13th Fiscal Period
May 1, 2011 – October 31, 2011

Semiannual Report

Delivering the Whole Package

The KENEDIX-REIT Investment
and Management Strategy
Kenedix Realty Investment Corporation (KENEDIX-REIT) and its asset management company
Kenedix REIT Management, Inc. are committed to prudent investment primarily in mid-sized Tokyo
office buildings so that KENEDIX-REIT can fully utilize Kenedix REIT Management's expertise in

Delivering the Whole Package

real estate asset management of mid-sized office buildings, ensure maximum efficiency of funds
and asset, property and leasing management resources; and deliver consistently strong returns to
our investors without sacrificing service.

Table of Contents
The Essential Elements of J-REITManagement………………………… 2
Message from the President………… 4
Our Take on the Environment ………… 7
External Growth ……………………… 8Internal Growth………………………10
Financial Strategy……………………12
Investor Relations……………………14
Portfolio Map…………………………15
Portfolio Table ………………………16
Financial Statements …………………17
Unitholders' Information ………………33

SapporoSendai

Niigata

General Manager,
Investment Management Division

CEO and President

Director and General Manager,
Property Management Division

Director and General Manager,
Financial Planning Division

Koju Komatsu

Taisuke Miyajima

Masashi Ohwa

Masahiko Tajima

Operating Revenues

Operating Income

9,044 million yen(million yen)

10,0008,000

Fukuoka

Tokyo Metropolitan Area
Kanazawa

Osaka

8,067

8,358

8,136

9,044

5,000

3,000

4,000

2,000

2,000

1,000

0

9th Period

10th Period 11th Period 12th Period 13th Period

0(Oct. 31, 2009) (Apr. 30, 2010) (Oct. 31, 2010) (Apr. 30, 2011) (Oct. 31, 2011)

Net Income

3,052 million yen

3,000

3,052
2,567
2,102

3,213

9th Period

3,738

3,835

3,709

10th Period 11th Period 12th Period 13th Period(Oct. 31, 2009) (Apr. 30, 2010) (Oct. 31, 2010) (Apr. 30, 2011) (Oct. 31, 2011)

Unitholders’ Equity(million yen)

2,000

4,425

4,000

6,000

NagoyaDisclaimer
This semiannual report includes translations of certain documents originally filed and made available in Japan in accordance with the Financial Instruments and Exchange Act of Japan. This English-language semiannual
report has been prepared solely for the convenience of readers outside Japan and is not intended to constitute a document for an offer to sell, or seeking an offer to buy, any securities of KENEDIX-REIT.
English terms for Japanese legal, accounting, tax and business concepts used herein may not be precisely identical to the concept of the equivalent Japanese terms. With respect to any and all terms herein, including
without limitation, financial statements, if there exist any discrepancies in the meaning or interpretation thereof between the original Japanese documents and English translation contained herein, the original Japanese
documents will always govern the meaning and interpretation.
Neither KENEDIX-REIT, Kenedix REIT Management, Inc. nor any of their respective directors, officers, employees, partners, unitholders, agents, affiliates nor their advisors shall be responsible or liable for thecompleteness, appropriateness, or accuracy of English translations or the selection of the portion(s) of any document(s) translated into English.
The financial statements of KENEDIX-REIT have been prepared in accordance with generally accepted accounting principles in Japan (Japanese GAAP), which may materially differ in certain respects from the generally
accepted accounting principles of other jurisdictions.
This semiannual report contains forward-looking statements. These statements appear in a number of places in this semiannual report and include statements regarding the intent, belief, or current and future expectationsof KENEDIX-REIT or Kenedix REIT Management, Inc. with respect to its business, financial condition and results of operations. In some cases, you can identify forward-looking statements by terms such as “may,” “will,”“should,” “would,” “expect,” “plan,” “anticipate,” “believe,” ”estimate,” “predict,” “potential,” or the negative of these terms or other similar terminology. These statements are not guarantees of future performance andare subject to various risks and uncertainties. Actual results, performance or achievements, or those of the industries in which we operate, may differ materially from any future results, performance or achievements
expressed or implied by these forward-looking statements. In addition, these forward-looking statements are necessarily dependent upon assumptions, estimates and data that may be incorrect or imprecise and involve
known and unknown risks and uncertainties. Accordingly, readers of this document should not interpret the forward-looking statements included herein as predictions or representations of future events or circumstances.
Potential risks and uncertainties also include those identified and discussed in this document. Given these risks and uncertainties, readers of this document are cautioned not to place undue reliance on forward-looking
statements, which are only valid as of the date of the information published herein. We disclaim any obligation to update or, except in the limited circumstances required by the Tokyo Stock Exchange, announce publicly
any revisions to any of the forward-looking statements contained in these documents.

7,921

4,425 million yen(million yen)

2,607

15,00012,0002,309

150,272 million yen(million yen)

127,067

135,689

135,732

135,505150,272

9,000
6,000

1,000

3,000
0

9th Period

10th Period 11th Period 12th Period 13th Period(Oct. 31, 2009) (Apr. 30, 2010) (Oct. 31, 2010) (Apr. 30, 2011) (Oct. 31, 2011)

0

9th Period

10th Period 11th Period 12th Period 13th Period(Oct. 31, 2009) (Apr. 30, 2010) (Oct. 31, 2010) (Apr. 30, 2011) (Oct. 31, 2011)1

The Essential Elements of
J-REIT Management

Delivering theWhole Package
Kenedix Realty Investment Corporation

The externally managed J-REIT is designed to be a human-less, transparent vehicle providing dividends to its investors.
Although the transparency is clearly top of the class among vehicles listed on the Tokyo Stock Exchange, nothing could befurther from the truth when it comes to being "human-less." Though outside the walls of the J-REIT vehicle, a J-REIT isentirely dependent on its asset management company and the services the said company provides for its performance. A
J-REIT can only deliver optimal dividends consistently if its asset management company, Kenedix REIT Management in thiscase, delivers the whole package – from leadership to individual services.
Kenedix REIT Management's delivery of the whole package enabled KENEDIX-REIT to post the following "2 years of results"
after the financial crisis.

The Investment Management Division is responsible for the investment and divestment of properties toconstantly ensure that the best possible portfolio for the investment strategy is formed.

■ History of Portfolio Growth

The asset management company President provides proactive and prudent management leadership to enabledistributions for the portfolio to be maximized.

Number ofproperties(yen/unit)

3,000

82

+32%

62

properties

15,000

2,567

2,000

bn yen
(4.6%)

properties■ History of Total Distribution (Left) / Distribution per Unit (Right)(mn yen)bn yen
(4.9%)+40%

9.86

Annual NOI(NOI yield)

13.83

2,102

10,993

10,511

2,749

2,541

10,881

2,310

9,891

(bn yen)300

10,000

9,596

5,000

0

9th Period(Oct. 31, 2009)

10th Period

11th Period(Apr. 30, 2010)

12th Period(Oct. 31, 2010)40

13th Period(Apr. 30, 2011)(Oct. 31, 2011)

284.0

280

see moreon page

300
200

The Property Management Division General Manager heads the actual management of properties through Kenedix
REIT Management's on-staff property management team. The on-staff team ensures prompt understanding andreflection of tenant needs.

100

Asset Size

1,000

260

+29%
240

0

■ History of Occupancy Ratio for Office Buildings

15000

220

220.1

(%)

100
95 94.2 93.3 93.2 92.8 92.9 94.0 93.8 94.0 93.9 93.6 93.6 93.3 92.9

91.9

92.2 92.3 93.0

94.2 93.8

93.0

10000

94.3%

94.5 93.8 93.8

85

Nov. 2009

May 2010

Aug. 2010

Nov. 2010

Feb. 2011

May 2011

Aug. 2011

Oct. 2011100

10th Period(Apr. 30, 2010)

11th Period(Oct. 31, 2010)

12th Period(Apr. 30, 2011)

13th Period(Oct. 31, 2011)

As of
Dec. 31, 20110

see moreon pageFeb. 2010

9th Period(Oct. 31, 2009)

5000

90

80

200

10

10th Period(April 2010)

12th Period(April 2011)

13th Period(October 2011)

December 2011 Acquisitions

95
90

The Financial Planning Division General Manager works with his team to obtain capital needed by KENEDIX-REIT at
the best possible rates and to overcome any turmoil in the market place.

■ History of Interest-bearing Debt and LTV (*)(mn yen)

100,000

50

40.9

40.9

102,968

102,567

Approx. 45.0%

43.0
40.3
112,715

139,114110,91450,000080(%)

200,000
150,000

85

45

41.1

40

97,22035
10th Period(Apr. 30, 2010)

11th Period(Oct. 31, 2010)

12th Period(Apr. 30, 2011)

13th Period(Oct. 31, 2011)

As of
Dec. 31, 201130

see moreon page12

9th Period(Oct. 31, 2009)

Notes: 1. The figures corresponding to the KDX Shin-Yokohama 381 Building Annex Tower (acquired in 10th Fiscal Period) are included in the figures for the
KDX Shin-Yokohama Building (A47, acquired in 6th Fiscal Period).
2. The annual NOI was calculated based on actual figures for the fiscal period ended October 2011 (13th Fiscal Period) and the present NOI of
properties acquired in December 2011. As for properties acquired in the 12th and 13th Fiscal Periods, the real property tax and city planning tax
have been converted into expenses.

see moreon page

8*LTV = Interest-bearing at the end of period ÷ Total assets

2

3
50

Delivering theWhole Package

Message from the President
Drawing Tomorrow Today

Kenedix Realty Investment Corporation

Q: Why are you so confident about your investment strategy?
Miyajima: I am confident because I believe the numbers back it up. First, 92.2% of offices in Tokyo have 29 or fewer workers and94.9% less than 3,000 tsubos. First, this means that the numbers overwhelmingly back us up. Put differently, there isalways demand for a Lexus, but its price and other aspects mean that there is always greater demand for a Corolla.
Second, we are in the process of building a brand with a portfolio of 70 properties. We cannot compete for tenants that
seek 200-300 tsubo floor plates, but for the overwhelming share of tenants we provide good properties with excellent,
identifiable services. We are on the verge of becoming the office brand of choice for SMEs and enjoy an occupancy ofaround 95% for Tokyo, about 5% above market because we are focused on improving quality of services for an officebuilding size where this is not commonly provided. Finally, because of the size of our tenants, we have a diverse group ofover 700 tenants of which about a tenth relocate each year. Thus, we proactively conclude contracts with 70-80 new
tenants a year. This means that we can maintain strong relationships with leasing agents due to the large scope ofbusiness we provide. To put it simply, I am confident because of an overwhelming quantity of market demand and ourstrong identity and service for emerging mid-sized office buildings.
■ Breakdown of Offices by Number of
Employees (Tokyo)
Over 100 employees 2.0%30~99 employees
10~29 employees

Investment Strategy – Not a Point but a LineKENEDIX-REIT had a busy 13th Fiscal Period (ended October 31, 2011) with a public offering and the issuance of aninvestment corporation bond. These diverse fund procurement initiatives eloquently reflect CEO & President Taisuke
Miyajima’s belief that investment isn’t a point but a line. The following interview is a part of a broad discussion held on a
November afternoon in Tokyo.

Q

In your discussions with investors and analysts you can often be heard speaking about investment being a line rather:
than a point. Can you illustrate your position as it pertains to this fiscal period in particular?

Miyajima: It is true that some existing investors questioned our timing for the public offering because it led to a small drop in our
cash distribution per unit and was done at a value below our net asset value (NAV). It is vital to note, however, that we areoperating KENEDIX-REIT from a medium to long-term perspective and not a short-term perspective. As such, we wereconvinced that this was the appropriate time and opportunity for equity financing because: 1) Real estate have adjusted in
the medium to long-term, 2) Necessity to lower our leverage to enable future acquisitions in line with our investment
strategy which calls for the best properties, best prices and best timing, and 3) Our recovery from the post-Lehman credit
crunch.
This equity financing allowed us to lower fund procurement costs, eliminate collateral and generate other positive effects.
Yes, the public offering traded below our NAV, but through the acquisitions and lower fund procurement costs we aretaking steps to lower costs and overcome this negative.
It must also be noted that legal changes enabled more than half of the offering to be marketed overseas and, in fact, we
allocated a strong 58% of the offering to overseas investors. Further, if the question becomes have we been successful– the simple truth is that our fund procurement costs soared in the wake of the Lehman crises, but following the equity
financing we were able to issue an investment corporation bond at a reasonable spread. Coming down from 130bps
spread to around 100bps is an enormous improvement on the near future bottom line, which was in part made possible by
the public offering.

July 2011
Public Offering

4Issuance of new investment
50,400 units
units through public offering
1,000 units
Secondary offering
1,600 units
Third-party allotment
Outstanding units after offering 286,550 units
July 12, 2011
Pricing dateJuly 20, 2011
3.0%
¥274,510¥14.1 bn
Nomura Securities Co., Ltd.
Bookrunners
UBS Securities Japan Ltd., etc.
Payment date
Discount rate
Selling price
Offering size

■ Breakdown of Office Buildings by GFA (tsubo)

1~29 employees: 92.2%
More than 3,000 tsubo
5.2
%

5.8
%

16.5%

28.6%
66.2%

75.7%
1~9 employees

Source: Kenedix REIT Management, based on Tokyo office statistics
report as of 2009 (MPHPT Statistics Bureau)500~3,000 tsubo

Broad stock of mid-sized
office buildings
Less than 500 tsubo

Note: The above data covers rental office buildings located in Tokyo’s central 5 wards that were surveyed by CB
Richard Ellis Research Institute. The above data may not include the data of all properties in the said 5 wards.
Source: Survey conducted by CB Richard Ellis Research Institute based on KENEDIX-REIT’s request “Macromarket survey of Tokyo’s 5 wards” (as of May 2011)

Q: procurement activities?

You refinanced a number of loans this fiscal period. What were the highlights or accomplishments of the fundMiyajima: We had a number of refinancing events this 13th Fiscal Period (ended October 31, 2011). You must understand that wehave already borrowed 100 billion yen. One of our goals for the equity financing was to reduce our present average
spread of 130bps to below 100bps over two to three years. This represents a huge reduction of costs when you consider
the fact that we already borrowed 100 billion yen. Lowering costs also required diversified sources of fund procurement.
The equity financing helped us release collateral and made it possible to issue 1.5 billion yen in an investment corporationbond. It also means that we were able to secure new participation of Mizuho Trust & Banking in our bank formation. Our
focus is presently on maintaining a sound financial base to lower costs and on the refinancing of 90 billion yen in corporate
bonds maturing next fiscal period, which we can accomplish with the many financial tools we have at our disposal.

Q: Is your philosophy to develop strong tenant relations and to build solid building identities proving successful?
Miyajima: Our customer satisfaction survey conducted with global marketing information company J.D. Power Asia Pacific, our newparticipation in the Global Real Estate Sustainability Benchmark (GRESB) survey, the branding of our KDX office buildings,
tie-ups with leasing brokers, property value-up strategies, and more than anything our quality properties have generated
more than adequate results to date. This is backed up by the fact that our vacancy in Tokyo is around 5%, while the market
is at 8-9% vacancy.
We have not yet attained our ultimate goal, but we are approaching it. One day, maybe when we have around 100
properties, it will be good to have a system in place to provide incentives for tenants moving from one KDX property toanother, and tenants moving to KDX properties from local areas. However, we need to broaden our supply further before
this can be established.

5Message from the President

Q: Why are you so proactive concerning investor relations? What tools are you prone to use?
Miyajima: First in reference to the tools, we use Japanese and English semi-annual reports, thewebsite, real world seminars, web seminars, road shows, etc. It is essential for us tomeet with present and potential investors.

Our Take on the Environment“First, the strength andadvantage of a REIT
lies with the equity
liquidity, simplicity andtransparency of the
product and IR is themost essential means
for maintaining thistransparency.”

As to why we are proactive, there are two dominant reasons. First, the strength andadvantage of a REIT lies with the equity liquidity, simplicity and transparency of the
product and IR is the most essential means for maintaining this transparency. Second,
and this is my personal reason, is that the discussion of strategy with investors and theirensuing questions helps me to polish our strategy further and to learn what the market thinks about us and the market asa whole. The vehicle for this is obviously IR. This “fine-tuning” of thought is great. Of course, banks and leasing agentsare also a good source of information but doing so with investors provides a completely different perspective and isabsolutely essential as it requires you to fine tune the message.

Q: What is the pledge you make to investors in paying cash distributions?
Miyajima: Ultimately, one of the most important tasks of a REIT manager is to pay stable cash distributions. Unfortunately, at various
short-term periods in the management of a REIT there will be times like now when rents drop or leverage must be
lowered to enable further growth. As professionals, we must do our best to overcome these with as little damage to thebottom line and cash
■ History of Distribution per Unit
distributions as possible.
(yen)
18,000What this means is our
16,711
15,00015,618
responsibility is to maximize
13,884 13,529 13,682 13,960
12,00012,172
total performance over the
10,511 10,993 10,881 9,891
9,000
9,596
medium to long-term, but
6,000
entails a certain degree of
3,000
3,052
flexibility to overcome short0
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
12th
13th
term issues.
Period Period Period Period Period Period Period Period Period Period Period Period Period
Corporate Japan is once again in the news for governance issues with the cases of a lens maker and paper and pulp
Q: manufacturer
particularly filling up the pages of newspapers. Why is this so “foreign” to a REIT?
Miyajima: It comes back to the simplicity and transparency I discussed earlier. These are definite and clear merits. The type ofscandal being reported in corporate Japan today is impossible for a REIT. Our governance is quite tight with outside
management, a compliance committee, outside lawyers and even a board on the REIT which all serve to prevent thesetypes of scandals from occurring. On top of this, our bookkeeping and accounting is handled by a trust bank. Our
simplicity, transparency and clear safety measures protect investors and us from scandals.
Post-earthquake, environmental response and energy conservation have become greater parts of our lives. How does
Q: KENEDIX-REIT
perceive these issues?
Miyajima: Obviously, energy conservation and environmental
response have been growing issues from even before the earthquake.
18000
However, after the earthquake, the government15000
asked us to reduce peak-time electricity consumption by 15%, I am proud
to say we actually attained a reduction of about12000
30%. This was achieved through good tenant relations, good portfolio
management and our active management approach.
9000 The issue now is how to achieve a low carbon society without
6000
giving up comfort and without burden being placed3000
on tenants. I must also strongly iterate that the key
Taisuke Miyajima
to this issue is not the Class S and Class A office 0
CEO and President
Kenedix REIT Management, Inc.
buildings, it is the mid-sized office buildings due totheir overwhelming quantity. Unless it is realized in
mid-sized office buildings, nothing will beaccomplished.

6

Delivering theWhole Package
Kenedix Realty Investment Corporation

Environmental Policy, Measures and Achievements
KENEDIX-REIT recently announced a simple environmental policy to represent our foundation as we confront
environmental issues.

Environmental Policy
The officers and employees of KENEDIX-REIT will undertake investment management operations in accordance with thefollowing environmental policies.

1

Compliance with Environmental Laws and Regulations

2

Promotion of Energy Conservation Measures

3

Reduction of Environmental Burden

KENEDIX-REIT will promote environment-friendly investment management operations by adhering toenvironmental laws and regulations.

KENEDIX-REIT will systematically advance energy conservation measures at its managed properties,
maintaining a strong awareness of the importance of natural and energy resources.

KENEDIX-REIT will undertake initiatives to reduce CO2 and waste emissions as well as promote recycling at
its managed properties, underscoring its commitment to alleviating its environmental burden. In addition,
KENEDIX-REIT will take sufficient care when handling harmful substances and environmental pollutants.

Disclosure of Environmental Information

4

KENEDIX-REIT will work to disclose necessary information to a variety of concerned parties, including
investors, tenants and business partners, in such areas as its environmental policies and measures.

5

KENEDIX-REIT will take steps to improve the environmental consciousness of its officers and employees
through internal education.

Environmental Education

Global Real Estate Sustainability Benchmark (GRESB)KENEDIX-REIT’s new participation in the GRESB survey is discussed separately; however, here we would like to outline
the scale of this movement so that you the investor can understand its significance. The following is taken from the 2011
GRESB survey.
Key Figures 2011 GRESB Survey

GRESB Survey Respondents by Region

Institutional Capital$1.7 trillion

North America

60

Survey respondents

340

South America

4

Properties covered

21,000Total Property Value$928 billion
65Green Stars
Reported Energy Costs$1 billion

Estimated Tons of CO2 Emitted

34 million

Reduction of CO2 Emissions in 2010

Europe

194

Asia

49

Australia

33

1.8%

New Environment System Based Loan Issued

New Development: 14th Fiscal Period

On January 10, 2012, KENEDIX-REIT announced that it had become the first J-REIT to take out a loan with Sumitomo
Mitsui Banking Corporation that took advantage of the SMBC Environmentally Friendly Building Assessment System. Thissystem was established by the bank and by CSR Design & Landscape Co., Ltd. The financial product recognizes buildings
owned by companies for their environmental performance, risk management, and policies and implementation ofmanagement to achieve environmental friendliness. In the case of the Series 67 loan issued by the bank (2. 5 billion yen),
KDX Nagoya Sakae Building was recognized as a Silver building and the KDX Harumi Building as a Bronze building.

7

Delivering theWhole Package

External Growth

Delivering Liquidity through Strategic Portfolio GrowthChoosing the Best Property, the Best Price and the Best Timing

Kenedix Realty Investment Corporation

Continued Building Blocks to a Vibrant, Optimal Portfolio

KENEDIX-REIT is committed to expanding and molding its portfolio of primarily mid-sized office buildings based on a
dynamic and flexible approach that considers market trends and other factors. KENEDIX-REIT bases its investments onproperty type, location and size and will continue its dedication to prudent growth at the right timing as it constructs
portfolios that can withstand and perform within different economic cycles. Our strength is fast decision-making and astrong track record that makes KENEDIX-REIT, a chosen destination for new and existing property sources.

New Development: 14th Fiscal Period

KENEDIX-REIT acquired eight properties on December 26, 2011. The properties were acquired from AIG Edison Life
Insurance Company for a total of 28,550 million yen using debt financing. With this transaction, the total portfolio of
KENEDIX-REIT grew to 82 properties with an acquisition price of 284.0 billion yen.

■ Step-by-Step: Prudent Steps Towards a Portfolio of 100 Properties and 400 Billion Yen
KENEDIX-REIT is presently targeting to build a 400 billion yen portfolio of office buildings that will solidify the brandamong office users and investors both institutional and retail.

Steps Toward a 400 Billion Yen Portfolio

A-75 Kabutocho Nikko Building
Location: Chuo-ku, Tokyo
Gross Floor Area: 11,705.49 m2
Acquisition Price: 11,270 million yen
Acquisition Date: Dec. 26, 2011

A-76 Ikebukuro Nikko Building
Location: Toshima-ku, Tokyo
Gross Floor Area: 3,223.75 m2
Acquisition Price: 1,653 million yen
Acquisition Date: Dec. 26, 2011

A-77 Kabutocho Nikko Building II
Location: Chuo-ku, Tokyo
Gross Floor Area: 2,016.03 m2
Acquisition Price: 1,280 million yen
Acquisition Date: Dec. 26, 2011

A-78 Tachikawa Ekimae Building
Location: Tachikawa-shi, Tokyo
Gross Floor Area: 2,896.48 m2
Acquisition Price: 1,267 million yen
Acquisition Date: Dec. 26, 2011

A-79 Nagoya Ekimae
Sakura-dori Building
Location: Nakamura-ku, Nagoya
Gross Floor Area: 13,380.30 m2
Acquisition Price: 7,327 million yen
Acquisition Date: Dec. 26, 2011

A-80 Nagoya Nikko
Shoken Building
Location: Naka-ku, Nagoya
Gross Floor Area: 14,308.76 m2
Acquisition Price: 4,158 million yen
Acquisition Date: Dec. 26, 2011

A-81 Sendai Nikko Building
Location: Aoba-ku, Sendai
Gross Floor Area: 3,598.01 m2
Acquisition Price: 950 million yen
Acquisition Date: Dec. 26, 2011

D-1 Kanazawa Nikko Building
Location: Minamicho, Kanazawa
Gross Floor Area: 4,497.22 m2
Acquisition Price: 645 million yen
Acquisition Date: Dec. 26, 2011

Diversification of Investment Methods
Warehousing fundInvestments in silent partnerships(along with sponsors)

Real estate

Advance securing of multiple properties
using a warehousing fund

Loans
EquityKENEDIX-REIT + sponsors, etc.

Replacement of Assets
Sale of properties with an eye on acquiring
new properties

Improving the portfolio quality

Molding the Portfolio to Achieve Optimal Growth

Another Step Forward
The acquisition of four properties on July 22, 2011 was an important step to strengthening our portfolio and was also
optimal in laying the foundation for future growth by lowering our leverage and positioning us for future advantageous
acquisitions, which we made on December 26, 2011. As a result, as of December 31, 2011, the portfolio is 92.0% office and81.0% of it is located in the Tokyo Metropolitan Area. The table below shows the growth history of KENEDIX-REIT.
300

The 13th Fiscal Period (ended October 31, 2011) proved to be a case study of our newly evolved growth strategy. During
this period we sold the KDX Hirakawacho Building in June for a capital gain and lessened the need for capital from the
newly issued units in the acquisition of four properties we believe were ideally priced and available at the best timing for
us to strengthen our portfolio and lower our leverage towards future growth. The four properties we acquired this time
were the KDX Iidabashi Building, KDX Higashi-Shinagawa Building, KDX Hakozaki Building and KDX Shin-Nihonbashi
Building. All of these buildings were renamed on October 31.

8

A-74
KDX Shin-Nihonbashi
Building
Location: Chuo-ku, Tokyo
Gross Floor Area: 3,712.25 m2
Acquisition Price: 2,300 million yen
Acquisition Date: July 22, 2011

Residential

197.0

222.0
196.9

220.1

235.7
213.0

197.4

233.2
211.4

246.4
224.6

255.5

261.6

233.7

137.9

146.7

150

0

A-73
KDX Hakozaki Building
Location: Chuo-ku, Tokyo
Gross Floor Area: 6,332.48 m2
Acquisition Price: 2,710 million yen
Acquisition Date: July 22, 2011

Central Urban Retail

200

50

A-72
KDX Higashi-Shinagawa
Building
Location: Shinagawa-ku, Tokyo
Gross Floor Area: 10,138.65 m2
Acquisition Price: 4,590 million yen
Acquisition Date: July 22, 2011

284.0(Note)

Office

250

100

A-71
KDX Iidabashi Building
Location: Shinjuku-ku, Tokyo
Gross Floor Area: 5,422.64 m2
Acquisition Price: 4,670 million yen
Acquisition Date: July 22, 2011

(As of December 26, 2011)(bn yen)

86.2

69.1
37.7
12.3
18.9

End of
1st Period(Oct. 2005)

16.0
44.4

End of
3rd Period(Oct. 2006)

16.0
43.0

End of
5th Period(Oct. 2007)

12.3
12.7

End of
7th Period(Oct. 2008)

12.3
10.3

End of
9th Period(Oct. 2009)

12.3
10.3

End of10th Period(Apr. 2010)

12.3
9.4

End of11th Period(Oct. 2010)

12.3
9.4

End of12th Period(Apr. 2011)

12.3
9.4

End of13th Period(Oct. 2011)

Note: The total amount of the acquisition price for December 2011 includes usage of Other(Hotel) valued at 600 million yen.

12.3
9.4

As of
Dec. 2011

300

Koju Komatsu

250

General Manager,
Investment Management Division 200
150

100

9

Delivering theWhole Package

Internal Growth
Reinforcing the Portfolio from Within

Kenedix Realty Investment Corporation

Exceeding Market Figures through Proven, Evolving Strategies

Customer Satisfaction Survey: Conducted in 13th Period (ended October 31, 2011) to Implement in 15th Period

KENEDIX-REIT has time and again posted occupancy figures that exceed the market average. With a portfolio that has
around a 10% turnover ratio annually for leases, performing above market means being attuned to the market more than
the average property owner. It means the ability to adapt strategies to fit the times with programs like the DBJ Green
Building certification, but continuing with effective strategies such as the internal property management team andcustomer satisfaction survey.
■ Proving the Market by Beating the Market
One of the central arguments of our investment strategy is that more than 93% of Tokyo offices have 29 or fewer workers; inother words, our market enjoys a phenomenal share of the entities looking for leased space. This combined with excellent
relationships with leasing agents that have been cultivated to be beneficial in both good and bad times and a portfolio ofstrong mid-sized office buildings means that our agents are out in the market recommending our buildings and spaces.
Our leasing agents not only provide us with market info that is “live” they proactively hold open houses to secure new
tenants. As a result KENEDIX-REIT has once again outperformed the market at 95.7% for the Tokyo Metropolitan Area asof October 31, 2011.
(%) Occupancy Ratio for Office Portfolio
98

As of Oct. 31, 2011

96

Tokyo Metropolitan Area 95.7%

94

Total office building 94.3%

92
90

Other Regional Areas 90.2%

Proactively Respond to the

Improve theTenantKnow theProperty

Tenant (Market)
Know theProperty

Applying J.D. Power’s Proven Approach to Cultivating a Competitive Advantage
J.D. Power Asia Pacific's consulting services assist clients in developing competitive advantages by helping themunderstand and integrate the Voice of the Customer into their strategic planning and operational activities. The
methodologies employed are practical and proven, yielding measurable results and providing clients with assistance indeveloping and refining processes and products from concept through sales and service.

DBJ Green Building Certification

88
86
84
82

As an owner of for-rent office buildings, KENEDIX-REIT must take steps to make sure its customers, tenants, are happy
with their space. KENEDIX-REIT has teamed up with J.D. Power Asia Pacific to conduct biannual surveys of its tenants
where findings are reflected in needed improvements over the coming two terms. The last survey, which was conductedin the 9th Fiscal Period, also resulted in the renovation of stairs and installation of new security cameras at many
properties along with establishment of a more detailed maintenance and upgrade schedule for portfolio properties. The
2011 survey is being compiled now for implementation in the coming fiscal periods. We are all keen to see theimprovements that will come out of the newest study.

Reference: Total portfolio 94.7%

80

Nov. 2008
May 2009
Nov. 2009
May 2010
Nov. 2010
May 2011
Oct. 2011
Note: The impact of the move-out of 1 tenant of KDX Harumi Building will be reflected for the occupancy ratios as of the end of Nov. and Dec. 2011

Property Management: Internal Team Means Fast Timely Response
KENEDIX-REIT is the only J-REIT with an internal property management team. This competitive advantage is distinct. First,
it places skilled professionals of the Kenedix Group in direct responsibility of properties rather than having said
professionals overseeing third parties handling the property management. KENEDIX-REIT is known by its tenants as the“go to team” for handling any problems that may occur and KENEDIX-REIT constantly hones its skills through customer
satisfaction surveys conducted with market leader J.D. Power Asia Pacific, on-site inspections and access to tenants.
Our team of 14 people is committed to building a powerful, dependable KDX office brand.

Expanding the Identity of KENEDIX-REIT in the Market
As KENEDIX-REIT marches toward 100 office buildings, it is also strategically renaming buildings to create the KDX brandof office buildings that is relied upon in Tokyo as the de-facto choice for small and mid-sized companies. On October 31,
2011, we changed over the names of seven office buildings to further broadcast to the public that they are a part of
KENEDIX-REIT.

Despite economically tough times, the importanceof the environment to tenants is growing on a daily
basis. The original driver was global warming but
DBJ Green Building
the fact that less power plants are available
Silverpost-earthquake has led to greater consumerawareness. The Development Bank of Japan Inc.
A-60
A-58
KDX Harumi Building
KDX Nagoya Sakaeawards buildings a green certification looking at
Building
five areas: Disaster-prevention & anticrime
measures, tenant comfort & convenience,
DBJ Green Building
harmony with the environment & community, collaboration with tenants and investors
Bronzeand environmental IR activities. The bank’s certification system boasts three levels
and recently the KDX Harumi Building and Nagoya Sakae Building received silver
certifications and the KDX Kobayashi-Doshomachi Building the bronze.

A-69
KDX KobayashiDoshomachi Building

GRESB: Benchmarking Our Environmental Performance
The Global Real Estate Sustainability Benchmark (GRESB) Foundation is a program enacted by globally renowned
institutional investors, academics and associations that provide a sustainability benchmark for commercial property
portfolios with the goal of improving real estate environmental and social performance.
Over 300 entities participated in the annual survey that is at the core of the rating. GRESB scoring places a 70% weight on
Implementation and Measurement and 30% on Management and Policy. KENEDIX-REIT ranked fourth among listedcompanies in Asia for its performance.
■ GRESB Scoring &Dimensions

Implementation &Measurement

10

70%

Management &Policy30%

Masashi Ohwa

Director and General Manager,
Property Management

11Delivering theWhole Package

Financial Strategy
Overcoming Today’s Needs for Tomorrow’s Strength

Kenedix Realty Investment Corporation

Progressing Toward a Better Spread

Building an Even More Robust Formation of LeadersPreviously, CFO Masahiko Tajima is quoted as saying, “The three most vital elements in maintaining banking relations are:1) Maintain deep communications with banks and notify them of any policy or other changes in advance (don’t surprisethem), 2) Prevent yourself from being unilaterally dependent on banks by maintaining a plethora of financing and capitalraising options, and 3) Maintain a balanced exposure to banks. During the 13th and 14th Fiscal Periods, his team was
active in proving their expertise in this area. Their accomplishments included:

One of Japan’s leading trust banks was added to give the formation a broader base of support among nationally leadingbanks.
■ Breakdown of Lenders (As of December 26, 2011)(billion yen)

1 Refinancing of 20.0 billion yen
financing with an approximate net value of 14,024 million yen was used to purchase
2 Equityfour properties, lower the LTV and release collateral on all properties
3
4 Adding Mizuho Trust Bank to the formation of lenders
term-loan commitment agreement for the maximum amount of 7 billion yen to prepare
5 Enteredfor redemption of First series bondIssued Third Series Unsecured Investment Corporation Bond (1.5 billion yen)

KENEDIX-REIT Finances Acquisitions with ¥29 Billion in Loans

New Development: 14th Fiscal Period(100 million yen)

Repayment
23.30 Repayment
20.0
4.00
7.50
9.00

New finance in 14th period (on Dec. 26, 2011)
New finance in 13th period (incl. refinance)

7.50

0

9.44
7.27

1.00
1.50
8.79

14th
Period15th
Period

13.30

6.50
2.50

4.00

7.00

8.71
6.61

5.15

13th
Period

7.00

6.64
4.50

16th
Period17th
Period18th
Period19th
Period20th
Period21stPeriod3.00
22nd
Period23rd
Period24th
Period3.00
25th
Period(As of December 19, 2011)

Credit ratings and investment corporation bonds
Rating agency

12

Size

¥9 bn
¥3 bn
¥1.5 bn

23.9

Aozora Bank

12.0

18.0

Chuo Mitsui Trust andBanking

14.5

17.3

Bank of Tokyo
Mitsubishi UFJ

9.8

16.3

Mitsubishi UFJ Trustand Banking

7.2

9.2

Resona Bank

4.3

7.3

Mizuho Trust &Banking-

1.0

Norinchukin Bank

4.0

0.0

Total

85.2

122.4

Interest rate
1.74% p.a.
2.37% p.a.
1.59% p.a.

Resona Bank

6.0%

Mitsubishi UFJ
Trust and Banking

0.8%

Sumitomo Mitsui
Banking Corporation

24.0%

7.5%

Bank of Mitsubishi
Tokyo UFJ

Development
Bank of Japan

Chuo Mitsui
Trust and Banking

Aozora Bank

19.5%

13.3%

14.7%

14.1%

The average spread - which refers to the spread for financing obtained during the concerned fiscal period - is a clear signof KENEDIX-REIT's standing among banks. One of the key goals of KENEDIX-REIT, both with this fiscal period's equity
financing and with its portfolio management - is to lower the average spread of its financing and generate cost savings.
As is evident in the diagram below, KENEDIX-REIT has succeeded in considerably lowering the spread from the postLehman low.
■ Changes in Borrowings
8th Period (Apr. 2009) and9th Period (Oct. 2009)

12th Period(Apr. 2011)

13th Period(Oct. 2011)

14th Period
Borrowed in Dec. 2011

Average life

1.8 years

3.4 years

2.4 years

3.1 years

Average spread

2.27%

1.42%

1.18%

1.07%

Amount¥25 bn¥32.5 bn

¥20 bn¥29 bnNotes: 1. Average life is weighted by borrowing amount (rounded to the first decimal place).
2. Average spread - which refers to the spread for financing obtained during the concerned fiscal period - is weighted by borrowing amount and by adding annualized upfront fee to the
spread cost for total debt costs (rounded to the second decimal place)
3. Amount represents the amount borrowed or refinanced during the period. The amounts borrowed and repaid during the same period (i.e. no outstanding balance at the end of the period)
are not included.

RatingJapan Credit Rating Agency (JCR)
1st Bond
2nd Bond
3rd Bond

12.0

Mizuho Trust and Banking

26th
PeriodNote: The chart illustrates total debt amounts that mature in each period (rounded to the first decimal place). The debts that were financed during 13th and 14th periods (including
refinanced portions) are indicated in red box.

Bonds

Development Bank ofJapan

Borrowings

6.00

5.0

29.4

Investment corporation bonds

15.0

10.0

19.4

Average Spread of KENEDIX-REIT Debt

Diversification of Debt Maturities (as of December 26, 2011)
25.0

Sumitomo Mitsui
Banking Corporation

Note: Amounts less than 100 million yen are rounded to the nearest 100 million yen. The total amount at Oct. 31, 2009 includes borrowings from Citibank and Mitsui Sumitomo Insurance.

KENEDIX-REIT demonstrated its strong standing with Japanese financial insitutions when it took out 29 billion yen in a
combination of new long and short-term loans to acquire eight new properties on December 26, 2011. These loans were
provided by 7 banks with Sumitomo Mitsui Banking Corporation as the arranger and Development Bank of Japan Inc. as
the co-arranger. The average spread for the loans was 100bps with some above and some below.

(bn yen)

As of
As of
Oct. 31, 2009 Dec. 26, 2011

A (Stable)

Maturity
5 yrs
10 yrs2 yrs

Maturity dateMar. 15, 2012
Mar. 15, 2017
Sep. 13, 2013

Masahiko Tajima

Director and General Manager,
Financial Planning Division13

Investor Relations

Portfolio Map

The Linchpin of Successful Investor Communications
Constantly Honing Our IR Prowess(As of December 26, 2011)

This page only represents properties in Central Tokyo.

“Conversations” with existing and potential investors that assist in fine-tuning strategies further by providing an
opportunity to ruminate on the thoughts of investors through an educated dialog among parties and also helps convince
investors to buy, hold or sell. The constant communication needs to be a skillful weaving of print, virtual and human(verbal) communication. KENEDIX-REIT uses a diverse group of tools as it regularly hones its IR prowess. Below aresome of the tools recently and regularly used by KENEDIX-REIT to convey its presence and strategy.

Joined with other J-REITs in a celebratory covermarking the tenth anniversary of J-REITs.
Website:Actively updated website by posting releases,
disclosure materials, etc.
Semi-annual reports: English presentation of business over the most recent
period.
Presentation materials: An English set of PPT materials is always prepared forour overseas investors.
Road shows:
Our leadership regularly travels in Japan and overseas
on road shows and to participate in investment conferences.
The Economist:

KENEDIX-REIT also published Japanese business reports, Kessan Tanshin, releases, etc. and the leadership participatesin Web seminars, traditional securities seminars and other vehicles to spread the message to users.

A-75
Kabutocho Nikko Building

A-60
KDX Harumi Building

B-3

Tokyo
Metropolitan
Government

Simplicity, Transparency and Diligence Set KENEDIX-REIT Apart

A-55

Unfortunately recent corporate maneuvers have shifted investor attention to manipulation of financial statements andother deeds by staff at a number of major Japanese firms making investors question what they read. The fact is, however,as President Miyajima pointed out earlier, the simplicity and transparency of J-REITs make this impossible. Additionally,
KENEDIX-REIT has set up a clear decision-making process and rules for transactions with interested parties that are
adhered to prevent any misunderstanding from occurring.

A-29

Preview

ComplianceOfﬁcerAsset
Management
Committee

Approval for transactions with interested parties
Approval for transactions outside ofmanagement guidelines
Approval for transactinos that follow
management guidelines excluding those withinterested parties

A-46
A-23

C-2

The Imperial
Palace
Tokyo

A-15
A-51
A-75
A-73
A-64 A-77
A-74

A-1 A-20 A-3
A-4

Shibuya-ku

A-67
A-28

A-45

Office

A-21

B-19

A-61

Tokyo Tower
A-17

Chuo-ku

A-40 A-39

A-7

Resolution

Reporting

A-27
A-68

A-13

Shibuya
Board
MeetingChiyoda-ku

A-59

A-8

A-57

Resolution/Reporting

Compliance
Committee

A-37
A-56

A-6

Creation of management guidelines

Corresponding
Division

A-52

A-71

Shinjuku-ku

A-41

C-1

Deliberation &Resolution

A-66
KDX Shinjuku Building

Ueno

Shinjuku
A-66

A-46
Hiei Kudan-Kita Building

MejiroA-38■ Decision-making Process
Deliberation &Resolution

A-40
Toranomon Toyo Building

A-19

Minato-ku

A-60

A-32

Hamamatsucho

Residential
Central Urban Retail
JR Yamanote Line

Rules for Transactions with Interested Parties

JR Chuo Line

ShinagawaTransactions with interested parties-Asset acquisition: Must not acquire properties for more than appraised price(except for properties pre-acquired by Kenedix Inc. pursuant to the Memorandum of Understanding)-Asset disposal: Must not sell properties for less than appraised price
Implementation is most important and KENEDIX-REIT stands apart from its competition through the frequency of its
implementation of committee meetings in place to prevent issues from occurring. It is important to both adhere to rules inspirit and in practice and KENEDIX-REIT is proud of its success in doing both.
7th
8th
9th
10th
11th
12th
13th
Period Period Period Period Period Period Period

Compliance committee
Asset Management Committee
Board of Directors
Board of Directors ofInvestment Corporation

14

9
52
10

8
44
8

8
36
10

10
39
12

7
32
11

7
37
9

8
44
11

7

8

8

8

8

7

9

The Frequency of Board of
Directors, Asset Management
Committee and Compliance
Committee Meetings at Kenedix
REIT Management and the Board of
Directors at KENEDIX-REIT

A-37
KDX Ochanomizu Building

A-32
KDX Shiba-Daimon Building

A-13
KDX Kojimachi Building

15

Portfolio Table(As of October 31, 2011)
Occupancy
Year Built
Acquisition Price
No.
Location
Property Name
Ratio
(Note 1)(mn yen)
85.2%
Apr.
1974
5,940
A-1
Chuo-ku, TokyoKDX Nihonbashi 313 Building
100.0%
Jan. 1987
4,450
A-3
Chuo-ku, Tokyo
Higashi-Kayabacho Yuraku Building
100.0%
Jun. 1993
3,680
A-4
Chuo-ku, Tokyo
KDX Hatchobori Building
84.1%
Aug. 1992
2,533
A-5
Nakano-ku, TokyoKDX Nakano-Sakaue Building
100.0%
Nov. 1985
2,450
A-6
Shibuya-ku, Tokyo
Harajuku F.F. Building
100.0%
Nov. 1988
2,270
A-7
Minato-ku, Tokyo
FIK Minami Aoyama
100.0%
May 1993
1,950
A-8
Chiyoda-ku, Tokyo
Kanda Kihara Building
100.0%
May 1994
5,950
A-13
Chiyoda-ku, TokyoKDX Kojimachi Building
98.7%
Apr. 1989
2,252
A-14
Funabashi, Chiba
KDX Funabashi Building
95.0%
Sep. 1993
2,300
A-15
Chuo-ku, Tokyo
KDX Hamacho Building
96.2%
Sep. 1984
5,300
A-16
Yokohama, Kanagawa
Toshin 24 Building
100.0%
Jan. 1992
4,640
A-17
Shibuya-ku, TokyoKDX Ebisu Building (Note 3)
100.0%
Oct. 1990
3,500
A-18
Ohta-ku, TokyoKDX Omori Building
100.0%
Sep. 1999
3,460
A-19
Minato-ku, Tokyo
KDX Hamamatsucho Building
100.0%
Oct. 1987
2,780
A-20
Chuo-ku, TokyoKDX Kayabacho Building
100.0%
Feb. 1992
2,690
A-21
Minato-ku, TokyoKDX Shinbashi Building
93.1%
Sep. 1990
2,520
A-22
Yokohama, Kanagawa
KDX Shin-Yokohama Building
100.0%
Oct. 1989
1,950
A-23
Shinjuku-ku, TokyoKDX Yotsuya Building
100.0%
Oct. 1992
1,580
A-26
Koto-ku, TokyoKDX Kiba Building
100.0%
Mar. 1990
2,350
A-27
Chiyoda-ku, TokyoKDX Kajicho Building
100.0%
May 1991
1,065
A-28
Minato-ku, TokyoKDX Nogizaka Building
83.3%
Jan. 1990
2,950
A-29
Shinjuku-ku, Tokyo
KDX Higashi-Shinjuku Building
100.0%
Nov. 1992
4,200
A-30
Shinagawa-ku, TokyoKDX Nishi-Gotanda Building
100.0%
Sep. 1986
1,400
A-31
Koto-ku, Tokyo
KDX Monzen-Nakacho Building
100.0%
Jul. 1986
6,090
A-32
Minato-ku, TokyoKDX Shiba-Daimon Building
100.0%
Jun. 1988
2,000
A-33
Taito-ku, TokyoKDX Okachimachi Building
100.0%
May 1995
1,305
A-34
Atsugi, Kanagawa
KDX Hon-Atsugi Building
Office100.0%
Dec. 1985
1,155
A-35
Hachioji, Tokyo
KDX Hachioji Building(Tokyo100.0%
Aug. 1982
6,400
A-37
Chiyoda-ku, TokyoKDX Ochanomizu Building
Metropolitan
100.0%
Oct. 1992
1,500
A-38
Shinjuku-ku, TokyoKDX Nishi-Shinjuku BuildingArea)100.0%
Apr. 1988
4,400
A-39
Minato-ku, TokyoKDX Toranomon Building
100.0%
Aug. 1962
9,850
A-40
Minato-ku, Tokyo
Toranomon Toyo Building
100.0%
Aug. 1989
2,300
A-41
Shinjuku-ku, TokyoKDX Shinjuku 286 Building
65.1%
Apr. 1989
3,300
A-45
Minato-ku, TokyoKDX Roppongi 228 Building
98.8%
Mar. 1988
7,600
A-46
Chiyoda-ku, Tokyo
Hiei Kudan-Kita Building
93.0%
Mar. 1988
5,800
A-47
Yokohama, Kanagawa
KDX Shin-Yokohama 381 Building (Note 2)
100.0%
Feb. 1985
3,760
A-48
Kawasaki, Kanagawa
KDX Kawasaki-Ekimae Hon-cho Building
86.4%
Jul. 1991
2,710
A-49
Yokohama, Kanagawa
Nissou Dai-17 Building
54.9%
Sep. 1988
2,400
A-50
Meguro-ku, Tokyo
Ikejiri-Oohashi Building
100.0%
Sep.
1988
2,310
A-51
Chuo-ku, Tokyo
KDX Hamacho Nakanohashi Building
100.0%
Oct. 1992
1,380
A-52
Chiyoda-ku, TokyoKDX Kanda Misaki-cho Building
81.2%
Jul. 1990
2,110
A-55
Shinjuku-ku, Tokyo
Shin-toshin Maruzen Building
100.0%
May 1994
2,760
A-56
Chiyoda-ku, TokyoKDX Jimbocho Building
100.0%
Aug. 2000
1,951
A-57
Chiyoda-ku, TokyoKDX Gobancho Building
100.0%
Mar. 2008
1,864
A-59
Chiyoda-ku, Tokyo
KDX Iwamoto-cho Building
88.9%
Feb. 2008
10,250A-60
Chuo-ku, Tokyo
KDX Harumi Building
100.0%
Apr. 1992
2,200
A-61
Minato-ku, Tokyo
KDX Hamamatsucho Dai-2 Building
100.0%
Nov. 1989
3,080
A-62
Bunkyo-ku, Tokyo
Koishikawa TG Building
80.0%
Apr. 1988
2,620
A-63
Shinagawa-ku, Tokyo
Gotanda TG Building
100.0%
Oct. 2006
2,010
A-64
Chuo-ku, TokyoKDX Nihonbashi 216 Building
100.0%
May 1993
6,800
A-66
Shinjuku-ku, TokyoKDX Shinjuku Building
100.0%
Nov. 1991
4,300
A-67
Chuo-ku, TokyoKDX Ginza 1chome Building (Note 3)
100.0%
Jan. 1984
4,000
A-68
Chuo-ku, TokyoKDX Nihonbashi Honcho Building (Note 3)
100.0%
Mar. 1990
4,670
A-71
Shinjuku-ku, Tokyo
KDX Iidabashi Building (Note 3)
100.0%
Jan. 1993
4,590
A-72
Shinagawa-ku, Tokyo
KDX Higashi-Shinagawa Building (Note 3)
83.3%
Nov. 1993
2,710
A-73
Chuo-ku, Tokyo
KDX Hakozaki Building (Note 3)
100.0%
Nov. 2002
2,300
A-74
Chuo-ku, TokyoKDX Shin-Nihonbashi Building (Note 3)
90.1%
Sep. 1993
5,570
A-12
Sakai, Osaka
Portus Center Building
94.7%
Mar. 1993
1,610
A-24
Osaka, Osaka
KDX Minami Semba Dai-1 Building
94.3%
Sep. 1993
1,560
A-25
Osaka, Osaka
KDX Minami Semba Dai-2 Building
64.6%
Jul. 1983
1,305
A-36
Niigata, Niigata
KDX Niigata Building
99.2%
Oct. 1982
5,400
A-42
Kyoto, Kyoto
Karasuma Building
Office87.4%
Feb. 1984
2,100
A-44
Sendai, Miyagi
KDX Sendai Building(Other Regional A-53
79.3%
Jun. 1973
4,900
Fukuoka, Fukuoka
KDX Hakata-Minami Building
Areas)
84.4%
Jul. 1994
2,220
A-54
Osaka, Osaka
KDX Kitahama Building
100.0%
Apr. 2009
7,550
A-58
Nagoya, Aichi
KDX Nagoya Sakae Building
95.6%
Jul. 2009
2,870
A-69
Osaka, Osaka
KDX Kobayashi-Doshomachi Building
100.0%
Oct. 1989
2,005
A-70
Sapporo, Hokkaido
Kitananajo SIA Building
94.3%
Office Subtotal (68 properties)
Avg. 21.6 years
233,726–
100.0%
Mar. 1997
1,250
B-3
Shinjuku-ku, Tokyo
Court Mejiro
99.5%
Mar. 1989
1,800
B-18
Sapporo, Hokkaido
Venus Hibarigaoka
Jan. 2004
5,353
Residential
B-19
Chuo-ku, Tokyo
Residence Charmante Tsukishima
100.0%
Feb. 2006
1,038
B-34
Kawaguchi, Saitama
Gradito Kawaguchi
100.0%
Avg. 11.3 years
Residential Subtotal (4 properties)
9,441
–
99.7%
Mar. 2005
9,900
C-1
Shibuya-ku, Tokyo
Frame Jinnan-zaka
89.5%
Central Urban
Aug. 1991
2,479
C-2
Shibuya-ku, TokyoKDX Yoyogi Building
100.0%
RetailAvg. 9.3 years
12,379–Central Urban Retail Subtotal (2 properties)
91.6%
Avg. 20.6 years
255,546
Total (74 properties)
94.7%
Notes: 1. The year built refers to the date of construction completion recorded in the land register. The average age subtotal and total data are calculated using the weighted-average based on
acquisition prices as of October 31, 2011, and are rounded down to the first decimal place.
2. As of the end of the fiscal period ended October 31, 2010, A-47 KDX Shin-Yokohama 381 Building and A-65 KDX Shin-Yokohama 381 Building Annex Tower are presented collectively as
one property. Year of construction of existing tower is shown. Upon calculating the weighted-average portfolio age, the completion date (April 2009) for the KDX Shin-Yokohama 381
Building Annex Tower is not considered.
3. KENEDIX-REIT has changed the names of seven assets to heighten its brand presence. The new asset names are followed by their previous names in parentheses: A-17 KDX Ebisu
Building (Ebisu East 438 Building), A-67 KDX Ginza 1 chome Building (Kyodo Building (Ginza No. 8)), A-68 KDX Nihonbashi Honcho Building (Kyodo Building (Honcho 1 chome)), A-71 KDX
Iidabashi Building (Kyodo Building (Iidabashi)), A-72 KDX Higashi-Shinagawa Building (P's Higashi-Shinagawa Building), A-73 KDX Hakozaki Building (Nihonbashi Dai-2 Building), and
A-74 KDX Shin-Nihonbashi Building (Kyodo Building (Shin-Nihonbashi)).
4. Amounts indicated have been rounded down.

16

Financial Statements(13th Fiscal Period: From May 1, 2011 to October 31, 2011)
Report of Independent Auditors·······18
Balance Sheets·······19
Statements of Income and Retained Earnings·······20
Statements of Changes in Net Assets·······20
Notes to Financial Statements·······21
Statements of Cash Flows and Related Notes (Unaudited) ·······32

Financial Summary (Unaudited)
Historical Operating trends For the 9th - 13th Periods
9th Period(as of Oct. 31,
2009)

10th Period(as of Apr. 30,
2010)

11th Period(as of Oct. 31,
2010)

12th Period(as of Apr. 30,
2011)

13th Period(as of Oct. 31,
2011)

%

7,921
7,921
4,708
3,652
3,213
2,103
2,102
236,320(-1.0)
97,220(-1.5)
127,067(-0.3)
124,973(0.0)
200,000
635,335
2,102
10,511
10,5110.9 (1.8)
1.7 (3.3)
53.8(+0.4)
41.1(-0.2)
100.0

8,067
8,067
4,329
3,714
3,738
2,568
2,567
251,566(+6.5)
102,968(+5.9)
135,689(+6.8)
133,129(+6.5)
233,550
580,987
2,567
10,993
10,993
1.1 (2.1)
2.0 (3.9)
53.9(+0.2)
40.9(-0.2)
99.9

8,358
8,242
4,522
3,817
3,835
2,608
2,607
251,080(-0.2)
102,567(-0.4)
135,732(+0.0)
133,129(0.0)
233,550
581,170
2,541
10,881
10,8811.0 (2.1)
1.9 (3.8)
54.1(+0.1)
40.9(-0.1)
97.4

8,136
8,136
4,427
3,767
3,709
2,346
2,309
261,928(+4.3)
112,715(+9.9)
135,505(-0.2)
133,129(0.0)
233,550
580,199
2,310
9,891
9,891
0.9 (1.8)
1.7 (3.4)
51.7(-2.3)
43.0(+2.2)
100.0

9,044
8,498
4,618
3,961
4,425
3,040
3,052
274,973(+5.0)
110,914(-1.6)
150,272(+10.9)147,153(+10.5)286,550
524,419
2,749
9,596
9,596
1.1 (2.2)
2.1 (4.2)
54.6(+2.9)
40.3(-2.7)
90.0

propertiesm2%
mn yenmn yenmn yenmn yenyen

65
254,225.04
94.7
1,451
400
5,721
3,994
19,97370
271,260.81
94.4
1,477
330
5,830
4,044
17,31867
267,737.33
93.6
1,440
312
5,864
3,995
17,10671
286,237.93
94.6
1,406
574
5,776
3,716
15,91474
300,016.89
94.7
1,442
674
5,980
3,950
13,786

PeriodUnit

Operating revenues(Rental revenues)
Operating expenses(Property-related expenses)
Operating income
Ordinary income
Net income (a)Total assets (b)(Period-on-period change)
Interest-bearing debt (c)(Period-on-period change)
Unitholders' equity (d)(Period-on-period change)
Unitholders' capital(Period-on-period change)
Number of investment units issued and outstanding (e)Unitholders' equity per unit (d)/(e)Total distribution (f)Distribution per unit (f)/(e)(Earnings distributed per unit)(Distribution in excess of earnings per unit)
Return on assets (annualized) (Notes 1 and 2)
Return on net assets (annualized) (Notes 2 and 3)
Net assets ratio at end of period (d)/(b)(Period-on-period change)
Interest-bearing debt ratio at end of period (c)/(b)(Period-on-period change)
Payout ratio (Note 4) (f)/(a)Other reference
Number of properties
Total leasable floor area
Occupancy at end of period
Depreciation expenses for the period
Capital expenditures for the period
Leasing NOI (Net Operating Income) (Note 5)
FFO (Funds From Operation) (Note 6)
FFO per unit (Note 7)

mn yenmn yenmn yenmn yenmn yenmn yenmn yenmn yen%mn yen%mn yen%mn yen%unityen
mn yen
yen
yen
yen
%
%
%
%

Notes:1. Return on assets = Ordinary income/(Total assets at beginning of period + Total assets at end of period)/2 × 100
2. Annualized values for the 9th Fiscal Period are calculated based on a period of 184 days, 181 days for the 10th Fiscal Period, 184 days for the 11th Period, 181 days for 12th Fiscal Period
and 184 days for the 13th Fiscal Period, .
3. Return on net assets = Net income/(Total net assets at beginning of period + Total net assets at end of period)/2 × 100
4. Payout ratio is rounded down to the first decimal place.
5. Leasing NOI = Rental revenues – Rental expenses + Depreciation expenses for the period
6. FFO = Net income + Depreciation expenses for the period – Profit on sale of trust beneficiary interests in real estate or real estate + Loss on sale of trust beneficiary interests in realestate or real estate
7. FFO per unit = FFO/Number of investment units issued and outstanding (figures below ¥1 rounded down)
8. Where applicable, figures are rounded down to the nearest million.

17

Report of Independent Auditors

Balance Sheets
As of October 31, 2011 and April 30, 2011

(In thousands of yen)
As of
October 31, 2011

AssetsCurrent assets:
Cash and bank deposits (Notes 6 and 15)
Rental receivables
Consumption tax refundable
Other current assets (Note 9)
Total current assets
Property and equipment, at cost:(Notes 4, 6, 14 and 16)
Land
Buildings and structures (Note 7)
Machinery and equipment
Tools, furniture and fixtures
Construction in progressLess-accumulated depreciation
Net property and equipment
Other assets:
Ground leasehold (Notes 14 and 16)
Corporate bond issuance costs
Unit issuance costs
Other assets (Notes 6, 14 and 16)
Total assets
Liabilities and Net Assets
Liabilities
Current liabilities:
Trade and other payables
Current portion of corporate bonds (Notes 5 and 15)
Short-term debt and current portion of long-term debt (Notes 5, 6 and 15)
Deposits received
Rents received in advance
Provision for loss due to disaster
Other current liabilities
Total current liabilities
Corporate bonds (Notes 5 and 15)
Long-term debt (Notes 5, 6 and 15)
Leasehold and security deposits received
Total liabilities
Net Assets
Unitholders' equity
Unitholders' capital
Units authorized: 2,000,000 units
Units issued and outstanding: 286,550 and 233,550 units
As of October 31, 2011 and April 30, 2011, respectively
Surplus
Voluntary retained earnings
Reserve for reduction entry
Retained earnings
Total Surplus
Total unitholders' equity
Total net assets (Note 10)
Total liabilities and net assets

¥

¥

¥

¥

18,338,535
173,773
77,564
18,589,872

As ofApril 30, 2011¥

13,794,963
186,413
310,485
60,39014,352,251

177,220,871
89,329,995
1,354,493
406,173
1,874(13,751,870)
254,561,536

171,111,081
85,658,330
1,308,858
401,538(12,653,540)
245,826,267

359,429
30,906111,272
1,320,426
274,973,441

360,204
22,20625,136
1,342,835
261,928,899

802,437
9,000,000
24,050,000
2,814
1,281,807
2,334
272,91335,412,305
4,500,000
73,364,000
11,424,682
124,700,987¥¥

617,497
9,000,000
36,160,000
16,243
1,872,708
30,932244,82247,942,202
3,000,000
64,555,500
10,925,583
126,423,285

147,153,820

133,129,755

65,796
3,052,838
3,118,634
150,272,454
150,272,454
274,973,441

65,7962,310,063
2,375,859
135,505,614
135,505,614
261,928,899¥

See accompanying notes to the financial statements.

18

19

Statements of Income and Retained Earnings

Notes to Financial Statements

For the period from May 1, 2011 to October 31, 2011 and the period from November 1, 2010 to April 30, 2011
(In thousands of yen)
From May 1, 2011 to October 31, 2011

Operating revenues:
Rental revenues (Notes 12 and 14)
Profit on sale of real estate (Note 12)
Total operating revenues
Operating expenses:
Property-related expenses (Notes 12 and 14)
Asset management fees
Administrative service and custodian fees
Other operating expenses
Total operating expenses
Operating income¥

8,498,949
545,282
9,044,231

Non-operating expenses:
Interest expense
Financing-related expenses
Amortization of unit issuance costs
Amortization of corporate bond issuance costs
Others,net
Total non-operating expenses
Ordinary income
Extraordinary income
SubsidyGain on donation of noncurrent assets
Extraordinary losses
Loss on disaster
Loss on reduction of fixed assets
Income before income taxes
Income taxes (Note 9)
Net income
Retained earnings at the beginning of period
Retained earnings at the end of period¥

From November 1, 2010 to April 30, 2011¥

3,767,178
448,106
79,591132,133
4,427,008
3,709,909

1,036,388
298,043
27,282
6,881
16,322
1,384,916
3,040,407

1,048,723
303,479
8,380
5,782(3,193)
1,363,170
2,346,739

13,97026,230-3,054,377
1,560
3,052,817
21
3,052,838

35,36026,2302,311,379
1,384
2,309,995
68
2,310,063¥

See accompanying notes to the financial statements.

Statements of Changes in Net Assets
For the period from May 1, 2011 to October 31, 2011 and the period from November 1, 2010 to April 30, 2011

(In thousands of yen)

Valuation,
Transaction
Adjustments
and Others

Unitholders' Equity
Surplus
Unitholders'
capitalBalance as of October 31, 2010
Changes during the fiscal period
Provision for reserve for
reduction entry
Payments of dividends
Net income
Interest-rate swap
Total changes during the
fiscal period
Balance as of April 30, 2011
Changes during the fiscal period
New unit issuance
Payments of dividends
Net income
Total changes during the
fiscal period
Balance as of October 31, 2011

Voluntary
retainedearnings

Unrealized
Total
gain
unitholders' from deferred
equityhedgetransactions

Retained
Total
earnings
SurplusReserve for
reduction
entry¥ 133,129,755 ¥- ¥ 2,607,122 ¥ 2,607,122 ¥ 135,736,877 ¥Organization
Kenedix Realty Investment Corporation (”the Investment Corporation”) was established on May 6, 2005 under the Law
concerning Investment Trusts and Investment Corporations of Japan (“the Investment Trust Law”). On July 21, 2005, theInvestment Corporation was listed on the Real Estate Investment Trust Market of the Tokyo Stock Exchange with a total of
75,400 investment units issued and outstanding. (Securities Code: 8972). Subsequently, the Investment Corporation raised
funds through public offerings including three global offerings. Most recently, the Investment Corporation additionallyissued 51,400 investment units on July 20, 2011 through public offerings including global offerings, and 1,600 investment
units on August 8, 2011 by way of third-party allotment. As a result, as of October 31, 2011, the end of the thirteenth fiscal
period, the number of investment units issued and outstanding totaled 286,550 units. The Investment Corporation issued
the Third Series Unsecured Investment Corporation Bonds (totaling ¥1,500 million and maturing in two years) on
September 15, 2011. As a result, the outstanding investment corporation bonds as of the end of the fiscal period underreview (fiscal period ended October 31, 2011) totaled ¥13,500 million.
The Investment Corporation is externally managed by Kenedix REIT Management, Inc. (“the Asset Management
Company”) as its asset management company. In concert with the Asset Management Company, the Investment
Corporation strives to maximize cash distribution to investors by securing stable earnings and sustainable investment
growth. To this end, the Investment Corporation adopts a dynamic and flexible investment stance that accurately reflects
its environment and market trends, and endeavors to ensure a timely response to each and every opportunity. The
Investment Corporation endeavors to develop a diversified investment portfolio named “KENEDIX Selection,” adopting athree-point investment criteria based on property type, area and size.
During the period ended October 31, 2011, the Investment Corporation acquired 4 office buildings (total acquisition
price of ¥14,270 million) and sold 1 office building (initial acquisition price of ¥5,180 million) located in the Tokyo
Metropolitan Area (sales price: ¥5,800 million). As of October 31, 2011, the Investment Corporation had total unitholders’capital of ¥147,154 million with 286,550 investment units outstanding. The Investment Corporation owned a portfolio of 74
properties with a total acquisition price of ¥255,547 million containing a total leasable area of 300,016.89 m2. The
occupancy ratio was approximately 94.7%. A portfolio of 74 properties consists of 68 office buildings, 4 residential
properties and 2 central urban retail properties. 62 properties are located in the Tokyo metropolitan area and 12
properties are located in other regional areas.

8,136,917
8,136,917

3,961,611
487,406
81,852
88,0394,618,908
4,425,323

1. ORGANIZATION AND BASIS OF PRESENTATION

Total(4,502) ¥ 135,732,375-

65,796(65,796)

-

-

-

-

-

-

(2,541,258)
2,309,995-(2,541,258)
2,309,995-(2,541,258)
2,309,995-

4,502(2,541,258)
2,309,995
4,502-

65,796(297,059)(231,263)(231,263)

4,502(226,761)

133,129,755

65,7962,310,063

2,375,859

135,505,614-

14,024,065--(2,310,042)
3,052,817(2,310,042)
3,052,817

14,024,065(2,310,042)
3,052,817-

135,505,614
14,024,065(2,310,042)
3,052,817

14,024,065-

742,775

742,775

14,766,840-

14,766,840¥ 147,153,820 ¥

65,796 ¥3,052,838 ¥

3,118,634 ¥ 150,272,454 ¥Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in theInvestment Trust Law of Japan, the Japanese Corporation Law, the Financial Instruments and Exchange Law of Japanand related regulations, and in conformity with accounting principles and practices generally accepted in Japan(“Japanese GAAP”), which are different in certain respects as to the application and disclosure requirements of theInternational Financial Reporting Standards or accounting principles generally accepted in the United States of America.
The accompanying financial statements are a basically translation of the audited financial statements that wereprepared for Japanese domestic purposes from the accounts and records maintained by the Investment Corporation andfiled with the Kanto Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments andExchange Law. In preparing the accompanying financial statements, relevant notes have been added and certain
reclassifications have been made from the financial statements issued domestically in order to present them in a form
that is more familiar to readers outside Japan. The Investment Corporation’s fiscal period is a six-month period which
ends at the end of April and October of each year, respectively. The Investment Corporation does not prepare
consolidated financial statements because it has no subsidiaries.

- ¥ 150,272,454

See accompanying notes to the financial statements.

20

21Notes to Financial Statements
and April 30, 2011, respectively. In subsequent calendar years, such property-related taxes are charged as operating
expenses in the fiscal period to which the installments of such taxes correspond.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(A) Property and Equipment
Property and equipment are stated at cost. Depreciation of property and equipment is calculated on a straight-line basis
over the estimated useful lives of the assets ranging as stated below:

Buildings and structures
Machinery and equipment
Tools, furniture and fixtures

From May 1, 2011
to October 31, 2011

From November 1, 2010
to April 30, 20112-49 years
3-17 years
3-20 years

2-49 years
3-17 years
3-20 years(I) Income Taxes
Deferred tax assets and liabilities are computed based on the difference between the financial statements and income
tax bases of assets and liabilities using the statutory tax rates.

(J) Consumption Taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes. Non-deductible
consumption taxes applicable to the acquisition of assets are included in the cost of acquisition for each asset.

(B) Unit Issuance Costs
Unit issuance costs are amortized over a period of three years under the straight-line method.

(C) Corporate Bond Issuance Costs
Corporate bond issuance costs are amortized over a loan period under the straight-line method.

(D) 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 inJapan, all assets and liabilities within trust are recorded in the relevant balance sheets and statements of income andretained earnings.

(E) Leasehold rights
Fixed term leasehold with special agreement on buildings sales, and the building are amortized over a contractual periodof forty-eight years and nine months under the straight-line method.

(F) Provision for loss due to disasterFor cost of repairs on impaired fixed assets due to the massive earthquake off the east coast of Japan, the amountreasonably estimable at the end of period is recognized as “provision for loss due to disaster” under current liability.

(G) Revenue Recognition
Operating revenues consist of rental revenues including base rents and common area charges, and other operating
revenues including utility charge reimbursements, parking space rental revenues and other miscellaneous revenues.
Rental revenues are generally recognized on an accrual basis over the life of each lease. Utility charge reimbursements
are recognized when earned and their amounts can be reasonably estimated. Reimbursements from tenants including
utility charge reimbursements are recorded on a gross basis and such amounts are recorded both as revenues andexpenses during the fiscal period, respectively.

(K) Derivative Financial Instruments
The Investment Corporation utilizes interest-rate swap agreements as derivative financial instruments only for the
purpose of hedging its exposure to changes in interest rates. The Investment Corporation deferred recognition of gains orlosses resulting from changes in fair value of interest-rate swap agreements because its interest-rate swap agreements
met the criteria for deferral hedging accounting. However, the Investment Corporation adopted special treatment forinterest-swap agreements if its interest-rate swap agreements met the criteria for hedging accounting under thistreatment, whereby the net amount to be paid or received under the interest-rate swap contract is added to or deductedfrom the interest on the assets or liabilities for which the swap contract was executed. The hedge effectiveness forinterest-rate swap contracts is assessed each fiscal period except for those that meet the criteria of special treatment.

(L) Rounding of Amounts Presented
Amounts have been truncated in the Japanese financial statements prepared in accordance with Japanese GAAP and
filed with regulatory authorities in Japan, whereas amounts have been rounded to the nearest million in theaccompanying financial statements. Totals shown in the accompanying financial statements do not necessarily agreewith the sums of the individual amounts.

3. ADDITIONAL INFORMATION
Accounting Standards for Accounting Changes and Error Corrections
The Investment Corporation has applied the "Accounting Standard for Accounting Changes and Error Corrections"(Accounting Standards Board of Japan (ASBJ) Statement No. 24; December 4, 2009) and the "Guidance on AccountingStandard for Accounting Changes and Error Corrections" (ASBJ Guidance No. 24); December 4, 2009), starting withaccounting changes and corrections of past errors to be conducted after the beginning of the fiscal period under review.

4. SCHEDULE OF PROPERTY
In millions of yen(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 the Japanese tax rule, the seller of the property at the time ofdisposal is liable for these taxes on the property from the date of disposal to the end of the calendar year in which theproperty is disposed. The seller, however, is reimbursed by the purchaser for these accrued property-related tax
liabilities.

Land
Buildings and structures
Machinery and equipment
Tools, furniture and fixtures
Construction in progress
Total

As of October 31, 2011
Acquisition
AccumulatedBook value
costs
depreciation¥177,221¥¥177,221
13,021
76,30989,330
1,354
540
814
406
190
216
2
2
¥268,313¥13,751¥254,562

Acquisition
costs¥171,111
85,6581,309
402¥258,480

As of April 30, 2011
Accumulated
depreciation¥11,983
497
174¥12,654

Book value¥171,111
73,675812
228¥245,826

When the Investment Corporation purchases properties, it typically allocates the portion of the property-related taxes
related to the period following the purchase date of each property through the end of the calendar year. The amounts of
those allocated portions of the property-related taxes are capitalized as part of the acquisition costs of the related
properties. Capitalized property-related taxes amounted to ¥44,439 thousand and ¥23,704 thousand as of October 31, 20112223

Notes to Financial Statements
5. SHORT-TERM DEBT, LONG-TERM DEBT AND CORPORATE BONDS

6. ASSETS PLEDGED AS COLLATERAL AND SECURED LOANS PAYABLE

The following summarizes short-term debt, long-term debt and corporate bonds outstanding as of October 31, 2011:
Classification
Short-term debt

Current portion of long-term debt

SubtotalLong-term debt

Subtotal
Current portion of corporate bonds
Corporate bonds
Subtotal
Total

24

Drawdown Date

Last Repayment Date

January 31, 2011
April 18, 2011
July 29, 2011
October 31, 2011
December 1, 2006
January 10, 2008
February 27, 2009
April 2, 2007
April 30, 2009
June 30, 2008
February 27, 2009
October 29, 2010

January 31, 2012
November 30, 2011
July 31, 2012
October 31, 2012
November 30, 2011
January 10, 2012
February 29, 2012
April 2, 2012
April 27, 2012
June 30, 2012
August 31, 2012
October 31, 2012

Weighted-averageinterest rate
1.09%
1.38%
1.04%
0.99%
1.96%
1.50%
2.07%
1.88%
2.24%
2.15%
2.04%
1.45%

May 1, 2006
September 1, 2006
June 30, 2008
October 26, 2009
October 30, 2009
December 8, 2009
January 13, 2010
January 29, 2010
February 18, 2010
February 18, 2010
April 2, 2010
July 30, 2010
July 30, 2010
July 30, 2010
October 29, 2010
November 12, 2010
November 12, 2010
November 12, 2010
December 1, 2010
December 1, 2010
December 1, 2010
January 31, 2011
January 31, 2011
February 28, 2011
February 28, 2011
March 22, 2011
March 31, 2011
March 31, 2011
March 31, 2011
April 28, 2011
April 28, 2011
April 28, 2011
July 13, 2011
July 29, 2011
July 29, 2011
August 31, 2011
September 1, 2011
September 30, 2011
September 30, 2011
September 30, 2011
September 30, 2011

April 30, 2016
August 31, 2013
December 28, 2012
October 26, 2013
October 30, 2013
December 8, 2012
January 15, 2013
January 30, 2015
February 18, 2013
February 18, 2015
April 2, 2015
July 31, 2013
January 31, 2014
July 31, 2014
October 31, 2013
November 12, 2013
November 12, 2015
November 12, 2017
November 12, 2013
November 12, 2015
November 12, 2017
January 31, 2014
January 29, 2016
August 31, 2015
January 29, 2016
September 22, 2014
September 30, 2013
January 29, 2016
March 31, 2016
April 30, 2013
October 31, 2015
January 29, 2016
July 14, 2014
July 31, 2014
July 31, 2014
February 27, 2015
August 29, 2014
September 30, 2013
March 31, 2014
September 30, 2014
March 31, 2015

2.73%
2.12%
2.26%
2.42%
2.45%
1.67%
1.90%
2.17%
1.90%
2.19%
2.22%
1.49%
1.66%
1.73%
1.46%
1.58%
1.79%
2.02%
1.45%
1.55%
2.21%
1.57%
1.94%
1.91%
1.95%
1.63%
1.53%
1.91%
1.39%
1.50%
1.86%
1.89%
1.54%
1.14%
1.40%
1.09%
1.15%
1.15%
1.16%
1.27%
1.29%

March 15, 2007
March 15, 2007
September 15, 2011

March 15, 2012
March 15, 2017
September 13, 2013

1.74%
2.37%
1.59%

Balance(In millions of yen)
¥
2,700
1,500
1,500
4,500
2,500
2,500
450
2,000
1,500
1,500
900
2,500
24,050
5,000
3,000
3,000
920
1,840
500
1,000
1,104
1,500
4,950
1,850
500
3,700
3,700
500
2,700
2,000
2,300
800
1,000
700
1,300
800
3,000
500
2,700
2,000
2,000
1,000
1,000
1,500
1,000
1,000
3,200
300
1,500
1,000
1,000
2,500
1,000
2,500
73,364
9,000
3,000
1,500
13,500¥110,914(As of April 30, 2011)
Assets pledged as collateral
Cash and bank deposits
Land
Buildings and structures
Machinery and equipment
Tools, furniture and fixtures
Other assets
Total
Secured loans payable:
Short-term debt
Long-term debt
Total

In thousands of yen¥5,090,463
127,680,740
54,309,842
507,811135,035
909
187,724,800
36,160,000
64,555,500¥100,715,500(As of October 31, 2011)

On July 20, 2011, the collateral pledges established for the Investment Corporations’ 47 properties as of the end of thetwelfth fiscal period (April 30, 2011) were released. As a result, all borrowings of the Investment Corporation became
unsecured and unguaranteed.

7. REDUCTION ENTRY
The amount of reduction entry of property and equipment acquired by government subsidy

Buildings and structures

In thousands of yen
As of October 31, 2011
As of April 30, 2011
¥26,230¥26,230

8. PER UNIT INFORMATIONyen

Net asset value per unit
Net income per unit
Weighted average number of units (units)

From May 1, 2011
to October 31, 2011
¥524,420¥11,593
263,341

From November 1, 2010
to April 30, 2011
¥580,200¥9,891
233,550

The weighted average number of units outstanding of 263,341 and 233,550 were used for the computation of the amount of
net income per unit as of October 31, 2011 and April 30, 2011. Net income per unit after adjusting for residual units is notincluded because there were no residual investment units.

9. INCOME TAXESThe Investment Corporation is subject to corporate income taxes at a regular statutory rate of approximately 40%.
However, the Investment Corporation may deduct from its taxable income amounts distributed to its unitholders, provided
the requirements are met under the Special Taxation Measure Law of Japan. Under this law, the Investment Corporationmust meet a number of tax requirements, including a requirement that it currently distribute in excess of 90% of its net
income for the fiscal period in order to be able to deduct such amounts. If the Investment Corporation does not satisfy allof the requirements, the entire taxable income of the Investment Corporation will be subject to regular corporate income
taxes. Since the Investment Corporation distributed in excess of 90% of its distributable income in the form of cash
distributions totaling ¥2,750 million and ¥2,310 million for the periods ended October 31, 2011 and April 30, 2011. Such
distributions were treated as deductible distributions for purposes of corporate income taxes. The effective tax rate on
the Investment Corporation’s income was 0.05% and 0.06% for the periods ended October 31, 2011 and April 30, 2011. The
following summarizes the significant difference between the statutory tax rate and the effective tax rate:

25

Notes to Financial Statements

Statutory tax rate
Deductible cash distributions
Provision for reserve for reduction entry
Other
Effective tax rate

From May 1, 2011
to October 31, 2011

From November 1, 2010
to April 30, 201139.33%(35.41)(3.90)
0.03
0.05%

39.33%(39.31)
0.04
0.06%

The significant components of deferred tax assets and liabilities as of October 31, 2011 and April 30, 2011 were as follows:
In thousands of yen
As of October 31, 2011
As of April 30, 2011
Deferred tax assets:
Enterprise tax payable
Amortization of leasehold rights
Subtotal deferred tax assets
Valuation allowance
Total deferred tax assets

¥49
558
607
558
¥49

¥39
254
293
254
¥39

Tax rate changes after the settlement date
The Act to Revise the Income Tax Act, etc., in Order to Construct a Tax System Addressing Changes in the SocioEconomic Structure (Act No. 114 of 2011) and the Act on Special Measures for Securing Necessary Financial Resources
to Implement Measures to Rebuild Areas Devastated by the Great East Japan Earthquake (Act No. 117 of 2011) were
promulgated on December 2, 2011. In accordance with the promulgation, the effective statutory tax rate used to calculate
the deferred tax assets and deferred tax liabilities concerning the temporary differences, etc. expected to be reversed in
the accounting periods starting on April 1, 2012 and after will be changed to 36.59%, and the effective statutory tax rateused to calculate the deferred tax assets and deferred tax liabilities concerning the temporary differences, etc. expected
to be reversed in the accounting periods starting on April 1, 2015 and after will be changed to 34.16%, respectively. Thesechanges will have no impact on the settlement of the Investment Corporation.

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

11. RELATED-PARTY TRANSACTIONSTransactions with Kenedix REIT Management, Inc.
Kenedix REIT Management, Inc., a consolidated subsidiary of Kenedix, Inc., provides the Investment Corporation withproperty management services and related services. For these services, the Investment Corporation pays Kenedix REITManagement, Inc. property management fees in accordance with the terms of its Property Management Agreements. For
these services, the Investment Corporation paid ¥333 million to Kenedix REIT Management, Inc.

26

12. BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES AND PROPERTY-RELATED EXPENSES
Rental and other operating revenues and property-related expenses for the periods from May 1, 2011 to October
31, 2011 and from November 1, 2010 to April 30, 2011 consist of the following:
In thousands of yen
From May 1, 2011
From November 1, 2010
to October 31, 2011
to April 30, 2011
Rental and other operating revenues:
Rental revenues
Common area charges
Subtotal
Others:Parking space rental revenues
Utility charge reimbursement
Miscellaneous
Subtotal
Total rental and other operating revenues¥Property management fees and facility management fees
Depreciation
Utilities
Taxes
Insurance
Repairs and maintenance
Trust fees
Loss on retirement of fixed assets
OthersTotal property-related expenses¥832,724
1,442,935
617,943
703,543
14,655
152,453
43,614
153,744¥
3,961,611¥811,787
1,406,895
561,061
643,179
16,209123,949
42,317
5,403
156,378¥
3,767,178

Profit on sale of real estate:
Revenue from sale of investment property
Cost of investment property
Other sales expenses
Profit on sale of real estate¥5,800,000
5,122,100
132,618¥545,282-¥6,121,318
1,353,952
7,475,270¥5,908,063
1,300,172
7,208,235

249,514
633,845
140,320
1,023,679
8,498,949

250,325
583,965
94,392
928,682
8,136,917¥

13. LEASESThe Investment Corporation, as lessor, has entered into leases whose fixed monthly rents are due in advance withlease term of generally two years for office buildings and residential properties and with lease term ranging from two to
ten years for retail properties. The future minimum rental revenues under existing non-cancelable operating leases as of
October 31, 2011 and April 30, 2011 are as follows:

Due within one year
Due after one year
Total

In thousands of yen
As of October 31, 2011
As of April 30, 2011
788,659¥
1,008,045¥
5,355,453
5,892,331¥
6,144,112¥
6,900,376

27

Notes to Financial Statements(2) Types of financial instruments and related risk

14. PROPERTY INFORMATION
Details of the property portfolio as of October 31, 2011 were as follows:
Central Urban
Retail Properties
Tokyo
Tokyo
Tokyo
Other Regional
Other Regional
Location
Metropolitan
Metropolitan
Metropolitan
Areas
Areas
Area
Area
Area
Number of properties
57
11
3
1
2
Property information(In millions of yen)
Acquisition price¥196,636 ¥37,090 ¥7,641 ¥1,800 ¥12,380
Percentage of total acquisition costs
76.95%
14.51%
2.99%
0.70%
4.85%
Net book value
197,560
35,947
7,199
1,830
12,386
Appraisal value at year end
182,925
28,7296,403
1,470
11,190Percentage of total appraisal value
79.29%
12.45%
2.77%
0.64%
4.85%
Financial results for the period from May 1, 2011 to October 31, 2011
(In thousands of yen)
Rental and other operating revenues¥6,409,007 ¥1,448,503 ¥221,456 ¥93,778 ¥326,205
Rental revenues
5,682,652
1,209,438
201,615
83,660297,905
Other revenues
726,355
239,065
19,841
10,11828,300Property-related expenses
1,800,804
554,191
57,89433,676
72,111
Property management fees
582,629
197,315
22,165
8,319
22,296
Taxes
532,387
126,676
15,3698,294
20,817
Utilities
454,375
136,436
2,243
1,942
22,947
Repairs and maintenance
112,958
23,066
8,198
6,703
1,528
Insurance
8,842
4,694
498
386
235
Trust fees and other expenses
109,61366,004
9,421
8,032
4,288
NOI (Net Operating Income)
4,608,203
894,312
163,562
60,102254,094
Depreciation expenses
953,788
333,00266,784
23,116
66,245
Operating income from property leasing activities
3,654,415
561,310
96,77836,986
187,849
Capital expenditures
486,318
129,030
3,193
720
54,805
NCF (Net Cash Flow)¥4,121,885 ¥765,282 ¥160,369 ¥59,382 ¥199,289
Type

Office Buildings

Residential Properties

A breakdown of property-type as of October 31, 2011 was as follows:
Class of assets

Property type
Office Buildings

Area
Tokyo Metropolitan Area
Other Regional Areas

Subtotal
Property and equipment

Residential Properties
Subtotal
Central Urban Retail Properties

Total
Bank deposits and other assets
Total assets
Total liabilities
Net assets

Tokyo Metropolitan Area
Other Regional Areas
Tokyo Metropolitan Area

Balanceat the end of period(In millions of yen)¥197,560
35,947
233,507
7,199
1,830
9,029
12,386
254,922
20,051
274,973
124,701¥150,272

Percentage of
total assets
71.8%
13.1%
84.9%
2.6%
0.7%
3.3%
4.5%
92.7%
7.3%
100.0%
45.4%
54.6%

15. FINANCIAL INSTRUMENTS
Thirteenth Fiscal Period (May 1, 2011 to October 31, 2011)

Debt and corporate bonds are used primarily for procuring funds necessary for the acquisition of properties and havea redemption date of a maximum of seven years following the accounting date. Although a certain portion of said
liabilities are subject to interest rate fluctuation risk, the Investment Corporation utilizes derivatives (interest-rate
swap transactions) in order to reduce such risk.
Interest-rate swap transactions are used as derivative financial instruments. Utilizing interest-rate swap transactions,the Investment Corporation fixes its interest expense for long-term debt bearing interest at a variable rate. With
regard to hedge accounting methods, hedging instruments and hedged items, hedge policy, and the assessment of theeffectiveness of hedging activities, please see 2. (K) Derivative Financial Instruments.

(3) Risk management for financial instruments(a) Monitoring of market risk (the risks arising from fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap transactions in order to minimize risk arising from fluctuationsin interest rates on funds procured.
(b)	Monitoring of liquidity risk (the risk that the Investment Corporation may not be able to meet its obligations onscheduled due dates) associated with funds procurement
Although loans and other liabilities are subject to liquidity risk, the Investment Corporation reduces such risk by
spreading out payment due dates and by using diversified fund procurement methods. Liquidity risk is also
managed by such means as regularly checking the balance of cash reserves.

(4) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted
market price available, fair value is reasonably estimated. Since various assumptions and factors are reflected inestimating 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 as of October 31, 2011 and estimated fair value areshown in the following table.

(In thousands of yen)

(1) Cash and bank deposits
Subtotal(1) Short-term debt
(2) Corporate bonds(including current portion of corporate bonds)(3) Long-term debt(including current portion of long-term debt)
Subtotal
Derivative Transactions (*)

Carrying value¥18,338,535
18,338,535
10,200,000
13,500,000
87,214,000¥110,914,000-

Estimated fair value
Difference¥¥18,338,535
18,338,535
10,200,000
13,324,050(175,950)
86,587,303(626,697)¥(802,647)¥110,111,353-(*) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing net liability
position.
*1: Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivative transactions

Assets(1) Cash and bank deposits
Since these items are settled in a short period of time, their carrying value approximates fair value.

Liabilities(A) Overview(1) Policy for financial instruments
The Investment Corporation procures essential funds for acquiring properties and undertaking the repayment of loans
primarily through bank loans and the issuance of corporate bonds and new investment units. The Investment
Corporation uses derivatives for the purpose of hedging its exposure to changes in interest rates and does not enter
into derivatives for speculative or trading purposes. Management of surplus funds is undertaken in a prudent mannerthat considers fully such factors as safety, liquidity, interest rate conditions and cash flows.

28(1) Short-term debt
Since these items are settled in a short period of time, their carrying value approximates fair value.
(2) Corporate bonds
The fair value of corporate bonds is based on quoted market prices.
(3) Long-term debt
The fair value of long-term debt is based on the present value of the total of principal and interest discounted by
the interest rate to be applied if similar new loans were entered into. The fair value of long-term debt bearing
interest at variable rate, which is subject to fixed interest rates resulting from interest-rate swaps and special
treatment applied to said swaps, is based on the present value of the total of principal and interest, which ishandled together with applicable interest-rate swaps, discounted by the interest rate to be applied if similar loans
were entered into.

29

Notes to Financial Statements
Derivative Transactions(1) Items that are not applied to hedge accounting
Not applicable(2) Items that are applied to hedge accounting

Type

Hedge accounting method

Type of Derivative Transactions

Hedged items

Contracted amountCalculation
Fair value(In thousands of yen)method for(In thousands
applicable
Maturingof yen)fair value
after 1 year

Special treatment of interestrate swaps

Interest-rate swaps:
Receive/floating and pay/fixedLong-term debt

¥6,500,000¥2,000,000¥6,500,000¥2,000,000

Total

*

(*) Special treatment of interest-rate swaps is reported at the fair value of applicable long-term debt. This is because such swaps are handled together with hedged long-term debt.

*2: Redemption schedule for receivables

Short-term debt
Corporate bonds
Long-term debt

Due after 1 year
through 2 years¥
1,500,000
17,606,000

Due after 2 years
through 3 years¥
24,323,000

Due after 3 years
through 4 years¥
15,135,000

Due after 4 years
through 5 years¥
13,300,000

Due after 5 years¥

3,000,000
3,000,000

AmountLenderInterest Rate
Repayment Date

16. INVESTMENT AND RENTAL PROPERTIES

Nov. 1998
Mar. 1986
Oct. 2001
Feb. 1990
Apr. 1986
Aug. 1974
Mar. 1989
Mar. 1989

Long-term debt (Term Loan 65-D)¥4,500 million (*1)
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Base rate (JPY TIBOR for 3-month in JBA) + 0.70% (*2)
October 31, 2015

Long-term debt (Term Loan 65-C)¥2,500 million

The Investment Corporation owns real estate for rental purposes mainly in the Tokyo metropolitan area for the purpose ofgenerating rental revenues.
The carrying value in the balance sheets and corresponding fair value of those properties are as follows:

LenderDevelopment Bank of Japan Inc.

As of October 31, 2011¥254,921,755

Interest Rate
Repayment Date

Fixed rate of interest
October 31, 2014

Fair value As of October 31, 2011
(In thousands of yen)AmountLong-term debt (Term Loan 65-E)¥2,500 million¥230,717,000

LenderDevelopment Bank of Japan Inc.

*1: The carrying value represents the acquisition cost less accumulated depreciation.
*2: The fair value is the appraisal value or the survey value determined by outside appraisers.
*3: Among changes in the amount of real estate for rental purposes that occurred during the fiscal period under review, principal increases were the acquisition of four properties totaling¥14,609,502 thousand, the sale of real estate trust beneficiary interests to one property amounting ¥5,122,100 thousand and depreciation amounting to ¥1,442,935 thousand.

Income and loss in the fiscal period ended October 31, 2011 for real estate for rental purposes is listed in the Note “12,BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES AND PROPERTY-RELATED EXPENSES”

17. SUBSEQUENT EVENTSInterest Rate
Repayment Date

Fixed rate of interest
October 31, 2015

AmountLenderInterest Rate
Repayment Date

Long-term debt (Term Loan 65-G)¥2,500 million
Development Bank of Japan Inc.
Fixed rate of interest
October 31, 2016

Long-term debt (Term Loan 65-F)¥4,500 million (*1)
Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Base rate (JPY TIBOR for 3-month in JBA) + 0.75% (*2)
October 31, 2016

Details shared by the abovementioned borrowings(1) Acquisition of Properties
On December 19, 2011, the Investment Corporation decided to acquire the eight properties described below (totalplanned acquisition price: ¥28,550 million) as of December 26, 2011, with funds procured through new borrowings
described in (2) below.
The following planned acquisition price does not include the acquisition costs, property tax, city-planning tax andconsumption tax, etc.
Details shared by the following acquisitions
Date of Contract
SellerScheduled Date of Acquisition

B1 F8
B1 F8
F8
B1 F8
B2 F15B3 F11B1 F8
B1 F7Long-term debt (Term Loan 65-B)¥5,000 million (*1)
Sumitomo Mitsui Banking Corporation
Resona Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Base rate (JPY TIBOR for 3-month in JBA) + 0.65% (*2)
October 31, 2014

AmountCarrying Value (In thousands of yen)
Net change¥8,734,375

6-5 Nihombashi Kabutocho, Chuo-ku, Tokyo
1-20-8 Minami Ikebukuro, Toshima-ku, Tokyo
8-1 Nihombashi Kabutocho, Chuo-ku, Tokyo
2-12-18 Akebonocho, Tachikawa-shi, Tokyo
3-26-8 Meieki, Nakamura-ku, Nagoya-shi, Aichi
3-2-3 Sakae, Naka-ku, Nagoya-shi, Aichi
3-2-21 Chuo, Aoba-ku, Sendai-shi, Miyagi
4-65 Minamicho, Kanazawa-shi, Ishikawa

NumberofYear Built
Stories

Short-term debt (Term Loan 65-A)¥7,500 million
Aozora Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corporation
The Chuo Mitsui Trust and Banking Co., Limited
Base rate (JPY TIBOR for 3-month in JBA) + 0.55% (*2)
October 31, 2012

Thirteenth Fiscal Period (May 1, 2011 to October 31, 2011)

As of April 30, 2011
¥246,187,380

30

Kabutocho Nikko Building
Ikebukuro Nikko Building
Kabutocho Nikko Building II
Trust
Officebeneficiary Tachikawa Ekimae Building
Building
interest in Nagoya Ekimae Sakura-dori Building
real estate Nagoya Nikko Shoken Building
Sendai Nikko Building
Other
Kanazawa Nikko Building

Location (Address)

As of December 19, 2011, the Investment Corporation concluded an agreement to borrow funds through syndicatedloans, with Sumitomo Mitsui Banking Corporation as the arranger and the agent and Development Bank of Japan Inc.
as the co-arranger, in order to finance the acquisition of the above eight properties.

*3: Redemption schedule for debt and corporate bonds
Due within 1 year
or less¥ 10,200,000
9,000,000
13,850,000

Property Name

PlannedAcquisitionPrice(In millions ofyen)
11,270
1,653
1,280
1,267
7,327
4,158
950
645

(2) Debt Financing

Due within 1 year or less
(In thousands of yen)
¥18,338,535¥18,338,535

Cash and bank deposits
Total

Type ofSpecified
Asset

Drawdown Date
Interest Payment Date
Repayment Method
Collateral

December 26, 2011
First interest payment on March 31, 2012, and at the end of every three months (on the lastbusiness day of each month, if the end of each month is a non-business day) and repayment date.
Each principal repayment in full on respective dates of maturity
Unsecured, unguaranteed*1. The Investment Corporation has decided to execute an interest-rate swap agreement as a hedge against possible increases in future interest rates for the long-term debt which has floating
rate of interest (Term Loan 65-B, 65-D and 65-F).
*2. The base rate for the period commencing December 26, 2011 through March 31, 2012 will be the Japanese Yen TIBOR for four months which Japanese Bankers Association (JBA) will releaseon December 21, 2011. Thereafter, the base rate shall be calculated based on Japanese Yen TIBOR for three months which JBA releases two business days before each interest payment
date. The base rate for the last period shall be calculated based on Japanese Yen TIBOR for one month.

December 19, 2011
AIG Edison Life Insurance Company
December 26, 201131

Statements of Cash Flows and Related Notes (Unaudited)

Unitholders' Information

For the period from May 1, 2011 to October 31, 2011 and the period from November 1, 2010 to April 30, 2011

Kenedix Realty Investment Corporation(In thousands of yen)

From May 1, 2011 to October 31, 2011 From November 1, 2010 to April 30, 2011
Cash Flows from Operating Activities:
Income before income taxes
Adjustments to reconcile income before income taxes
to net cash provided by operating activities:
Depreciation and amortization
Interest expense
Loss on retirement of fixed assets
Loss on disaster
Subsidy
Loss on reduction of fixed assets
Gain on donation of noncurrent assets
Changes in assets and liabilities:
Rental receivables
Consumption tax refundable
Accrued consumption tax
Trade and other payables
Rents received in advance
Property and equipment due to sale
Others,net
Subtotal
Cash payments of interest expense
Payments for loss on disaster
Cash payments of income taxes
Net cash provided by operating activities¥

3,054,377¥

2,311,379

1,724,828
1,036,388(13,970)

1,634,424
1,048,723
5,403
35,360(26,230)
26,230-12,640310,485
28,956
74,415(590,901)
5,122,100(258,096)
10,501,222(1,037,432)(28,598)(1,171)
9,434,021

22,067(310,485)(230,841)(33,748)705,812(628,713)
4,559,381(1,011,751)(633)
3,546,997

Cash Flows from Investing Activities:
Purchases of property and equipment
Purchase of intangible assets
Proceeds from leasehold and security deposits received
Payments of leasehold and security deposits
Proceeds from collection of lease and guarantee deposits
Payments of leasehold and security deposits received
Payments of time deposits
Proceeds from withdrawal of time deposits
Payments of restricted bank deposits
Proceeds from restricted bank deposits
Net cash used in investing activities(15,230,474)
1,210,624
669(684,035)
464,000
100,404(14,138,812)(13,803,598)(75,499)
1,011,848(122,709)(615,156)(74,000)(134,900)
112,588(13,701,426)

Cash Flows from Financing Activities
Proceeds from short-term debt
Payment of short-term debt
Proceeds from long-term debt
Payment of long-term debt
Proceeds from issuance of investment units
Proceeds from issuance of investment corporation bonds
Payment of dividends
Net cash (used in) provided by financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of period

6,000,000(4,500,000)
14,000,000(18,801,500)
13,938,969
1,485,336(2,310,038)
9,812,767
5,107,976
12,820,027
17,928,003

6,200,000(3,800,000)
26,300,000(18,551,500)(2,541,094)
7,607,406(2,547,023)
15,367,050
12,820,027¥¥

Fiscal Periods Six months ending April 30 and October 31
Stock Listing Real Estate Investment Trust Market of the Tokyo Stock Exchange (Security Code: 8972)
Transfer Agent The Chuo Mitsui Trust and Banking Company, Limited
2-8-4 Izumi, Suginami-ku, Tokyo 168-0063 Japan
Ernst & Young ShinNihon LLC
AuditorIR Schedule (13th and 14th Fiscal Periods)
End of 13th Period

Performance for 13th Period is announced
Distributions for the 13th Period are paid
Dec.
2011

Oct.
2011

Jan.
2012

Jun.
2012

Apr.
2012

End of 14th Period

Foreign corporations and Other domestic
Financial institutions
corporations (including securities companies)
individuals
End of 13 th Period
End of 12 th Period

38.5%

1.8%

47.8%

12.0%

110,189 units

5,186 units

136,919 units

34,256 units

43.1%

1.6%

47.2%

8.0%

100,681 units

3,757 units

110,317 units

18,795 units

Note: Figures are rounded to the first decimal place.

July
Distributions for the 14th Period are paid

Top Ten Unitholders (As of October 31, 2011)

June
Performance for 14th Period announced

Name

Share of OutstandingUnits
20.17%
10.41%
9.10%
3.35%
3.32%
2.36%
1.90%
1.54%
1.32%
1.30%

Units Held

April
End of 14th Period

Japan Trustee Services Bank, Ltd. (trust account)
Trust & Custody Services Bank, Ltd. (Securities Investment Trust Account)
The Nomura Trust and Banking Co., Ltd. (Investment Trust Account)
Nomura Bank (Luxembourg) S.A.
The Master Trust Bank of Japan, Ltd. (trust account)
Goldman Sachs International
The Bank of New York, Treaty JASDEC AccountState Street Bank and Trust Company 505223
BNP Paribas Securities Services Luxembourg/JASDEC/HENDERSON HHF SICAVGoldman Sachs and Company Regular Account
Total

Unit Price Performance

57,79929,841
26,102
9,620
9,535
6,763
5,452
4,430
3,787
3,733
157,06254.81%

020

40

Trading Volume(yen)

1,000,000

20,000Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments which arehighly liquid, readily convertible to cash and with insignificant risk of market value fluctuation, with maturities of threemonths or less from the date of purchase.

CASH AND CASH EQUIVALENTS (UNAUDITED)Cash and cash equivalents consisted of the following as of October 31, 2011 and April 30, 2011:
As of October 31, 2011
¥18,338,535(410,532)¥
17,928,003(In thousands of yen)
As of April 30, 2011
¥13,794,963(510,936)(464,000)¥
12,820,027

60

Closing Price(Units)Cash and Cash Equivalents

32

Individuals andothersNote: The respective shares are rounded down to the second decimal place.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (UNAUDITED)

Note 1: Restricted bank deposits are retained for repayment of tenant leasehold and security deposits.
Note 2: More than 3-month fixed deposits are fixed deposits which have deposit term of more than 3 months.

Distributions for the 14th Period are paid
Performance for 14th Period announced

General Breakdown of Unitholders

See related notes

Cash and bank deposits
Restricted bank deposits (Note 1)
More than 3-month fixed deposits(Note 2)
Cash and cash equivalents

Jul.
2012

Trading Volume
Closing Price
10,000800,000

7,500

600,000

5,000

400,000

2,500

200,000

0Jul. Oct.
2005

Apr.

2006

Oct.

Apr.

2007

Oct.

Apr.

2008

Oct.

Apr.

2009

Oct.

Apr.

2010

Oct.

Apr.

2011

Oct.

0

33

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