FINANCIAL
STATEMENTS
7th Fiscal Period

From May 1, 2008 to October 31, 2008
Report of Independent Auditors
Balance Sheet
Statements of Income and Retained Earnings
Statements of Changes of Unitholders’ Equity
Statements of Cash Flows
Notes to Financial Statements19 ❘ K E N E D I X

BALANCE SHEETAS OF OCTOBER 31, 2008 AND APRIL 30, 2008

In thousands of yen
As of October 31, 2008

As of April 30, 2008ASSETS
Current assets:
Cash and bank deposits¥

13,029,801¥

13,192,761

Rental receivables

187,278

Consumption tax refundable

180,365-

Other current assets

67,69645,262

13,465,141

13,397,027

Land

155,906,794

150,671,196

Buildings and structures

74,546,241

69,663,667

Machinery and equipment

905,705

787,653

Tools, furniture and fixtures

382,011314,867(6,230,362)(4,953,431)

225,510,389

216,483,952

Ground leasehold

285,350

285,350

Organization costs

15,26920,359Corporate bond issuance costs

51,30657,184

Unit issuance costs

88,837130,306

Total current assets

159,004

Property and equipment, at cost:Less-accumulated depreciation
Net property and equipment
Other assets:

Other assets
Total assets

232,306¥

146,065

239,648,598¥

728,711¥230,520,243

LIABILITIES AND UNITHOLDERS' EQUITY
Liabilities
Current liabilities:
Trade and other payables¥

Short-term debt

24,000,000

Deposits received
Rents received in advance
Other current liabilities

793,006
31,750,000

6,411

4,504

1,238,195

1,172,675

177,809305,962

26,151,126

34,026,147

Corporate bonds

12,000,000

12,000,000

Long-term debt

62,750,000

46,000,000

Leasehold and security deposits received

10,643,623

10,176,842

Total current liabilities

Other liabilities
Total liabilities

16,272

3,092¥

111,561,020¥

102,206,081¥

124,973,750¥

124,973,750

Unitholders' equity
Unitholders' capital
Units authorized:2,000,000units
Units issued and outstanding:200,000units
As of October 31, 2008 and April 30, 2008, respectively
Retained earnings
Unrealized gain from deferred hedge transactions

3,123,699

Total unitholders' equity
Total liabilities and unitholders' equity¥

3,342,285(9,872)(1,873)

128,087,577

128,314,162

239,648,598¥

230,520,243

See notes to financial statements

K E N E D I X ❘ 20

STATEMENTS OF INCOME AND RETAINED EARNINGSFOR THE PERIOD FROM NOVEMBER 1, 2007 TO APRIL 30, 2008, AND THE PERIOD FROM MAY 1, 2008 TO OCTOBER 31, 2008

In thousands of yen
From May 1, 2008
to October 31, 2008

From November 1, 2007
to April 30, 2008

Operating Revenues:
Rental revenues¥

Profit on sale of real estate

8,156,517¥

7,630,465

299,717952,230

8,456,234

8,582,695

Property-related expenses

3,678,720

3,447,634

Loss on sale of real estate-

439,333

Asset management fees

442,470

424,142

Administrative service and custodian fees

74,27675,148Other operating expenses

116,030

130,783

4,311,495

4,517,040

Total operating revenues
Operating Expenses:

Total operating expenses
Operating income¥

4,144,738¥

4,065,655¥

803,790¥

618,126

Non-Operating Expenses:
Interest expense
Financing related expense

145,680

28,471

Amortization of organization costs

5,090

5,090

Amortization of unit issuance costs

41,46941,469Amortization of corporate bond issuance costs

5,878

5,814

Others, net

18,42522,9283,124,407

3,343,757

793

1,556

3,123,614

3,342,201

85

84

Income before income taxes
Income taxes
Net income
Retained earnings at the beginning of period
Retained earnings at the end of period
See notes to financial statements

21 ❘ K E N E D I X¥

3,123,699¥

3,342,285

STATEMENTS OF CHANGES IN UNITHOLDERS’ EQUITY
FOR THE PERIOD FROM NOVEMBER 1, 2007 TO APRIL 30, 2008 AND THE PERIOD FROM MAY 1, 2008 TO OCTOBER 31, 2008

In thousands of yen
Unitholders' Equity
Unitholders'
capitalBalance as of November 1, 2007¥

124,973,750

Retainedearnings¥

2,792,084

Unrealized
gain fromdeferred hedgetransactions¥(3,899)

Total¥

127,761,935

Changes during the fiscal period
New unit issuance

-

-

-

-

Payment of dividends-(2,792,000)-(2,792,000)

Net income-

3,342,201-

3,342,201

Interest-rate swap

-

-

2,026

2,026

-

550,201(1,873)548,327

Total changes
during the fiscal period
Balance as of April 30, 2008¥

124,973,750¥

3,342,285¥(1,873)¥

127,314,162

Changes during the fiscal period
New unit issuance

-

-

-

-

Payment of dividends-(3,342,200)-(3,342,200)

Net income-

3,123,614-

3,123,614

Interest-rate swap--

(7,998)(7,998)-(218,586)(7,998)(226,584)

Total changes
during the fiscal period
Balance as of October 31, 2008¥

124,973,750¥

3,123,699¥(9,872)¥

128,087,577

See notes to financial statements

K E N E D I X ❘ 22

STATEMENTS OF CASH FLOWSFOR THE PERIOD FROM NOVEMBER 1, 2007 TO APRIL 30, 2008, AND THE PERIOD FROM MAY 1, 2008 TO OCTOBER 31, 2008

In thousands of yen
From May 1, 2008
to October 31, 2008

From November 1, 2007
to April 30, 2008

Cash Flows from Operating Activities:
Income before income taxes¥

3,124,407¥

3,343,757

Adjustments to reconcile income before income taxes to
net cash provided by operating activities:
Depreciation and amortization

1,535,995

1,509,898

803,790

618,126

7,853

45,289Rental receivables(28,275)(17,093)

Consumption tax refundable(180,365)

47,552

Accrued consumption tax(179,988)

215,992

Trade and other payables(66,480)

263,920

Interest expense
Loss on retirement of fixed assets
Changes in assets and liabilities:

Rents received in advance
Property and equipment due to sale65,52031,3425,100,280

30,755,698

Others, net(151,165)(66,119)

Subtotal

10,031,573

36,748,362(751,791)(603,866)

(769)

(659)

Cash payments of interest expense
Cash payments of income taxes
Net cash provided by operating activities¥

9,279,013¥

36,143,837¥(15,579,837)¥(48,150,727)

Cash Flow from Investing Activities:
Purchases of property and equipment
Proceeds from leasehold and security deposits received

1,147,506

Payments of leasehold and security deposits received(680,726)(705,167)

Payments of restricted bank deposits(574,468)(1,130,321)

Proceeds from restricted bank deposits

1,299,219

71,434

11,100(10,915)

Others, net
Net cash used in investing activities

2,132,300¥(14,377,206)¥(47,793,396)¥

5,500,000¥

1,500,000

Cash Flows from Financing Activities:
Proceeds from short-term debt
Payment of short-term debt

(6,250,000)(2,250,000)

Proceeds from long-term debt

22,750,000

15,000,000

Payment of long-term debt

(13,000,000)-

Payment of dividends(3,340,016)(2,789,908)

Net cash provided by financing activities

5,659,984

11,460,092

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
See notes to financial statements

23 ❘ K E N E D I X¥

561,791(189,467)

11,141,858

11,331,325

11,703,649¥

11,141,858

NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM NOVEMBER 1, 2007 TO APRIL 30, 2008, AND THE PERIOD FROM MAY 1, 2008 TO OCTOBER 31, 2008

1. ORGANIZATION AND BASIS OFPRESENTATIONORGANIZATION
Kenedix Realty Investment Corporation (“theInvestment Corporation”) is a real estate investment
corporation whose units are listed on the Tokyo
Stock Exchange. The Investment Corporation is
engaged in ownership and operation of selected officebuildings, residential and retail properties in Japan.
The Investment Corporation was incorporated as aninvestment corporation under the Law Concerning
Investment Trusts and Investment Corporations ofJapan, or the Investment Trust Law. Pursuant to thislaw, the Investment Corporation is externally managed
by a registered asset management company, Kenedix
REIT Management, Inc. (“the Asset Management
Company”), a wholly-owned subsidiary of Kenedix,
Inc. (“Kenedix”).
On May 6, 2005, the Investment Corporation was
originally formed with ¥200 million of initial capital
contributions from Kenedix, the Asset Management
Company and their executives and employees. On July20, 2005, the Investment Corporation raised ¥41,869
million of equity capital through an initial public
offering of 75,000 investment units and was listed on
the J-REIT section of the Tokyo Stock Exchange on thefollowing day.
On August 1, 2005, 29 properties with an aggregate
purchase price of ¥61,083 million were acquiredwith additional debt proceeds of ¥23,000 million andsubstantial operations of the Investment Corporation
were commenced from that date.
On August 16, 2005, the Investment Corporation
completed third-party allotment of 3,970 investment
units, generating an additional ¥2,216 million.
Subsequent to that, the Investment Corporationacquired 2 additional properties in September 2005.
During the period ended April 30, 2006, the Investment
Corporation acquired 4 additional properties byutilizing internal cash and bank borrowing.
On May 1, 2006, the Investment Corporation raised¥42,172 million of equity capital through a public
offering of 73,660 investment units and 26 properties
with an aggregate purchase price of ¥58,033 million

were acquired with additional debt proceeds of ¥16,000
million.
On May 26, 2006, the Investment Corporation
completed third-party allotment of 3,970 investment
units, generating an additional ¥2,273 million. During
the period ended October 31, 2006, the Investment
Corporation sold 2 properties and acquired 5
properties.
On March 15, 2007, the Investment Corporation issued
the investment corporation bonds. Their total amountis ¥12,000 million and terms are five years and ten
years.
On February 1, 2008, the Investment Corporation sold
23 residential properties (initial total acquisition priceof ¥30,343 million) to a wholly owned subsidiary of
Kenedix, Inc. and acquired 9 office buildings (totalacquisition price of ¥31,980 million) from a wholly
owned subsidiary of Kenedix, Inc. In addition, theInvestment Corporation acquired 5 office buildings(total acquisition price of ¥14,121 million), during theperiod ended April 30, 2008.
During the period ended October 31, 2008, theInvestment Corporation acquired 3 properties byutilizing internal cash and bank borrowing, and sold 2
properties.
At October 31, 2008, the Investment Corporation had
total unitholders’ capital of ¥124,974 million with
200,000 investment units outstanding. The Investment
Corporation owned a portfolio of 69 properties withtotal acquisition price of ¥222,053 million containing
total leasable area of 256,214m2. The occupancy ratio
was approximately 95.6%. A portfolio of 69 properties
consists of 60 office buildings, 7 residential properties
and 2 central urban retail properties. 58 propertiesare located in the Tokyo metropolitan area and 11
properties are located in other regional areas.

BASIS OF PRESENTATION
The accompanying financial statements have been
prepared in accordance with the provisions set forthin the Investment Trust Law of Japan, the JapaneseCorporation Law, the Financial Instruments andExchange Law of Japan and related regulations, and in
conformity with accounting principles and practices
generally accepted in Japan (“Japanese GAAP”), which

K E N E D I X ❘ 24

NOTES TO FINANCIAL STATEMENTS (cont.)

are different in certain respects as to the application and disclosure requirements of International 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 thatwere prepared for Japanese domestic purposes from the accounts and records maintained by the Investment
Corporation and filed with the Kanto Local Finance Bureau of the Ministry of Finance as required by the Financial
Instruments and Exchange Law. In preparing the accompanying financial statements, relevant notes have been
added and certain reclassifications have been made from the financial statements issued domestically in order topresent 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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(A) CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments which
are highly liquid, readily convertible to cash and with insignificant risk of market value fluctuation, with maturitiesof three months or less from the date of purchase.

(B) 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:
From May 1, 2008
to October 31, 2008

From November 1, 2007
to April 30, 2008

Buildings and structures

2-49 years

2-46 years

Machinery and equipment

3-17 years

3-17 years

Tools, furniture and fixtures

3-20years

3-20 years(C) ORGANIZATION COSTS
Organization costs are amortized over a period of five years, comprised of ten fiscal periods, with an equal amountamortized in each fiscal period.

(D) UNIT ISSUANCE COSTS
Unit issuance costs are amortized over a period of three years under the straight-line method.

(E) CORPORATE BOND ISSUANCE COSTS
Investment corporation bonds issuance costs are amortized over a loan period under the straight-line method.

(F) ACCOUNTING TREATMENT OF TRUST BENEFICIARY INTERESTS IN REAL ESTATE
For trust beneficiary interests in real estate, which are commonly utilized in the ownership of commercial
properties in Japan and through which the Investment Corporation holds all of its real property, all assets andliabilities within trust are recorded in the relevant balance sheet and income statement accounts.

25 ❘ K E N E D I X

(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. Reimbursementsfrom tenants including utility charge reimbursements are recorded on a gross basis and such amounts arerecorded both as revenue and expense during the fiscal period, respectively.

(H) TAXES ON PROPERTY AND EQUIPMENT
Property-related taxes including property taxes, city planning taxes and depreciable property taxes are imposedon properties on a calendar year basis. 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
the property is disposed. The seller, however, is reimbursed by the purchaser for these accrued property-related
tax liabilities.
When the Investment Corporation purchases properties, it typically allocates the portion of the property-related
taxes related to the period following the purchase date of each property through the end of the calendar year. The
amounts of those allocated portions of the property-related taxes are capitalized as part of the acquisition costs of
the related properties. Capitalized property-related taxes amounted to ¥11 million and ¥174 million as of October
31, 2008 and April 30, 2008. In subsequent calendar years, such property-related taxes are charged as operating
expenses in the fiscal period in which the installments of such taxes are paid to the relevant tax authorities.

(I) INCOME TAXES
Deferred tax assets and liabilities are computed based on the difference between the financial statements andincome tax bases of assets and liabilities using the statutory tax rates.

(J) 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 recognitionof gains or losses resulting from changes in fair value of interest-rate swap agreements because its interest-rate
swap agreements met the criteria for deferral hedging accounting. But, the Investment Corporation adopted
special treatment for interest-swap agreements if its interest-rate swap agreements met the criteria for hedging
accounting under this treatment, the net amount to be paid or received under the interest rate swap contract is
added to or deducted from the interest on the assets or liabilities for which the swap contract was executed.

(K) 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
agree with the sums of the individual amounts.

K E N E D I X ❘ 26

NOTES TO FINANCIAL STATEMENTS (cont.)

3. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consisted of the following as of October 31, 2008 and April 30, 2008:
In thousands of yen
As of October 31, 2008

As of April 30, 2008

¥ 13,029,801¥ 13,192,761(1,326,152)(2,050,903)¥ 11,703,649¥ 11,141,858

Cash and bank deposits
Restricted bank deposits held in trust
Cash and cash equivalents

Restricted bank deposits held in trust are retained for repayment of tenant leasehold and security deposits.

4. SCHEDULE OF PROPERTY
In millions of yen
As of October 31, 2008Land
Buildings and structures
Machinery and equipment
Tools, furniture and fixtures
Total

Acquisition
costs

Accumulated
depreciation¥155,907-

74,546906

As of April 30, 2008
Acquisition
costs

Accumulated
depreciation

Book value¥ 155,907¥150,671-¥ 150,671¥5,89068,656

69,664¥ 4,678

64,986

241

665

788

198

589

Book value

382

100

282

315

77

237

¥ 231,740¥ 6,230¥ 225,510¥ 221,437¥ 4,953¥ 216,484

5. SHORT-TERM AND LONG-TERM DEBTS
The following summarizes short-term and long-term debt outstanding as of October 31, 2008:(As of October 31, 2008)

Classification

Unsecured short-term debt

Unsecured current portion of
long-term debt

Subtotal

27 ❘ K E N E D I X

Drawdown date

Repayment date

Weighted-averageinterest rate

Balance(In millions of yen)

January 10, 2008

January 10, 20091.15%

¥ 1,000

February 29, 2008

February 28, 2009

1.20%

500

May 1, 2008

November 1, 2008

1.20%

1,000

October 31, 2008

October 30, 2009

1.24%

1,500

October 31, 2008

October 31, 2009

1.52%

1,000

December 8, 2005

December 7, 2008

1.10%

2,000

March 1, 2006

February 28, 2009

1.45%

2,000

March 16, 2006

March 16, 2009

1.48%

2,500

May 1, 2006

April 30, 2009

1.63%

6,500

October 31, 2007

October 31, 2009

1.34%

2,000

April 25, 2008

October 25, 2009

1.56%

1,000

April 25, 2008

October 25, 2009

1.46%

3,000
¥ 24,000

Classification

Unsecured long-term debt

Drawdown date

Repayment date

Weighted-averageinterest rate

August 1, 2005

July 31 ,2010

1.29%¥ 9,500

May 1, 2006

April 30, 2011

2.20%

2,500

May 1, 2006

April 30, 2016

2.73%

5,000

July 14, 2006

July 13, 2011

2.15%

1,000

September 1, 2006

August 31, 2013

2.12%

3,000

December 1, 2006

November 30, 2011

1.96%

2,500

April 2, 2007

April 2, 2010

1.57%

2,000

April 2, 2007

April 2, 2012

1.88%

2,000

April 17, 2007

April 16, 2011

1.65%

1,500

January 10, 2008

January 10, 2012

1.50%

2,500

February 29, 2008

February 28, 2011

1.37%

2,000

February 29, 2008

August 31, 2011

1.43%

1,500

March 31, 2008

September 30, 2011

1.61%

3,000

March 31, 2008

September 30, 2011

1.56%

2,000

May 1, 2008

November 1, 2011

1.91%

1,000

June 30, 2008

February 28, 2011

1.99%

1,000

June 30, 2008

June 30, 2012

2.15%

1,500

June 30, 2008

December 28, 2012

2.26%

3,000

July 15, 2008

March 31, 2011

1.87%

2,000

July 31, 2008

January 31, 2010

1.68%

2,500

July 31, 2008

January 31, 2011

1.87%

3,500

July 31, 2008

July 31, 2011

1.99%

3,500

September 1, 2008

September 1, 2011

1.78%

1,000

September 22, 2008

March 22, 2011

1.71%

1,250

September 30, 2008

March 31, 2011

1.82%

2,000

October 31, 2008

October 31, 2010

1.57%

500

Subtotal
Corporate bonds
Subtotal
Total

Balance(In millions of yen)

¥ 62,750
March 15, 2007

March 15, 2012

1.74%

¥ 9,000

March 15, 2007

March 15, 2017

2.37%

3,000
¥ 12,000¥ 98,750

K E N E D I X ❘ 28

NOTES TO FINANCIAL STATEMENTS (cont.)

6. UNSECURED LINE OF CREDIT
The Investment Corporation established a credit commitment line with two lenders. The total borrowings
available under the commitment line agreements are ¥5 billion. Currently, the Investment Corporation has abalance of ¥5 billion based on the concerted agreements. The unused borrowings under the commitment line
agreement are ¥0.

7. PER UNIT INFORMATIONThe net asset value per unit as of October 31, 2008 and April 30, 2008 was ¥640,437 and ¥641,571. Net income perunit as of October 31, 2008 and April 30, 2008 was ¥15,618 and ¥16,711.
The weighted average number of units outstanding of 200,000 and 200,000 was used for the computation of theamount of net income per unit as of October 31, 2008 and April 30, 2008.

8. 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 thislaw, the Investment Corporation must meet a number of tax requirements, including a requirement it currently
distribute in excess of 90% of its taxable income for the fiscal period in order to be able to deduct such amounts.
If the Investment Corporation does not satisfy all of the requirements, the entire taxable income of the Investment
Corporation will be subject to regular corporate income taxes. Since the Investment Corporation distributed
approximately 100% of its distributable income in the form of cash distributions totaling ¥3,124 million and ¥3,342
million for the periods ended October 31, 2008 and April 30, 2008. Such distributions were treated as deductible
distributions for purposes of corporate income taxes. The effective tax rate on the Investment Corporation’s
income was 0.03% and 0.05% for the periods ended October 31, 2008 and April 30, 2008. The following summarizes
the significant difference between the statutory tax rate and the effective tax rate:

From May 1, 2008
to October 31, 2008

From November 1, 2007
to April 30, 2008

Statutory tax rate

39.39%

39.39%

Deductible cash distributions(39.38)(39.37)

0.02

0.03

0.03%

0.05%

Other
Effective tax rate

9. UNITHOLDERS’ EQUITYThe 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 isrequired to maintain net assets of at least ¥50 million as required by the Investment Trust Law.

29 ❘ K E N E D I X

10. RELATED-PARTY TRANSACTIONS(A) TRANSACTIONS WITH Y.K. KW PROPERTY 11
Y.K. KW Property 11 is a wholly owned subsidiary of Kenedix. On June 30, 2008, the Investment Corporationacquired 1 property from Y.K. KW Property 11 for ¥10,250 million. The purchase price of this property wasdetermined based on an independently appraised value at the time of acquisition.

11. BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES AND PROPERTYRELATED EXPENSES
Rental and other operating revenues and property-related expenses for the periods from May 1, 2008 to October
31, 2008 and from November 1, 2007 to April 30, 2008 consist of the following:
In thousands of yen
From May 1, 2008
to October 31, 2008

From November 1, 2007
to April 30, 2008

Rental and other operating revenues:
Rental revenues¥ 5,847,510¥ 5,626,515

Common area charges

1,263,583

1,144,196

Subtotal

7,111,093

6,770,711

Parking space rental revenues

250,006

240,631

Utility charge reimbursement

668,719458,128

Miscellaneous

126,700

160,995

Others:

1,045,424

859,754

Total rental and other operating revenues

Subtotal¥ 8,156,517¥ 7,630,465

Property management fees and facility management fees¥¥

Depreciation

792,077

750,333

1,445,267

1,430,126

Utilities

611,722450,237Taxes

406,439395,277

Insurance

17,035

16,806

Repairs and maintenance

188,401

149,231

Trust fees

46,90457,312Others163,023

149,083

Loss on retirement of fixed assets

7,853

49,229Total property-related expenses¥ 3,678,720¥ 3,447,634¥ 5,578,810¥18,788,000

5,100,280

17,705,426

Profit on sale of real estate:
Revenue from sale of investment properties
Cost of investment properties
Other sales expenses
Profit on sale of real estate

178,813¥299,717130,344¥952,230

Loss on sale of real estate:
Revenue from sale of investment properties-¥12,702,000

Cost of investment properties-

13,050,272

Other sales expenses
Loss on sale of real estate¥

91,061
439,333

K E N E D I X ❘ 30

NOTES TO FINANCIAL STATEMENTS (cont.)

12. LEASESThe Investment Corporation, as lessor, has entered into leases whose fixed monthly rents are due in advancewith lease 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, 2008 and April 30, 2008 are as follows:
In thousands of yen
As of October 31, 2008

As of April 30, 2008

Due within one year

¥ 1,493,056¥ 1,689,845

Due after one year

8,487,580

9,711,097¥ 9,980,637¥ 11,400,942

Total

13. DERIVATIVES AND HEDGE ACCOUNTINGThe Investment Corporation has entered into interest-rate swap agreements with several Japanese financial
institutions to hedge its variable rate long-term debt obligations. The Investment Corporation utilizes interestrate swap agreements, which are derivative financial instruments, only for the purpose of mitigating future risksof fluctuations of interest rates, but does not enter into such transactions for speculative or trading purposes. The
Investment Corporation entered into such derivative transactions to hedge risk in accordance with its Articles ofIncorporation and the established risk management policies of the Asset Management Company.
The following summarizes the notional principal amounts and the estimated unrealized loss from interest rate
swap contracts as of October 31, 2008:
The estimated unrealized loss does not include the interest rate swap contracts that met the criteria for the
special treatment.
(As of October 31, 2008)
Type
Interest-rate swap:
Fixed rate payable and floating rate receivable

31 ❘ K E N E D I X

Notional amount

Unrealized loss

¥41,800 million¥(16 million)

14. PROPERTY INFORMATION
Details of the property portfolio as of October 31, 2008 were as follows:
Type

Office Buildings

Residential Properties

Central Urban
Retail Properties

Tokyo
Metropolitan
Area

Other Regional
Areas

Tokyo
Metropolitan
Area

Other Regional
Areas

Tokyo
Metropolitan
Area

50

10

6

1

2

¥165,950¥31,015¥10,909¥1,800¥12,380

Percentage of total acquisition costs

74.73%

13.97%

4.91%

0.81%

5.58%

Net book value

169,136

31,237

10,845

1,898

12,680Appraisal value at year end

180,675

30,431

10,4301,660

14,210Percentage of total appraisal value

76.10%

12.82%

4.39%

0.70%

5.99%

Location
Number of properties

Property information (In millions of yen)
Acquisition priceFinancial results for the period ended October 31, 2008 (In thousands of yen)
Rental and other operating revenues¥ 5,983,457¥ 1,289,908¥ 349,584¥ 88,302¥ 369,747

Rental revenues

5,233,886

1,076,943

317,166

78,889333,570

Other revenues

749,571

212,965

32,417

9,412

36,177

Property-related expenses

1,627,615

409,10267,49337,72976,756

Property management fees

542,021179,377

30,744

8,797

24,475

Taxes

301,875

56,902

16,0298,576

19,563

Utilities

461,387

117,167

4,034

2,067

23,871

Repairs and maintenance

136,033

28,921

6,046

10,972

5,458

Insurance

10,186

4,952

891

512

357

Trust fees and other expenses

176,112

21,783

9,749

6,805

3,032

NOI (Net Operating Income)

4,355,842

880,806

282,091

50,572292,991

965,635

277,005

94,391

22,973

71,2583,390,207

603,801

187,700

27,599221,733

Capital expenditures

788,901

312,298

-

-

4,470

NCF (Net Cash Flow)

3,566,942

568,508

282,091

50,572

288,521

Depreciation expenses
Operating income from property leasing
activities

K E N E D I X ❘ 32

NOTES TO FINANCIAL STATEMENTS (cont.)

A breakdown of property-type as of October 31, 2008 was as follows:
Area

Balance at the end of period(In millions of yen)

Percentage of
total assets

Tokyo Metropolitan Area

¥169,136

70.6%

Other Regional Areas

31,23713.0%

200,373

83.6%

Tokyo Metropolitan Area

10,845

4.5%

Other Regional Areas

1,898

0.8%

12,743

5.3%

Tokyo Metropolitan Area

12,680

5.3%

Other Regional Areas--

12,680

5.3%

Total

225,796

94.2%

Bank deposits and other assets

13,852

5.8%

Total assets

239,649

100.0%

Total liabilities

111,561

46.6%

Net assets¥128,088

53.5%

Property type

Office Buildings
Subtotal
Residential Properties
Subtotal
Central Urban Retail Properties
Subtotal

33 ❘ K E N E D I X