Kenedix Realty Investment Corporation
14th Period Results (Ended April 2012)

Updated due to the change of the corporatename of the Asset Management Company

September 2012
Kenedix Office Partners, Inc.
http://www.kdx-reit.com/eng/

Executive Summary (14th Period Topics)
Initiatives taken
until the 13th Period

14th Period (April 2012) Topics

Future initiatives

•

•
•

•

•

Release of pledges

Financial Strategy•

Acquisition of View Flex Umeda Building for¥2.77 billion (2012/3/28) following the acquisitionof 8 properties worth ¥28.55 billion (2011/12/26)
Disposal of KDX Omori Building for ¥4.2 billion(sold on May 11, 2012 (15th Period))
Execution of the first investment in equity of a
SPC (TMK) by KRI (2012/4/26, ¥891million)

・ Asset replacement
・ Investment in TK investments,
etc.

Occupancy ratio of the portfolio as of end of 14th
period increased to 95.4% exceeding the 13th
periodMaintain & increase the value of properties
through active CAPEX (over ¥1.1 billion)

・ Maintain occupancy ratios
・ Lease up after move out ofkey tenants
・ Improve leasing terms andconditions including
negotiations for shorter
rent-free periods

Steady reduction in finance costs throughongoing negotiations with financial institutions
Change in loan spread: 1.42% (12th Period)→
1.18% (13th Period)→1.07% (14th Period）

Secure stable DPU

Steady acquisitioneven after the financial crisis(acquisition of 13 properties
worth ¥43 billion
since 10th Period)

Internal Growth

Execution of the 4th
Public Offering(July 2011,
approx. ¥14billion)

External GrowthManagement under new CEO started※ For details, see P.26••

Issue of investment corporation bonds(¥1.5 billion) following in the previous period.
Redemption of the 1st investment corporation
bonds (¥9.0 billion)
Banking syndicate increased to 10 banks byadding Mizuho Bank and Fukuoka Bank・ Finance costs reduction

DPU
13th Period: ¥9,596 (A)14th Period: ¥9,364 (A)15th Period: ¥9,400 (E)The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

1

SECTION 1

14th Period Results (April 30, 2012)

14th period (2012/4) financial results:
Performance highlights（in millions of yen）

Operating income/lossesC
14th PeriodApr-2012
Actual13th VS 14th comparison C-A
ChangeMajor Factors
・Acquisition of 9 properties in the 14th Period +793
・Gain on sales of properties in the 13th Period -545
・Decrease in income from existing properties -139

Forcast VS Actual Comparison C-B
Change

9,033

9,090

46

Of which gain on sales ofreal estate properties

545

-

-

-545

Operating expenses

4,618

4,935

5,004

385

Expenses related to rent business(exd. Depreciaton)

2,518

2,650

2,705

187

・Full period contribution for properties acquired in the 13th Period +24
・Increase due to acquisition of 9 properties in the 14th Period +138

55 ・Utilities costs, brokerage fees, Maintenance and repairs costs +51

Depreciation

1,442

1,563

1,578

135

・Full period contribution for properties acquired in the 13th Period +27
・Increase due to acquisition of 9 properties in the 14th Period +110

15 View Flex Umeda Building +11

657

721

719

62

・CS Survey costs
・Expenses including General Meeting of Unitholders expenses

-2

4,425

4,098

4,086

-338

-12

5

5

4

-1

-1

Non-operating expenses

1,390

1,577

1,539

148

-38

Interest expenses etc.

1,334

1,539

1,502

168

Increase in interest costs from new debt
incl. miscellaneous expenses related to syndicated loans 143-37 Larger decrease in net interest costs than anticipated

56

37

36

-19

Inclusion of consumption tax to expenses following the sale of KDX
Hirakawacho Building-1

Non-operating income

OthersOrdinary income

Decrease in Gain on sales of properties due to sale of KDX Hirakawacho
Building in the 13th Period

57

Major Facotrs
・View Flex Umeda Building +20
・Receipt of fees for restoration to original state +36

9,044

Operating income

X/O gains/lossesB
14th PeriodApr-2012
Forecast

Operating revenues

OthersNon-operating income/losses

Ordinary income/losses

Account

A
13th Period
Oct-2011
Actual69
・View Flex Umeda Building ＋4

3,040

2,525

2,551

-488

Extraordinary gains

13

-

-

-13

Decrease in Gain on donated fixed assets in the 13th Period -13

Extraordinary losses

-

-

10

10

Legal settlement paid in the 14th Period +10

3,052

2,524

2,540

-512

Leasing NOI (Net Operating Income)

5,980

6,383

6,384

404 ・Decrease from existing properties -164

1

FFO (Funds From Operation)

3,950

4,088

4,119

169

31

Number of properties

74

82

83

9

Provison for reserve for reduction entry(reversal)

303

(143)

(143)

-446

-

286,550Units

286,550Units

286,550Units

0Units0Units9,596yen

9,300yen

9,364yen -232yen

64yen

Net Income

Number of units issued
Distribution per unit

26
10 Accrued legal settlement +10
16・Increase from acquisition of 9 properties in the 14th Period +655

Acquisition of 8 Nikko properties (2011/12/26)
Acquisition of View Flex Umeda Building (2012/3/28)

1 Acquisition of View Flex Umeda Building (2012/3/28)＊Leasing NOI = Rental revenues–Rental expenses＋Depreciation expense for the period＊FFO (Funds From Operation) = Net income＋Depreciation expense for the period‐Gain on sales of real estate properties+Loss on sales of real estate properties
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

3

14th Period Results (2012/4): Factors leading toincrease/decrease compared to the previous period
A. Operating income

B. Property-related expenses (not incl. depreciation)

 Decrease in Operating income stemming from the decrease in Gain on sales of KDX Hirakawacho Bldg. in the 13th Period
 Increase in Operating income by ¥793 million through acquisition of 9 properties in the 14th Period
 Most significant factor was decrease in operating income of KDX Harumi Bldg.

 Increase in property-related expenses by ¥138 million due to acquisition of new properties Acquisition of new properties led to increase in utility expenses

(¥M)

(¥M)

9,050

+46

2,700

-49
Full period contribution for 4 properties
acquired in 13th Period+169
KDX Harumi Bldg.
-169
KDX Higashi-ShinjukuBldg.
-35
Other
-104

8,950
8,850
8,750
8,650

-545

9,090

8,450

2,400

-139

2,705

Full period contribution for 4 properties acquiredin the 13the Period+19
9 properties acquired in the 14the Period
+52

2,518

2,350

-12
OperatingOperating
Gain on sales
Operating
Revenue fromOperatingrevenue of 13th income from of Hirakawacho revenue fromutilities
revenue from
PeriodHirakawacho
Bldg
exsiting
properties
Bldg
properties
aquired in 14th
Period* Utility reinbursement is not included in operating income

Operatingrevenues in
14th period

2,300
Expensesrelated to rent
business in
13th period Decrease in income from existing properties, but acquisition of new properties resulted in NOI increase

OperatingOperatingcost ofcost of exsting
Hirakawacho Bldg
properties

Utility cost

* Operating costs do not include Utilities costs

D. DPU

C.Leasing NOIOperatingcost ofproperties
aquired in
14th period

Expensesrelated to rent
business in
14th period

 Offset decrease in income from existing properties, and elimination of gain on sales with increase in income through acquisition of new
properties
 Distribution per unit would have been ¥8,865, assuming the ¥143 million reserve for reduction entry (RE) were not reversed

(¥M)

6,400

(¥)

6,300

9,500

6,200
655

5,900

8,500

6,384

-28
-164
5,980

8,000
7,500

-58

5,700

7,000

5,600

6,500
NOI in 13th
Period

-944

9,000

+404

6,000
5,800

45
24

-21

2,500
2,450

6,100

+187

2,550

793

8,550

8,250

138

2,600

9,044

8,350

Full period contribution for 4 properties
acquired in the 13th Period +24

2,650

NOI f rom
Hirakawacho

NOI f rom
existing
properties

Prof its f rom
utility

NOI f rom
properties
acquired in 14th
periodNOI in 14th
period

9,596
yen

-232

DPU of ¥8,865 assumed the reversal ofprovision for reserve for reduction entry is
not taken into consideration

499

-574
-588

2,287

9,364
yen

-474
-438
DPU inGai n o n Decrease Incr ease Incr ease Incr ease
NOI of
Reversal
DPU in13th Perio d sales o fof p rofi t in fi nancing
inin other prop ertiesof
14th perio dHirakawacho fromcost
dep reciatio n
cost
acquire d in reseve
Bldg
existing
14th perio d for RE
prop erties* “Sale of KDX Hirakawacho Bldg” shows the amount of Gain on sale of ”KDX Hirakawacho Bldg” - Amount ofReserve for Reduction + Operating Gain (Loss)

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

4

15th Period (2012/10): Earning Forecast(in millions of yen)Account

Operating revenues

Operating income/losses

B
15th Period
Oct-2012
Forecast (4/19)

C
15th Period
Oct-2012
Forecast (6/12)

15th(Forecast) comparison Ｃ-B

15th(Forecast) VS 14th comparison C-A
ChangeMajor Factors

9,090

9,876

9,882

792

Anticipated gain on sales of KDX Omori Bldg.
+ 597

-

597

597

597

Anticipated gain on sales of KDX Omori Bldg.

Change6-

Major Factors

Includes portion of the increase inelectricity costs

5,004

5,380

5,428

424

Expenses related to rent
business (exd.
Depreciaton)

2,705

3,079

3,098

393

・Full period contribution of properties acquiredin 14th period・Rise in electricity costs

19 for improving occupancy ratios

Depreciation

1,578

1,578

1,599

21

Full period contribution of properties acquiredin 14th period

21 and actual figures

719

722

729

10

7

Operating income

4,086

4,495

4,454

368

-41

Non-operating income

4

5

5

1

1,539

1,510

1,472

-67

Operating expenses

OthersNon-operating income/losses

Ordinary income/losses

Of which gain on sales ofreal estate properties

A
14th PeriodApr-2012
ActualNon-operating expenses
Interest expenses etc.

1,502

1,458

1,418

-84

48
Includes additional marketing costs

Recalculation based on estimated-38
・Temporary costs related to new borrowings in
14th period
・Full period interest expenses for new borrowing in
14th period
Consumption tax accrued from the sale of KDX
Omori Bldg. included to “Other expenses”

Downward revision of estimated-40 interest expenses based on actual
performance results

36

52

53

17

2,551

2,990

2,987

436

-3

-

-

-

-

10

-

-

-10

-

2,540

2,988

2,985

445

Leasing NOI(Net Operating Income)

6,384

6,199

FFO (Funds From Operation)

4,119

3,970

83

82

(143)

291

Number of units issued

286,550Units

286,550Units

Distribution per unit

9,364yen

9,400yen

OthersOrdinary income

X/O Extraordinary gains
gains/
losses Extraordinary losses

Net Income

Number of properties
Provison for reserve for reduction
entry (Reversal)

-

1

-3

(in millions)
6,186 ■Changes in amounts of provision for reserve for reduction entry
11th period 12th period 13th period 14th period 15th period (Forecast)
3,988 Amount carried over from
65
65
368
225
the previous period
82
Transfer
65
303
291
291 Reversal
143
Balance
65
65
368
225
516
286,550Units

9,400yen■(Reference) Estimated Property & City planning tax
15th period 837 million
16th period 835 million

1,800 yen/unit based on
286,550 units

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

5

15th Period Forecast (2012/10):
Factors leading to increase/decrease from 14th period
A. Operating income

B. Property-related expenses (not incl. depreciation) ¥597mn anticipated gain on sales of KDX Omori Bldg.
 Offset decrease in income from existing properties with increase in income throughacquisition of new properties
(¥M)

9,700
9,500

(¥M)

KDX Kawasaki-Ekimae Hon-cho Bldg. -41
KDX Shinjuku Bldg.
-18
KDX Higashi-Shinagawa Bldg.
-18
KDX Kojimachi Bldg.
-17
etc.

9,900

+792

428

2,900

9,100

8,500

597

-279
9,090

Includes seasonal increases
in electricity costs andportion of the rise inelectricity costs

9,882

2,800

Operating
Full period
Operating Gain on sales Revenues
Operatingincome from income from of KDX Omori from utilities contribution revenues in
Bldg
for properties 15th period
KDX Omoriexisting
acquired in
Bldg
properties
previous
period※ Properties income does not include income from utilities charges

151

217

3,098

-32
Includes seasonal increases
in electricity costs and portionof the rise in electricity costs

2,705

2,600

-140

C. Leasing NOI

2,500
Expensesrelated to rent
business in
14th period

Operating cost Operating costof existingof KDX Omori
properties
Bldg

Utility cost

Full-period
operating costof properties
acquired in
14th period

Expensesrelated to rent
business in
15th period※ Properties income does not include income from utilities charges

D. DPU Decrease in rent income and inclusion of Property & City planning tax resulted in NOI
decrease from existing properties, which is expected to exceed the increase fromproperties acquired in the 14th period
(¥M)
6,400

 Offset decrease in income from existing properties with increase in income through acquisition of
new properties
 DPU will be ¥8,333 when considering anticipated gain on sales of KDX Omori Bldg.

(¥)
10,500

-198

6,300

-335

9,400

6,100
6,000

56

2,700

Operatingrevenue in
14th period

6,200Portion of the increase in
Property & City planningtax +32

+393

186

9,300

8,700

Portion of the increase in
Property & City planningtax +92

3,000

▲

8,900

 Pre-conditional to inclusion of ¥124mn Property & city planning tax on properties acquired in 2011
to Operational costs
 Anticipating rise in electricity costs and increase in utilities costs

277

Amount of dividend assumed
reversal of provision forreserve for reduction entry is
not taken into consideration:¥8,865

499
yen

-108

6,384

-31

5,900

6,186

8,300

9,364
yen

DPU of ¥8,333 assumed thereversal of provision forreserve for reduction entry is
not taken into consideration

2,083-1,015

Surplus dividend
reserves forpayout in thefollowing period
and thereafter

Reversal ofprovision forreserve for
reduction entry-303-1,171

967

9,400
yen

5,800
5,700

-314

293

Increasein othercost

Decreasein financing
cost

7,200

5,600
NOI in 14th
periodNOI from
existing
properties

NOI from KDX
Omori Bldg

Revenus from Full period NOI
utilityfrom properties
acquired in
14th period

NOI in 15th
periodDPU in14th period

Decreaseof profit
fromexisting
properties

Full period
contribution
forproperties
acquired in
14th period

Decrease in Gain on sales Reserve for
DPU
rent income of KDX Omori RE in 15th in 15th period
from KDX
Bldg
periodOmori Bldg

※ [rent income from KDX Omori Bldg] shows the amount of “Operating income plus/minus depreciation”
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

6

SECTION 2

Portfolio focused on office buildings

Portfolio that focuses on office buildings
Portfolio growth (by acquisition value)

Portfolio overview(as of April 30, 2012)

(¥B)
300
OfficeCentral urban retail

250

R

Gro

# of properties: 82
Total size: ¥283.3B※
Portfolio breakdown by property type
Residential
3.3%
OthersCentral urban
0.2%
retailStable period

Residential

200¥283.3B (Note)

od
peri
h
t
ow
e-gr

d
er i o
p
h
wt

4.3%

260.9

150

Office92.0%

100¥69.1B
50

0

Office buildings: 75 properties
Total size: ¥260.9B ※

37.7
12.3
18.9

12.3
9.4

End of 1st End of 2nd End of 3rd End of 4th End of 5th End of 6th End of 7th End of 8th End of 9th End of 10th End of 11th End of 12th End of 13th End of 14th
(2005/10) (2006/4) (2006/10) (2007/4) (2007/10) (2008/4) (2008/10) (2009/4) (2009/10) (2010/4) (2010/10) (2011/4) (2011/10) (2012/4)
Note: Acquisition value as of April 30, 2012 includes Other (Hotels) of ¥0.6 billion<By size (Total floor base)>
3,000-5,000 tsubo
2.2%<By building age>Less than 1 yr
0.4%

1-5 yrs
2.8%

1,000-3,000 tsubo
12.3%

Less than
500 tsubo
66.2%

Note:
Source:500-1,000
tsubo
16.3%

More than
30 yrs35.8%

Other Regional Areas
20.0%(Reference) Categories of Offices by
employee numbers in Tokyo(Reference) Office market in Tokyo’s 5 central wards(by number of buildings)
More than 5,000 tsubo
3.0%

Portfolio breakdown by region (office buildings)

5-10 yrs
3.4%

10-20 yrs
18.0%
20-30 yrs
39.6%

The data covers rental office buildings located in Tokyo’s 5 wards that were surveyed by CB Richard
Ellis Research Institute. (As of March 2011).
“Mid-sized office building market trend”, CBRE, May 2011 (report compiled at KOP’s request.)

More than 100
2.0%

Less than 30
employees
92.2%

30-99
5.8%

10-29
16.5%
1-9
75.7%

Source： Created by KOP based on data from Economic census,
basic survey, 2009

Other Tokyo
Metropolitan
Area
19.9%

Central
Tokyo
59.9%

Notes:
・ Amounts are rounded down to the nearest ¥100M.
・ The above percentages are calculated using the acquisition prices
rounded down to the first decimal place.
・ Central Tokyo includes Chiyoda, Chuo, Minato, Shibuya andShinjuku wards.

*Calculated without counting KDX Omori Building (Sold on May 11, 2012).

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

9

History of portfolio growth and its results
History of portfolio growth since November 2009
Summary of portfolio growth (Note 2)300

283.3 (Note 1)

Owned atOct 31, 2009

Asset Size (¥B)

280

(Excl. properties
already sold)

Owned at
Apr 30, 2012

Increase(%)

New
acquisition
since 2009/11

260

Total number oftenants

799

971

22%

172

240

Number ofproperties

61

82

34%

21

Leasable area

243,735m2

335,644m2

38%

91,909m2

Annual NOI(NOI yield)¥9.01 billion(4.3%)¥12.96 billion(4.6%)

44%¥3.95 billion(5.4%)

220

220.1

200
9th
period(09/10)10th
period(10/4)

11th
period(10/10)12th
period
(11/4)

13th
period(11/10)14th
period(12/4)(Note 3)Note 1:
Note 2:

Note 3:(10th period)(12th period)

Data does not include the data for KDX Omori Building (sold in May 2012), and amounts are rounded down to the nearest 100 million yen.
Data for KDX Shin-Yokohama 381 Building Annex Tower (Acquired in the 10th Period) is included in the data for A47KDX Shin-Yokohama
381 Building (acquired in the 6th Period).
Data for KDX Omori Building (sold in the 15th Period) is not included.
Annual NOI shows the annualized NOI based on the data for the Period ended April 2012 (14th Period).
NOI of properties acquired in the 14th Period is calculated by taking into consideration the current NOI at acquisition of properties.
For Annual NOI, second decimal place was omitted, while for NOI yield, figures are rounded to the first decimal.

(13th period)(14th period)

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

10Replacement of properties during the 14th Period (2012/4)
Acquired: View Flex Umeda Building

Sold: KDX Omori Building

Difference
between property
acquired and sold

Location
Gross Floor Area
Age of building (Year built)

Kita-ku, Osaka
6,805.76m2
2.8 years (Jul 2009)-18.7 years

Location

Ota-ku, Tokyo

Gross Floor Area

7,334.77m2

Age of building (Year built)

21.5 years (Oct 1990)

Acquisition price

2,770 mn yen

Sales price4,200 mn yen

Appraisal value at acquisition

3,240 mn yen

Appraisal value (as of April 30, 2012)

3,790 mn yen

Difference between Acquisition
price and Appraisal value-470 mn yen (-14.5%)

Difference between Sales priceand Appraisal value

410 mn yen (+10.8%)

Acquisition date
Actual NOI
Actual NOI/Acquisition priceAppraisal NOI
Appraisal NOI/Acquisition priceNote:

Mar 28, 2012 (14th Period)

Date of saleMay 11, 2012 (15th Period)

188 mn yen

Actual NOI

229 mn yen

6.8%

+1.3%

Appraisal NOI

172 mn yen
6.2%

Actual NOI/Sales price+1.1%

Appraisal NOI/Sales price

5.5%
216 mn yen
5.1%

Actual NOI for View Flex Umeda Building based on the Net Operating Income (p.a.) which was calculated by taking into consideration the Operating income and expenses (after property tax and city planning tax) under the terms and conditions of thecontracts with tenants valid as of Feb 29, 2012.
Amounts for KDX Omori Building were annualized based on Actual NOI in the 14th Period.
Appraisal NOI for View Flex Umeda Building shows the Net Operating Income (p.a.) calculated with the Direct capitalization method at the time of acquisition, and Appraised NOI for KDX Omori Building shows the Net Operating Income (p.a.) stated theappraisal report as of end of April 2012 which was calculated with the Direct capitalization method.
Amounts less than one million yen are omitted, and percentages are rounded to first decimal place.
Average age is calculated as of Apr 30, 2012, and are rounded to the first decimal place.
For KDX Omori Bldg., sales agreement was signed on Feb 23, 2012 (14th Period) and sold on May 11, 2012 (15 th period).

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

11New Initiatives taken in the 14th Period：
Diversification of Investment Methods
 Acquisition of TMK Preferred Equity Securities to secure investment returns and future pipeline
Description of Preferred Equity Securities
Senri Property TMK(Assets)¥8.81 billion

Specified assets:¥8.02bilion(Liabilities)¥6.83billion

Specified bonds &Specific purpose borrowings:¥6.83billion(Note)
Other:¥0.79 billion(Equity)¥1.98billion
Preferred equity:¥1.88 billion
Specified equity:¥0.1 billion

Note: Appraisal value of Specified assets (as of Feb 1, 2012) is¥12.3 billion

 Acquisition of Senri Property TMK Preferred Equity
Securities worth 891 million yen (c. 47.4% of Preferred
Equity Securities outstanding) Estimated dividend yield of Preferred Equity Securities
is c. 11.5% p.a. (Note) In the event the TMK conducts a sale of the Property,
the Investment Corporation shall be granted an
opportunity to consider acquiring the Property
Note：The estimated dividend yield is computed based on the amount of the preferred dividend
the Investment Corporation expects to receive in the three years of the investment period
between 2013 and 2015 within the investment period, divided by the amount of theInvestment Corporation’s investment (¥891,000,000) and annualized (rounded to thenearest decimal). Note that any gain or loss at the time of a sale of the Property has been
excluded from consideration.
Payment of dividends from TMK to KRI will start from the 16th Period (April 2013).

Description of Specified Assets (Senri Life Science Center Building)
Location

Toyonaka-shi, Osaka

Site area

5,911.08 m2

Gross Floor Area

49,260.78 m2

Year Built

June 1992

Number of tenants

62 (as of February 29, 2012)

Occupancy rate

93.7% (as of February 29, 2012)• 13 minutes to Shinkansen station “Shin Osaka” by KitaOsaka Kyuko Railway• 20-30 minutes to Umeda, Shinsaibashi, and Nanba by
Subway Midosuji Line• Diversified tenant base including a pharmaceutical,
education service, and insurance company, as well as
administrative agency, foundation, clinic, and a sports clubKey features of theproperty

Note: For details regarding the preferred equity securities, please see our “Notification regarding the acquisition of assets” (Senri Property TMK Preferred Equity Securities) dated
April 25, 2012
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

12

Future Investment Policy
 Continue making new investments into mid-sized office buildings in Tokyo metropolitan area
 Asset replacement aimed to improve quality and profitability of portfolio
 Secure investment revenues and future pipeline through investment in TK investment, etc.
Improve quality and profitability of portfolio

Investment through acquisition of TK interest＜Acquisition policy＞＜Investment criteria＞

Continue making new investments mainly into mid-sized
office buildings in Tokyo metropolitan area

 Total equity investment amount of approximately ¥5 bn

Make also some selective investments into mid-sized
office buildings in other regional areas

 KRI has an opportunity to purchase the property when
SPC is selling itAcquire properties which are relatively profitable＜Disposition policy＞


Dispose non-office properties (central urban retailproperties, residential properties, etc) in preference as
KRI aims to develop a portfolio comprised of mid-sized
office buildings

Dispose regional properties, small-sized properties, andproperties with declining profitability

Maintain/improve dividends through gain on sale ofproperties Target properties have to satisfy KRI’s investment criteria＜Merits to KRI＞
 Ability to secure property acquisition opportunities
through small amount of investment
 Secure return on investment＜Illustrated structure＞
SPC

Loans
Properties
Equityinvestment＋
Sponsor, etc

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

13

SECTION 3

Portfolio management strategy

Management of existing properties:
Tenant turnover and occupancy (office buildings)
Changes in occupancy ratios for office tenants (by area)
Occupancy ratio at the end of
14th period（2012/4)
Area

Occupancy
ratiosTokyo Metropolitan
Area

96.6%

Total office building

95.1%

Other Regional
Areas

91.4%

Reference：
Total portfolio

95.4%

98%
96%
94%
92%
90%
88%
86%
84%
82%
80%
2009/5<Reference>
Average occupancy ratio
in the past 3 years(Simple average of eachmonth from the 9th Period
to 14th Period)

2009/112010/5

2010/112011/5Area

Occupancy
ratiosTokyo
Metropolitan Area

94.8%

Total officebuilding

93.3%

Other Regional
Areas

88.5%

2011/11

Annualized turnover ratios for office tenants (actual and forecast)Less than 200 tsubo
12.0%
10.0%

10.0%
9.0%

10.9%
8.4%

8.0%

4.0%

2.2%
9.0%

9.2%

11.7%
3.7%

0.8%

6.0%

More than 200 tsubo

11.1%
9.7%

2.4%

8.3%
4.8%
3.9%

10.9%
8.7%

8.0%
6.2%

2.0%

4.9%

4.4%

0.0%
8th period(2009/4)

9th period(2009/10)

10th period(2010/4)

11th period(2010/10)

12th period(2011/4)

13th period(2011/10)

14th period(2012/4)

15th period
Forecast(2012/10)

Note: The ratio is calculated and annualized as follows: (total leasable area of the tenants who cancelled the lease agreement during the six-month period from the beginning to end of each period) / (Averageleasable area of all office buildings owned by KRI as of each month-end during the relevant period) x 2. Values for the 15th Period (Period ending Oct 2012) are estimates which are based on the cancellation
notice received during the 14th Period (Period ended Apr 2012). Calculation does not include KDX Omori Building sold on May 11, 2012. Breakdown of Leased area was calculated by adding up the values oftenants’ leased area by property.

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

15

Management of existing properties:
Tenant turnover for office tenants
Trend of tenant turnover Most of the tenant move-ins and move-outs are for the leased floor areas of less than 200 tsubo
 Move-ins: Stable results for move-ins. Both the No. of move-in tenants and the floor areas increased from previous period. Occupied
space of move-in tenants is 1500 tsubo larger than that of move-outs
 Move-outs：Slightly decreased from the previous period. 90.2% of the move-out tenants had occupied less than 200 tsubo each(# of tenants)■ Move-ins

8th

9th

■ Move-outs
10th

Area occupied (move-ins － move-outs）
11th

12th

13th

(tsubo)Move-ins during 14th period（73 tenants）

14th

More than
200 tsubo
6.8%

100–200
tsubo
21.9%

200坪未満Less than
78.8%100 tsubo
71.2%

93.2% of the move-in tenants had
occupied less than 200 tsubo eachMove-outs during 14th period（51 tenants）
More than
200 tsubo
9.8%

100–200
tsubo
23.5%

8th period(08/11～09/04)

10th period(09/11～10/04)

12th period(09/11～10/04)

14th period(11/11～12/04)

Less than
100 tsubo
66.7%

Note： Based on number of floors. If one tenant leases more than one floor, each floor is counted as one

90.2% of the move-out tenants had
occupied less than 200 tsubo each
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

16

Management of existing properties: Lease-up of large
buildings
Leasing policies of Kabutocho Nikko Building
Location:
Chuo-ku, Tokyo
Gross Floor Area:
11,705.49m2
Number of floors:
B1 F8
Leasable area on standard floors:c.929m2 (c. 281 tsubo)
Year built:
Nov 1998(Details of contract termination by major tenant)Major tenant:
SMBC Nikko Securities
Date of contract termination:Nov 30, 2012
(16th Period)
Size of cancelled area: 7,833.19m2% of cancelled area within the whole building:
100.0%% within total leased area of KRI’s portfolio(Note):
2.4%
A75 Kabutocho Nikko Building

Location

Kabuto-cho (Chuo-ku), Building is facing Heisei-dori and located close to TSE

2 minutes walk from “Kayabacho” Station of Tokyo Metro Tozai Line and Hibiya Line
Public transport
Can also be accessed from “Nihombashi” Station of Tokyo Metro Ginza Line & Tozai Line, andaccessibility
Tokyo Municipal Subway Asakusa LineAge of building

13 years. Considering the many other old buildings in the same area, competitiveness of theproperty is highSpecification of Individual air conditioning, electronic security service, OA floors, 6 elevatorsbuilding
Open parking lots and mechanical parking （for 39 cars）
Target tenants

・ Financial institutions including securities companies, securities related companies and banks
・ Affiliates and business partners of companies who are headquartered in Otemachi andsystem related companies
・ Companies who want to have a head office which is close to Tokyo Station

Taking advantage of KRI’s
leasing track record, we aim to• Shorten the vacancy periods
AND• Generate leasing income assoon as possible

Flexibility of Flexible treatment possible (Multi-tenant, Single-tenant)leasing format

Lease-ups during the 14th period
Location:Chuo-ku, Tokyo
Gross Floor Area
:12,694.32m2
Number of floors:B1 F11
Leasable area on standard floors:c. 862m2 (c. 261 tsubo)
Year built:Feb 2008(Details of contract termination by major tenant)Major tenant:NTT Data
Size of cancelled area :4,307.60m2 (5 floors)% within the whole building:46.3%% within total leased area of KRI’s portfolio（Note）:1.3%

A60 KDX Harumi Building

Location:Chuo-ku, Tokyo
Gross Floor Area
:3,804.36m2
Number of floors:F8
Leasable area on standard floors:c.437m2 (c.132 tsubo)
Year built:Oct 1987(Details of contract termination by tenant)Contract terminated by :1 tenantSize of cancelled area :838.82m2 (2 floors)% within the whole building:27.8%% within total leasable area of KRI’s portfolio(Note):0.3%

A20 KDX Kayabacho Building

Leasing activities that
capitalize on the highspecifications of the building

Leasing activities that are
based on top classmarketing by the AssetManagement Company
and close collaboration
with brokers
Lease-up strategy based onvalue-up works

Leasing policies

 Shorten vacancy periods Execute appropriate value-ups
 Leverage the leasing capabilities of the AssetManagement Company

Changes in the occupancy ratios of 2 properties (1 year performance)
A20 KDX Kayabacho Bldg

A60 KDX Harumi Bldg

Vacancy period: 6 months

Termination
notice(2floors)

2011/4

2011/5

Termination
notice(5floors)

2011/6

2011/7

Vacancy period: 6 months

2011/8

2011/92011/10

2011/112011/122012/1

2012/2

2012/3

2012/4

Note: Percentage of cancelled area within KRI’s entire portfolio as of end of 14th Period (Apr 2012). However, KDX Omori Building which was sold on May 11, 2012 is not included.
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

17

Management of existing properties:
Trends in office rents for new tenants
Rents for new tenants
Average% change in rents between new & existing tenants
and # of contracts

CentralTokyo(5 wards)

Total Office
Buildings

9th
period2009/1010th
period2010/411th
period2010/1012th
period2011/413th
period2011/1014th
period2012/4

Expansion

26

40

36

31

34

50

Scale down

17

14

6

18

9

6

Other
/unknown

12

3

4

5

4

8

9th
period2009/1010th
11th
period period
2010/4 2010/10

12th
period2011/413th
period2011/1014th
period2012/4

Changes-19.3%-22.8%-19.0%-20.9%-24.4%-23.6%

Increasein rent

0

0

0

1

0

0

Decreasein rent

17

16

18

16

20

26

Changes-8.4%-15.5%-20.0%-18.6%-19.6%-18.7%

3

1

0

0

0

0

(Reference) Changes in reasons for moving out of
KRI’s office buildings

15

11

6

17

6

22

Changes-16.4%-15.0%-16.6%-14.0%-14.5%-21.0%

9th
10th
11th
12th
13th
14th
period period period period period period
2009/10 2010/4 2010/10 2011/4 2011/10 2012/4

Increasein rent

2

6

1

1

0

1

Decreasein rent

11

18

13

10

16

17

Changes-14.4%-17.5%-18.3%-18.3%-19.9%-21.2%

Increasein rent

5

7

1

2

0

Decreasein rent

43

45

37

43

42

Other Tokyo Increase
Metropolitan in rent
Area
Decreasein rent

Other
Regional
Areas(Reference) Reasons for moving into KRI’s office buildings

Note: Surveyed mainly on office floors on the 2nd floor or above

15th
period2012/10(Forecast)

Expansion

2

4

9

7

9

8

10

Scale down

44

47

31

30

40

27

36

1

Other
/unknown

6

4

5

7

6

4

6

65

Note: All floors excluding residential floors are included in the calculation. Estimates for the
15th Period do not include KDX Omori Building sold on May 11, 2012

Notes：Ratios represent the simple percentage differences in average monthly rents (per tsubo) for
existing tenants and new tenants in the respective buildings. The analysis excludes thosebuildings that were acquired during the relevant fiscal periods and based on office floors
on the 2nd floor or above

Note： Including KDX Omori Bldg. (sold on 2012/05/11) in calculation
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

18

Management of existing properties:
Change in rent for office buildings
Rent renewals
Status of rent renewals (% renewal trends)

Status of rent renewals (% change)

Less than 200 tsubo

9th Period 10th Period 11th Period 12th Period 13th Period 14th Period(2009/10)(2010/4)(2010/10)(2011/4)(2011/10)(2012/4)

Increase in rent

Changes(Total)

-5.7％

-9.0％

-10.8％-13.8％-4.2％-13.9％

Changes(Less than
200 tsubo)-9.6%-12.6%-11.2%-12.6%

-9.7%

-8.8%

Changes(More than
200 tsubo)

1.3%

80%
60%

-6.5%

-10.4%-15.0%-0.9%-16.3%

Note: Percentage change in rents are calculated by dividing the total monthly rents of those tenants who haverenewed their leases with either decrease or increase in rental levels by total monthly rents before therenewal. Those tenants whose rents are unchanged at renewal are excluded

Decrease in rent

No change

100%

70.4%

61.4%

55.4%
77.9%

81.2%

78.5%

19.0%
3.0%

17.0%
1.8%

15.7%
5.8%

12th
Period13th
Period14th
Period

40%
39.3%

20%

25.8%

0%

3.8%

1.5%

5.3%

9th
Period10th
Period11th
PeriodChange in monthly rent

37.1%

(30 tenants)(53 tenants)(56 tenants)(31 tenants)(27 tenants)(30 tenants)(Thousands of Yen)

■Rent increase（more than 200 tsubo）■Rent decrease（more than 200 tsubo）■Rent increase（less than 200 tsubo）■Rent decrease（less than 200 tsubo）

844
1,420

291

525
1,939

866

-5,402-3,766-4,591More than 200 tsubo

5,000
0

605
1,015

-5,991-5,000-1,027-10,644

1,133-9,385-2,464

Increase in rent

Decrease in rent

80%

30.0%
56.2%

36.5%
61.5%

60%

-5,434

No change

100%

67.3%

55.6%

-10,000-14,777-5,52240%-8,756-15,000

20%-20,000

19.3%
24.5%

0%
-25,000
9th
Period10th
Period11th
Period12th
Period13th
Period14th
PeriodNote: The changes in monthly rent are summation of differences before and after the rent renewal and calculated
separately for tenants with rent increase and decrease

9th
Period

56.9%

13.0%
10th
Period

40.1%

63.5%

38.5%

33.0%

0.0%

0.0%

4.4%

0.0%

11th
Period12th
Period13th
Period14th
Period(6 tenants) (14 tenants)(5 tenants) (7 tenants) (7 tenants) (9 tenants)
Note: Any renewed contracts, including contracts extended before theexpiration date. Ratio calculation based on leased floor area

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

19

Management of existing properties:
Trends for office buildings segment
Percentage of the area in “more than 200 tsubo, more than
¥20,000” （comparison of 10th and 14th Period）

Tenant distribution in Tokyo Metropolitan Area (end of 14th period)
Rent perLess thantsubo/leasable area 100 tsubo

100–200
tsubo

200–300
tsubo

300–400
tsubo

400–500
tsubo

500–1,000 1,000–2,000 More than
tsubo
tsubo
2,000 tsubo¥30,000–¥40,000

2

1

1

-

-

-

-

-

¥20,000–¥30,000

32

22

5

3

-

-

1

1

¥15,000–¥20,000

68

57

14

7

2

7

-

-

¥10,000–¥15,000

116

39

8

-

1

3

1

-

Less than ¥10,000

45

7

4

2

-

1

-

-

End of Apr 2010 (10th period)
More than 200 tsubo,
More than ¥20,000(Tokyo metropolitan area)
10.0%

Less than\10,000
6.5%\10,000\15,000
31.3%

More than\20,000
29.0%

Less than\ 10,000
13.1%\ 10,000\15,000
37.3%\15000\20,000
33.2%

More than\ 20,000
15.1%

End tenants of office buildings
Variety of tenants(As of end of 14th period)
Personal Use 40(5.2%)

Public Sector(Others)
2 (0.3%)

Note: Pie charts show the distribution of tenants of KRI’s office buildings in Tokyo metropolitan area as of end of
relevant Period based on their contracted rent per tsubo

Mining 1 (0.1%)
Construction 37(4.8%)
Industrial
Goods 96(12.4%)

Service312
40.2%\ 15000\ 20,000
34.4%

Less than
200 tsubo or
Others in Less than
Portofolio ¥20,000
40.9%(Tokyometropolitan
area)
53.2%0Note: Pie chart shows the percentage of each category’s total area within Total leased areaof KRI’s portfolio as of end of relevant Period

Distribution of rent range (comparison of 10th and 14th Period)
End of Apr 2012 (14th period)

More than 200 tsubo,
More than ¥20,000(Tokyo metropolitan area)
5.9%

Less than
Others in 200 tsubo or
portofolio Less than
36.8%
¥20,000(Tokyometropolitan
area)
53.1%

Note: Based on rents as stated in lease agreements (including common area charges) for 450 office tenants in Tokyo Metropolitan Area

End of Apr 2010 (10th period)

End of Apr 2012 (14th period)

Retail, Food &Beverage 185(23.8%)

Major end tenants# of end tenant(# of properties)

776 tenants(76 properties)

Share of theLargest Tenant

5.8％

Total Share of theTop 3 Tenants

8.4％

Note: The ratio of top-end tenants within the entire
portfolio(based on leased area)
The largest tenant is SMBC Nikko Securities.
Affiliates of SMBC Nikko Securities who areTransportation &tenants of Kabutocho Nikko Bldg. II are
Financial・Insurance48
Communication 29
included in the data for SMBC Nikko Securities.
Real estate 26(3.7%)(6.2%)
Tenants of Kabutocho Nikko Bldg. who have
(3.4%)
notified us of their cancellation of contract on
Note: Percentage figures in the above pie charts
May 31 account for c. 2.4% of KRI’s total
represent the proportion of each type of end
leased area
tenants as a percentage of the total (776 tenants)

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

20

Management of existing properties: Proactive CAPEX[Improvement works planned in the 15th and 16th Period (Excerpt)]
・ KDX Kayabacho Bldg:
Renovation of common area (on standard floors)
・ Nagoya Ekimae Sakura-Dori Bldg. :Renovation of entrance, exterior, common area
・ Blanket order as a portfolio:
Replacement of down lights with LED bulbs in common areas
・ Replacement of air-conditioning system:
15th Period: (7 units)
16th Period: (2 units)

Maintain/improve value and competitiveness of properties throughproactive improvement works
 Sufficient budget for improvement works secured
through ample funds (Depreciation) generated by ourportfolio Works for saving energy and electricity are underway(Replacement of air-conditioning system, replacementof lighting with LED bulbs in common areas, installationof motion sensors)<KDX Kayabacho Bldg. before renovation>c. 45mn yen
c.75mn yen
c.100mn yen
c.484mn yen
c.412mn yen<KDX Kayabacho Bldg. after renovation>

 Early lease-up through value-up works (renovation)(Reference) Concept for repairs, replacement and renovations(million yen)

1,600

1,578
1,429

1,451

1,477

1,440

1,406

1,599

1,400
1,200

1,275

1,213

1,083

1,030

1,000

826
698

800
571
441

462

400
200
0
8th
9th
10th
11th
12th
13th
14th
15th
16th
Acutal Acutal Acutal Acutal Acutal Acutal Acutal Budget Budget(As of 2012/4/30)

Maintainperformance

・Safety & security
・Energy & laborsaving
・Investments in IT
・Effective use of space・Improve image

Identify tenants’ needs
through CS survey

Conservation & maintenanceReplacement
Repairs
Agedeterioration

Socially required
specifications

Renovation
・CS improvement works to satisfy the needs of customers
・Construction costs reduction through adopting bidding process・Introduction of KDX standards

Note: Prepared by asset manager based on BELCA guideline

Physical deterioration

600

1,593

1,442

Improveperformance

Social deterioration

1,800

Building
specification
Building specification at completion of construction

Depreciation
Improvement (Budget & Actual)

Value-up

Changes in Depreciation & Improvement works (Budjet/Actual)

Time course

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

21

Management of existing properties: Occupancy ratios andbuilding age of KRI’s office buildings
Breakdown of KRI’s properties by building age(based on total leasable area)

Less than
15 years
15.6%
15–20 years
22.6%

Occupancy ratios of KRI’s properties by age of building

25 yearsor older31.4%

20–25 years
30.4%<Reference>
Overall satisfaction of tenants by age of building(Excerpt from the 4th CS Survey)

End of 12th
Period（2011/04）

End of 13th
Period（2011/10）

End of 14th
Period（2012/04）

25 years or older

89.2%

89.3%

93.0%

95.0%

20–25 years

94.8%

95.7%

93.8%

96.4%

15–20 years

94.5%

96.0%

95.5%

94.7%

Less than 15 years

93.8%

96.0%

96.0%

93.1%

Total office buildings

93.3%

94.2%

94.3%

95.1%

Total office building

More than 25yrs

20–25yrs

15–20yrs

Less than 15 yrs

97.0%
n=551

90.7%

Less than 15 yrs

End of 11th
Period（2010/10）

96.0%
95.0%
94.0%

75.7%

15–20 yrs

93.0%
92.0%

83.0%

20–25 yrs

90.0%More than 25
yrs
65%
Note:

91.0%

81.7%

70%

75%

80%

85%

89.0%

90%

95%

We have compiled the answers “satisfied and moderately satisfied”
out of the 6-grade evaluation “satisfied, moderately satisfied, can’ttell, moderately dissatisfied, dissatisfied and unknown” for creationof the above chart.

88.0%
End of 11th Period（2010/10）
Note:

End of 12th Period（2011/04）

End of 13th Period（2011/10）

End of 14th Period（2012/04）

KRI’s office buildings’ occupancy ratios by age of building.

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

22

SECTION 4

Financial Strategy

Stable financial management:
Conservative LTV and diversification of debt maturity
Changes in LTV
50%
45%Conservative LTV level

47.0%

45.6%

43.0%
41.2%

40%
35%

45.3%

41.4%

41.1%

40.9%

40.9%

 Raised ¥6.3 billion by leveraging the committed termloan facility established in Dec 201138.9%

 Issuance of the 4th investment corporation bond worth¥1.5 billion

40.3%

38.7%

37.5%

Redemption of the 1st investment corporation bonds
due March 15, 2012 (9.0billion yen)

 Bank loan of ¥1.0 billion from Mizuho Bank (new lender)

35.3%
30%
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
12th
13th
14th
period period period period period period period period period period period period period period
2005/10 2006/4 2006/10 2007/4 2007/10 2008/4 2008/10 2009/4 2009/10 2010/4 2010/10 2011/4 2011/10 2012/4※ Remaining amount for redemption of bonds paid bycash on handNote: Interest bearing debt ratio = Interest-bearing debt at end of period / Total assets

Fund raised for property acquisition
on Mar 28, 2012

Diversification of debt maturity (As of April 30, 2012) Bank of loan of ¥0.5 billion from Bank of Fukuoka (newlender)New finance in 14th period(¥ billion)

Investment corporation bonds

 7-year loan from Sumitomo Mitsui Banking Corporation
and Development Bank of Japan

Borrowing

30
25 Repayment

Credit ratings and investment corporation bonds(as of April 30, 2012)

20
7.5

15

7.5

2.5

1.5

10

10.0

1.2
11.2

5

7.3

9.8

Debt with maturityof 7 years

2.5

6.3

11.2

13.1

13.3

10.6

7.0

4.5

0
14th
period15th
period16th
period17th
period18th
period19th
period20th
period21th
period22th
period23th
period

0.5
3.0
24th
period1.5
25th
period3.0
26th
period2.4
27th
period28th
periodRating agency

RatingJapan Credit Rating Agency (JCR)

A(Positive)

Bond

Size

Interest rate Maturity Maturity date

1st Bond
2nd Bond
3rd Bond
4th Bond

¥9.0B
¥3.0B
¥1.5B
¥1.5B

5 yrs
1.74% p.a.
2.37% p.a. 10 yrs
1.59% p.a.
2 yrs
2.00% p.a. 5.5 yrs

Redeemed
2017/3/15
2013/9/13
2017/9/8

Note: The chart illustrates total debt amounts that mature in each period, including principle repayment based on contract (rounded to the first decimal place). The debts
that were financed during 14th period (including refinanced portions) are indicated in red box.

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

25

Stable financial management: Improvement of borrowing terms
Changes in borrowings

Changes in average interest rate / average life
Average life

8th period(09/4)
and
9th period(09/10)

12th period(2011/4)

Average life

1.8 years

3.4 years

2.4 years

3.2 years

Average spread

2.27%

1.42%

1.18%

1.07%

Amount¥25.0B¥32.5B¥20.0B¥47.4B

13th period(2011/10)

14th period(2012/4)

Average interest rate

(Upfront fee included)

5.0yrs

2.30%
2.21%
2.20%

2.17%

2.14%

4.0yrs

2.10%
2.02%

Note: ・ Average life is weighted by borrowing amount (rounded to the first decimal place).
・ Average spread 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).
・ Amount represents the amount borrowed or refinanced during the period. The
amounts borrowed and repaid during the same period (i.e. no outstanding balanceat the end of the period) are not included.

2.00%
1.90%

Floating rate
¥28.5B
20.7%
Fixed rate
¥108.9B
79.3%

Long-term borrowings andinvestment corporation
bonds¥110.8B
80.7%

Average interest rate*

1.58%

Average life

2.5 years

Proportion of L-T debt

Debt balance by maturity
Short-term
Current portion
borrowingsof long-term¥14.7Bborrowings
10.7%¥11.9B
8.6%

89.3%*Note: The average interest rate above does notinclude upfront fees (if included, 2.02%).
“Fixed-rate debt” includes borrowings thatwere converted to fixed through interest
rate swap.

2.5yrs2.3yrs2.2yrs

2.0yrs

1.8yrs
1.0yrs1.80%

0.0yrs1.70%
11th period(2010/10)

12th period(2011/4)

Fixed-rate debt/balance by maturity (as of April 30, 2012)
Proportion of floating-rate debt
vs fixed-rate debt

3.0yrs13th period(2011/10)

14th period(2012/4)

Breakdown of lenders(Billions of Yen)
Sumitomo Mitsui
Banking Corporation
Development Bank
2of Japan1

As of
Oct 31, 2011

As of
ChangeApr 30,2012

22.4

32.0

+9.6

16.4

26.7

+10.3

14.0

19.7

+5.7

15.8

17.7

+1.9

11.3

16.3

+5.0

7.2

9.2

+2.0

7 Resona Bank

5.3

7.3

+2.0

8 Mizuho Trust & Banking

1.0

1.0

0

3 Aozora Bank
Sumitomo Mitsui Trust
4
Bank
Bank of Tokyo
5
Mitsubishi UFJ
Mitsubishi UFJ Trust
6
and Banking

9 Mizuho Bank

-

1.0

+1.0

10 Bank of Fukuoka

-

0.5

+0.5

11 Norinchukin Bank

4.0

-

-4.0

Mizuho Trust & Banking
0.8%
Resona Bank
5.6%

Mizuho Bank
0.8%
Bank of Fukuoka
0.4%

Mitsubishi
UFJ
Trust andBanking
7.0%Bank of Tokyo
Mitsubishi UFJ
12.4%
Sumitomo
Mitsui Trust Bank
13.5%

Sumitomo
Mitsui Banking
Corporation
24.4%

Development
Bank of Japan
20.3%

Aozora Bank
15.0%

Note:Borrowing amounts are rounded to the first decimal place.
Total
97.4
131.4
注：金額は、億円未満を四捨五入して記載しています。

+34.0

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

26

Appendix

Properties acquired during 14th period (2012/4)
Properties acquired during 14th period
Total of Acquisition Price 31.32 billion yen

Property Name

Kabutocho
Nikko Building（Note 3)

Ikebukuro Nikko
Building

Kabutocho
Nikko BuildingⅡ

Tachikawa
Ekimae Building

Nagoya Ekimae
Sakura-dori
Building

Nagoya Nikko
Shoken Building

Sendai Nikko
Building

Location

Chuo-ku, Tokyo

Toshima-ku, Tokyo

Chuo-ku, Tokyo

Tachikawa-shi,Tokyo

Nakamura-ku,
NagoyaNaka-ku, Nagoya

Aoba-ku, Sendai

Minamicho,
Kanazawa

Kita-ku, Osaka-

GFA

11,705.49 ㎡

3,223.75 ㎡

2,016.03 ㎡

2,896.48 ㎡

13,380.30 ㎡

14,308.76 ㎡

3,598.01 ㎡

4,497.22 ㎡

6,805.76 ㎡

62,431.80㎡

Kanazawa Nikko View Flex Umeda
Building
Building

Total of 9
properties

Year built

November-1998

March-1986

October-2001

February-1990

April-1986

August-1974

March-1989

March-1989

July-2009-

Acquisition Price (A)¥11.27B¥1.65B¥1.28B¥1.26B¥7.32B¥4.15B¥0.95B¥0.64B¥2.77B¥31.32B

Appraisal value atthe time ofacquisition (B)¥13.50B¥1.70B¥1.54B¥1.34B¥7.73B¥4.20B¥1.01B¥1.07B¥3.24B¥35.33B

Difference (A)-(B)-16.5%-2.8%-16.9%

-5.4%

-5.2%

-1.0%

-5.9%

-39.7%-14.5%-11.4%

ITOCHU
Corporation-

Seller

The Gibraltar Life Insurance Co., Ltd. (formely AIG Edison Life Insurance Co.)

Actual NOI (Note 1)

¥560M

¥99M

¥73M

¥87M

¥407M

¥264M

¥55M

¥87M

¥188M

¥1,824M

Actual NOI /Acquisition Price

5.0%

6.0%

5.8%

6.9%

5.6%

6.4%

5.9%

13.5%

6.8%

5.8%

Appraisal NOI(Note 1)

¥643M

¥102M

¥80M

¥85M

¥436M

¥254M

¥69M

¥83M

¥172M

¥1,927M

Aprraisal NOI /Acquisition Price

5.7%

6.2%

6.3%

6.8%

6.0%

6.1%

7.3%

13.0%

6.2%

6.2%

Note 1:

Note 2:
Note 3:

Acutal NOI shows the Net Operating Income (annualized) which is based on the Operating income and Operating expenses（after property & city planning tax） of relevant properties under
the contracts with tenants as of Oct 31, 2011（for View Flex Umeda Building, as of Feb 29, 2012）. Appraisal NOI is the net operating income (annualized) as of acquisition of relevant
properties stated in the appraisal reports calculated by the direct capitalization method.
Acquisition price and appraisal values are rounded down to the first decimal place. Actual NOI and Appraisal NOI are rounded to the nearest whole number. Ratios are rounded to the firstdecimal place.
Received cancellation notice dated May 31, 2012 from SMBC Nikko Securities Inc. for Kabutocho Nikko Building. Scheduled date of termination is Nov 30, 2012.

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

28

Appraisal values and cap rates as of the end of 14th period
No

Property nameAppraiser

Acquisition
price

14th period

Cap rate
No

Appraisal value

Book value

vsacquisition

vs 13thperiodvs bookvalue

End of 14th
periodProperty nameAppraiser

Acquisition
pricevs 13th period

14th period
Appraisal value

Book value

vsacquisition

Cap rate
vs 13thperiodvs bookvalue

End of 14th
periodvs 13th period

A

1

KDX Nihonbashi 313 Building

Daiwa

5,940

6,380

6,110

7.4%

-7.8%

4.4%

4.8%

0.0%

A

50

Ikejiri-Oohashi Building

JREI

2,400

1,500

2,452

-37.5%-4.5%-38.8%

5.8%

-0.1%

A

3

Higashi-Kayabacho Yuraku Building

JREI

4,450

5,190

4,348

16.6%

-0.6%

19.3%

4.9%

0.0%

A

51

KDX Hamacho Nakanohashi Building

JREI

2,310

1,700

2,347

-26.4%

0.0%-27.6%

5.3%

0.0%

A

4

KDX Hatchobori Building

Daiwa

3,680

3,440

3,343

-6.5%

0.6%

2.9%

5.0%

0.0%

A

52

KDX Kanda Misaki-cho Building

JREI

1,380

981

1,377

-28.9%

0.5%-28.8%

5.3%

0.0%

A

5

KDX Nakano-Sakaue Building

Daiwa

2,533

2,290

2,447

-9.6%

-1.7%

-6.4%

5.4%

0.0%

A

53

KDX Hakata-Minami Building

JREI

4,900

3,460

4,795

-29.4%-0.9%-27.8%

6.6%

0.0%

A

6

Harajuku F.F. Building

JREI

2,450

2,980

2,442

21.6%

1.0%

22.0%

5.6%

0.0%

A

54

KDX Kitahama Building

JREI

2,220

1,530

2,191

-31.1%

1.3%-30.2%

6.0%

0.0%

A

7

FIK Minami Aoyama

JREI

2,270

2,120

2,247

-6.6%

-1.4%

-5.7%

4.8%

0.0%

A

55

Shin-toshin Maruzen Building

JREI

2,110

1,570

2,160

-25.6%-2.5%-27.3%

5.3%

0.0%

A

8

Kanda Kihara Building

Daiwa

1,950

1,870

1,848

-4.1%

0.0%

1.2%

5.0%

0.0%

A

56

KDX Jimbocho Building

JREI

2,760

1,870

2,900

-32.2%

0.5%-35.5%

5.3%

0.0%

A

12

Portus Center Building

Daiwa

5,570

4,600

4,584

-17.4%

0.2%

0.3%

6.4%

0.0%

A

57

KDX Gobancho Building

JREI

1,951

1,500

1,987

-23.1%-2.0%-24.5%

4.9%

0.0%

A

13

KDX Kojimachi Building

JREI

5,950

4,400

5,627

-26.1%-0.2%-21.8%

4.4%

0.0%

A

58

KDX Nagoya Sakae Building

Daiwa

7,550

4,750

7,492

-37.1%

0.4%-36.6%

5.2%

0.0%

A

14

KDX Funabashi Building

JREI

2,252

1,970

2,397

-12.5%

1.0%-17.8%

6.1%

0.0%

A

59

KDX Iwamoto-cho Building

JREI

1,864

1,350

1,795

-27.6%

0.7%-24.8%

5.4%

0.0%

A

15

KDX Hamacho Building

JREI

2,300

2,370

2,260

3.0%

0.4%

4.8%

5.2%

0.0%

A

60

KDX Harumi Building

JREI

10,250

8,230

9,701

-19.7%-2.6%-15.2%

4.8%

0.0%

A

16

Toshin 24 Building

JREI

5,300

4,160

5,121

-21.5%-1.0%-18.8%

5.7%

0.0%

A

61

KDX Hamamatsucho Dai-2 Building

Daiwa

2,200

1,860

2,288

-15.5%

0.5%-18.7%

4.7%

0.0%

A

17

KDX Ebisu Building

JREI

4,640

4,200

4,559

-9.5%

-1.4%

-7.9%

4.9%

0.0%

A

62

Koishikawa TG Building

JREI

3,080

3,150

3,133

2.3%

-5.4%

0.5%

5.0%

0.0%

A

18

KDX Omori Building

JREI

3,500

3,790

3,361

8.3%

0.0%

12.7%

5.3%

0.0%

A

63

Gotanda TG Building

JREI

2,620

2,590

2,816

-1.1%

-2.6%

-8.0%

5.3%

0.0%

A

19

KDX Hamamatsucho Building

Daiwa

3,460

3,180

3,245

-8.1%

0.0%

-2.0%

4.7%

0.0%

A

64

KDX Hihonbashi 216 Building

JREI

2,010

1,930

1,970

-4.0%

0.0%

-2.0%

4.7%

0.0%

A

20

KDX Kayabacho Building

JREI

2,780

2,690

2,843

-3.2%

-6.6%

-5.4%

5.3%

0.0%

A

66

KDX Shinjuku Building

JREI

6,800

6,600

6,883

-2.9%

-0.3%

-4.1%

4.5%

0.0%

A

21

KDX Shinbashi Building

JREI

2,690

2,700

2,693

0.4%

-5.3%

0.3%

4.6%

0.0%

A

67

KDX Ginza 1chome Building

Daiwa

4,300

4,760

4,302

10.7%

0.4%

10.6%

4.5%

0.0%

A

68

KDX Nihonbashi Honcho Building

Daiwa

4,000

4,300

4,013

7.5%

-0.7%

7.2%

4.8%

0.0%

A

69

KDX Kobayashi-Doshomachi Building

JREI

2,870

2,890

2,748

0.7%

-1.0%

5.2%

7.0%

0.1%

A

70

Kitananajo SIA Building

Daiwa

2,005

2,050

2,089

2.2%

0.0%

-1.9%

5.8%

0.0%

A

71

KDX Iidabas hi Building

Daiwa

4,670

4,830

4,697

3.4%

0.0%

2.8%

4.9%

0.0%
0.0%

A

22

KDX Shin-Yokohama Building

JREI

2,520

2,270

2,451

-9.9%

-0.4%

-7.4%

5.9%

0.0%

A

23

KDX Yotsuya Building

JREI

1,950

2,470

1,979

26.7%

0.4%

24.8%

5.3%

0.0%

A

24

KDX Minami Semba Dai-1 Building

JREI

1,610

1,020

1,456

-36.6%

1.0%-30.0%

5.8%

0.0%

A

25

KDX Minami Semba Dai-2 Building

JREI

1,560

1,050

1,369

-32.7%-1.9%-23.3%

5.8%

0.0%

A

26

KDX Kiba Building

JREI

1,580

1,430

1,562

-9.5%

-9.5%

-8.5%

5.6%

0.0%

A

27

KDX Kajicho Building

Daiwa

2,350

2,320

2,386

-1.3%

0.0%

-2.8%

5.1%

0.0%

A

28

KDX Nogizaka Building

JREI

1,065

723

1,124

-32.1%

0.7%-35.7%

5.5%

0.0%

A

29

KDX Higashi-Shinjuku Building

Daiwa

2,950

3,320

3,196

12.5%

0.0%

3.9%

5.2%

0.0%

A

30

KDX Nishi-Gotanda Building

JREI

4,200

3,780

4,045

-10.0%

-0.5%

-6.6%

5.1%

0.0%

A

31

KDX Monzen-Nakacho Building

Daiwa

1,400

1,170

1,402

-16.4%-7.1%-16.6%

5.6%

0.0%

A

32

KDX Shiba-Daimon Building

JREI

6,090

4,950

6,199

-18.7%-1.2%-20.1%

4.9%

0.0%

A

33

KDX Okachimachi Building

Daiwa

2,000

1,850

2,121

-7.5%

1.1%

-12.8%

5.1%

0.0%

A

34

KDX Hon-Atsugi Building

Daiwa

1,305

1,070

1,172

-18.0%

0.0%

-8.7%

6.3%

0.0%

A

35

KDX Hachioji Building

Daiwa

1,155

831

1,282

-28.1%

1.2%-35.2%

5.9%

0.0%

A

36

KDX Niigata Building

JREI

1,305

914

1,453

-30.0%

1.7%-37.1%

7.3%

0.0%

A

37

KDX Ochanomizu Building

JREI

6,400

6,540

6,641

2.2%

2.2%

-1.5%

4.9%

0.0%

A

38

KDX Nishi-Shinjuku Building

JREI

1,500

1,130

1,544

-24.7%-3.4%-26.8%

5.2%

0.0%

A

39

KDX Toranomon Building

JREI

4,400

3,460

4,791

-21.4%-4.9%-27.8%

4.4%

0.0%

A

40

Toranomon Toyo Building

JREI

9,850

10,100

9,853

2.5%

0.0%

2.5%

4.5%

0.0%

A

41

KDX Shinjuku 286 Building

JREI

2,300

2,140

2,392

-7.0%

0.9%

-10.6%

5.0%

0.0%

A

72

KDX Higashi-Shinagawa Building

Daiwa

4,590

4,800

4,817

4.6%

0.0%

-0.4%

5.1%

A

73

KDX Hakozaki Building

Daiwa

2,710

2,850

2,910

5.2%

0.0%

-2.1%

5.2%

0.0%

A

74

KDX Shin-Nihonbashi Building

Daiwa

2,300

2,480

2,294

7.8%

0.0%

8.1%

4.7%

0.0%

A

75

Kabutocho Nikko Building

JREI

11,27013,50011,364

19.8%

0.0%

18.8%

4.6%

0.0%

A

76

Ikebukuro Nikko Building

JREI

1,653

1,690

1,675

2.2%

-0.6%

0.8%

5.5%

0.0%

A

77

Kabutocho Nikko Building II

JREI

1,280

1,550

1,294

21.1%

0.6%

19.8%

5.0%

0.0%

A

78

Tachikawa Ekimae Building

JREI

1,267

1,330

1,290

5.0%

-0.7%

3.1%

5.9%

0.0%

A

79

Nagoya Ekimae Sakura–dori Building

JREI

7,327

7,780

7,420

6.2%

0.6%

4.8%

5.1%

0.0%

A

80

Nagoya Nikko Shoken Building

JREI

4,158

4,280

4,210

2.9%

1.9%

1.7%

5.5%

0.0%

A

81

Sendai Nikko Building

JREI

950

1,050

975

10.5%

4.0%

7.6%

5.9%

0.0%

A

82

View Flex Umeda Buliding

JREI

2,770

3,240

2,882

17.0%

0.0%

12.4%

5.1%

0.0%

264,401

243,469

264,136

-7.9%

-1.0%

-7.8%

5.2%

0.0%

A

Office Buildings Subtotal

B

3

Court Mejiro

JREI

1,250

940

1,173

-24.8%-1.3%-19.9%

5.5%

0.1%

B

18

Venus Hibarigaoka

JREI

1,800

1,520

1,807

-15.6%

3.4%-15.9%

6.6%

-0.2%

B

19

Residence Charmante Tsukishima

JREI

5,353

4,480

4,984

-16.3%

0.0%-10.1%

5.3%

0.0%

B

34

Gradito Kawaguchi

JREI

1,038

948

995

-8.7%

-2.4%

-4.8%

5.6%

0.0%

9,441

7,888

8,960

-16.4%

0.2%-12.0%

5.6%

0.0%

9,900

9,090

9,816

-8.2%

-2.0%

-7.4%

4.5%

-0.1%

B

A

42

Karasuma Building

Daiwa

5,400

5,030

5,394

-6.9%

0.2%

-6.8%

5.6%

0.0%

A

44

KDX Sendai Building

Daiwa

2,100

1,440

2,162

-31.4%

0.0%-33.4%

6.1%

0.0%

A

45

KDX Roppongi 228 Building

JREI

3,300

2,160

3,434

-34.5%

0.0%-37.1%

4.8%

0.0%

A

46

Hiei Kudan-Kita Building

Daiwa

7,600

7,380

7,649

-2.9%

-2.0%

-3.5%

4.7%

0.0%

Residential Properties Subtotal

C

1

C

2

C
D

A

47

KDX Shin-Yokohama 381 Building

JREI

5,800

4,050

5,888

-30.2%-2.2%-31.2%

5.9%

0.0%

A

48

KDX Kawasaki-Ekimae Hon-cho Building

JREI

3,760

2,990

3,792

-20.5%-12.3%-21.2%

6.1%

-0.2%

D

A

49

Nissou Dai-17 Building

JREI

2,710

1,600

2,618

-41.0%

0.6%-38.9%

5.8%

0.0%

Note 1: Acquisition price, appraisal values, and book values are rounded down to the nearest ¥M. Ratios
are rounded to the first decimal place.
Note 2: Total cap rates for each property type are the weighted-average based on the acquisition prices.

Frame Jinnan-zaka

JREI

KDX Yoyogi Building

JREI

Central Urban Retails Subtotal
1

Kanazawa Nikko Building

JREI

2,479

1,910

2,514

-23.0%

0.0%-24.0%

5.3%

0.0%

12,37911,00012,330-11.1%-1.7%-10.8%

4.7%

-0.1%

645

1,100

686

70.5%

2.8%

60.3%

7.3%

0.0%

Others

645

1,100

686

70.5%

2.8%

60.3%

7.3%

0.0%

Total

286,866

263,457

286,114

-8.2%

-1.0%

-7.9%

5.2%

0.0%

Note 3: A-47 KDX Shin-Yokohama 381 Building (existing tower) and KDX Shin-Yokohama 381 Building
Annex Tower are indicated as one property.

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

29

Variations in appraisal value of office buildings
Variations in appraisal profit/loss ratio and amount ofoffice buildings

Variations in appraisal value of office buildings(¥M)
25,000

8%
5.2%

6%

15.0%

20,0004.4% 4.5%

15,000

As of Apr 30, 2012

10,000-7.8%¥-20,667 million

4%
2%
1.8%

1.2%

0

-1.3%

0.0%

-5,000

-2%
-3.5%

-2.6%

-5.0%

-10,000

Appraisal profit/loss amount(Left axis)
Appraisal profit/loss ratio(Right axis)-4%-15,000

-6.1%

-6%

-20,000-7.5%-8%
2nd period(Apr 2006)Note:

4th period(Apr 2007)

6th period(Apr 2008)

8th period(Apr 2009)

Changes in cap rates(average)

12th period(Apr 2011)

14th period(Apr 2012)⇒End of8th period(2009/4)⇒End of9th period(2009/10)⇒End of10th period(2010/4)⇒End of11th period(2010/10)⇒End of12th period(2011/4)⇒End of13th period(2011/10)⇒End of14th period(2012/4)

0.2%

0.1%

0.0%

0.0%

0.0%

-0.1%

0.0%

-4.3%

-4.5%

-2.5%

-1.5%

-1.1%

-2.0%

Note:

-1.5%

Changes in mid- and long-term rent and cap rate (difference with value at the end of theprevious period) of office buildings owned at the end of each period. Figures are based onweighted average acquisition price.

-15.0%
2nd period 4th period 6th period 8th period 10th period 12th period 14th period(Apr 2006) (Apr 2007) (Apr 2008) (Apr 2009) (Apr 2010) (Apr 2011) (Apr 2012)(5.1%→5.3%) (5.3%→5.4%) (5.4%→5.3%) (5.3%→5.3%) (5.3%→5.3%) (5.3%→5.2%) (5.2%→5.2%)

Changes in appraisal
mid- and long-term
rents-10.0%-25,000

10th period(Apr 2010)

Percentage change in appraisal values as of the end of each period compared with theprevious period. Percentage change for the properties acquired during the period is
calculated by using the appraisal value at the time of acquisition as the appraisal value
as of the end of the previous period.

Items of appraisal
valuation

Note:

5.0%

5,000

-0.7% -0.4% -1.0%

0%

10.0%

*

Appraisal profit/loss is calculated by subtracting office buildings’ book values fromappraisal values for respective period; the ratio is calculated by dividing the appraisal
profit/loss by total book value.

⇒End of8th period(2009/4)⇒End of9th period(2009/10)⇒End of10th period(2010/4)⇒End of11th period(2010/10)⇒End of12th period(2011/4)⇒End of13th period(2011/10)⇒End of14th period(2012/4)

Appraisal
profit/loss amount(¥M)-4,615-16,958-20,153-21,696-21,932-21,851-20,667

Appraisal
profit/loss
ratio

-2.5%

-8.8%

-9.7%

-10.5%-10.0%

-9.4%

-7.8%

“Changes in appraisal value as of end of each period compared with the previous period”,“appraisal profit/loss amount” and “appraisal profit/loss ratio” are based on office buildings
owned at the end of 14th period and properties sold are excluded from the calculation.
The appraisal profit/loss amount is rounded to the nearest ¥1M.

Changes for the properties acquired during the period are calculated by using theappraisal value at the time of acquisition as those as of the end of the previous period.
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

30

Portfolio Overview(As of April 30, 2012)■Office Buildings (75 properties)
No.

A-1
A-3

Tokyo Metropolitan Area

Higashi-Kayabacho Yuraku Building

Location

Chuo-ward, Toky oChuo-ward, Toky oYear Built²

No.

Name

5,940

Apr-74

94.6%

A-40

Toranomon Toyo Building

Minato-ward, Toky o

100.0%

A-41

4,450

Jan-87Type

Area

Occupancy
at end of
14th period（%）³

AcquisitionPrice（ ¥M） ¹

Year Built²

9,850

Aug-62

95.1%

KDX Shinjuku 286 Building

Shinjuku-ward, Toky o

2,300

Aug-89100.0%KDX Roppongi 228 Building

Minato-ward, Toky o

3,300

Apr-8965.1%

Mar-88

91.4%

Location

A-4

KDX Hatchobori Building

Chuo-ward, Toky o

3,680

Jun-93100.0%A-45

A-5

KDX Nakano-Sakaue Building

Nakano-ward, Toky o

2,533

Aug-92

98.3%

A-46

Hiei Kudan-Kita Building

Chiy oda-ward, Toky o

7,600

A-6

Harajuku F.F. Building

Shibuy a-ward, Toky o

2,450

Nov -85

100.0%A-47

KDX Shin-Yokohama 381 Building

Y okohama, Kanagawa

5,800

Mar-8891.5%
100.0%FIK Minami Aoyama

Minato-ward, Toky o

2,270

Nov -88

100.0%A-48

KDX Kawasaki-Ekimae Hon-cho Building

Kawasaki, Kanagawa

3,760

Feb-85

A-8

Kanda Kihara Building

Chiy oda-ward, Toky o

1,950

May -93

100.0%

A-49

Nissou Dai-17 Building

Y okohama, Kanagawa

2,710

Jul-91

86.4%

A-13

KDX Kojimachi Building

Chiy oda-ward, Toky o

5,950

May -94

100.0%

A-50

Ikejiri-Oohashi Building

Meguro-ward, Toky o

2,400

Sep-88100.0%A-14

KDX Funabashi Building

Funabashi, Chiba

2,252

Apr-89100.0%A-51

KDX Hamacho Nakanohashi Building

Chuo-ward, Toky o

2,310

Sep-88100.0%A-15

A-7

Office Buildings

Name

KDX Nihonbashi 313 Building

KDX Hamacho Building

Chuo-ward, Toky o

2,300

Sep-93

95.0%

A-52

KDX Kanda Misaki-cho Building

Chiy oda-ward, Toky o

1,380

Oct-92100.0%

A-16

Toshin 24 Building

Y okohama, Kanagawa

5,300

Sep-84100.0%

A-55

Shin-toshin Maruzen Building

Shinjuku-ward, Toky o

2,110Jul-90100.0%A-17

KDX Ebisu Building

Shibuy a-ward, Toky o

4,640

Jan-92100.0%A-56

KDX Jimbocho Building

Chiy oda-ward, Toky o

2,760

May -94

100.0%A-19

KDX Hamamatsucho Building

Minato-ward, Toky o

3,460

Sep-99100.0%A-57

KDX Gobancho Building

Chiy oda-ward, Toky o

1,951

Aug-00100.0%A-20

A-59

KDX Iwamoto-cho Building

Chiy oda-ward, Toky o

1,864

Mar-08100.0%A-60

KDX Harumi Building

Chuo-ward, Toky o

10,250

Feb-08

70.3%

A-61

KDX Hamamatsucho Dai-2 Building

Minato-ward, Toky o

2,200

Apr-92

87.6%

A-62

Koishikawa TG Building

Bunky o-ward, Toky o

3,080

Nov -89

100.0%A-63

KDX Kayabacho Building

Chuo-ward, Toky o

2,780

Oct-87100.0%A-21

KDX Shinbashi Building

Minato-ward, Toky o2,690

Feb-92

99.5%

A-22

KDX Shin-Yokohama Building

Y okohama, Kanagawa

2,520

Sep-90

97.9%

A-23

KDX Yotsuya Building

Shinjuku-ward, Toky o

1,950

Oct-89100.0%

A-26

Tokyo Metropolitan Area

Area

Occupancy
at end of
14th period（%）³

Office Buildings

Type

AcquisitionPrice（ ¥M） ¹KDX Kiba Building

Koto-ward, Toky o

1,580

Oct-92100.0%

Gotanda TG Building

Shinagawa-ward, Toky o

2,620

Apr-88100.0%A-27

KDX Kajicho Building

Chiy oda-ward, Toky o

2,350

Mar-90100.0%A-64

KDX Nihonbashi 216 Building

Chuo-ward, Toky o

2,010

Oct-06100.0%A-28

KDX Nogizaka Building

Minato-ward, Toky o

1,065

May -91

100.0%A-66

KDX Shinjuku Building

Shinjuku-ward, Toky o

6,800

May -93

97.7%

A-29

KDX Higashi-Shinjuku Building

Shinjuku-ward, Toky o

2,950

Jan-90

99.7%

A-67

KDX Ginza 1chome Building

Chuo-ward, Toky o

4,300

Nov -91

100.0%A-30

KDX Nishi-Gotanda Building

Shinagawa-ward, Toky o

4,200

Nov -92

100.0%A-68

KDX Nihonbashi Honcho Building

Chuo-ward, Toky o

4,000

Jan-84100.0%A-31

KDX Monzen-Nakacho Building

Koto-ward, Toky o

1,400

Sep-86100.0%A-71

KDX Iidabashi Building

Shinjuku-ward, Toky o

4,670

Mar-90100.0%A-32

KDX Shiba-Daimon Building

Minato-ward, Toky o

6,090

Jul-86100.0%A-72

KDX Higashi-Shinagawa Building

Shinagawa-ward, Toky o

4,590

Jan-93

89.2%

A-33

KDX Okachimachi Building

Taito-ward, Toky o

2,000

Jun-88100.0%A-73

KDX Hakozaki Building

Chuo-ward, Toky o

2,710

Nov -93

100.0%A-34

KDX Hon-Atsugi Building

Atsugi, Kanagawa

1,305

May -95

100.0%A-74

KDX Shin-Nihonbashi Building

Chuo-ward, Toky o

2,300

Nov -02100.0%A-35

KDX Hachioji Building

Hachioji, Toky o

1,155

Dec-85100.0%

A-75

Kabutocho Nikko Building

Chuo-ward, Toky o

11,270Nov -98

100.0%A-37

KDX Ochanomizu Building

Chiy oda-ward, Toky o

6,400

Aug-82100.0%

A-76

Ikebukuro Nikko Building

Toy oshima-ward, Toky o

1,653

Mar-86100.0%A-38

KDX Nishi-Shinjuku Building

Shinjuku-ward, Toky o

1,500

Oct-92

88.6%

A-77

Kabutocho Nikko Building II

Chuo-ward, Toky o

1,280

Oct-01100.0%KDX Toranomon Building

Minato-ward, Toky o

4,400

Apr-88100.0%

A-78

Tachikawa Ekimae Building

Tachikawa, Toky o

1,267

Feb-90100.0%

A-39

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

31

Portfolio overview
Sakai, Osaka

5,570

Sep-93

89.5%

A-24

KDX Minami Semba Dai-1 Building

Osaka, Osaka

1,610

Mar-93

86.0%

A-25

KDX Minami Semba Dai-2 Building

Osaka, Osaka

1,560

Sep-93

90.4%

A-36

KDX Niigata Building

Niigata, Niigata

1,305

Jul-83

64.1%

A-42

Karasuma Building

Ky oto, Ky oto

5,400

Oct-82100.0%A-44

KDX Sendai Building

Sendai, Miy agi

2,100

Feb-84

96.7%

A-53

KDX Hakata-Minami Building

Fukuoka, Fukuoka

4,900

Jun-73

86.0%

A-54

KDX Kitahama Building

Osaka, Osaka

2,220

Jul-94

89.2%

A-58

Location

KDX Nagoya Sakae Building

Nagoy a, Aichi

7,550

Apr-09100.0%A-69

KDX Kobayashi-Doshomachi Building

Osaka, Osaka

2,870

Jul-09

95.6%

A-70

Kitananajo SIA Building

Sapporo, Hokkaido

2,005

Oct-89100.0%

A-79

Nagoya Ekimae Sakura–dori Building

Nagoy a, Aichi

7,327

Apr-86

92.8%

A-80

Nagoya Nikko Shoken Building

Nagoy a, Aichi

4,158

Aug-74

92.7%

A-81

Sendai Nikko Building

Sendai, Miy agi

950

Mar-8975.4%

View Flex Umeda Buliding

Osaka, Osaka

2,770

Jul-0995.5%

260,901

Av g
21.9 y rs

95.0%

A-82

Of f ice Buildings （75 properties） Subtotal

Tokyo
Metropolitan Area

Central Urban Retail
Properties

Area

No.

Name

Location

AcquisitionPrice（ ¥M） ¹

Year Built²

Occupancy
at end of
14th period（ %）³Frame Jinnan-zaka

Shibuy a-ward, Toky o

9,900Mar-05100.0%C-2

KDX Yoyogi Building

Shibuy a-ward, Toky o2,479

Aug-91100.0%

12,379Av g
9.8 y rs

100.0%■Others (1 property)

Occupancy
at end of
14th period

Area

No.

Name

OthersOther Regional
Areas

Acquisition
Price

Type

D-1

Kanazawa Nikko Building

Others （1 property ） Subtotal

Location

Kanazawa, Ishikawa（%）³

Shinjuku-ward, Toky o

1,250

Mar-97

95.2%

B-19

Residence Charmante Tsukishima

Chuo-ward, Toky o

5,353

Jan-04100.0%

B-34

Gradito Kawaguchi

Kawaguchi, Saitama

1,038

Feb-06100.0%

B-18

Venus Hibarigaoka

Sapporo, Hokkaido

1,800

Mar-89

95.0%

9,441

Av g
11.8 y rs

96.9%

No.

（ ¥M） ¹

Name

Year Built²

（%）³

645

Mar-89100.0%

645

Av g
23.1 y rs

100.0%

Location

Residential Properties （4 properties） Subtotal■Investment Security (1 property)
Location

AcquisitionPrice（ ¥ M）

Year Built

Toy onaka, Osaka891

Jun-92Name

Investment
Securities

Senri Property TMK Preferred Securities■Property sold in the 15th period (period ending Oct.31, 2012)
Type

C-1

Central Urban Retail Properties （2 properties） Subtotal

Year Built²

Court Mejiro

Area

Type

■Central Urban Retail Properties (2 properties)Type（ ¥M） ¹

B-3

Type

No.

Tokyo
Metropolitan Area

Name

Tokyo
Metropolitan Area

Portus Center Building

No.

Occupancy
at end of
14th period

Acquisition
Price

Other Regional
Areas

A-12

■Residential Properties (4 properties)

Office Buildings

Other Regional Areas

Office Buildings

Area

AcquisitionPrice（ ¥M） ¹

Residential Properties

Year Built²

Occupancy
at end of
14th period（%）³■Office Buildings (75 properties)Type(As of April 30, 2012)

Notes:A-18

Name

KDX Omori Building

Acquisition
Price

Sale Price

Location

（ ¥M）

（ ¥M）

Date of Sale

Ota-ward, Toky o

3,500

4,200

11-May -12

1 Acquisition price is based on the purchase price for trust beneficiary interests etc. acquired by KRI.
2 Year built is the date of construction completion recorded in the land register. KDX Omori Building(sold on May 11,2012) is excluded from the office subtotal. Average age subtotal is shown as theweighted-average portfolio age based upon acquisition prices with a base date of Apr. 30, 2012,
and is rounded down to the nearest first decimal place. The weighted-average age of 83
properties held as of Apr. 30, 2012 is 21.0 years (As of Apr. 30, 2012).
3 Occupancy ratio is calculated by dividing leased area by leasable area and rounded to the firstdecimal place. Average occupancy ratio of 83 properties held as of Apr. 30 , 2012 is 95.4%.

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

32

Emphasis on mid-sized office buildingsin Tokyo Metropolitan Area

(As of April 30, 2012 *)Office portfolio: 75 properties, with a total acquisition price ¥260.9B (Note 1)
Hokkaido
1 property ¥2.0B

Acquisition price(Tokyo Metropolitan Area)

Composition of office portfolio
Acquisition priceTokyo 23 wards
51 properties ¥182.5B
82.5B

More than ¥10.0B(2 properties)
Less than ¥2.5B(¥21.5B)¥7.5B–¥10.0B(34 properties)(3 properties)(¥62.3B)(¥25.0B)

Acquisition price(Other Regional Areas)
Central Tokyo (Note 2)
41 properties ¥156.4B

Niigata
1property ¥1.3B

Average:¥3.47B/
Property

Miyagi2 properties ¥3.0B

Osaka, Kyoto
7 properties ¥22.0B¥5.0B–¥7.5B(10 properties)(¥60.5B)

Other 18 wards
10 properties ¥26.0B

Fukuoka
1 property ¥4.9B

Tokyo 23 wards
Other Regional Areas
20.0%

Chiba
1 property ¥2.2B

Aichi
3 properties ¥19.0B

Central Tokyo
59.9%

Hachioji, Tachikawa
2 properties ¥2.4B

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

Other Tokyo
Metropolitan Area
19.9%

KDX Omori Building (sold on May. 11, 2012) is excluded from the calculation

Number of
Property
60
Tokyo Metropolitan Area
15
Other Regional Areas
Total

75

Acquisition
Price
Ratio
(¥B)
(%)
208.6
79.9
52.2
20.0
260.9

Time required from the nearest
station on foot7 to 10 min

Breakdown of acquisition
price by region

Kanagawa
6 properties ¥21.3B¥2.5B–¥5.0B(26 properties)(¥91.5B)

100.0

6 min (4 properties)(7 properties) ¥23.3B
1 min
8%¥24.5B(15 properties)
9%¥53.2B20%
5 min(4 properties)¥13.1B
80%above5%
within 54 min
minute walk
(14 properties)¥41.6B
2 min
15%(17 properties)
3 min¥57.7B. (14 properties)
22%¥47.2B
18%
Note: Values show the total acquisition price of theproperties in each category and the ratios
indicate the total acquisition price of properties ineach category in proportion to the totalacquisition price for all properties combined.
Note: Amounts are rounded down to the nearest ¥100
million. Ratios are rounded down to the nearest
whole number.

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

33

Major factors of changes in monthly rental income for officebuildings
Factors of changes in monthly rental income
 Compared to those at the end of the 13th Period, the monthly rent increased by 149 million yen
 Increased due to acquisition of properties (+187 million yen)
 Decreased primarily due to move-out (-80 million yen)

1,400

Increase due
to property
acquisition(million yen)

＋149

1,300

1,200

Increase due torent
revision・space
expansion-80(-6.6%)
Decreasedue totenant move-out

1,100

1,000

1,207
(100%)

900

+10
-23

Increase due
to new tenant(+12.3%)(+15.5%)+55(+4.5%)

1,356(+0.8%)(-1.9%)
Decrease due
to rent
revision・
space
reduction

Decrease of rental income¥ -103 M (-8.5%)+187(112.3%)

Increase of rental income¥252 M (+20.8%)

800

At the end of 13th Period(October 31, 2011)

At the end of 14th Period(April 30, 2012)

Note: Changes in monthly rental income includes common area charges, but excludes the income from parking lots and billboards. Amounts arerounded down to the nearest ¥1M. The values in brackets show the percentages of amounts increased/decreased.

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

34

Changes in the average rent and occupancy ratios of officebuildings
Average rent of KRI office buildings compared with average market rent (Tokyo’s Central 5 Wards )(JPY/Tsubo)

Average market rent
24,00022,00020,000

KRI exceeds market
average by 1,089 yen(6.5%)

Average rent of KRI

22,68722,55920,965
21,391
20,58920,42020,292
20,22820,326
20,23919,941
19,071
19,50019,192
19,11318,15418,00019,396
17,63919,041

17,41918,34017,011

17,80016,711

16,00014,00012,00010,000
3rd period 4th period 5th period 6th period 7th period 8th period 9th period 10th period 11th period 12th period 13th period 14th period（2006/10） （2007/04） （2007/10） （2008/04） （2008/10） （2009/04） （2009/10） （2010/04） （2010/10） （2011/04） （2011/10） （2012/04）

Occupancy ratio of KRI office buildings compared with market average (Tokyo’s Central 5 Wards)
100.0%

97.9%
98.0%
96.0%
94.0%
92.0%

98.5%
97.3%

97.0%
97.5%

97.1%

Occupancy ratio of Market

97.0%

Occupancy ratio of KRI

97.4%
96.0%

95.9%

96.5%

96.3%

91.1%

91.2%

96.2%

KRI exceeds
market averageby 5.4％

95.3%

95.9% 95.7%
95.0%
93.2%
92.2%

90.0%

91.2%

91.2%

90.8%

88.0%
86.0%
3rd period 4th period 5th period 6th period 7th period 8th period 9th period 10th period 11th period 12th period 13th period 14th period（2006/10）（2007/04）（2007/10）（2008/04）（2008/10）（2009/04）（2009/10）（2010/04）（2010/10）（2011/04）（2011/10）（2012/04）* Average market rent shows the data on average rent or the occupancy ratio in Tokyo’s Central 5 Wards published by Miki Shoji. Average office rent of KRI shows theaverage of rent in the standard floors of KRI’s properties held at end of each period.
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

35

Reasons for being a tenant of KRI’s office buildings
Reasons for being a tenant of KRI’s office buildings (excerpt from the 4th CS Survey conducted in Sept. 2011)
 “Good public transport accessibility” was the top reason for being a tenant of KRI’s office buildings
 Another important criteria was compliance with the new standards for earthquake resistant design
while age of building was considered to be less important
Main reasons for being a tenant of
KRI’s office building
80.0%
70.0%
60.0%
50.0%
40.0%

n＝566

11 Good
Good public
public transporttransport accessibility
accessibility (74.2%)(74.2%)
22 Large
Large floor
floor area
area (leased(leased office
office area)area) (50.5%)(50.5%)Is compliance with the new standards
for earthquake resistant design oneof the key criteria to you?
Not Clear
2.5%
Don't Know
17.8%
No
4.4%

33 Rent
Rent (43.3%)(43.3%)

Yes
75.3%

30.0%
20.0%

Ranking: 17
10.4%

10.0%
0.0%

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Breakdown of KRI’s office buildings
by age of building(based on the number of properties)
Less than 15 yrs
14.5%

More than 25 yrs
23.7%

15–20 yrs
23.7%
20–25 yrs
38.2%

Average age of building 21.9* years* Excluding KDX Omori Building (sold in May 2012)
Weighted average age of buildings based on theacquisition price of all 75 office buildings held as ofend of Apr. 2012.
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

36

Earthquake-resistance Out of the 82 properties in our portfolio, 78 comply with the new earthquake resistance standards
 The 4 properties that were designed before implementation of the new earthquake resistance standards were acquired after
confirming that they were either reinforced appropriately or are of similar quake-resistant design Portfolio PML: 4.98% (82 properties)

Earthquake resistance of properties to be acquired
Earthquake resistance of property to be acquired has to be similar to
the earthquake resistance of properties under the new standards forearthquake resistance. Also, PML of individual property has to be lower
than 20％, and PML of the entire portfolio after acquisition of relevant
property may not exceed 10%.
However, the below criteria may be included to investment targets inthe following cases:① properties able to maintain economic efficiency of investment evenafter purchase of earthquake insurance for relevant properties② properties that can be reinforced through anti-seismic retrofitting andsatisfy the standard

Compliance with safety measure for existing properties• Properties to be acquired are subject to building assessment including
deterioration checking, preparation of short- and long term repairs plan,checking for compliance with the laws and regulations including the
Building Standards Law, checking for building materials to see if they
contain harmful substances, and investigation of soil environment• All investigations are to be outsourced to third parties to ensure strong
expertise, objectivity and transparency• Properties with building assessment conducted long time ago aresubject to reassessment and update of short-term and long-term
repairs plan

Properties in our portfolio which were designed before implementation of
the new earthquake standards (4 properties)

Earthquake resistance reinforcement
Toranomon Toyo Building
Location：Minato-ku, Tokyo
Year built： Aug.1962

The previous owner has completed aseismic
enforcement by Taisei Corporation in Oct. 2005

KDX Hakata-Minami Building
Location：Fukuoka, Fukuoka
Year built： Jun.1973

The previous owner has completed aseismic
enforcement by Takenaka Corporation in Oct.
2007

Properties equivalent of the new earthquake resistance standards
KDX Nihonbashi 313 Building
Location: Chuo-ku, Tokyo
Year built: Apr. 1974

A seismatic report created by Nihon Sekkei states that the seismic
resistance of the building is equivalent to that of buildings built by the
new standard

Nagoya Nikko Shoken Building A seismatic report created by Mitsubishi Estate states that seismic
Location: Nagoya, Aichi
resistance of the building was checked based on the seismic index ofYear built: Aug. 1974
structure and horizontal load resistance (secondary design). They

resulted that the structure of the building has no problem as it stands

Notes:
1 PML values are values as of Feb 2012, of research implemented by NKSJ Risk Management. The values for KDX Omori Building (sold on May 11, 2012) are not included in the calculation
2 ｢New Earthquake Resistance Standard」 was formulated on the base of the revision of enforcement order of Building Standard Law in 1981. The antiseismic performance of buildings has been greatly improved since theenforcement of the law due to the newly added provisions such as ① New provision on tie-hoop ratio of Reinforced-Concrete Pillars (above 0.2%); ② Resetting of horizontal seismic coefficient and elastic shear modulus, etc. ③
New requirement on the secondary design in seismic calculation
3 PML (Probable Maximum Loss) refers to the expected maximum loss rate due to the earthquakes. PML is for both individual property and the entire portfolio. Although there is no unified definition of PML, we define PML here as
the ratio of the loss, estimated restoration expenses in case of the severest earthquake (e.g. severe earthquake that happens only once in 475 years = the probability of which happening in 50 years is 10%) that could happen
during the life-span of the property (50 years = ), to the replacement cost
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

37

Energy saving measure and environmental initiatives
Energy saving measures: details

5-year energy usage reduction plan

Take measures on a portfolio basis focusing on air conditioners and lightings
which account for about 80% of total energy usage
Hardware:
Software:Renew air conditioning system
Public (tenant) awareness Prepare request letters for・ Renew air conditioners
cooperation energy saving
・ Use heat exchanging air fans・Pre-set temperature at 28℃
・ Renew ventilation systems
・Reduction of lights or lights-out
Renew evacuation signs and・Energy saving on OA equipment
install motion detection sensor
 Posters on energy saving
・ LED lights in evacuation signs
・put up posters in common
・ Install motion detection sensors
space on each floor(toilet, office kitchen, stair case) Distribute manuals and energy
savings
Renew lighting system
Questionnaire on energy saving
・ LED lights for common space・ Carried out a questionnaire on
down lights
energy saving in the 4th CS
・ LED lights for occupied areas
SurveyRenewal to high-efficiency air conditioner(by each property)
LED lights for evacuation signs
Install motion detection sensor(by portfolio)
LED lights for common
space down lights（by portfolio)
LED lights for exclusiveareas（by each property）

 Investment in environment initiatives
・Entire portfolio: LED lights for common space down lights. (Approximately ¥100M)
・Renewal of air-conditioning system (15th Period: 7 renewals): approximately ¥484M;(16th Period: 3 renewals): approximately ¥420M
・Replacement of traditional lights in exclusive areas with LED lights

KRI’s environmental initiatives
Received DBJ Green Building
Certification
View Flex Umeda Building (acquired on
March 28, 2012) received DBJ Green
Building certification (Bronze)(Properties Certified )“Silver”:
KDX Harumi Bldg
KDX Nagoya Sakae Bldg

Debt Financing based on the SMBC’s
Green Building Assessment Loan
KRI became the first JREIT to undertake debt
financing from SMBC’s “Green Building
Assessment Loan”（Properties Assessed）
Silver: KDX Nagoya Sakae Bldg
Bronze: KDX Harumi Bldg

“Bronze”:
KDX Kobayashi
Doshomachi Bldg
View Flex Umeda Bldg

Participation in GRESB evaluation（Asset management company）
GRESB is a benchmark to analyze and evaluate sustainability of real estatecompanies, REITs and private real estate funds in terms of environmental andsocial performance
Highly evaluated in GRESB’s survey in 2011

Global Real Estate
Sustainability Benchmark
View Flex Umeda Bldg

KDX Nagoya Sakae Bldg

KDX Harumi Bldg

※Source: Excerpt from GRESB “RESEARCH REPORT 2011 Regional Results/Asia”

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

39

Property management focusing on business continuity
and CSR
Efforts on Business Continuity and CSR
 Asset manager’s business continuity ensured through measures including implementation of Thin Client terminals
 Preparation of asset manager’s disaster manual by mainly its management team is completed, and revisions and improvements to themanual is continuously implemented
 Information service spots including infrastructure (Wireless LAN + Optical IP Network) required for speedy collection of information onproperties provided to the local community
 AED’s installed in the entrance halls of our office buildings
High recognition of efforts on business
continuity in the 14th Period
Debt Financing based on “SMBC’s BusinessContinuity Assessment Loan Program”

Efforts focusing on Business Continuity and CSR
Improvement of the internet environment to make it moredisaster-resistantInstallation of “AEDs”
Relationship between successful resuscitation and time
elapse before using AED

The 1st J-REIT to be awarded the loan,¥1.4B loan of “Series 70-B”
provided on Mar 28, 2012

Mobile/fixedline network

IP networkof FLET’S
HikariInternet

Chance for successful
resuscitation declines by 710% every 1 minute(%)
Chance ofresuscitation

Critical to act
speedily with AED(minutes)
Time scale

Debt Financing based on the DBJ
Disaster Preparedness Rating

The 1st J-REIT to be awarded the loan,“Term loan 65-C, 65-E, and term loan 65-G”(¥2.5B each, total ¥7.5B)
provided on Dec 26, 2011
under this planDec 2011, KRI was awarded loans under thedisaster preparedness rating and financing planof the Development Bank of Japan (DBJ)
DBJ found that KRI “efforts for disaster prevention was outstanding”

Source:In the event of adisaster,accessing
networks will bedifficult due totraffic
concentration

Free access to the wirelessinternet provided in case of
emergencies including
natural disaster

Installation of AEDs started since April 2012,
based on the results of the CS survey to our
tenants“Hikari Station”
Wi-Fi rooter

At ordinary times, tenants
and visitors can access to
the wireless internet via WiFi for a certain time for free※”Hikari Station” is the registered trademark of NTT-East.

(main AED unit)(training provided to
relevant persons)※ AED (Automated External Defibrillator) is anelectronic device used for treating patients withventricular fibrillation by sending an electric
shock to the heart to restore its normal rhythm.

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

40

KRI Unitholders
Top 10 unitholders at the end of 14th period (as of 2012/4/30)

Changes in share of investment units by unitholders
Individuals and Others
Other Domestic Co.

Financial Inst. (incl. Securities Co.)
Foreign Co. and Individuals

Name# of units held
(unit)(%)

51,691

18,.03%22,545

7.86%

20,971

7.31%

13,574

4.73%

Japan Trustee Services Bank, Ltd. (Trust Acct.)

22.7

1st period

49.0

12.4

16.0

3rd period

10.6

4th period

6.8

46.5

6.4

40.3

The Nomura Trust and Banking Co., Ltd.
(Investment Trust Acct.)
Trust and Custody Services Bank, Ltd.
(Securities Investment Trust Acct.)
The Master Trust Bank of Japan, Ltd. (Trust Acct.)

5th period 5.7

48.4

5.1

40.8

The Bank of NY Treaty JASDEC Account

11,2553.92%

6th period 5.4

49.4

5.0

40.2

Nomura Bank (Luxembourg) S.A.

9,283

3.23%

7th period

8.1

45.6

5.4

41.0

JP Morgan Chase BANK 385174

6,820

2.38%

8th period

10.8

42.5

45.4

Goldman Sachs & Co. Regular Account

4,239

1.47%

9th period

8.2

43.1

1.3
1.2

47.5

State Street Bank and Trust Company

3,191

1.11%

10th period

9.9

38.1

2.1

49.9

11th period

8.7

49.5

12th period

8.0

47.2

15.6

2nd period

13th period
14th period

47.0

8.5

48.0

6.8

1.9

43.1

34.6

Trust and Custody Services Bank, Ltd. (Money trust tax acc.)

40.0

Total

3,130

1.09%

146,69951.19%

43.1

1.6

47.8

12.0
11.8

29.0

1.8

38.5

1.6

43.4

60%

80%

Note: Figures showing the percentage for total units owned to total units outstanding rounded
down to the second decimal place.

(Reference) Reporting of major unitholders
0%

20%

40%

100%

Note: Rounded to the first decimal place

Name

Submitted on

DIAM Co., Ltd.

2/5/2012
DIAM Co., Ltd.

Type of unitholders at the end of 14th period (as of April 30, 2012)
Type of unitholders
Individual and Others
Financial Inst. (Incl. Securities co.)Other Domestic Co.
Foreign Co. and Individuals

Total

# of
Unitholders

Ratio
(%)

# of Units
held (unit)

Ratio
(%)

8,678
53
123
198

95.9%
0.6%
1.4%
2.2%

33,911
123,531
4,639
124,469

11.8%
43.1%
1.6%
43.4%

100.0%

286,550

100.0%

9,052

Note: Rounded to the first decimal place# of units held
(unit)
24,771
24,771
23,311
12,025
10,451835
22,06915,617
6,452
18,93015,91615,092544
280

Sumitomo Mitsui Trust Holdings, Inc
6/6/2012
Nikko Asset Management Co., Ltd.
Sumitomo Mitsui Trust Asset Management
Sumitomo Mitsui Trust Bank, Limited
Mizuho Asset Management Co., Ltd.
5/8/2011
Mizuho Asset Management Co., Ltd.
Sinko Investment Trust Management Co., Ltd.
CBRE Clarion Securities LLC
16/1/2012
Nomura Securities Co., Ltd.
4/8/2011
Nomura Asset Management Co., Ltd.
Nomura Securities Co., Ltd.
NOMURA INTERNATIONAL PLC
Notes:
1 Report submitted after PO on 2009/11/16 to 2012/6/6 (excluding unitholders that have lessthan 10,000 units)
2 Total unitholders increased from 233,550 units to 284,950 units due to PO on 2011/7/20,
and further increased to 286,550 units due to third-party allotment on 2011/8/8

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

41

Disclosure and IR activities
IR activities for individual investors
Disclosure using KRI website

Using English website /1on1 meetings

Timely disclosure through website
Items

IR activities for domestic and international investors

14th period(Apr 2012) Access

Top page

52,847

List of portfolio

10,183Press Release

8,739

Disclosure Materials

7,198

Distributions/Financial Results

6,683

KOP Site top

5,699

Others (occupancy ratio etc.)

15,513Created new page for“Environmental Initiatives”

Press releasein English
accessible at
TSE-TDnet
since Feb.
2012
【Reference】 Number of meetings (including conference calls)

WEB/IR through magazines
WEB/Magazines

Monthly Property Management (December issue)
Special feature on “Value of Mid- and Smallsized Buildings”
Minna no Kabushiki (2012/02/15)
Report on J-REIT

IR fair/seminar for individual investors
Attending events below including WEB seminars
Events attended

Disclosure in English website on same day(Press release and Financial results)

Investors

14th period IR

Domestic institutional investor

29

Domestic regional investors

2

International investors (Europe)

9

International investors (US)24

International investors (Asia)

9

Total

73

※From Dec 20, 2011
to Jun 12. 2012

Conference for domestic/international investors
Date

J-REIT Seminar for Individual Investors 2011
(Sponsored by ARES)

2011/11/26

J-REIT Fair for Individual Investors 2012
(Sponsored by ARES)

2012/3/92012/3/10

Stock Voice IR(Produced by Stock Voice)2012/3/29

J-REIT Seminar for Individual Investors
2012/3/27(Operated by Nomura Investor Relations Co.,Ltd.)Events attended

Date

Macquarie Real Estate Tour
(Sponsored by Macquarie Capital Securities (Japan))

2011/11/29

Tokyo Property Conference 2011
(Sponsored by SMBC Nikko Securities)

2011/11/30

Nomura Investment & Global Real Estate
Forum 2011（Sponsored by Nomura Securities）

2011/12/2

APAC Financials & Property Conference(Sponsored by Macquarie Capital Securities)

2012/1/162012/1/17

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

42

Unit price performance since IPO
Kenedix Realty Investment Corporation (KRI) price/volume performance
Unit price (JPY)

Volume (unit)
8,000
7,000
6,000

PO
(¥873,180)

VolumeUnit price

900,000

PO(¥593,096

800,000

IPO¥580,000

700,000
PO(¥274,510)

5,000
4,000

PO
(¥252,200)

600,000
500,000
400,000

3,000

300,000

2,000

200,000

1,000

100,000
00・As of May 1, 2012
Highest price (trading price): ¥988,000 (2007/5/31)
Lowest price (trading price): ¥100,300 (2008/10/20)
・Average Trading Volume during 2011/5/1～2012/4/30: 1,166 Units(2011/5/2～2012/4/27)

1,000,000

Notes:
1 Period: IPO to 2012/4/27
2 Price: Closing price3 Excluding over 8,000 trading volume (2008/10/20:19,728 units)

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

43

Borrowing list (as of April 30, 2012)
Mitsubishi UFJ Trust and Banking Corporation
A ozora Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corporation
A ozora Bank, Ltd. (4,000), Mitsubishi UFJ Trust and Banking Corporation (2,000)
Sumitomo Mitsui Trust Bank, Limited (1,500)
Mitsubishi UFJ Trust and Banking Corporation
Short-term borrow ings subtotal
Resona Bank, Ltd.
Development Bank of Japan Inc.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Resona Bank, Ltd.
Development Bank of Japan Inc.
Sumitomo Mitsui Trust Bank, Limited
A ozora Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corporation
Current portion of long-term borrow ings subtotal

Balance Draw dow n
Last repayment date
(¥M)
date
2012/7/31
1,500 2011/7/29
2012/10/31
3,500 2011/10/31
2012/10/31
1,000 2011/10/31
7,500 2011/12/26

2012/10/31

1,200 2012/1/31
14,7001,500 2008/6/30
880 2009/2/27
2,500 2010/10/29
500 2009/12/8
3,000 2008/6/30
1,000 2010/1/13
1,500 2010/2/18
1,000 2011/4/28
11,8802013/1/31

LenderResona Bank, Ltd.
Development Bank of Japan Inc.
Aozora Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Banking Corporation
Resona Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd. (1,500)
Sumitomo Mitsui Trust Bank, Limited (800), Aozora Bank, Ltd. (400)The Bank of Tokyo-Mitsubishi UFJ, Ltd. (500)
Sumitomo Mitsui Trust Bank, Limited (200), Aozora Bank, Ltd. (100)Sumitomo Mitsui Trust Bank, Limited
Sumitomo Mitsui Banking Corporation
Aozora Bank, Ltd. (2,250), Sumitomo Mitsui Banking Corporation (1,800) Development
Bank of Japan Inc. (1,800)
Sumitomo Mitsui Trust Bank, Limited. (450)
Sumitomo Mitsui Trust Bank, Limited
Mitsubishi UFJ Trust and Banking Corporation
Sumitomo Mitsui Banking Corporation (2,200)
Sumitomo Mitsui Trust Bank, Limited (1,000), Resona Bank, Ltd. (300)2012/6/30
2012/8/31 (Note 1)
2012/10/31
2012/12/8
2012/12/28
2013/1/15
2013/2/18
2013/4/30

Long-term borrowings

Current portion of longterm borrowings

Short-termborrowings

LenderNotes:
1. Repayment Method: repayment of every 6 month (amortization).
2. The amount is rounded to the nearest whole number.

Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
Sumitomo Mitsui Trust Bank, Limited
Mizuho Trust & Banking Co., Ltd.
Development Bank of Japan Inc.
Sumitomo Mitsui Banking Corporation (2,000), Resona Bank, Ltd. (2,000)
The Bank of Tokyo-Mitsubishi UFJ, Ltd. (1,000)
Sumitomo Mitsui Banking Corporation
Mitsubishi UFJ Trust and Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation (2,070), Development Bank of Japan Inc. (1,530)
Sumitomo Mitsui Trust Bank, Limited (900), Aozora Bank, Ltd. (450)Mizuho Bank, Ltd.
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Banking Corporation
Aozora Bank, Ltd.
Sumitomo Mitsui Trust Bank, LimitedAozora Bank, Ltd.
Development Bank of Japan Inc.
Sumitomo Mitsui Banking Corporation (2,500)
The Bank of Tokyo-Mitsubishi UFJ, Ltd. (2,000)

Balance Draw dow n
Last repayment date
(¥M)
date
500 2010/7/30
2013/7/31
3,000 2006/9/1
2013/8/31
2,000 2011/3/31
2013/9/30
1,000 2011/9/30
2013/9/30
900 2009/10/26 2013/10/26 (Note 1)
1,800 2009/10/30 2013/10/30 (Note 1)
500 2010/10/29
2013/10/31
2,700 2010/11/12

2013/11/12

800 2010/12/1

2013/11/12

3,700 2010/7/30
1,300 2011/1/31

2014/1/31
2014/1/31

6,300 2012/3/12

2014/3/12

2,500 2011/9/30
1,000 2011/7/13

2014/3/31
2014/7/14

3,500 2011/7/29

2014/7/31

3,700 2010/7/30
1,000 2011/9/1
2,700 2011/3/22
1,000 2011/9/30
2,500 2011/12/26

2014/7/31
2014/8/29
2014/9/22
2014/9/30
2014/10/31

5,000 2011/12/26

2014/10/31

1,080 2010/1/29
1,500 2012/1/31
1,500 2011/8/31

2015/1/30 (Note 1)
2015/1/30
2015/2/27

4,813 2010/2/18

2015/2/18 (Note 1)

1,000 2012/3/12
2,500 2011/9/30
1,800 2010/4/2
3,000 2011/2/28
2,000 2012/3/30
1,500 2011/4/28
2,500 2011/12/26

2015/3/12
2015/3/31
2015/4/2 (Note 1)
2015/8/31
2015/9/30
2015/10/30
2015/10/30

4,500 2011/12/26

2015/10/30

Aozora Bank, Ltd.

1,000 2012/4/27

2015/10/30

Sumitomo Mitsui Banking Corporation (1,200), Resona Bank, Ltd. (800)
Sumitomo Mitsui Banking Corporation (800), Resona Bank, Ltd. (200)The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation
Resona Bank, Ltd.
Development Bank of Japan Inc.
Sumitomo Mitsui Banking Corporation (2,500)
The Bank of Tokyo-Mitsubishi UFJ, Ltd. (2,000)
Development Bank of Japan Inc.
The Bank of Fukuoka
Development Bank of Japan Inc.
Development Bank of Japan Inc.
Sumitomo Mitsui Banking Corporation (1,400)
Development Bank of Japan Inc. (1,000)
Long-term borrow ings subtotal
Total

2,000 2010/11/12
1,000 2010/12/1
800 2011/1/31
500 2011/2/28
2,000 2011/3/31
1,000 2011/4/28
2,500 2012/1/10
1,000 2011/3/31
5,000 2006/5/1

2015/11/12
2015/11/12
2016/1/29
2016/1/29
2016/1/29
2016/1/29
2016/1/29
2016/3/31
2016/4/30

4,500 2011/12/26

2016/10/31

2,500 2011/12/26
500 2012/3/28
2,300 2010/11/12
700 2010/12/1

2016/10/31
2017/3/28
2017/11/12
2017/11/12

2,400 2012/3/28

2019/3/28

104,793
131,373

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44

Summary financial results for 14th period (April 2012)- Income statement, etc.
Comparison between 13th (Oct 2011) and 14th period (Apr 2012)
Rental and other operating revenues

Operating income/loss
Non-operating income/loss

Ordinary income/loss
Special ordinary
income/loss

14th period Difference
(¥ M)
(¥ M)
8,071
596

6,121

6,581

460 9 properties newly accquired in 14th period

1,353

1,490

136 9 properties newly accquired in 14th period

Other leas e business revenue

1,018

249

271

21 9 properties newly accquired in 14th period-4

Utility charge reimbursements

633

621

-12 Seasonal change

Miscellaneous

140

125

-14

8,498

9,090

591

Gain on s ale etc.

545

-

-545

Operating revenues

9,044

9,090

46

Gains on sale of Hirakawacho Bdlg. in 13th
period832

911

79 9 properties newly accquired in 14th period

Utilities

617

663

45 Increase in fuel cos t ajus tment

703

724

21

165

12

Others (*１)

212

240

Depreciation

1,442

1,578

14th period

3,052,837,677 2,540,386,573

II Reversal of voluntary reserves

III Total distribution-

143,000,000

2,749,733,800 2,683,254,200(Distribution per unit)

Property management fee

152

Retained earnings at the end of period

Reversal of reserve for reduction entry

1,023

Parking space rental revenues

Repairs and maintenance co13th period
I

Common area charges

Taxes

Basis for calculating cash distribution (¥)

Note

Rental revenues-real estate

Total rental and other operating revenues（※1）

13th period
(¥ M)
7,475

(9,596)(9,364)

Provision for reserve for reduction entry

303,000,000-

V Retained earnings to be carried forward

103,877

132,373

IV Transferred from voluntary reserve

Cash flow statement (¥ M)

28

13th period 14th period
(¥ M)
(¥ M)

135 9 properties newly accquired in 14th period

Total expenses related to rent business B

3,961

4,284

323

Rental bus ines s profit (A-B)

4,537

4,805

268

Net cash provided by operating activities

9,434

4,144

Net operating income (NOI)

5,980

6,384

404

Net cash provided by investing activities-14,138-32,217

Ass et management fee

487

491

3

Others (*2)

169

228

58 CS s urvey cos t、IR cost etc.

Net cash provided by financing activities

9,812

23,664

Operating expenses

4,618

5,004

385

Net increase in cash and cash equivalents

5,107-4,408Operating income

4,425

4,086

-338

Non-operating income

5

4

-1

Cash and cash equivalents at beginning of period

12,82017,928Cash and cash equivalents at end of period

17,92813,519Interest expenses
Interest expense on inves tment
corporation bonds

919

948

29 Increase in new borrowings in 14th period

117

110

-7

Borrowing related expens e

298

444

146

Amortization of investment corporation
bonds issuance costs
Amortization of investment unit is suance
costs
Other non-operating expenses

6

9

2

27

27

-

22

-

-22

Non-operating expenses

1,390

1,539

148

Ordinary income

3,040

2,551

-488

Gain from donation of fixed ass ets

13

-

-13

Extraordinary income

13

-

-13

-

10

10

Settlement fee for lawsuits
Extraordinary loss

-

10

10

Income before income taxes

3,054

2,541

-512

1

1

0

Net income

3,052

2,540

-512

Income taxes
Retained earnings brought forward
Unappropriated retained earnings

0

0

-

3,052

2,540

-512

Increase in new borrowings and originating
fee of borrowings in 14th period

Undeductable amount for consumption tax
calculation

Notes:
1 Other expenses: Insurance, trust fees, etc.
2 Other operating expenses: Director’s compensation, asset custody fees,
administrative fees, auditor’s fees, etc.
※ Numbers showing differences are rounded to the nearest ¥M

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45

Summary financial results for 14th period (April 2012)- Balance sheet, etc
13th period
As of Oct 31, 2011
Current assets
Cash and bank deposit
Entrusted deposits
Other current assets
Fixed assets
Property, plant and equipment(¥ M)
18,589(%)
6.8

14th period
As of Apr 30, 2012(¥ M)
14,487

12,349
5,989

6,924
7,095

251

467

256,241
254,561

93.2

288,673285,755

Buildings
Land13,248
29,104

13,112
29,104

Buildings in trust

64,09070,697

Land in trust
Construction in progress in trust

148,116
1

172,834
6

360
285

359
285

74

73

0
1,319

0
2,558

-

896

Leasehold and guarantee deposits
Long-term prepaid expenses

133
1,185

133
1,528

Deferred assets
Investment corporation bond issuance costs

142
30

Intangible assets
Leasehold rightLeasehold right in trust
Right of using water facilities in trust
Investment and other assets
Investments in securities

Investment unit issuance expenses

0.1

111

123
39

95.2

0.0

303,284

100.0

Current liabilities

35,412

12.9

29,490

9.7

556

604

Short-term loans payable
Current portion of investment corporation bond

10,2009,000

14,700-Current portion of Long-term Debt
Other account payables

13,850246

11,880170

Advance received
Others

2

-

1,281
275

1,887
247

Fixed liabilities
Investment corporation bonds

89,2884,500

Long-term loans payable

73,364

104,792

Tenant leasehold and security deposit
Tenant leasehold and security deposit in trust

1,556
9,868

1,541
11,395

Total liabilities
Total unitholders' capital
Reserve for reduction entry
Unappropriated retained earnings

124,700
147,15365

32.5

123,730
6,000

45.4

153,221147,153
368

3,052

40.8

Note

¥ 523,688

Interest-bearing debt ratio
at end of period

40.3%

45.3%

borrowing of+5.0% New¥31.9B in 14th period

Unitholders’ equity tototal asset

54.6%

49.5%

-5.2%

Number of properties
at end of period

74

83

300,016.89m2¥-731+9 9 properties acquired

340,589.96㎡ +40,573.07m2 9 properties acquired

94.7%

95.4%

+0.7%

Reference: Historical cap rate (by asset type/annualized base)8th
period9th
period10th
period11th
period12th
Period13th
period14th
periodOfficeBuildings

5.5%

5.2%

5.1%

4.9%

4.7%

4.7%

4.6%

Central Urban
Retail

4.7%

4.6%

4.5%

4.5%

4.6%

4.1%

4.1%

Residential

5.2%

5.0%

5.2%

4.8%

4.9%

4.7%

4.7%

Others

-

-

-

-

-

-

14.2%

5.4%

5.2%

5.1%

4.9%

4.7%

4.7%

4.6%

Total
50.5

Difference¥524,419

83
100.0

14th period

Unitholders equity per unit

Occupancy ratio
at end of period

274,973

Provision for loss on disaster13th period

Total leasable floor

Total assets

Account payables

Key indicators

(%)
4.8

Notes:
1 Each ratio is after deduction of fixed property tax and city planning tax in each period
2 Each ratio is rounded to the first decimal place

2,909

Total equities

150,27254.6

150,063

49.5

Total liabilities and unitholders' equity

274,973100.0

303,284

100.0

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

46

Reference data 1
1. 23 wards of Tokyo: rent levels for large buildings andmedium-sized buildings

2. Breakdown of office buildings by GFA (23 wards of Tokyo)

115
500–1,000 tsubo

1,000–3,000 tsubo

More than 3,000 tsubo

110

More than
3,000 tsubo
5.1%

105
100

500–3,000 tsubo

95

28.2% tsubo

90

28.2%

85

Less than
500 tsubo
66.7%

84

80
77

75
Rent for medium-sized building isless volatile than large building

70

Broad-stocked of midsized office buildings

69

65
2000

2001

2003

2004

2006

2007

2009

2010

2012

Note: Large building is a building with a GFA of 3,000 tsubo or more, while medium sized building is a building with a GFA
of 1,000 to 3,000 tsubo
Source: Created by KDX based on the data compiled by CBRE (the latest values as of 2012/3)

Note: The above data covers rental office buildings located in Tokyo’s 23 wards that were surveyed by CBRE. The above
data may not include the data of all properties in the 23 wards (as of 2011/3).
Source: Survey conducted by CBRE based on KOP’s request “Market survey of Medium-sized building”(2011/5)

3. Changes in the offered rent and vacancy ratio inCentral Tokyo

4. Changes in rent levels by region

(%)

(JPY)

10

25,000Vacancy ratio (left)

Tokyo

Osaka

NagoyaFukuoka

SendaiAverage rent (right)

924,0008

23,0007

22,0006

21,0005

20,0004

19,0003

18,0002

17,000

1
2002

(JPY)

¥16,716/tsubo¥11,437/tsubo¥11,033/tsubo¥9,400/tubo¥9,128/tsubo

16,000
2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Note: Survey covers buildings with more than 100 tsubo in Tokyo’s central 5 wards (Chiyoda, Chuo, Minato, Shinjuku
and Shibuya)
Source: Miki Shoji “Latest Office Building Markets in Tokyo’s central 5 wards” (the latest values as of 2012/4)

Note: Targeting the properties with a GFA of 100 tsubo or more in Tokyo’s central 5 wards (Chiyoda, Chuo, Minato,
Shinjuku, and Shibuya)
Source: Created by KDX based on the data compiled by Miki Shoji (the latest values as of 2012/4)

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

47

Reference data 2
1. Economic foundation etc. of Tokyo

2. Population transition of Tokyo(Timing)(Item)

Japan

Tokyo

2009

Nominal GDP¥474,040.2B¥85,201.6B(Thousand people)
13,30013,160 13,184

13,20013,084

13,100July 1, 2009

# of offices

6,040,000

690,000

July 1, 2009

# of employees

62.86M

9.5M

12,97813,00012,854

12,90012,80012,70012,71912,59812,600

October 1,
2010

Total population

October 1,
2010

Population of
productive age(15–64years old)

128.05M

13.15M

12,50012,40080.75M

8.85M

12,3002005

Source: Created by KOP based on the data complied by “Kurashi to toukei 2011 (Life and statistics 2011)” on the Tokyo
metropolitan government website

3. Breakdown of number of offices and employees byprefecture (2009)
Top 4 prefectures:
about 30%

2006

2007

2008

2009

2010

2011

Source: Created by KOP on the data from population census, MIA Statistics Bureau

4. No. of headquarters of Fortune 500 companies (2010)

Top 4 prefectures:
about 35%

60
50
50

Tokyo
11.5%

Tokyo
15.1%

Osaka
7.4%
Others
46.9%

Aichi
5.7%

Total No. of
Kanagawa
offices:
5.2%
6.04M Hokkaido Saitama

4.4%
4.3%
ShizuokaFukuoka
3.8% Hyogo
3.2%
4.0%
Chiba
3.4%

40
30
Osaka
7.8%

30

Aichi
6.4%

20

Kanagawa
Hokkaido 5.9%
Shizuoka
Fukuoka 4.0% Saitama
3.1%
4.4%
3.9%
Hyogo
Chiba
3.9%
3.7%

10

Others41.9%

Total No. of
employees
62.86M

Note: Data of top 10 prefectures listed in each chart.
Source: MIAC, Statistics Bureau, Economic census, basic survey, Jun,2011

25
19

17

New York

London0Tokyo

Beijing

Paris

Source: Fortune Global 500, 2010, Fortune Magazine

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48

Management structure of the Asset Management Company
Decision-making process
Deliberation&
Resolution

Deliberation&
Resolution

Preview

Resolution/Reporting

Creation of management guidelines

Corresponding

Compliancedivision

officerApproval for transactions with interested parties

Asset
management
committee

Approval for transactions outside ofmanagement guidelines

Compliancecommittee

Approval for transactions that follow
management guidelines excluding those withinterested parties

Resolution
Boardmeeting
Reporting< Reference >Asset Management Company’s management fee structure

Rules on transactions with interested parties Transactions with interested parties Asset acquisition: Must not acquire properties for more thanappraised value (except for properties pre-acquired by Kenedix Inc.
pursuant to the MOU)
 Asset disposition: Must not sell properties for less than appraisedvalue Asset management fee
 Management fee I: 0.15% of total assets
 Management fee II: 3.0% of distributable amount each fiscal
period Acquisition fee: 0.5% of acquisition price (0.25% if interested
parties)< Reference >Meetings held by the various committees, Board of Directors of the AssetManagement Company / Investment Corporation

 Disposition fee: capped at 0.5% of sales price

8th
Period9th
Period10th
Period11th
Period12th
Period13th
Period14th
PeriodCompliance committee

8

8

10

7

7

8

6

Asset management
committee

44

36

39

32

37

44

40

Board of directors

8

10

12

11

9

11

9

Board of directors ofInvestment Corporation

8

8

8

8

7

9

10

 Property management fees Rental management fee: 2% of rent revenues + 2% of
operating revenues from the property (after deducting
operating expenses and before deducting depreciation)
 Management transfer fee: amount determined in proportion to
the acquisition/sale price(e.g. ¥1-3B → ¥2M, ¥5-10B → ¥2.4M）
 Construction supervision fee: amount determined inproportion to the construction costs(e.g. ¥1-5M →5%, ¥10-100M → ¥450,000＋3%)

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49

Overview of shareholders of the Asset Management Company
and the Memorandum of Understanding
Structure of the Sponsor

Memorandum of Understanding (revised in Aug.2010)

Unitholders

KDX/KDA’s private funds

Properties held by KDX(incl. development projects)

Brokerage

KDX/KDA’s
warehousing fundWarehousing function
by KDX

Kenedix Office Partners, Inc.
(the Asset Management Company)

Corporate sector

Commit asset management

Financial institutions

Real estate funds

Kenedix Realty Investment
Corporation (J-REIT)

Construction companies
and developers

Investment

90% Investment

Kenedix, Inc. (“KDX”)/
Kenedix Advisors Co., Ltd. (“KDA”)

Real Estate market

Original network of theAsset Manager

Support-line

10% Investment

Potential acquisition channels
Kenedix Asset Management, Inc.

100%
Investment
Asset Management

Kenedix, Inc.

ITOCHU
Corporation(the AssetManagement
Company)(the Investment
Corporation)

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50

Kenedix Office Partners, Inc. : Organizational chart
Key members

Shareholders’meeting
2 Auditors (part-time)
Haruo Funabashi,
Ninji HayashiHaruo Funabashi
Auditor(part-time)







Ninji Hayashi

Auditors

Board ofdirectors

After joining the Ministry of Finance, heserved as commissioner of Tokyo Customs,
Deputy Commissioner of the National Tax
Administration, Secretary General of the
Securities and Exchange SurveillanceCommission, Director General, Minister’s
Secretariat of the National Land Agency
Currently serving as an auditor of Kenedix,Inc.
After joining Mitsubishi Trust and Banking,he served as General Manger for Realestate custody div. before joining Kenedix,
Inc. in Apr 2006.
Currently serving as an auditor of Kenedix,
Inc. after working as an Representative
director for Kenedix Advisors, Inc.

Naokatsu UchidaCEO and PresidentCompliance officer

Asset management
committee

Auditor(part-time)

Keisuke Sato

Compliancecommittee

Director & General Manager,
Investment Management
DivisionCEO and President(Naokatsu Uchida)Fumihiko Shimodomae
Director & General Manager,
Property Management Division

Investment
management div.

Property
management div.

Financialplanning div.

Business
administration div.


Hikaru Teramato

Asset
investment
group

Asset
management
group

Property
managementgroup• Property
acquisition anddisposition• Research andanalysis of realestate markets• Property
management• Assessment ofproperty
management/riskmanagement• Property
leasing• Property
management

Engineeringgroup• Construction
management

IR
group

Finance andaccountinggroup• Investor relations • Formulation ofactivities
budget, financial• Negotiations with statements
regulatory• Procurement ofagencies andfunds
concerned bodies

Business
administrationgroup• Running
unitholders’ anddirectors’
meetings• Administration/
Accounting/Human
resources

Director & General Manager
Financial Planning DivisionWorked for c. 17 years at Mitsubishi Trustand Banking (Real Estate, Real Estate
Project Origination, others)
CEO & President of Joint AssetManagement before joining Kenedix OfficePartners and worked for c.2 years in
Financial Planning Div.
Became CEO & President of Kenedix OfficePartners on Feb. 2, 2012
Worked for c.9 years at Tokyu Land
Corporation (Urban Development Div.)
Worked for JPMorgan Securites Japan,
Prudential Real Estate Investors, otherbefore joining Kenedix, Inc.
Licensed real estate appraiser
Became Director & General Manager ofInvetment Management Div. of Kenedix
Office Partners on Aug. 1, 2012 after
experiencing as a General Manager ofFinancial Planning Div.
Worked for c. 12 years at Mitsui Fudosan
Building Management
After working for Pacific Mangement, theasset management company of Nippon
Comercial Investment Corporation as its
Director, etc., he joined Kenedix OfficePartners, Inc.
Became Director & General Manager of
Property Managament Div. on Jul 1, 2012
after working as a Senior Manager of
Property Mangament Div.
Worked for c.6 years at Sakura Bank
before joining Sakura Securities, Daiwa
Securities SMBC and Goldman Sachs
Japan where he experienced c.10 years ininvestment banking
Worked for Goldman Sachs Realty Japan
before joining Kenedix, Inc.
Became Director & General Manager ofFinancial Planning Div. of Kenedix OfficePartners on Aug. 1, 2012
Worked for c.27 years at Shinsei
Bank, Ltd.
Joined Kenedix Office Partners
after 8 years of experience as acompliance officer at Shinsei Bank.
Became a Compliance Officer on
Sept. 16, 2008

Yuuji Kamimura
Compliance Officer

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51

Disclaimer
The contents of this document, including summary notes, quotes, data and other information,
are provided solely for informational purposes and not intended for the purpose of soliciting
investment in, or as a recommendation to purchase or sell, any specific products.
Please be aware that matters described herein may change or cease to exist without priornotice of any kind. This document contains forward-looking statements and anticipations of
future results, based on current assumptions and beliefs in light of currently available
information and resources. Risks and uncertainties, both known and unknown, including
those relating to the future performance of the real estate market in Japan, interest rate
fluctuations, competitive scenarios, and changing regulations or taxation, may cause Kenedix
Realty Investment Corporation (KRI)'s actual results, performance, achievements and financial
performance to be materially different from those explicitly or implicitly expressed in thisdocument.
With respect to any and all terms herein, including without limitation, this document, theinformation provided is intended to be thorough. However, no assurance or warranties are
given with respect to the accuracy or completeness thereof.
Neither KRI nor Kenedix Office Partners (KOP) shall be liable for any errors, inaccuracies, loss
or damage, or for any actions taken in reliance thereon, or undertake any obligation to publicly
update the information contained in this document after the date of this document.
Revised editions of our annual reports will be posted on our website if there should be major corrections
going forward.

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

52