Focused Investment in
Shopping Centers for Daily Needs

Semi-annual Reportfor the 15th Period(From April 1, 2022
to September 30, 2022)

Security code: 3453

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

From the Executive Director r
I would like to take this opportunity to express my sincere gratitude to our shareholders for yourcontinued support to Kenedix Retail REIT Corporation (“KRR”).
Thanks to your support, KRR has reported its results of operations for the 15th fiscal period (from
April 1, 2022 to September 30, 2022).
During the 15th fiscal period, shopping centers for daily needs with grocery supermarkets as coretenants have continued to act as vital retail infrastructure providing fundamental functions tomaintain day-to-day life of consumers, while the number of COVID-19 cases reached record highin Japan. Therefore, impact of the pandemic remained limited for KRR in the 15th fiscal period.
We have acquired three properties including additional acquisition of an existing asset in the 15th
fiscal period. In addition, we conducted the 6th public offering at the beginning of the 16th fiscal
period (from October 1, 2022 to March 31, 2023) and acquired two properties. As a result, KRR’s
portfolio totaled 269,219 million yen for 70 properties as of October 31, 2022.
There are clear signs of resumption in the economy as the number of COVID-19 cases decreases.
However, the business environment remains uncertain due to the inflation in Japan including
soaring utility charges, global inflation and rising interest rates, and geopolitical risks overseas.
Due to the impact of soaring utility charges, we expect a decrease in DPU forecast in the 16th
and 17th fiscal periods. We dedicate ourselves to promote the operation of retail and logistics
facilities in order to respond to the confidence and expectations of investors even under thecurrent environment.
We respectfully look forward to your continued support.

Moyuru Watanabe

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

Highlights of the 15th fiscal period ended September 30, 2022
Distributions per unitJ P Y 6,484

Forecast DPU

Forecast DPU

for the 16th fiscal period

for the 17th fiscal period

JP Y 6,360

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

524

J P Y 6,240

J P Y 253.6 bn / 68
Occupancy rate

at the end of period (Note)

99.3 ％

Note: As Kitera Plaza Aobadai is under conversion, its occupancy rate is 0% as of September 30, 2022. However, if we exclude this property,
the occupancy rate is 99.6%.

Vol. 15

Close-up KRR

R-10

NSC

Sun Street Hamakita

An NSC serving diverse customer needs, located in a residential area
in central Hamamatsu with growing population
Sun Street Hamakita is a large neighborhood shopping center(NSC) located in Hamakita in central Hamamatsu with growing
population and opened in 2007. The property is facing National
Route 152 and Prefectural Route 391, providing easy access to theproperty from the north, south, east and west. The center canaccommodate approximately 2,000 cars and is conveniently
located not only for neighboring consumers, but also for people
in a wide catchment area including workers at the large car
manufacture’s plant located in the neighborhood.

local Tenryu cedar trees.
Regarding environmental certification, we have received DBJ
Green Building Certification for the property (rating: three-star) as
a property with excellent environmental and social awareness inJune 2022, in recognition of our efforts to conserve energy andresources, such as utilization of LED lightings.
In order to enliven local communities, we held Hamakita Summer
Festival in August 2022, a community-participating event, with thesupport and cooperation of Hamakita-ku, Hamakita Chamber ofCommerce and Industry and local elementary schools. The event
was held as a substitute for a local firework event suspended in
response to the COVID-19 pandemic. In addition, we have held
events called “Panstreet Hamakita” where products of popularbakery shops in Shizuoka are sold and the events has attracted
many customers since 2018.

The property consists of a mall building which houses coretenants of the center, Seiyu, the grocery supermarket chain, andHome Center Valor. Other tenants include a leading movie
theater, a food court and specialty stores (such as a clothingretailer and a dollar shop), and a separate building houses a car
dealership, an automotive parts store and an internet cafe. The
center can appeal to a wide range of customers, including childrearing families due to its traits such as coziness and synergies
generated among service-oriented tenants including the movie
theater, a relaxation spa and an arcade game center, which areresilient to e-commerce.

In addition to the 90% quasi-co-ownership interest of theproperty we acquired in 2017, we acquired the remaining 10%
quasi-co-ownership interest in April 2022, making it a soleownership in the property.

The renovation in 2019 has also improved its comfortableness andconvenience significantly. We removed a smoking space in thefood court, installing nursing rooms and created a space for
events and rests in a passage in front of abook shop facing an atrium.
Regarding SDGs initiatives, we installedrecycled soaps in restrooms of the property
in 2021, hosted ten SDGs educational eventsfor children and held an
exhibition/workshop to create environmentfriendly Christmas trees using timbers of
Acquisition price

JPY 11,946 mn

Location

Hamamatsu, Shizuoka

Land area

96,832.21m 2

Gross floor area

60,088.91m 2

Core tenant

Seiyu Co., Ltd.

Going forward, we will continue to focus on the operation of theneighborhood shopping center, which is closely linked to local
communities, and will work to promote further environmental andsocial considerations in the operation of center.
Enlarged
View

Hamakita
TenryuRiver

Tomei Expy

MagomeRiver

Factory(Suzuki)Sun Street Hamakita
Hamakita
StationHamamatsu IC
Kirari Town
Hamakita
Tenryugawa

Enshu-Komatsu

Factory(Yamaha)Hamamatsu

1

ESG Initiatives

1 Promoting ESG initiatives
KRR promotes ESG initiatives for the purpose of enhancing unitholder value in the medium- to long-term
Major ESG initiatives
Awarded GRESB Ratingin the 2022 GRESB Real Estate

E

Disclosed analysis on climate change
in line with TCFD recommendation

Medium- to long-term targets
for GHG emission reduction

Awarded
4 Star Rating for
fourth consecutive
year(Environment)

By FY2030

By 2050

40% reduction(vs. FY2015)

Achievecarbon neutral

S

Collaboration withlocal communities

Hosting SDGs
enlightening eventfor children

Decision to introduce
investment unit
ownershipprogramG

Unitholder value-linked
management fee
structure

Same boat
investment
by Kenedix, Inc.

Kenedix Group’s
strongcommitment(Social)(Governance)

Sustainability Office andSustainability Committee
covering REITs managed
by KFM

Sustainability OfficeSustainability Committee✓ Dealing with matters relating to sustainability and ESG
in KFM✓ Published the first Sustainability Report of KFM,
introducing ESG initiatives of its managing REITs✓ Chaired by the President of KFM, for the purpose ofenhancing approaches to sustainability and ESG

2 Environment
The number of certified properties and certified floor area (as of Oct. 31, 2022)
The number of certified properties

Total certified floor area

Ratio (based on gross floor area)

21 properties

585,988.22m2

65.0% (Target: 70%+)

Certification for CASBEE For Real Estate

DBJ Green Building Certification

12 certified properties

8 certified properties

S rank ★★★★★

A rank ★★★★

Apita Terrace Yokohama Tsunashima

Musashi Ranzan Distribution Center

MONA Shin-Urayasu

Passaggio Nishiarai

Homecenter Kohnan Sunadabashi

Costco Wholesale Sapporo Warehouse

Unicus Ina

Blumer HAT Kobe

Resora Obu Shopping Terrace

Carino Esaka

Kawamachi Yahagi Mall

Roseo Mito

Ashico Town Ashikaga

Sun Street Hamakita

Kitera Town Chofu★★★

Unicus Yoshikawa

Certification for Building-Housing Energy-efficiency Labeling System (BELS)

Kalsa Hiratsuka
Blumer Maitamon
COMBOX Komyoike

2 certified properties

Yumemachi Narashinodai Mall★★★★★
Apita Terrace Yokohama Tsunashima★★
iias Kasugai

Solar panel installation

Unicus Ina
Kawamachi Yahagi Mall
Apita Terrace Yokohama Tsunashima
Monenosato Mall
Yumemachi Narashinodai Mall
Tenri Distribution Center(as of Oct. 31, 2022)

LED lighting installation
56 of 58 properties (excl. land-only
properties) installed LED entirely or
partially(as of Oct. 31, 2022)
Monenosato Mall

MONA Shin-Urayasu

2

ESG Initiatives

3 Social
Contribution to community
Collaboration with local communities

Hosting used clothing collecting event

SDGs educational events for children✓ Entering into agreements, allowing the property
to be used as a temporary shelter at emergency✓ Hosting an event organized by BRING, a project
aimed at recycling used clothing✓ Holding an event featuring essence of SDGs

Ashico Town Ashikaga

Blumer Maitamon

Sun Street Hamakita

Bicycle sharing

Property nameSupporting Japan for
UNHCR✓ Providing a portion of theproperties in order toprovide services to users
of facilities and residents
in the vicinity, and to
reduce environmental
impact✓ Providing common areas ofour retail properties fortheir fund-raising campaign✓ In 2021, the campaign
locations were provided at
the following 6 properties

MONA Shin-Urayasu

Efforts for employees

Passaggio Nishiarai
Blumer Maitamon
Blumer HAT Kobe
Carino Esaka
COMBOX Komyoike
Resora Obu Shopping Terrace

Passaggio Nishiarai

Introduction of investment unit ownership program

Engagement survey✓ In August 2022, Kenedix, Inc. decided to introduce an investment unit ownershipprogram for employees of KFM and its specified related corporations, including
Kenedix, Inc.

✓ A survey to promote mutual understanding and affinity between the company andemployees✓ The introduction of investment unit ownership program aims to facilitate theirwealth building as well as to enhance unitholder value over the medium- to longterm by promoting further alignment of interests with KRR’s unitholders✓ Regular surveys will enable a qualitative understanding of the relationship between
company and employees, and will be used in the drafting of internal initiatives toimprove the organization

4 Governance
The Kenedix Group’s strong commitment to J-REITs

Unitholder value-linked management fee structure

The Kenedix Group’s J-REIT assets (as of Jun. 30, 2022) constitute about
a half of their AUM
Sound growth of the J-REITs is in line with their interests
Private REIT / Private
funds / Foreign REIT
46.3%

J-REIT
47.6%

Number of investment
units owned
16,950 units(As of Oct. 31, 2022)

Ownership of total investment
units issued
2.8%

Decision-making process for related-party transactions
Preparation of
proposal

Investment Department

Confirmation of
proposalCompliance Officer

Compliance Committee

Othertransactions

Asset Management Committee of Retail REIT
Department
Transactions with interested party

Deliberation
and resolution

Reporting

KRR Board of Directors

KFM Board of Directors

Total assets at the end of the previous FP x 0.27%(annual rate)

II Net income x DPU x 0.0013%

Investment unit
performance fee

KRR’s excess returns over Tokyo Stock Exchange
REIT Total Return Index (including dividends) x
Market capitalization x 0.1%

Acquisition fee

Acquisition price x 1.0% (Including acquisition ofbuildings through property expansion orreconstruction)

Disposition fee

Disposition price x 0.5%

Merger fee

Appraisal value of the assets to be succeeded x 1.0%
(maximum)✓ The purpose of the revision in Dec. 2021 is to increase the linkage between
unitholder returns and the asset management fee

Transactions with interested party

Deliberation
and resolution

I

The investment unit performance fee structure

Transactions with interested party

Deliberation
and resolution

Fee structure providing incentives to enhance unitholder value
Asset
management
fee

Properietary investments
6.0%

Investment in KRR by Kenedix, Inc.

KRR has introduced a fee structure providing incentives toenhance unitholder value✓ Revised the method of calculation to factor in a case where KRR’s
investment unit prices underperform the TSE REIT Index
KRR’s excess return

KRR’s market capitalization

KRR’s total return(Growth rate considering
dividends)

0.1%

TSE REIT Total Return Index(including dividends)(Growth rate for the same period)

In case of negative excess return
Other
transactions

・ No investment unit performance fee
Revisedpoint

・ Negative performance figures are carried over to the next
period (only for one FP). If the next period’s excess return ispositive, the excess return is offset by the previous period’s
negative performance figure3

Financial Summary
11th fiscal period

12th fiscal period

13th fiscal period

14th fiscal period

15th fiscal period(From April 1, 2020
to September 30, 2020)(From October 1, 2020
to March 31, 2021)(From April 1, 2021
to September 30, 2021)(From October 1, 2021
to March 31, 2022)(From April 1, 2022
to September 30, 2022)

Millions of yen

8,398

8,717

9,576

10,254

9,357

Millions of yen

8,272

8,263

8,901

8,956

9,357

Millions of yen

4,316

4,338

4,694

5,497

4,951

Millions of yen

3,479

3,377

3,662

3,588

3,949

Operating income

Millions of yen

4,082

4,379

4,881

4,756

4,406

Ordinary income

Millions of yen

3,505

3,799

4,262

4,131

3,778

Net income

Millions of yen

3,504

3,798

4,261

4,127

3,774

Total assets

Millions of yen

251,655

251,773272,622275,833

276,699

Fiscal period
Operating revenues
Of which, property-related revenues
Operating expenses
Of which, property-related expenses[Period-on-period changes]
Total net assets%(+1.0)(+0.0)(+8.3)(+1.2)(+0.3)

Millions of yen

124,308

124,701

137,052

137,354

137,428%(-0.1)(+0.3)(+9.9)(+0.2)(+0.1)

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

Millions of yen

121,183

121,183

133,103

133,103

133,103

Units

536,177

536,177

582,177

582,177

582,177

Yen

231,842

232,575

235,414235,932

236,059

Distributions[Period-on-period changes]

Millions of yen

3,509

3,804

4,266

4,127

3,774

Distributions per unit

Yen

6,546

7,095

7,328

7,090

6,484

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

Yen

6,270

7,085

7,274

7,090

6,484

Yen

276

10

54

-

-

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

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

%

%

%

1.4

1.5

1.6

1.5

1.4

(2.8)

(3.0)

(3.2)

(3.0)

(2.7)

2.8

3.1

3.3

3.0

2.7

(5.6)

(6.1)

(6.5)

(6.0)

(5.5)

49.4

49.5

50.3

49.8

49.7

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

Operating days

Days

183

182

183

182

183

Payout ratio (Note 7)

%

95.9

100.0

99.4

100.0

100.0

62

64

66

66

68

941,020.65

956,496.64

997,493.50

993,677.76

1,041,850.14

496

502

528

519

524

%

99.7

99.8

99.6

99.2

99.3

Depreciation

Millions of yen

1,040

1,068

1,166

1,189

1,244

Capital expenditures

Millions of yen

544

543

628

680

457

Rental NOI (Net operating income) (Note 9)

Millions of yen

5,833

5,954

6,405

6,557

6,652

FFO (Funds from operation) (Note 10)

Millions of yen

4,431

4,426

4,774

4,900

5,040

(Note 11)

Yen

8,265

8,254

8,200

8,418

8,658

Number of properties
Leasable aream2

Number of tenants (Note 8)
Occupancy ratio

FFO per unit
Note 1:
Note 2:
Note 3:Note 4:

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

4

Financial Statements(15th Fiscal Period: from April 1, 2022 to September 30, 2022)
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

5Kenedix Retail REIT Corporation

Balance Sheet
As of September 30, 2022
As of September 30, 2022

As of March 31, 2022
(in thousands of yen)

AssetsCurrent assets
Cash and deposits (Notes 9 and 11)¥10,003,221¥11,738,047

Cash and deposits in trust (Notes 9 and 11)

10,833,639

14,487,445

Operating accounts receivable

238,068

174,355

Prepaid expenses

149,376

24,748

1,907

1,912

21,226,213

26,426,509

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

773,703764,808

Accumulated depreciation(109,983)(93,931)

Buildings, net

663,720

670,877

Buildings

46,777

46,777

Accumulated depreciation(8,230)(6,827)Structures, net

38,54739,9492,956,465

2,956,465

Structures

Land

20,666-72,000,294

70,054,703

Accumulated depreciation(11,403,948)(10,272,226)

Buildings in trust, net (Note 3)

60,596,346

59,782,476

3,646,089

3,495,870

Construction in progress
Buildings in trust

Structures in trust
Accumulated depreciation(774,128)(705,818)

Structures in trust, net (Note 3)

2,871,961

2,790,051

Machinery and equipment in trust

339,316

308,571

Accumulated depreciation(70,931)(61,564)

Machinery and equipment in trust, net

268,384

247,007

Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust (Note 3)
Construction in progress in trust
Total property, plant and equipment, net
Intangible assets (Note 21)
Leasehold right in trust (Note 18)

191,805

183,512(99,843)(86,187)

91,961

97,325

181,272,334

176,940,236

238,915

153,057

249,019,303

243,677,447

4,713,944

4,292,890

OtherTotal intangible assets
Investments and other assets
Lease and guarantee deposits

4,558

5,695

4,718,502

4,298,585

10,00010,000

Lease and guarantee deposits in trust

62,927

60,236Long-term prepaid expenses

900,180

998,151

Long-term deposits

98,08095,680Other590,363

186,275

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

1,661,551

1,350,342

255,399,357

249,326,375

50,67442,32723,02738,42973,70280,757¥276,699,273¥275,833,642

See accompanying notes to financial statements.

6

As of September 30, 2022

As of March 31, 2022

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

Short-term loans payable (Notes 11 and 22)

750,000

750,000-

1,000,000

Current portion of investment corporation bonds (Notes 11 and 23)¥972,907

8,500,000

10,050,000

Accounts payable-other487,701

603,279

Accrued expenses

71,70564,266

Income taxes payable

3,705

4,045

126,797

296,493

1,450,130

1,413,214

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

Accrued consumption taxes
Advances received

22,70818,70912,236,728

15,172,916

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

10,000,000

8,000,000

Long-term loans payable (Notes 11 and 22)

105,050,000

103,500,000

156,083

148,083

11,779,677

11,586,510

Asset retirement obligations (Note 15)

24,99924,843

Other

23,55446,800127,034,315

123,306,238

139,271,043

138,479,155

133,103,750

133,103,750(40,522)(317,378)

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

Total non-current liabilities
Total liabilities
Net assets
Unitholders' equity
Unitholders' capital
Deduction from unitholders' capital
Allowance for temporary difference adjustments (Note 5)(40,522)(317,378)

133,063,228

132,786,372

3,775,141

4,404,711

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

3,775,141

4,404,711

136,838,369

137,191,084

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

589,860

163,403

Total valuation and translation adjustments

589,860

163,403

Total net assets (Note 6)

137,428,230

137,354,487

Total liabilities and net assets¥276,699,273¥275,833,642

Total surplus
Total unitholders' equity
Valuation and translation adjustments

See accompanying notes to financial statements.

7

Kenedix Retail REIT Corporation

Statement of Income and Retained Earnings
For the period from April 1, 2022 to September 30, 2022
From April 1, 2022

From October 1, 2021

to September 30, 2022

to March 31, 2022

(in thousands of yen)
Operating revenues
Rent revenue-real estate （Note 7)¥8,011,772¥7,882,731

Other lease business revenue (Note 7)

1,346,195

1,074,082-

1,297,793

9,357,967

10,254,608

3,949,838

3,588,893

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

861,164

Asset management fees

765,048864,525

Asset custody fees

10,964

10,860Administrative service fees

34,96634,822

Loss on sale of real estate property (Note 7)

Directors' compensation

3,000

3,750

Other operating expenses

187,889

133,883

Total operating expenses

4,951,708

5,497,899

4,406,259

4,756,708

Operating income
Non-operating income
Interest income

63

65

Gain on forfeiture of unclaimed dividends

258

376

2

856

324

1,297

471,585

476,880

Interest on refund
Total non-operating income
Non-operating expenses
Interest expenses
Interest expenses on investment corporation bonds

27,63522,389Financing-related expenses

108,498

107,871

Amortization of investment corporation bond issuance costs

4,826

3,847

Amortization of investment unit issuance costs

15,402

15,402627,948626,392

Ordinary income

3,778,636

4,131,614

Income before income taxes

3,778,636

4,131,614

3,715

4,055

Total non-operating expenses

Income taxes
Current

3,715

4,055

3,774,920

4,127,558

Retained earnings brought forward

221

277,152

Unappropriated retained earnings¥3,775,141¥4,404,711

Total income taxes
Net income

See accompanying notes to financial statements.

8

Kenedix Retail REIT Corporation

Statement of Changes in Net Assets
For the period from April 1, 2022 to September 30, 2022
Unitholders' equity
Unitholders' capital

Surplus

Deduction from unitholders'
capitalAllowance
for
temporarydifference
adjustments

Unitholders'
capitalTotal
deduction
fromunitholders'
capitalUnitholders'
capital, net

Unappropri
ated
retainedearnings

Total
surplusTotal
unitholders'equity¥4,511,908¥4,511,908¥137,329,718(4,234,755)(4,234,755)(4,234,755)(in thousands of yen)
Balance as of September 30, 2021 (Note 8)¥133,103,750¥ (285,940)¥(285,940)¥132,817,810

Changes of items during the period
Dividends from surplus
Distributions in excess of earnings
from allowance for temporary
difference adjustments(31,437)(31,437)(31,437)

Net income(31,437)
4,127,558

4,127,558

4,127,558

Net changes of items other thanunitholders’ equity
Total changes of items during the period-(31,437)(31,437)(31,437)(107,196)(107,196)(138,634)

Balance as of March 31, 2022 (Note 8)¥133,103,750¥ (317,378)¥(317,378)¥132,786,372¥4,404,711¥4,404,711¥137,191,084(4,127,634)(4,127,634)(4,127,634)(276,855)(276,855)-

3,774,920

3,774,920

3,774,920

Changes of items during the period
Dividends from surplus
Reversal of allowance for temporary
difference adjustments

276,855

276,855

276,855

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

276,855

276,855

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

9Valuation and translation adjustments
Deferred gains orlosses on hedges
Balance as of September 30, 2021 (Note 8)
Changes of items during the period¥(276,894)

Total net assets

Total valuation andtranslation adjustments(in thousands of yen)¥(276,894)¥137,052,824

Dividends from surplus
Distributions in excess of earnings fromallowance for temporary difference
adjustments(4,234,755)

Net income
Net changes of items other thanunitholders’ equity

4,127,558(31,437)

440,297

440,297

440,297

Total changes of items during the period

440,297

440,297

301,663

Balance as of March 31, 2022 (Note 8)¥163,403¥163,403¥137,354,487

Changes of items during the period
Dividends from surplus
Reversal of allowance for temporary
difference adjustments(4,127,634)

Net income
Net changes of items other thanunitholders’ equity

3,774,920-

426,457

426,457

426,457

Total changes of items during the period

426,457

426,457

73,742

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

See accompanying notes to financial statements.

10Kenedix Retail REIT Corporation

Statement of Cash Flows
For the period from April 1, 2022 to September 30, 2022
From April 1, 2022

From October 1, 2021

to September 30, 2022

to March 31, 2022

(in thousands of yen)
Net cash provided by (used in) operating activities
Income before income taxes¥3,778,636¥4,131,614

Depreciation and amortization

1,245,780

1,190,803

Amortization of investment corporation bond issuance costs

4,826

3,847

Amortization of investment unit issuance costs

15,402

15,402

Interest income

(63)

(65)

Interest expenses

499,221499,270

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

7,044-

343,985

Decrease (increase) in consumption taxes receivable(124,628)

129,026

31,418(43,882)

Increase (decrease) in accounts payable-other(114,574)(28,915)

Increase (decrease) in accrued consumption taxes

Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable(169,696)

242,818

Increase (decrease) in advances received

36,915(7,102)

Increase (decrease) in deposits received

3,999(3,492)

Decrease (increase) in long-term prepaid expenses

97,970(127,883)

Decrease (increase) in long-term deposits(2,400)6,399-

7,812,059

Other(1,089)3,450

Subtotal

5,238,004

14,174,380

Decrease in net property, plant and equipment held in trust due to sale63

65

(491,822)(493,232)(4,055)(1,187)

4,742,191

13,680,026(34,327)(9,028)(6,728,384)(10,296,807)(425,032)-

Repayments of lease and guarantee deposits in trust(2,691)-

Proceeds from tenant leasehold and security deposits

8,000

-

Repayments of tenant leasehold and security deposits in trust(177,584)(480,882)

Proceeds from tenant leasehold and security deposits in trust

370,751

278,278

Proceeds from restricted bank deposits in trust

15,00015,000(6,974,268)(10,493,439)

Proceeds of short-term loans payable

1,000,000

750,000

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

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

Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities

Proceeds from long-term loans payable

2,050,000

11,000,000

Repayments of long-term loans payable(2,050,000)(9,750,000)

Proceeds from issuance of investment corporation bonds

1,986,826

1,983,675

Redemption of investment corporation bonds(1,000,000)(1,000,000)

Dividends paid

(4,128,380)(4,265,387)

Net cash provided by (used in) financing activities(3,141,554)(1,281,712)

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

1,904,874

Cash and cash equivalents at the beginning of the period

26,047,993

24,143,118

Cash and cash equivalents at the end of the period (Note 9)¥20,674,361¥26,047,993

See accompanying notes to financial statements.

11

Kenedix Retail REIT Corporation

Notes to Financial Statements
For the period from April 1, 2022 to September 30, 2022

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Kenedix Retail REIT Corporation (“KRR”) was established on October 3, 2014, under the Act on Investment Trusts and Investment Corporations of Japan(the “Investment Trust Act”). On February 10, 2015, KRR was listed on the Real Estate Investment Trust Securities (J-REIT) Market of Tokyo Stock Exchange,
Inc. (the Tokyo Stock Exchange) (Securities code: 3453). Subsequently, KRR raised funds through public offerings, including international offerings. As aresult, the number of investment units issued as of September 30, 2022 was 582,177 units.
KRR seeks to invest primarily in neighborhood, community and other shopping centers that cater to the day-to-day needs of local area customers and havestable demand from retailers and customers, and also seeks to invest in distribution centers, which supplement shopping centers in providing goods toconsumers, in order to provide stable investment returns over the long term. Sponsored by Kenedix, Inc., KRR entrusts its asset management and investment
operations to Kenedix Real Estate Fund Management, Inc. (“KFM”), with the following strategies.
(Note) For management purposes and ease of classification, KRR defines neighborhood, community and other shopping centers for daily needs asretail properties that generally have the following characteristics:
a. Retail trade area of an approximate radius of one to ten kilometers (and generally, a radius of three to five kilometers), with customers
predominantly from local areas surrounding the retail property
b. Operational capacity to accommodate certain daily local retail needs and strong customer traffic on both weekdays and weekends
c. Composed of various specialty stores to meet a range of day-to-day needs such as groceries, clothing and other daily goods and services
KRR acquired three assets (Kitera Town Fukuoka Nagahama with acquisition price of 6,000 million yen, Kitera Plaza Aobadai with acquisition price of
2,553 million yen and Tenri Distribution Center with acquisition price of 1,070 million yen), and disposed of three properties (Daikanyama Address Dixsept(30% trust beneficiary quasi co-ownership interests) with sale price of 1,993 million yen (acquisition price was 1,617 million yen), K’s Denki ShonanFujisawa (Land) and Prime Square Jiyugaoka with total sale price of 6,360 million yen (total acquisition price was 5,989 million yen)). For the period ended
March 31, 2022, the portfolio of 66 properties (total acquisition price of 247,291 million yen) as a whole performed well with an overall occupancy ratio of
99.2% as of March 31, 2022.
KRR acquired three assets (Sun Street Hamakita (10% trust beneficiary quasi co-ownership interests) with acquisition price of 1,200 million yen,
Higashimatsuyama Shopping Center with acquisition price of 4,080 million yen and Prima Meat Packers Kinki Center with acquisition price of 1,047 millionyen). For the period ended September 30, 2022, the portfolio of 68 properties (total acquisition price of 253,619 million yen) as a whole performed well withan overall occupancy ratio of 99.3% as of September 30, 2022.
Furthermore, the portfolio was diversified in terms of tenants as there were 519 and 524 end-tenants as of March 31, 2022 and September 30, 2022 in
KRR’s properties, respectively.
Basis of Presentation
KRR maintains its accounting records and prepares its financial statements in accordance with accounting principles generally accepted in Japan (JapaneseGAAP), including provisions set forth in the Investment Trust Act, the Companies Act of Japan, the Financial Instruments and Exchange Act of Japan andrelated regulations, which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are basically a translation of the financial statements of KRR, which were prepared in accordance with Japanese
GAAP and were presented in the Semiannual Securities Report of KRR filed with the Kanto Local Finance Bureau. In preparing the accompanying financial
statements, certain reclassifications and modifications have been made to the financial statements issued domestically in order to present them in a format
that is more familiar to readers outside Japan. In addition, the notes to financial statements include certain information that might not be required underJapanese GAAP but is presented herein as additional information.
KRR’s fiscal period is a six-month period which ends at the end of March or September. KRR does not prepare consolidated financial statements because
it has no subsidiaries.

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

Buildings

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

From October 1, 2021
to March 31, 2022
2-70 years

Structures

8-59 years

8-59 years

Machinery and equipment

2-25 years

2-25 years

Tools, furniture and fixtures

3-15 years

3-15 years(B) Intangible Assets (including trust assets)
Intangible assets are amortized by the straight-line method.
(C) Long-term Prepaid Expenses
Long-term prepaid expenses are amortized by the straight-line method.
(D) Investment Unit Issuance Costs
Investment unit issuance costs are amortized over a period of 3 years under the straight-line method.
(E) Investment Corporation Bond Issuance Costs
Investment corporation bond issuance costs are amortized over a maturity period under the straight-line method.
(F) Accounting Treatment of Trust Beneficiary Interests in Real Estate
For trust beneficiary interests in real estate, which are commonly utilized in the ownership of commercial properties in Japan, all relevant assets andliabilities in trust are recorded on the balance sheets and the statements of income and retained earnings.
(G) Revenue Recognition
Operating revenues consist of rental revenues including base rents, common area charges and other operating revenues, which include utility charge
reimbursements, parking space rental revenues and other miscellaneous revenues. Rental revenues are generally recognized on an accrual basis overthe life of each lease. Utility charge reimbursements are recognized when earned and their amounts can be reasonably estimated. Reimbursementsfrom tenants including utility charge reimbursements are recorded on a gross basis and such amounts are recorded both as revenues and expenses
during the fiscal period.
(H) Taxes on Property and Equipment
Property-related taxes including property taxes, city planning taxes and depreciable property taxes are imposed on properties on a calendar year basis.
These taxes are generally charged to operating expenses for the period, for the portion of such taxes corresponding to said period. Under Japanese tax
regulations, the seller of the property is liable for these taxes on the property from the date of disposal to the end of the calendar year in which theproperty is disposed. The seller, however, is generally reimbursed by the purchaser for these accrued property-related tax liabilities.
When KRR purchases properties, it typically allocates the portion of the property-related taxes related to the period following the purchase date of each
property through the end of the calendar year. The amounts of those allocated portions of the property-related taxes are capitalized as part of theacquisition costs of the related properties. Capitalized property-related taxes amounted to ¥26,508 thousand and ¥22,301 thousand as of March 31,
2022 and September 30, 2022, respectively.
(I)

Accounting for Revenues
The details of main performance obligations concerning revenue generated from contracts between KRR and its customers and the general timing of
the fulfillment of said performance obligations (general timing of revenue recognition) are as follows.
1. Sale of real estate property
Revenue from sale of real estate properties is recorded as revenue when a buyer who is a customer obtains control over a real estate property following
the seller’s fulfilment of its obligation to hand over the property which is stipulated in the contract associated with the sale of real estate property.
2. Utility charge reimbursements
Revenue from utility charge reimbursements is recorded revenue according to the supply of electric power, water, etc. to lessees who are customers
based on lease agreements and other terms related to the real estate properties.

13With regard to utility charge reimbursements which KRR deems to fall under that for an agent, the net amount after deducting the amount paid to anotherparty from the amount that is received as charges for electric power, gas, etc. which is supplied by another concerned party is recognized as revenue.
(J) Income Taxes
Deferred tax assets and liabilities are computed based on the difference between the financial statements and income tax bases of assets and liabilities
using the statutory tax rates.
(K) Non-deductible Consumption Taxes
Non-deductible consumption taxes applicable to the acquisition of assets are included in the cost of acquisition for each asset.
(L) Derivative Financial Instruments
KRR utilizes interest-rate swap contracts as derivative financial instruments only for the purpose of hedging its exposure to changes in interest rates.
KRR deferred recognition of gains or losses resulting from changes in fair value of interest-rate swap contracts because these contracts met the criteria
for deferral hedge accounting. However, KRR adopted the special treatment for interest-swap contracts if they met the criteria for hedge accounting
under this treatment. An assessment of the effectiveness of hedging is omitted for interest rate swaps because they fulfill the requirements for the special
treatment.
(M) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments which are highly liquid, readily convertible
to cash and with insignificant risk of market value fluctuation, with maturities of three months or less from the date of purchase.
(N) Presentation of Amounts
Amounts have been truncated in the Japanese financial statements prepared in accordance with Japanese GAAP and filed with regulatory authorities
in Japan. Unless otherwise noted, amounts are rounded down and ratios are rounded off in the accompanying financial statements. Totals shown in theaccompanying financial statements do not necessarily agree with the sums of the individual amounts.

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

As of September 30, 2022

As of March 31, 2022
(in thousands of yen)

Buildings in trust¥628,385

Structures in trust

17,972

19,1752,709,001

2,709,001¥3,355,359¥3,359,164

Land in trust
Total
Secured liabilities¥630,987

As of September 30, 2022

Tenant leasehold and security deposits in trust
Total

As of March 31, 2022

¥348,077¥370,075¥348,077¥370,075

4. COMMITMENT LINE CONTRACTSKRR has commitment line contracts with the following financial institutions.
As of September 30, 2022

As of March 31, 2022
(in thousands of yen)

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

Balance of loans payable outstanding--

Remaining amount¥3,000,000¥3,000,000

145. ALLOWANCE FOR TEMPORARY DIFFERENCE ADJUSTMENTS
The following summarizes allowance for temporary difference adjustments as of September 30, 2022
1. Reasons, related assets, initial amount, allowance and reversal
Related assets, etc.

Reason for allowance

Initial amount

Buildings in trust,
Leasehold right in trust

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

Deferred gains or losses
on hedges

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

Total

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

276,855

276,855¥317,378¥317,378

¥

¥

-

¥

Balance atthe end of
the period-

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

Changes infair value ofderivativetransactions-

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

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

Deferred gains or losses on hedges

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

The following summarizes allowance for temporary difference adjustments as of March 31, 2022
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)

¥40,522¥35,477¥5,045

276,855

250,463

26,392¥317,378¥285,940¥31,437¥¥

Balance atthe end of
the period-¥40,522-

276,855-¥317,378

Reason forreversal--

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

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

Deferred gains or losses on hedges

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

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

15

7. BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATEDEXPENSES AND GAIN ON SALES OF REAL ESTATE PROPERTY
Rental and other operating revenues and property-related expenses for the periods from April 1, 2022 to September 30, 2022 and October 1, 2021 to March
31, 2022 from consist of the following:
From April 1, 2022

From October 1, 2021

to September 30, 2022

to March 31, 2022

(in thousands of yen)
Rental and other operating revenues:
Rent revenue-real estate:
Rental revenues
Rental revenues from limited proprietary rights of landCommon area charges¥6,820,886¥6,654,040

928,021964,805

262,864

263,886

8,011,772

7,882,731

Parking space rental revenues

178,905

186,834

Utility charge reimbursement

810,240

606,713

Subtotal
Other lease business revenue:

Miscellaneous

357,049

280,534

Subtotal

1,346,195

1,074,082

9,357,967

8,956,814

Property management fees and facility management fees

687,655

681,763

Utilities

824,618

565,594

Taxes

806,828

722,391

Repairs and maintenance

104,105

146,170

Insurance

22,564

16,783

Trust fees

27,35125,705

Depreciation

1,244,644

1,189,560

Others232,070

240,923

Total property-related expenses

3,949,838

3,588,893

Net operating income from real estate rental business¥5,408,129¥5,367,920

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

Gain on sales of real estate property:
From April 1, 2022 to September 30, 2022
Not applicable
From October 1, 2021 to March 31, 2022
(in thousands of yen)
Daikanyama Address Dixsept (30.0% quasi coownership interest)
Revenue from sale of real estate property¥1,993,200

Cost of real estate property

1,602,750

Other sales expenses
Gain on sale of real estate property

40,391¥350,057

K’s Denki Shonan-Fujisawa (Land) and Prime
Square Jiyugaoka *Revenue from sale of real estate property¥6,360,000

Cost of real estate property

6,209,308

Other sales expenses
Gain on sale of real estate property

64,118¥86,572

16

* Each of revenue from sale of real estate property is not disclosed as KRR has not obtained the buyer’s consent. The properties were acquired by the same buyer. The
dispositions were negotiated and agreed as impartible deals. Gain on sale of real estate property includes both of gain and loss on sales of real estate property.

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

From October 1, 2021

to September 30, 2022

to March 31, 2022

Total number of authorized investment units

5,000,000 units

5,000,000 units

Total number of investment units issued and outstanding

582,177 units

582,177 units

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

As of March 31, 2022

(in thousands of yen)
Cash and deposits¥10,003,221¥11,738,047

Cash and deposits in trust

10,833,639

14,487,445

Restricted bank deposits in trust *(162,500)(177,500)¥20,674,361¥26,047,993

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

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

As of March 31, 2022

(in thousands of yen)
Due within 1 year

¥10,500¥10,500

Due after 1 year

141,298

146,548

Total¥151,798¥157,048(As lessor)
Future minimum lease income under the non-cancelable operating leases as of September 30, 2022 and March 31, 2022 are as follows:
As of September 30, 2022

As of March 31, 2022

(in thousands of yen)
Due within 1 year

¥10,389,207¥9,999,070

Due after 1 year

52,938,573

55,719,923

Total¥63,327,781¥65,718,993

17

11. FINANCIAL INSTRUMENTS(A). Overview(1) Policy for financial instruments
KRR procures funds for asset acquisitions, repairs, payment of distributions, repayment of loans, etc. through loans from financial institutions, issuance ofinvestment corporation bonds, issuance of investment units and other means. With regard to the procurement of interest-bearing debts, KRR ensures that it
can effectively combine stable long-term funds with flexible short-term funds. Management of surplus funds is undertaken through various bank deposits
focusing on safety, liquidity and effectiveness. KRR uses derivatives for the purpose of hedging its exposure to changes in interest rates and other risks anddoes not enter into derivative transactions for speculative or trading purposes.
(2) Types of financial instruments and related risk
Bank deposits are for managing KRR’s surplus funds and are exposed to credit risk such as the bankruptcy of financial institutions at which funds are deposited.
Loans payable and investment corporation bonds, which are made or issued primarily for the purpose of procuring funds for the acquisition of real estate andtrust beneficiary interests in real estate and have a repayment date of a maximum of 8years and 7 month for loans payable and also have a redemption dateof a maximum of 9 years and 4months for investment corporation bonds as of September 30, 2022, the end of the 15th fiscal period, are exposed to liquidity
risk where alternative funds may not be procured by the repayment date. Also, loans payable with floating interest rates are exposed to interest rate fluctuation
risk. Derivatives are used for the purpose of hedging interest rate fluctuation risk for a certain portion of the loans payable.
Tenant leasehold and security deposits are deposits received from tenants, which are exposed to liquidity risks when the tenants vacate the properties.
(3) Risk management for financial instruments
a. Credit risk
While bank deposits are exposed to credit risk such as the bankruptcy of financial institutions at which funds are deposited, such risk is monitored by deposits
in non-interest bearing ordinary savings accounts or with financial institutions with credit ratings above a certain level. In utilizing derivatives, KRR aims to
mitigate counterparty risk such as by transacting with financial institutions with favorable ratings.
b. Market risk
While loans payable with floating rates are exposed to interest rate fluctuation risk, such risk is monitored by adjusting the rate of the balance of loans payable
with floating rates against the total loans payable according to the financial environment, interest rate forecasts by continuous monitoring, etc. and by using
derivatives, etc. A risk management policy is established with regard to the execution and management of derivatives and such transactions are conductedbased on this policy.
c. Liquidity risk
Though loans payable are subject to liquidity risk, KRR reduces such risk by spreading out payment due dates and by diversifying financial institutions.
Liquidity risk is also managed by such means as regularly checking the balance of cash reserves.
Though tenant leasehold and security deposits are subject to liquidity risk, in principle, KRR reduces such risk by retaining funds that would enable KRR toreturn necessary amounts to tenants.
(4) Supplementary explanation of the estimated fair value of financial instruments
Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors could result in a different fair value.
(B). Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheets and estimated fair value are shown in the following table. Furthermore, “cash and deposits”,"cash and deposits in trust” and “short-term loans payable” are omitted as they are settled with cash and in a short span of time and are therefore similar infair value to the carrying value. Also, “tenant leasehold and security deposits in trust” is omitted as it is immaterial.
As of September 30, 2022
Carrying amount

Estimated fair value

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

¥

-

¥

-

¥

-

(2) Current portion of long-term loans payable

8,500,000

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

10,000,000

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

105,050,000

104,897,191(152,808)

123,550,000

123,269,351(280,648)¥589,860¥589,860

Total
Derivative transactions

¥

-

18

(Note) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing the net liability
position.
As of March 31, 2022
Carrying amount

Estimated fair value

Difference(in thousands of yen)
(1) Current portion of investment corporation bonds¥1,000,000¥999,600¥ (400)(2) Current portion of long-term loans payable

10,050,000

10,083,678

33,678(3) Investment corporation bonds(4) Long-term loans payable
Total

8,000,000

7,930,500(69,500)

103,500,000

103,615,372

115,372

122,550,000

122,629,151

79,151¥163,403¥163,403

Derivative transactions¥-(Note) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing the net liability
position.
*1: Methods to determine the estimated fair value of financial instruments and matters related to derivative transactions
Liabilities(1) Current portion of investment corporation bonds and (3) Investment corporation bonds
The fair value of investment corporation bonds is based on quoted market prices.
(2) Current portion of long-term loans payable and (4) Long-term loans payable
Among these items, the fair value of loans payable with fixed interest rates is calculated based on the present value, which is the total amount of principal andinterest discounted by the estimated interest rate to be applied in the event that KRR conducts new loans of the same type. As for the fair value of loans
payable with floating interest rates, it is based on the carrying amount since market interest rates are reflected in the short term and the fair value is believed
to approximate the carrying amount as the credit standing of KRR has not changed significantly since the loans were made. (However, the fair value of longterm loans payable subject to the special treatment for interest-rate swaps is based on the present value of the total of principal and interest, accounted fortogether with the applicable interest-rate swaps, discounted by the estimated interest rate to be applied in the event that KRR conducts new loans payable ofthe same type.)
Derivative transactions
Please refer to Note “12. DERIVATIVE TRANSACTIONS”.
*2: Redemption of long-term loans payable and other interest-bearing debt scheduled to be due after the balance sheet date
As of September 30, 2022
Due in 1 year orDue after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

lessthrough 2 years

through 3 years

through 4 years

through 5 years

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

¥

-

¥

-

¥1,000,000¥-¥3,000,000¥6,000,000

8,500,000

9,490,000

15,320,000

20,850,000

21,500,000

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

Due in 1 year orDue after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

lessthrough 2 years

through 3 years

through 4 years

through 5 years

As of March 31, 2022
Due after 5 years(in thousands of yen)
Investment corporation bonds¥1,000,000¥

Long-term loans payable

10,050,000¥11,050,000

Total

-

¥

-

¥1,000,000¥1,000,000¥6,000,000

7,500,000

9,310,000

19,090,000

19,960,000

47,640,000¥7,500,000¥9,310,000¥20,090,000¥20,960,000¥53,640,000

1912. DERIVATIVE TRANSACTIONS
The contract amount and the fair value of interest-rate swap transactions as of September 30, 2022 are shown in the following table.
(1) Transactions not subject to hedge accounting
Not applicable(2) Transactions subject to hedge accounting
Hedge
accounting
methodType of derivativetransactions

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

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

21,000,000

17,000,000¥85,360,000¥81,360,000

Fair value(in thousands of yen)

¥589,860

Calculation method for
applicable fair value
Based on the amountprovided by counterparty
financial institutions*¥589,860*Interest rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fair value isincluded in the fair value of the hedged long-term loans payable.（Please refer to Note “11. FINANCIAL INSTRUMENTS” (*1) Methods to determine theestimated fair value of financial instruments and matters related to derivative transactions; Liabilities (2) Current portion of long-term loans payable and (4)Long-term loans payable.）
The contract amount and the fair value of interest-rate swap transactions as of March 31, 2022 are shown in the following table.
(1) Transactions not subject to hedge accounting
Not applicable(2) Transactions subject to hedge accounting
Hedge
accounting
methodType of derivativetransactions

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

Hedged items
Long-term loans
payableLong-term loans
payableContract amount(in thousands of yen)
Maturing after 1
year¥66,410,000¥64,360,000

21,000,000

17,000,000¥87,410,000¥81,360,000

Fair value(in thousands of yen)

¥163,403

Calculation method for
applicable fair value
Based on the amountprovided by counterparty
financial institutions*¥163,403*Interest rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fair value isincluded in the fair value of the hedged long-term loans payable.（Please refer to Note “11. FINANCIAL INSTRUMENTS” (*1) Methods to determine theestimated fair value of financial instruments and matters related to derivative transactions; Liabilities (2) Current portion of long-term loans payable and (4)Long-term loans payable.）

13. RELATED PARTY TRANSACTIONS
1．Parent Company, major corporate unitholders and other15th Fiscal Period (April 1, 2022 to September 30, 2022) and 14th Fiscal Period (October 1, 2021 to March 31, 2022) : Not applicable
2．Affiliated companies and other15th Fiscal Period (April 1, 2022 to September 30, 2022) and 14th Fiscal Period (October 1, 2021 to March 31, 2022) : Not applicable
3．Fellow subsidiary companies and other15th Fiscal Period (April 1, 2022 to September 30, 2022) and 14th Fiscal Period (October 1, 2021 to March 31, 2022) : Not applicable
4．Directors, major individual unitholders and other15th Fiscal Period (April 1, 2022 to September 30, 2022) and 14th Fiscal Period (October 1, 2021 to March 31, 2022) : Not applicable20

14. INCOME TAXESKRR is subject to corporate income taxes at a regular statutory rate of approximately 31%. However, KRR may deduct from its taxable income amounts
distributed to its unitholders, provided the requirements under the Special Taxation Measures Law of Japan are met, including a requirement that it currently
distributes in excess of 90% of its net income for the fiscal period in order to be able to deduct such amounts. If KRR does not satisfy all of the requirements,
the entire taxable income of KRR will be subject to regular corporate income taxes. Since KRR distributed in excess of 90% of its distributable income in theform of cash distributions totaling ¥3,774 million and ¥4,127million for the periods ended September 30, 2022 and March 31, 2022, respectively, thedistributions were treated as deductible distributions for purposes of corporate income taxes. The effective tax rates on KRR’s income were 0.10% for theperiods ended September 30, 2022 and March 31, 2022, respectively. The following table summarizes the significant differences between the statutory tax
rate and the effective tax rate:
As of September 30, 2022

As of March 31, 2022

Statutory tax rate

31.46%

31.46%

Deductible cash distributions(31.43)(31.43)

Others0.07

0.07

Effective tax rate

0.10%

0.10%

The significant components of deferred tax assets and liabilities:
As of September 30, 2022

As of March 31, 2022

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

¥

224

¥

252

Amortization of leasehold right in trust

19,192

17,940Depreciation

6,908

6,457

Asset retirement obligations

7,864

7,815

Subtotal deferred tax assets

34,18932,466

Valuation allowance(34,189)(32,466)¥¥

Total deferred tax assets

-

-

21

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

From October 1, 2021

to September 30, 2022

to March 31, 2022

(in thousands of yen)
Balance at the beginning of the period¥24,843¥24,688

156

155¥24,999¥24,843

Accretion adjustment
Balance at the end of the period

16. REVENUE RECOGNITION
1. Disaggregation of revenue from contracts with customers
15th Fiscal Period (From April 1, 2022 to September 30, 2022)
Revenues generated from contracts

Sales to external customers

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

¥

-

¥

-

Utility charge reimbursements

810,240

810,240

Other-

8,547,727

Total¥810,240¥9,357,967*1 Rental revenues, etc. which are subject to Accounting Standard for Lease Transactions (ASBJ Statement No. 13) and the transfer of real estate properties
which is subject to the “Practical Guidelines on Accounting by Transferors for Securitization of Real Estate Using Special Purpose Companies” (Accounting
System Committee Report No.15 of the Japanese Institute of Certified Public Accountants) are not included in the above amounts as they are excluded fromrevenue recognition accounting standards. Revenue generated from contracts with major customers include of revenue from sale of real estate properties
and utility charge reimbursements.
14th Fiscal Period (From October 1, 2021 to March 31, 2022)
Revenues generated from contracts

Sales to external customers

with customers *1(in thousands of yen)
Revenue from sale of real estate property
Utility charge reimbursements¥6,360,000*2¥86,572

606,713606,713

Other-

9,561,322

Total¥6,966,713¥10,254,608*1 Rental revenues, etc. which are subject to Accounting Standard for Lease Transactions (ASBJ Statement No. 13) and the transfer of real estate properties
which is subject to the “Practical Guidelines on Accounting by Transferors for Securitization of Real Estate Using Special Purpose Companies” (Accounting
System Committee Report No.15 of the Japanese Institute of Certified Public Accountants) are not included in the above amounts as they are excluded fromrevenue recognition accounting standards. Revenue generated from contracts with major customers include of revenue from sale of real estate properties
and utility charge reimbursements.

22*2 As proceeds from sale of real estate property are recorded as gain on sale of real estate property in the statements of income and retained earnings, theamount calculated by deducting the cost of real estate property sales and other sales expenses from proceeds from sale of real estate property is indicated.
2. Basis for understanding revenues generated from contracts with customers
15th Fiscal Period (April 1, 2022 to September 30, 2022) and 14th Fiscal Period (October 1, 2021 to March 31, 2022)
The basis for understanding revenues generated from contracts with customers is as indicated in the Summary of Significant Accounting Policies.
3．Information on relationship of fulfillment of performance obligations based on contracts with customers and cashflow generated from said contracts alongwith amount and period of revenue expected to be recognized in the next fiscal period or thereafter from contracts with customers existing at the end of the
fiscal period.
15th Fiscal Period (From April 1, 2022 to September 30, 2022)(1) Balance of contract assets and contract liabilities, etc.
From April 1, 2022
to September 30, 2022
(in thousands of yen)
Receivables generated from contracts with customers¥124,784(balance at beginning of fiscal period)
Receivables generated from contracts with customers

192,333(balance at end of fiscal period)
Contract assets (balance at beginning of fiscal period)-

Contract assets (balance at end of fiscal period)-

Contract liabilities (balance at beginning of fiscal period)-

Contract liabilities (balance at end of fiscal period)¥-(2) Transaction price allocated to remaining performance obligations
Not applicable.
KRR does not include contracts whose terms are initially expected to be one year or less.
Also, with regard to utility charge reimbursements, as KRR has the right to receive from customers an amount directly corresponding to the value for thelessees who are customers of sections for which performance is complete by the end of the fiscal period, the amount it has the right to claim according toParagraph 19 of the Implementation Guidelines of the Accounting Standard for Revenue Recognition is recognized as revenue. Accordingly, such is notincluded in the note on transaction value allocated to remaining performance obligations through application of the provisions of Paragraph 80-22 (2) of the
Accounting Standard for Revenue Recognition.
14th Fiscal Period (From October 1, 2021 to March 31, 2022)(1) Balance of contract assets and contract liabilities, etc.
From October 1, 2021
to March 31, 2022
(in thousands of yen)
Receivables generated from contracts with customers(balance at beginning of fiscal period)
Receivables generated from contracts with customers(balance at end of fiscal period)¥138,197
124,784

Contract assets (balance at beginning of fiscal period)-

Contract assets (balance at end of fiscal period)-

Contract liabilities (balance at beginning of fiscal period)-

Contract liabilities (balance at end of fiscal period)¥-(2) Transaction price allocated to remaining performance obligations
Not applicable.
KRR does not include contracts whose terms are initially expected to be one year or less.

23

Also, with regard to utility charge reimbursements, as KRR has the right to receive from customers an amount directly corresponding to the value for thelessees who are customers of sections for which performance is complete by the end of the fiscal period, the amount it has the right to claim according toParagraph 19 of the Implementation Guidelines of the Accounting Standard for Revenue Recognition is recognized as revenue. Accordingly, such is notincluded in the note on transaction value allocated to remaining performance obligations through application of the provisions of Paragraph 80-22 (2) of the
Accounting Standard for Revenue Recognition.

17. SEGMENT INFORMATION
Segment information for the periods from April 1, 2022 to September 30, 2022 and October 1, 2021 to March 31, 2022 is as follows:(A) Segment information
Disclosure is omitted because the real estate leasing business is KRR’s sole business and it has no reportable segment information to disclose.
(B) Related information(1) Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of the operating revenue on thestatements of income and retained earnings.
(2) Information about each geographic area(a) Net sales
Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenue on the statements of income andretained earnings.
(b) Property, plant and equipment
Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts for over 90% of the amount of property, plant andequipment on the balance sheets.
(3) Information about each major customer
Disclosure is omitted because no net sales to a single external customer accounts for more than 10% of the operating revenue on the statements of income
and retained earnings.

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

From October 1, 2021

to September 30, 2022

to March 31, 2022
(in thousands of yen)Book value
Balance at the beginning of the period
Changes during the period
Balance at the end of the period
Fair value at the end of the period¥247,974,742¥246,469,699

5,762,028

1,505,042

253,736,770

247,974,742¥274,185,000¥266,837,000

Note 1: Book value is acquisition cost less accumulated depreciation.
Note 2: Among changes in the amount of real estate for rental purposes that occurred during the fiscal period ended September 30, 2022, the principal
increase was the acquisition of real estate trust beneficiary interest in 2 properties totaling 5,221,986 thousand yen and the additional acquisition of 1
real estate trust beneficiary interest amounting to 1,221,185 thousand yen and the principal decrease was the depreciation of 1,244,488 thousand
yen and during the fiscal period ended March 31, 2022, the principal increase was the acquisition of real estate trust beneficiary interest in 3
properties totaling 9,680,298 thousand yen and the principal decrease was the sales of real estate trust beneficiary interests in 3 properties totaling
7,812,059 thousand yen and depreciation of 1,189,405 thousand yen.
Note 3: The fair value at the end of the period is the appraisal value determined by outside appraisers.
The profit or loss for the periods ended September 30, 2022 and March 31, 2022 concerning investment and rental properties is included in Note “7.
BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES AND GAIN ON SALES OF REAL ESTATEPROPERTY.”24

19. PER UNIT INFORMATION
From April 1, 2022

From October 1, 2021

to September 30, 2022

to March 31, 2022

Net asset value per unit

¥236,059¥235,932¥6,484¥7,089Net income per unit

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 September 30, 2022 (582,177 units) and during the fiscal period ended March 31, 2022 (582,177 units). Net income per unit after adjusting forresidual units is not included because there were no residual investment units.
The basis for calculating net income per unit is as follows:
From April 1, 2022

From October 1, 2021

to September 30, 2022

to March 31, 2022

Net income (in thousands of yen)

¥3,774,920¥4,127,558--¥3,774,920¥4,127,558

582,177

582,177

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)

20. SIGNIFICANT SUBSEQUENT EVENTSIssuance of new investment units
KRR passed resolutions at the Board of Directors Meeting held on October 6, 2022 and October 13, 2022, to issue new investment units to fund part of theacquisition of specified assets. Payments for the issuance of new investment units through public offering have been completed on October 19, 2022.
As a result, unitholders' capital totaled ¥138,058,250,770 and total number of investment units issued and outstanding increased to 602,177 as of October
19, 2022.
(Issuance of new investment units through public offerings)
Total number of units issued

20,000units

Issue price (offer price)

256,132 yen per unit

Total amount of issue price (total offer price)

5,122,640,000 yen

Paid-in amount (issue amount)

247,725 yen per unit

Total paid-in amount (total issue amount)

4,954,500,000 yen

Payment date

October 19, 2022

25

21. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Property, plant and equipment and intangible assets consist of the following as of September 30, 2022
Type of asset

Balance atthebeginning of
the period

Increaseduring theperiodDecreaseduring theperiodDepreciation
for the periodNetbalance atthe end of
the period

Depreciation

Balance atthe end of
the period

Accumulated
depreciation

Remarks(in thousands of yen)
Buildings¥764,808¥8,895-¥773,703¥109,983¥16,051¥663,720

Structures

46,777--

46,777

8,230

1,402

38,547

2,956,465--

2,956,465--

2,956,465-

20,666-

20,666--

20,666Land
Construction inprogress

Property,plant andequipment

Subtotal

3,768,051

29,561-

3,797,612

118,213

17,454

3,679,399

Buildings in trust

70,054,703

1,945,590-

72,000,294

11,403,948

1,131,721

60,596,346

Structures in trust

3,495,870

150,219-

3,646,089

774,128

68,3102,871,961

Machinery andequipment in trust

308,571

30,744-

339,316

70,931

9,367

268,384

Tools, furniture andfixtures in trust

183,5128,293-

191,805

99,843

13,656

91,961

176,940,236

4,332,098-

181,272,334--

181,272,334

153,057

92,254

6,397

238,915--

238,915251,135,951

6,559,201

6,397

257,688,755

12,348,851

1,223,055

245,339,903

254,904,002

6,588,763

6,397

261,486,368

12,467,065

1,240,509

249,019,303

4,349,916

425,032-

4,774,948

61,0043,978

4,713,944

16,719--16,71912,160

1,136

4,558

¥4,366,636¥ 425,032-¥4,791,668¥73,165¥5,114¥4,718,502

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

Total

¥

*1

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

Property, plant and equipment and intangible assets consist of the following as of March 31, 2022
Type of asset

Balance atthebeginning of
the period

Increaseduring theperiodBuildings¥755,598¥9,210Decreaseduring theperiodBalance atthe end of
the period

Depreciation
for the periodNetbalance atthe end of
the period¥670,877

Depreciation
Accumulated
depreciation

Remarks(in thousands of yen)
¥93,931¥16,397--

46,777

6,827

1,402

39,949--2,956,465--

2,956,465

Subtotal

3,758,841

9,210

-

3,768,051

100,759

17,7993,667,291

Buildings in trust

67,921,666

2,947,995

814,958

70,054,703

10,272,226

1,081,548

59,782,476

Structures in trust

3,491,894

19,175

15,1993,495,870

705,818

65,0232,790,051

Machinery andequipment in trust

248,01465,647

5,089

308,571

61,564

7,180

247,007

Tools, furniture andfixtures in trust

179,449

10,043

5,980

183,512

86,187

13,87597,325

176,754,774

7,309,613

7,124,151

176,940,236--

176,940,236

7,254

146,880

1,076

153,057--

153,057

248,603,053

10,499,354

7,966,456

251,135,951

11,125,796

1,167,627

240,010,155

252,361,894

10,508,564

7,966,456

254,904,002

11,226,555

1,185,427

243,677,447

4,349,916--

4,349,916

57,026

3,978

4,292,890--

16,71911,024

1,242

5,695

-

¥4,366,636¥68,050¥5,211¥4,298,585

Land in trust
Construction inprogress in trust
Subtotal
Total

Total

¥764,808

46,777Land

Intangible
assets-2,956,465

Structures

Property,plant andequipment¥

Leasehold right in
trust
Other

16,719¥4,366,636

¥

-

¥

*1

*1,2

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

26

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 September 30, 2022:
Classification
LenderBalance at the
beginning of theperiodIncreaseduring theperiodDecreaseduring theperiodAverageinterest rate
（Note 2）
（Note 3）

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

ShortTerm
Loans
PayableSumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Banking
Corporation(Note8)
Sub Total

750,000-

1,000,000

1,000,000-

1,000,000

1,000,000

750,000

1,250,000-

1,250,000-

Mizuho Bank, Ltd.

800,000-

800,000-

1,000,000--

1,000,000

1,000,000--

1,000,000

600,000--

600,000

0.477

0.425

0.603

0.467

(Note 5)

Unsecured/
Nonguaranteed(Note 5)

Unsecured/
Nonguaranteed(Note 5)

Unsecured/
Nonguaranteed2022
October 31,
2022-

400,000

400,000--

400,000

Mizuho Trust &Banking Co., Ltd.

400,000--

400,000

MUFG Bank, Ltd.

400,000--

400,000

1,500,000--

1,500,000

450,000--

450,000

200,000
150,000--

150,000

1,500,000--

1,500,000

1.013

March 31,2023

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

500,000--

500,000

0.670

September
29, 2023

Sub Total

10,550,000-

2,050,000

8,500,000

4,600,000--

4,600,000

1.366

April 16,2025

3,000,000--

3,000,000

Mizuho Bank, Ltd.

1,150,000
1,000,000-

1,150,000

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

-

1.110

700,000--

700,000

March 31,2024

650,000--

650,000

500,000--

500,000

1,500,000--

1,500,000

MUFG Bank, Ltd.

400,000--

400,000

Sumitomo Mitsui
Trust Bank, Ltd.

450,000--

450,000

0.803

September
30, 2024

Development
Bank of Japan
Inc.(Note 6)

890,000--

890,000

0.760

September
30, 2024

Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Banking
Corporation

Unsecured/
UnguaranteedAugust 31,-

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

400,000

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

Remarks

January 31,
2023

Resona Bank,
Ltd.

Resona Bank, Ltd.

Long-Term
Loans-

750,000

Sumitomo Mitsui
Trust Bank, Ltd.
Mizuho Bank, Ltd.

Long-Term
Loans
Payable

-

Use

(%)

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

Current
portion of
long-term
loans
payable750,000

Payment due
date（Note 4）200,000

1,000,000

0.975

0.994

0.987

1.243

March 31,2023

March 31,2023
March 31,2023

April 16,2025

27

Classification
LenderBalance at the
beginning of theperiodIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)
PayablePayment due
date（Note 4）2,670,000--

2,670,000

0.932

April 21,2026

MUFG Bank, Ltd.

890,000--

890,000

0.888

October 31,
2025

2,000,000--

2,000,000

1.049

1,000,000--

1,000,000

1.049

Resona Bank, Ltd.

500,000--

500,000

1.002

Sumitomo Mitsui
Banking
Corporation

1,500,000--

1,500,000

Sumitomo Mitsui
Trust Bank, Ltd.

400,000--

400,000

Aozora Bank, Ltd.

400,000--

400,000

Resona Bank, Ltd.

300,000--

300,000

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

600,000

0.696

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

600,000

0.815

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

0.772

(Note 5)

Unsecured/
Nonguaranteed

October 31,
2024

October 31,
2024

-

-

500,000

0.814

200,000--

200,000

0.814

500,000--

500,000

0.903

October 31,
2026

500,000--

500,000

500,000--

500,000

1.033

May 18,2027--

400,000

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

500,000

1.050

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

500,000

1.049

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

300,000

1.050

Sumitomo Mitsui
Trust Bank, Ltd.

1,500,000--

1,500,000

0.918

500,000--

500,000

0.930

1,500,000--

1,500,000

1.029

1,500,000--

1,500,000

1.100

September
29, 2028

500,000--

500,000

1.035

October 3,
2027

1,200,000--

1,200,000

1.000

February 10,2028

900,000--

900,000

0.988

April 30,2027

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

Remarks

January 31,
2027

500,000

400,000

Use(%)

Sumitomo Mitsui
Banking
Corporation

Development
Bank of Japan Inc.
(Note 6)
Mizuho Trust &Banking Co., Ltd.
(Note 6)Long-Term
Loans
PayableAverageinterest rate
（Note 2）
（Note 3）

May 18,2027

September
30, 2026
September
29, 2027

28

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

-2,600,000

0.985

April 30,2027

2,000,000--

2,000,000

0.902

April 30,2026

1,000,000--

1,000,000

1.090

1,000,000--

1,000,000

0.907

1,500,000--

1,500,000

0.999

500,000--

500,000

0.900

500,000--

500,000

0.999

500,000--

500,000

0.999

700,000--

700,000

0.913

700,000--

700,000

0.726

500,000-

500,000

0.676

500,000

0.726

400,000

0.726

500,000

Mizuho Bank, Ltd.

400,000

Use

Remarks(Note 5)

Unsecured/
Nonguaranteed(%)-

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

400,000--

400,000

0.676

1,850,000--

1,850,000

0.910

1,300,000--

1,300,000

0.860

Resona Bank, Ltd.

650,000--

650,000

0.460

Aozora Bank, Ltd.

890,000--

890,000

0.585

Mizuho Bank, Ltd.

1,370,000--

1,370,000

0.718

Sumitomo Mitsui
Trust Bank, Ltd.

820,000--

820,000

0.550

MUFG Bank, Ltd.

1,270,000--

1,270,000

0.750

650,000--

650,000

0.670

1,500,000--

1,500,000

0.520

1,000,000--

1,000,000

0.644

1,000,000--

1,000,000

0.644

500,000--

500,000

0.550

300,000--

300,000

0.644

500,000--

500,000

0.830

400,000--

400,000

0.498

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

Payment due
date（Note 4）2,600,000-

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

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

April 30,2028
May 31,
2026

May 31,2027

March 31,2025

March 31,2026

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

October 31,
2026

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

400,000--

400,000

0.478

700,000--

700,000

0.758

September
30, 2028

Aozora Bank, Ltd.

450,000--

450,000

0.725

January 31,
2029

Sumitomo Mitsui
Banking
Corporation

3,000,000--

3,000,000

0.809January 31,
2030

29

Classification
LenderBalance at the
beginning of theperiodIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)

Payment due
date（Note 4）700,000--

700,000

500,000--

500,000

450,000
400,000-

450,000

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

-1,500,000--

1,500,000

2,400,000--

2,400,000

0.888January 31,
2031

0.535

February 28,
2026

0.407

April 30,
2025

0.400

April 30,
2025

0.461

April 30,2026

1,600,000--

1,600,000

550,000--

550,000

Resona Bank, Ltd.

500,000
500,000

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

350,000-

500,000

Aozora Bank, Ltd.

-

300,000--

300,000

600,000--

600,000

500,000
400,000-

500,000

Resona Bank, Ltd.

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

500,000

500,000--

500,000

200,000--

200,000

1,000,000--

1,000,000

0.490

October 31,
2026

400,000--

400,000

0.475

October 31,
2026

1,600,000--

1,600,000

400,000--

400,000

0.548

300,000--

October 31,
2027

300,000

300,000--

300,000

600,000--

600,000

0.525

October 31,
2027

500,000--

500,000

0.856

April 30,2031

500,000--

500,000

0.426

500,000--

500,000

0.350

800,000--

800,000

700,000--

700,000

600,000--

600,000

600,000--

600,000

500,000
500,000--

500,000

500,000--

500,000

The 77 Bank, Ltd.
The Musashino
Bank,Ltd. (Note 6)
Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Trust Bank, Ltd.
Mizuho Trust &Banking Co., Ltd.
Aozora Bank, Ltd.
Mizuho Bank, Ltd.
MUFG Bank, Ltd.
(Note 6)
SUMITOMO LIFE
INSURANCECOMPANY (Note6)

Remarks(Note 5)

Unsecured/
Nonguaranteed

400,000

Sumitomo Mitsui
Trust Bank, Ltd.

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

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

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

Long-term
loans
payableAverageinterest rate
（Note 2）
（Note 3）500,000
350,000

400,000

April 30,
2026
April 30,
2026

0.601

April 30,
2028

0.550

April 30,2028

500,000

30

Classification

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

Averageinterest rate
（Note 2）
（Note 3）300,000--

300,000

0.824

Mizuho Bank, Ltd.

500,000--

500,000

0.357

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

200,000

0.525

Aozora Bank, Ltd.

200,000--

200,000

0.601

The Gunma Bank,
Ltd. (Note 6)

500,000--

500,000

0.450

The Bank
Fukuoka, Ltd.

500,000-

500,000

The Nishi-Nippon
City Bank, Ltd.
Shinsei Bank, Ltd.
The Yamaguchi
Bank, Ltd.
The Higo Bank,
Ltd.
Sumitomo Mitsui
Banking
Corporation
Sumitomo Mitsui
Trust Bank, Ltd.
Mizuho Trust &Banking Co., Ltd.
Aozora Bank, Ltd.

500,000--

500,000

800,000-

800,000

700,000-

500,000--

500,000-

2,600,000

2,600,000

700,000

0.599

September
30, 2029

0.722

January 31,
2029-

600,000

400,000--

400,000

400,000-

400,000

800,000--

800,000

0.640

1,600,000--

1,600,000

0.879

-

600,000-

600,000

0.604-

950,000-

950,000

0.800-

500,000-

500,000

0.720

103,000,000

2,050,000-

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

300,000
300,000

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

Resona Bank, Ltd.

Total

-

Remarks

April 30,
2031

0.387

600,000

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

-

Use

(%)

Development
Bank of Japan Inc.
(Note 6)ofPayment due
date（Note 4）300,000
300,000
January 31,
2029
January 31,
2031
February 28,
2027
August 31,
2029

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

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

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

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

Due after 5 years¥ 37,890,000

Note 2: All debts except for the following Note 6 are loans payable at a floating rate.
Note 3: Average interest rates are the weighted average during the period and figures are rounded to the nearest third decimal place. Also, with regard to loans payable forwhich interest rate swap transactions were implemented in order to hedge the interest rate volatility risk, the weighted average interest rates taking into consideration
the effects of the interest rate swaps are indicated.
Note 4: All the repayment methods of debt financing are lump-sum repayments on the due date.
Note 5: All debts were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate (additional expenses are included) and repayment ofdebts.
Note 6: Loans payable at a fixed rate.
Note 7: Borrowings are listed in the current portion of long-term loans payable from the fiscal period under review, listed in long-term loans payable in the previous fiscal
period.
Note8: Full prepayment of 1,000,000 thousand yen was made on June 30, 2022.

31

The following summarizes short-term loans payable and long-term loans payable outstanding as of March 31, 2022:
Classification
LenderBalance at the
beginning of theperiodIncreaseduring theperiodDecreaseduring theperiodAverageinterest rate
（Note 2）
（Note 3）

Balance atthe end of
the period(in thousands of yen)
ShortTerm
Loans
PayableSumitomo Mitsui
Banking
Corporation
Sub Total

Remarks

January 31,
2023(Note 5)

Unsecured/
Unguaranteed(Note 5)

Unsecured/
Nonguaranteed(%)

750,000-

750,000-

750,000-

750,000

Sumitomo Mitsui
Banking
Corporation

2,600,000-

2,600,000-

MUFG Bank, Ltd.

800,000-

800,000-

600,000-

600,000-

400,000-

400,000-

400,000-

400,000-

300,000-

300,000-

300,000-

300,000-

1,600,000-

1,600,000

-

1.033

February 10,2022

2,750,000-

2,750,000

-

0.480

January 31,
2022

1,250,000--

1,250,000

800,000
1,000,000--

1,000,000

600,000--

600,000

400,000--

400,000

400,000--

400,000

Mizuho Trust &Banking Co., Ltd.
（Note 7）400,000--

400,000

MUFG Bank, Ltd.
（Note 7）400,000--

400,000

1,500,000--

1,500,000

450,000--

450,000

200,000--

200,000

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

Development
Bank of Japan
Inc.（Note 6）（Note 7）
MUFG Bank, Ltd.
（Note 7）
Resona Bank, Ltd.
（Note 7）The Musashino
Bank, Ltd. （Note7）
Development
Bank of Japan
Inc.(Note
6)(Note 7)
Sumitomo Mitsui
Banking
Corporation

Long-Term

Use-

Sumitomo Mitsui
Trust Bank, Ltd.
Aozora Bank, Ltd.

Current
Portion ofLong-Term
Loans
PayablePayment due
date（Note 4）800,000

0.476

0.978

0.603

0.975

0.994

0.987

February 10,2022

August 31,
2022

March 31,2023

March 31,2023

March 31,2023

150,000--

150,000

1,500,000--

1,500,000

1.013

March 31,2023-

1,000,000-

1,000,000

0.461

October 31,
2022

Sub Total

18,800,000

1,000,000

9,750,000

10,050,000

Sumitomo Mitsui
Banking
Corporation

4,600,000--

4,600,000

1.366

April 16,
2025

Unsecured/
Nonguaranteed32

Classification
LenderBalance at the
beginning of theperiodIncreaseduring theperiodDecreaseduring theperiodBalance atthe end of
the period(in thousands of yen)
Loans
PayablePayment due
date（Note 4）3,000,000--

3,000,000

Mizuho Bank, Ltd.

1,150,000
1,000,000-

1,150,000

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

700,000--

700,000

650,000--

650,000

500,000--

500,000

1,500,000--

1,500,000

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

400,000--

400,000

450,000--

450,000

0.803

September
30, 2024

890,000--

890,000

0.760

September
30, 2024

2,670,000--

2,670,000

0.932

April 21,2026

890,000--

890,000

0.888

October 31,
2025

2,000,000--

2,000,000

1.049

1,000,000--

1,000,000

1.049

500,000--

500,000

1.002

1,500,000--

1,500,000

400,000--

400,000

400,000--

400,000

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

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

1,500,000

Use

Remarks(%)

Sumitomo Mitsui
Banking
Corporation

MUFG Bank, Ltd.

Long-Term
Loans
PayableAverageinterest rate
（Note 2）
（Note 3）1,000,000(Note 5)

1.110

1.243

0.772

March 31,2024

April 16,2025

January 31,
2027

October 31,
2024

300,000

0.918

October 31,
2024

May 18,2027

September
29, 2023
September
30, 2026(Note 5)

Unsecured/
Nonguaranteed33

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

-

500,000

0.930

1,500,000--

1,500,000

1.029

1,500,000--

1,500,000

1.100

September
29, 2028

500,000--

500,000

1.035

October 3,
2027

1,200,000--

1,200,000

1.000

February 10,2028

900,000--

900,000

0.988

April 30,2027

2,600,000--

2,600,000

0.985

April 30,2027

2,000,000--

2,000,000

0.902

April 30,2026

1,000,000--

1,000,000

1.090

1,000,000--

1,000,000

0.907

1,500,000--

1,500,000

0.999

500,000--

500,000

0.900

500,000--

500,000

0.999

500,000--

500,000

0.999

700,000--

700,000

0.913

700,000--

700,000

0.726

500,000-

500,000

0.676

500,000

0.726

400,000

0.726

500,000

Mizuho Bank, Ltd.

400,000

Use

Remarks(Note 5)

Unsecured/
Nonguaranteed(%)-

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

400,000--

400,000

0.676

1,850,000--

1,850,000

0.910

1,300,000--

1,300,000

0.860

Resona Bank, Ltd.

650,000--

650,000

0.460

Aozora Bank, Ltd.

890,000--

890,000

0.585

Mizuho Bank, Ltd.

1,370,000--

1,370,000

0.718

Sumitomo Mitsui
Trust Bank, Ltd.

820,000--

820,000

0.550

MUFG Bank, Ltd.

1,270,000--

1,270,000

0.750

650,000--

650,000

0.670

1,500,000--

1,500,000

0.520

1,000,000--

1,000,000

0.644

1,000,000--

1,000,000

0.644

500,000--

500,000

0.550

300,000--

300,000

0.644

Mizuho Trust &Banking Co., Ltd.
(Note 6)
Resona Bank, Ltd.

Payment due
date（Note 4）500,000-

Mizuho Trust &Banking Co., Ltd.
(Note 6)
MUFG Bank, Ltd.
(Note 6)
Sumitomo Mitsui
Banking
Corporation
Mizuho Bank, Ltd.
Long-term
loans
payableAverageinterest rate
（Note 2）
（Note 3）September
29, 2027

April 30,2028
May 31,
2026

May 31,2027

March 31,2025

March 31,2026

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

October 31,
2026

34

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

Payment due
date（Note 4）-500,000

0.830

400,000--

400,000

0.498

400,000--

400,000

0.478

700,000--

700,000

0.758

September
30, 2028

Aozora Bank, Ltd.

450,000--

450,000

0.725

January 31,
2029

Sumitomo Mitsui
Banking
Corporation

3,000,000--

3,000,000

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

700,000--

700,000

500,000--

500,000

0.809

January 31,
2030

Resona Bank, Ltd.

450,000
400,000-

450,000

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

-1,500,000--

1,500,000

0.888January 31,2031

2,400,000--

2,400,000

1,600,000--

1,600,000

550,000--

550,000

500,000-

500,000

0.535

February 28,
2026

0.407

April 30,
2025

0.400

April 30,
2025

0.461

April 30,
2026

Unsecured/
Nonguaranteed

400,000

Aozora Bank, Ltd.

500,000

Mizuho Bank, Ltd.

350,000
300,000--

300,000

600,000--

600,000

500,000-

500,000

400,000-

500,000--

500,000

500,000--

500,000

200,000--

200,000

1,000,000--

1,000,000

0.490

October 31,
2026

400,000--

400,000

0.475

October 31,
2026

1,600,000--

1,600,000

Mizuho Bank, Ltd.
Sumitomo Mitsui
Trust Bank, Ltd.
Resona Bank, Ltd.
MUFG Bank, Ltd.
(Note 6)Development
Bank of Japan Inc.
(Note 6)400,000--

400,000

0.548

300,000--

October 31,
2027

300,000

300,000--

300,000

600,000--

600,000

0.525

October 31,
2027

500,000--

500,000

0.856

April 30,
2031

The 77 Bank, Ltd.

500,000--

500,000

0.426

-

-

500,000

500,000(Note 5)January 31,
2025
January 31,
2025-

The Musashino
Bank,Ltd. (Note 6)

Remarks

October 31,
2029-

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

Use

(%)

500,000

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

Long-term
loans
payableAverageinterest rate
（Note 2）
（Note 3）500,000
350,000

400,000

0.350

April 30,
2026
April 30,
2026

35

Classification

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

Averageinterest rate
（Note 2）
（Note 3）800,000--

800,000

700,000--

700,000

600,000--

600,000

600,000-

600,000

0.601

April 30,
2028

0.550

April 30,
2028

April 30,2031

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

500,000

500,000--

500,000

300,000--

300,000

0.824

Mizuho Bank, Ltd.

500,000--

500,000

0.357

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

200,000

0.525

Aozora Bank, Ltd.

200,000--

200,000

0.601

The Gunma Bank,
Ltd. (Note 6)

500,000--

500,000

0.450-

500,000-

500,000

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

-

500,000-

500,000-

800,000

800,000

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

-

700,000--

500,000-

500,000-

2,600,000-

2,600,000-

600,000-

600,000-

400,000-

400,000

Aozora Bank, Ltd.

-

400,000

400,000

300,000--

800,000-

800,000

0.640-

1,600,000-

1,600,000

0.879

of

Mizuho Bank, Ltd.
Resona Bank, Ltd.
MUFG Bank, Ltd.
(Note 6)Development
Bank of Japan Inc.
Sub Total
Total

300,000

Use

Remarks(%)-

The Bank
Fukuoka, Ltd.

Payment due
date（Note 4）500,000

700,000

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

0.387

March 31,
2026

0.599

September
30, 2029

0.722

January 31,
2029

300,000
300,000

93,500,000

10,000,000-

103,500,000¥ 112,300,000¥11,750,000¥ 9,750,000¥114,300,000

January 31,
2029
January 31,
2031

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¥ 7,500,000

Due after 2 years
through 3 years¥ 9,310,000

Due after 3 years
through 4 years（in thousands yen）
¥ 19,090,000

Due after 4 years
through 5 years¥ 19,960,000

Due after 5 years¥ 47,640,000

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.

36

Note 6: Loans payable at a fixed rate.
Note 7: Borrowings are listed in the current portion of long-term loans payable from the fiscal period under review, listed in long-term loans payable in the previous fiscal
period.

23. INVESTMENT CORPORATION BONDS
Outstanding investment corporation bonds as of September 30, 2022 are as follows.
SeriesDate of issue

Balance atthe beginningof period

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

Interest rate

Repayment date

Use

(Note3)(%)

October 31,
2016

1,000,000-

1,000,000

0.600

October 30,
2026

August 31,
2017

1,000,000

1,000,000

-

0.320

August 31,
2022

August 31,
2017

2,000,000-

2,000,000

0.700

August 31,
2027

0.700

April 26,
2028

April 26,2018

2,000,000

Remarks-

2,000,000(Note4)
Unsecured

April 30,2020

1,000,000-

1,000,000

0.400

April 30,2025

January 28,2022

2,000,000-

2,000,000

0.460

January
28, 2032(Note5)June 22,
2022

-

-

2,000,000

0.500

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

Note 1: Ranking pari passu among the specified investment corporation bonds.
Note 2: Ranking pari passu among the specified investment corporation bonds and small private placement with restrictions on splits of denomination of each bond.
Note 3: Investment corporation bonds were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate and repayment of debts.
Note 4: Investment corporation bonds were used as the funds for repayment of debts.
Note 5: Investment corporation bonds were used as the funds for repayment of debts that were borrowed for the purpose to acquire the eligible green assets.
Note 6: Investment corporation bonds were used as the funds for repayment of Investment corporation bonds and debts that were borrowed for the purpose to acquire theeligible green assets.
Note 7: Annual repayments of investment corporation bonds scheduled for the next five years after the balance sheet date are as follows.
Due in 1 year
or less
Investment
corporation bonds¥

Due after 1 year
through 2 years-¥

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

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

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

Repayment date

Use

Outstanding investment corporation bonds as of March 31, 2022 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)
Sixth series of unsecured
investment corporation bonds(Note 2)Seventh Series Unsecured

October 31,
2016¥1,000,000¥1,000,000

October 31,
2016

1,000,000

August 31,
2017
August 31,
2017

Interest rate

Remarks

(%)
-

0.200

October 29,
2021-

1,000,000

0.600

October 30,
2026

1,000,000-

1,000,000

0.320

August 31,
2022

2,000,000-

2,000,000

0.700

August 31,
2027¥

April 26,2018

2,000,000-

2,000,000

0.700

April 26,
2028

April 30,2020

1,000,000-

1,000,000

0.400

April 30,2025

January 28,--

2,000,000

0.460

January(Note3)

Unsecured(Note4)(Note5)37

Investment Corporation
Bonds (Green Bonds) (Note
1)
Total

2022

28, 2032¥8,000,000¥1,000,000¥9,000,000

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

Due after 1 year
through 2 years¥1,000,000¥

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

Due after 3 years
through 4 years-

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

24. DISTRIBUTIONS
From April 1, 2022
to September 30, 2022

From October 1, 2021
to March 31, 2022

I.. Retained earnings at the end of period¥3,775,141,552¥4,404,711,898

Ⅱ.Incorporation into unitholders’ capital¥-¥ 276,855,799

Of which, reversal of allowance fortemporary difference adjustments¥-¥ 276,855,799

Ⅲ. Total distributions¥3,774,835,668¥4,127,634,930

Distributions per unit

¥6,484¥7,090¥3,774,835,668¥4,127,634,930¥6,484¥7,090¥305,884¥221,169

Of which, distributions of earnings
Of which, distributions of earnings per
unit
Ⅳ.Retained earnings brought forward to
the next period

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

In accordance with the policy described in Article 39-1
of its Articles of Incorporation, KRR determines that theamount of distribution shall exceed the amountequivalent to 90% of its distributable profit as stipulated
in Article 67- 15 of the Special Taxation Measures Law
and shall be up to its profits as the maximum amount.
Following this policy, KRR has decided that it shall
distribute ¥4,127,634,930 which is almost the entire
amount of income as defined in Article 136-1 of theInvestment Trust Act after deduction of reversal of
allowance for temporary difference adjustments (asdefined in Article 2-2-30 of the Ordinance on
Accountings of Investment Corporations).
Procedures for the distribution of amounts exceeding
distributable income are outlined in Article 39-2 of KRR’s
Articles of Incorporation. In the14th fiscal period, KRR
has decided not to distribute cash in excess of
distributable profit.

38

15th Fiscal Period (April 1, 2022 to September 30, 2022)
Not applicable

14th Fiscal Period (October 1, 2021 to March 31, 2022)
1. Reasons, related assets and 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¥276,855

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.

39

Independent Auditor’s Report
The Board of Directors
Kenedix Retail REIT Corporation
OpinionWe have audited the accompanying financial statements of Kenedix Retail REIT Corporation(the Company), which comprise the balance sheet as at September 30, 2022, and the statements
of income and retained earnings, changes in net assets, and cash flows for the six-month period
then ended, and notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects,
the financial position of the Company as at September 30, 2022, and its financial performanceand its cash flows for the six-month period then ended in accordance with accounting principles
generally accepted in Japan.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in Japan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Financial Statements section of our report. We are independent of the Company
in accordance with the ethical requirements that are relevant to our audit of the financial
statements in Japan, and we have fulfilled our other ethical responsibilities in accordance withthese requirements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.
Other Information
The other information comprises the information included in the Semi-annual Report that
contains audited financial statements but does not include the financial statements and our
auditor’s report thereon. Management is responsible for preparation and disclosure of the otherinformation. the Supervisory Director is responsible for overseeing the Company’s reporting
process of the other information.
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.

40

Responsibilities of Management and Supervisory Director for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in Japan, and for suchinternal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s
ability to continue as a going concern and disclosing, as required by accounting principles
generally accepted in Japan, matters related to going concern.
The Supervisory Director is responsible for overseeing the Company’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with auditing standards generally accepted in Japan, we
exercise professional judgment and maintain professional skepticism throughout the audit. We
also:
・ Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
・ Consider internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances for our risk assessments, while the purpose of the audit of
the financial statements is not expressing an opinion on the effectiveness of the Company’s
internal control.
・ Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.
・ Conclude on the appropriateness of management’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Company’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Company to cease to continue as a going concern.
・ Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation in accordance withaccounting principles generally accepted in Japan.
41

We communicate with the Executive Director regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide the Executive Director with a statement that we have complied with the ethicalrequirements regarding independence that are relevant to our audit of the financial statements
in Japan, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related safeguards.
Interest Required to Be Disclosed by the Certified Public Accountants Act of Japan
Our firm and its designated engagement partners do not have any interest in the Company whichis required to be disclosed pursuant to the provisions of the Certified Public Accountants Act ofJapan.

Ernst & Young ShinNihon LLC
Tokyo, Japan
December 22, 2022

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

42