Focused Investment in
Shopping Centers for Daily Needs

Semi-annual Report for the 10th Period(From October 1, 2019 to March 31, 2020)

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

H i ghlights

The 10th fiscal period ended March 31, 2020
Distribution per unit

JPY 6,535

Forecast DPU for the 11th fiscal period

JPY 5,540

Forecast DPU for the 12th fiscal period

JPY 6,450

Total assets (by acquisition price)

JPY 225.8bn

Number of properties

Number of tenants

62
496

Occupancy rate at the end of period

99.4%

Apita Terrace Yokohama Tsunashima

Contents
I. Overview of KRR
From the Executive Director
Key Characteristics
Growth Strategies
ESG Initiatives
Close-up KRR Vol.10
Yumemachi Narashinodai Mall
Financial Highlights
Portfolio List
Portfolio Map
Overview of Portfolio
Summery of Investment Unit
II. Asset Management Report
Overview of Asset Management
Profile of KRR
Status on Investment Properties
Capital Expenditures
Expenses and Liabilities
Acquisition and Disposition
Accounting
OthersFrom the Executive Director
I would like to take this opportunity to express my sincere
gratitude to our shareholders for your continued support to
Kenedix Retail REIT Corporation (“KRR”). I would also like to express
my sympathy to those suffering from COVID-19.
Thanks to your support, KRR has reported its results of operations
for the tenth fiscal period (from October 1, 2019 to March 31, 2020).
In February 2015, We became the first J-REIT to focus primarily on
shopping centers for daily needs that cater to the day -to-day needs of
local area customers. During the five years since our listing,
we have been steadily accumulating track records. In June 2018,
we added logistics facilities to our investment targets, and we have acquired
six distribution centers so far. We expanded our investment criteria in order to adapt to changing retail
environment with the recent penetration of e-commerce where the functions of retail and logistics facilities are
getting similar from the perspective of providing products to consumers.
For the tenth fiscal period, operating revenue totaled 8,291 million yen, operating income was 4,101 million yen,ordinary income was 3,499 million yen, and net income was 3,498 million yen. The distributions to unitholders
was 6,535 yen per unit.
In the tenth fiscal period, we acquired six retail facilities and one logistics facility through the fourth public
offering after our listing, including the assets acquired through the reshuffle with Fululu Garden Yachiyo,
announced in September 2019. In addition, we acquired a distribution center in Shinjuku ward, Tokyo in
January 2020. As a result, our portfolio at the end of the tenth fiscal period has expanded to 62 properties at
225,810 million yen from 18 properties at 80,843 million yen at the time of listing.
Meanwhile, the spread of COVID-19 and the government’s announcement of the state of emergency havecreated unprecedented challenges to the retail industry. Despite these circumstances, shopping centers fordaily needs with grocery supermarkets as core tenants remain vital to local communities. On the other hand,the business climate is expected to remain unstable for service -oriented tenants, some suspending operations.
We believe that it is essential to aim for co-existence by accepting temporary rent reductions/deferral in orderto sustain businesses of tenants facing a serious decline in sales due to the spread of COVID -19, which we
believe will also lead to the maximization of the long-term value of our portfolio. The forecast distribution perunit for the eleventh fiscal period is 5,540 yen per unit, taking into account the impact of the spread of COVID 19. Meanwhile, for the twelfth fiscal period, we expect 6,450 yen per unit on the assumption that the spread of
COVID-19 will converge.
In an uncertain business climate, investment unit price has fluctuated significantly. We dedicate ourselves topromote the operation of retail and logistics facilities in order to respond to the confidence and expectationsof investors.
We respectfully look forward to your continued support.

Moyuru Watanabe

Executive Director, Kenedix Retail REIT Corporation
Director & COO, Head of Retail REIT Department,
Kenedix Real Estate Fund Management, Inc.
1

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

1

Environment recognition

Changes in retail facilities with the rise of
e-commerce

Challenges faced by the logistics sector
with the rise of e-commerce■

Partnerships between online and brick-and-mortar retailers■

Frequent small deliveries■

Delivery of products from retail facilities■

Shorter lead time■

Pickup of products at retail facilities■

Managing to last mile issues■

Integration of logistics and retail facilities■

Needs for distribution centers close to consumption areas

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

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

Installation of lockers to pick up products

PUDO Station (Apita Terrace Yokohama Tsunashima)

Leasing a portion of the land of retail properties tologistics operators

Cargo transfer area (Kurume-Nishi Shopping Center)▶ Retail facilities adapting to delivery or receipt of products ordered on the Internet (Note)

MONA Shin-Urayasu

Passaggio Nishiarai

Daikanyama Address Dixsept

Unicus Ina

Yorktown Kita-Kaname

Unicus Yoshikawa

K's Denki Shonan-Fujisawa(Land)

Unicus Kamisato (Land)

Unicus Konosu (Land)

Inageya Yokohama
Minamihonjuku (Land)

Life Kameido

Totsuka-Fukaya Shopping
Center (Land)

Yumemachi Narashinodai Mall

Kawamachi Yahagi Mall

Apita Terrace Yokohama
Tsunashima

Monenosato Mall

Blumer Maitamon

Blumer HAT Kobe

Carino Esaka

COMBOX Komyoike

Habikigaoka Shopping
CenterHomecenter Kohnan
Sunadabashi

K's Denki Aomori Honten

Ashico Town Ashikaga

Kasumi Technopark Sakura

P-1 Plaza Tenno

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

2

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

2

Investment Policy

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

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

High volume ofcustomer traffic

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

Specialty store
tenant diversity

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

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

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

Residential district

Specialty stores(small retail spaces)

Flat parking lot

Tenants

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

Restaurant building
expansion site
Unicus Ina (NSC)

Facilities

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

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

Shopping centers
for daily needs

Manufacturing

Visit
Stores

Delivery

Large logistics facilities
Delivery

ImportDelivery
Retail distribution centers3

Growth Strategies
Steady AUM growth1

Since IPO in 2015, KRR achieved steady growth in AUM through four public offerings. AUM size that was 80.8 billion
yen at IPO has expanded 3 times to 225.8 billion yen.
Aiming forsteady growthof AUM going
forward（JPY bn）
300

250

200

158.7

164.3

3rd
period4th
period

204.9

206.1

5th
period6th
period

212.8

225.8

213.2
200.9

150

131.6
91.8

100

80.8
50

1st
periodIPO

2ndperiod7th
periodUrban
Station-Front SC
14.2％

Logistics
5.0％

95.0 ％

NSC
56.9％

SS
16.7％

▶ Percentage of tenant category (based on rents)
Drug store Dollar shops
1.4％
Restaurants 2.6％
3.8％
Logistics facilities
5.4％
Consumer electronics
5.5％
Apparel
5.6％

4 major
Metropolitan Areas

Greater
Nagoya area
10.3％

Other retailers
7.0％
Service businesses
7.8％

80.8 ％

Tokyo
metropolitan area
46.9％

Greater
Osaka area
20.1％

▶ Top 10 tenants (based on rent)
4.2％

Office

3.6％
3.4％
3.2％
3.1％
3.0％
2.7％
T o p 1 0 t e n a n ts
2.7％
2.7％
％
2.3％

0.2％

Groceries +Costco27.7％

30.9

Sports clubs
5.9％
Amusement
6.0％

10th
periodOrdinance-designed
cities, core cities andother areas
19.2％
Fukuokaarea
3.5％

Shopping centers
for daily needs

9th
period▶ Location (by acquisition price)▶ Types of retail property (by acquisition price)
SM
7.2％

8th
periodMaster lease
12.4％

69.1％

Home & garden
8.8％

Note: The percentages in the above pie charts are based on properties owned by KRR as of April 30, 2020. The rent-based ratio is calculated based on the rents of the properties as of March 31, 2020.

4

2 Assets acquired in the 10th fiscal period
T-25

Apita Terrace Yokohama Tsunashima(51% quasi-co-ownership interest)

T-26

A n N S C t h a t m e e t s d i v e r s e c u s to m e r n e e d s a n d c o n s tit ut es a n e x t - g en e r a ti on
u r b a n s m a r t c i t y i n a n a r e a w i t h a d e n s e a n d g r o w ing p o p u la tio n

NSC

T-27

Location

Yokohama,
Kanagawa

Acquisition
price

JPY 5,899 mn

T-29

T-28

JPY 5,980 mn

4.7%

Chofu Center Building (Retail wing)

A n N S C t h a t s e r v e s t h e n e e d s o f i t s n e i g h bo r h o o d , l o c a te d i n a c o m m e r c i al a n dr e s i d en ti al d i s tr i c t w i t hi n w a l kin g d i s ta nc e o f C h o f u S t a tio n , a n d a g r o c e r ys u p e r m a r k e t a s i t s c o r e t e n an t

NSC

Chofu, Tokyo

JPY 2,410 mn

Acquisition
price

JPY 2,300 mn

Appraisalvalue

JPY 2,510 mn

Appraisalvalue

JPY 2,440 mn

Appraisal
NOI yield

5.3%

Appraisal
NOI yield

5.5%

Yotsukaido, Chiba

Acquisition
price

N-7

Valor Nakashidami (Land)T h e u n d e r l y i n g l a n d f o r a r e l a ti v e ly n e w g r o c e r y s u p e r m ar k e t i n M o r i y a m a -k u ,N a g o y a , a n a r e a u n d e r g o ing c o n tin u ed d e v e lo p m e n t, w i t h a l a n d r e a d j us tm e n t
p r o j e ct u n d e r w a ySM

Location

Nagoya, Aichi

JPY 2,248 mn

Acquisition
price

JPY 2,551 mn

JPY 2,300 mn

Appraisalvalue

JPY 2,560 mn

4.0%

Appraisal
NOI yield

4.7%

Location

Urayasu, Chiba

Acquisition
priceAppraisalvalue

Gyoda Distribution CenterL-6

A v e r s a ti le s t o r a g e a n d d i s t r ib u tio n c e n te r s u i t ab le f o r l o c al d i s tr i b u tio n i n
T o k y o m e t r o p o lit an c o m m u te r d i s tr i c ts a n d s e m i -l on g -d is ta n ce d i s tr i bu ti on

Shinjuku Nishiochiai Distribution Center

H i g h ly s c a r c e u r b a n d i s tr i bu ti on c e n t e r f o r l a s t -m i le d e l i v e r i es i n a d e n s e ly
p o p u la te d a r e aL

Location

Shinjuku ward,Tokyo

JPY 3,160 mn

Acquisition
price

JPY 810 mn

Appraisalvalue

JPY 3,350 mn

Appraisalvalue

JPY 815 mn

Appraisal
NOI yield

5.7%

Appraisal
NOI yield

4.3%

Location

Gyoda, Saitama

Acquisition
price

Assets acquired in the 11th
3 fiscal period
Comfort Market Nishi-Magome

Assets to be disposed of in the
4 11th fiscal periodN-5

A n e w - b r a n d g r o c e r y s u p e r m a r k et a d j ac en t t o N i s h i -m a g o m e s t a tio n ,c o n v e n ie n t f o r c o m m u tin g t o c e n tr a l T o k y oSMAcquisition
price

Location

Location

Appraisal
NOI yield

T-30

Hiratsuka,
Kanagawa

Appraisal
NOI yield

4.8%

Across Plaza Urayasu Higashino (Land)

L

Location

Appraisal
NOI yield

T h e u n d e r l y i n g l a n d f o r a r e l a ti v e ly n e w N S C o p e n ed i n D e c e m b er 2 0 1 7 a l o ng a
m a j o r r o a d i n a r e s id e n tia l a r e a i n U r a y a su , a n a r e a w i t h c o n t in u ed p o p u l at io n
g r o w th

L-5

NSC

Appraisal value JPY 6,010 mn

Monenosato MallNSC

A n N S C w i t h t h e r e t a il t r a d e a r e a c o v e r in g H i r a tsu k a a n d C h i g a sa ki ,t he core of t he Shonan area

Appraisal value JPY 6,220 mn

A n N S C w i t h Y o r k Ma r t a s i t s c o r e t e n a n t, l o c a te d i n t h e d e v e lo p in g M o n en o sa to
N e w T o w n r e s id e n tia l a r e a

NSC

Kalsa Hiratsuka

Location

Ota ward, Tokyo

Acquisition
price

K’s Denki ShinMoriyama (Land)T o b e d i s p o se d o f a t a p r i ce a b o v e t h e b o o k v a l u e a n d a p p r a isa l v a l u e a s a n
a s s et r e s h u ff lin g w i t h C o m f or t M a r k e t N i s h i - Ma g om e

SS

Location

Nagoya, Aichi

JPY 1,920 mn

Disposition
price

JPY 1,527 mn

Appraisalvalue

JPY 2,000 mn

Appraisalvalue

JPY 1,440 mn

Appraisal
NOI yield

4.4%

Disposition
NOI yield

3.9%

Note: “Appraisal value” indicates the appraisal value at the time of acquisition for the acquired property and the appraisal value at the end of March 2020 for the property to be sold. “Appraisal NOI yield” is the realestate appraisal at the time of acquisition. It is calculated by dividing the net operating income stated in the evaluation report by the acquisition price. “Disposition NOI yield” is calculated by dividing the net
operating income stated in the latest real estate appraisal report by the sale price.

5

ESG Initiatives
1 Environmental initiatives▶ Evaluation of Environmental Initiatives
Acquired Certification for CASBEE for Real Estate
CASBEE is an evaluation system for rating the environmental performance of buildings,
developed under the auspices of the Ministry of Land, Infrastructure, Transport and Tourism. The
system rates the overall environmental performance of buildings from two perspectives; theevaluation of the environmental quality and performance of buildings themselves and theexternal environmental load of buildings. On March 31, 2020, KRR acquired CASBEE real estateevaluation certification for the following two properties.
N-4

L-3

Musashi Ranzan
Distribution Center

Homecenter Kohnan
Sunadabashi

Certification rank

Certification rank

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

Properties with outstanding environmental & social awareness (★★★★)T -2

MONA Shin-Urayasu

T-4

Daikanyama Address Dixept

Properties with excellent environmental& social awareness (★★★)

O-1 Blumer Maitamon

Properties with high environmental& social awareness (★★)

T -3

O-5

T-5

N-6

Passaggio Nishiarai

Carino Esaka

Unicus Ina

T -7

R -1

T-19

Resora Obu Shopping
TerraceUnicus Yoshikawa

Roseo Mito

Yumemachi
Narashinodai Mall

T-20

R -4

Kawamachi Yahagi Mall

Ashico Town Ashikaga

O -4

R -10

Blumer HAT Kobe

Sun Street Hamakita

The number of certified properties and certified floor area (m 2 ) (as of March 31, 2020)
The number of certified
properties

Certified floor area (m2)

Ratio (%) (Note)

DBJ Green Building Certification

14

340,251.61

47.0

Certification for CASBEE for Real Estate

252,232.95

7.2

Note: The ratio is the percentage of certified floor area to the gross floor area of properties owned by KRR (723,374.38m 2, calculated on a pro-rata basis of ownership ratio for compartmentalized ownership,
excluding land-only properties).

Awarded GRESB Green Stars for four consecutive years
Awarded a “Green Star” Rating in response to high evaluations for four
consecutive years since its first participation in the GRESB Real Estate Assessment
in 2016.
Won the first place in the “Eastern Asia - Retail - Listed” category and also
earned four star (out of five star) GRESB Rating in 2019, improved from three starin the previous year.

▶ Solar panel installation
We installed solar panels at Unicus Ina todecrease CO2 emissions.

2019 Power generation
results（Note）

283,143kWh

Note: The figures are for the period April to December 2019.

6

2

Social initiatives

Collaboration with local communities

Local events at our properties

Supporting Japan for UNHCR

We entered into agreements with Yoshikawa City,Ina Town, and Konosu City can be used as atemporary shelter at times of emergency.

We are making efforts to enliven local communities
by holding community-participating events at our
properties.

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

©Japan for UNHCR

3

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

Deliberation andresolution

Confirmation of
proposalCompliance
Officer

Related party
transaction

Compliance
Committee

Deliberation andresolution

Related party
transaction

Other transactions

Asset
Management
Committee ofRetail REIT
Division

Deliberation andresolution
KRR Boardof Directors

Relatedpartytransaction(Note)

ReportAsset
Manager's
Board ofDirectors

Other transactions

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

▶ Kenedix Group's business model benefiting from our growth
The Kenedix Group’s J-REIT assets constitute the majority of their AUM. Because of the importance of the J-REIT
business to the Kenedix Group, we believe that our sound growth is in line with their interests.
We also implemented the following measures to align the Kenedix Group’s performance to unitholder value.

Alignment with
Kenedix Group (Note)

Kenedix increased its
holdings to 10,050 units(Approx. 1.9% of total
outstanding units)

Introduction of fee aiming to provide incentives toenhance unitholder value (since October 1, 2018)
Investment unit performancefee (newly adopted)

Asset management fee I

Asset management fee II

Total assets at the endof the previous period X
0.3% (annual rate)

Net income X DPU X
0.0012%

Total assets at the endof the previous period X
0.27% (annual rate)

Net income X DPU X
0.0013%Acquisition fee

Disposition fee

Merger fee (newly adopted)

Disposition price X 0.5%

Appraisal value of the assets tobe succeeded X 1.0%
(maximum)Acquisition price X 1.0%
(Including acquisition ofbuildings through expansion orreconstruction)

KRR’s excess returns over TSE
REIT Total Return Index X market
cap X 0.1%

Note: The figures are as of the end of March 2020.

7

Close-up KRR

T-19

Vol. 10NSC

Yumemachi Narashinodai Mall

Shopping center for daily needs in Funabashi, with a highly competitive grocery supermarket
as the core tenant

Yumemachi Narashinodai Mall is a relatively new neighborhood
shopping center (NSC) opened in April 2016, located in thenortheastern part of Funabashi along National Road 296 (Narita
Road), which connects Tsudanuma and Funabashi to Narita. The
shopping center has flat parking lots that can accommodate 343
vehicles, attracting customers by car, in addition to residents livingin the vicinity.
In the vicinity of this property, the Toyo Rapid Railway Toyo Rapid
Line started operations, connecting directly with the Tokyo Metro
Tozai Line (approximately 35 minutes of commuting from thenearest Funabashi-Nichidaimae Station to Otemachi Station on a
rapid train), improving commuting convenience. Since its opening,
the area has been developed as a residential district, andapproximately 1,000 condominiums are currently being developedin front of Yachiyo Midorigaoka Station, which is one stationadjacent to the nearest station.

On the operational front, we are actively working to build stronger
ties with local communities by sponsoring the distribution of 2,000
educational stickers to local communities on road safety measuresin the surrounding roads and sponsoring annual regional summer
festivals. In addition, from the standpoint of energy conservation,
we are using LED lighting in the shopping center and parking lots.
As a result of these efforts, we received DBJ Green Building
Certification as a property with high environmental and social
awareness for the property in June 2019.
We will continue to pursue management that is integrated with thelocal community and work to revitalize the facility as a shopping
center for daily needs.

The property consists of the main building and the GU (apparelshop) building. The core tenant is Lopia, a grocery supermarket,
which specializes in meat products and is popular among
consumers for its offering of low-priced goods. In addition to
shops such as a drug store, a consumer electronics store, anapparel shop, and a dollar shop, there are also service-oriented
tenants such as a dentist, a laundry, a restaurant, a cat cafe, abarber shop and a massage shop, making it easy for child-rearing
families as well as a wide range of households to visit. Since its
opening, the visitors to the shopping center have increased every
year as an active shopping center for everyday use regardless ofweekdays or holidays. Since the acquisition of the property in April
2017, we have been maintaining and improving the value of theproperty by creating a website for the shopping center, replacing
furniture in common areas, and refurbishing the parking lot withconsideration for neighborhood residents.

Acquisition
price

JPY 3,416 mn

Location

Funabashi, Chiba

Land area

16,633.58m2

Gross floor
area
Core
tenants

7,889.24m2
Lopia Co., Ltd.
Nojima Corporation

8

F in ancial H i ghligh ts
KRR implements flexible financial strategies, aiming to produce stable profits in the medium - to long-term andto steadily grow its portfolio.

Financial highlights (as of March 31, 2020)

1

LTV

44.5%

Long-term debt ratio

Fixed interest debt ratio

Number of lenders

Average interest rate

Weighted averagedebt maturity

96.9%

4.5 years

2

3

12

91.3%

0.99%

Credit rating and commitment lines (as of March 31, 2020)
Credit rating (JCR)

Commitment credit lines

A+ (Stable)J P Y 3.0 b n

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

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

Borrowings

20,000Investment corporation bonds

15,00010,000

5,000

0

4

13th
11th
12th
14th
15th
16th
17th
18th
19th 20th
21st 22nd 23rd
24th
25th 26th
27th
28th 29th
30th
period period period period period period period period period period period period period period period period period period period period

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

FTSE EPRA Nareit Global Real Estate Index

S&P Developed REIT Index

Dow Jones Global Select REIT Index

Bloomberg Asia REIT Index

GPR 250 Index

MSCI Japan Small Cap Index
9

Por tfolio List as of April 15, 2020
Total acquisition price

Weighted average occupancy rateJ P Y 2 2 7 , 7 3 0 mn

99.4 %No.

Name of property

Location(city / ward, prefecture)

Number of Tenants497
Acquisition price Occupancy rate(%) (Note 1)(JPY mn)

Number oftenants (Note 2)

99.5
100.0
99.1
100.0
100.0
99.6
100.0
100.0
100.0
100.0
100.0
100.0
100.0
81.0
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
99.7
100.0

57
42
27
1
1
10
1
1
1
1
1
1
1
1
1
2
14
12
2
1
1
1
1
3
6
3
1
50
1

T-2
T-3
T-4
T-5
T-6
T-7
T-8
T-9
T-10
T-11
T-12
T-13
T-15
T-16
T-17
T-18
T-19
T-20
T-21
T-22
T-23
T-24
T-25
T-26
T-27
T-28
T-29

MONA Shin-Urayasu
Passaggio Nishiarai
Daikanyama Address Dixsept
Unicus Ina
Yorktown Kita-Kaname
Unicus Yoshikawa
Sports Club Renaissance Fujimidai
Super Viva Home Iwatsuki (Land)
K’s Denki Shonan-Fujisawa (Land)
Unicus Kamisato (Land)
Unicus Konosu (Land)
Inageya Yokohama Minamihonjuku (Land)
Nakamachidai Tokyu Store
Central Wellness Club Nagatsuta MinamidaiLife Kameido
Totsuka-Fukaya Shopping Center (Land)
Yumemachi Narashinodai Mall
Kawamachi Yahagi Mall
Prime Square Jiyugaoka
Round1 Ichikawa-Onitaka
Ozeki Tokiwadai
Konami Sports Club Shibuya
Apita Terrace Yokohama Tsunashima
Kalsa Hiratsuka
Monenosato Mall
Chofu Center Building (Retail wing)
Across Plaza Urayasu Higashino (Land)

Urayasu, Chiba
Adachi ward, Tokyo
Shibuya ward, Tokyo
Kitaadachi-gun, Saitama
Hiratsuka, Kanagawa
Yoshikawa, Saitama
Nerima ward, Tokyo
Saitama, Saitama
Fujisawa, Kanagawa
Kodama-gun, Saitama
Konosu, Saitama
Yokohama, Kanagawa
Yokohama, Kanagawa
Yokohama, Kanagawa
Koto ward, Tokyo
Yokohama, Kanagawa
Funabashi, Chiba
Chiba, Chiba
Meguro ward, Tokyo
Ichikawa, Chiba
Itabashi ward, Tokyo
Shibuya ward, Tokyo
Yokohama, Kanagawa
Hiratsuka, Kanagawa
Yotsukaido, Chiba
Chofu, Tokyo
Urayasu, Chiba

O-1
O-2

Blumer Maitamon
Central Square Takadono (Land)DCM Kahma MEGA Don Quijote UNY
Omihachiman
Blumer HAT Kobe
Carino Esaka
COMBOX Komyoike
Hankyu Oasis Hirakatadeguchi
Life Nishi-Tengachaya
Million Town Tsukaguchi (Land)
Habikigaoka Shopping Center

Kobe, Hyogo
Osaka, Osaka

8,063
5,850
5,390
4,470
4,000
3,600
2,586
4,815
3,169
3,000
1,700
1,442
3,360
1,724
1,450
4,170
3,416
3,097
2,820
1,880
1,263
3,400
5,899
5,980
2,410
2,300
2,248
8,389
2,685

Omihachiman, Shiga

2,140

100.0

2

Kobe, Hyogo
Suita, Osaka
Izumi, Osaka
Hirakata, Osaka
Osaka, Osaka
Amagasaki, Hyogo
Habikino, Osaka

11,000
6,555
6,450
1,280
1,505
3,723
2,000

99.5
98.8
100.0
100.0
100.0
100.0
100.0

42
29
1
1
1
1
2

Nagoya, Aichi

2,311
2,174
7,140
1,370
7,911
2,551
1,497
5,020
1,515
10,046
1,469
898
4,180

100.0
100.0
100.0
100.0
97.1
100.0
100.0
100.0
100.0
100.0
100.0
100.0
95.0

1

O-3
O-4
O-5
O-6
O-7
O-9
O-10
O-11

N-1 DCM Kahma Nakagawa Tomita (Land)
N-2 Valor Ichinomiya-Nishi
N-4 Homecenter Kohnan Sunadabashi
N-5 K’s Denki Shin-Moriyama (Land)
N-6 Resora Obu Shopping Terrace
N-7 Valor Nakashidami (Land)
F-1
F-2
F-3
R-1
R-2
R-3
R-4

Ichinomiya, Aichi
Nagoya, Aichi
Nagoya, Aichi
Obu, Aichi
Nagoya, Aichi

Sunny Noma
Round1 Stadium Hakata-Hanmichibashi
Kurume-Nishi Shopping Center

Fukuoka, Fukuoka
Fukuoka, Fukuoka
Kurume, Fukuoka

Roseo Mito
K's Denki Aomori Honten
Super Sports Xebio Aomori-Chuo

Mito, Ibaraki
Aomori, Aomori
Aomori, Aomori
Ashikaga, Tochigi

Ashico Town Ashikaga

1
1
1
39
1
1
1
4
23
1
1
28
10

Por tfolio Map as of April 15, 2020
R-4
T-11

NSC

R-1

SM

L-5 Gyoda Distribution Center

T-12

Urban Station-Front SC

R-6

T-5

SS

L-3

T-7

Shinjuku Nishiochiai
Disttribution Center L-6

L- 1
T-6

T-16
T-18
T-10

R-9

T-23
T-3

T-8
T-28
T-24

R-11

Logistics

T-9

T-22
T-17

T-4

T-25

R-3

T-27 Monenosato Mall

T-2
T-21

R-2

T-19
T-20

Plaza Urayasu
T-29 AcrossHigashino (Land)
T-30 Comfort Market Nishi-Magome

T-15 Apita Terrace
Yokohama Tsunashima
T-13
L-4

R-5

L-2
T-26 Kalsa Hiratsuka

O-3

F-2

N-2

F-1

N-5
O-4

O-10

O-1

F-3

O-9
O-6

No.

Name of property

R-5
R-6
R-8
R-9
R-10

O-7
O-5
O-2
O-11

Location(city / ward, prefecture)

Yorktown Shinden-Higashi
Sendai, Miyagi
Kasumi Technopark Sakura
Tsukuba, Ibaraki
P-1 Plaza Tenno
Hamamatsu, Shizuoka
Seiyu Rakuichi Moriya (Land)
Moriya, Ibaraki
Sun Street Hamakita
Hamamatsu, Shizuoka
Costco Wholesale Sapporo
R-11
Sapporo, Hokkaido
Warehouse
L-1 Zama Distribution Center
Zama, Kanagawa
L-2 Oppama Distribution Center
Yokosuka, Kanagawa
Musashi Ranzan Distribution
L-3
Hiki-gun, Saitama
CenterYokohama Kamigo Distribution
L-4
Yokohama, Kanagawa
Center
L-5 Gyoda Distribution Center
Gyoda, Saitama
Shinjuku Nihiochiai Distribution
L-6
Shinjuku ward, Tokyo
CenterTotal of assets acquired by the end of the 10th period
T-30 Comfort Market Nishi-Magome Ota ward, Tokyo
Total of assets acquired during the 11th period
Total
Note 1: “Occupancy rate” is as of March 31, 2020.
Note 2: “Number of tenants” indicates the number of end-tenants as of March 31, 2020.

N-1

Valor Nakashidami (Land)
N-7

N-4
N-6
R-10
R-8

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

Numberof tenants (Note 2)

3,252
830
4,010
4,111
10,746

100.0
100.0
100.0
100.0
99.4

2
1
7
1
50

4,210

100.0

1

1,400
1,300

100.0
100.0

1
1

3,879

100.0

1

790

100.0

1

3,160

100.0

1

810

100.0

1

225,8101,920
1,920
227,730

99.4
100.0
100.0
99.4

496
1
1
497
11

Over view of portfolio (as of April 15, 2020)
T-2

MONA Shin-Urayasu

T-3

Passaggio Nishiarai

T-4

Daikanyama Address Dixsept

T-6

Yorktown Kita-Kaname

T-7

Unicus Yoshikawa

T-15

Nakamachidai
Tokyu Store

T-8

Sports Club
Renaissance Fujimidai

T-9

Super Viva Home
Iwatsuki (Land)

Denki
T-10 K’s
Shonan-Fujisawa (Land)

T-11

Unicus Kamisato (Land)

T-12

Unicus Konosu (Land)

T-13

Inageya Yokohama
Minamihonjuku (Land)

T-17

Life Kameido

T-18

Totsuka-Fukaya
Shopping Center (Land)

T-19

Yumemachi Narashinodai Mall

T-21

Prime Square Jiyugaoka

T-22

Round1 IchikawaOnitaka

T-23

Ozeki Tokiwadai

T-24

Konami Sports Club
ShibuyaO-2Life Takadono (Land)

O-3

DCM Kahma MEGA Don
Quijote UNY Omihachiman

O-4

Blumer HAT Kobe

O-1

Blumer Maitamon

O-7

Hankyu Oasis
Hirakatadeguchi

T-5

Unicus Ina

T-16

Central Wellness Club
Nagatsuta Minamidai

T-20

Kawamachi Yahagi Mall

O-9

Life Nishi-Tengachaya

Note: Please refer p.5 for the properties acquired in the tenth and eleventh fiscal period and properties to be disposed in eleventh fiscal period.

12

O-5

N-4

Carino Esaka

Homecenter Kohnan Sunadabashi

F-3

Kurume-Nishi

R-3

O-6

COMBOX Komyoike

O-11

Habikigaoka Shopping
CenterN-6

Resora Obu Shopping Terrace

R-1

Roseo Mito

Super Sports Xebio
Aomori-Chuo

R-4

Ashico Town Ashikaga

R-8

P-1 Plaza Tenno

R-9

Seiyu Rakuichi Moriya (Land)

R-10

Sun Street Hamakita

R-11

Costco Wholesale
Sapporo Warehouse

L-1

Zama Distribution Center

L-2

Oppama Distribution
CenterShopping Center

N-1

DCM Kahma
Nakagawa Tomita (Land)

O-10

Million Town
Tsukaguchi (Land)

N-2

Valor Ichinomiya-Nishi

F-1

Sunny Noma

F-2

Round1 Stadium
Hakata-Hanmichibashi

R-2

K’s Denki Aomori Honten

R-5

Yorktown ShindenHigashi

R-6

Kasumi Technopark Sakura

L-3

Musashi Ranzan
Distribution Center

L-4

Yokohama Kamigo
Distribution Center

13

Summar y of Investment Unit
Unit Price and trading volume(Units)
1 00,000February 10, 2015
JPY 266,100(Yen)
340,000

40,000
Unit Price

Volume31 0,000

35,000280,000

30,000250,000

25,000220,000

20,000April 30, 2020
JPY 170,300

1 90,000

1 5,000

1 60,000

1 0,000

1 30,000

5,000

1 00,000

Sep
30

Mar
Feb
30
10

Sep
30

Mar
30

2015

Mar
30

2016

Sep
30

Mar
30

2017

Sep
30
2018

Mar
30

Apr
30

Sep
30
2019

0

2020

General breakdown of unitholders
As of March 31, 2020

Ownership ratio by investor type
Brokerage firms
20,886 units(3.5%)

Individuals
and others
81,337 units(15.2%)

536,177(3.8%)

Financial
Institutions
101(2.3%)

Foreign investors239(1.8%)
Brokerage firms
25(0.2%)

13,558units

Other domestic
corporation
20,148 units

Other domestic
corporation306(0.7%)

Foreign investors
156,256 units(29.1%)

Number of unitholders by investor type

Financial
Institutions
257,550 units(48.0%)

Individuals and others
12,887(95.1%)

14

II. ASSET MANAGEMENT REPORT
Overview of Asset Management(1) Trends in Key Indicators
Sixth fiscal period(From October 1,2017
to March 31, 2018)

Fiscal period
Operating revenues

Seventh fiscal period Eighth fiscal period

Ninth fiscal period

Tenth fiscal period(From April 1,2018
to September 30, 2018)(From October 1, 2018
to March 31, 2019)(From April 1, 2019
to September 30, 2019)(From October 1, 2019
To March 31, 2020)

Millions of yen

8,126

8,577

8,415

8,609

8,291

Millions of yen

8,126

8,364

8,197

8,367

8,234

Millions of yen

4,358

4,760

4,530

4,729

4,189

Millions of yen

3,609

3,984

3,733

3,891

3,359

Operating income

Millions of yen

3,768

3,816

3,884

3,879

4,101

Ordinary income

Millions of yen

3,179

3,201

3,284

3,288

3,499

Net income

Millions of yen

3,175

3,197

3,283

3,287

3,498

Total assets

Millions of yen

231,107

238,490

237,845236,253249,246%(+0.6)(+3.2)(-0.3)(-0.7)(+5.5)

Millions of yen

116,585

116,729

116,505

116,386

124,450%(+0.1)(+0.1)(-0.2)(-0.1)(+6.9)Of which, property-related revenues
Property-related expenses
Of which, property-related expenses[Period-on-period changes]
Total net assets[Period-on-period changes]
Unitholders’ capital
Number of investment units issued andoutstanding
Net assets per unit

Millions of yen

113,399

113,399

113,399

113,399

121,183

Units

507,700

507,700

507,700

507,700

536,177

Yen

229,633

229,918

229,477

229,242

232,107

Distributions(Note 2)Millions of yen

3,175

3,198

3,288

3,292

3,503

Distributions per unit

Yen

6,255

6,299

6,477

6,486

6,535

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

Yen

6,255

6,299

6,138

6,242

6,525

Yen

-

-

339

244

10

1.4

1.4

1.4

1.4

1.4

(2.8)

(2.7)

(2.8)

(2.8)

(2.9)

2.7

2.7

2.8

2.8

2.9

(5.5)

(5.5)

(5.6)

(5.6)

(5.8)

50.4

48.9

49.0

49.3

49.9

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

Days

182

183

182

183

183

%

100.0

100.0

94.9

96.4

100.0

52

53

53

55

62

m2

866,425.22

890,152.09

913,759.61

850,456.06

945,177.87

522

520

511

480

496

%

99.5

99.4

99.2

98.9

99.4

Depreciation expense

Millions of yen

925

971

990

1,019

1,024

Capital expenditures

Millions of yen

263

806

500

791

475

Rental NOI (Net operating income) (Note 9)

Millions of yen

5,441

5,352

5,454

5,494

5,899

FFO (Funds from operation) (Note 10)

Millions of yen

4,194

4,028

4,105

4,093

4,498

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

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

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

FFO per unit
Yen
8,260
7,935
8,085
8,063
8,389
Note 1: Figures above are rounded down for monetary amounts and rounded to the nearest tenth for ratios.
Note 2: Distributions in excess of earnings for the allowance for temporary difference adjustments are not considered.
Note 3: Ordinary income to total assets = Ordinary income /{(Total assets at beginning of period + Total assets at end of period) / 2} × 100
Note 4: For the first fiscal period, annualized as if the operation began from February 10, 2015, when the actual operation began.
Note 5: Return on net assets = Net income /{( Net assets at beginning of period + Net assets at end of period) / 2} × 100
Note 6: Net assets to total assets = Net assets at end of period / Total assets at end of period × 100
Note 7: Payout ratio = Total distibutions (excluding excess of earnings) / Net income × 100
When calculated as follows, the payout ratio is 100.1% for the fiscal period ended March 31, 2019 and 100.2% for the fiscal period ended
September 30, 2019 and 100.2% for the fiscal period ended March 31, 2020
Payout ratio = Total distributions (including excess of earnings) / Net income × 100
Note 8: As for building tenants, if a tenant leases multiple spaces in a building, each space is counted as one tenant. In a pass-through type master lease,
the number of end-tenants is shown in parentheses. In a sublease type master lease, the number of master lessee is shown.
Note 9: Rental NOI = Property-related revenues - Property-related expenses + Depreciation expenses
Note 10: FFO = Net income + Depreciation + Amortization - Gain on sale of property + Loss on sale of property
Note 11: FFO per unit = FFO / Number of investment units issued and outstanding(Note 11)15

(2) Status of Asset Management(Overview of the Fiscal Period ended March 31, 2020)i) Transition of KRR
KRR was established on October 3, 2014, under the Act on Investment Trusts and Investment Corporations of Japan (the“Investment Trust Act”). On October 30, 2014, KRR was registered with the Director-General of the Kanto Local
Finance Bureau (registration number: Director-General of the Kanto Local Finance Bureau No. 97). KRR was listed on
the Real Estate Investment Trust Securities (“J-REIT”) Market of Tokyo Stock Exchange, Inc. (the “Tokyo Stock
Exchange”) (Securities code: 3453) on February 10, 2015. Subsequently, KRR raised funds through public offerings,
including an international offering. As a result, the number of investment units issued at the end of the fiscal period ended
March 31, 2020 was 536,177 units.
KRR seeks to invest primarily in neighborhood, community and other shopping centers that cater to the day-to-day needsof local area customers and have stable demand from retailers and customers, in order to provide stable investment
returns over the long term. Sponsored by Kenedix, Inc., a leading, independent real estate asset management company,
KRR entrusts its asset management and investment operations to Kenedix Real Estate Fund Management, Inc. (“KFM”),
with the following strategies.
Note: For KRR’s management purposes and ease of classification, KRR defines shopping centers for daily needs as retail properties that generally
have the following characteristics:
a. Retail trade area of approximately a one to ten kilometer radius (and generally, a three to five kilometer radius), with customers
predominantly from local areas surrounding the retail property
b. Operational capacity to accommodate certain daily local retail needs and strong customer traffic on both weekdays and weekends
c. Composed of various specialty stores to meet a range of day-to-day needs such as groceries, clothing and other daily goods and servicesii) Investment Environment
The Japanese economy slowed down during the fiscal year under review, affected by the consumption tax hike in October
2019. In addition, economic activity slowed down sharply due to the spread of novel coronavirus (COVID-19).
The financial conditions have remained extremely unstable due to the spread of COVID-19. Interest rates in Japanremained low and stable on the backdrop of the strengthening of easing policy by the Bank of Japan, monetary easing
policies by the U.S. monetary authorities, and the unstable global markets.
Under these conditions, active real estate transactions continued in the real estate sales market against the backdrop ofaccommodative monetary policy, but the outlook remains uncertain due to the spread of COVID-19. In addition, although
J-REIT performed well in the fiscal year under review with the TSE REIT Index reaching a 12-year high, it fell sharply
due to the spread of COVID-19.
iii) Management Performance(A) Acquisition of Assets
KRR acquired eight assets (Gyoda Distribution Center with acquisition price (Note 1) of 3,160 million yen, Monenosato
Mall with acquisition price of 2,410 million yen, Chofu Center Building (Retail wing) with acquisition price of 2,300
million yen, Across Plaza Urayasu Higashino (Land) with acquisition price of 2,248 million yen, Apita Terrace
Yokohama Tsunashima (51% trust beneficiary quasico-ownership interest) with acquisition price of 5,899 million yen,
Kalsa Hiratsuka with acquisition price of 5,980 million yen, Valor Nakashidami (Land) with acquisition price of 2,551
million yen and Shinjuku Nishiochiai Distribution Center with acquisition price of 810 million yen). KRR disposed of
one asset (Welcia Kishiwadakamori (Land) with sale price of 560 million yen (acquisition price was 487 million yen)).
As a result, the portfolio at the end of the period under review (March 31, 2020) consists 62 properties with the totalacquisition price of 225,810 million yen.
Note 1:
Note 2:“Acquisition price” represents the amount specified in the purchase and sale agreement for the trust beneficiary interests, exclusive of thevarious expenses (acquisition expenses, property tax, city planning tax, consumption tax, etc.) required in the acquisition of the asset.
“Sale price” represents the amount specified in the purchase and sale agreement for the trust beneficiary interests, exclusive of the various
expenses (sale expenses, property tax, etc.) required in the sale of the asset.

(B) Management and Operation of Assets
KFM provides property management services for all of the properties owned by KRR at the end of the period underreview (March 31, 2020). By using the same company for both asset management and property management services,
KRR aims to build stronger relationships with tenants and increase returns from its portfolio. Furthermore, byimplementing retail property and distribution centers management that better reflects the needs of our tenants, KRR
strives to accumulate know-how and improve tenant satisfaction.
KRR invests primarily in neighborhood and community shopping centers that cater to the day-to-day needs of customers.
The portfolio is diversified in terms of properties, tenants and other characteristics with a goal to generate consistentlong-term cash flows. At the same time, a portion of the rent includes sales-linked rent to explore the upside potential(Note 1) for rental income. By using these measures, KRR aims to pursue a portfolio that achieves both stability andgrowth.
As of the end of the period under review, portfolio as a whole performed well with an overall occupancy ratio of 99.4%.
Furthermore, the portfolio is diversified in terms of tenants as there are 496 end-tenants (Note 2) in KRR’s retailproperties and distribution centers.
Note 1:
Note 2:“Upside potential” represents feasibility of rental income or cash flow growth.
The number of end-tenants is the sum of the number of end-tenants in a pass-through type master lease and the number of master lessees
in a sublease type master lease.
16(C) Financing
When financing to acquire properties, KRR seeks to achieve the proper balance between financial stability and the costof the funds with the objectives to achieve stable medium- to long-term returns and consistent growth of assets undermanagement.
(Debt Finance)
During the fiscal period under review, KRR borrowed 4,800 million yen for the acquisition of properties and 12,490
million refinancing. Consequently, borrowings totaled 103,900 million yen and interest-bearing debt including
investment corporation bonds (excluding interest-bearing tenant leasehold and security deposits) totaled 110,900 million
yen at the end of the fiscal period under review (March 31, 2020).
When undertaking borrowings, KRR seeks to spread out repayment dates and lengthen borrowing periods. KRR may
use swaps to fix the interest payments to hedge against the risk of a rise in interest rates.
As a result, the average maturity of debt is 4.5 years, the weighted average interest rate is 0.99%, the long-term debt ratio(Note 1) is 96.9% and the LTV ratio (Note 2) is 44.5%.
Note 1:
Note 2:Long-term debt ratio = (Long-term borrowings + Investment corporation bonds) / (Borrowings + Investment corporation bonds)
LTV ratio = (Loans payable + Investment corporation bonds) / Total assets(Credit Ratings)
The status of the credit ratings as of March 31, 2020 is as follows.
Credit rating agency
Japan Credit Rating Agency, Ltd. (JCR)

Details of the ratings
Long-term issuer rating

A+ (Outlook: Stable)

Rating on bonds

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

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

Use of funds

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

iv) Results of Operations
For this period, revenue was 8,291 million yen, operating income was 4,101 million yen, ordinary income was 3,499
million yen and net income was 3,498 million yen.
Furthermore, in accordance with the distribution policy in the KRR Articles of Incorporation, KRR made a distribution(excluding excess of earnings) of 3,498,554,925 yen which is almost equivalent to the earnings for the fiscal period. The
distribution per unit (excluding excess of earnings) was 6,525 yen, Cash distributions are paid in accordance with Article
67-15 of the Special Taxation Measures Law (Law No. 26 of 1957, including subsequent amendments).
Furthermore, in accordance with the policy for “Distribution of Money in Excess of Profits” as stated in the KRR Articles
of Incorporation, KRR made a distribution in excess of earnings for the 5,361,770 yen allowance for temporary
adjustment (as defined in Article 2-2-30 of the Ordinance on Accountings of Investment Corporations (Cabinet Office
Ordinance No.47 of 2006, including subsequent amendments.)) for the purpose of reflecting the effect on distributionsof the difference in earnings calculated under Japanese GAAP and Japanese tax laws in association with the amortizationof fixed-term land lease rights (as defined in Article 2-2-30 (a) of the Ordinance on Accountings of Investment
Corporations) and the item deduced from net asset (as defined in Article 2-2-30 (b) of the Ordinance on Accountings ofInvestment Corporations) in association with deferred losses on hedges. This resulted in a distribution in excess ofearnings per unit of 10 yen.
Consequently, the distribution per unit was 6,535 yen (of which the distribution in excess of earnings per unit was 10
yen).

17

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

Total number of units issued andoutstanding (units)

Type of issue

Increase

BalanceUnitholders’ capital(in million yen)
Increase

Balance

Notes

October 1, 2015

Public offering

88,750349,500

18,54776,404(Note 1)

October 21, 2015

Capital increase throughthird-party allocation

5,750

355,250

1,201

77,606(Note 2)

April 20, 2016

Public offering

64,000419,250

15,856

93,463(Note 3)

May 18, 2016

Capital increase throughthird-party allocation

3,200

422,450

792

94,256(Note 4)

April 18, 2017

Public offering

81,250503,700

18,244

112,500(Note 5)

May 17, 2017

Capital increase throughthird-party allocation

4,000

507,700

898

113,399(Note 6)

October 23, 2019

Public offering

27,300535,000

7,462

120,861(Note 7)

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

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

Sixth fiscal period

Seventh fiscal period

Eighth fiscal period

Ninth fiscal period

Tenth fiscal period

For the period ended

March 31, 2018

September 30, 2018

March 31, 2019

September 30, 2019

March 31, 2020

Highest

JPY 251,700

JPY 249,200

JPY 279,600

JPY 291,800

JPY 301,500

LowestJPY 223,000

JPY 227,600

JPY 237,200

JPY 256,300

JPY 110,900

18(4) Distributions
The distribution of earnings for the third period is 6,525 yen per unit. In order to maintain KRR’s favorable tax treatment,
which is available to J-REITs under Article 67-15 of the Special Taxation Measures Act, KRR intends to distribute mostof KRR’s retained earnings.
Furthermore, KRR made a distribution in excess of earnings for the allowance for temporary adjustment for the purposeof reflecting the effect on distributions of the difference in earnings calculated under Japanese GAAP and Japanese tax
laws in association with the amortization of fixed-term land lease rights and the item deducted from net asset inassociation with deferred losses on hedges. This resulted in a distribution in excess of earnings per unit of 10 yen.
Consequently, the distribution per unit for the fiscal period, including the excess distribution, was 6,535 yen (of which
the distribution in excess of earnings per unit was 10 yen).
(in thousands of yen)
Sixth fiscal period
March 31, 2018

Seventh fiscal period
September 30, 2018

Eighth fiscal period
March 31, 2019

Ninth fiscal period
September 30, 2019

Tenth fiscal period
March 31, 2020

3,175,962

3,198,151

3,283,881

3,455,496

3,784,993

299

149

167,619

286,433

212,121

3,175,663

3,198,002

3,288,372

3,292,942

3,503,916[6,255 yen]

[6,299 yen]

[6,477 yen]

[6,486 yen]

[6,535 yen]

3,175,663

3,198,002

3,116,262

3,169,063

3,498,554[6,255 yen]

[6,299 yen]

[6,138 yen]

[6,242 yen]

[6,525 yen]－－

172,110

123,878

5,361

[－]

[－]

[339 yen][244 yen][10 yen]－－172,110

123,8785,361[Distributions per unit]

[－]

[－]

[339 yen][244 yen][10 yen]Total distributions in excessof earnings from theunitholders’ capital for tax
purposes

－

－

－

－

－

[Distributions per unit]

[－]

[－]

[－]

[－]

[-]

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

19

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

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

(B) Management Strategy for Existing Properties
KRR is committed to building a portfolio that can pursue both stability and growth. KRR believes that implementing
integrated asset and property management services makes it possible to properly manage retail properties and distribution
centers and pursue internal growth. Furthermore, this integrated management framework facilitates activities to enliven
local communities where KRR’s properties are located, enabling us to aim for medium to long-term growth in asset
value.
To accomplish these goals, KFM oversees properties owned by KRR while placing priority on the following themes.
・“One-stop” asset management and property management services
・Continuously implementing a retail property management cycle through our in-house property management
services
・Pursuit of internal growth through management of retail properties
・Directing investments and management policies to enliven local communities in the medium to long-term
・Implementing distribution center management“One-stop” asset management and property management services
KRR plans to use the integrated asset management and property management services of KFM for strengthening
relationships with tenants and making the portfolio more profitable.
Continuously implementing a retail property management cycle through KRR’s in-house property management services
KFM provides property management services for all of KRR’s properties. KRR does this for the purposes of performing
retail property management that better reflects the needs of the tenants as well as accumulating know-how and improving
tenant satisfaction. Specifically, KRR uses direct contact with tenant companies at our properties in order to strengthen
tenant relationships and make properties more profitable. To this end, KRR maintains periodic communication withtenants and perform questionnaire surveys to customers for monitoring of market conditions, so that KRR can identify
the needs of tenants and the customers visiting their sites. This process makes it possible to find issues that stand in theway of achieving greater satisfaction for tenants and their customers. Once KRR has discovered points that require
attention, KRR takes actions that take full advantage of the resources and knowledge regarding retail properties within
20

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

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

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

21

(6) Important Subsequent Events
Not applicable(Reference Material)i) Acquisition of Assets
KRR acquired following assets.
Property
number

Property
type(Note 1)

T-30

SM

Property name
Comfort Market
Nishi-Magome

Location

SellerOta ward, Tokyo

Undisclosed (Note 2)

Acquisition price(million yen)
(Note 3)

Appraisal value(million yen)
(Note 4)

1,920

2,000

Acquisition date
April 15, 2020

Note 1: Properties are categorized into the following six types of properties: NSC (Neighborhood Shopping Center), SM (Supermarket), CSC (Community
Shopping Center), Urban Station-Front SC (Urban Station-Front Shopping Center), SS (Specialty Store) and L (Logistics facility).
Note 2: Undisclosed as KRR has not obtained consent from the seller.
Note 3: “Acquisition price” represents the amount specified in the purchase and sale agreement for the trust beneficiary interests, exclusive of the various
expenses (acquisition expenses, property tax, city planning tax, consumption tax, etc.) required in the acquisition of the asset.
Note 4: Appraisal values are as of March 1, 2020.

ii) Disposition of Assets
KRR has contracted a purchase and sale agreement on March 31, 2020 to dispose of the following asset.
Property
number

Property type

N-5

SS

Property name
K’s Denki Shin-Moriyama(Land) (Note 1)

Location

Buyer

Moriyama-ku, Nagoya,
Aichi

Nippon Commercial
Development Co., Ltd.

Sale price(million yen) (Note2)

Sale date

1,527 September 30, 2020

Note 1: The purchase and sale agreement with the buyer on the sale of the asset falls under the category of forward commitment made by investment
corporations as stipulated in the “Comprehensive Guidelines for Supervision of Financial Instruments Business Operators, etc.” ruled by the
Financial Service Agency of Japan. In case the agreement is terminated, either of the parties responsible for the termination shall compensate forthe damage resulted from the termination by paying a penalty corresponding to 20% of the sale price (excluding consumption taxes and local
consumption taxes) to the other party. However, since KRR is the seller in this transaction and there is no concern such as financing in executing
the sale, KRR believes that the risk of KRR paying the penalty and making an important impact on its financial condition is small.
Note 2: “Sale price” represents the amount specified in the purchase and sale agreement for the trust beneficiary interests, exclusive of the various expenses(sale expenses, property tax, city planning tax, consumption tax, etc.) required in the sale of the asset.

iii) Investment Corporation Bonds
KRR decided to issue investment corporation bonds adopted at the board of directors’ meeting held on September 26,
2019 and the payment was completed on April 30, 2020. The details are as follows.
Name of investment
corporation bonds
Total amount of the bonds

Kenedix Retail REIT Corporation 6th Series Unsecured Investment Corporation Bonds (Ranking pari passu
among the specified investment corporation bonds and small private placement with restrictions on splits ofdenomination of each bond) (the “Investment Corporation Bonds”)
1.0 billion yen

Interest rate

0.400% per annum

Payment date

April 30, 2020

Collateral / Guarantee

Redemption method and maturity

Ratings
Fiscal agent, issuing agent
and paying agent
Use of funds

No collateral or guarantee is applicable, and no assets are specifically reserved as collateral for the Investment
Corporation Bonds.
April 30, 2025
The Investment Corporation Bonds may be purchased and cancelled at any time after the payment date, except
for the case of service regulations and other rules that the statutory or depository otherwise stipulates.
If the maturity date of the Investment Corporation Bonds falls on the bank holiday, the payment will be brought
forward to the previous bank business day.
Not acquired
MUFG Bank, Ltd.
Total amount raised (approximate net balance) was 993 million yen. It was used for partial prepayment ofborrowings, which was borrowed on April 15, 2020.

22

Profile of KRR(1) Status of Unitholders’ Capital
Sixth fiscal period
Seventh fiscal period
Eighth fiscal period
Ninth fiscal period
Tenth fiscal period(From October 1, 2017 (From April 1, 2018 to (From October 1, 2018 (From April 1, 2019 to (From October 1, 2019
to March 31, 2018)
September 30, 2018)
to March 31, 2019)
September 30, 2019)
to March 31, 2020)

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

5,000,000 units

5,000,000 units

5,000,000 units

5,000,000 units

5,000,000 units

507,700 units

507,700 units

507,700 units

507,700 units

536,177 units

Unitholders’ capital

113,399 million yen

113,399 million yen

113,399 million yen

113,399 million yen

121,183 million yen

Number of unitholders

12,545

12,261

10,931

10,907

13,558(2) Matters Concerning Investment Units
The following is a list of major unitholders as of March 31, 2020.
Name

Location

Number of units
held(Units)Ratio (%)
(Note)THE MASTER TRUST BANK OF JAPAN, LTD.
(Trust Acct.)

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

72,165

13.45

JAPAN TRUSTEE SERVICES BANK, LTD.
(Trust Acct.)

1-8-11 Harumi, Chuo-ku, Tokyo

55,836

10.41

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

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

27,458

5.12

MIZUHO TRUST & BANKING CO., LTD.

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

14,7922.75

TRUST & CUSTODY SERVICE BANK, LTD.
(Securities Investment Trust Acct.)

Office Tower Z, Harumi Island Triton Square,
1-8-12 Harumi, Chuo-ku, Tokyo

12,407

2.31

AOZORA BANK, LTD.

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

11,9582.23

10,8092.01

10,3871.93

2-7-1 Marunouchi, Chiyoda-ku, Tokyo
Standing proxy: The Bank of Tokyo Mitsubishi
UFJ, Ltd.
Shinagawa Intercity Tower A
2-15-1 Kohnan, Minato-ku, Tokyo
Standing proxy: Mizuho Bank, Ltd.

JPMC GOLDMAN SACHS TRUST JASDEC
LENDING ACCOUNT
J.P. MORGAN BANK LUXEMBOURG S.A.
385576
Kenedix, Inc.

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

10,0501.87

STATE STREET BANK WEST CLIENTTREATY 505234

Shinagawa Intercity Tower A
2-15-1 Kohnan, Minato-ku, Tokyo
Standing proxy: Mizuho Bank, Ltd.

8,641

1.61

234,503

43.73

Total
Note:

“Ratio” is the ratio to total number of units issued and outstanding, rounded down to the second decimal place.

23

(3) Matters Concerning Directors and Auditori) Executive Director, Supervisory Director, and Independent Auditor as of March 31, 2020
Position

Name

Total amount of fees
paid during the period(thousand yen)

Other concurrent title

Akihiro Asano

Director & COO, Head of Retail REIT Department, KFM

1,250

Moyuru Watanabe

Director & COO, Head of Retail REIT Department, KFM

250

Yoshitoshi Yasu

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

1,500

Akiko Yamakawa

Partner of Vanguard Lawyers Tokyo

1,500

Executive Director(Note 1)Supervisory
Director(Note 2)

Independent Auditor(Note 3)Note 1:
Note 2:
Note 3:

Ernst & Young ShinNihon LLC

14,800－On February 25, 2020, Akihiro Asano resigned as an executive officer and Moyuru Watanabe was appointed as an executive director on
February 26, 2020. For major concurrent positions held by Akihiro Asano, information as of the date of retirement is provided.
Although supervisory directors are concurrently officers in corporations other than the ones stated above, there are no conflicts of interest
between KRR and any other corporations, including those stated above.
Compensation for independent auditors includes compensation for preparing a comfort letter for the issuance of new investment units.

ii) Policy on Decisions to Terminate or not Reappoint the Accounting Auditor
The KRR Board of Directors will consider the termination of the Accounting Auditor pursuant to the provisions of theInvestment Trust Act of Japan. The directors will also consider not reappointing the Accounting Auditor after examining
the quality of audits, compensation for auditing and other applicable items.
(4) Asset Manager, the Custodian and Administrators
Asset manager, the custodian and administrators as of March 31, 2020 are as follows.
Operational role

Name

Asset Manager

Kenedix Real Estate Fund Management, Inc.

Asset Custodian

Mizuho Trust & Banking Co., Ltd.

Unitholders’ Register Agent

Mizuho Trust & Banking Co., Ltd.

General Administrator

Mizuho Trust & Banking Co., Ltd.

Financial Agent for Investment Corporation Bonds

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

24

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

Areas

Property type

(Note 1)

Total amount held
(Millions of yen)
(Note 2)

Note 3:(Note 3)(Note 2)

Ratio (%)
(Note 3)75,60432.0

94,70338.0

Greater Osaka area

46,91419.9

46,272

18.6

Shopping
centers for daily Greater Nagoya area
needs

21,005

8.9

23,542

9.4

Fukuoka area

7,972

3.4

7,932

3.2

Ordinance-designatedcities, core cities andother areas

44,101

18.7

43,994

17.7

Other retailproperties

－

－

－

－

－

Distribution
centers

Tokyo metropolitan
area

4,740

2.0

7,883

3.2

Total of trust beneficiary interests in real estate

200,33884.8

224,32890.0

Distribution
centers

2,830

1.2

3,699

1.5

Total of real estate

2,830

1.2

3,699

1.5

Bank deposits and other assets

33,08414.0

21,218

8.5

Total assets

236,253

100.0

249,246

100.0

Real estate

Note 2:

Total amount held
(Millions of yen)

Ratio (%)

Tokyo metropolitan
area

Trust beneficiaryinterest in realestateNote 1:Tenth fiscal period
as of March 31, 2020

Ninth fiscal period
as of September 30, 2019

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

25

(2) Major Assets Owned
The following are major assets owned (the ten largest properties by book value) by KRR as of March 31, 2020.
Property
numberO-4

Property nameBlumer HAT Kobe

Book value(million yen)
11,310

Leasable area(m2)
(Note 1)

Leased area(m2)
(Note 2)

23,775.88

23,646.58

48,697.29

48,463.82

Occupancy
rate(%)(Note 3)

Ratio tototal rental
revenue(%)

Primary use(Note 4)

99.5

5.6

Retail(Note 5)

99.5

6.3

RetailR-10

Sun Street Hamakita

10,708R-1

Roseo Mito

9,766

48,296.15

48,296.15

100.0

4.7

Retail

T-2

MONA Shin-Urayasu

8,742

9,953.98

9,902.93

99.5

6.4

RetailO-1

Blumer Maitamon

8,368

30,290.85

30,187.39

99.7

5.8

Retail

N-6

Resora Obu Shopping Terrace

8,139

19,909.33

19,323.01

97.1

3.4

Retail－(Note 5)N-4

Homecenter Kohnan Sunadabashi

6,928

20,329.07

20,329.07

100.0(Note 7)RetailO-5Carino Esaka

6,804

7,540.58

7,447.11

98.8

3.7

RetailO-6

COMBOX Komyoike

6,239

25,530.44

100.0

2.7

Retail－Retail

T-26

25,530.44(Note 6)

Kalsa Hiratsuka

6,039

14,195.00

14,195.00

100.0(Note 7)

Total

83,047

248,518.57

247,321.80

99.5(Note 7)－Note 1: “Leasable area” is equivalent to gross floor area of space that KRR considers to be available for lease in each property, rounded to the nearest
tenth. For land-only properties, leasable area is equivalent to land area as described in the property registry.
Note 2: “Leased area” indicates the total leased area based on the lease agreements for each property as of March 31, 2020. As for lease agreements ofbuildings, the leased area of warehouses and land are excluded. As for pass-through type master leases, the leased area based on the leaseagreements between the master lessee and the end-tenants as of March 31, 2020 is shown. As for sublease type master leases, the leased area
to the master lessee is shown.
Note 3: “Occupancy rate” is calculated by dividing leased area by leasable area as of March 31, 2020, rounded to the nearest tenth.
Note 4: “Ratio to total rental revenue” is calculated by rental revenue each property divided by total rental revenue.
Note 5: The area that KRR owns exclusively as proportion to the co-ownership interest (co-ownership ratio: 90%).
Note 6: The total area that KRR owns exclusively as a compartmentalized ownership interest (retail space).
Note 7: KRR has not obtained consent from the tenant(s) to release this information.

26

(3) Overview of the Portfolio[Overview of Assets Owned]
The following summarizes the real estate or the real estate properties in trust owned by KRR as of March 31, 2020.
Area(Note1)

Property
number
T-2
T-3
T-4

T

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

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

Urayasu, Chiba

Passaggio Nishiarai

Adachi ward, Tokyo

Daikanyama Address
Dixsept

Shibuya ward, Tokyo

T-5

NSC

Unicus Ina

Kitaadachi-gun, Saitama

T-6

NSC

Yorktown Kita-Kaname

Hiratsuka, Kanagawa

T-7

NSC

Unicus Yoshikawa

Yoshikawa, Saitama

T-8

SS

T-9

NSC

T-10

SS

T-11

NSC

Unicus Kamisato (Land)

Kodama-gun, Saitama

T-12

NSC

Unicus Konosu (Land)

Konosu, Saitama

T-13

SM

T-15

NSC

T-16

SS

T-17

SM

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

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

Nerima ward, Tokyo
Saitama, Saitama
Fujisawa, Kanagawa

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

T-18

NSC

T-19

NSC

T-20

NSC

Kawamachi Yahagi Mall

Chiba, Chiba

T-21

SS

Prime Square Jiyugaoka

Meguro-ku, Tokyo

T-22

SS

Round1 IchikawaOnitaka

Ichikawa, Chiba

T-23

SM

Ozeki Tokiwadai

Itabashi ward, Tokyo

T-24

SS

T-25

NSC

T-26

NSC

Kalsa Hiratsuka

Hiratsuka, Kanagawa

T-27

NSC

Monenosato Mall

Yotsukaido, Chiba

T-28

NSC

T-29

NSC

Konami Sports Club
Shibuya
Apita Terrace Yokohama
Tsunashima

Chofu Center Building(Retail wing)
Across Plaza Urayasu
Higashino (Land)

Yokohama, Kanagawa
Funabashi, Chiba

Shibuya ward, Tokyo
Yokohama, Kanagawa

Chofu, Tokyo
Urayasu, Chiba

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

Evaluation value(in million yen)
(Note 3)

8,742

10,000

5,724

6,750

5,367

6,250

4,431

5,240

3,901

4,350

3,534

3,860

2,471

2,760

4,890

5,600

3,210

3,480

3,043

3,050

1,726

1,780

1,462

1,390

3,351

3,810

1,748

1,780

1,484

1,520

4,228

4,320

3,394

3,520

3,094

3,230

2,989

2,840

1,854

1,980

1,275

1,350

3.595

3,380

5,952

6,220

(Note 4)(Note 4)

6,039

6,020

2,508

2,570

2,394

2,480

2,283

2,320

27

Area
(Note1)O

Property
type

O-1

NSC

Blumer Maitamon

Kobe, Hyogo

O-2

SM

Life Takadono (Land)

Osaka, Osaka

O-3

NSC

DCM Kahma MEGADon
QuijoteUNY Omihachiman, Shiga
Omihachiman

O-4

NSC

Blumer HAT Kobe

Kobe, Hyogo

Carino Esaka

Suita, Osaka

COMBOX Komyoike

Izumi, Osaka

O-5
O-6

Urban StationFront SC
Urban StationFront SC

Property name(Note 2)

O-7

SM

Hankyu Oasis
Hirakatadeguchi

Hirakata, Osaka

O-9

SM

Life Nishi-Tengachaya

Osaka, Osaka

O-10

NSC

O-11

NSC

N-1

SS

N-2

NSC

N-4

SS

N-5

SS

N-6

NSC

N-7

SM

F-1

SM

N

F

Location(City/ward,
prefecure)

Property
number

F-2

SS

F-3

NSC

R-1

NSC

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

Round1 Stadium
Hakata-Hanmichibashi
Kurume-Nishi Shopping
CenterRoseo Mito

Fukuoka, Fukuoka
Kurume, Fukuoka
Mito, Ibaraki

K’s Denki Aomori
HontenSuper Sports Xebio
Aomori-Chuo

R-2

SS

R-3

SS

R-4

NSC

R-5

NSC

R-6

SM

R-8

NSC

P-1 Plaza Tenno

Hamamatsu, Shizuoka

R-9

NSC

Seiyu Rakuichi Moriya(Land)Moriya, Ibaraki

R-10

NSC

Sun Street Hamakita

Hamamatsu, Shizuoka

R-11

SS

Costco Wholesale
Sapporo Warehouse

Sapporo, Hokkaido

L-1

L

Zama Distribution Center Zama, Kanagawa

L-2

L

R

L-3

L

L-4

L

L-5

L

L-6

L

T

Ashico Town Ashikaga
Yorktown ShindenHigashi
Kasumi Technopark
SakuraOppama Distribution
CenterMusashi Ranzan
Distribution Center
Yokohama Kamigo
Distribution Center
Gyoda Distribution
CenterShinjuku Nishiochiai
Distribution Center
Total

Aomori, Aomori
Aomori, Aomori
Ashikaga, Tochigi
Sendai, Miyagi
Tsukuba, Ibaraki

Yokosuka, Kanagawa
Hiki-gun, Saitama
Yokohama, Kanagawa
Gyoda, Saitama
Shinjuku ward, Tokyo

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

Evaluation value(in million yen)
(Note 3)

8,368

9,630

2,727

3,150

2,132

2,590

11,31011,500

6,804

7,210

6,239

6,550

1,300

1,330

1,539

1,690

3,772

3,980

2,077

2,020

2,351

2,700

2,143

2,360

6,928

7,300

1,390

1,440

8,139

7,060

2,587

2,570

1,404

1,640

4,972

5,760

1,554

1,840

9,766

12,000

1,442

1,560

869

920

4,374

4,880

3,250

2,660

838

878

4,129

4,350

4,320

4,260

10,708

11,250

4,293

4,420

Real estate

1,477

1,640

Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate
Trust beneficiaryinterest in real estate(Note 4)(Note 4)

Real estate

1,362

1,570

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

3,873

4,010

835

841

3,180

3,370

Real estate

853

821

228,027

243,600(Note 4)(Note 4)Note 1: Properties are categorized into the following six types of properties: NSC (Neighborhood Shopping Center), SM (Supermarket), CSC (Community
Shopping Center), Urban Station-Front SC (Urban Station-Front Shopping Center), SS (Specialty Store) and L (Logistics facility).
We categorize shopping centers for daily needs as follows.

28

Type of shopping centers for dailyneeds
NSC (Neighborhood Shopping
Centers)

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

3km-5km

SM (Supermarkets)

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

3km

CSC (Community Shopping Centers)

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

5km-10km

Features

Trade area

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

29

[Earnings Performance for the Individual Properties]

Area

Property
number

Property
type

T-1

CSC

T-2
T-3
T-4
T-5

Fululu Garden
Yachiyo (Note 4)

－

678

8.1

－

－

－

－

MONA Shin-Urayasu

1(58)

100.0

526

6.3

1(57)

99.5

528

6.4

Passaggio Nishiarai

1(42)

100.0

318

3.8

1(42)

100.0

303

3.7

Daikanyama Address
Dixsept

1(27)

99.1

270

3.2

1(27)

99.1

267

3.3

1

100.0

140

1.7

1

100.0

143

1.7

－

－

Unicus Ina

T-6

NSC

Yorktown KitaKaname

T-7

NSC

Unicus Yoshikawa

SS

T-9

NSC

T-10

SS

T-11

NSC

T-12

NSC

T-13

SM

T-15

NSC

T-16

SS

T-17

SM

T-18

NSC

T-19

NSC

T-20

NSC

T-21

SS

T-22

SS

T-23

SM

Ratio tototal rental
revenue
(%)

－

NSC

T-8

T

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

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

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

－

1

100.0

(Note 3)(Note 3)1100.0(Note 3)(Note 3)

1(10)

99.6

132

1.6

1(10)

99.6

132

1.6

1

100.0

1

100.0

－

－

(Note 3)(Note 3)

1

100.0

1

100.0

－

－

(Note 3)(Note 3)

100.0

75

0.9

1

100.0

43

0.5

100.0

1

100.0

1

100.0

1

100.0

1

81.0

1

81.0

1

100.0

1

100.0

2

100.0

2

100.0

1(14)

100.0

145

1.7

1(14)

1(12)

100.0

117

1.4

2

100.0

1

100.0

1

100.0

1

100.0

1

100.0

75

0.9

1

1

100.0

43

0.5

1

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

100.0

141

1.7

1(12)

100.0

114

1.4

2

100.0

1

100.0

1

100.0

1

100.0

1

100.0

1

100.0

－

－

－

－

1

100.0

－

－

(Note 3)(Note 3)

100.0

80

1.0

3

100.0

75

0.9

1

100.0

－

－

(Note 3)(Note 3)

T-24

SS

T-25

NSC

T-26

NSC

Kalsa Hiratsuka

－

－

－

－

3

100.0

T-27

NSC

Monenosato Mall

－

－

－

－

1(6)

T-28

NSC

－

－

－

－

T-29

NSC

－

－

－

－

Chofu Center
Building (Retailwing)
Across Plaza Urayasu
Higashino (Land)

－

30

Area

Property
number

Property
type

O-1

NSC

O-2
O-3
O-4
O-5
O

O-6
O-7

F

NSC
Urban StationFront SC
Urban StationFront SC
SM
SS

O-9

SM

O-10

NSC

O-11

NSC

N-1

SS
NSC

N-4

SS

N-5

SS

N-6

NSC

Blumer Maitamon
Life Takadono(Land)DCM Kahma
MEGA Don Quijote
UNY Omihachiman

50

99.7

1

100.0

1(29)

98.8

301

3.7

1

100.0

226

2.7

1

100.0

1

100.0

1

100.0

1

100.0

2

100.0

1

100.0

100.0

226

2.7

1

100.0
－

－

(Note 3)(Note 3)

44

0.5

100.0

1

100.0

1

100.0

2

100.0

1

100.0

1

100.0

Round1 Stadium
HakataHanmichibashi
Kurume-Nishi
Shopping Center
Roseo Mito－－

(Note 3)(Note 3)－－(Note 3)(Note 3)

1

100.0

1

100.0

1

100.0

1

100.0

1

100.0

1(39)

95.5

1(39)

97.1

272

－

(Note 3)(Note 3)－(Note 3)

1

100.0

100.0

3.4

－

－

384

1

278

(Note 3)

100.0

100.0

－
(Note 3)(Note 3)

1(23)

2

－
(Note 3)(Note 3)

52

100.0

100.0

0.5

－

100.0

1(2)

1

44

－

4

100.0

100.0

－
(Note 3)

－

100.0

1

1

－
(Note 3)－

1

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

3.3

1

100.0

0.6

4

100.0

52

0.6

4.6

1(23)

100.0

383

4.7

1

100.0

1

100.0

1(28)

95.0

2

100.0

1

100.0

－

－

1.7

1(7)

－

－

(Note 3)(Note 3)

332

3.4

R-4

NSC

R-5

NSC

R-6

SM

R-7

Urban StationFront SC

Solala Plaza (Note 4)

1

100.0

R-8

NSC

P-1 Plaza Tenno

1(7)

100.0

138

R-9

NSC

Seiyu Rakuichi
Moriya (Land)

1

100.0

(Note 3)(Note 3)

－

R-10

NSC

Sun Street Hamakita

1(50)

99.4

547

R-11

SS

1

100.0

(Note 3)

L-1

L

－

－

L-2

L

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

－

L

5.6

1

SS

L-4

464

3.7

R-3

L

99.5

312

100.0

L-3

－
(Note 3)

100.0

1

5.8

－

1(30)

COMBOX
Komyoike
Hankyu Oasis
Hirakatadeguchi
WelciaKishiwadakamori(Land)
Life
Nishi-Tengachaya
Million Town
Tsukaguchi (Land)
Habikigaoka
Shopping Center
DCM Kahma
Nakagawa Tomita(Land)
Valor IchinomiyaNishi
Homecenter Kohnan
Sunadabashi
K’s Denki ShinMoriyama (Land)
Resora Obu
Shopping Terrace

478(Note 3)Carino Esaka

1

T

100.0

1(42)

Sunny Noma

SS

2

5.6

SM

NSC

(Note 3)

100.0

469

F-1

R-1

(Note 3)

1

84.4

－

NSC

－

99.7

1(41)

－

F-3

－

50

Blumer HAT Kobe

Valor Nakashidami(Land)

SS

5.9

100.0

SM

F-2

494

2

N-7

R-2

R

NSC

O-8

N-2
N

SM

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

(Note 3)(Note 3)－－(Note 3)(Note 3)

251

3.1

－

－

(Note 3)(Note 3)

100.0

137

1.7

1

100.0

－

－

(Note 3)(Note 3)

6.5

1(51)

99.5

516

6.3

－

1

100.0

－

－

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

－

－

1

100.0

－

－

－

1

100.0

1

100.0

－

－

(Note 3)(Note 3)

1

100.0

－

－

－

－

1

100.0

－

－

－

－

(Note 3)(Note 3)

31

L-5

L

L-6

L
Total

Gyoda Distribution
CenterShinjuku Nishiochiai
Distribution Center

－

－

－

－

1

100.0

－

－

－

－

1

100.0

480

98.9

8,367

100.0

496

99.4

8,234

100.0

Note 1: Number of tenants is based upon the number of lease agreements with respect to the building(s) (or land in the case of land -only properties withleasehold interest) on each such property used mainly as stores and offices, as of March 31, 2020. Where one lessee leases more than one section of
the property, the lessee is counted as a tenant for each section leased within the property. Where pass-through type master lease agreements are enteredinto, the number of master lessees is with the number of end-tenants indicated in parentheses. Where sublease type master lease agreements are enteredinto, the indicated, number of master lessee is shown. As for the “Total” of “Number of tenants”, the number of end-tenants is used for pass-throughtype master leases and the number of master lessee is used for sublease type master leases.
Note 2: Rental revenue is based on total rental and other operating revenues of each property.
Note 3: KRR has not obtained consent from the tenant(s) to release this information.
Note 4: Fululu Garden Yachiyo was disposed of on September 27, 2019 and Solala Plaza was disposed on April 5, 2019 (51% quasi co-ownership interests)..

32

(4) Specified Transaction
As of March 31, 2020, the contract amount and fair value of the outstanding transaction under the specified transaction
account of KRR are as follows.
Contract amount (million yen)
(Note 1)Type

Due after one year

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

Interest rate swaps:
Receive floating / pay fixed

70,61065,110

-211

Total

－

70,61065,110-211

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

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

33

Capital Expenditures(1) Planned Capital Expenditures
The table below shows major capital expenditures (Note) for renovations, repairs and other projects that are planned for the
Eleventh fiscal period ending September 30, 2020. These expenditures are for real estate owned by KRR and real estatein trusts in which KRR owns trust beneficiary rights. These planned projects may include some expenditure that will berecorded as expenses rather than capital expenditures for accounting purposes.
Property
number

Property nameLocation

PurposePlanned amount of capital expenditure(Millions of yen)

Schedule

Payment for the Total amountperiodalready paid

Total

T-2

MONA
Shin-Urayasu

Urayasu, Chiba

Air Conditioning Equipment
Replacement (Phase 1)

From April 2020
to September 2020

204

-

-

R-4

Ashico Town
Ashikaga

Ashikaga,
Tochigi

Compartment division
Construction

From June 2020
to August 2020

107

-

-

O-1

Blumer Maitamon

Kobe, Hyogo

Exterior wall repair work
(Phase 1)

From April 2020
to September 2020

76

-

-

T-20

Kawamachi
Yahagi Mall

Chiba, Chiba

Solar panel installation

From June 2020
to July 2020

40

-

-

27 (Note)

-

-

R-10
Note:

Sun Street
Hamamatsu,
Installation of a parking lot fillFrom April 2020
Hamakita
Shizuoka
up control system
to September 2020
The amount corresponding to the quasi co-ownership interest held by the KRR is shown.

(2) Capital Expenditures during the Fiscal Period under Review
The table below shows major capital expenditures for renovations, repairs and other projects in the fiscal period underreview.
The amount of capital expenditures in the fiscal period under review was 475 million yen. There were also expendituresof 208 million yen that were recorded as repair expenses. In total KRR spent 683 million yen on the projects.
Property
number

Property nameLocation

PurposeSchedule

Capital expenditure(Millions of yen)

R-4

Ashico Town
Ashikaga

Ashikaga, Tochigi

Rooftop waterproof (YB building)

From October 2019
to March 2020

71

T-5

Unicus Ina

Kitaadachi-gun,
Saitama

Rooftop waterproof

From January 2020
to March 2020

49

T-2

MONA ShinUrayasu

Urayasu, Chiba

Installation of pressurized water supply
pump

From March 2020
to March 2020

33

N-2

Valor IchinomiyaNishi

Ichinomiya, Aichi

GHP renewal

From October 2019
to December 201931

From February 2020
to March 202030

From September 2019
to November 2019

26

T-24
O-3

Konami Sports Club
Shibuya ward, Tokyo Hot water heater replacement
Shibuya
DCM Kahma
Exterior wall repair work (MEGA Don
MEGA Don Quijote Omihachiman, Shiga
Quijote UNY building)
UNY Omihachiman
Others

231

Total

475

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

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

674,397685,500

Asset custody fees

9,699

9,643

Administrative service fees

30,90432,189Directors' compensation

4,500

4,500

Other operating expenses

118,687

98,176

Total

838,188830,010

Note: In addition to above, the amount of asset management fees capitalized are 54,900 thousand yen for the ninth fiscal period and 253,581 thousand yen
for the tenth fiscal period related to the acquisition of properties that entered the book value of the properties, and 91,249 thousand yen for the ninth
fiscal period and 2,800 thousand yen for the tenth fiscal period related to the disposition of properties.

35

(2) Status of Borrowings
Borrowings on a financial institution basis as of March 31, 2020 are as follows.
Classification

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

Short-Term Loans
PayableBalance at the
beginning of period(Thousands of yen)

Increase during theperiod(Thousands ofyen)

Decrease during
the period(Thousands ofyen)

Sumitomo Mitsui Banking Corporation

2,750,000－

2,750,000

－

0.473

Sumitomo Mitsui Banking Corporation

700,000－－

700,000

0.471

Sumitomo Mitsui Trust Bank, Ltd. （Note6）620,000－

620,000

－

0.477
0.469

January 31, 2021

0.751

February 10, 2020

0.477

August 31, 2020

LenderBalance at the end of
period(Thousands of yen)－

2,750,000－

2,750,000

4,070,000

2,750,000

3,370,000

3,450,000

Sumitomo Mitsui Banking Corporation

2,400,000－

2,400,000－

MUFG Bank, Ltd.

800,000－

800,000－

MUFG Bank, Ltd.

800,000－

800,000－

Sumitomo Mitsui Trust Bank, Ltd.

550,000－

550,000－

Aozora Bank, Ltd.

500,000－

500,000－

Resona Bank, Ltd.

500,000－

500,000－

The Gunma Bank, Ltd.

400,000－

400,000－

The Musashino Bank, Ltd.

400,000－

400,000－

Mizuho Bank, Ltd.

350,000－

350,000－

Mizuho Trust & Banking Co., Ltd.

300,000－

300,000－

MUFG Bank, Ltd.（Note6）

1,270,000－

1,270,000－

Mizuho Trust & Banking Co., Ltd.（Note6）

650,000－

650,000－

Sumitomo Mitsui Trust Bank, Ltd. （Note6）200,000－

200,000－

Sumitomo Mitsui Banking Corporation（Note7）

3,000,000－－

3,000,000

MUFG Bank, Ltd.（Note7）700,000－－

700,000

Sumitomo Mitsui Trust Bank, Ltd. （Note7）500,000－－

500,000

Aozora Bank, Ltd.（Note7）450,000－－

450,000

Resona Bank, Ltd.（Note7）450,000－－

450,000

Mizuho Bank, Ltd. （Note7）400,000－－

400,000

Development Bank of Japan Inc.（Note5）（Note7）

1,500,000－－

1,500,000

Sumitomo Mitsui Banking Corporation－

2,400,000－

2,400,000

MUFG Bank, Ltd.

－

1,600,000－

1,600,000

Sumitomo Mitsui Trust Bank, Ltd.

－

550,000－

550,000

Resona Bank, Ltd.

－

500,000－

500,000

Aozora Bank, Ltd.

－

500,000－

500,000

Mizuho Bank, Ltd.

－

350,000－

350,000

Mizuho Trust & Banking Co., Ltd.

－

300,000－

300,000

Sub Total

16,120,000

6,200,000

9,120,000

13,200,000

Sumitomo Mitsui Banking Corporation

2,600,000－－

2,600,000

MUFG Bank, Ltd.

800,000－－

800,000

Sumitomo Mitsui Trust Bank, Ltd.

600,000－－

600,000

Aozora Bank, Ltd.

400,000－－

400,000

Mizuho Trust & Banking Co., Ltd.

400,000－－

400,000

Mizuho Bank, Ltd.

300,000－－

300,000

Resona Bank, Ltd.

300,000－－

300,000

Development Bank of Japan Inc.（Note5）

1,600,000－－

Sumitomo Mitsui Banking Corporation

4,600,000－

MUFG Bank, Ltd.

1,000,000

Sumitomo Mitsui Trust Bank, Ltd.

Sumitomo Mitsui Banking Corporation
Sub Total

Payment due date
（Note 3）Current Portion of Long-Term Loans Payable
Long-Term Loans Payable

Use

Remarks(Note 4)

Unsecured/
Unguaranteed(Note 4)

Unsecured/
Unguaranteed(Note 4)

Unsecured/
Unguaranteed

January 31, 2020
September 30, 2020

0.865

February 10, 2021

0.925

February 10, 2021

0.469

February 28, 2021

0.978

February 10, 2022

1,600,000

1.033

February 10, 2022－

4,600,000

1.366

April 16, 2025－－

1,000,000

600,000－－

600,000

Mizuho Bank, Ltd.

400,000－－

400,000

Resona Bank, Ltd.

400,000－－

400,000

Mizuho Trust & Banking Co., Ltd.

400,000－－

400,000

MUFG Bank, Ltd.

400,000－－

400,000

Development Bank of Japan Inc.（Note5）

1,500,000－－

1,500,000

MUFG Bank, Ltd.

450,000－－

450,000

Resona Bank, Ltd.

200,000－－

200,000

The Musashino Bank, Ltd.

150,000－－

150,000

Development Bank of Japan Inc.（Note5）

1,500,000－－

1,500,000

0.975

March 31, 2023

0.994

March 31, 2023

0.987

March 31, 2023

1.013

March 31, 2023

36

Sumitomo Mitsui Banking Corporation

3,000,000－－

3,000,000

Mizuho Bank, Ltd.

1,150,000－－

1,150,000

MUFG Bank, Ltd.

1,000,000－－

1,000,000

Mizuho Trust & Banking Co., Ltd.

700,000－－

700,000

Sumitomo Mitsui Trust Bank, Ltd.

650,000－－

650,000

Resona Bank, Ltd.

500,000－－

500,000

Sumitomo Mitsui Banking Corporation

1,500,000－－

1,500,000

MUFG Bank, Ltd.

400,000－－

400,000

Sumitomo Mitsui Trust Bank, Ltd.

450,000－－

Development Bank of Japan Inc.（Note5）

890,000－－

Sumitomo Mitsui Banking Corporation

2,670,000－

MUFG Bank, Ltd.

890,000

The Gunma Bank, Ltd.（Note5）
Development Bank of Japan Inc.（Note5）
Mizuho Trust & Banking Co., Ltd.（Note5）
Resona Bank, Ltd.

Long-Term Loans Payable

1.110

March 31, 2024

1.243

April 16, 2025

450,000

0.803

September 30, 2024

890,000

0.760

September 30, 2024－

2,670,000

0.932

April 21, 2026－－

890,000

0.888

October 31, 2025

500,000－－

500,000

0.550

September 30, 2021

2,000,000－－

2,000,000

1.049

1,000,000－－

1,000,000

1.049

500,000－－

500,000

1.002

Sumitomo Mitsui Banking Corporation

2,600,000－－

2,600,000

Aozora Bank, Ltd.

500,000－－

500,000

MUFG Bank, Ltd.

400,000－－

400,000

Sumitomo Mitsui Trust Bank, Ltd.

300,000－－

300,000

Resona Bank, Ltd.

300,000－－

300,000

MUFG Bank, Ltd.（Note5）

600,000－－

600,000

0.400

Development Bank of Japan Inc.（Note5）

500,000－－

500,000

0.553

Mizuho Bank, Ltd. （Note5）

400,000－－

400,000

0.553

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

200,000

0.553

Sumitomo Mitsui Banking Corporation

1,500,000－－

1,500,000

Sumitomo Mitsui Trust Bank, Ltd.

400,000－－

400,000

Aozora Bank, Ltd.

400,000－－

400,000

Resona Bank, Ltd.

300,000－－

300,000

MUFG Bank, Ltd.（Note5）

600,000－－

600,000

0.696

Mizuho Bank, Ltd. （Note5）

600,000－－

600,000

0.815

Development Bank of Japan Inc.（Note5）

500,000－－

500,000

0.814

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

200,000

0.814

MUFG Bank, Ltd.（Note5）

500,000－－

500,000

0.903

October 31, 2026

Sumitomo Mitsui Banking Corporation

500,000－－

500,000

Sumitomo Mitsui Trust Bank, Ltd.

500,000－－

500,000

1.033

May 18, 2027

Resona Bank, Ltd.

400,000－－

400,000

Development Bank of Japan Inc.（Note5）

500,000－－

500,000

1.050

Mizuho Bank, Ltd. （Note5）

500,000－－

500,000

1.049

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

300,000－－

300,000

1.050

MUFG Bank, Ltd.（Note5）

500,000－－

500,000

0.670

September 29, 2023

Sumitomo Mitsui Trust Bank, Ltd.

1,500,000－－

1,500,000

0.918

September 30, 2026

MUFG Bank, Ltd.（Note5）

500,000－－

500,000

0.930

Mizuho Bank, Ltd. （Note5）

1,500,000－－

1,500,000

1.029

Sumitomo Mitsui Trust Bank, Ltd.

1,500,000－－

1,500,000

1.100

Sumitomo Mitsui Banking Corporation

500,000－－

500,000

1.035

October 3, 2027

MUFG Bank, Ltd.（Note5）

1,200,000－－

1,200,000

1.000

February 10, 2028

MUFG Bank, Ltd.

1,250,000－－

1,250,000－

August 31, 2022

800,000－

0.603

Mizuho Bank, Ltd.

800,000

Sumitomo Mitsui Banking Corporation

900,000－－

900,000

0.988

April 30, 2027

Sumitomo Mitsui Banking Corporation

2,600,000－－

2,600,000

0.985

April 30, 2027

Sumitomo Mitsui Banking Corporation

2,000,000－－

2,000,000

0.902

April 30, 2026

Mizuho Bank, Ltd.

1,000,000－－

1,000,000

1.090

April 30, 2028

The Bank of Fukuoka, Ltd.

1,000,000－－

1,000,000

0.907

May 31, 2026

0.485

January 31, 2027

April 27, 2021

April 27, 2021

0.772

October 31, 2024

(Note 4)

Unsecured/
Unguaranteed

October 31, 2024

May 18, 2027

September 29, 2027
September 29, 202837

1,500,000－－

1,500,000

0.999

MUFG Bank, Ltd.（Note5）

500,000－－

500,000

0.900

Mizuho Bank, Ltd.

500,000－－

500,000

0.999

Mizuho Trust & Banking Co., Ltd.

500,000－－

500,000

0.999

Nippon Life Insurance Company

700,000－－

700,000

0.913

Sumitomo Mitsui Trust Bank, Ltd.

700,000－－

700,000

0.726

Resona Bank, Ltd.

500,000－－

500,000

0.676

Aozora Bank, Ltd.

500,000－－

500,000

0.726

Mizuho Bank, Ltd.

400,000－－

400,000

0.726

Sumitomo Mitsui Banking Corporation

May 31, 2027

March 31, 2025

March 31, 2026

400,000－－

400,000

0.676

Sumitomo Mitsui Banking Corporation

1,850,000－－

1,850,000

0.910

MUFG Bank, Ltd.

1,300,000－－

1,300,000

0.860

Resona Bank, Ltd.

650,000－－

650,000

0.460

August 31, 2024

Aozora Bank, Ltd.

890,000－－

890,000

0.585

August 31, 2026

Mizuho Bank, Ltd.

The Musashino Bank, Ltd.
Long-Term Loans Payable

March 31, 2028

(Note 4)

1,370,000－－

1,370,000

0.718

March 31, 2028

Sumitomo Mitsui Trust Bank, Ltd.

－820,000－

820,000

0.550

October 31, 2024

MUFG Bank, Ltd.

－

1,270,000－

1,270,000

0.750

January 31, 2028

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

650,000－

650,000

0.670

April 30, 2028

MUFG Bank, Ltd.（Note5）－

1,500,000－

1,500,000

0.520

Sumitomo Mitsui Banking Corporation－

1,000,000－

1,000,000

0.644Mizuho Bank, Ltd.

－

1,000,000－

1,000,000

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

500,000－

500,000

0.550

Resona Bank, Ltd.

－

300,000－

300,000

0.644

Development Bank of Japan Inc.（Note5）－

500,000－

500,000

0.830

October 31, 2029

The Gunma Bank, Ltd.

－

400,000－

400,000

0.498

January 31, 2025

The Musashino Bank, Ltd. （Note5）－

400,000－

400,000

0.478

January 31, 2025

78,910,000

8,340,000－

87,250,000

99,100,000

17,290,000

12,490,000

103,900,000

Sub Total
Total

Unsecured/
Unguaranteed

October 31, 2026

Note 1: All debts except for the following Note 5 are borrowings at a floating rate.
Note 2: Average interest rates are the weighted average during the period and figures are rounded to the nearest third decimal place. Also, with regard toborrowings for which interest rate swap transactions were implemented in order to hedge the interest rate volatility risk, the weighted averageinterest rates taking into consideration the effects of the interest rate swaps are indicated.
Note 3: All the repayment methods of debt financing are lump-sum repayments on the due date.
Note 4: All debts were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate (additional expenses are included)
and repayment of debts.
Note 5: Borrowings at a fixed rate.
Note 6: Prepayment was made on October 31, 2019.
Note 7: Borrowings are listed in the current portion of long-term loans payable from the fiscal period under review, listed in long-term loans payable in
the previous fiscal period.

(3) Status of Investment Corporation Bonds
Balance as of
Balance as ofInterest rate
Redemption
Issuance date October 1, 2019 March 31, 2020
Maturity date(%)
method(million yen)(million yen)
1st Series Unsecured Investment October 31,
October 29,
1,000
1,000
0.200
Corporation Bonds
2016
2021
Bonds

2nd Series Unsecured Investment
Corporation Bonds

October 31,
2016

1,000

1,000

0.600

October 30,
2026

3rd Series Unsecured Investment
Corporation Bonds

August 31,
2017

1,000

1,000

0.320

August 31,
2022

4th Series Unsecured Investment
Corporation Bonds

August 31,
2017

2,000

2,000

0.700

August 31,
2027

5th Series Unsecured Investment
Corporation Bonds

April 26,
2018

2,000

2,000

0.700

April 26,
2028

7,000

7,000

Total

Use

Remarks(Note 1)

Full onmaturity(Note 3)(Note 2)

Note 1: “Use” is acquisition funds for specified assets, repayment funds for borrowings, etc.
Note 2: “Use” is repayment funds for borrowings.
Note 3: Ranking pari passu among the specified investment corporation bonds(4) Status of Short-Term Investment Corporation Bonds
Not applicable(5) Status of Subscription Rights to New Investment Units
Not applicable38

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

Property
number

Property nameAcquisition date

Disposition

Acquisition price(million yen)
(Note)

Disposition
Date

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

Trust beneficiaryinterest in real estate

L-5

Gyoda Distribution
CenterOctober 1, 2019

3,160

－

－

－

－

Trust beneficiaryinterest in real estate

T-27

Monenosato Mall

October 24, 2019

2,410

－

－

－

－

Trust beneficiaryinterest in real estate

T-28

Chofu Center Building(Retail wing)

October 24, 2019

2,300

－

－

－

－

Trust beneficiaryinterest in real estate

T-29

Across Plaza Urayasu
Higashino (Land)

October 24, 2019

2,248

－

－

－

－

Trust beneficiaryinterest in real estate

T-25

Apita Terrace
November 1, 2019
Yokohama Tsunashima

5,899

－

－

－

－

Trust beneficiaryinterest in real estate

T-26

Kalsa Hiratsuka

November 1, 2019

5,980

－

－

－

－

Trust beneficiaryinterest in real estate

N-7

Valor Nakashidami(Land)

November 1, 2019

2,551

－

－

－

－

Real estate

L-6

Shinjuku Nishiochiai
Distribution Center

January 10, 2020

810

－

－

－

－

Trust beneficiaryinterest in real estate

O-8

WelciaKishiwadakamori (Land)－－

October 31,
2019

560

497

56

Note:

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

(2) Acquisition and Disposition of Other Assets
Other assets except real estate properties and asset-backed securities mentioned above mostly consist of cash and deposits
and cash and deposits in trust.
(3) Appraisal Values of Specific Assetsi) Real Estate
Acquisition/disposition

Ownership
form

Property
number

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

Appraiser

Evaluation date

(Note 1)

Real estate

L-6

Shinjuku
Nishiochiai
Distribution Center

L-5

Gyoda Distribution
October 1, 2019
Center

T-27

Monenosato Mall

T-28

Chofu Center
Building (Retail
wing)

810

815

Japan Real Estate
Institute

December 1,
2019

3,160

3,350

The Tanizawa Sōgō
Appraisal Co., Ltd.

September 1,
2019

October 24,
2019

2,410

2,510

Japan Real Estate
Institute

September 1,
2019

October 24,
2019

2,300

2,440

Japan Real Estate
Institute

September 1,
2019

January 10,
2020

Acquisition
Trust beneficiaryinterest in realestate39

Acquisition/disposition

Ownership
form

Property
number

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

Appraiser

Evaluation date

(Note 1)

Acquisition

Disposition

T-29

Across Plaza
Urayasu Higashino(Land)

October 24,
2019

2,248

2,300

Daiwa Real EstateAppraisal Co., Ltd.

September 1,
2019

T-25

Apita Terrace
Yokohama
Tsunashima

November 1,
2019

5,899

6,220

Daiwa Real EstateAppraisal Co., Ltd.

September 1,
2019

T-26

Kalsa Hiratsuka

November 1,
2019

5,980

6,010

Japan Real Estate
Institute

September 1,
2019

N-7

Valor Nakashidami(Land)

November 1,
2019

2,551

2,560

The Tanizawa Sōgō
Appraisal Co., Ltd.

September 1,
2019

O-8

WelciaKishiwadakamori(Land)

October 31,
2019

560

488

Japan Real Estate
Institute

September 30,
2019

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

BDO Toyo & Co.
(B) Result and method of investigation
With regard to transactions and contracts entered by KRR whose values shall be investigated based on the Article
201 of the Act on Investment Trusts and Investment Corporations, BDO Toyo & Co. performs an investigation oftransactions. For the fiscal period from October 1, 2019 to March 31, 2020, the transactions subject to suchinvestigation were three interest rate swap transactions, for which KRR received reports from BDO Toyo & Co. For
this purpose, investigation was performed with respect to details of the interest swap contracts, such as the name ofcounter parties, contract amounts, or the period of transactions. This survey is not a part of the audit for finalcial
statements, and there is no guarantee of fairness of the price and internal management system.

40

(4) Related-Party Transactionsi) Transactions
Transaction price (in million yen)

Total amount

Purchase

Sale

25,358560

Transaction with related-party
GK IK Investment Four

5,899

(23.3%)-(-%)

GK KRF77

3,160(12.5%)

-

(-%)

Total

9,059

(35.7%)-(-%)ii) Amounts of Fees Paid
Related-party transaction
Total amount of fee paid (A)(in million yen)

Ratio (B) / (A)Payment destination

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

165

Kenedix, Inc.

141

85.3

Note 1: A related party, etc. is defined as a related party, etc. of the asset manager having an asset management agreement with KRR as prescribedin Article 123 of the Order for Enforcement of the Act on Investment Trusts and Investment Corporations of Japan and in Article 26-27 of
the Regulations for Asset Investment Reports by Investment Trusts and Investment Corporations of the Investment Trusts Association,
Japan.
Note 2: The fee paid for renovation placing orders to related party is as follows.
Kenedix Engineering, Inc. Capital expenditures JPY 69 million, repair JPY 9 million(5) Transactions with Asset Manager in Connection with Concurrent Business Conducted by the Asset Manager
There is no transaction with the Asset Manager, KFM, regarding to the Type II Financial Instruments Business, andBuilding Lots and Buildings Transaction Business. Furthermore, KFM does not concurrently engage in any of Type I
Financial Instruments Business, Real Estate Specified Joint Business.

41

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

Others(1) Noticei) General Meeting of Unitholders
Not applicableii) Board of Directors
Not applicable(2) Others
In this report, any fraction is rounded down for monetary amounts and rounded off for ratios unless otherwise stated.

42

43

44

Financial Statements(10th Fiscal Period: from October 1, 2019 to March 31, 2020)
Independent Auditor’s Report
Balance Sheet
Statement of Income and Retained Earnings
Statement of Changes in Net Assets
Statement of Cash Flows
Notes to Financial Statements

45

Kenedix Retail REIT Corporation

Balance Sheet
As of March 31, 2020
As of March 31, 2020

As of September 30, 2019(in thousands of yen)
AssetsCurrent assets
Cash and deposits (Notes 9 and 11)¥6,125,619¥18,599,690

Cash and deposits in trust (Notes 9 and 11)

12,924,521

12,974,943

Operating accounts receivable

166,961

230,017

Prepaid expenses

32,902137,034

Consumption taxes receivable

863,462-

1,907

25,002

20,115,374

31,966,688

735,397

692,529

Accumulated depreciation(29,574)(14,554)

Buildings, net

705,823

677,974

38,75137,947

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

Structures
Accumulated depreciation(1,954)(969)

Structures, net

36,79636,9782,951,386

2,115,355

LandConstruction in progress

5,062

-

60,239,912

53,995,091

Accumulated depreciation(6,621,134)(5,698,859)

Buildings in trust, net (Note 3)

53,618,778

48,296,231

3,419,821

3,055,215

Buildings in trust

Structures in trust
Accumulated depreciation(474,705)(410,820)

Structures in trust, net (Note 3)

2,945,115

2,644,394

Machinery and equipment in trust

220,898

220,898

Accumulated depreciation(39,592)(33,189)

Machinery and equipment in trust, net

181,305

187,709

Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net (Note 3)
Land in trust (Note 3)
Construction in progress in trust
Total property, plant and equipment, net
Intangible assets (Note 20)
Leasehold right in trust (Note 17)
Other
Total intangible assets
Investments and other assets
Lease and guarantee deposits

147,539

127,382(40,505)(29,146)

107,034

98,235

163,155,870

144,794,027

4,115

-

223,711,288

198,850,906

4,308,804

4,312,783

9,937

7,811

4,318,742

4,320,594

10,00010,000

Lease and guarantee deposits in trust

60,23660,256Long-term prepaid expenses

830,025825,953

Long-term deposits

117,110

157,110

8,339

2,352

Other
Total investments and other assets
Total non-current assets
Deferred assets
Organization costs

1,025,711

1,055,672

229,055,742

204,227,173-

55

Investment corporation bond issuance costs

36,61540,329Investment unit issuance costs

38,633

19,253

Total deferred assets

75,24859,638¥249,246,364¥236,253,500

Total assets

1

46See accompanying notes to financial statements.
As of March 31, 2020

As of September 30, 2019(in thousands of yen)
Liabilities
Current liabilities
Operating accounts payable¥692,883¥951,647

Short-term loans payable (Notes 11 and 21)

3,450,000

4,070,000

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

13,200,000

9,120,000

Accounts payable-other463,187

541,163

Accrued expenses

32,55824,019956

1,108

120,675

556,438

Advances received

1,266,351

1,193,590

Deposits received

20,626

71,404

19,247,239

16,529,373

Income taxes payable
Accrued consumption taxes

Total current liabilities
Non-current liabilities
Investment corporation bonds (Notes 11 and 22)

7,000,000

7,000,000

Long-term loans payable (Notes 11 and 21)

87,250,000

85,910,000

148,083

128,623

10,878,319

9,958,139

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

24,22924,077

Other

247,638

316,840

105,548,270

103,337,680

124,795,509

119,867,054

121,183,494

113,399,022(305,743)(181,865)

Total non-current liabilities
Total liabilities
Net assets
Unitholders' equity
Unitholders' capital
Deduction from unitholders' capital
Allowance for temporary difference adjustments (Note 5)(305,743)(181,865)

120,877,750

113,217,156

Unappropriated retained earnings

3,784,993

3,455,496

Total surplus

3,784,993

3,455,496

124,662,744

116,672,653

Deferred gains or losses on hedges (Notes 11 and 12)(211,889)(286,206)

Total valuation and translation adjustments(211,889)(286,206)

Total net assets (Note 6)

124,450,854

116,386,446

Total liabilities and net assets¥249,246,364¥236,253,500

Total deduction from unitholders' capital
Unitholders' capital, net
Surplus

Total unitholders' equity
Valuation and translation adjustments

See accompanying notes to financial statements.

2

47

Kenedix Retail REIT Corporation

Statement of Income and Retained Earnings
For the period from October 1, 2019 to March 31, 2020
From October 1, 2019

From April 1, 2019

to March 31, 2020

to September 30, 2019(in thousands of yen)
Operating revenues
Rent revenue-real estate （Note 7)
Other lease business revenue (Note 7)¥7,238,807¥7,129,860

996,119

1,237,149

56,596

242,514

8,291,523

8,609,524

3,359,716

3,891,696

Gain on sales of real estate property (Note 7)
Total operating revenues
Operating expenses
Expenses related to rent business (Note 7)

685,500

674,397

Asset custody fees

9,643

9,699

Administrative service fees

32,18930,904

Directors' compensation

4,500

4,500

Asset management fees

Other operating expenses

98,176

118,687

Total operating expenses

4,189,726

4,729,884

4,101,796

3,879,639

Interest income

57

58

Dividends and redemption-prescription

565

722

Total non-operating income

622

780

Interest expenses

453,558

449,454

Interest expenses on investment corporation bonds

19,671

19,538Financing-related expenses

98,913

94,397

55

5,066

3,714

3,714

Operating income
Non-operating income

Non-operating expenses

Amortization of organization costs
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs

26,98019,253

Total non-operating expenses

602,893591,425

Ordinary income

3,499,525

3,288,995

Income before income taxes

3,499,525

3,288,995

965

1,117

965

1,117

Income taxes
Current
Total income taxes

3,498,560

3,287,877

Retained earnings brought forward

286,433

167,619

Unappropriated retained earnings¥3,784,993¥3,455,496

Net income

See accompanying notes to financial statements.

348

Kenedix Retail REIT Corporation

Statement of Changes in Net Assets
For the period from October 1, 2019 to March 31, 2020
Unitholders' equity
Unitholders' capital

Surplus

Deduction from unitholders'
capitalUnitholders'
capitalAllowance fortemporarydifference
adjustments

Total
deduction
fromunitholders'
capitalUnitholders'
capital, net

Unappropri
ated
retainedearnings

Total
surplusTotal
unitholders'equity¥3,283,881¥3,283,881¥116,673,148(3,116,262)(3,116,262)(3,116,262)(in thousands of yen)
Balance as of March 31, 2019 (Note 8)¥113,399,022¥ (9,754)¥ (9,754)¥113,389,267

Changes of items during the period
Dividends from surplus
Distributions in excess of earnings
from allowance for temporary
difference adjustments(172,110)(172,110)(172,110)

Net income
Net changes of items other thanunitholders’ equity
Total changes of items during the period
Balance as of September 30, 2019 (Note 8)(172,110)
3,287,877

3,287,877

3,287,877-(172,110)(172,110)(172,110)

171,614

171,614(495)¥113,399,022¥ (181,865)¥ (181,865)¥113,217,156¥3,455,496¥3,455,496¥116,672,653(3,169,063)(3,169,063)(3,169,063)

3,498,560

3,498,560

3,498,560

Changes of items during the period
Issuance of new investment units

7,784,472

Dividends from surplus
Distributions in excess of earnings
from allowance for temporary
difference adjustments

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

7,784,472(123,878)

Net income
Net changes of items other thanunitholders’ equity(123,878)

Total changes of items during the period

7,784,472(123,878)(123,878)(7,660,593)

329,496

329,496

7,990,090

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

449

Valuation and translation adjustments
Deferred gains orlosses on hedges
Balance as of March 31, 2019 (Note 8)¥(167,579)

Total net assets

Total valuation andtranslation adjustments(in thousands of yen)¥(167,579)

Changes of items during the period
Dividends from surplus
Distributions in excess of earnings fromallowance for temporary difference
adjustments¥116,505,569(3,116,262)(172,110)
3,287,877

Net income
Net changes of items other thanunitholders’ equity(118,627)(118,627)

Total changes of items during the period(118,627)(118,627)(119,122)

Balance as of September 30, 2019 (Note 8)¥(286,206)¥(286,206)¥116,386,446(118,627)

Changes of items during the period
Issuance of new investment units

7,784,472

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

Net income
Net changes of items other thanunitholders’ equity

3,498,560
74,31774,31774,317

Total changes of items during the period

74,31774,317

8,064,408

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

124,450,854(123,878)

See accompanying notes to financial statements.

550

Kenedix Retail REIT Corporation

Statement of Cash Flows
For the period from October 1, 2019 to March 31, 2020
From October 1, 2019

From April 1, 2019

to March 31, 2020

to September 30, 2019(in thousands of yen)
Net cash provided by (used in) operating activities
Income before income taxes¥3,499,525¥3,288,995

Depreciation and amortization

1,025,511

1,020,517

55

5,066

Amortization of organization costs
Amortization of investment corporation bond issuance costs

3,714

3,714

Amortization of investment unit issuance costs

26,98019,253

Interest income

(57)

(58)

Interest expenses

473,230

468,993

Decrease (increase) in operating accounts receivable

63,055(16,802)

Decrease (increase) in consumption taxes receivable(863,462)-

Decrease (increase) in prepaid expenses

104,132(105,726)

Increase (decrease) in operating accounts payable(101,513)

9,399

Increase (decrease) in accounts payable-other(56,055)

85,880

Increase (decrease) in accrued consumption taxes(435,763)

373,363

Increase (decrease) in advances received

72,761

39,037

Increase (decrease) in deposits received(50,778)(11,587)

Decrease (increase) in long-term prepaid expenses(4,072)65,552

Increase (decrease) in long-term deposits received

40,000-Decrease in net property, plant and equipment held in trust due to sale

497,568

17,624,357

(65)

5,485

4,294,767

22,875,441

Other
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities

57

58(464,671)(472,583)(1,117)(1,027)

3,829,036

22,401,889

Net cash provided by (used in) investing activities
Purchase of property, plant and equipment
Purchase of property, plant and equipment in trust
Purchase of intangible assets
Proceeds from lease and guarantee deposits in trust(884,765)(2,845,831)(25,672,644)(3,501,983)(3,580)(2,500)20-

19,460128,623

Repayments of tenant leasehold and security deposits in trust(151,208)(2,824,940)

Proceeds from tenant leasehold and security deposits in trust

1,093,091

384,497

15,0001,419,737(25,584,626)(7,242,397)

Increase in short-term loans payable

2,750,000

1,320,000

Decrease in short-term loans payable(3,370,000)-

Proceeds from long-term loans payable

14,540,000

5,690,000

Repayments of long-term loans payable（9,120,000）(7,010,000)

Proceeds from tenant leasehold and security deposits

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

7,738,113-(3,292,016)(3,288,016)

Net cash provided by (used in) financing activities

9,246,096(3,288,016)

Net increase (decrease) in cash and cash equivalents(12,509,493)

11,871,475

Proceeds from issuance of investment units
Dividends paid

Cash and cash equivalents at the beginning of the period

31,319,634

19,448,158

Cash and cash equivalents at the end of the period (Note 9)¥18,810,140¥31,319,634

See accompanying notes to financial statements.

651

Kenedix Retail REIT Corporation

Notes to Financial Statements
For the period from October 1, 2019 to March 31, 2020

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Kenedix Retail REIT Corporation (“KRR”) was established on October 3, 2014, under the Act on Investment Trusts and Investment Corporations of Japan(the “Investment Trust Act”). On February 10, 2015, KRR was listed on the Real Estate Investment Trust Securities (J-REIT) Market of Tokyo Stock
Exchange, Inc. (the Tokyo Stock Exchange) (Securities code: 3453). Subsequently, KRR raised funds through public offerings, including international
offerings. As a result, the number of investment units issued as of March 31, 2020 was 536,177 units.
KRR seeks to invest primarily in neighborhood, community and other shopping centers that cater to the day-to-day needs of local area customers andhave stable demand from retailers and customers, and also seeks to invest in distribution centers, which supplement shopping centers in providing goods toconsumers, in order to provide stable investment returns over the long term. Sponsored by Kenedix, Inc., KRR entrusts its asset management andinvestment operations to Kenedix Real Estate Fund Management, Inc. (“KFM”), with the following strategies.
(Note) For management purposes and ease of classification, KRR defines neighborhood, community and other shopping centers for daily needs asretail properties that generally have the following characteristics:
a. Retail trade area of an approximate radius of one to ten kilometers (and generally, a radius of three to five kilometers), with customers
predominantly from local areas surrounding the retail property
b. Operational capacity to accommodate certain daily local retail needs and strong customer traffic on both weekdays and weekends
c. Composed of various specialty stores to meet a range of day-to-day needs such as groceries, clothing and other daily goods and services
KRR acquired four properties (Zama Distribution Center with acquisition price of 1,400 million yen, Oppama Distribution Center with acquisition price of
1,300 million yen, Yokohama Kamigo Distribution Center with acquisition price of 790 million yen and Habikigaoka Shopping Center with acquisition price of
2,000 million yen), and sold two properties (Solala Plaza (51% quasi co-ownership interest) with sale price of 3,049 million yen (initial acquisition price of
2,917 million yen) and Fululu Garden Yachiyo with sale price of 15,200 million yen (initial acquisition price of 14,848 million yen)). For the period ended
September 30, 2019, the portfolio of 55 properties (total acquisition price of 200,938 million yen) as a whole performed well with an overall occupancy ratioof 98.9% as of September 30, 2019.
KRR acquired eight properties (Gyoda Distribution Center with acquisition price of 3,160 million yen, Monenosato Mall with acquisition price of 2,410
million yen , Chofu Center Building with acquisition price of 2,300 million yen, Across Plaza Urayasu Higashino(Land) with acquisition price of 2,248 million
yen, Apita Terrace Yokohama Tsunashima with acquisition price of 5,899 million yen, Kalsa Hiratsuka with acquisition price of 5,980 million yen, Valor
Nakashidami (Land) with acquisition price of 2,551 million yen, Shinjuku Nishiochiai Distribution Center with acquisition price of 810 million yen), and soldone property ( Welcia Kishiwadakamori (Land) with sale price of 560 million yen (initial acquisition price of 487 million yen). For the period ended March 31,
2020, the portfolio of 62 properties (total acquisition price of 225,810 million yen) as a whole performed well with an overall occupancy ratio of 99.4% as ofMarch 31, 2020.
Furthermore, the portfolio was diversified in terms of tenants as there were 480 and 496 end-tenants as of September 30, 2019 and March 31, 2020 in
KRR’s properties, respectively.
Basis of Presentation
KRR maintains its accounting records and prepares its financial statements in accordance with accounting principles generally accepted in Japan(Japanese GAAP), including provisions set forth in the Investment Trust Act, the Companies Act of Japan, the Financial Instruments and Exchange Act ofJapan and related regulations, which are different in certain respects as to the application and disclosure requirements of International Financial ReportingStandards.
The accompanying financial statements are basically a translation of the financial statements of KRR, which were prepared in accordance with Japanese
GAAP and were presented in the Semiannual Securities Report of KRR filed with the Kanto Local Finance Bureau. In preparing the accompanying financial
statements, certain reclassifications and modifications have been made to the financial statements issued domestically in order to present them in a format
that is more familiar to readers outside Japan. In addition, the notes to financial statements include certain information that might not be required underJapanese GAAP but is presented herein as additional information.
KRR’s fiscal period is a six-month period which ends at the end of March or September. KRR does not prepare consolidated financial statements
because it has no subsidiaries.

752

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

Buildings

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

From April 1, 2019
to September 30, 20192-70 years

Structures

8-59 years

8-59 years

Machinery and equipment

2-25 years

2-25 years

Tools, furniture and fixtures

3-15 years

3-15 years(B) Intangible Assets (including trust assets)
Intangible assets are amortized by the straight-line method.
(C) Long-term Prepaid Expenses
Long-term prepaid expenses are amortized by the straight-line method.
(D) Organization Costs
Organization costs are amortized over a period of 5 years under the straight-line method.
(E) Investment Unit Issuance Costs
Investment unit issuance costs are amortized over a period of 3 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 relevant assets andliabilities in trust are recorded on the balance sheets and the 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
reimbursements, 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 are recorded both asrevenues and expenses during the fiscal period.
(I)

Taxes on Property and Equipment
Property-related taxes including property taxes, city planning taxes and depreciable property taxes are imposed on properties on a calendar year basis.
These taxes are generally charged to operating expenses for the period, for the portion of such taxes corresponding to said period. Under Japanese
tax regulations, the seller of the property is liable for these taxes on the property from the date of disposal to the end of the calendar year in which theproperty is disposed. The seller, however, is reimbursed by the purchaser for these accrued property-related tax liabilities.
When KRR purchases properties, it typically allocates the portion of the property-related taxes related to the period following the purchase date ofeach property through the end of the calendar year. The amounts of those allocated portions of the property-related taxes are capitalized as part of theacquisition costs of the related properties. Capitalized property-related taxes amounted to ¥20,564 thousand and ¥32,362 thousand as of September
30, 2019 and March 31, 2020, respectively.

853

(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 tothe acquisition of assets are included in the cost of acquisition for each asset.
(L) Derivative Financial Instruments
KRR utilizes interest-rate swap contracts as derivative financial instruments only for the purpose of hedging its exposure to changes in interest rates.
KRR deferred recognition of gains or losses resulting from changes in fair value of interest-rate swap contracts because these contracts met thecriteria for deferral hedge accounting. However, KRR adopted the special treatment for interest-swap contracts if they met the criteria for hedge
accounting under this treatment. An assessment of the effectiveness of hedging is omitted for interest rate swaps because they fulfill the requirements
for the special treatment.
(M) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments which are highly liquid, readily convertible
to cash and with insignificant risk of market value fluctuation, with maturities of three months or less from the date of purchase.
(N) Presentation of Amounts
Amounts have been truncated in the Japanese financial statements prepared in accordance with Japanese GAAP and filed with regulatory authorities
in Japan. Unless otherwise noted, amounts are rounded down and ratios are rounded off in the accompanying financial statements. Totals shown in
the accompanying financial statements do not necessarily agree with the sums of the individual amounts.

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

・ “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30 issued on July 4, 2019)
・ “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31 issued on July 4, 2019)954

・ “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19 issued on March 31, 2019)(1) Overview
The IASB and the FASB have established detailed guidance regarding fair value measurement (IFRS 13 “Fair Value Measurement” (IASB) and Topic 820“Fair Value Measurement” (FASB)). The ASBJ repeatedly considered the guidance regarding fair value of financial instruments and disclosure in order toimprove the comparability with such international accounting standards, and issued “Accounting Standard for Fair Value Measurement” and “Implementation
Guidance on Accounting Standard for Fair Value Measurement.”(2) Scheduled date of application
The accounting standards will be applied from the beginning of the fiscal period ending September 30, 2021.
(3) Impact of applying the accounting standards
The impact of applying the “Accounting Standard for Fair Value Measurement” and its guidance on KRR’s financial statements is currently underevaluation.

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

1055

4. COLLATERAL
Assets pledged as collateral and related secured liabilities are as follows:
As of March 31, 2020

Assets pledged as collateral

As of September 30, 2019(in thousands of yen)

Buildings in trust¥668,630¥652,282

Structures in trust

23,98925,193

Land in trust
Total
Secured liabilities

2,709,001

2,709,001¥3,401,621¥3,386,476

As of March 31, 2020

Tenant leasehold and security deposits in trust
Total

As of September 30, 2019
¥460,565¥482,562¥460,565¥482,562

5. COMMITMENT LINE CONTRACTSKRR has commitment line contracts with the banks with which it does business.
As of March 31, 2020

As of September 30, 2019(in thousands of yen)

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

Balance of loans payable outstanding--

Remaining amount¥3,000,000¥3,000,000

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

Reason for allowance

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

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

Total

Initial amount

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

¥19,575¥14,324¥5,251

286,168

167,541

118,627¥305,743¥181,865¥123,878¥¥

Balance atthe end of
the period

Reason forreversal-¥19,575--

286,168-

305,743--¥

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

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

Deferred gains or losses on hedges

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

The following summarizes allowance for temporary difference adjustments as of September 30, 2019
1. Reasons, related assets, initial amount, allowance and reversal
Related assets, etc.

Reason for allowance

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

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

Total

Initial amount

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

¥14,324¥9,754¥4,569167,541-

167,541¥181,865¥9,754¥172,110¥¥

Balance atthe end of
the period

Reason forreversal-¥14,324--

167,541--¥181,865

-

11

56

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

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

Deferred gains or losses on hedges

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

7. NET ASSETSKRR issues only non-par value units in accordance with the Investment Trust Act. The entire amount of the issue price of new units is designated as statedcapital. KRR is required to maintain net assets of at least ¥50 million as required by the Investment Trust Act.

8. BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATEDEXPENSES AND GAIN ON SALES OF REAL ESTATE PROPERTY
Rental and other operating revenues and property-related expenses for the periods from October 1, 2019 to March 31, 2020 and April 1, 2019 to September
30, 2019 from consist of the following:
From October 1, 2019

From April 1, 2019

to March 31, 2020

to September 30, 2019(in thousands of yen)

Rental and other operating revenues:
Rent revenue-real estate:
Rental revenues¥5,957,213¥5,906,675

Rental revenues from limited proprietary rights of land

1,014,174

929,686

Common area charges

267,419

293,498

7,238,807

7,129,860

Parking space rental revenues

204,170

196,389

Utility charge reimbursement529,178

686,217

Miscellaneous

262,770

354,542

Subtotal
Other lease business revenue:

Subtotal

996,119

1,237,149

8,234,927

8,367,009

Property management fees and facility management fees

675,050

812,506

Utilities

495,587

651,605

Taxes

629,029

736,890

Repairs and maintenance

208,221296,687

Insurance

13,47012,880Trust fees

23,92623,026

Depreciation

1,024,057

1,019,546

Others290,373

338,551

Total property-related expenses

3,359,716

3,891,696

Net operating income from real estate rental business¥4,875,211¥4,475,313

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

1257

Gain on sales of real estate property:
From October 1, 2019 to March 31, 2020
(in thousands of yen)

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

497,568

Other sales expenses
Gain on sales of real estate property

5,835¥56,596

From April 1, 2019 to September 30, 2019(in thousands of yen)
Solala Plaza (51% quasi co-ownership interests)
Revenue from sales of real estate property¥3,049,800

Cost of real estate property

2,827,727

Other sales expenses
Gain on sales of real estate property

20,455¥201,616(in thousands of yen)

Fululu Garden Yachiyo
Revenue from sales of real estate property¥15,200,000

Cost of real estate property

14,796,629

Other sales expenses
Gain on sales of real estate property

362,472¥40,898

9. UNITHOLDERS’ EQUITY
Total number of authorized investment units and total number of investment units issued and outstanding are as follows:
From October 1, 2019

From April 1, 2019

to March 31, 2020

to September 30, 2019

Total number of authorized investment units

5,000,000 units

5,000,000 units

Total number of investment units issued and outstanding

536,177 units

507,700 units

10. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following as of March 31, 2020 and September 30, 2019:
As of March 31, 2020

As of September 30, 2019(in thousands of yen)
Cash and deposits¥6,125,619¥18,599,690

Cash and deposits in trust

12,924,521

12,974,943

Restricted bank deposits in trust *(240,000)(255,000)¥18,810,140¥31,319,634

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

13

58

11. LEASES(As lessee)
Future minimum lease payments under non-cancelable operating leases as of March 31, 2020 and September 30, 2019 are as follows:
As of March 31, 2020

As of September 30, 2019(in thousands of yen)
Due within 1 year

¥10,500¥10,500

Due after 1 year

167,548

172,798

Total¥178,048¥183,298(As lessor)
Future minimum lease income under the non-cancelable operating leases as of March 31, 2020 and September 30, 2019 are as follows:
As of March 31, 2020

As of September 30, 2019(in thousands of yen)
Due within 1 year

¥9,818,120¥8,850,474

Due after 1 year

59,381,345

53,231,922

Total¥69,199,466¥62,082,397

1459

12. FINANCIAL INSTRUMENTS(A). Overview(1) Policy for financial instruments
KRR procures funds for asset acquisitions, repairs, payment of distributions, repayment of loans, etc. through loans from financial institutions, issuance ofinvestment corporation bonds, issuance of investment units and other means. With regard to the procurement of interest-bearing debts, KRR ensures that it
can effectively combine stable long-term funds with flexible short-term funds. Management of surplus funds is undertaken through various bank deposits
focusing on safety, liquidity and effectiveness. KRR uses derivatives for the purpose of hedging its exposure to changes in interest rates and other risks anddoes not enter into derivative transactions for speculative or trading purposes.
(2) Types of financial instruments and related risk
Bank deposits are for managing KRR’s surplus funds and are exposed to credit risk such as the bankruptcy of financial institutions at which funds aredeposited.
Loans payable and investment corporation bonds, which are made or issued primarily for the purpose of procuring funds for the acquisition of real estate
and trust beneficiary interests in real estate and have a repayment date of a maximum of 9 years and 7 months for loans payable and also have aredemption date of a maximum of 8 years and 1 month for investment corporation bonds as of March 31, 2020, the end of the 10th fiscal period, areexposed to liquidity risk where alternative funds may not be procured by the repayment date. Also, loans payable with floating interest rates are exposed tointerest rate fluctuation risk. Derivatives are used for the purpose of hedging interest rate fluctuation risk for a certain portion of the loans payable.
Tenant leasehold and security deposits are deposits received from tenants, which are exposed to liquidity risks when the tenants vacate the properties.
(3) Risk management for financial instruments
a. Credit risk
While bank deposits are exposed to credit risk such as the bankruptcy of financial institutions at which funds are deposited, such risk is monitored bydeposits in non-interest bearing ordinary savings accounts or with financial institutions with credit ratings above a certain level. In utilizing derivatives, KRR
aims to mitigate counterparty risk such as by transacting with financial institutions with favorable ratings.
b. Market risk
While loans payable with floating rates are exposed to interest rate fluctuation risk, such risk is monitored by adjusting the rate of the balance of loans
payable with floating rates against the total loans payable according to the financial environment, interest rate forecasts by continuous monitoring, etc. andby using derivatives, etc. A risk management policy is established with regard to the execution and management of derivatives and such transactions are
conducted based on this policy.
c. Liquidity risk
Though loans payable are subject to liquidity risk, KRR reduces such risk by spreading out payment due dates and by diversifying financial institutions.
Liquidity risk is also managed by such means as regularly checking the balance of cash reserves.
Though tenant leasehold and security deposits are subject to liquidity risk, in principle, KRR reduces such risk by retaining funds that would enable KRR toreturn necessary amounts to tenants.
(4) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available, fair value isreasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors could result in adifferent fair value.
(B). Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheets and estimated fair value are shown in the following table. Items whose fair values are
difficult to determine are not included in the following table (*2).

1560

As of March 31, 2020
Carrying amount

Estimated fair value

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

12,924,521

12,924,521

-

Total

¥

-

19,050,140

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

3,450,000

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

13,200,000

13,223,248

23,248(3) Investment corporation bonds

7,000,000

7,003,600

3,600(4) Long-term loans payable

87,250,000

87,807,444

557,444853,538

828,393(25,145)

111,753,538

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

559,147¥-(Note) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing the net liability
position.
As of September 30, 2019
Carrying amount

Estimated fair value

Difference(in thousands of yen)
(1) Cash and deposits¥18,599,690¥18,599,690(2) Cash and deposits in trust

12,974,943

12,974,943

-

Total

¥

-

31,574,634

31,574,634-(1) Short-term loans payable

4,070,000

4,070,000-(2) Current portion of long-term loans payable

9,120,000

9,115,112(4,887)(3) Investment corporation bonds

7,000,000

7,084,100

84,100(4) Long-term loans payable

85,910,000

86,818,747

908,747

777,358

758,152(19,206)

106,877,358

107,846,112¥(286,206)¥(286,206)(5) Tenant leasehold and security deposits in trust
Total
Derivative transactions

968,753¥-(Note) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing the net liability
position.
*1: Methods to determine the estimated fair value of financial instruments and matters related to derivative transactions
Assets(1) Cash and deposits and (2) Cash and deposits in trust
Since these items are settled in a short period of time, their carrying amount approximates fair value.
Liabilities(1) Short-term loans payable
Since these items are settled in a short period of time with floating interest rates, their carrying amount approximates fair value.
(2) Current portion of long-term loans payable and (4) Long-term loans payable
Among these items, the fair value of loans payable with fixed interest rates is calculated based on the present value, which is the total amount of principal
and interest discounted by the estimated interest rate to be applied in the event that KRR conducts new loans of the same type. As for the fair value of loans
payable with floating interest rates, it is based on the carrying amount since market interest rates are reflected in the short term and the fair value is believed
to approximate the carrying amount as the credit standing of KRR has not changed significantly since the loans were made. (However, the fair value of
long-term loans payable subject to the special treatment for interest-rate swaps is based on the present value of the total of principal and interest, accounted
for together with the applicable interest-rate swaps, discounted by the estimated interest rate to be applied in the event that KRR conducts new loans
payable of the same type.)1661

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

As of March 31, 2020

As of September 30, 2019(in thousands of yen)
Tenant leasehold and security deposits (Note)¥148,083¥128,623

Tenant leasehold and security deposits in trust (Note)¥10,024,780¥9,180,780

Total¥10,172,863¥9,309,403(Note) It is extremely difficult to determine their fair values based on estimated future cash flows because no quoted market price is available and therepayment dates of those deposits are not certain. Therefore, tenant leasehold and security deposits and tenant leasehold and security
deposits in trust are not included in the above quantitative information.
*3: Redemption of monetary claims scheduled to be due after the balance sheet date
As of March 31, 2020
Due in 1 year orDue after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

lessthrough 2 years

through 3 years

through 4 years

through 5 years

Due after 5 years(in thousands of yen)
Cash and deposits¥6,125,619

Cash and deposits in trust

12,924,521

Total

¥

-

¥

-

-

¥19,050,140

¥

¥

-

-

-

¥

¥

-

-

-

¥

¥

-

-

-

¥

-

-

¥

-

As of September 30, 2019
Due in 1 year orDue after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

lessthrough 2 years

through 3 years

through 4 years

through 5 years

Due after 5 years(in thousands of yen)
Cash and deposits¥18,599,690

Cash and deposits in trust

12,974,943

Total

¥

-

¥

-

-

¥31,574,634

¥

¥

-

-

¥

-

¥

-

-

¥

-

¥

-

-

¥

-

-

¥

-

*4: Redemption of long-term loans payable and other interest-bearing debt scheduled to be due after the balance sheet date
As of March 31, 2020
Due in 1 year orDue after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

lessthrough 2 years

through 3 years

through 4 years

through 5 years

Due after 5 years(in thousands of yen)
Short-term loans payable
Investment corporation bonds
Long-term loans payable
Tenant leasehold and security
deposits in trust¥3,450,000

-

¥

-

1,000,000¥-

1,000,000

¥

-

¥

-

¥

-

5,000,000-

13,200,000

13,300,000

9,050,000

7,500,000

8,810,000

48,590,000

13,995

13,995

13,995

13,995

13,99575,8061762

Total¥16,663,995¥14,313,995¥10,063,995¥7,513,995¥8,823,995

Due in 1 year orDue after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

lessthrough 2 years

through 3 years

through 4 years

through 5 years¥53,665,806

As of September 30, 2019
Due after 5 years(in thousands of yen)
Short-term loans payable¥4,070,000

-

¥

-

¥

-

-

2,000,000--

5,000,000

9,120,000

13,300,000

9,050,000

7,500,000

8,990,000

47,070,000

13,995

13,995

13,995

13,995

13,99582,803¥13,203,995¥13,313,995¥11,063,995¥7,513,995¥9,003,995¥52,152,803

Investment corporation bonds
Long-term loans payable
Tenant leasehold and security
deposits in trust
Total

¥

-

¥

-

¥

-

13. DERIVATIVE TRANSACTIONS
The contract amount and the fair value of interest-rate swap transactions as of March 31, 2020 are shown in the following table.
(1) Transactions not subject to hedge accounting
Not applicable(2) Transactions subject to hedge accounting
Hedge
accounting
methodType of derivativetransactions

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

Hedged items
Long-term loans
payableLong-term loans
payableContract amount(in thousands of yen)
Maturing after 1
year¥38,710,000¥38,710,000

31,900,000

26,400,000¥70,610,000¥65,110,000

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

Calculation method for
applicable fair value
Based on the amountprovided by counterparty
financial institutions*¥(211,889)*Interest rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fair value isincluded in the fair value of the hedged long-term loans payable.（Please refer to Note “11. FINANCIAL INSTRUMENTS” (*1) Methods to determine theestimated fair value of financial instruments and matters related to derivative transactions; Liabilities (2) Current portion of long-term loans payable and (4)Long-term loans payable.）
The contract amount and the fair value of interest-rate swap transactions as of September 30, 2019 are shown in the following table.
(1) Transactions not subject to hedge accounting
Not applicable(2) Transactions subject to hedge accounting
Hedge
accounting
methodType of derivativetransactions

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

Hedged items
Long-term loans
payableLong-term loans
payableContract amount(in thousands of yen)
Maturing after 1
year¥33,920,000¥33,920,000

38,900,000

31,900,000¥72,820,000¥65,820,000

Fair value(in thousands of yen)¥(286,206)*

Calculation method for
applicable fair value
Based on the amountprovided by counterparty
financial institutions-¥(286,206)*Interest rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fair value isincluded in the fair value of the hedged long-term loans payable.（Please refer to Note “11. FINANCIAL INSTRUMENTS” (*1) Methods to determine theestimated fair value of financial instruments and matters related to derivative transactions; Liabilities (2) Current portion of long-term loans payable and (4)Long-term loans payable.）18

63

14. RELATED PARTY TRANSACTIONS
1．Parent Company, major corporate unitholders and other10th Fiscal Period (October 1, 2019 to March 31, 2020) and 9th Fiscal Period (April 1, 2019 to September 30, 2019): Not applicable
2．Affiliated companies and other10th Fiscal Period (October 1, 2019 to March 31, 2020) and 9th Fiscal Period (April 1, 2019 to September 30, 2019): Not applicable
3．Fellow subsidiary companies and other10th Fiscal Period (October 1, 2019 to March 31, 2020) and 9th Fiscal Period (April 1, 2019 to September 30, 2019): Not applicable
4．Directors, major individual unitholders and other10th Fiscal Period (October 1, 2019 to March 31, 2020) and 9th Fiscal Period (April 1, 2019 to September 30, 2019): Not applicable

15. INCOME TAXESKRR is subject to corporate income taxes at a regular statutory rate of approximately 32%. However, KRR may deduct from its taxable income amounts
distributed to its unitholders, provided the requirements under the Special Taxation Measures Law of Japan are met, including a requirement that it currently
distributes in excess of 90% of its net income for the fiscal period in order to be able to deduct such amounts. If KRR does not satisfy all of the requirements,
the entire taxable income of KRR will be subject to regular corporate income taxes. Since KRR distributed in excess of 90% of its distributable income in theform of cash distributions totaling ¥3,503 million and ¥3,292 million for the periods ended March 31, 2020 and September 30, 2019, respectively, thedistributions were treated as deductible distributions for purposes of corporate income taxes. The effective tax rate on KRR’s income was 0.03% for theperiods ended March 31, 2020 and September 30, 2019 . The following table summarizes the significant differences between the statutory tax rate and theeffective tax rate:
As of March 31, 2020

As of September 30, 2019

Statutory tax rate

31.46%

31.51%

Deductible cash distributions(31.50)(31.55)

Others0.07

0.07

Effective tax rate

0.03%

0.03%

The significant components of deferred tax assets and liabilities:
As of March 31, 2020

As of September 30, 2019(in thousands of yen)
Deferred tax assets:
Enterprise tax payable¥

17

Amortization of leasehold right in trust

12,933

11,682

Depreciation

4,655

4,205

¥

24

Asset retirement obligations

7,622

7,574

Deferred gains or losses on hedges

66,66090,040Subtotal deferred tax assets

91,889113,527

Valuation allowance(91,889)(113,527)

Total deferred tax assets

¥

-

¥

-

19

64

16. ASSET RETIREMENT OBLIGATIONS
Asset retirement obligations reported on balance sheets
1. Summary of the asset retirement obligations
KRR has recognized the original state restoration obligations assumed under the fixed-term business-purpose land leasehold agreement as the asset
retirement obligations in connection with Sunny Noma acquired on February 10, 2015.
2. Method of calculating asset retirement obligations
Asset retirement obligations are calculated based on a discount rate of 1.256% after the useful life has been estimated to be 22 years and two months
based on the time period from the date of acquisition to the expiration of the agreement.
3. Changes in the amount of applicable asset retirement obligations consisted of the following:
From October 1, 2019

From April 1, 2019

to March 31, 2020

to September 30, 2019(in thousands of yen)
Balance at the beginning of the period
Accretion adjustment
Balance at the end of the period¥24,077¥23,927151

150¥24,229¥24,077

17. SEGMENT INFORMATION
Segment information for the periods from October 1, 2019 to March 31, 2020 and April 1, 2019 to September 30, 2019 is as follows:(A) Segment information
Disclosure is omitted because the real estate leasing business is KRR’s sole business and it has no reportable segment information to disclose.
(B) Related information(1) Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of the operating revenue on thestatements of income and retained earnings.
(2) Information about each geographic area(a) Net sales
Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenue on the statements of income andretained earnings.
(b) Property, plant and equipment
Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts for over 90% of the amount of property, plant andequipment on the balance sheets.
(3) Information about each major customer
Disclosure is omitted because no net sales to a single external customer accounts for more than 10% of the operating revenue on the statements of income
and retained earnings.

20

65

18. INVESTMENT AND RENTAL PROPERTIESKRR owns retail properties and logistics facility for rental purposes mainly in the four major metropolitan areas and other regional areas of Japan.
The book value and fair value concerning the above real estate for rental purposes are as follows.
From October 1, 2019

From April 1, 2019

to March 31, 2020

to September 30, 2019(in thousands of yen)Book value
Balance at the beginning of the period¥203,168,529¥215,255,734

Changes during the period

24,859,032(12,087,205)

Balance at the end of the period

228,027,561

203,168,529¥243,687,900¥217,936,000

Fair value at the end of the period

Note 1: Book value is acquisition cost less accumulated depreciation.
Note 2: Among changes in the amount of real estate for rental purposes that occurred during the fiscal period ended March 31, 2020, the principal increase
was due to the acquisitions of real estate and real estate trust beneficiary interests in 8 properties totaling 25,882,004 thousand yen and the principal
decrease was due to the sales of real estate trust beneficiary interests in 1 property totaling 497,568 thousand yen and depreciation amounting to
1,023,906 thousand yen and during the fiscal period ended September 30, 2019, the principal increase was due to the acquisitions of real estate andreal estate trust beneficiary interests in 4 properties totaling 5,765,573 thousand yen and the principal decrease was due to the sales of real estate
trust beneficiary interests in 2 properties totaling 17,624,357 thousand yen and depreciation amounting to 1,019,396 thousand yen.
Note 3: The fair value at the end of the period is the appraisal value determined by outside appraisers. The fair value of K’s Denki Shin-Moriyama (Land) as
of March 31, 2020, is based on the sales price (1,527,900 thousand yen) under the trust beneficiary interest sales contracts entered into on March
31, 2020. In addition, the fair value of Welcia Kishiwadakamori (Land) as of September 30, 2019, is based on the sales price (560,000 thousandyen) under the trust beneficiary interest sales contracts entered into on May 16, 2019.
The profit or loss for the periods ended March 31, 2020 and September 30, 2019 concerning investment and rental properties is included in Note “7.
BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES AND GAIN ON SALES OF REAL ESTATEPROPERTY.”

19. PER UNIT INFORMATION
From October 1, 2019

From April 1, 2019

to March 31, 2020

to September 30, 2019

Net asset value per unit
Net income per unit

¥232,107¥229,242¥6,568¥6,476

Net income per unit is calculated by dividing net income by the day-weighted average number of investment units outstanding during the fiscal period
ended March 31, 2020 (532,612 units) and during the fiscal period ended September 30, 2019 (507,700 units) . Net income per unit after adjusting forresidual units is not included because there were no residual investment units.
The basis for calculating net income per unit is as follows:

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

From October 1, 2019

From April 1, 2019

to March 31, 2020

to September 30, 2019

¥3,498,560¥3,287,877--¥3,498,560¥3,287,877

532,612507,700

2166

20. SIGNIFICANT SUBSEQUENT EVENTS
Not applicable2267

21. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Property, plant and equipment and intangible assets consist of the following as of March 31, 2020:
Type of asset

Balance atthe beginningof the period

Increaseduring theperiodDecreaseduring theperiodBalance atthe end of theperiodDepreciation
Accumulated
depreciation

Depreciation
for theperiodNetbalance atthe end of
the period

Remarks(in thousands of yen)
Buildings¥692,529¥42,868-¥735,397¥29,574¥15,020¥705,823

Structures

37,947803-

38,751

1,954

985

36,796Land

Property,plant andequipment

2,115,355

836,031-2,951,386--

2,951,386

Construction inprogress

-

5,062

-

5,062

-

-

5,062

Subtotal

2,845,831

884,765-

3,730,597

31,52916,005

3,699,068

Buildings in trust

53,995,091

6,244,821-

60,239,912

6,621,134

922,274

53,618,778

Structures in trust

3,055,215

364,605-

3,419,821

474,705

63,884

2,945,115

Machinery andequipment in trust

220,898--

220,898

39,592

6,403

181,305

Tools, furnitureand fixtures intrust

127,382

20,157-

147,539

40,505

11,359107,034

144,794,027

18,859,411

497,568

163,155,870--

163,155,870

-

4,115

-

4,115

-

-

4,115

202,192,614

25,493,112

497,568

227,188,158

7,175,938

1,003,922

220,012,220

205,038,446

26,377,878

497,568

230,918,756

7,207,467

1,019,927

223,711,288

4,349,916--

4,349,916

41,111

3,978

4,308,804

12,3033,580-

15,883

5,945

1,453

9,937

¥ 4,362,219¥3,580-¥4,365,799¥47,057¥5,432¥4,318,742

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

Total

¥

*

*

*The amount of increase during the period is primarily attributable to the acquisition of the real estate properties and capital expenditures.
Property, plant and equipment and intangible assets consist of the following as of September 30, 2019:
Type of asset

Balance atthe beginningof the period

Increaseduring theperiodDecreaseduring theperiodBalance atthe end of theperiodDepreciation
Accumulated
depreciation

Depreciation
for theperiodNetbalance atthe end of
the period¥677,974

Remarks(in thousands of yen)
Buildings

Total¥692,529¥-¥692,529¥14,554¥14,554-

37,947-37,947969

969

36,978Land-

2,115,355-

2,115,355--

2,115,355-

2,845,831-

2,845,831

15,523

15,5232,830,308

Buildings in trust

59,140,856

1,240,754

6,386,519

53,995,091

5,698,859

926,698

48,296,231

Structures in trust

2,999,320

99,63143,737

3,055,215

410,820

58,1212,644,394

Machinery andequipment in trust

250,568-

29,669220,898

33,1896,512

187,709

Tools, furnitureand fixtures intrust

93,286

61,25827,162

127,382

29,146

8,561

98,235Land in trust

154,566,718

2,306,956

12,079,647

144,794,027--

144,794,027

Subtotal

217,050,750

3,708,600

18,566,736

202,192,614

6,172,016

999,893

196,020,598

217,050,750

6,554,432

18,566,736

205,038,446

6,187,539

1,015,417

198,850,906

4,349,916--

4,349,916

37,133

3,978

4,312,783

9,803

2,500

-

12,303

4,491

971

7,811

-

¥ 4,362,219¥ 41,625¥ 4,949¥ 4,320,594

Total
Intangible
assets-

Structures
Subtotal
Property,plant andequipment¥

Leasehold rightin trust
Other¥ 4,359,719

¥

2,500

¥

*

*

*The amount of decrease during the period is primarily attributable to the sales of the real estate properties.

2368

22. SHORT-TERM LOANS PAYABLE AND LONG-TERM LOANS PAYABLE
The following summarizes short-term loans payable and long-term loans payable outstanding as of March 31, 2020:
Classification
LenderBalance atthe beginningof the period

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

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

Short-termloanspayableCurrent
portion of
long-term
loans
payableLong-term
loans
payableSumitomo Mitsui
Banking Corporation
Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui Trust
Bank, Limited(Note 7)
Sumitomo Mitsui
Banking Corporation¥2,750,000
700,000¥

Payment due
date（Note 4）

Remarks(Note 5)

Unsecured/
Nonguaranteed(Note 5)

Unsecured/
Nonguaranteed(Note 5)

Unsecured/
Nonguaranteed(%)-¥2,750,000

-

-

¥

-

0.473

700,000

0.471

January 31,
2020
September 30,
2020

620,000-

620,000

-

0.477

-

2,750,000-

2,750,000

0.469

January 31,
2021

Subtotal
Sumitomo Mitsui
Banking Corporation

4,070,000

2,750,000

3,370,000

3,450,000

2,400,000-

2,400,000-

MUFG Bank, Ltd.

800,000-

800,000-

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

800,000-

800,000-

550,000-

550,000-

500,000-

500,000-

Resona Bank, Limited.

500,000-

500,000-

0.751

February 10,
2020

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

400,000-

400,000-

400,000-

400,000-

350,000-

350,000-

300,000-

300,000-

1,270,000-

1,270,000-

650,000-

650,000-

0.477

August 31,
2020

200,000-

200,000-

3,000,000--

3,000,000

700,000--

700,000

500,000--

500,000

450,000--

450,000

450,000--

450,000

400,000--

400,000

1,500,000--

1,500,000-

2,400,000-

2,400,000-

1,600,000-

1,600,000

Sumitomo Mitsui Trust
Bank, Limited-

550,000-

550,000

Resona Bank, Limited-

500,000-

500,000

Aozora Bank, Ltd.

-

500,000-

500,000

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

350,000-

350,000

MUFG Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Limited

Use-

300,000-

300,000

16,120,000

6,200,000

9,120,000

13,200,000

2,600,000--

2,600,000

800,000--

800,000

600,000--

600,000

0.865

February 10,
2021

0.925

February 10,
2021

0.469

February 28,
2021

0.978

February 10,
2022

24

69

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

400,000--

400,000

400,000--

400,000

300,000--

300,000

Resona Bank, Limited

300,000--

300,000

1,600,000--

1,600,000

1.033

4,600,000--

4,600,000

1.366

MUFG Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Limited

1,000,000--

1,000,000

600,000--

600,000

Mizuho Bank, Ltd.

400,000--

400,000

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

400,000--

400,000

400,000--

400,000

400,000--

400,000

1,500,000--

1,500,000

450,000--

450,000

200,000--

200,000

150,000--

150,000

1,500,000--

1,500,000

3,000,000--

3,000,000

Mizuho Bank, Ltd.

1,150,000--

1,150,000

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

1,000,000--

1,000,000

700,000--

700,000

650,000--

650,000

500,000--

500,000

1,500,000--

1,500,000

400,000--

400,000

450,000--

450,000

0.803

890,000--

890,000

0.760

2,670,000--

2,670,000

0.932

890,000--

890,000

0.888

500,000--

500,000

0.550

2,000,000--

2,000,000

1.049

1,000,000--

1,000,000

1.049

500,000--

500,000

1.002

2,600,000--

2,600,000

500,000--

500,000

400,000--

400,000

300,000--

300,000

300,000--

300,000

600,000--

600,000

0.400

500,000--

500,000

0.553

400,000--

400,000

0.553

200,000--

200,000

0.553

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

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

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

Long-term
loans
payableMUFG Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Limited
Resona Bank, Limited
MUFG Bank, Ltd.
(Note 6)Development Bank ofJapan Inc.（Note 6）
Mizuho Bank, Ltd.
(Note 6)
Mizuho Trust &Banking Co., Ltd.
（Note 6）0.978

February 10,2022
February 10,
2022
April 16,
2025

0.975

March 31,
2023

0.994

March 31,
2023

0.987

March 31,
2023

1.013

March 31,
2023

1.110

March 31,
2024

1.110

March 31,
2024

1.243

April 16,2025

(Note 5)

Unsecured/
Nonguaranteed(Note 5)

Unsecured/
Nonguaranteed

September 30,
2024
September 30,
2024
April 21,2026
October 31,
2025
September 30,
2021

January 31,
2027

0.485

April 27,
2021

0.485

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

25

70

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

--1,500,000

400,000--

400,000

400,000--

400,000

300,000--

300,000

600,000--

600,000

0.696

600,000--

600,000

0.815

500,000--

500,000

0.814

200,000--

200,000

0.814

500,000--

500,000

0.903

October 31,
2026

500,000--

500,000

500,000--

500,000

1.033

May 18,2027

400,000--

400,000

500,000--

500,000

1.050

500,000--

500,000

1.049

300,000--

300,000

1.050

500,000--

500,000

0.670

1,500,000--

1,500,000

0.918

500,000--

500,000

0.930

1,500,000--

1,500,000

1.029

1,500,000--

1,500,000

1.100

500,000--

500,000

1.035

1,200,000--

1,200,000

1.000

1,250,000--

1,250,000

800,000--

800,000

0.772

0.603

Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui
Banking Corporation

900,000--

900,000

0.988

2,600,000--

2,600,000

0.985

2,000,000--

2,000,000

0.902

Mizuho Bank, Ltd.

1,000,000--

1,000,000

1.090

1,000,000--

1,000,000

0.907

1,500,000--

1,500,000

0.999

500,000--

500,000

0.900

500,000--

500,000

0.999

500,000--

500,000

0.999

700,000--

700,000

0.913

700,000--

700,000

0.726

500,000--

500,000

0.676

Aozora Bank, Ltd.

500,000--

500,000

0.726

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

400,000--

400,000

0.726

400,000--

400,000

0.676

1,850,000--

1,850,000

0.910

The Bank of Fukuoka,
Ltd.
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd.
(Note 6)
Mizuho Bank, Ltd.

Long-term
loans
payable1,500,000

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

October 31,
2024

October 31,
2024

May 18,2027

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

March 31,2026

(Note 5)

Unsecured/
Nonguaranteed

March 31,

26

71

MUFG Bank, Ltd.

1,300,000--

1,300,000

0.860

Resona Bank, Limited.

650,000--

650,000

0.460

Aozora Bank, Ltd.

890,000--

890,000

0.585

Mizuho Bank, Ltd.

1,370,000--

1,370,000

0.718

Sumitomo Mitsui Trust
Bank, Limited-

820,000-

820,000

0.550

MUFG Bank, Ltd.

-

1,270,000-

1,270,000

0.750

-

650,000-

650,000

0.670-

1,500,000-

1,500,000

0.520

-

1,000,000-

1,000,000

0.644

-

1,000,000-

1,000,000

0.644

-

500,000-

500,000

0.550

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

300,000-

300,000

0.644-

500,000-

500,000

0.830

The Gunma Bank, Ltd.

-

400,000-

400,000

0.498

The Musashino Bank,
Ltd. （Note 6）-

400,000-

400,000

0.478

78,910,000

8,340,000-

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

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

Subtotal
Total

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

October 31,
2026

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

Note 1: Annual repayments of long-term loans payable (except for current portion of long-term loans payable) scheduled after the balance sheet date are as follows:
Due after 1 year
through 2 years
Long-term loans
payable¥ 13,300,000

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

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

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

Due after 5 years¥ 48,590,000

Note 2: All debts except for the following Note 6 are loans payable at a floating rate.
Note 3: Average interest rates are the weighted average during the period and figures are rounded to the nearest third decimal place. Also, with regard to loans payable forwhich interest rate swap transactions were implemented in order to hedge the interest rate volatility risk, the weighted average interest rates taking into consideration
the effects of the interest rate swaps are indicated.
Note 4: All the repayment methods of debt financing are lump-sum repayments on the due date.
Note 5: All debts were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate (additional expenses are included) and repayment ofdebts.
Note 6: Loans payable at a fixed rate.
Note 7: Prepayment was made on October 31, 2019.
Note 8: Borrowings are listed in the current portion of long-term loans payable from the fiscal period under review, listed in long-term loans payable in the previous fiscal
period.

27

72

The following summarizes short-term loans payable and long-term loans payable outstanding as of September 30, 2019:
Classification
LenderBalance atthe beginningof the period

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

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

Short-termloanspayableCurrent
portion of
long-term
loans
payableSumitomo Mitsui
Banking Corporation
Sumitomo Mitsui
Banking Corporation
Sumitomo Mitsui Trust
Bank, Limited

¥

-

¥

-

¥2,750,000

0.466January 31,
2020

0.477

September 30,
2020

0.368

September
30, 2019

0.488

August 31,
2019

0.488

August 31,
2019

0.488

August 31,
2019

0.466

September
30, 2019

700,000-

700,000-

620,000-

620,000

Subtotal

2,750,000

1,320,000-

4,070,000

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

710,000-

710,000-

620,000-

620,000-

350,000-

350,000-

250,000-

250,000-

Resona Bank, Limited.
Sumitomo Mitsui Trust
Bank, Limited

250,000-

250,000-

200,000-

200,000-

Mizuho Bank, Ltd.

300,000-

300,000-

MUFG Bank, Ltd.

1,270,000-

1,270,000-

Aozora Bank, Ltd.

640,000-

640,000-

Resona Bank, Limited

400,000-

400,000-

Mizuho Bank, Ltd.

360,000-

360,000-

300,000-

300,000-

700,000-

700,000-

2,400,000--

2,400,000

MUFG Bank, Ltd.

800,000--

800,000

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

800,000--

800,000

550,000--

550,000

500,000--

500,000

Resona Bank, Limited.

500,000--

500,000

The Gunma Bank, Ltd.
The Musashino Bank,
Ltd.
Mizuho Bank, Ltd.
Mizuho Trust &Banking Co., Ltd.
MUFG Bank, Ltd.

400,000--

400,000

400,000--

400,000

350,000--

350,000

300,000--

300,000-

1,270,000-

1,270,000

0.476

-

660,000

660,000

-

0.475

-

650,000-

650,000-

200,000-

200,000

13,350,000

2,780,000

7,010,000

9,120,000

3,000,000--

3,000,000

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

700,000--

700,000

500,000--

500,000

450,000--

450,000

Resona Bank, Limited

450,000--

450,000

Mizuho Bank, Ltd.
Sumitomo Mitsui
Banking Corporation

400,000--

400,000

2,600,000--

2,600,000

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

Use

Remarks(Note 5)

Unsecured/
Nonguaranteed(Note 5)

Unsecured/
Nonguaranteed(Note 5)

Unsecured/
Nonguaranteed(%)-

Mizuho Bank, Ltd.
(Note 7)
Mizuho Trust &Banking Co., Ltd.
Sumitomo Mitsui Trust
Bank, Limited
Subtotal
Sumitomo Mitsui
Banking Corporation

Long-term
loans
payable¥ 2,750,000

Payment due
date（Note 4）0.751

February 10,
2020

August 31,
2020

0.476

0.865

0.978

February 10,2021

February 10,
2022

28

73

Classification
LenderBalance atthe beginningof the period

Increaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)
800,000--

800,000

600,000--

600,000

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

400,000--

400,000

400,000--

400,000

300,000--

300,000

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

300,000--

300,000

1,500,000--

1,500,000

0.925

1,600,000--

1,600,000

1.033

4,600,000--

4,600,000

1.366

1,000,000--

1,000,000

600,000--

600,000

400,000--

400,000

Resona Bank, Limited

400,000--

400,000

Mizuho Trust &Banking Co., Ltd.

400,000--

400,000

400,000--

400,000

1,500,000--

1,500,000

MUFG Bank, Ltd.

450,000--

450,000

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

200,000--

200,000

150,000--

150,000

1,500,000--

1,500,000

MUFG Bank, Ltd.

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

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

Payment due
date（Note 4）Use

Remarks(Note 5)

Unsecured/
Nonguaranteed(%)

MUFG Bank, Ltd.
Sumitomo Mitsui Trust
Bank, Limited

Sumitomo Mitsui Trust
Bank, Limited
Mizuho Bank, Ltd.

Long-term
loans
payableAverageinterest rate
（Note 2）
（Note 3）0.978

March 31,
2023

0.994

March 31,
2023

0.987

March 31,
2023

1.013

March 31,
2023

-

-

3,000,000

1,150,000--

1,150,000

1,000,000--

1,000,000

700,000--

700,000

650,000--

650,000

500,000--

500,000

1,500,000--

1,500,000

400,000--

400,000

450,000--

450,000

0.803

890,000--

890,000

0.760

2,670,000--

2,670,000

0.932

890,000--

890,000

0.888

500,000--

500,000

0.550

2,000,000--

2,000,000

1.049

1,000,000--

1,000,000

1.049
1.002

500,000--

500,000

2,600,000--

2,600,000

Aozora Bank, Ltd.

500,000--

500,000

MUFG Bank, Ltd.

400,000--

400,000

February 10,2021
February 10,
2022
April 16,
2025

0.975

3,000,000

Sumitomo Mitsui
Banking Corporation

February 10,
2022

1.110

March 31,
2024

1.110

March 31,
2024

1.243

April 16,
2025

0.485

September 30,
2024
September 30,
2024
April 21,2026
October 31,
2025
September 30,
2021

January 31,
2027

April 27,
2021

29

74

Classification
LenderBalance atthe beginningof the period

Increaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)
Sumitomo Mitsui Trust
Bank, Limited

Payment due
date（Note 4）--300,000

300,000--

300,000

600,000--

600,000

0.400

500,000--

500,000

0.553

400,000--

400,000

0.553

200,000--

200,000

0.553

1,500,000--

1,500,000

400,000--

400,000

400,000--

400,000

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

300,000--

300,000

600,000--

600,000

0.696

600,000--

600,000

0.815

500,000--

500,000

0.814

200,000--

200,000

0.814

500,000--

500,000

0.903

October 31,
2026

500,000--

500,000

500,000--

500,000

1.033

May 18,2027

Resona Bank, Limited
Development Bank ofJapan Inc. (Note 6)
Mizuho Bank, Ltd.
(Note 6)
Mizuho Trust &Banking Co., Ltd.
(Note 6)
MUFG Bank, Ltd.
(Note 6)
Sumitomo Mitsui Trust
Bank, Limited
MUFG Bank, Ltd.
(Note 6)
Mizuho Bank, Ltd.
(Note 6)
Sumitomo Mitsui Trust
Bank, Limited
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd.
(Note 6)400,000--

400,000

500,000--

500,000

1.050

500,000--

500,000

1.049

300,000--

300,000

1.050

500,000--

500,000

0.670

1,500,000--

1,500,000

0.918

500,000--

500,000

0.930

1,500,000--

1,500,000

1.029

1,500,000--

1,500,000

1.100

500,000--

500,000

1.035

1,200,000--

1,200,000

1.000

MUFG Bank, Ltd.

1,250,000--

1,250,000

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

800,000--

800,000

900,000--

900,000

0.988

2,600,000--

2,600,000

0.985

2,000,000--

2,000,000

0.902

1,000,000--

1,000,000

1.090

1,000,000--

1,000,000

0.907

1,500,000--

1,500,000

0.999Mizuho Bank, Ltd.
The Bank of Fukuoka,
Ltd.
Sumitomo Mitsui
Banking Corporation

Use

Remarks(Note 5)

Unsecured/
Nonguaranteed(%)

300,000

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

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

0.485

0.772

0.603

April 27,
2021

April 27,
2021

October 31,
2024

October 31,
2024

May 18,2027

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

30

75

Classification

Balance atthe beginningof the period

LenderIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)
MUFG Bank, Ltd.
(Note 6)Long-term
loans
payableAverageinterest rate
（Note 2）
（Note 3）--500,000

0.900

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

500,000--

500,000

0.999

500,000--

500,000

0.999

700,000--

700,000

0.913

700,000--

700,000

0.726

500,000--

500,000

0.676

Aozora Bank, Ltd.

500,000--

500,000

0.726

March 31,2026-

400,000

0.726

400,000--

400,000

0.676

1,850,000--

1,850,000

0.910

March 31,1,300,000--

1,300,000

0.860

2028

Resona Bank, Limited.

-

650,000-

650,000

0.460

Aozora Bank, Ltd.

-

890,000-

890,000

0.585

Mizuho Bank, Ltd.

-1,370,000-

1,370,000

0.718

83,000,000

2,910,000-

85,910,000¥99,100,000¥7,010,000¥7,010,000¥99,100,000

Total(Note 5)

Unsecured/
Nonguaranteed

March 31,2025-

Subtotal

Remarks

May 31,2027

400,000

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

Use

(%)

500,000

Mizuho Bank, Ltd.

Payment due
date（Note 4）

August 31,
2024
August 31,
2026
March 31,2028

Note 1: Annual repayments of long-term loans payable (except for current portion of long-term loans payable) scheduled after the balance sheet date are as follows:
Due after 1 year
through 2 years
Long-term loans
payable¥ 13,300,000

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

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

Due after 4 years
through 5 years¥ 8,990,000

Due after 5 years¥ 47,070,000

Note 2: All debts except for the following Note 6 are loans payable at a floating rate.
Note 3: Average interest rates are the weighted average during the period and figures are rounded to the nearest third decimal place. Also, with regard to loans payable forwhich interest rate swap transactions were implemented in order to hedge the interest rate volatility risk, the weighted average interest rates taking into consideration
the effects of the interest rate swaps are indicated.
Note 4: All the repayment methods of debt financing are lump-sum repayments on the due date.
Note 5: All debts were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate (additional expenses are included) and repayment ofdebts.
Note 6: Loans payable at a fixed rate.
Note 7: Prepayment was made on September 30, 2019.

3176

23. INVESTMENT CORPORATION BONDS
Outstanding investment corporation bonds as of March 31, 2020 are as follows.
SeriesDate of issue

Balance atthe beginningof period

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

October 31,
2016¥1,000,000¥-

Interest rate

Repayment date

¥1,000,000

0.200

October 29,
2021

1,000,000-

1,000,000

0.600

October 30,
2026

August 31,
2017

1,000,000-

1,000,000

0.320

August 31,
2022

August 31,
2017

2,000,000-

2,000,000

0.700

August 31,
2027

April 26,2018

2,000,000-

2,000,000

0.700

April 26,2028-

¥7,000,000¥

Remarks(%)

October 31,
2016¥7,000,000

Use(Note2)

Unsecured(Note3)Note 1: Ranking pari passu among the specified investment corporation bonds.
Note 2: Investment corporation bonds were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate and repayment of debts.
Note 3: Investment corporation bonds were used as the funds for repayment of debts.
Note 4: Annual repayments of investment corporation bonds scheduled for the next five years after the balance sheet date are as follows.
Due in 1 year
or less
Investment
corporation bonds¥

Due after 1 year
through 2 years

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

¥1,000,000¥1,000,000-

Due after 3 years
through 4 years¥

Due after 4 years
through 5 years-¥-

Outstanding investment corporation bonds as of September 30, 2019 are as follows.
SeriesFirst series of unsecured
investment corporation bonds(Note 1)
Second series of unsecured
investment corporation bonds(Note 1)
Third series of unsecured
investment corporation bonds(Note 1)
Fourth series of unsecured
investment corporation bonds(Note 1)Fifth series of unsecured
investment corporation bonds(Note 1)
Total

Date of issue

Balance atthe beginningof period

October 31,
2016¥1,000,000

October 31,
2016

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

Repayment date

¥1,000,000

0.200

October 29,
2021

1,000,000-

1,000,000

0.600

October 30,
2026

August 31,
2017

1,000,000-

1,000,000

0.320

August 31,
2022

August 31,
2017

2,000,000-

2,000,000

0.700

August 31,
2027

April 26,2018

2,000,000-

2,000,000

0.700

April 26,2028-

¥7,000,000¥7,000,000¥

Remarks

(%)

-

¥

Use

(Note2)

Unsecured(Note3)Note 1: Ranking pari passu among the specified investment corporation bonds.
Note 2: Investment corporation bonds were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate and repayment of debts.
Note 3: Investment corporation bonds were used as the funds for repayment of debts.
Note 4: Annual repayments of investment corporation bonds scheduled for the next five years after the balance sheet date are as follows.
Due in 1 year
or less
Investment
corporation bonds¥

Due after 1 year
through 2 years-¥

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

¥2,000,000

Due after 3 years
through 4 years¥

Due after 4 years
through 5 years
-

¥

-

32

77

24. DISTRIBUTIONS
From October 1, 2019
to March 31, 2020

I.. Retained earnings at the end of period

From April 1, 2019
to September 30, 2019

¥3,784,993,657¥3,455,496,659

II. Distributions in excess of earnings¥5,361,770¥123,878,800

Of which, allowance for temporary
difference adjustments¥5,361,770¥123,878,800

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

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

Ⅳ. Total distributions¥3,503,916,695¥3,292,942,200

Distributions per unit

¥6,535¥6,486¥3,498,554,925¥3,169,063,400¥6,525¥6,242¥5,361,770¥123,878,800

¥10

¥244

¥212,121,506¥286,433,259

In accordance with the policy described in Article 39-1 of its
Articles of Incorporation, KRR determines that the amountof distribution shall exceed the amount equivalent to 90% of
its distributable profit as stipulated in Article 67-15 of theSpecial Taxation Measures Law and shall be up to its
profits as the maximum amount. Following this policy, KRR
has decided that it shall distribute ¥3,498,554,925 which isalmost the entire amount of income as defined in Article
136-1 of the Investment Trust Act after deduction ofreversal of allowance for temporary difference adjustments(as defined in Article 2-2-30 of the Ordinance on
Accountings of Investment Corporations).
Furthermore, in accordance with the policy for “Distributionof Money in Excess of Profits” as stated in Article 39-2 of
KRR’s Articles of Incorporation, KRR made a distribution inexcess of earnings of ¥5,361,770 for allowance fortemporary difference adjustments (as defined in Article
2-2-30 of the Ordinance on Accountings of Investment
Corporations) for the purpose of reflecting the effect on
distributions of the difference in earnings calculated underJapanese GAAP and Japanese tax laws (as defined in
Article 2-2-30 (a) of the Ordinance on Accountings ofInvestment Corporations) in association with theamortization of fixed-term land leasehold rights and of theitem deducted from net asset (as defined in Article 2-2-30(b) of the Ordinance on Accountings of Investment
Corporations) in association with deferred losses onhedges.

In accordance with the policy described in Article 39-1 of its
Articles of Incorporation, KRR determines that the amountof distribution shall exceed the amount equivalent to 90% of
its distributable profit as stipulated in Article 67-15 of theSpecial Taxation Measures Law and shall be up to its profits
as the maximum amount. Following this policy, KRR has
decided that it shall distribute ¥3,169,063,400 which isalmost the entire amount of income as defined in Article
136-1 of the Investment Trust Act.
Furthermore, in accordance with the policy for “Distributionof Money in Excess of Profits” as stated in Article 39-2 of
KRR’s Articles of Incorporation, KRR made a distribution inexcess of earnings of ¥123,878,800 for allowance fortemporary difference adjustments (as defined in Article
2-2-30 of the Ordinance on Accountings of Investment
Corporations) for the purpose of reflecting the effect on
distributions of the difference in earnings calculated underJapanese GAAP and Japanese tax laws (as defined in
Article 2-2-30 (a) of the Ordinance on Accountings ofInvestment Corporations) in association with theamortization of fixed-term land leasehold rights and of theitem deducted from net asset (as defined in Article 2-2-30(b) of the Ordinance on Accountings of Investment
Corporations) in association with deferred losses onhedges.

Of which, distributions of earnings
Of which, distributions of earnings per unit
Of which, allowance for temporary
difference adjustments
Of which, distributions in excess ofearnings per unit (allowance for temporary
difference adjustments)
Ⅴ.Retained earnings brought forward to thenext period

Method of calculating distribution amount10th Fiscal Period (From October 1, 2019 to March 31, 2020)
1. Reasons, related assets and allowance(in thousands of yen)
Related assets, etc.
Buildings in trust,
Leasehold right in trust

ReasonAmortization of leasehold right in trust and the amount in excess ofdepreciation

Allowance for temporary
difference adjustments¥5,36133

78

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

Reversal of allowance for temporary
difference adjustments

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

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

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

Deferred gains or losses on hedges

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

9th Fiscal Period (From April 1, 2019 to September 30, 2019)
1. Reasons, related assets and allowance(in thousands of yen)
Related assets, etc.

Allowance for temporary
difference adjustments

ReasonBuildings in trust,
Leasehold right in trust

Amortization of leasehold right in trust and the amount in excess ofdepreciation¥5,251

Deferred gains or losses on hedges

Loss on interest-rate swaps recognized at the end of the fiscal period¥118,627

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

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

Deferred gains or losses on hedges

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

3479