Private funds

29 properties¥61.0B
61.0B

Original
At IPO(2005/8)

End of 3rd period End of 5th period(2006/10)(2007/10)

Growth performance by pipeline

Original

Pension/Private funds

KDX Proprietary investments(Development projects)

Future growth

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

Future vision6

Office development projects of Kenedix, Inc.
Focus on expanding the pipeline for office development projects, as offices are positioned to becomea key asset types for Kenedix
Kenedix track record for development projects and pipeline(¥B)

Examples of Kenedix office development projects
KDX Harumi Project

120
Other
100

Location

101.1

OfficesPlanned completion
Development pipeline (Total of
offices + others) target

80
62.4

61.4

57.3

60.9

Size
Key advantages

47.9

60
40
20

26.5

53.2

2005A

5.1

0.5

2006A

2007E

Location
Planned completion

2008E

2009E

2010E

Source: Kenedix Inc. (Nov. 2007)

Kenedix development structure

Size
Key advantages

Kenedix has a dedicated development force for providing one-stop service
comprised of sourcing development projects, engineering and leasing
Development Business Division

Koto-ku, Tokyo
May 2008
1B/10F GFA c.20,000 Tsubo♦ Large office with c.1,500 Tsubo leasable area per floor♦ Located within the redevelopment area. Excellent accessto major business areas♦ Introduction of modern facilities for air-conditioning,telecom and energy saving measures

Office development project in Chuo-ku Osaka(1 General Manager)

Location

Sourcing Team

Engineering Team

Leasing Team♦ Development activities
started in 2003.
Development of an
extensive network♦ Dedicated team ofengineers to provide
in-house planningcapabilities♦ Development &Planning support fromviewpoint of leasing♦ Structuring of productthat reflect tenants
needs

Source： Kenedix inc.

♦ Only 2km to Ginza andexcellent access in all directions
with Oedo Line♦ 260 Tsubo leasable area per
floor; shaped astylar space

Office development project in Koto-ku

26.5

0

Harumi 3-chome, Chuo-ku, Tokyo
Feb. 2008
1B/11F GFA: 3,907 Tsubo

Planned completion
Size
Key advantages

Chuo-ku, Osaka Prefecture
Jun. 2009
1B/12F GFA of c.3,300 Tsubo♦ Business area in Osaka♦ Large listed companies to use the building as HQ

Note: We have no current plans to acquire any of these properties but may consider acquiring
one or more of them in the future as appropriate

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

7

Management expertise for mid-sized office buildings(KDX Toranomon Building)
Development of a strong asset base (Portfolio) and leverage expertise in management of mid-sized office buildings
Leverage of Kenedix Group’Group’s management expertise to maximum extent
Acquisition policy
・ Acquisition of buildings in prime locations
aimed to maximize their potential
Renovation of the entire building (¥(¥330M)・ Renovation works aimed to achieve quasi
new office building quality
・ Increase in asset value through renovation
works
Leasing of vacant buildings
・ Increase rent levels
・ Direct leasing

A-39 KDX Toranomon Buildingguildin・Location: Toranomon, Minato-ku, Tokyo・Leasable area

: 1,966.56m2

・Year built: Jun. 1988

・Acquisition date : Apr. 2007
・Acquisition price : ¥4,400M

Entrance hall before renovation

Entrance hall after renovation

At acquisition in 2007/4

As of 2007/10

Appraisal value¥4.02B
4.02B (after renovation ¥4.19B
4.19B)

Appraisal value¥4.77B
4.77B

Occupancy

0% (vacant building)Occupancy

100% (full occupancy)

Rent level(per month/per tsubo)
tsubo)
Use of 1st Floor¥32,000(estimated post renovation value)Game hall(former pachinko arcade)Game hall(former pachinko arcade)Rent level(per month/per tsubo)
tsubo)
Use of 1st Floor¥34,500(average contracted rent)
Office(branch office ofa financial institution)
Restaurant

Use of B1 Floor

Use of B1 Floor

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

8

SECTION 2

Management of Existing Properties

Management of existing properties－track record for increasing therent level of office buildings (5th period)
Acquisition of new contracts(3rd–(3rd–5th period)

Breakdown of change rates for rentsof new contracts (5th period)▲5-▲10%0-▲5%Tenants since
3rd period (2%)＋0～5%Tenants since
4th period (5.5%)＋5～10%
Tenants since
5th period (4.5%)＋10～
10～20%

Continued
occupancy byexisting tenants
(88%
(88%)

Note： The above breakdown shows the ratio by leased area as of end of 5th period▲1010-15%

Acquisition of new contracts by region(5th period)
Average
Average rent
Change rate increase rate＊(# of(# ofcontracts)
contracts)
contracts)
contracts)

More than
30% increase＋20～
20～30%

Note： The above breakdown is based on leased area as of end of 5th period

Tenants turnover in office portfolio

Central Tokyo
(5 wards)
wards)

22%
(10)

22%
22%
(10)

(0 )

Other Tokyo
metropolitan
area

8%
(9)

10%
10%
(8)

▲0%

Other regional
regional
areas

6%
(11)

18%
18%
(6)

▲8%

Total

12%
(30)

17%
17%
(24)

▲7%

(Actual and estimated:
estimated: annualized)
1stperiod2nd
period3rd
period4th
period5th
period6th
period
(E)

12.2%

2.7%

6.1% 14.8%

8.2
8.2%

5.3%

Rents for renewed contracts(5th period)

Renewal date to
come
(83%)
83%)

(1)

(5)
(6)

＊Indicates the simple average of the fluctuations in the rent for new contracts.
The weighted average of the fluctuations based on leased floor area
is 16% for the total portfolio(Central Tokyo: 23%; Other Tokyo metropolitan
area: 11%; Other regional areas: 7%).

Breakdown of change rates for rentsof renewed contracts (5th period)+20～+20～30%Rent maintained atcurrent level (9.7%)
17%

Average rent
reduction rate(# ofcontracts)
contracts)

Maintained atcurrent level

Rents for renewed contracts(5th period)+10～+10～20%Total

Rent increased
at contract renewal

Average rent
increase rate

43.2%
43.2%

7.6%
7.6%

+5～
+5～10%

Rents increased (7.3%)
Note： The above breakdown is based on leased area as of end of 5th period

+0～
+0～5%

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

10Management of existing properties－Lowering of construction costs through auction process
Management cost reduction based on a strong asset base (portfolio)
Reduction of construction costs by tendering the installation of
airair-conditioning facilities at 4 buildings through group auction processprocess

Case study—
study—Exterior renovation

Total: ¥779M
779M

232

Average auction price

242

166

Exterior renovation of 4 properties
KDX
Kiba

135
¥190M
190M reduction

Construction costs

187

163

122

117

Total: ¥589M
589M

KDX HigashiHigashi-Shinjuku Bldg.

KDX Shiba Daimon Bldg.

KDX
Higashiigashi-Shinjuku

A Co.
Co.
B Co.
Co.
(1 contract awarded)awarded)
C Co.
Co.

201
221

KDX HirakawaHirakawa-cho Bldg.

KDX
KDX
Shiba Daimon HirakawaHirakawa-cho
220
185
242
122

KDX Hachioji Bldg.

KDX
Hachioji
136
122

(¥M)

Total
(4 properties)
762
716

280
187

253
163

157
148

137
117

827
615

F Co.
Co.
Average price submitted

269
280
232

302
316
242

199
202
166

153
160
135

923
958
779

Order price

187

163

122

117

589

D Co.
Co.
(3 contracts awarded)awarded)
E Co.
Co.

G Co.
(contracts
awarded)

12

H Co.

18.8

20.5

I Co.

17

J Co.

20.7

KDX
Shiba
Daimon

Total

36

94.5

30

54

123.3

22

25.4

47

111.4

22.2

36.5

40.8

120.2

¥17.8M
17.8M reduction
Exterior renovation of 3 properties
KDX
KDX
Funabashi Hamacho

(¥M)
KDX
Kajicho

Total

K Co.
(contracts
awarded)awarded)

39

22

24

85

L Co

39

26

30

95

Key points of the group auction process and construction
・ Expanded portfolio allows for bundled handling of similar
construction projects
・ Schedule coordination via a list of construction work by projecttype
・ Nominate bidders based on track record and credibility
・ Costs lowered further through price negotiations after execution of
the auction process(¥M)

HigashiKDX
HigashiKayabacho MinamiMinamiYuraku
Senba
DaiDai-1
20
26.5¥5M reduction

Merits for KRI:KRI:Merits for construction companies:★ Lower construction costs★ LargeLarge-scale renovation work orders★ Ability to place orders with major construction ★ Lower costs through bulk orders placed tocompanies who have high credibility
materials suppliers and affiliates★ Improved specification of airair-conditioning
systems
systems

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

11

Management of existing properties—CS (Customer satisfaction) strategy based management
Physical aspects: Case study of increased satisfaction
through CS oriented renovation works

CS survey ＝ Survey on Customer Satisfaction(Outline of the survey in 2007)2005 → 2007

zz AdminAdmin Dpt.
Dpt. staff
staff andand employees
employees ofof tenants
tenants in
in 44
44

Surveyed
Surveyed

officeoffice buildings
buildings

zz Survey
Survey Population:
Population:

SurveySurvey Population/
Population/
Response
Response rate
rate

Admin
Admin Dpt.
Dpt. == 446
446
employees
employees == 2,348
2,348
Admin
Admin Dpt.
Dpt. == 88%88%
employees
employees == 81%
81%

zz Response
Response rate:
rate:

・ Survey to customers = tenants conducted through cooperation with J. D. Power
Asia Pacific・ Satisfaction measured by checking each item on a five-point scale(satisfied/mildly satisfied/neutral/mildly unsatisfied/unsatisfied)・ Perfect score for overall satisfaction is 1,000 points
・ 1st survey conducted in Dec. 2005, 2nd survey conducted in Jul. 2007

Surveyin 2007

Mildly satisfied

NeutralMildly unsatisfied

MildlysatisfiedSatisfiedAssessment on security anddisaster prevention:

576 → 697

Implementation of electronic
security system

Hakata Ekimae Dai-2 Building
Assessment on toilets:

608 → 791
Renovation of interior, toilet
and bathroom vanity

Soft aspects: Correlation between the building managementcompany (BM Co)’Co)’s response time and overall satisfaction

Changes in overall satisfaction (Admin Dpt. staff)
Satisfied

Higashi Kayabacho Yuraku Building

Correlation between time required to cope withaccidents/defects and overall satisfaction

N.A.

Quick response →higher degree ofoverall satisfaction

Response
within one
hour

Mildlyunsatisfied

Response
within 3 hours

Future issue:
Training of BM Co
and persons incharge of building
management

Response
within a day

Surveyin 2005

MildlysatisfiedSatisfied

Mildlyunsatisfied

Other
more

600

0

20

40

60

80

100
(%)

650

700

750

800

(Satisfaction)

High degree of satisfaction

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

12

Management of existing properties—Comprehensive property management by Kenedix Group
Leasing activities
Leasing activities for KDX Toranomon
Building (2007/10)

Kenedix Group
comprehensive property
management by Kenedix
Advisors
Increase in rent levels

Requests for info material
Tour of premises
Application

Store
34
11
9

Office
44
21
10

Total
78
32
19

Leasing activities for KDX Nishi-Gotanda
Building (2007/4)

Renovation and conversion works
KDX Toranomon Building: Renovationof the entire building (2007/10)
KDX Nishi-Gotanda Building: Entrance
and elevator hall renovation (2007/4)
KDX Higashi-Shinjuku Building: Former
gas station site on 1F converted to ashop
KDX Hamacho Building: Residentials
and stores converted to offices(2006/10)

Rent increase achieved for
new contracts
2007/10: 17% increase on average
2007/4: 15% increase on average
2006/10: 15% increase on average

CS survey based management
2nd CS survey: Implemented
in Jul. 2007
Surveyed: 43 office buildings
1 central urban retail
Survey Population: 2,794(Response rate: Admin Dpt. = 88%,
employees = 81%)

1st CS survey: Implemented
in Dec. 2005
Surveyed: 19 office buildings
1 central urban retail

Reduction in total property leasing
expenses achieved
Reduction in building management
costs achieved
Out of 44 office buildings, c.¥80M reduction
achieved at 28 office buildings (annualized)(average reduction rate: 8.6%)

Reduction in electric utility charge
Planned reduction at 23 office buildings out of
44 (annualized): c.¥12M(pro forma base)

Implementation of KDX standards
Renamed: 34 office buildings out of 44
Installation of building
name signboard

Case study of KDX standard
Introduction of standard specification forelevators and toilets
Installation of security cameras
Improved security levels and lowered
security costs by consolidating security
companies

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

13

SECTION 3

Financial Strategies

Stable Financial Management—Diversified maturities and Fixed debt interest rates
Diversify debt maturity
Amount of debt maturing in each year (as of Feb. 29, 2008)
14
12

(¥B)

(¥B)
3.3

35

2.5

10

5–year & 10–year
Investment
Corporation Bonds

9.0

8
6
4

Breakdown of debt maturities(Initial debt financ
ing)
financing)

6.5

2

6.5
2.0

0

5.0

2.0

20

5.0

3.0

0.0

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

1H

2H

22.2

10
5

2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016
1H

30.8

15

3.0

2.0

9.0

25

7–year &10–year loans
from DBJ

11.5

9.5 10.0

30

5.8

2.0

1 year

2 years

3.0
8.0

0(short-term)

3 years /4 years /7 years /3.5 years

5years

10 years

Notes: 1 Shows the amounts of debt maturing in each Half
2 1H is from Apr. 1 to Sep. 30, 2H is from Oct. 1 to Mar. 31 of the following year and not identical withthe fiscal period of the Investment Corporation (e.g. 2008, 1H is from Apr. 1, 2008 to Sep. 30, 2008)

Fixed debt interest rates(as of Feb. 29, 2008)
Floating interest rate debt
¥5.75B
7.1%

Average interest rateLong-term: 1.60%

Fixed interest rate debt
¥75.0B
92.8%→Debt financing that focuses on
diversifying maturities.

DurationLong-term: 3.0 years→Leverage of low-interest rate environment by focusing
on long-term fixed interest rate debt financing.

Notes: 1 “Fixed interest rate debt” includes debt that were converted to fixed from floating
through interest rate swap
2 Second decimal place omitted for ratios

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

15

Stable financing strategy—LTV and diversify of debt providers
Breakdown of debt providers

Changes in LTV

Sumitomo Mitsui

Investment
1st
PeriodTotal interest-bearing debt
（¥B)
LTV

2nd
Period3rd
Period4th
Period

29.0

42.0

62.0

88.5

75.5

37.5%

45.6%

38.7%

47.0%

35.3%

Banking

Corporation Bonds

5th
PeriodCorporation

12.0

11.3

Development Bank
Chuo Mitsui Trustof Japanand Banking

8.0
Mitsui Sumitomo

10.5

F&M

Conservative interest-bearing debt ratio（kept within the mid 30% to c. 50% range）

1.7
Chiba Bank

Norinchukin Bank

2.0

9.5

Resona Bank
2.8

→ We will stay focused on maintaining
conservative LTV

Aozora Bank

Bank of Tokyo-

Mitsubishi UFJ Trust

Mitsubishi UFJ

and Banking

6.3

7.2

9.5

（as of Feb. 29, 2008;¥B）→ We will continue diversifying debt providers（Reference）
Reference）Borrowing capacity estimation

Commitment Line

5
PeriodthTotal interest-bearing debt
（¥B)
LTV

75.5
35.3%

Borrowing capacity estimation：c. ¥63B
（based on the LTV as of end of 5th period, calculation assumes
increase of LTV to 50% level)

Commitment line
LenderBank of Tokyo-Mitsubishi UFJ
Citibank

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

Amount
¥2.5B
¥2.5B

16

Financial strategy—Diversified financing methods
Credit rating and issuance of investment corporation bondS

Secured diversified financing methods

Credit rating

Shelf registration

Rating agency

Moody’s
Japan Credit Rating Agency(JCR)

RatingRating acquired

Type

Assumed size

A3 (stable)
A+ (stable)

Feb. 2006
Dec. 2006

Investment Corporation Bond

¥100B

Investment securities¥100B

Assumed issuance
2 years fromFeb. 15, 2007
2 years fromMay 7, 2007

Investment Corporation Bonds
Name
1st Bond

Size\9B

Interest rate
1.74%

Maturity
5 yrs.

Payment dateMar. 15, 2007

2nd Bond

\3B

2.37%

10yrs.

Mar. 15, 2007

→ We aim to lengthen debt maturity
through various financing methods

Only public offering of 10year bonds by a single-A
rated J-REIT

Changes in NAV per unit

Repayment of shortshort-term debt ahead of schedule(from 4th Period – 6th Period)
2007/3/15¥12B

2007/5/30¥6.75B

2007/6/13¥4.75B

2007/6/22¥1.5B

2007/10/31¥0.5B

2008/2/29¥1.0B

Repayment by issuing
Investment Corporation Bonds（Mar. 2007）(¥)

640,000

Exercise ofPOs
600,000

Repayment of ¥13B through 2nd
Public offering（May 2007）
Repayment through refinancing
with long-term debt
（2 yrs., 3.5 yrs.)¥26.5B

560,000

520,000

1st period

2nd period

Increase in Net income

3rd period 4th period

5th period

POPO

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

17

SECTION 4

5th Period Financial Results (ending October 2007)

5th period financial results—performance highlights
Performance
1st period results 2nd period results 3rd period results 4th period results(to Oct. 2005)(to Apr. 2006)(to Oct. 2006)(to Apr. 2007)

Operating revenues¥1,196M¥2,871M

Disposal income--¥5,288M¥5,778M

¥157M

¥130M

5th period results
Notes(to Oct. 2007)¥7,208M+ ¥1,430M (+24.7%)-

Rental business profit¥677M¥1,606M¥2,734M¥3,040M¥4,002M+ ¥962M (+31.6%)

Depreciation

¥268M

¥650M

¥1,135M¥1,243M¥1,392M+ ¥149M (+12.0%)

Net operating income (NOI)¥945M¥2,256M¥3,869M¥4,283M¥5,394M+ ¥1,111M (+25.9%)

FFO (Funds from operation)¥510M¥1,752M¥3,102M¥3,261M¥4,184M+ ¥923M (+28.3%)

Net income¥242M¥1,101M¥2,124M¥2,148M¥2,792M+ ¥644M (+30.0%)

79,370units

79,370units

157,000units

157,000units

200,000units

FFO per unit

¥6,430¥22,076¥19,759¥20,772¥20,920+ ¥148 (+0.7%)

Distribution per unit

¥3,052¥13, 884¥13, 529¥13, 682¥13, 960+ ¥278 (+2.0%)

Number of units outstanding

Rental revenues – Property-related expenses + Depreciation

Net income + Depreciation for the Profit on sale of peal estate+ 43,000units (+27.4%) 07/5 PO

Financial ratio
1st period results 2nd period results 3rd period results(to Oct. 2005)(to Apr. 2006)(to Oct. 2006)

4th period results(to Apr. 2007)

5th period results(to Oct. 2007)

Notes

Total assets¥77,325M¥92,053M¥160,314M¥188,400M¥213,763M+ ¥25,363M (+13.5%)

Total unitsholders’ equity
Total unitsholders’ equity
per unit
Interest-bearing debt ratio
Unitholders’ equity to total
assetsNumber of properties¥44,527M¥45,387M¥90,933M¥90,877M¥127,761M+ ¥36,884M (+40.6%)¥561,008¥571,840¥579,192¥578,839¥638,809+ ¥59,970(+10.4%)

37.5%

45.6%

38.7%

47.0%

35.3%

▲11.7%

07/5PO

57.6%

49.3%

56.7%

48.2%

59.8%

+ 11.6%

31

35

64

72

77

2

104,868.65m

2

192,085.34m

2

223,322.77m

2248,653.07m

2

96.6%

94.9%

95.3%

95.9%

96.9%

Total leasable floor area
Occupancy rate

81,298.67m+ 5 (Office)+ 25,330.3m2 (+11.3%）+ 1.0%

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

19

6th period earnings forecasts
Operating forecasts for 6th period (to April 2008)
6th period initial forecasts
6th period revised forecasts
5th period results(to Apr. 2008)(to Apr. 2008)(announced on Oct. 26, 2007) (announced on Dec. 11, 2007) Notes(to Oct. 2007)

Operating revenues
Operating expenses

7,208
3,737

7,377
3,873

7,935
3,961

1,813

1,849

1,916

1,392
3,470
689

1,416
3,504
683

1,415
3,974
693

Interest expense

595

584

587

Ordinary income
Net income

2,793
2,792

2,828
2,827

3,288
3,287

200,000
13,960200,000
14,100200,000
16,400

NOI

5,394

5,528

5,568

FFO

4,184

4,243

4,206

-

-

496 (forecast)

72→77

77→77 (forecast)

77→63 (forecast)

Property-related expenses(excl. depreciation)
Depreciation

Operating income
Non-operating expenses

Number of units outstanding
Distribution per unit (Yen)(Reference) Gain on real estate disposals(Reference) Trends in the number ofproperties+¥727M+¥224M+¥103M(Property tax and city planning tax were ¥329M in the 5th period)+¥23M+¥504M+¥4M
Assumption of the 6th period borrowings ¥63.5B,
investment corporation bond issue ¥12B+¥495M+¥495M+¥2,440+¥173M(Rental revenues – Property-related expenses + Depreciation)+¥22M(Net income + Depreciation for the period – Gain on real estate
disposals)

Assumption of the sale of 23 residentials
Assumption of the cross-deal

Preconditions of 6th period forecasts
9 offices acquired and 23 residentials
disposed on Feb. 1, 2008 (cross-deal)

Funds for acquisition of the 9 officesbuildings from sales of the 23
residentials and cash on handGain on real estate sale of the 23
residentials calculated as planned sales
price less assumed book value at timeof sale, less disposal costs

As of the end of period, interestbearing debt ¥75.5B and LTV approx
35%

Note: Preconditions of 7th period forecasts♦

Property tax and city planning tax for 44
office buildings expected to rise ¥81M vs
6th period

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

20

SECTION 5

Appendix

KRI unitholders
Investment units by unitholder

Type of unitholder (as of October 31, 2007)
49.0

22.7

1st period

47.0

15.6

2nd period

10.6

3rd period

12.4
8.5

48.0

6.8

34.6

46.5

6.4

40.3

5th period 5.7

48.4

5.1

40.8

0

20

40

Individuals and Others
Other Domestic Corporation

Individuals and Others
Financial Inst.
(incl. Securities companies)
Other Domestic
Corporation
Foreign Corporation andIndividuals
Total

29.0

6.8

4th period

Type ofunitholder

16.0

Name

Japan Trustee Services Bank, Ltd. (Trust Acct.)
Nikko Cititrust and Banking Co., Ltd. (Investment Trust
Acct.)
Trust & Custody Services Bank, Ltd. (Securities Investment
Trust Acct.)
State Street Bank and Trust Company
The Master Trust Bank of Japan, Ltd. (Trust Acct.)
The Nomura Trust and Banking Co., Ltd. (Investment Trust
Acct.)
Kenedix, Inc.
The Bank of New York Treaty JASDEC AccountGoldman Sachs International
JPMC Goldman Sachs Trust JASDEC lending Account
TOTAL
Note:
Second decimal place omitted for ratios(%)# of units
held (unit)

(%)

5,252

93.2%

11,364

5.7%

113

2.0%

96,845

48.4%

110

1.9%

10,189

5.1%

163

2.9%

81,602

40.8%

5,638

100.0%

200,000

100.0%

60
80
100
(%)
Financial Inst. (incl.Securities companies)
Foreign Corporation and Individuals

Top 10 unitholders (as of October 31, 2007)

1# ofunitholder(Reference) Reporting of major unitholders# of units held
(unit)(%)

18,022

9.01

14,341

7.17

14,3297.16

12,953
11,499

6.47
5.74

9,061

4.53

7,850
5,950
4,556
4,382
102,943

3.92
2.97
2.27
2.19
51.47

Nomura Securities Co., Ltd
Nomura Asset Management Co., Ltd.
Nomura Securities Co., Ltd.
Nikko Asset Management Co., Ltd.
Nikko Asset Management Co., Ltd.
Nikko Citigroup Limited
Cohen & Steers Capital Management Inc.
Cohen & Steers Capital Management Inc.
Cohen & Steers Europe SA
Mizuho Securities Co., Ltd.
Mizuho Asset Management Co.,Ltd.
Mizuho Trust & Banking Co., Ltd.
Mizuho Securities Co., Ltd.

# of units Ratio
Submitted on held (unit) (%)
2007/11/22
15,085
7.54
14,515
7.26
570
0.29
2007/10/5
15,027
7.51
14,585
7.29
442
0.22
2007/10/30
14,362
7.18
14,2667.13
96
0.05
2007/7/23
11,258
5.63
10,223
5.11
818
0.41
217
0.11

Notes:
1 Reports submitted as of Nov. 22, 2007
2 Ratio held of 200,000 units outstanding

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22

Global REIT Market vs. Government Bond
J-REITs yield spread are still wider than other regions
Japan

US

(%)
5.0

(%)
3.0

(%)
6.0

(%)
2.0

4.0

2.5

5.0

1.5

2.0

4.0

1.5

3.0

1.0

2.0

0.5

1.0

0.0
0.0
Jan-05 Jun-05 Nov-05 Apr-06 Sep-06 Feb-07 Jul-07 Dec-07
JREIT div. Yield(Lhs)
10yr govt. bond yield(Lhs)
Spread(Rhs)

0.0

Source: UBS, Bloomberg
Note : Data as of Dec.11, 2007

Source: Bloomberg
Note : Data as of Dec.11, 2007

3.0
2.0
1.0

2.20%

UK

0.5
0.0
-0.5
0.73%

Jan-05

Jun-05

3.46(1.21)UK div.
Yield

10yr govt.
bond yield

Source: UBS, Bloomberg
Note : Data as of Dec.11, 2007

Spread

7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
(1.0)

5.84

Apr-06

Sep-06

Feb-07

Jul-0710yr govt. bond yield(Lhs)

-1.0
-1.5

Dec-07
Spread(Rhs)

Singapore

(%)

4.67

Nov-05NAREIT div. yield(Lhs)

Australia

(%)

5.0
4.0
3.0
2.0
1.0
0.0
(1.0)
(2.0)

1.0

(%)

6.18

6.0

5.01

5.0
4.0

2.84

3.0

2.17

2.0
1.0

LPT div.
Yield

10yr govt.
bond yield

Source: UBS, Bloomberg
Note : Data as of Dec.11, 2007

(0.34)
Spread0.0
SREIT div.
Yield

10yr govt.
bond yield

SpreadSource: UBS, Bloomberg
Note : Data as of Dec.11, 2007

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

23

J-REITs investment trends by investor category
Banks

Foreign Corporation and Individuals
Buy

Buy

(¥100M)

Sell

Sell

Net

Net
(¥100M)

5,000

1,000
500

4,000

0
-500

3,000

-1,000

20
07

No
v

20
07

Au
g

ay

20
07

20
07
M

Fe
b

20
06

No
v

20
06

Au
g

ay

20
06

20
06
M

Fe
b

No
v

20
05

20
05

Au
g

ay
M

20
05

-1,500

2,000

1,000

0

Investment Trusts-1,000Buy(¥100M)
800

Sell

Net

600

-2,000400
200
0-3,000-200-400

Source:

20
06
M
ay
20
06
Au
g
20
06
No
v
20
06
Fe
b
20
07
M
ay
20
07
Au
g
20
07
No
v
20
07

Fe
b

20
05

No
v

20
05

Au
g

20
05
ay
M

20
07
No
v
20
07

20
07

Au
g

ay

20
07
M

20
06

Fe
b

20
06

No
v

Au
g

20
06

ay

20
06
M

Fe
b

20
05

No
v

20
05

-600

Au
g

M

ay

20
05

-4,000Tokyo Stock Exchange

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24

Disclosure and IR activities
Complete renewal of company website on Mar. 3, 2008
Active information
disclosure through ourcompany website

Asset Management Reports(sent to existing investors)■You can check the
portfolio and individual
properties from theportfolio list and map.
The pages for individual
properties are linked with
Google map(Reference) Number of investor meetings
Domestic institutions

251

Domestic regional financial institutions

91

International investors (Europe)

93

International investors (US)93

International investors (other)

100

TOTAL

628

Note:
1
From Jun. 21, 2005 to Dec. 11, 2007
(including conference calls)

Domestic institutions

82

Domestic regional financial institutions

28

International investors (Europe)

15

International investors (US)29

International investors (other)

43

TOTAL

197

Note:
1 From May 1, 2007 to Dec. 11, 2007

Ability to sort press release by item

English Annual
Reports(Reference) Access to
KRI website
Press release
Portfolio
Disclosure material
KDRM site top
Dividends
Occupancy rate
English Website
Bank borrowings
TOTAL TRAFFICEnglish(clicks)

11,837
7,432
4,361
4,681
2,426
2,426
1,681
1,507
32,880Note:
1 Six-months from May 1, 2007 to Oct.
31, 2007As additional service, we have
prepared an English website

Disclosure through English Website
http://www.kdx-reit.com/eng/

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25

Financing Strategy—Equity finance and debt finance
Estimated capital costs

Lenders

Asset yield (5th period)

Capital cost

♦ NOI from property
leasing c.5.4%♦ Average interest rate for debts as of end of 5th
period: c.1.56%♦ Average leverage during the 5th period: c.38%♦ Yield level of dividends as of end of 5th period:
c.3.5%– Unit price as of end of 5th period: ¥795,000→ WACC: c.2.7–2.8%

Sumitomo Mitsui Banking Corporation
The Chuo Mitsui Trust and Banking Co., Ltd
The Norinchukin Bank
The Bank of Tokyo Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust and Banking Corporation
Aozora Bank, Ltd.
Resona Bank, Ltd.
The Chiba Bank, Ltd.
Mitsui Sumitomo Insurance Co., Ltd.
Development Bank of Japan

07/5 PO in 2007(¥B)

(Reference) Refinance during 5th period

250# of transaction
6 (5 Lenders)

200

Debt

150
100
50

Prepayment of
¥13B

Debt

Est. borrowing capacity

Asset

Asset
EquityEquity0
End of 4th period

Repayment Borrowing¥7.25B¥7.25BEnd of 5th period

Raised ¥36.2B
via PO

1st period 2nd period 3rd period 4th period 5th period

Debt (¥B)
D/E ratio

29
37.5%

42
45.6%

LTV target:
Mid 30% to 50%

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62
38.7%

88.5
47.0%

75.5
35.3%

Borrowing capacity estimation is
¥63B

26

Unit price performance/transaction volume
KRI unit price performance
Volume (unit)

Unit price (Yen)

6,000

1,000,000
Follow-on price
JPY 873,180

950,000

5,000
900,000
4,000

3,000

850,000

Listing price
JPY 580,000

800,000

Follow-on price
JPY 593,096

750,000
700,000

2,000

650,000
1,000
600,000
0Jul. 21, 2005

550,000
Nov. 22, 2005

Mar. 28, 2006

Jul. 28, 2006
VolumePortfolio expansion

Nov. 29, 2006

Apr. 4, 2007

Aug. 6, 2007

KRI closing priceDec. 6, Dec
20077, 2007(as of Feb.1, 2008)

Portfolio expansion+
Increase the ratio of office buildings

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27

Statements of income
4th period

5th period

2006/11/1–2007/4/30 2007/4/30–2007/10/31
AmountOf
AmountOf(¥ thousand) operating(%) (¥ thousand) operating(%)

Rental and other operating revenues
Rental revenues
Common area charges
OthersParking space rental revenues
Utility charge reimbursements
Miscellaneous
Total rental and other operating revenues (A)Profit on side of trust beneficiary interests in real estate
Operating revenues
Property management fees and management fees
Utilities
Taxes
Repairs and maintenance costs
Other expenses¹
Depreciation
Total property-related expenses (B)Rental business profit (A-B)
Net operating income (NOI)
Asset management fees
2
Other operating expenses
Operating expenses
Operating income
Non Operating income
Interest expense
Investment coporation bonds interest
Financing related expense
Amortization of bond issuance costs
Amortization of unit issuance costs
Amortization of organization costs（※1）expenses
Other non-operating
Non-operating expenses
Non-operating expenses

Ordinary income
Income before income taxes
Income taxes
Deferred income taxes

4,965,303
4,234,864
730,439
682,158
182,047
274,748
225,3635,647,461
130,748
5,778,210
571,265
275,900
206,871
89,963
219,487
1,243,900
2,607,389
3,040,072
4,283,972
306,965
177,110
3,091,465
2,686,744
9,716
450,605
29,32020,595
1,501
17,784
5,089
22,685547,581▲ 537,865
2,148,879
2,148,879
816
4
2,148,058
59
2,148,117

100.0

53.5
46.5
0.2

9.5
▲ 9.3
37.2
37.2
0.0

6,334,707
5,336,255
998,452
873,538
222,255
476,613
174,669
7,208,246
7,208,246
704,418454,312329,927
119,710205,345
1,392,013
3,205,728
4,002,518
5,394,531
369,009
162,583
3,737,320
3,470,925
11,934
481,855
113,304
24,3385,877
41,4685,089
17,859689,794▲ 677,860
2,793,064
2,793,064
1,029▲5
2,792,039
43
2,792,083

37.2
Net income
Retained earnings at the beginning of period
Retained earnings at the end of period
Notes:
1 Other expenses:
Insurance premium, trust fees, etc.
2 Other operating expenses:
Directors compensation, asset custodian fees, administrative service fees, audit fees etc.

Net operating days in each period♦ 5th period: 184days (May 1, 2007–Oct. 31, 2007)
4th period: 181days (Nov. 1, 2006–Apr. 30, 2007)
To see Income statement by property, pleaserefer to the list in the Kessan Tanshin♦

Rental and other operating revenues:– To the 72 properties as of the end of the 4th
period, we have added 5 new office buildings– 77 properties as of the end of the 5th period♦

Property-related expenses:– Property tax and city planning tax were
included to expenses on tax payment date♦

Amortization of unit issuance costs:– Issuance costs were split in three years from the
3rd period

100.0

51.8
48.2
0.2

Summary of the revisions to the 5th period(ended October 31, 2007) results forecast
Initial forecast（announced on Actual results
Jun. 11, 2007）

9.6
▲ 9.3
38.7
38.7
0.0
38.7

Differences fromoriginal forecast

Operating revenues

7,060

7,208

＋148 （+2.1%)

Operating income

3,470

3,350

＋120 (+3.6%)

Net income

2,680

2,792

＋112 (+4.2%)

Distribution per unit ¥13,400¥13,960+¥560 (+4.2%)

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28

Balance sheet
4th period

5th period

as of Apr. 30, 2007ASSETS
Current assets
Cash and bank deposits
Entrusted deposits
Other current assets
Fixed assets
Property and equipment at cost
Buildings
Land
Buildings in trust
Land in trust
Intangible assets
Ground leasehold
Investments and other assets
Leasehold and security deposits
Long-term prepaid expenses
Deferred income tax asset
Deferred assets
Organization costs
Corporate bond issuance costs
Unit issuance costs

Amount (¥ thousand)

9,333,184
3,740,550
5,182,512
410,121
178,896,941
178,516,827
4,902,623
7,910,082
60,426,940
105,277,180
285,144
285,144
94,96911,64983,320170,551
30,53868,875
71,138
188,400,678

TOTAL ASSETS
Current liabilities
Trade and other payables
Short-term debt
Other account payables
Rents received in advance
OthersFixed liablities
Corporate bonds
Long-term debt
Leasehold and security deposit received
Security deposit received in trust
Derivative liability

LIABILTIES
Total unitholders' capital
Retained earnings
Unrealized gain from deferred hedge transactions

EQUITIESTOTAL LIABILITIES AND UNITHOLDERS' EQUITY

21,444,151
275,299
20,000,000
225,737
916,372
26,74376,078,756
12,000,000
56,500,000
626,499
6,952,256
97,522,908
88,729,652
2,148,117
90,877,769
188,400,678

as of Oct. 31, 2007(%)

Amount (¥ thousand)

4.9

95.0
94.8

0.1
0.1

0.1

100.0
11.4

40.4

51.8
47.1
1.1
48.2
100.0

12,570,970
6,561,025
5,762,315
247,630
200,932,798
200,564,337
4,896,943
7,918,083
64,120,208
123,629,101
285,350
285,350
83,11012,411
68,1652,534
260,220
25,44862,997
171,774
213,763,989
21,245,911
358,328
19,500,000
168,666
1,141,332
77,58464,756,142
12,000,000
44,000,000
647,396
8,102,312
6,434
86,002,054
124,973,750
2,792,084▲ 3,899
127,761,934
213,763,989

(%)

4.9

94.0
93.8

♦ Properties and equipment at cost
– 71 properties held at the end of the 5th period are held in the formof trust beneficiary interests. KDX Funabashi Building, KDX Nogizaka
Building, KDX Nishi-Gotanda Building, KDX Okachimachi Building,
KDX Nishi-Shinjuku Building, KDX Monzen-Nakacho Building wereacquired as real estate
End of 5th period①

Acquisition
value

②

③

③-①

③-②

Book
value

Appraisalvalue atthe end of
5th period

Differences fromacquisition value(%)

Differences frombook value (%)

0.1

(¥M)

0.1

OfficeCentral urban
retail137,979

140,411 156,048+18,069 (+13.1%) +15,637 (+11.1%)

16,05916,541 18,250+2,191 (+13.6%)+1,709 (+10.3%)

Residential

43,05243,896 44,358+1,306 (+3.0%)+478 (+1.1%)

Total

197,090

200,849 218,656+21,566 (+10.9%)+17,807 (+8.9%)

Differences fromacquisition value(%)

Differences frombook value
(%)

0.1

100.0

End of 4th period

9.9
(¥M)

30.3

40.2
47.1
1.1
▲ 0.0
59.8
100.0

Acquisition
value

Book
value

Appraisalvalue atthe end of
4th period

OfficeCentral urban
retail

115,979

118,029 127,187+11,208 (+9.7%)+9,158 (+7.8%)

16,05916,606 18,050+1,991 (+12.4%)+1,444 (+8.7%)

Residential

43,052

44,166 44,468+1,416 (+3.3%)+302 (+0.7%)

Total

175,090

178,801 189,705+14,615 (+8.3%)+10,904 (+6.1%)♦ Measurement of interest swap at fair value recorded as a piece of total
unitholders’ capital from the 4th period♦ Out of the interest rate swap transactions, one was accounted forunder deferred hedge accounting (Notional principal amount ¥1.5B)

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

29

Portfolio overview
Office buildings as of the end of October 31, 2007 (44 properties)
Area

Other
regional
areas

Occupancy
Ratio
3

Name

Location

A-40

Toranomon Toyo Building

Minato ward, Tokyo

9,850

Aug. 1962

97.5%

A-37

KDX Ochanomizu Building

Chiyoda ward, Tokyo

6,400

Aug. 1982

100.0%A-32

KDX Shiba-Daimon Building

Minato ward, Tokyo

6,090

Jul. 1986

100.0%(%)

A-13

KDX Kojimachi Building

Chiyoda ward, Tokyo

5,950

May 1994

97.1%

A-1

KDX Nihonbashi 313 Building

Chuo ward, Tokyo

5,940

Apr. 1974

100.0%

A-16

Toshin 24 Building

Yokohama, Kanagawa

5,300

Sep. 1984

100.0%A-2

KDX Hirakawacho Building

Chiyoda ward, Tokyo

5,180

Mar. 1988

100.0%

A-17

Ebisu East 438 Building

Shibuya ward, Tokyo

4,640

Jan. 1992

100.0%

A-3

Higashi-Kayabacho Yuraku Building

Chuo ward, Tokyo

4,450

Jan. 1987

100.0%A-39

KDX Toranomon Building

Minato ward, Tokyo

4,400

Apr. 1988

100.0%A-30

KDX Nishi-Gotanda Building

Shinagawa ward, Tokyo

4,200

Nov. 1992

100.0%A-4

KDX Hatchobori Building

Chuo ward, Tokyo

3,680

Jun. 1993

100.0%A-18

KDX Omori Building

Ohta ward, Tokyo

3,500

Oct. 1990

100.0%A-19

KDX Hamamatsucho Buildng

Minato ward, Tokyo

3,460

Sep. 1999

100.0%A-29

KDX Higashi-Shinjuku Building

Shinjuku ward, Tokyo

2,950

Jan. 1990

92.6%

A-20

KDX Kayabacho Building

Chuo ward, Tokyo

2,780

Oct. 1987

100.0%A-21

KDX Shinbashi Building

Minato ward, Tokyo

2,690

Feb. 1992

100.0%KDX Nakano-Sakaue Building

Nakano ward, Tokyo

2,533

Aug. 1992

100.0%KDX Shin-Yokohama Building

Yokohama, Kanagawa

2,520

Sep. 1990

99.6%

Tokyo
A-5
metropolitan
A-22
area

OfficeAcquisition price Completion
1
2
(¥M)
date

# of props.

A-6

Harajuku F.F. Building

Shibuya ward, Tokyo

2,450

Nov. 1985

100.0%A-27

KDX Kajicho Building

Chiyoda ward, Tokyo

2,350

Mar. 1990

85.8%

A-15

KDX Hamacho Building

Chuo ward, Tokyo

2,300

Sep. 1993

100.0%

Aug. 1989

100.0%

Nov. 1988

100.0%A-41

KDX Shinjuku 286 Building

Shinjuku ward, Tokyo

2,300

A-7

FIK Minami Aoyama

Minato ward, Tokyo

2,270

A-14

KDX Funabashi Building

Funabashi, Chiba

2,252

Apr. 1989

100.0%A-33

KDX Okachimachi Building

Taito ward, Tokyo

2,000

Jun. 1988

100.0%

A-8

Kanda Kihara Building

Chiyoda ward, Tokyo

1,950

May 1993

100.0%A-23

KDX Yotsuya Building

Shinjuku ward, Tokyo

1,950

Oct. 1989

100.0%A-9

KDX Shinjuku-Gyoen Building

Shinjuku ward, Tokyo

1,610

Jun. 1992

100.0%A-26

KDX Kiba Building

Koto ward, Tokyo

1,580

Oct. 1992

100.0%A-38

KDX Nishi-Shinjuku Building

Shinjuku ward, Tokyo

1,500

Oct. 1992

100.0%A-31

KDX Monzen-Nakacho Building

Koto ward, Tokyo

1,400

Sep. 1986

84.4%

A-34

KDX Hon-Atsugi Building

Atsugi, Kanagawa

1,305

May 1995

100.0%A-35

KDX Hachioji Building

Hachioji, Tokyo

1,155

Dec. 1985

85.6%

A-28

KDX Nogizaka Building

Minato ward, Tokyo

1,065

May. 1991

87.7%

A-10

KDX Koishikawa Building

Bunkyo ward, Tokyo

704

Oct. 1992

100.0%

A-12

Portus Center Building

Sakai, Osaka

5,570

Sep. 1993

94.6%

A-42

Karasuma Building

Kyoto, Kyoto

5,400

Oct. 1982

100.0%
100.0%A-43

KDX Hakata Building

Fukuoka, Fukuoka

2,350

Jul. 1982

A-44

KDX Sendai Building

Sendai, Miyagi

2,100

Feb. 1984

97.1%

A-24

KDX Minami Semba Dai-1 Building

Osaka, Osaka

1,610

Mar. 1993

100.0%93.6%

A-25

KDX Minami Semba Dai-2 Building

Osaka, Osaka

1,560

Sep. 1993

A-11

Hakata-Ekimae Dai-2 Building

Fukuoka, Fukuoka

1,430

Sep. 1984

94.4%

A-36

KDX Niigata Building

Niigata, Niigata

1,305

Jul. 1983

71.2%

Office (Total 44 properties) Sub Total

137,979--

Properties acquired on February 1, 2008 (9 properties)
Area# of props.

A - 46

OfficeTokyo
metropolitan
area

Other
regional
areas

Acquisition price Completion
1
2
(¥M)
date

Name

Location

Hiei Kudan-Kita Building

Chiyoda ward, Tokyo

7,600

Mar. 1988

A - 47KDX Shin-Yokohama 381 Building

Yokohama, Kanagawa

4,700Mar. 1988

97.5%

KDX Kawasaki-Ekimae Hon-cho Building

Kawasaki, Kanagawa

3,760

Feb. 1985

100.0%
100.0%

A - 49Nissou Dai-17 Building

Yokohama, Kanagawa

2,710

Jul. 1991

A - 50

Ikejiri-Oohashi Building

Meguro ward, Tokyo

2,400

Sep. 1988

71.8%

A - 51KDX Hamacho Nakanohashi Building

Chuo ward, Tokyo

2,310

Sep. 1988

100.0%
100.0%

A - 52

KDX Kanda Misaki-cho Building

Chiyoda ward, Tokyo

1,380

Oct. 1992

A - 53

KDX Hakata-Minami Building

Fukuoka, Fukuoka

4,900

Jun. 1973

94.2%

A - 54

KDX Kitahama Building

Osaka, Osaka

2,220

Jul. 1994

88.1%

31,980-Property acquired on January 10, 2008 (1 property)
OfficeTokyo
metropolitan
area

3

(%)

100.0%

A - 48

Office (Total 9 properties) Sub Total

Area

Occupancy
Ratio# of props.

A - 45Name

Location

KDX Roppongi 228 Building

MInato ward, Tokyo

Acquisition price Completion
1
2
(¥M)
date

3,300
3,300

Office (Total 1 property) Sub Total

Apr. 1989-

Occupancy
Ratio
3

(%)

91.3%

-

-

Central urban retail properties as of the end of October 31, 2007
(3 properties)
Area# of props.

Tokyo
C-1
metropolitan
Central
C-2
area
Urban
Other
Retailregional
C-3
areas

Acquisition price Completion
1
2
(¥M)
date

Occupancy
rate
3

Name

Location

Frame Jinnan-zaka

Shibuya ward, Tokyo

9,900

Mar. 2005

100.0%KDX Yoyogi Building

Shibuya ward, Tokyo

2,479

Aug. 1991

100.0%ZARA Tenjin Nishi-dori

Fukuoka, Fukuoka

3,680

Nov. 2005

100.0%

16,059-

Office (Total 9 properties) Sub Total(%)-

Notes:
1
The acquisition price equals the transaction value of the trust beneficiary and other rights the investment corporation has
acquired (before taxes, and rounded down to the nearest million)
2
The building completion date refers to the registered month/year when the building was initially built. The weighted averageof the building ages on acquisition prices of 77 properties as of the end of Oct., 2007 is 16.2 years. The weighted averages ofthe building ages of 44 office buildings, 3 central urban retail properties, 30 residential properties are 20.8 years, 4.4 years,
5.6 years, respectively
3
The occupancy rate is calculated by dividing the occupied area (as of Oct. 31, 2007) by the total leasable area (rounded to thefirst decimal place), and the occupancy rates of 1 office building property acquired on Jan. 10, 2008 and 9 office buildings
properties acquired on Feb. 1, 2008 are calculated as of Nov. 30, 2007. The weighted average of the occupancy rates onacquisition prices of 77 properties as of the end of Oct. 2007 is 96.9%. The weighted averages of the occupancy rates of 44
office buildings, 3 central urban retail properties, 30 residential properties are 97.5%, 100.0%, 95.5%, respectively

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

30

Portfolio overview
Residential properties as of the end of October 31, 2007 (30 properties)
Area

3

(%)

Location

B-19

Residence Charmante Tsukishima

Chuo ward, Tokyo

5,353

Jan. 2004

100.0%

B-20

Regalo Ochanomizu I・II

Bunkyo ward, Tokyo

3,600

I :Jan. 2006
II :Feb. 2006

97.2%

B-1

Storia Sirokane

Minato ward, Tokyo

3,150

Feb. 2003

93.5%

B-2

Tre di Casa Minami Aoyama

Minato ward, Tokyo

2,460

Feb. 2004

94.8%

B-21

Regalo Shiba-Kouen

Minato ward, Tokyo

2,260

Nov. 2005

94.9%

B-3

Court Mejiro

Shinjuku ward, Tokyo

1,250

Mar. 1997

100.0%

B-4

Apartments Motoazabu

Minato ward, Tokyo

1,210

Jan. 2004

97.4%

B-5

Apartments Wakamatsu Kawada

Shinjuku ward, Tokyo

1,180

Feb. 2004

94.6%

B-22

Chigasaki Socie Ni-bankan

Chigasaki, Kanagawa

1,160

Jan. 1991

89.6%

B-6

Court Nihonbashi-Hakozaki

Chuo ward, Tokyo

1,130

Feb. 2004

96.7%

Court Nishi-Shinjuku

Shinjuku ward, Tokyo

1,130

Oct. 2005

100.0%Side Denenchofu

Ohta ward, Tokyo

1,110

Feb. 1997

97.2%

Gradito Kawaguchi

Kawagushi, Saitama

1,038

Feb. 2006

100.0%
97.4%

B-34

Residential

Occupancy
Ratio

Name

Tokyo
B-23
metropolitan
area
B-7

B-8

S-court Yokohama-Kannai II

Yokohama, Kanagawa

945

Mar. 2003

B-24

Regalo Komazawa-Kouen

Setagaya ward, Tokyo

912

Feb. 2006

97.8%

B-9

Court Motoasakusa

Taito ward, Tokyo

880

Jan. 2005

88.3%

B-25

Court Shin-Okachimachi

Taito ward, Tokyo

878

Oct. 2005

90.7%

B-11

Bloom Omotesando

Shibuya ward, Tokyo

875

Mar. 2003

82.8%

B-13

Human Heim Okachimachi

Taito ward, Tokyo

830

Dec. 2004

100.0%

B-26

Primo Regalo Kagurazaka

Shinjuku ward, Tokyo

762

Jan. 2006

97.2%

B-27

Primo Regalo Youga

Setagaya ward, Tokyo

730

Dec. 2005

100.0%

B-28

Court Shimouma

Setagaya ward, Tokyo

638

Oct. 2005

96.9%

B-29

Ashiya Royal Homes

Ashiya, Hyogo

2,330

Jun. 1991

100.0%

B-18

Venus Hibarigaoka

Sapporo, Hokkaido

1,800

Mar. 1989

94.4%

I: May.1991
II: Mar. 1993

90.1%

Regalo Ibaraki I・II

Ibaraki, Osaka

1,600

B-31

Collection Higashi-Sakura

Nagoya, Aichi

1,264

Mar. 2006

85.1%

B-32

Renaissance 21 Hirao Jousui-machi

Fukuoka, Fukuoka

900

Oct. 2005

95.8%

B-30
Other
regional
areas

Acquisition price Completion
1
2
(¥M)
date

# of props.

B-33

Montore Nishikouen Bay Court

Fukuoka, Fukuoka

826

Feb. 2006

97.2%

B-16

Abreast Hara

Nagoya, Aichi

444

Feb. 2000

97.8%

B-17

Abreast Hirabari

Nagoya, Aichi

407

Mar. 2000

100.0%

43,052-

Residential (Total 30 properties) Sub Total

Notes:
1
The acquisition price equals the transaction value of the trust beneficiary and other rights theinvestment corporation has acquired (before taxes, and rounded down to the nearest million)
2
The building completion date refers to the registered month/year when the building was
initially built
3
The occupancy rate is calculated by dividing the occupied area (as of Oct. 31, 2007) by the
total leasable area (rounded to the first decimal place)4: Disposed on Feb. 1, 2008-

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

31

The cross–deal of properties
Acquisition of offices
Property nameSale of residentials
Note
Appraisal Acquisition
value
price
Specified
(¥M)
(¥M)
asset
Line

Area

Tokyo
metropolitan area
KDX Hakata-Minami
Other regional
Building
areas
Tokyo
KDX Shin-Yokohama 381
Building
metropolitan area
KDX Kawasaki-Ekimae Hon- Tokyo
cho Building
metropolitan area
Tokyo
Nissou Dai-17 Building
metropolitan area
Tokyo
Ikejiri-Oohashi Building
metropolitan area
KDX Hamacho Nakanohashi Tokyo
Building
metropolitan area
Other regional
KDX Kitahama Buildingareas
KDX Kanda Misaki-cho
Tokyo
Building
metropolitan area
Hiei Kudan-Kita Building

TOTAL

Property
No.
Property name

Initial acquisition
price
(¥M)

B-1

Storia Sirokane

3,150

B-2

Tre di Casa Minami Aoyama

2,460

B-6

Court Nihonbashi-Hakozaki

1,130

B-7

Side Denenchofu

1,110

Prop

B-8

S-court Yokohama-Kannai II

945

Trust

WH

B-9

Court Motoasakusa

880

2,400

Trust

Prop

B-11

Bloom Omotesando

875

B-13

Human Heim Okachimachi

830

2,360

2,310

Trust

Prop

B-16

Abreast Hara

444

2,220

2,220

Trust

Prop

B-17

Abreast Hirabari

407

1,380

1,380

Prop

WH

B-20

Regalo Ochanomizu I･II

3,600

31,98031,980B-21

Regalo Shiba-Kouen

2,260

B-22

Chigasaki Socie Ni-bankan

1,160

B-23

Court Nishi-Shinjuku

1,130

B-24

Regalo Komazawa-Kouen

912

B-26

Primo Regalo Kagurazaka

762

B-27

Primo Regalo Youga

730

B-28

Court Shimouma

638

B-29

Ashiya Royal Homes

2,330

B-30

Regalo Ibaraki I･II

1,600

B-31

Collection Higashi-Sakura

1,264

7,910

7,600

Trust

Prop

4,900

4,900

Prop

Prop

4,700

4,700

Trust

Prop

3,760

3,760

Prop

2,300

2,710

2,450

Source of acquisition
Acquisition of Supportoffice
line

Own
(WH)

Number of properties

9

7

2

Acquisition price (¥M)(¥mn)

31,98027,890

4,090

Average acquisition price

3,553

3,984

2,045

Appraisal value (¥M)(¥mn)
Differences between
acquisition price andappraisal value

31,98028,300

3,680

0

-410

＋410

B-32
B-33

Renaissance 21 Hirao
Jousui-machi
Montore Nishikouen Bay
Court
TOTAL

900
826
30,343The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

Area

Tokyo
metropolitan areaTokyo
metropolitan areaTokyo
metropolitan areaTokyo
metropolitan areaTokyo
metropolitan areaTokyo
metropolitan areaTokyo
metropolitan areaTokyo
metropolitan area
Other regional
areas
Other regional
areas
Tokyo
metropolitan areaTokyo
metropolitan areaTokyo
metropolitan areaTokyo
metropolitan areaTokyo
metropolitan areaTokyo
metropolitan areaTokyo
metropolitan areaTokyo
metropolitan area
Other regional
areas
Other regional
areas
Other regional
areas
Other regional
areas
Other regional
areas

Appraisal
value

Sale price

(¥M)

(¥M)

3,370

3,370

2,680

2,680

1,220

1,220

1,110

1,110

1,020

1,020

943

943

962

962

905

905

494

494

457

457

3,670

3,670

2,280

2,280

1,140

1,140

1,160

1,160

943

943

770

770

737

737

644

644

2,420

2,420

1,620

1,620

1,150

1,150

964

964

831

831

31,49031,49032

Emphasis on mid-sized office buildings in Tokyo metropolitan area
Office 54 properties, total acquisition price of ¥173.2B
Miyagi1 property ¥2.1B

Acquisition price(Tokyo metropolitan area)(as of February 1, 2008)

Tokyo’s 23 wards
36 Properties ¥121.1B

Acquisition price(Other regional areas)
Central Tokyo1
28 properties ¥102.7B

Niigata
1 property ¥1.3B

Tokyo metropolitan area
Other regional areas
Total

Greater Osaka area
5 properties ¥16.3B

Fukuoka
3 properties ¥8.6B# ofproperties

Acquisition
price
(¥B)

Ratio
(%)

44
10

144.8
28.4

83.6
16.4

54

173.2

100.0

Other 18 wards
8 properties ¥18.3B

Other regional areas
16.4%

Central Tokyo
59.3%

Tokyo
Chiba
1 property ¥2.2B
Hachioji, Tokyo
1 property ¥1.1B

Kanagawa
6 properties ¥20.2B

Other Tokyo
metropolitan area
24.2%

Notes:
1
Central Tokyo: Chiyoda, Chuo, Minato, Shibuya and Shinjuku wards
2
Acquisition price are rounded to the nearest ¥100M. Ratios indicate the total acquisition price for properties in each area in proportion to thetotal acquisition price for all properties combined

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

33

Focus on office buildings
Portfolio overview
As of end of 3rd period(Oct. 31, 2006)(64 properties approx. ¥146.7B)
Residential
30.3%

Office buildings
58.8%

Type

As of Jun. 11, 2007
(77 properties approx. ¥197.0B)
Residential
30 properties
21.8%

Office54 buildings
85.7%

Office44 buildings
70.1%

Other reginal areas
15.9%

Area

¥7.5–10.0B
1 property
6.7%

Other regional areas
17.5%
Tokyo
metropolitan area
84.0%

Less than ¥1.0B
16 properties
8.2%¥1.0–2.5B
28 properties
32.5%

Other regional areas
16.7%
Tokyo
metropolitan area
82.4%

¥7.5–10.0B
2 properties
10.0%¥5.0–7.5B
9 properties
25.9%¥5.0–7.5B
6 properties
22.6%¥2.5–5.0B
13 properties
29.7%

Residential 7 properties
6.2%
Central urban retail
3 properties
7.9%

Central urban retail
3 properties
8.1%

Central urban retail
10.9%

Size

As of Feb. 1, 2008
(64 properties approx. ¥202.0B)

Tokyo
metropolitan area
83.2%

Less than ¥1.0B
14 properties
5.4%¥1.0–2.5B
37 properties
32.0%¥7.5–10.0B
3 properties
13.5%¥5.0–7.5B
9 properties
25.3%¥2.5–5.0B
15 properties
26.5%

Less than ¥1.0B
2 properties
0.7%¥1.0–2.5B
32 properties
28.2%¥2.5–5.0B
18 properties
32.1%

Note:
1 Share (%) is rounded to the first decimal place. Ratios indicate the acquisition price for properties in each portion to the total acquisition price for all properties combined

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

34

Management of existing properties—NOI yield and occupancy rates
NOI yield from property leasing of the portfolio (annualized)

4th period

5th period *5th period(Before Tax
adjusted)

Office

5.3%

5.5%

5.7%

Urban retailcenters

5.2%

5.1%

5.1%

Residentials

5.4%

5.3%

5.3%

Total

5.3%

5.4%

5.5%

(%)

100
96.6

250,000

95.3

95.9

96.9

94.9

3rd
period4th
period5th
periodOffice

187

318

400

516

Central urban retail

20

22

25

26

Residential

542

1,081

1,124

1,120

Diversification in tenant mix (as of the end of 5th period)(Offices: 44 properties, Number of tenants: 498)

Leasable area and Occupancy rates
300,000

2nd
periodNote: Including type duplication

Notes:
1 NOI yield from property leasing (rounded up)：income from property business(before depreciation) /acquisition price2 Calculation of NOI yield after including Property & City Planning Tax to expenses（m2）

Changes in # of end-tenants (by type)

Individuals
11 tenants
Official (Others) 2.21%
2 tenants
0.40%

Agriculture
1 tenant
0.20%

Manufactures
75 tenants
15.06%

95

200,000
150,000

90

100,000
85
50,00080

0
1st period 2nd period 3rd period 4th period 5th period
Total leaseable area (m²)

Occupancy rates (% )Constructions
30 tenants
6.02%

Service
184 tenants
36.95%

Carriers &Telecome
12 tenants
2.41%
Real estate Financials &22 tenants Insurance
4.42%
29 tenants

Wholesale, retail &food
132 tenants
26.51%

5.82%

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

35

KDX Toranomon Building. —Renovation of the entire building
After renovation—Typical floor

Beforerenovation

After renovation—Elevator hall

Beforerenovation

ELV Hall: Glass partition installed

After renovation—Toilet

After renovation—Entrance hall

Beforerenovation

Beforerenovation

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

36

(Reference data) Market environment for office buildings
1．Percentage of entities based on number of employees per office
30–99
5.0%

Potentially strong demandfor Mid-sized office buildingby tenants

100 and above
1.6%

10–29
15.7%

2．Distribution of office buildings by tsubo (Central Tokyo)

Less than
500 tsubo
66.4%

Ratio of offices with 1–29
employees: 93.4%

Broad based stock ofMid-sized office buildings

More than 3,000 tsubo
5.0%
500 tsubo–
3,000 tsubo
28.6%

1–9 employees
77.7%
Source： Survey conducted by Ikoma Data Service System based on KRI’s requests(survey as of end of Mar. 2007) “Macro market survey of Tokyo’s central 5 wards”
Note： The above data covers rental office buildings located in Tokyo’s central 5 wards that were surveyed
by Ikoma Data Service System. Please note that the above data may not include the data of allproperties in the said 5 wards

Source： KDRM, based on Tokyo office statistics report as of 2006 (MPHPT Statistics Bureau)

3．Office building average rent and vacancy rates (Central Tokyo)
9.0

60

2004

2006

21,000

7.0
6.0

20,0005.0
4.0

19,0003.0
2.0

18,000

1.0

.2
00
7
Se
p

20
06
De

c.
De

Average rent

c.

20
05

20
04
De

c.

20
03
c.
De

c.
De

c.
De

20
02

0.0
20
01

17,000

40
(%)

2

8.0
Vacancy rate (%)

Yen per tsubo (approx. 3.3m )22,0004．Reasons citied by companies in Tokyo if they were to relocate

200Expansion of Reorganization of Restructuring offloor space due offices for costinternal
to the increase of
reductionorganizations
employees

Building
additional
meeting rooms
and dressing
rooms, etc.

Vacancy rate

Source： Miki Shoji “Latest office building market conditions in Central Tokyo”,
Miki Shoji Co., Ltd.

Source： “Real Estate White Paper 2000”, K.K. Ikoma Data Service System

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

37

Leverage of multi-pipeline and Kenedix Group’s successful track record
Property acquisition leveraging multiple acquisition pipelines

Kenedix, Inc./
Kenedix Advisors Co., Ltd.

Original network of theAsset Manager

Increased importance of J-REITs
within Kenedix Group

100%
100%

Private funds

60%
60%

Pension funds

Properties heldby Kenedix(incl. development projects)

80%
80%

Brokerage

Warehousing
pre-acquisition services

Corporate sector

Construction
companies anddevelopers

Financial institutions

Real estate market

Assets by type of investor

40%
40%
20%
20%
0%0%
00/12
00/12

01/12
01/12

03/12
03/12

Foreign investors
Pension funds
J-REITs

Priority for information
to Kenedix REIT

Support line from Kenedix and
Kenedix Advisors (MOU)

02/12
02/12

04/12
04/12

05/12
05/12

06/12
06/12

07/9
07/9

Japanese institutional investors
Kenedix Group accounts
LPT

Assets by type of property
（¥mn）
(¥M)

675,954

Potential acquisition channels

700,000

544,479

Others600,000

Distribution facilities

500,000

Commercial facilities
400,000

385,663

Apartment buildings

300,000

Office buildings

240,393

200,000

Kenedix REITManagement, Inc.
(Asset Manager)

Asset management

Kenedix Realty
Investment
Corporation (KRI)(Kenedix REIT)

100,000

19,03968,476

83,799

01/12

02/12

105,880

0

00/12

03/12

04/12

05/12

06/12

07/9

Source: Kenedix, Inc. as of Sep. 30, 2007
Note:
1 Includes properties of Japan Logistics Fund, which are entrusted to an affiliate of
Kenedix, Inc. for asset management, and properties held by KRI

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

38

Management structure of the asset management company
Decision making flow chart
Discussion& Resolution

Screening

Resolution/Report

Approval of transactions withrelated parties

Department
concerned

ComplianceofficerApproval of transactions exempt
from investment guidelines

Compliancecommittee1

Asset
management
committee

Approval of transactions with nonrelated parties under investment
guidelines

Resolution

ReportBoard of Directors

Preparation of investment guidelines

Note:
1 One lawyer works as an external commission member

Policy on transaction with related parties(1) Asset acquisition: Must not acquire properties for more than appraised price (except for properties pre-acquired by Kenedix
Inc. pursuant to the MOU)
(2) Asset disposal: Must not sell properties for less than appraised price(3) Real estate leasing: Proper conditions must be determined in conjunction with research on market price and conditions as well as
reference to third party opinion(4) Real estate agency business such as trading and leasing properties: commissions must be within range specified in Building Lots andBuildings Transaction Business Law＜Reference＞＜Reference＞
Meetings held by the various committees, Board of Directors of the asset
Asset management company’s management fee
management company/investment corporation
structure
1st
period2nd
period3rd
period4th
period5th
periodTotal

Compliance committee

7

7

7

8

6

35

Asset management committee

21

35

39

39

38

172

Board of Directors

9

7

9

8

9

42

Board of Directors of investment co

11

7

7

9

7

41

Management fee I: 0.15% of total assets
Management fee II: 3.0% of money available for
distribution in each fiscal period
Acquisition fee:
0.5%of acquisition price (0.25% ifinterested parties)
Transfer fee:
capped at 0.5% of transfer price

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

39

Kenedix REIT Management, Inc.—Organizational chart
Major members

Shareholders’meeting♦

Part-time auditor
Haruo Funabashi, Kenichi Yamasaki

Board ofcorporate auditors
Board ofdirectors♦ After joining the Ministryof Finance, he served ascommissioner of Tokyo
Customs, Deputy
Commissioner of the
National Tax
Administration, Secretary
Haruo Funabashi General of the Securities
Part-time auditor and Exchange
Surveillance Commission,
Director General,
Minister’s secretariat of
the National Land Agency
before joining Kenedix asa corporate auditor♦

Taisuke Miyajima
CEO & President

Compliance officer
Koju Komatsu

Investmentcommittee

Compliancecommittee

Representative
director
Taisuke Miyajima♦

Worked for 10 years for Sojitz Corporation（incl. Construction Department）♦

After joining Kenedix, he worked for Kenedix Advisors
before being transferred to Kenedix REIT Management

Kenji Ajitani
Director & General Manager ,Investment Management
Division♦♦

Investment
management div.
Kenji Ajitani

Property
management div.
Masashi Ohwa

Financialplanning div.
Masahiko Tajima

Corporate
administration div.
Teruo Nozaki♦♦ Property
acquisition
anddisposition♦ Research andAnalysis ofreal estatemarkets

Asset
Management
group

Property
Managementgroup♦ Property leasing ♦ Property
and management
leasingEngineeringgroup♦ Construction
management♦ Property♦ Assessment
managementof property
management/riskmanagement

IR
group
♦ Investor
Relationsactivities

Finance andaccountinggroup♦ Formulationof budget,
financialstatements,♦ Negotiations
disclosure
withregulatory
agencies andconcerned
bodiesBusiness
administrationgroup♦ Running
unitholders’ anddirectors’ meetings♦

Worked for 12 years at Chuo Mitsui Trust andBanking, where he was responsible for securitization
Joined Kenedix, Inc. after four years of experience invarious securitized paper investments at Sumitomo Life
Insurance
MBA from Columbia Business School

Masahiko Tajima
Director & General Manager,
Financial Planning Division♦♦ Administration/
Accounting/
Human Resources♦ Dealing withinspections
conducted byconcerned agencies

Worked for Asahi Urban Development Corporation,
Nihonjisho, others before he joined Kenedix
Executive Officer & General Manager of REITManagement Division, Kenedix Advisors before joining
Kenedix REIT Management

Masashi Ohwa
Director & General Manager,
Property Management Division♦

Asset
Investment
group

Worked for Mitsubishi Trust and Banking (debt
capital market group, Los Angeles branch). Seven yearsof experience in real estate investment advisory division
after joining Kenedix, Inc.
Transferred to Kenedix REIT Management to become
CEO and president♦

Koju Komatsu
Compliance Officer♦

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

Worked for c.7 years for Chuo Mitsui Trust andBanking（Property Sales Department, Property Investment
Advisory Department,
Asset Finance Department）
Joined Kenedix, Inc after having worked for Cititrust &Banking
Property appraiser

40

Disclaimer
The contents of this document, including summary notes, quotes, data and other information, areprovided solely for informational purposes and not intended for the purpose of soliciting investmentin, or as a recommendation to purchase or sell, any specific products.
Please be aware that matters described herein may change or cease to exist without prior notice ofany kind. This document contains forward-looking statements and anticipations of future results,
based on current assumptions and beliefs in light of currently available information and resources.
Risks and uncertainties, both known and unknown, including those relating to the future performanceof the real estate market in Japan, interest rate fluctuations, competitive scenarios, and changing
regulations or taxations, may cause Kenedix Realty Investment Corporation (KRI)'s actual results,
performance, achievements and financial performance to be materially different from those explicitly
or implicitly expressed in this document.
With respect to any and all terms herein, including without limitation, this document, the information
provided is intended to be thorough. However, no absolute assurance or warranties are given withrespect to the accuracy or completeness thereof.
Neither KRI nor Kenedix REIT Management (KDRM) shall be liable for any errors, inaccuracies, loss ordamage, or for any actions taken in reliance thereon, or undertake any obligation to publicly
update the information contained in this document after the date of this document.

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

41