20th

Fiscal Period

SEMIANNUAL REPORT

November 1, 2014–April 30, 2015

KENEDIX-REIT
Focusing on Mid-sized Office Buildings in the Tokyo Metropolitan Area
TSE 8972

Top Message

Reinforcing Our Strength in
the Mid-sized Office Building Market

In July 2015, we celebrated our 10th anniversary of listing on the First Section of the Tokyo Stock
Exchange. Over the years, we have sharpened our focus to mainly invest in mid-sized office buildings in
the Tokyo Metropolitan Area. Starting with 31 properties (total acquisition price 69.1 billion yen), we havesteadily expanded our portfolio size to 97 properties (total acquisition price 385.0 billion yen). We havealso managed to improve our portfolio quality through property reshuffles.
As the No. 1 J-REIT for mid-sized office buildings, we will continue with our strategy, balancing external
and internal growth, backed by sound financial management.
Naokatsu Uchida
Executive Director
Kenedix Office Investment Corporation

| 1

Kenedix Office Investment Corporation Semiannual Report(As of April 30, 2015)

Operating Revenues

Operating Income

14,130

6,537

million yen
14,130

million yen

12,928
9,867

9,819

16th Period

17th Period

5,028

10,89518th Period

6,537

19th Period

20th Period

4,401

4,240

4,283

16th Period

17th Period

18th Period

19th Period

20th Period(Ended Apr. 30, 2013) (Ended Oct. 31, 2013) (Ended Apr. 30, 2014) (Ended Oct. 31, 2014) (Ended Apr. 30, 2015)(Ended Apr. 30, 2013) (Ended Oct. 31, 2013) (Ended Apr. 30, 2014) (Ended Oct. 31, 2014) (Ended Apr. 30, 2015)

Net Income

Distribution per Unit

5,110

11,363

million yen

yen

11,363

5,110
9,434

16th Period

9,302

9,638

10,06017th Period

18th Period

19th Period

3,569
3,002

16th Period

2,831

2,885

17th Period

18th Period

19th Period

20th Period

20th Period(Ended Apr. 30, 2013) (Ended Oct. 31, 2013) (Ended Apr. 30, 2014) (Ended Oct. 31, 2014) (Ended Apr. 30, 2015)(Ended Apr. 30, 2013) (Ended Oct. 31, 2013) (Ended Apr. 30, 2014) (Ended Oct. 31, 2014) (Ended Apr. 30, 2015)

Total Assets

Net Assets Ratio / Unitholders’ Equity

407,799
308,172

16th Period

316,753

17th Period

355,167

18th Period

52.0

million yen

388,169

19th Period

407,799

20th Period

%

52.0%

48.9%

47.6%

47.9%

46.6%

150,653

150,781

170,109180,844

211,951

million yen

million yen

million yen

million yen

million yen

16th Period

17th Period

18th Period

19th Period

20th Period(Ended Apr. 30, 2013) (Ended Oct. 31, 2013) (Ended Apr. 30, 2014) (Ended Oct. 31, 2014) (Ended Apr. 30, 2015)(Ended Apr. 30, 2013) (Ended Oct. 31, 2013) (Ended Apr. 30, 2014) (Ended Oct. 31, 2014) (Ended Apr. 30, 2015)

Interest-Bearing Debt Ratio (LTV Ratio) / Interest-Bearing Debt

Portfolio Occupancy Rate

42.8

%

46.2%

47.5%

47.2%

48.4%

142,369

150,558

167,746

187,685

174,600

million yen

million yen

million yen

million yen

million yen

16th Period

17th Period

18th Period

19th Period

20th Period

42.8%(Ended Apr. 30, 2013) (Ended Oct. 31, 2013) (Ended Apr. 30, 2014) (Ended Oct. 31, 2014) (Ended Apr. 30, 2015)

96.5

%

93.9%

95.8%

96.0%

95.6%

96.5%

16th Period

17th Period

18th Period

19th Period

20th Period(Ended Apr. 30, 2013) (Ended Oct. 31, 2013) (Ended Apr. 30, 2014) (Ended Oct. 31, 2014) (Ended Apr. 30, 2015)

2 |Kenedix Office Investment Corporation Semiannual Report

Strategy 1
Improving Portfolio Quality by Reshuffling Properties as
We Steadily Increase Total Asset Size
We began the 20th Fiscal Period (ended April 30, 2015) by raising additional capitalthrough a public offering and acquiring five office buildings. Later, we acquired two
additional office buildings, both located in Tokyo’s five central wards, for a total ofseven properties at a total acquisition price of 21.7 billion yen.
On the other hand, in light of buying/selling opportunities and overall market
conditions, we sold four properties in
non-core asset categories, namely residential properties and regional officebuildings.
As a result of these acquisitions anddispositions, our portfolio at the end of
the period (April 30, 2015) stands at 97
properties with a total acquisition priceof 385.0 billion yen. While increasing
our asset size, we are also steadily
improving the quality of our portfolio by reshuffling properties.
We secured capital gains from the sale of properties. A portion of the gains wasbooked as a reserve for reduction entry under internal reserve. This increased thereserve to more than 1.1 billion yen, which we plan to use for stable unitholder distributions.
Currently, competition in the property acquisition market is intensifying. There arefewer opportunities to acquire properties at prices justifiable over the medium andlong term. It is our policy to invest only after going through a rigorous selection process that weighs the wide-ranging information obtained.
We also aim to increase the profitability and quality of our portfolio, strategically combining acquisitions of properties in the Tokyo Metropolitan Area outside the five central
wards and in other regional areas while selling properties of declining profitability.

Strategy 2
Rental Revenue from Existing Properties on Upswing:
Steadily Securing Rent Increases with Renewals
The occupancy rate for the overall portfolio at the end of the period (April 30, 2015)
remained high, at 96.5%.
Rental revenue has begun to bounce back after bottoming out. During the period
under review, rental revenue from existing properties and the number of upward rent
revisions (by number of contracts) both grew compared with the previous period(ended October 2014).
In terms of rent revisions, the number of properties with upward rent revisions has

Kenedix Office Investment Corporation Semiannual Reportbeen building steadily in the 21st period (ending October 2015). We now feel that we
can expect full-fledged internal growth, as successes begin to emerge not only inTokyo’s five central wards, but also elsewhere in Tokyo and in other regional areas.
We are also seeing more cases in which existing tenants move to other properties
owned by the Investment Corporation in order to optimize the size of their officespace. I believe this reflects our success in thoroughly catching tenant needs throughportfolio-level property management, as well our success in appealing to tenants thatneed to relocate, backed by high tenant satisfaction.
To support strong internal growth, we plan to pursue several initiatives. These
include raising the level of rents for new tenants, negotiating upward rent revisions
with existing tenants and, of course, preventing downward revisions. In addition, we
will continue with prudent capital expenditure, a factor that significantly affects thecompetitiveness of mid-sized office buildings.

Strategy 3
Insight and Operating Competency Honed Over 10 Years:
Making Our Presence Felt as the No. 1 Owner of Mid-Sized Office Buildings
In the office building market, we believe
there are certain factors that determine
a building’s competitiveness within abuilding size category.
Rental revenue from mid-sized officebuildings that are truly competitive is
steadily rising. Mid-sized office buildings
are characterized by relatively high tenant turnover rate and a shorter rent revision cycle, typically around two years.
We believe these factors make it easier
to quickly adjust to market changes.
While building location and features cannot be ignored, we intend to win out
among the competition in mid-sized office buildings by conducting integrated portfolio-wide property management as well as fine-tuned building management at eachsite to ensure tenant satisfaction.
A considerable stock of mid-sized office buildings remains on the market and needsfrom tenants are high. There is still ample room for growth.
Leveraging the insight and operational competency we have developed overthe past decade, we continue to strive to meet the expectations of our investors as
the No. 1 owner of mid-sized office buildings while addressing environmental andenergy-related issues to fulfill our social mission.

Naokatsu UchidaDirector and COO, General Manager of Office REIT Division,
Kenedix Real Estate Fund Management, Inc.

| 3

4 |

Kenedix Office Investment Corporation Semiannual Report

01

External
GrowthOur portfolio stands at

Reinforcing Our Strength in
97 properties with a total acquisition price at 385 billion yen

The fiscal period under review started with the third consecutive
public offering since the 18th Fiscal Period. This was completed
on December 24, 2014, allowing the acquisition of five properties—KDX Yokohama Nishiguchi Building, KDX Shin-Yokohama

Property Reshuffle
in the 20th Fiscal Period
Property disposition

214 Building, KDX Minami-Honmachi Building, BUREX
Toranomon and KDX Sakura-dori Building—at a total acquisition
price of 14.8 billion yen. (See also our 19th Fiscal Period
Semiannual Report.)
Then, further into the period, we went on to purchase twomore buildings—35 Sankyo Building and Pentel Building—both

KDX Hamacho Bldg.

located within Central Tokyo,* at a total acquisition price of 6.9

Central Tokyo

KDX Minami Semba Dai-2 Bldg.
Other regional areabillion yen. Meanwhile, we sold four buildings—KDX Hamacho
Building, KDX Minami Semba Dai-2 Building, Sendai Nikko
Building and Venus Hibarigaoka—with a total disposition price of
6.6 billion yen. The dispositions included two office buildings
located in other regional areas and one residential building. The
resulting portfolio reshuffle raised the ratio of office buildings in

Sendai Nikko Bldg.

Venus Hibarigaoka

the Tokyo Metropolitan Area in our portfolio from 78.9% to 81.4%.

Other regional area

Non-core (residential)* Central Tokyo represents Chiyoda, Chuo, Minato, Shibuya and Shinjuku wards.

A part of the capital gain from the sales of four properties was
retained as an internal reserve to provide for future stable unitholder distributions.
We are seeing fewer opportunities to acquire properties at

Total acquisition price
6.6 bn yen
Average NOI yield (Note 1)5.2%
Average NOI yield(after depreciation) (Note 2)3.4%

Property acquisition

appropriate prices given recent overheating in real estate markets, especially in the Tokyo Metropolitan Area. Utilizing ourbroad network and the sponsor company’s support line, we continue to look for new opportunities, but plan to make further
acquisitions in a selective manner, carefully judging their longterm profit potential. In addition to conventional transactions
involving a single building, we are gathering information on
potential portfolio acquisitions involving multiple properties orproperty transfer involving alternative pipelines. We are also
diversifying our acquisition methods to include equity investment
and co-acquisition with the sponsor company.
Our portfolio stands at 97 properties or 385.0 billion yen as ofApril 30, 2015. We are continuing with our strategy of pursuing
growth in terms of both portfolio size and quality.

35 Sankyo Bldg.

Pentel Bldg.

Central Tokyo

Central Tokyo

Total acquisition price
6.9 bn yen
Average NOI yield (Note 2)4.7%
Average NOI yield(after depreciation) (Note 2)4.0%
Notes: 1. A
 verage NOI yield / Average NOI yield (after depreciation) arecalculated as follows (rounded to the first decimal place):
Average NOI yield = Sum of annualized actual rental NOI
based on 20th fiscal period (2015/4) / Total acquisition price.
Average NOI yield (after depreciation) = Sum of annualized
actual rental NOI minus depreciation based on 20th fiscal
period (2015/4) / Total acquisition price
2. Based on asset manager's estimate, excluding extraordinary
factors expected in the year of acquisition

Kenedix Office Investment Corporation Semiannual Report| 5

Terms of Both Portfolio Size and QualityB reakdown by Property TypeB
 reakdown of Office Buildings by Region

Residential 1.3%

Other 0.7%

Central urban
retail properties
5.7%
Office Bldg.
(other)7.9%

Office Bldg.
(mid-sized)
84.1%

Office Bldg.

92.1%

Other regional areas
18.5%

Central
Tokyo
54.6%

Other Tokyo
Metropolitan Area
26.7%

Tokyo
Metropolitan
Area

81.4%

Notes: 1. The percentage breakdown by property type based on the acquisition price as of April 30, 2015. (Figures are rounded down to the first decimal place).
2. Central Tokyo represents Chiyoda, Chuo, Minato, Shibuya and Shinjuku wards.

Property Acquisition and Disposition Track Record (Note 1)
N Acquisition N Disposition(Billion yen)

Acq: 7 properties
Disp: 2 properties(+33.8)

Acq: 8 properties (Note 2)
Disp: 3 properties(+31.3)

40

30

20

10

Acq: 3 properties
Disp: 2 properties(+6.3)

10.8
0

-10

-4.5
15th Fiscal Period(2012/10)

Acq: 3 properties
Disp: 1 property(+12.3)

Acq: 1 property
Disp: 2 properties(-0.5)

Acq: 7 properties
Disp: 7 properties(+15.1)

38.1

35.1

21.7
13.9

2.0
-2.5

-1.6

16th Fiscal Period(2013/4)

17th Fiscal Period(2013/10)

-3.8

-4.3

18th Fiscal Period(2014/4)

19th Fiscal Period(2014/10)-6.6
20th Fiscal Period(2015/4)

External Growth and Portfolio Profitability
Properties inpossession at
the end of 16th
Fiscal Period (2013/4)

Properties acquired
after May 2013
(Note 4)(Note 3)

Properties inpossession
at the end of 20th
Fiscal Period(2015/4)

Number of properties

73

24

97

Total acquisition price277.1 billion yen

107.9 billion yen

385.0 billion yen

Actual NOI yield (Note 5)

4.2%

5.2%

4.5%

-7.6 billion yen

9.5 billion yen

1.9 billion yen

Appraisal profit/loss (Note 6)

Notes: 1. Actual amount of acquisition/disposition is based on acquisition price.
2. Includes an additional acquisition of classification ownership of KDX Shinbashi Bldg.
3. Properties in possession at the end of 16th Fiscal Period (2013/4) exclude properties sold through 17th Fiscal Period (13/10) to 20th Fiscal Period (2015/4).
4. A
 dditional acquisition and existing portion of KDX Shinbashi Bldg. are counted as 1 property together and are included as a property in possession at the end of
16th Fiscal Period.
5. A ctual NOI yield is calculated by dividing the sum of annualized actual rental NOI based on 20th Fiscal Period (2015/4) by total acquisition price (rounded to the firstdecimal place).
6. Difference between appraisal value and book value as of the end of 20th Fiscal Period (2015/4).

6 |Kenedix Office Investment Corporation Semiannual Report

02

Further Improving Portfolio

Internal
GrowthOffice building occupancy rate of

96.4% at the end of the 20th Fiscal Period

The fiscal period under review saw further improvement inLeasing conditions continue to improve. We are building

occupancy rates and leasing conditions.

up a solid track record of upward rent revisions throughThe occupancy rate for our office buildings at the end ofnegotiation with tenants, securing 28 upward rent revi-

the period stood at 96.4%, compared to 95.4% at thesions for the 21st and 22nd fiscal periods and afterwards,

end of the previous fiscal period.

which will bring our average rent growth to 13.4%.* Our

Looking at the tenant turnover of office buildings, move-

rent gap is shrinking as a result, down from a peak of

ins outpaced move-outs for the fiscal period under review,

22.0% at the end of the 13th Fiscal Period (2011/10) toboth in terms of the number of tenants and the total leased

3.1% at the end of the fiscal period under review.

area. We are also seeing more of our tenants moving into

* Based on fixed upward rent revisions as of June 9, 2015.

another building within our portfolio. We believe thisreflects the high tenant satisfaction with our service andAs we seek to attract and retain tenants at favorable leas-

property management carried out on a portfolio basis.

ing terms, we are proactively investing to renovate andOccupancy Rate Performance of Office Buildings (By region)
Tokyo Metropolitan Area
Total office building
Other regional areas

(%)

100

95

94.5
93.5

96.2

96.2

95.6

95.9
95.8

94.0

93.2

96.5
96.4
96.4

96.1
95.4
95.2

Office properties
Average month-end
occupancy rate
21st Period (estimate)
95.9%

90

Average occupancy rate for all office buildings
85

17th Period
94.1%

18th Period
95.2%

19th Period
94.8%

20th Period
95.9%

80
16th Period(2013/4)

17th Period(2013/10)

18th Period(2014/4)

19th Period(2014/10)

20th Period(2015/4)

Note: Occupancy rate is calculated by dividing leased area by leasable area and is rounded to the first decimal place. Average month-end occupancy rate of office properties isa simple average of monthly-end occupancy rates for each period. The forecast occupancy rate for the 21st Fiscal Period (2015/10) is calculated based on the AssetManagement Company’s earnings forecast for the 21st Fiscal Period.

 hange in Rent Level at Time ofC
Rent Revision (Based on monthly rent)(Note)(Thousand yen)

Increase in rent

2,500

1,597

1,867

0

898

2,101

1,176

-555

-2,500Note: Difference in monthly rent levels before and after rent
revision, calculated separately for each tenant.
Numbers are rounded to the nearest thousand yen.
The data for 21st fiscal period (2015/10) is based onrent revision confirmed as of June 9, 2015.

Decrease in rent

5,000

-5,0001,938-1,822-3,789-4,527-7,500-10,000-8,91616th Period(2013/4)-7,441
17th Period(2013/10)

18th Period(2014/4)

19th Period(2014/10)

20th Period(2015/4)

21st Period(2015/10)
Confirmed

Kenedix Office Investment Corporation Semiannual Report| 7

Occupancy and Leasing Conditions
upgrade the existing properties. A case in point is KDX

Akihabara Building in April 2015 (see below for details),

Ikebukuro West Building, which we acquired in September

and are looking forward to expanding the scope of this ini-

2014. As a result of improving the interior design andtiative. We have been awarded the⑤highest ranked Green

introducing energy-saving LED downlights, the building’sStar rating of the Global Real Estate Sustainability

occupancy, which stood at 81.2% as of February 28,

Benchmark (GRESB) survey for three consecutive years,

2015, is expected to rise to 100% on August 1, 2015. We

ranking first among seven players in Japan’s office building

also managed to raise the newly contracted rent per unit

division. We want to build up this track record in the areaby 4.0%.

of sustainability, fulfilling our social responsibility as a No. 1

As a new environmental initiative, we concluded our

J-REIT in the mid-sized office building market.

first Green Lease Agreement with a tenant at KDX

Adding Value to Our Properties

Focus

Adding Value with Renovation

KDX IkebukuroWest Building

Results
Occupancy rate:

81.2

Rent per unit:

+

100

%
%
Feb. 2015
Aug. 2015
		(expected)

4.0

Measures• Improved design and texture• Introduced energy-saving LED
downlights% (Note)(New contracts starting from Jul. 2015)

Note: Comparing vacating tenant's rent per unit to newly contracted rent per unit

Green Lease

KDX Akihabara
Building

(%)

100

9.2

80

Measures• Installed LED lighting for atenant office space at theexpense of KDO. A certain portion of electricity savings andrenovation costs will be paidback by tenant with rent
based on green lease contract.

Tenant’ s maintenance cost

60

Cost reduction

30.1
Electricity charge

90.8

Green Lease Fee paid
to KDO

40

30.1

20

Electricity charge

39.8
0Before

After

8 |

Kenedix Office Investment Corporation Semiannual Report

03

Keeping an Eye on BothRisks and Opportunities

Financial
Strategy

LTV ratio improved to42.8%, maintaining our stable financial structure

At the start of the fiscal period under review, the Investment Corporation under-

Fixed Interest Rate (2015/4)

took a third consecutive public offering, which resulted in a capital increase of

Floating
interest rate
¥8.0 billion
4.6%

29.5 billion yen. The interest-bearing debt ratio (LTV ratio) was 48.4% at the endof the 19th Fiscal Period and improved to stand at 42.8% at the end of the 20th
Fiscal Period.
Maintaining a conservative LTV ratio allows us to make new investments in a
flexible and timely manner when opportunity arrives. If we allow the LTV ratio to

Fixed interest rate
¥166.6 billion
95.4%

rise to 45%, or 49%, we will have an investment capacity of approximately 16 billion yen, or 49 billion yen, respectively.
We continue to lower financing costs and promote stability. Refinancing for theNote: Fixed rate includes borrowings that are
fixed through interest rate swap but
excludes those that are hedged by interest
rate cap (numbers are rounded to the firstdecimal place).

20th Fiscal Period brought down the average interest rate for loans totaling 17 billion yen from 1.92% to 1.14%, with the average borrowing period extended from
3.6 years to 8.1 years. Simultaneously, we reduced volatility by extending the average remaining term to maturity from 3.6 years to 4.1 years, while fixing the interest

rate on 95.4% of our debt. We seek to achieve further cost reduction through refinancing in the coming two fiscal periods.
We will continue with our policy of maintaining sound financial management with an eye on both risks and opportunities.

Changes in the LTV Ratio (Note)
(%)

50.0
47.0

45.6

45.0

45.3
41.2

40.0
35.0

37.5

41.4

41.1

40.9

40.9

46.2

47.5

47.2

48.4

43.0
42.8
40.3

38.9

38.7

45.8

35.3
30.0
1st Period(2005/10)

5th Period(2007/10)

10th Period(20010/4)

13th Period(2011/10)

20th Period(2015/4)

Note: LTV = Interest-bearing debt / Total assets

 Average Remaining Period toMaturity and Interest Rate in EachFiscal Period(%)(Year)

2.00

5.0

1.75

(Note)N W
 eighted average remaining period tomaturity (right axis)W eighted average interest rate(incl. up-front fees per year) (left axis)

1.88
1.77

1.50

1.25

1.65

4.1
3.6

3.1

1.45

4.0

3.0

1.46

2.4

2.3

End of 16th Period(2013/4)

End of 17th Period(2013/10)

2.0

1.00

1.0
End of 18th Period(2014/4)

End of 19th Period(2014/10)

End of 20th Period(2015/4)

Note: Average remaining period to maturity and interest rate are weighted averages based on outstanding debts at
the end of each fiscal period (Average remaining period to maturities and interest rate are rounded to the second and first decimal places respectively).

Kenedix Office Investment Corporation Semiannual Report| 9Management Team1

Naokatsu UchidaDirector and COO, General Manager of Office REIT Division

3

Hikaru Teramoto
General Manager of Planning Dept., Office REIT Division• Worked for Mitsubishi UFJ Trust and Banking Corporation for approximately 17 years (Real
Estate Division, Real Estate Project Origination Division)• After working for Sakura Bank for six years, worked at Sakura Securities, Daiwa Securities
SMBC, and Goldman Sachs in investment banking business for ten years• After working for Joint Asset Management Co., Ltd. as its Representative Director, joined
Kenedix Office Partners, Inc. and was a member of the Financial Planning Division for
approximately two years• Joined Kenedix Office Partners, Inc. after having worked for Goldman Sachs Realty Japan• Appointed Representative Director of Kenedix Office Partners, Inc. on February 2, 2012
• Appointed Director and COO, General Manager of Office REIT Division on October 1, 2013

Keisuke Sato

2 General Manager of Investment Management Dept., Office REIT Division• Worked for Tokyu Land Corporation for approximately nine years (Urban Business Division)• Joined Kenedix, Inc. after having worked for JPMorgan Securities Japan Co. Ltd., Prudential
Real Estate Investors (Japan) K.K.

• Appointed General Manager of Financial Planning Division, Kenedix Office Partners, Inc. on
August 1, 2012
• Appointed General Manager of Planning Department, Office REIT Division on October 1,
2013

4

Tetsushi Ichikawa
General Manager of Finance & Accounting Dept.

• Worked for Sumitomo Mitsui Trust Bank for 15 years (Engaged in real estate finance, etc.)• Joined Kenedix after having engaged in investment banking and having served as director
responsible for asset management business at Touchstone Capital Securities• Property appraiser• Appointed General Manager of Finance & Accounting Dept. on October 1, 2013 after serving as General Manager of Finance Group for Kenedix Residential Partners• Appointed General Manager of Investment Management Division, Kenedix Office Partners,
Inc. on August 1, 2012

• Concurrently appointed General Manager of Business Administration Department from
April 1, 2015

• Appointed General Manager of Investment Management Department, Office REIT Division
on October 1, 2013

3

1

2

4

10 |

Kenedix Office Investment Corporation Semiannual Report

KENEDIX-REIT Portfolio (As of April 30, 2015)
The properties acquired during the 20th Fiscal Period are marked with red boxes.
No.

Property Name

Location

Acquisition
Price (mn yen)
<Note 1>

Year Built<Note 2>

Occupancy
Rate<Note 3>A1

KDX Nihonbashi 313 Building

Chuo-ku, Tokyo

5,940

Apr. 1974

100.0%

A3

Higashi-Kayabacho Yuraku Building

Chuo-ku, Tokyo

4,450

Jan. 1987

100.0%A4

KDX Hatchobori Building

Chuo-ku, Tokyo

3,680

Jun. 1993

93.1%

A5

KDX Nakano-Sakaue Building

Nakano-ku, Tokyo

2,533

Aug. 1992

96.5%

A6

Harajuku F.F. Building

Shibuya-ku, Tokyo

2,450

Nov. 1985

100.0%A7

KDX Minami Aoyama Building

Minato-ku, Tokyo

2,270

Nov. 1988

100.0%

A8

Kanda Kihara Building

Chiyoda-ku, Tokyo

1,950

May 1993

88.2%

A13

KDX Kojimachi Building

Chiyoda-ku, Tokyo

5,950

May 1994

100.0%A14

KDX Funabashi Building

Funabashi, Chiba

2,252

Apr. 1989

99.8%

A16

Toshin 24 Building

Yokohama, Kanagawa

5,300

Sep. 1984

97.4%

A17

KDX Ebisu Building

Shibuya-ku, Tokyo

4,640

Jan. 1992

100.0%A19

KDX Hamamatsucho Building

Minato-ku, Tokyo

3,460

Sep. 1999

100.0%A20

KDX Kayabacho Building

Chuo-ku, Tokyo

2,780

Oct. 1987

84.9%

A21

KDX Shinbashi Building

Minato-ku, Tokyo

3,728

Feb. 1992

100.0%A22

KDX Shin-Yokohama Building

Yokohama, Kanagawa

2,520

Sep. 1990

87.2%

A26

KDX Kiba Building

Koto-ku, Tokyo

1,580

Oct. 1992

76.1%

A27

KDX Kajicho Building

Chiyoda-ku, Tokyo

2,350

Mar. 1990

97.5%

A28

KDX Nogizaka Building

Minato-ku, Tokyo

1,065

May 1991

86.8%

A29

KDX Higashi-Shinjuku Building

Shinjuku-ku, Tokyo

2,950

Jan. 1990

87.3%

A30

KDX Nishi-Gotanda Building

Shinagawa-ku, Tokyo

4,200

Nov. 1992

100.0%A31

KDX Monzen-Nakacho Building

Koto-ku, Tokyo

1,400

Sep. 1986

100.0%A32

KDX Shiba-Daimon Building

Minato-ku, Tokyo

6,090

Jul. 1986

100.0%A33

KDX Okachimachi Building

Taito-ku, Tokyo

2,000

Jun. 1988

100.0%A34

KDX Hon-Atsugi Building

Atsugi, Kanagawa

1,305

May 1995

94.3%

A35

KDX Hachioji Building

Hachioji, Tokyo

1,155

Dec. 1985

72.7%

A37

KDX Ochanomizu Building

Chiyoda-ku, Tokyo

6,400

Aug. 1982

100.0%

OfficeA38

KDX Nishi-Shinjuku Building

Shinjuku-ku, Tokyo

1,500

Oct. 1992

100.0%(Tokyo Metropolitan
Area)

A39

KDX Toranomon Building

Minato-ku, Tokyo

4,400

Apr. 1988

100.0%

A40

Toranomon Toyo Building

Minato-ku, Tokyo

9,850

Aug. 1962

90.5%

A41

KDX Shinjuku 286 Building

Shinjuku-ku, Tokyo

2,300

Aug. 1989

100.0%A45

KDX Roppongi 228 Building

Minato-ku, Tokyo

3,300

Apr. 1989

87.4%

A46

Hiei Kudan-Kita Building

Chiyoda-ku, Tokyo

7,600

Mar. 1988

100.0%A47

KDX Shin-Yokohama 381 Building

Yokohama, Kanagawa

5,800

Mar. 1988

100.0%A48

KDX Kawasaki-Ekimae Hon-cho Building

Kawasaki, Kanagawa

3,760

Feb. 1985

100.0%A50

KDX Ikejiri-Oohashi Building

Meguro-ku, Tokyo

2,400

Sep. 1988

100.0%A51

KDX Hamacho Nakanohashi Building

Chuo-ku, Tokyo

2,310

Sep. 1988

88.3%

A52

KDX Kanda Misaki-cho Building

Chiyoda-ku, Tokyo

1,380

Oct. 1992

100.0%

A55

Shin-toshin Maruzen Building

Shinjuku-ku, Tokyo

2,110

Jul. 1990

100.0%A56

KDX Jimbocho Building

Chiyoda-ku, Tokyo

2,760

May 1994

100.0%A57

KDX Gobancho Building

Chiyoda-ku, Tokyo

1,951

Aug. 2000

100.0%A59

KDX Iwamoto-cho Building

Chiyoda-ku, Tokyo

1,864

Mar. 2008

100.0%A60

KDX Harumi Building

Chuo-ku, Tokyo

10,250Feb. 2008

100.0%A61

KDX Hamamatsucho Dai-2 Building

Minato-ku, Tokyo

2,200

Apr. 1992

100.0%

A62

Koishikawa TG Building

Bunkyo-ku, Tokyo

3,080

Nov. 1989

100.0%

A63

Gotanda TG Building

Shinagawa-ku, Tokyo

2,620

Apr. 1988

100.0%A64

KDX Nihonbashi 216 Building

Chuo-ku, Tokyo

2,010

Oct. 2006

100.0%A66

KDX Shinjuku Building

Shinjuku-ku, Tokyo

6,800

May 1993

88.3%

A67

KDX Ginza 1chome Building

Chuo-ku, Tokyo

4,300

Nov. 1991

100.0%A68

KDX Nihonbashi Honcho Building

Chuo-ku, Tokyo

4,000

Jan. 1984

100.0%A71

KDX Iidabashi Building

Shinjuku-ku, Tokyo

4,670

Mar. 1990

86.6%

A72

KDX Higashi-Shinagawa Building

Shinagawa-ku, Tokyo

4,590

Jan. 1993

73.5%

A73

KDX Hakozaki Building

Chuo-ku, Tokyo

2,710

Nov. 1993

100.0%A74

KDX Shin-Nihonbashi Building

Chuo-ku, Tokyo

2,300

Nov. 2002

100.0%A75

KDX Nihonbashi Kabutocho Building

Chuo-ku, Tokyo

11,270Nov. 1998

100.0%A78

KDX Tachikawa Ekimae Building

Tachikawa, Tokyo

1,267

Feb. 1990

100.0%

Kenedix Office Investment Corporation Semiannual Report

No.

Property Name

Location

Acquisition
Price (mn yen)
<Note 1>

Office(Other Regional
Areas)

Central Urban
RetailOccupancy
Rate<Note 3>

KDX Fuchu Building

Fuchu, Tokyo

6,120

Mar. 1996

99.1%

A84

KDX Kasuga Building

Bunkyo-ku, Tokyo

2,800

Jun. 1992

100.0%A85

KDX Nakameguro Building

Meguro-ku, Tokyo

1,880

Oct. 1985

100.0%A86

KDX Omiya Building

Saitama, Saitama

2,020

Apr. 1993

93.8%

A87

Itopia Nihonbashi SA Building

Chuo-ku, Tokyo

2,200

Jul. 1995

100.0%A88

KDX Shinjuku 6-chome Building

Shinjuku-ku, Tokyo

1,900

Mar. 1990

100.0%A89

KDX Takanawadai Building

Minato-ku, Tokyo

5,250

Oct. 1985

100.0%A90

KDX Ikebukuro Building

Toshima-ku, Tokyo

3,900

Mar. 2009100.0%A91

KDX Mita Building

Minato-ku, Tokyo

3,180

Mar. 1993

95.6%

A92

KDX Akihabara Building

Chiyoda-ku, Tokyo

2,600

Dec. 1973

100.0%

A93

Aplus Tokyo Building

Shinjuku-ku, Tokyo

4,350

Jan. 1994

100.0%A94

KDX Musashi-Kosugi Building

Kawasaki, Kanagawa

12,000

May 2013

100.0%

A-95 KDX Toyosu Grand Square

Koto-ku, Tokyo

8,666

Apr. 2008

87.0%

A-96 KDX Takadanobaba Building

Toshima-ku, Tokyo

3,650

Oct. 1988

100.0%

A-99 Tosen Ikebukuro Building <Note 4>

Toshima-ku, Tokyo

1,934

Jul. 1988

81.2%

A-101 Urban Square Yokohama <Note 4>

Yokohama-shi, Kanagawa

7,210

Mar. 1994

100.0%

A-102 Yokohama Nishiguchi SIA Building <Note 4>

Yokohama-shi, Kanagawa

2,750

Oct. 1988

100.0%

A-103 Shin-Yokohama 214 Building <Note 4>

Yokohama-shi, Kanagawa

2,200

Nov. 1989

96.3%

A-105 BUREX Toranomon

Minato-ku, Tokyo

1,750

Jul. 2011

100.0%

A-107 35 Sankyo Building

Chiyoda-ku, Tokyo

3,600

Aug. 1991

96.4%

A-108 Pentel Building

Chiyoda-ku, Tokyo

3,350

Nov. 1990

100.0%

A12

Portus Center Building

Sakai, Osaka

5,570

Sep. 1993

94.9%

A42

Karasuma Building

Kyoto, Kyoto

5,400

Oct. 1982

100.0%A44

KDX Sendai Building

Sendai, Miyagi

2,100

Feb. 1984

96.4%

A53

KDX Hakata-Minami Building

Fukuoka, Fukuoka

4,900

Jun. 1973

94.7%

A54

KDX Kitahama Building

Osaka, Osaka

2,220

Jul. 1994

92.8%

A58

KDX Nagoya Sakae Building

Nagoya, Aichi

7,550

Apr. 2009100.0%A69

KDX Kobayashi-Doshomachi Building

Osaka, Osaka

2,870

Jul. 2009100.0%A70

KDX Sapporo Building

Sapporo, Hokkaido

2,005

Oct. 1989

100.0%A79

KDX Nagoya Ekimae Building

Nagoya, Aichi

7,327

Apr. 1986

99.0%

A80

Nagoya Nikko Shoken Building

Nagoya, Aichi

4,158

Aug. 1974

99.9%

A82

KDX Higashi Umeda Building

Osaka, Osaka

2,770

Jul. 2009100.0%

A-97 KDX Utsunomiya Building

Utsunomiya, Tochigi

2,350

Feb. 1999

98.5%

A-98 Hiroshima Ekimae-dori Mark Building <Note 4>

Hiroshima, Hiroshima

1,300

Jan. 1990

74.0%

A-100 Senri Life Science Center Building

Toyonaka-shi, Osaka

13,000Jun. 1992

99.0%

A-104 KDX Minami-Honmachi Building

Osaka, Osaka

2,200

Dec. 2009

98.8%

A-106 KDX Sakura-dori Building

Nagoya, Aichi

89.9%

B19

Residence Charmante Tsukishima

Chuo-ku, Tokyo

5,900

Aug. 1992

354,681

Avg. 23.0 years

96.4%

5,353

Jan. 2004

100.0%

5,353

Avg. 11.2 years

100.0%

C1

Frame Jinnan-zaka

Shibuya-ku, Tokyo

9,900

Mar. 2005

98.0%

C2

KDX Yoyogi Building

Shibuya-ku, Tokyo

2,479

Aug. 1991

91.7%

C4

Ginza 4chome Tower

Chuo-ku, Tokyo

9,800

Nov. 2008

100.0%

22,179Avg. 9.9 years

98.4%

Residential Subtotal (1 propertiy)Central Urban Retail Subtotal (3 properties)

Other<Note 2>

A83

Office Subtotal (92 properties)

Residential

Year Built

| 11

D2

Shinjuku 6-chome Building (Land)

Shinjuku-ku, Tokyo

Other Subtotal (1 property)       Total (97 properties)

Investment Security

G.K. KRF 43 Silent Partnership Equity Interest

Shinjuku-ku, Tokyo

2,880

—

100.0%

2,880—

100.0%

385,094

Avg. 22.1 years

1,107

Dec. 1979

96.5%

Notes: 1. A cquisition price is the purchase price of the trust beneficiary interests etc. acquired by KDO.
		
2. Y
 ear built shows the completion date recorded in land register book. The average value shown in subtotal section is a weighted average number calculated based on
acquisition prices with a base date of April 30, 2015, and is rounded down to the first decimal place.
		
3. O ccupancy rate is calculated by dividing leased floor area by leasable floor area as of April 30, 2015 and is rounded to the first decimal place. Occupancy rate subtotals
and total are each calculated by dividing the sum of leased floor area by the sum of leasable floor area of the relevant category. The figure for Shinjuku 6-chome Building(Land) is calculated based on the total leasable area indicated in the land lease agreement.
		
4. E ffecive from July 1, 2015, Hiroshima Ekimae-dori Mark Building, Tosen Ikebukuro Building, Urban Square Yokohama, Yokohama Nishiguchi SIA Building andShin-Yokohama 214 Building were renamed KDX Hiroshima Building, KDX Ikebukuro West Building, KDX Yokohama Building, KDX Yokohama Nishiguchi Building and
KDX Shin-Yokohama 214 Building, respectively.

12 |Kenedix Office Investment Corporation Semiannual Report

Financial Section
Contents
Independent Auditor’s ReportC

Balance Sheets

D

Statements of Income and Retained Earnings

E

Statements of Changes in Net Assets

E

Statements of Cash FlowsF

Notes to Financial Statements

G

Financial Summary (Unaudited)
Historical Operating Trends
For the 16th–20th Fiscal Periods
Unit

16th Period(as of Apr. 30, 2013)

Operating revenues

mn yen

9,867

9,819

10,895

12,92814,130(Rental revenues)

mn yen

9,306

9,501

10,33011,295

12,836

Operating expenses

mn yen

5,465

5,578

6,611

7,899

7,593

(Property-related expenses)

mn yen

4,740

4,845

5,047

5,557

6,377

Operating income

mn yen

4,401

4,240

4,283

5,028

6,537

Ordinary income

mn yen

3,003

2,832

2,887

3,570

5,111

Net income (a)mn yen

3,002

2,831

2,885

3,569

5,110

Total assets (b)mn yen308,172

316,753

355,167

388,169

407,799

Period(Period-on-period change)

Interest-bearing debt (c)%mn yen(Period-on-period change)%

Unitholders’ equity (d)mn yen(Period-on-period change)%

Unitholders’ capitalmn yen(Period-on-period change)

Number of investment units issued andoutstanding (e)Unitholders’ equity per unit (d)/(e)17th Period(as of Oct. 31, 2013)

18th Period(as of Apr. 30, 2014)

19th Period(as of Oct. 31, 2014)

20th Period(as of Apr. 30, 2015)(+0.5)(+2.8)(+12.1)(+9.3)(+5.1)

142,369

150,558

167,746

187,685

174,600(+1.3)(+5.8)(+11.4)(+11.9)(-7.0)

150,653

150,781

170,109180,844

211,951(+0.2)(+0.1)(+12.8)(+6.3)(+17.2)

147,153

147,153

166,261

176,632

206,199

%

(0.0)

(0.0)

(+13.0)(+6.2)(+16.7)

unit

286,550

286,550

332,540

355,010404,885
523,484yen

525,747

526,195

511,546

509,407mn yen

2,703

2,665

3,205

3,571

4,600

Distribution per unit (f)/(e)

yen

9,434

9,302

9,638

10,06011,363(Earnings distributed per unit)

yen

9,434

9,302

9,638

10,06011,363(Distribution in excess of earnings per unit)

yen

—

—

—

—

—

Return on assets (annualized) (Notes 1 and 2)%

1.0 (2.0)

0.9 (1.8)

0.9 (1.7)

1.0 (1.9)

1.3 (2.6)

Return on net assets (annualized) (Notes 2 and 3)%

2.0 (4.0)

1.9 (3.7)

1.8 (3.6)

2.0 (4.0)

2.6 (5.2)

48.9

47.6

47.9

46.6

52.0

(-0.1)(-1.3)(+0.3)(-1.3)(+5.4)

46.2

47.5

47.2

48.4

42.8

Total distribution (f)Net assets ratio at end of period (d)/(b)(Period-on-period change)

Interest-bearing debt ratio at end of period (c)/(b)(Period-on-period change)

Payout ratio (Note 4) (f)/(a)%%%(+0.4)(+1.3)(-0.3)(+1.1)(-5.5)

90.0

94.1

111.0

100.0

90.0

Other references
Number of properties

properties

Total leasable floor aream2

Occupancy ratio at end of period

83

85

89

94

97

347,853.97

358,517.31

386,659.01

437,233.24

453,999.44

%

93.9

95.8

96.0

95.6

96.5

Depreciation expenses for the period

mn yen

1,662

1,696

1,826

2,022

2,221

Capital expenditures for the period

mn yen

772

894

711

550

329

Leasing NOI (Net Operating Income) (Note 5)

mn yen

6,228

6,352

7,109

7,760

8,680

FFO (Funds From Operation) (Note 6)

mn yen

4,202

4,293

5,031

7,116

6,909

yen

14,664

14,984

15,13020,045

17,065

FFO per unit (Note 7)

Notes: 1. Return on assets = Ordinary income/{(Total assets at beginning of period + Total assets at end of period)/2} × 100
2. A
 nnualized values for the 16th Fiscal Period are calculated based on a period of 181 days, 184 days for the 17th Fiscal Period, 181 days for the 18th Fiscal Period,
184 days for the 19th Fiscal Period and 181 days for the 20th Fiscal Period.
3. Return on net assets = Net income/{(Total net assets at beginning of period + Total net assets at end of period)/2} × 100
4. Payout ratio is rounded down to the first decimal place.
5. Leasing NOI = Rental revenues – Rental expenses + Depreciation expenses for the period
6. FFO = Net income + Depreciation expenses for the period – Gain on sale of real estate property + Loss on sale of real estate property
7. FFO per unit = FFO/Number of investment units issued and outstanding (figures below ¥1 rounded down)
8. Where applicable, figures are rounded down to the nearest million.

Kenedix Office Investment Corporation Semiannual Report

| 13

14 |

Kenedix Office Investment Corporation Semiannual Report

Balance Sheets
Kenedix Office Investment Corporation
As of April 30, 2015 and October 31, 2014
In thousands of yen
As of April 30, 2015

As of October 31, 2014¥24,601,157¥ 16,469,910

321,915

293,161

Consumption tax refundable—

752,671

Other current assets (Note 8)

176,000

402,016

25,099,072

17,917,758

Land

269,158,456

257,050,371

Buildings and structures (Note 6)

131,523,414

128,517,097

Machinery and equipment

1,890,733

1,959,350

Tools, furniture and fixtures

484,345507,707

Construction in progress

1,785

—

ASSETS
Current assets:
Cash and bank deposits (Notes 3 and 13)
Rental receivables   Total current assets
Property and equipment, at cost: (Notes 4 and 15)

Less-accumulated depreciation(23,506,928)(22,554,292)    Net property and equipment

379,551,805

365,480,233

Other assets:
Ground leasehold (Note 15)354,009354,783

Investment securities (Note 13)

1,076,656

2,679,139

Corporate bond issuance costs

39,414

44,639Unit issuance costs

223,603

164,421

Other assets (Note 15)   Total assets

1,454,528

1,528,661¥407,799,087¥388,169,634¥  1,390,897¥  1,000,282

35,800,000

46,035,000

LIABILITIES AND NET ASSETS
Liabilities
Current liabilities:
Trade and other payables
Short-term debt and current portion of long-term debt (Notes 5 and 13)
Deposits received
Rents received in advance

57,472

15,695

2,108,001

1,868,868

Other current liabilities

355,338

133,808   Total current liabilities

39,711,708

49,053,653

Corporate bonds (Notes 5 and 13)

8,300,000

8,300,000

Long-term debt (Notes 5 and 13)

130,500,000

133,350,000

Leasehold and security deposits received

17,336,230

16,621,220

195,847,938

207,324,873

206,199,946

176,632,550   Total liabilities
Net Assets
Unitholders’ equity
Unitholders’ capital   Units authorized: 2,000,000 units   Units issued and outstanding: 404,885 and 355,010 units   As of April 30, 2015 and October 31, 2014
Surplus
Voluntary retained earnings   Reserve for reduction entry
Retained earnings
Total surplus

640,811642,566

5,110,392

3,569,645

5,751,203

4,212,211

Total unitholders’ equity

211,951,149

180,844,761   Total net assets (Note 9)

211,951,149

180,844,761    Total liabilities and net assets¥407,799,087¥388,169,634

See accompanying notes to the financial statements.

Kenedix Office Investment Corporation Semiannual Report| 15

Statements of Income and Retained Earnings
Kenedix Office Investment Corporation
For the period from November 1, 2014 to April 30, 2015 and the period from May 1, 2014 to October 31, 2014
In thousands of yen

Operating revenues:
Rental revenues (Note 11)
Gain on sale of real estate property (Note 11)
Dividends income   Total operating revenues
Operating expenses:
Property-related expenses (Note 11)
Loss on sale of real estate property (Note 11)
Asset management fees
Administrative service and custodian fees
Other operating expenses   Total operating expenses
Operating income
Non-operating expenses:
Interest expense
Financing-related expenses
Amortization of unit issuance costs
Amortization of corporate bond issuance costs
Others, net   Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes (Note 8)
Net income
Retained earnings at the beginning of period
Retained earnings at the end of period

From November 1, 2014 to April 30, 2015

From May 1, 2014 to October 31, 2014¥12,836,807
709,633
583,910
14,130,350¥11,295,407—
1,632,716
12,928,123

6,377,605
287,720
740,454
76,528110,841
7,593,148
6,537,202

5,557,660
1,524,518
643,21172,536
101,500
7,899,425
5,028,698

1,086,470
244,331
56,481
5,225
32,9801,425,487
5,111,715
5,111,715
1,323
5,110,392—¥ 5,110,392

1,115,016
288,414
37,204
4,888
12,5191,458,041
3,570,657
3,570,657
1,215
3,569,442
203¥ 3,569,645

See accompanying notes to the financial statements.

Statements of Changes in Net Assets
Kenedix Office Investment Corporation
For the period from November 1, 2014 to April 30, 2015 and the period from May 1, 2014 to October 31, 2014
In thousands of yen
Unitholders’ equity
Surplus
Voluntary retained
earnings

Balance as of April 30, 2014
Changes during the fiscal period
New unit issuance
Reversal of reserve for reduction entry
Payments of dividends
Net income    Total changes during the fiscal period
Balance as of October 31, 2014
Changes during the fiscal period
New unit issuance
Reversal of reserve for reduction entry
Payments of dividends
Net income    Total changes during the fiscal period
Balance as of April 30, 2015
See accompanying notes to the financial statements.

Total
unitholders’equityUnitholders’capitalReserve for
reduction entry

Retainedearnings¥166,261,746¥ 961,750¥ 2,886,039¥ 3,847,789 ¥170,109,535 ¥170,109,535

10,370,804———
10,370,804¥176,632,550—(319,184)——(319,184)¥ 642,566—
319,184(3,205,020)
3,569,442
683,606¥ 3,569,645—
10,370,804
10,370,804———(3,205,020)(3,205,020)(3,205,020)
3,569,442
3,569,442
3,569,442
364,422
10,735,226
10,735,226¥ 4,212,211 ¥180,844,761 ¥180,844,761

29,567,396———
29,567,396¥206,199,946—(1,755)——(1,755)¥ 640,811—
1,755(3,571,400)
5,110,392
1,540,747¥ 5,110,392—
29,567,396
29,567,396———(3,571,400)(3,571,400)(3,571,400)
5,110,392
5,110,392
5,110,392
1,538,992
31,106,388
31,106,388¥ 5,751,203 ¥211,951,149 ¥211,951,149

Total
surplus

Total

16 |

Kenedix Office Investment Corporation Semiannual ReportStatements of Cash Flows
Kenedix Office Investment Corporation
For the period from November 1, 2014 to April 30, 2015 and the period from May 1, 2014 to October 31, 2014
In thousands of yen
From November 1, 2014 to April 30, 2015

From May 1, 2014 to October 31, 2014¥  5,111,715¥  3,570,657

2,520,961

2,340,487

CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes 
Adjustments to reconcile income before income taxes to
net cash provided by operating activities:   Depreciation and amortization  Interest income

(772)

(650)

  Interest expense

1,086,470

1,115,016

Changes in assets and liabilities:  Rental receivables(28,754)(40,604)   Consumption tax refundable

752,671(533,224)   Accrued consumption tax

248,360(24,357)   Trade and other payables

223,597

169,776   Rents received in advance239,132

76,6206,200,424

4,037,460   Property and equipment due to sale  Others, net

97,348(614,600)   Subtotal

16,451,152

10,096,581

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

772

650

(1,109,425)(1,116,994)

(904)

(810)

15,341,595

8,979,427(22,545,378)(39,025,487)—(1,592,392)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
Purchases of investment securities
Proceeds from investment securities

1,602,482

919,815

Proceeds from leasehold and security deposits received

1,599,129

3,064,543

Payments of leasehold and security deposits received(663,116)(924,131)

Payments of restricted bank deposits(88,482)(1,834,660)

Proceeds from restricted bank deposits

1,475,886

88,375

Others, net

937—(18,618,542)(39,303,937)

Proceeds from short-term debt

1,500,000

17,900,000

Payments of short-term debt

(14,400,000)(8,000,000)

Proceeds from long-term debt

15,450,000

28,650,000

Payments of long-term debt

(15,635,000)(20,611,500)

Proceeds from issuance of investment units

29,451,732

10,277,174—

1,981,801

Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of investment corporation bonds
Payment of dividends(3,571,135)(3,204,772)

Net cash provided by financing activities

12,795,597

26,992,703

Net change in cash and cash equivalents

9,518,650(3,331,807)

Cash and cash equivalents at the beginning of period

14,206,034

17,537,841¥ 23,724,684¥ 14,206,034

Cash and cash equivalents at the end of period (Note 3)
See accompanying notes to the financial statements.

Kenedix Office Investment Corporation Semiannual Report| 17

Notes to Financial Statements
Kenedix Office Investment Corporation
For the period from November 1, 2014 to April 30, 2015 and the period from May 1, 2014 to October 31, 2014

1.

ORGANIZATION AND BASIS OF PRESENTATIONORGANIZATION
Kenedix Office Investment Corporation (“the Investment Corporation”) is a real estate investment corporation whose units are listed on theTokyo Stock Exchange. The Investment Corporation is engaged in ownership and operation of selected office buildings, residential and retailproperties in Japan, with a focus on mid-sized office buildings in the Tokyo metropolitan area. The Investment Corporation was incorporated on
May 6, 2005 as an investment corporation under the Law Concerning Investment Trusts and Investment Corporations of Japan, or the Investment
Trust Law. On July 21, 2005, the Investment Corporation was listed on the Real Estate Investment Trust Market of the Tokyo Stock Exchange witha total of 75,400 investment units issued and outstanding (Securities Code: 8972). Subsequently, the Investment Corporation raised funds
through seven public offerings and other means including global offerings. Pursuant to the Investment Trust Law, the Investment Corporation isexternally managed by a registered asset management company, Kenedix Real Estate Fund Management, Inc. (“the Asset Management
Company”), a subsidiary of Kenedix, Inc. (“Kenedix”). In concert with the Asset Management Company, the Investment Corporation strives tomaximize cash distribution to investors by securing stable earnings and sustainable investment growth. To this end, the Investment Corporation
adopts a dynamic and flexible investment stance that accurately reflects its environment and market trends, and endeavors to ensure a timely
response to each and every opportunity.
During the period ended October 31, 2014, the Investment Corporation acquired four office buildings (KDX Toyosu Grand Square: acquisition
price of ¥8,666 million, KDX Takadanobaba Building: acquisition price of ¥3,650 million, KDX Ikebukuro West Building: acquisition price of¥1,934 million and KDX Yokohama Nishiguchi Building: acquisition price of ¥7,210 million) located in the Tokyo Metropolitan Area, three officebuildings (KDX Utsunomiya Building: acquisition price of ¥2,350 million, KDX Hiroshima Building: acquisition price of ¥1,300 million and Senri
Life Science Center Building: acquisition price of ¥13,000 million) located in Other Regional Areas, preferred equity securities (Toyonaka Property
TMK: investment of ¥1,583 million) and sold KDX Minami Semba Dai-1 Building (initial acquisition price of ¥1,610 million) and Nissou Dai-17
Building (initial acquisition price of ¥2,710 million) (with a total combined disposition price of ¥2,600 million).
During the period ended April 30, 2015, the Investment Corporation acquired seven office buildings (KDX Yokohama Nishiguchi Building:acquisition price of ¥2,750 million, KDX Shin-Yokohama 214 Building: acquisition price of ¥2,200 million, KDX Minami-Honmachi Building:acquisition price of ¥2,200 million, BUREX Toranomon: acquisition price of ¥1,750 million, KDX Sakura-dori Building: acquisition price of ¥5,900
million, 35 Sankyo Building: acquisition price of ¥3,600 million and Pentel Building: acquisition price of ¥3,350 million) and sold KDX Minami
Semba Dai-2 Building (initial acquisition price of ¥1,560 million), KDX Hamacho Building: initial acquisition price of ¥2,300 million), Venus
Hibarigaoka (initial acquisition price of ¥1,800 million) and Sendai Nikko Building (initial acquisition price of ¥950 million) (with a total combined
disposition price of ¥6,792 million). Furthermore, the preferred equity securities (Toyonaka Property TMK) have been refunded in full.
At the end of the nineteenth fiscal period, the Investment Corporation had total unitholders’ capital of 176,633 million with 355,010 investment units outstanding. At the end of the twentieth fiscal period, the Investment Corporation had total unitholders’ capital of ¥206,200 million
with 404,885 investment units outstanding. The Investment Corporation owned a portfolio of 94 properties (consisting of 88 office buildings,
two residential properties, three central urban retail properties and one other property), 97 properties (consisting of 92 office buildings, one
residential property, three central urban retail properties and one other property) with total acquisition prices of ¥369,954 million and ¥385,094
million at the end of the nineteenth and twentieth fiscal periods, respectively. The occupancy ratios were approximately 95.6% and 96.5% at theend of the nineteenth and twentieth fiscal periods, respectively.

BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with the provisions set forth in the Investment Trust Act of Japan, theJapanese Corporation Law, the Financial Instruments and Exchange Law of Japan and related regulations, and in conformity with accounting
principles and practices generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to the application and disclosure
requirements of the International Financial Reporting Standards or accounting principles generally accepted in the United States of America.
The accompanying financial statements are basically a translation of the audited financial statements that were prepared for Japanese domestic
purposes from the accounts and records maintained by the Investment Corporation and filed with the Kanto Local Finance Bureau of the Ministryof Finance as required by the Financial Instruments and Exchange Law. In preparing the accompanying financial statements, relevant notes havebeen added and certain reclassifications have been made to the financial statements issued domestically in order to present them in a form that ismore familiar to readers outside Japan. The Investment Corporation’s fiscal period is a six-month period that ends at the end of April and the endof October each year. The Investment Corporation does not prepare consolidated financial statements because it has no subsidiaries.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(A) SECURITIESNon-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving average method.
Concerning silent partnership (tokumei kumiai, “TK”) interests, the method of incorporating the amount of equity equivalent to the portion that
corresponds to the net gain or loss of the TK is adopted.

18 |Kenedix Office Investment Corporation Semiannual Report(B) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation of property and equipment is calculated on a straight-line basis over the estimated useful
lives of the assets ranging as stated below:
From November 1, 2014 to April 30, 2015

From May 1, 2014 to October 31, 2014

Buildings and structures

2-49 years

2-49 years

Machinery and equipment

3-17 years

3-17 years

Tools, furniture and fixtures

3-20 years

3-20 years(C) UNIT ISSUANCE COSTS
Unit issuance costs are amortized over a period of three years under the straight-line method.

(D) CORPORATE BOND ISSUANCE COSTS
Corporate bond issuance costs are amortized over a maturity period under the straight-line method.

(E) ACCOUNTING TREATMENT OF TRUST BENEFICIARY INTERESTS IN REAL ESTATE
For trust beneficiary interests in real estate, which are commonly utilized in the ownership of commercial properties in Japan, all assets and liabilities in trust are recorded in the relevant balance sheets and statements of income and retained earnings.

(F) GROUND LEASEHOLD
Fixed term leaseholds on the building and special agreements on buildings sales are amortized over a contractual period of 48 years and ninemonths under the straight-line method.

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

(H) TAXES ON PROPERTY AND EQUIPMENT
Property-related taxes including property taxes, city planning taxes and depreciable property taxes are imposed on properties on a calendar year
basis. These taxes are generally charged to operating expenses for the period, for the portion of such taxes corresponding to said period. Under
Japanese tax rules, the seller of property at the time of disposal is liable for these taxes on the property from the date of disposal to the end of thecalendar year in which the property is disposed. The seller, however, is reimbursed by the purchaser for these accrued property-related tax liabilities.
When the Investment Corporation purchases properties, it typically allocates the portion of the property-related taxes related to the period following
the purchase date of each property through the end of the calendar year. The amounts of those allocated portions of the property-related taxes
are capitalized as part of the acquisition costs of the related properties. Capitalized property-related taxes amounted to ¥116,101 thousand and¥87,637 thousand as of April 30, 2015 and October 31, 2014, respectively. In subsequent calendar years, such property-related taxes are charged
as operating expenses in the fiscal period to which the installments of such taxes correspond.

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

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

(K) DERIVATIVE FINANCIAL INSTRUMENTS
The Investment Corporation utilizes interest-rate swap and interest-rate cap contracts as derivative financial instruments only for the purpose ofhedging its exposure to changes in interest rates. The Investment Corporation deferred recognition of gains or losses resulting from changes infair value of interest-rate swap and interest-rate cap contracts because these contracts met the criteria for deferral hedging accounting. However,the Investment Corporation adopted special treatment for interest-swap and interest-rate cap contracts if they met the criteria for hedging
accounting under this treatment, whereby the net amount to be paid or received under the interest-rate swap and interest-rate cap contract is
added to or deducted from the interest on the assets or liabilities for which the swap and cap contract was executed. The hedge effectiveness forinterest-rate swap and interest-rate cap contract is assessed each fiscal period except for those that meet the criteria of special treatment.

| 19

Kenedix Office Investment Corporation Semiannual Report(L) CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments which are highly liquid, readily
convertible to cash and with insignificant risk of market value fluctuation, with maturities of three months or less from the date of purchase.

(M) ROUNDING OF AMOUNTS PRESENTED
Amounts have been truncated in the Japanese financial statements prepared in accordance with Japanese GAAP and filed with regulatory
authorities in Japan, whereas amounts have been rounded to the nearest million in the accompanying financial statements. Totals shown in theaccompanying financial statements do not necessarily agree with the sums of the individual amounts.

3.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consisted of the following as of April 30, 2015 and October 31, 2014:
In thousands of yen
As of April 30, 2015

Cash and bank deposits

As of October 31, 2014¥24,601,157

Restricted bank deposits (Note)
Cash and cash equivalents¥16,469,910(876,473)(2,263,876)¥23,724,684¥14,206,034

Note: Restricted bank deposits are retained for repayment of tenant leasehold and security deposits.

4.

SCHEDULE OF PROPERTY AND EQUIPMENT
In millions of yen
As of April 30, 2015

As of October 31, 2014

Acquisition
costs

Accumulated
depreciation

Book
value

Acquisition
costs

Accumulated
depreciation

Book
value

Land

¥269,158¥    —¥269,158¥257,050¥    —¥257,050

Buildings and structures

131,523

22,486109,037

128,517

21,473

107,044

Machinery and equipment

1,891

777

1,114

1,959

820

1,139

Tools, furniture and fixtures

484

243

241

508

261

247

Construction in progress

2

—

2

—

—

—

¥403,058¥23,507¥379,552¥388,034¥22,554¥365,480

Total

5.

SHORT-TERM DEBT, LONG-TERM DEBT AND CORPORATE BONDS

The following summarizes short-term debt, long-term debt and corporate bonds outstanding as of April 30, 2015:
Classification

Short-term debt

Current portion of long-term debt

Drawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)

May 30, 2014

May 29, 2015

0.53%¥    500

July 31, 2014

July 31, 2015

0.48%

1,000

April 2, 2015

March 31, 2016

0.53%

1,500

February 28, 2011

August 31, 2015

1.91%¥  3,000March 30, 2012

September 30, 2015

1.21%

2,000

April 27, 2012

October 30, 2015

1.27%

1,000

April 28, 2011

October 31, 2015

1.86%

1,500

December 26, 2011

October 31, 2015

1.34%

2,500

December 26, 2011

October 31, 2015

1.32%

2,500

December 26, 2011

October 31, 2015

1.34%

2,000

November 12, 2010

November 12, 2015

1.79%

1,200

November 12, 2010

November 12, 2015

1.79%

800

December 1, 2010

November 12, 2015

1.38%

800

December 1, 2010

November 12, 2015

1.38%

200

January 31, 2011

January 29, 2016

1.94%

800

February 28, 2011

January 29, 2016

1.95%

500

March 31, 2011

January 29, 2016

1.91%

2,000

April 28, 2011

January 29, 2016

1.89%

1,000

January 10, 2012

January 29, 2016

1.27%

2,500

February 18, 2013

February 18, 2016

0.84%

1,500

20 |

Kenedix Office Investment Corporation Semiannual Report

Classification

Current portion of long-term debt

Drawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)March 31, 2011
May 1, 2006

March 31, 20161.24%¥  1,000

April 30, 2016

2.73%

April 30, 2013

5,000

April 30, 2016

0.68%

SubtotalLong-term debt

1,000
¥ 35,800

November 12, 2010

November 12, 2017

2.02%

December 1, 2010

November 12, 20172.21%¥  2,300
700

December 26, 2011

October 31, 2016

1.44%

2,500

December 26, 2011

October 31, 2016

1.42%

2,500

December 26, 2011

October 31, 2016

1.44%

2,000

March 28, 2012

March 28, 2017

1.36%

500

March 28, 2012

March 28, 2019

1.77%

1,400

March 28, 2012

March 28, 2019

1.77%

1,000

June 29, 2012

June 30, 2017

1.29%

1,500

September 21, 2012

September 21, 2017

1.16%

5,000

September 21, 2012

September 21, 2017

1.16%

1,000

September 21, 2012

September 21, 2017

1.16%

1,000

October 31, 2012

October 31, 2016

1.06%

2,500

October 31, 2012

October 31, 2016

1.05%

1,500

October 31, 2012

October 31, 2017

1.10%

2,500

October 31, 2012

October 31, 2018

1.25%

2,500

December 10, 2012

December 12, 2016

0.98%

500

December 28, 2012

December 28, 2016

1.01%

2,000

December 28, 2012

December 28, 2017

1.09%

500

December 28, 2012

December 29, 2017

1.09%

500

January 15, 2013

January 15, 2017

0.97%

1,000

March 26, 2013

March 26, 2018

1.04%

1,000

March 26, 2013

March 26, 2018

1.04%

1,000

July 31, 2013

July 29, 2016

0.58%

1,500

July 31, 2013

July 31, 2018

0.68%

500

August 19, 2013

August 19, 2018

0.95%

1,000

August 19, 2013

August 19, 2018

0.95%

1,000

August 19, 2013

August 19, 2018

0.95%

500

August 19, 2013

August 19, 2018

0.97%

500

August 19, 2013

August 19, 2018

0.95%

500

August 30, 2013

August 31, 2018

1.08%

700

August 30, 2013

August 31, 2018

1.08%

500

August 30, 2013

August 31, 2018

1.08%

300

August 30, 2013

August 31, 2020

1.42%

1,500

September 30, 2013

September 30, 2019

1.06%

1,800

September 30, 2013

September 30, 2019

1.06%

900

October 31, 2013

October 31, 2018

0.89%

500

November 12, 2013

November 12, 2018

0.82%

1,000

November 12, 2013

November 12, 2020

1.07%

2,000

November 12, 2013

November 12, 2020

1.07%

500

November 29, 2013

November 30, 2018

0.84%

200

November 29, 2013

November 30, 2020

1.12%

1,000

November 29, 2013

November 30, 2020

1.12%

900

January 10, 2014

January 31, 2021

1.21%

1,300

January 31, 2014

January 31, 2017

0.67%

1,200

January 31, 2014

January 31, 2020

0.93%

3,700

January 31, 2014

January 31, 2021

1.13%

2,300

March 12, 2014

March 12, 2018

0.75%

2,250

March 12, 2014

March 31, 2019

0.78%

450

March 12, 2014

March 12, 2020

0.92%

1,800

March 12, 2014

March 12, 2023

1.36%

1,800

March 20, 2014

March 12, 2020

0.91%

3,000

March 20, 2014

September 20, 2021

1.01%

4,000

Kenedix Office Investment Corporation Semiannual Report

Classification

Long-term debt

Drawdown date

Last
repayment date

March 20, 2014
March 20, 2014

| 21

Weighted-averageinterest rate

Balance(In millions of yen)March 20, 2022

1.20%¥  3,000March 12, 2023

1.35%

2,000

March 31, 2014

March 31, 2019

0.76%

2,500

April 22, 2014

October 31, 2020

0.95%

2,900

July 10, 2014

July 10, 2019

0.64%

500

July 10, 2014

July 10, 2021

0.90%

2,000

July 10, 2014

July 10, 2021

0.90%

500

July 14, 2014

July 31, 2019

0.68%

1,000

July 31, 2014

July 31, 2019

0.62%

1,000

July 31, 2014

July 31, 2020

0.74%

2,700

July 31, 2014

October 31, 2020

0.76%

300

July 31, 2014

July 31, 2022

1.01%

2,200

August 29, 2014

July 31, 2019

0.65%

1,000

September 1, 2014

August 31, 2021

0.89%

800

September 1, 2014

August 31, 2021

0.89%

500

September 3, 2014

August 31, 2022

0.98%

1,000

September 3, 2014

August 31, 2022

0.98%

950

September 22, 2014

September 30, 2020

0.80%

2,700

September 30, 2014

September 30, 2021

0.89%

1,000

October 31, 2014

October 31, 2021

0.80%

3,000

October 31, 2014

October 31, 2023

1.07%

2,000

October 31, 2014

October 31, 2023

1.13%

1,500

October 31, 2014

October 31, 2023

1.07%

1,000

October 31, 2014

October 31, 2024

1.26%

2,000

October 31, 2014

October 31, 2024

1.26%

1,000

January 30, 2015

January 31, 2021

0.71%

1,500

January 30, 2015

January 31, 2025

1.16%

1,500

February 18, 2015

February 28, 2022

0.91%

1,250

February 18, 2015

February 28, 2022

0.91%

350

February 18, 2015

February 29, 2024

1.16%

1,700

February 18, 2015

February 28, 2025

1.31%

1,250

February 27, 2015

February 28, 2025

1.15%

2,100

March 12, 2015

February 28, 2025

1.22%

1,000

March 31, 2015

March 31, 2025

1.27%

2,500

April 30, 2015

April 30, 2022

0.83%

Subtotal

2,300
130,500

Corporate bonds

March 15, 2007

March 15, 20172.37%¥  3,000March 8, 2012

September 8, 2017

2.00%

1,500

September 12, 2013

September 12, 2018

1.00%

1,800

July 25, 2014

July 25, 2024

1.18%

2,000

Subtotal

8,300

Total

¥174,600

The following summarizes short-term debt, long-term debt and corporate bonds outstanding as of October 31, 2014:
Classification

Short-term debt

Current portion of long-term debt

Drawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)

May 30, 2014

May 29, 2015

0.55%

¥    500

July 31, 2014

July 31, 2015

0.50%

1,000

October 15, 2014

October 15, 2015

0.55%

8,000

October 29, 2014

October 29, 2015

0.54%

3,000

October 29, 2014

October 29, 2015

0.54%

2,000

October 29, 2014

October 29, 2015

0.54%

1,400

January 29, 2010

January 30, 2015

2.17%

960

January 31, 2012

January 30, 2015

1.19%

1,500

February 18, 2010

February 18, 2015

2.19%

1,725

February 18, 2010

February 18, 2015

2.19%

1,275

February 18, 2010

February 18, 2015

2.19%

750

22 |

Kenedix Office Investment Corporation Semiannual Report

Classification

Drawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)

Current portion of long-term debt

February 18, 2010

February 18, 20152.19%¥    375

August 31, 2011

February 27, 2015

0.96%

1,500

March 12, 2012

March 12, 2015

1.08%

1,000

September 30, 2011

March 31, 2015

1.29%

2,500

April 2, 2010

April 2, 2015

2.22%

1,550

October 31, 2012

April 30, 2015

1.01%

2,500

February 28, 2011

August 31, 2015

1.91%

3,000

March 30, 2012

September 30, 2015

1.21%

2,000

April 27, 2012

October 30, 2015

1.27%

1,000

April 28, 2011

October 31, 2015

1.86%

1,500

December 26, 2011

October 31, 2015

1.34%

2,500

December 26, 2011

October 31, 2015

1.32%

2,500

December 26, 2011

October 31, 2015

1.34%

SubtotalLong-term debt

2,000
46,035

May 1, 2006

April 30, 20162.73%¥  5,000

November 12, 2010

November 12, 2015

1.79%

1,200

November 12, 2010

November 12, 2015

1.79%

800

November 12, 2010

November 12, 2017

2.02%

2,300

December 1, 2010

November 12, 2015

1.41%

800

December 1, 2010

November 12, 2015

1.41%

200

December 1, 2010

November 12, 2017

2.21%

700
800

January 31, 2011

January 29, 2016

1.94%

February 28, 2011

January 29, 2016

1.95%

500

March 31, 2011

January 29, 2016

1.91%

2,000

March 31, 2011

March 31, 2016

1.26%

1,000

April 28, 2011

January 29, 2016

1.89%

1,000

December 26, 2011

October 31, 2016

1.44%

2,500

December 26, 2011

October 31, 2016

1.42%

2,500

December 26, 2011

October 31, 2016

1.44%

2,000

January 10, 2012

January 29, 2016

1.27%

2,500

March 28, 2012

March 28, 2017

1.36%

500

March 28, 2012

March 28, 2019

1.77%

1,400

March 28, 2012

March 28, 2019

1.77%

1,000

June 29, 2012

June 30, 2017

1.29%

1,500

September 21, 2012

September 21, 2017

1.16%

5,000

September 21, 2012

September 21, 2017

1.16%

1,000

September 21, 2012

September 21, 2017

1.16%

1,000

October 31, 2012

October 31, 2016

1.06%

2,500

October 31, 2012

October 31, 2016

1.05%

1,500

October 31, 2012

October 31, 2017

1.10%

2,500

October 31, 2012

October 31, 2018

1.25%

2,500

December 10, 2012

December 12, 2016

0.98%

500

December 28, 2012

December 28, 2016

1.01%

2,000

December 28, 2012

December 28, 2017

1.09%

500

December 28, 2012

December 29, 2017

1.09%

500

January 15, 2013

January 15, 2017

0.97%

1,000

February 18, 2013

February 18, 2016

0.84%

1,500

March 26, 2013

March 26, 2018

1.04%

1,000

March 26, 2013

March 26, 2018

1.04%

1,000

April 30, 2013

April 30, 2016

0.71%

1,000

July 31, 2013

July 29, 2016

0.61%

1,500

July 31, 2013

July 31, 2018

0.71%

500

August 19, 2013

August 19, 2018

0.95%

1,000

August 19, 2013

August 19, 2018

0.95%

1,000

August 19, 2013

August 19, 2018

0.95%

500

August 19, 2013

August 19, 2018

0.97%

500

August 19, 2013

August 19, 2018

0.95%

500

Kenedix Office Investment Corporation Semiannual Report

Classification

Long-term debt

Drawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)August 30, 2013

August 31, 20181.08%¥    700

August 30, 2013

August 31, 2018

1.08%

500

August 30, 2013

August 31, 2018

1.08%

300

August 30, 2013

August 31, 2020

1.42%

1,500

September 30, 2013

September 30, 2019

1.06%

1,800

September 30, 2013

September 30, 2019

1.06%

900

October 31, 2013

October 31, 2018

0.89%

500

November 12, 2013

November 12, 2018

0.82%

1,000

November 12, 2013

November 12, 2020

1.07%

2,000

November 12, 2013

November 12, 2020

1.07%

500

November 29, 2013

November 30, 2018

0.84%

200

November 29, 2013

November 30, 2020

1.12%

1,000

November 29, 2013

November 30, 2020

1.12%

900

January 10, 2014

January 31, 2021

1.21%

1,300

January 31, 2014

January 31, 2017

0.67%

1,200

January 31, 2014

January 31, 2020

0.93%

3,700

January 31, 2014

January 31, 2021

1.13%

2,300

March 12, 2014

March 12, 2018

0.75%

2,250

March 12, 2014

March 31, 2019

0.78%

450

March 12, 2014

March 12, 2020

0.92%

1,800

March 12, 2014

March 12, 2023

1.36%

1,800

March 20, 2014

March 12, 2020

0.91%

3,000

March 20, 2014

September 20, 2021

1.01%

4,000

March 20, 2014

March 20, 2022

1.20%

3,000

March 20, 2014

March 12, 2023

1.35%

2,000

March 31, 2014

March 31, 2019

0.76%

2,500

April 22, 2014

October 31, 2020

0.95%

2,900

July 10, 2014

July 10, 2019

0.64%

500

July 10, 2014

July 10, 2021

0.90%

2,000

July 10, 2014

July 10, 2021

0.90%

500

July 14, 2014

July 31, 2019

0.68%

1,000

July 31, 2014

July 31, 2019

0.62%

1,000

July 31, 2014

July 31, 2020

0.74%

2,700

July 31, 2014

October 31, 2020

0.76%

300

July 31, 2014

July 31, 2022

1.01%

2,200

August 29, 2014

July 31, 2019

0.65%

1,000

September 1, 2014

August 31, 2021

0.89%

800

September 1, 2014

August 31, 2021

0.89%

500

September 3, 2014

August 31, 2022

0.98%

1,000

September 3, 2014

August 31, 2022

0.98%

950

September 22, 2014

September 30, 2020

0.80%

2,700

September 30, 2014

September 30, 2021

0.89%

1,000

October 31, 2014

October 31, 2021

0.80%

3,000

October 31, 2014

October 31, 2023

1.07%

2,000

October 31, 2014

October 31, 2023

1.13%

1,500

October 31, 2014

October 31, 2023

1.07%

1,000

October 31, 2014

October 31, 2024

1.26%

2,000

October 31, 2014

October 31, 2024

1.26%

Subtotal
Corporate bonds

Subtotal
Total

| 23

1,000
133,350

March 15, 2007

March 15, 20172.37%¥  3,000March 8, 2012

September 8, 2017

2.00%

1,500

September 12, 2013

September 12, 2018

1.00%

1,800

July 25, 2014

July 25, 2024

1.18%

2,000
8,300
¥187,685

24 |

6.

Kenedix Office Investment Corporation Semiannual Report

REDUCTION ENTRY

The amount of reduction entry of property and equipment acquired by government subsidy
In thousands of yen

Buildings and structures

7.

As of April 30, 2015

As of October 31, 2014

¥26,230¥26,230PER UNIT INFORMATION
Yen
From November 1, 2014 to April 30, 2015

From May 1, 2014 to October 31, 2014

Net asset value per unit

¥523,485¥509,408

Net income per unit

¥ 12,860¥ 10,150

Weighted average number of units (units)

397,394

351,672

The weighted average number of units outstanding of 397,394 as of April 30, 2015 and 351,672 as of October 31, 2014 was used for the computation of the amount of net income per unit. Net income per unit after adjusting for residual units is not included because there were no residual
investment units.

8.

INCOME TAXESThe Investment Corporation is subject to corporate income taxes at a regular statutory rate of approximately 34%. However, the Investment
Corporation may deduct from its taxable income amounts distributed to its unitholders, provided the requirements are met under the Special
Taxation Measures Law of Japan. Under this law, the Investment Corporation must meet a number of tax requirements, including a requirementthat it currently distribute in excess of 90% of its net income for the fiscal period in order to be able to deduct such amounts. If the Investment
Corporation does not satisfy all of the requirements, the entire taxable income of the Investment Corporation will be subject to regular corporate
income taxes. The Investment Corporation distributed in excess of 90% of its distributable income in the form of cash distributions totaling¥4,601 million (deducting ¥510 million as the provision of reserve for reduction entry) and ¥3,571 million (adding ¥2 million as the reversal ofreserve for reduction entry) for the periods ended April 30, 2015, and October 31, 2014. Therefore such distributions were treated as deductible
distributions for purposes of corporate income taxes. The effective tax rate on the Investment Corporation’s income was 0.03% for the fiscal
periods ended April 30, 2015 and October 31, 2014. The following table summarizes the significant differences between the statutory tax rate
and the effective tax rate:
From November 1, 2014 to April 30, 2015

From May 1, 2014 to October 31, 2014

Statutory tax rate

34.15%

34.16%

Deductible cash distributions(30.74)(34.17)

Provision of reserve for reduction entry(3.41)—

Others0.03

0.04

Effective tax rate

0.03%

0.03%

The significant components of deferred tax assets and liabilities as of April 30, 2015 and October 31, 2014 were as follows:
In thousands of yen
As of April 30, 2015

As of October 31, 2014

Enterprise tax payable¥   33¥   30

Amortization of leasehold rights

2,210

2,071

Subtotal deferred tax assets

2,243

2,101

Valuation allowance

2,210

2,071

Total deferred tax assets¥   33¥   30

Deferred tax assets:

Tax rate changes after the twentieth fiscal period
With the “Act on Partial Revision of the Income Tax Act, etc.” (Act No. 9 of 2015) promulgated on March 31, 2015, the local corporation tax rate
has been changed effective fiscal years starting on or after April 1, 2015. Accordingly, the effective statutory tax rate used to calculate deferred
tax assets and deferred tax liabilities for temporary differences, etc. expected to be resolved in accounting periods starting on or after April 1, 2015
will be changed to 32.31%. The effect of the announced tax rate changes is immaterial.

Kenedix Office Investment Corporation Semiannual Report

9.

| 25

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

10.

RELATED-PARTY TRANSACTIONS
1. PARENT COMPANY, CORPORATE UNITHOLDERS’ AND OTHER
Twentieth Fiscal Period (November 1, 2014 to April 30, 2015) and Nineteenth Fiscal Period (May 1, 2014 to October 31, 2014): Not applicable

2. AFFILIATED COMPANIES AND OTHER
Twentieth Fiscal Period (November 1, 2014 to April 30, 2015) and Nineteenth Fiscal Period (May 1, 2014 to October 31, 2014): Not applicable

3. FELLOW SUBSIDIARY COMPANIES AND OTHER
Twentieth Fiscal Period (November 1, 2014 to April 30, 2015) and Nineteenth Fiscal Period (May 1, 2014 to October 31, 2014): Not applicable

4. DIRECTORS, INDIVIDUAL UNITHOLDERS’ AND OTHER
Twentieth Fiscal Period (November 1, 2014 to April 30, 2015) and Nineteenth Fiscal Period (May 1, 2014 to October 31, 2014): Not applicable

11.

BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES,GAIN AND LOSS ON SALE OF REAL ESTATE PROPERTY

Rental and other operating revenues, property-related expenses, gain and loss on sale of real estate property for the periods from November 1,
2014 to April 30, 2015 and from May 1, 2014 to October 31, 2014 consist of the following:
In thousands of yen
From November 1, 2014 to April 30, 2015

From May 1, 2014 to October 31, 2014

Rental and other operating revenues:
Rental revenues¥ 9,075,126¥ 8,101,029

1,983,917

1,698,433

11,059,043

9,799,462

Parking space rental revenues

471,152

350,221

Utility charge reimbursement

1,019,055

976,931

Common area charges   Subtotal
Others:Miscellaneous

287,557

168,793   Subtotal

1,777,764

1,495,945    Total rental and other operating revenues

12,836,807

11,295,407

Property-related expenses:
Property management fees and facility management fees

¥ 1,241,711¥ 1,074,236

Depreciation

2,221,037

2,022,380

Utilities

1,208,553

1,103,867

Taxes

957,213916,289

Insurance

18,294

15,841

Repairs and maintenance437,406

174,512

Trust fees

45,46445,445

Others247,927

205,090

6,377,605

5,557,660

Revenue from sale of investment property

5,742,169—

Cost of investment property

4,892,161—

140,375—

709,633—

Revenue from sale of investment property

1,050,000

2,600,000

Cost of investment property

1,308,263

4,037,459

29,45787,059¥   287,720¥ 1,524,518   Total property-related expenses
Gain on sale of real estate property:

Other sales expenses    Gain on sale of real estate property
Loss on sale of real estate property:

Other sales expenses    Loss on sale of real estate property

26 |Kenedix Office Investment Corporation Semiannual Report

12.

LEASES

The Investment Corporation, as lessor, has entered into leases whose fixed monthly rents are due in advance with lease terms of generally two
years for office buildings and residential properties and with lease terms ranging from two to ten years for retail properties. The future minimum
rental revenues under existing non-cancelable operating leases as of April 30, 2015 and October 31, 2014 are as follows:
In thousands of yen
As of April 30, 2015

As of October 31, 2014

Due within one year

¥ 2,246,302¥ 2,138,972

Due after one year

10,202,936

9,346,089

Total¥12,449,238¥11,485,061

13.

FINANCIAL INSTRUMENTS

Twentieth Fiscal Period (November 1, 2014 to April 30, 2015)(A) OVERVIEW(1) POLICY FOR FINANCIAL INSTRUMENTS
The Investment Corporation procures essential funds for acquiring properties and undertaking the repayment of loans primarily through bankloans and the issuance of corporate bonds and new investment units. The Investment Corporation uses derivatives for the purpose of hedging its
exposure to changes in interest rates and does not enter into derivatives for speculative or trading purposes. Management of surplus funds isundertaken in a prudent manner that considers fully such factors as safety, liquidity, interest rate conditions and cash flows.

(2) TYPES OF FINANCIAL INSTRUMENTS AND RELATED RISK
Investment securities, which are Japanese silent partnership (tokumei kumiai, “TK”) interests, are exposed to credit risk of the issuer and risk offluctuation of value of its property.
Debt and corporate bonds are used primarily for procuring funds necessary for the acquisition of properties and have a redemption date of a
maximum of approximately ten years following the accounting date. Although a certain portion of said liabilities are subject to interest rate fluctuation risk, the Investment Corporation utilizes derivatives (interest-rate swap and interest-rate cap transactions) in order to reduce such risk.
Interest-rate swap and interest-rate cap transactions are used as derivative financial instruments. Utilizing interest-rate swap and interest-rate
cap transactions, the Investment Corporation fixes its interest expense for long-term debt bearing interest at a variable rate. With regard tohedge accounting methods, hedging instruments and hedged items, hedge policy, and the assessment of the effectiveness of hedging activities,
please see Note 2 (K) “Derivative Financial Instruments”.

(3) RISK MANAGEMENT FOR FINANCIAL INSTRUMENTS(a) Monitoring of market risk (the risks arising from fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap and interest-rate cap transactions in order to minimize risk arising from fluctuations in interest
rates on funds procured. The Investment Corporation periodically reviews the value of the property and financial condition of the issuer withregard to investment securities.
(b)	Monitoring of liquidity risk (the risk that the Investment Corporation may not be able to meet its obligations on scheduled due
dates) associated with funds procurement
Although loans and other liabilities are subject to liquidity risk, the Investment Corporation reduces such risk by spreading out payment due dates
and by using diversified fund procurement methods. Liquidity risk is also managed by such means as regularly checking the balance of cash reserves.

(4) SUPPLEMENTARY EXPLANATION OF THE ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available, fairvalue is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors
could result in a different fair value.

Kenedix Office Investment Corporation Semiannual Report| 27(B) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of financial instruments on the balance sheet as of April 30, 2015 and estimated fair value are shown in the following table.
The following table does not include financial instruments for which it is extremely difficult to determine the fair value (Refer to *2 below).
In thousands of yen

a Cash and bank deposits
Subtotal

Carrying value

Estimated fair value¥24,601,157¥24,601,157

Difference¥—

24,601,157

24,601,157—

a Short-term debt

3,000,000

3,000,000—b Corporate bonds(including current portion of corporate bonds)

8,300,000

8,500,380

200,380c Long-term debt(including current portion of long-term debt)
Subtotal

163,300,000

163,418,891

118,891

174,600,000

174,919,271

319,271———

Derivative Transactions (*)(*) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing net liability position.

*1: METHODS TO DETERMINE THE ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS AND OTHER MATTERS RELATED TO
SECURITIES AND DERIVATIVE TRANSACTIONSASSETSa Cash and bank deposits
Since these items are settled in a short period of time, their carrying value approximates fair value.

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

DERIVATIVE TRANSACTIONS
Please refer to Note 14 “DERIVATIVE TRANSACTIONS”.

*2: FINANCIAL INSTRUMENTS FOR WHICH IT IS EXTREMELY DIFFICULT TO DETERMINE THE FAIR VALUEClassification

Carrying value (In thousands of yen)

Investment securities¥1,076,656

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above TK interests are not included in thepreceding table.

*3: REDEMPTION SCHEDULE FOR RECEIVABLES
Due within 1 year or less
(In thousands of yen)

Cash and bank deposits¥24,601,157

Total¥24,601,157*4: REDEMPTION SCHEDULE FOR DEBT AND CORPORATE BONDS
In thousands of yen
Due within 1 year
or less

Due after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Due after
5 years

Short-term debt

¥ 3,000,000¥       —

¥       —

¥       —

¥        —¥       —Corporate bonds—

3,000,000

1,500,000

1,800,000—

2,000,000

Long-term debt

¥32,800,000¥17,700,000¥19,250,000¥15,050,000¥14,700,000¥63,800,000

28 |Kenedix Office Investment Corporation Semiannual Report

Nineteenth Fiscal Period (May 1, 2014 to October 31, 2014)(A) OVERVIEW(1) POLICY FOR FINANCIAL INSTRUMENTS
The Investment Corporation procures essential funds for acquiring properties and undertaking the repayment of loans primarily through bankloans and the issuance of corporate bonds and new investment units. The Investment Corporation uses derivatives for the purpose of hedging its
exposure to changes in interest rates and does not enter into derivatives for speculative or trading purposes. Management of surplus funds isundertaken in a prudent manner that fully considers such factors as safety, liquidity, interest rate conditions and cash flows.

(2) TYPES OF FINANCIAL INSTRUMENTS AND RELATED RISK
Investment securities, which are preferred equity securities issued by a special purpose entity (tokutei mokuteki kaisha, “TMK”) as set forth by the
Act on Securitization of Assets and Japanese silent partnership (tokumei kumiai, “TK”) interests, are exposed to the credit risk of the issuer andthe risk of its value fluctuating with the value of its property.
Debt and corporate bonds are used primarily for procuring funds necessary for the acquisition of properties and have a redemption date of a
maximum of ten years following the accounting date. Although a certain portion of said liabilities are subject to interest rate fluctuation risk, theInvestment Corporation utilizes derivatives (interest-rate swap and interest-rate cap transactions) in order to reduce such risk.
Interest-rate swap and interest-rate cap transactions are used as derivative financial instruments. Utilizing interest-rate swap and interest-rate
cap transaction, the Investment Corporation fixes its interest expense for long-term debt bearing interest at a variable rate. With regard to hedge
accounting methods, hedging instruments and hedged items, hedge policy, and the assessment of the effectiveness of hedging activities, please
see Note 2(K) “Derivative Financial Instruments”.

(3) RISK MANAGEMENT FOR FINANCIAL INSTRUMENTS(a) Monitoring of market risk (the risks arising from fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap and interest-rate cap transactions in order to minimize risk arising from fluctuations in interest
rates on funds procured. The Investment Corporation periodically reviews the value of the property and financial condition of the issuer withregard to investment securities.
(b)	Monitoring of liquidity risk (the risk that the Investment Corporation may not be able to meet its obligations on scheduled due
dates) associated with procurement of funds
Although loans and other liabilities are subject to liquidity risk, the Investment Corporation reduces such risk by spreading out payment due dates
and by using diversified fund procurement methods. Liquidity risk is also managed by such means as regularly checking the balance of cash reserves.

(4) SUPPLEMENTARY EXPLANATION OF THE ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available, fairvalue is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors
could result in a different fair value.

(B) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of financial instruments on the balance sheet as of October 31, 2014 and estimated fair value are shown in the following
table. The following table does not include financial instruments for which it is extremely difficult to determine the fair value (Refer to *2 below).
In thousands of yen
Carrying value

a Cash and bank deposits
Subtotal

Estimated fair value

Difference¥ 16,469,910¥ 16,469,910¥     —

16,469,910

16,469,910—

a Short-term debt

15,900,000

15,900,000—b Corporate bonds(including current portion of corporate bonds)

8,300,000

8,522,510

222,510c Long-term debt(including current portion of long-term debt)

163,485,000

164,117,409

632,409¥187,685,000¥188,539,919¥854,919———

Subtotal
Derivative Transactions (*)(*) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing net liability position.

Kenedix Office Investment Corporation Semiannual Report| 29*1: METHODS TO DETERMINE THE ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS AND OTHER MATTERS RELATED TO
SECURITIES AND DERIVATIVE TRANSACTIONSASSETSa Cash and bank deposits
Since these items are settled in a short period of time, their carrying value approximates fair value.

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

DERIVATIVE TRANSACTIONS
Please refer to Note 14 “DERIVATIVE TRANSACTIONS”.

*2: FINANCIAL INSTRUMENTS FOR WHICH IT IS EXTREMELY DIFFICULT TO DETERMINE THE FAIR VALUEClassification

Carrying value (In thousands of yen)

Investment securities¥2,679,139

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above preferred equity securities of TMK
and TK interests are not included in the preceding table.

*3: REDEMPTION SCHEDULE FOR RECEIVABLES
Due within 1 year or less
(In thousands of yen)

Cash and bank deposits¥16,469,910

Total¥16,469,910*4: REDEMPTION SCHEDULE FOR DEBT AND CORPORATE BONDS
In thousands of yen

Short-term debt

Due within 1 year
or less

Due after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Due after
5 years¥15,900,000¥       —

¥       —

¥       —

¥       —

¥       —Corporate bonds——

4,500,000

1,800,000—

2,000,000

Long-term debt

¥30,135,000¥30,800,000¥16,200,000¥16,750,000¥12,750,000¥56,850,000

14.

DERIVATIVE TRANSACTIONS

The following summarizes the contracted amount and the fair value of interest-rate swap and the interest-rate cap contracts as of April 30, 2015:a Hedge accounting not applied
Not applicableb Hedge accounting applied
Hedge accounting
methodContracted amount(In thousands of yen)Type of derivativetransactions

Hedged items

Special treatment ofinterest-rate swaps

Interest-rate swaps:
Receive/floating andpay/fixed

Long-term debt

¥90,550,000

Special treatment ofinterest-rate caps

Interest-rate caps
transaction

Long-term debt

Total

Fair value(In thousands of yen)Calculation method for
applicable fair value¥86,050,000*—

3,000,000

2,000,000*—¥93,550,000¥88,050,000

Maturing after 1 year—(*) Interest-rate swaps and interest-rate caps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, theirfair value is included in the fair value of the hedged long-term debt.

30 |Kenedix Office Investment Corporation Semiannual Report

The following summarizes the contracted amount and the fair value of interest-rate swap and the interest-rate cap contracts as of October 31, 2014:a Hedge accounting not applied
Not applicableb Hedge accounting applied
Hedge accounting
methodContracted amount(In thousands of yen)Type of derivativetransactions

Hedged items

Fair value(In thousands of yen)Calculation method for
applicable fair value

Special treatment ofinterest-rate swaps

Interest-rate swaps:
Receive/floating andpay/fixed

Long-term debt

¥77,850,000¥71,850,000*—

Special treatment ofinterest-rate caps

Interest-rate caps
transaction

Long-term debt

3,000,000

3,000,000*—¥80,850,000¥74,850,000

Maturing after 1 year

Total

—

(*) Interest-rate swaps and interest-rate caps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, theirfair value is included in the fair value of the hedged long-term debt.

15.

INVESTMENT AND RENTAL PROPERTIES

Twentieth Fiscal Period (November 1, 2014 to April 30, 2015)
The Investment Corporation owns real estate for rental purposes mainly in the Tokyo Metropolitan Area for the purpose of generating rental revenues.
The carrying value in the balance sheets and corresponding fair value of those properties are as follows:
Carrying value (In thousands of yen)
As of October 31, 2014

Net change

As of April 30, 2015

Fair value As of April 30, 2015
(In thousands of yen)

¥365,835,095¥14,070,719¥379,905,814¥381,864,000

notes:	1. The carrying value represents the acquisition cost less accumulated depreciation.
2. The fair value is the appraisal value or the survey value determined by outside appraisers.
3. Among changes in the amount of real estate for rental purposes that occurred during the fiscal period under review, principal increases and decreases were
the acquisition of seven properties totaling ¥22,140,043 thousand, the sale of four properties totaling ¥6,200,424 thousand and depreciation amounting to¥2,221,037 thousand.

Income and loss in the fiscal period ended April 30, 2015 for real estate for rental purposes is listed in the Note 11. “BREAKDOWN OF RENTALAND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, GAIN AND LOSS ON SALE OF REAL ESTATE PROPERTY”.
Nineteenth Fiscal Period (May 1, 2014 to October 31, 2014)
The Investment Corporation owns real estate for rental purposes mainly in the Tokyo Metropolitan Area for the purpose of generating rental revenues.
The carrying value in the balance sheets and corresponding fair value of those properties are as follows:
Carrying value (In thousands of yen)
As of April 30, 2014

Net change

As of October 31, 2014

Fair value As of October 31, 2014
(In thousands of yen)

¥332,883,295¥32,951,800¥365,835,095¥358,470,000

notes:	1. The carrying value represents the acquisition cost less accumulated depreciation.
2. The fair value is the appraisal value or the survey value determined by outside appraisers.
3. Among changes in the amount of real estate for rental purposes that occurred during the fiscal period under review, principal increases and decreases were
the acquisition of seven properties totaling ¥38,462,889 thousand, the sale of two property totaling ¥4,037,459 thousand and depreciation amounting to¥2,022,380 thousand.

Income and loss in the fiscal period ended October 31, 2014 for real estate for rental purposes is listed in the Note 11. “BREAKDOWN OFRENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, GAIN AND LOSS ON SALE OF REAL ESTATE PROPERTY”.

Kenedix Office Investment Corporation Semiannual Report

16.

| 31

SEGMENT AND RELATED INFORMATION

Twentieth Fiscal Period (November 1, 2014 to April 30, 2015)(A) SEGMENT INFORMATION
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has no reportable segment
subject to disclosure.

(B) RELATED INFORMATION(1) INFORMATION ABOUT EACH PRODUCT AND SERVICE
Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of the operating revenue
on the statement of income.

(2) INFORMATION ABOUT EACH GEOGRAPHIC AREA(a) Net sales
Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenue on the statement of income.
(b) Property and equipment
Disclosure is omitted because the amount of property and equipment located in Japan accounts for over 90% of the amount of property andequipment on the balance sheet.

(3) INFORMATION ABOUT EACH MAJOR CUSTOMER
Disclosure is omitted because net sales to a single external customer account for less than 10% of the operating revenue on the statement of income.
Nineteenth Fiscal Period (May 1, 2014 to October 31, 2014)(A) SEGMENT INFORMATION
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has no reportable segment
subject to disclosure.

(B) RELATED INFORMATION(1) INFORMATION ABOUT EACH PRODUCT AND SERVICE
Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of the operating revenue
on the statement of income.

(2) INFORMATION ABOUT EACH GEOGRAPHIC AREA(a) Net sales
Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenue on the statement of income.
(b) Property and equipment
Disclosure is omitted because the amount of property and equipment located in Japan accounts for over 90% of the amount of property andequipment on the balance sheet.

(3) INFORMATION ABOUT EACH MAJOR CUSTOMER
Disclosure is omitted because net sales to a single external customer account for less than 10% of the operating revenue on the statement of income.

17.

SUBSEQUENT EVENTS

Not applicable.

32 |Kenedix Office Investment Corporation Semiannual Report

Corporate Governance
Investment and Management Decision-making System
As the asset management company, Kenedix Real Estate Fund Management (KFM) creates guidelines governing our asset management.
These Asset Management Guidelines (AMGs) define our investment policy, rules concerning transactions with related parties, distribution
policy and disclosure policy.
The structure of the decision-making process is outlined below.

Decision-making Process
ReportEach Department(each REIT Div.)

Compliance Officer(common)Compliance
Committee(common)

1. Investment Policy

Asset Management
Committee(each REIT Div.)

Board of Directors(common)Acquisition and Sale of Properties

The Investment Management Department of Office REIT Division

The Investment Management Department of Office REIT Division

proposes any revision of the AMGs to the Compliance Officer.

selects properties for possible acquisition according to an agreed

After review, the Officer advances the revisions to the Compliance

upon process. The Investment Management Department first

Committee where they are deliberated and resolved. Lastly, theproposes property acquisitions to the Compliance Officer. When

Office REIT Division Asset Management Committee (OAMC)

the Officer concludes there are no conflicts or other issues, thedeliberates and reaches resolution on the revisions.

Officer then forwards the proposal to the OAMC for final review

The AMGs may be revised to reflect changes in investment
conditions and our investment policy, as well as other reasons

and resolution.
In the event that the Compliance Officer identifies such issues

such as changes in the legal or regulatory environment. Wheneveras related-party transactions, potential regulatory conflicts or

the AMGs are changed, the General Manager of Office REIT

other cases the Officer deems require closer scrutiny, the proposal

Division must report each revision to the Board of Directors.

must be submitted for review and resolution by the Compliance
Committee before proceeding to the OAMC for final review and2. Decision-making Process on Asset Management
Asset Management Plans
Relevant departments of Office REIT Division may propose property

resolution. After a related-party transaction is approved, theCompliance Officer must report this transaction to the Board of
Directors.

management plans to the Compliance Officer. After review by the

The Investment Management Department of Office REIT Division

Officer, the plans are deliberated and resolved in the Compliancealso proposes property sales or disposals to the Compliance Officer,

Committee. Following that OAMC deliberates and reaches resolu-

who reviews the proposal and, when necessary, forwards it to thetion on these plans.

Compliance Committee. In the absence of conflicts or other issues,

Each time a new property management plan is approved orrevised, the General Manager of Office REIT Division must report

the Compliance Officer may send the proposal directly to the
OAMC for final review and resolution.

this to the Board of Directors.

Environmental Initiatives
KFM undertakes investment management operations in accordance with the following
environmental policies:
1. Compliance with Environmental Laws and Regulations
2. Promotion of Energy Conservation Measures
3. Reduction of Environmental Burden
4. Disclosure of Environmental Information
5. Environmental Education
Thanks to continuous efforts, we have won a range of certifications, including the highest
ranked Green Star rating from the Global Real Estate Sustainability Benchmark (GRESB)
surveys for three consecutive years.

Kenedix Office Investment Corporation Semiannual Report| 33

Unitholders’ Information
Kenedix Office Investment Corporation
Fiscal Periods:
Six months ending April 30 and October 31
Stock Listing:	Real Estate Investment Trust Market of the Tokyo Stock Exchange (Security Code: 8972)
Transfer Agent:	Sumitomo Mitsui Trust Bank, Limited
Auditor:Ernst & Young ShinNihon LLC

IR Schedule (20th and 21st Fiscal Periods)
Apr.
2015

Jun.
2015

Jul.
2015

Oct.
2015

Dec.
2015

Jan.
2016

End ofthe 20th Period

Performance forthe 20th Period
is announced

Distributions forthe 20th Period
are paid

End ofthe 21st Period

Performance forthe 21st Period
will be announced

Distributions forthe 21st Period
will be paid

General Breakdown of Unitholders
Foreign corporations
and individuals
End of the20th Period
End of the
19th Period

Other domestic
corporations

Financial institutions(including securities companies)

40.5%

1.2%

53.4%

163,866 units

4,991 units

216,234 units

41.2%

1.4%

52.1%

146,421 units

4,802 units

184,795 units

Individuals
and others
4.9%
19,794 units

5.3%
18,992 units

Total
404,885 units
Total
355,010 units

Note: Figures are rounded to the first decimal place.

Top Ten Unitholders (As of April 30, 2015)
Name

Share of Outstanding Units

Units Held

Japan Trustee Services Bank, Ltd. (Trust Account)
Trust & Custody Services Bank, Ltd. (Securities Investment Trust Account)
The Master Trust Bank of Japan, Ltd. (Trust Account)
The Nomura Trust and Banking Co., Ltd. (Investment Trust Account)
Nomura Bank (Luxembourg) S.A.
The Bank of New York Mellon SA/NV 10
State Street Bank and Trust Company 505223
JP Morgan Chase & Co. 385174
The Bank of New York, Non-Treaty JASDEC AccountState Street Bank and Trust Company 505001
Total<Note>

70,85655,51939,816
18,93018,101
9,674
9,494
6,664
6,614
6,218
241,88617.50%
13.71%
9.83%
4.67%
4.47%
2.38%
2.34%
1.64%
1.63%
1.53%
59.74%

Note: The percentage of shares are rounded down to the second decimal place.

Unit Price and Trading Volume(Units)Closing Price

Trading Volume

11,000 •Offer price of PO(¥873,180)
May 22, 2007
(payment date)

Offer price of IPO(¥580,000)
Jul. 20, 2005
(payment date)

8,000 •
7,000 •

5,000 •

Offer price of PO(¥593,096)
May 1, 2006
(payment date)

4,000 •

• 1,000,000• 900,000• Average trading volume during the 20th Period (2015/4): 1,646 units• 800,000
Offer price of PO(¥274,510)
Jul. 20, 2011
(payment date)

Offer price of PO(¥252,200)
Nov. 16, 2009
(payment date)

6,000 •(Yen)

• As of As of May 29, 2015
Highest price (trading price): ¥988,000 (May 31, 2007)
Lowest price (trading price): ¥100,300 (October 20, 2008)

20,000 •Offer price of PO(¥430,950)
Nov. 13, 2013
(payment date)

Offer price of PO(¥478,725)
May 27, 2014
(payment date)• 700,000• 600,000• 500,000• 400,000

2,000 •

Offer price of PO• 300,000(¥614,250)
Nov. 27, 2014
(payment date) • 200,000

1,000 •

• 100,000

3,000 •

0•

•0
July

Oct.

2005

Apr.

Oct.

2006

Apr.

Oct.

2007

Apr.

Oct.

2008

Apr.

Oct.

2009

Apr.

Oct.

2010

Apr.

Oct.

2011

Apr.

Oct.

2012

Apr.

Oct.

2013

Apr.

Oct.

2014

Apr.

2015

http://www.kdx-reit.com/eng/

Disclaimer: This semiannual report includes translations of certain documents originally filed and made available in Japan in accordance with the Securities and Exchange Law
of Japan. The English language semiannual report was prepared solely for the convenience of readers outside Japan and is not intended to constitute a prospectus.
This semiannual report should not be construed as an offer or solicitation to buy or sell any securities of KENEDIX Office Investment Corporation (KENEDIX-REIT).
English terms for Japanese legal, accounting, tax and business concepts used herein may not be precisely identical to the concept of the equivalent Japaneseterms. With respect to any and all terms herein, including without limitation, financial statements, if there exist any discrepancies in the meaning or interpretation
thereof between the original Japanese documents and English translation contained herein, the original Japanese documents will always govern the meaning andinterpretation.
None of KENEDIX-REIT, KENEDIX Real Estate Fund Management, Inc. nor any of their respective directors, officers, employees, partners, unitholders, agents,
affiliates nor their advisors shall be responsible or liable for the completeness, appropriateness, or accuracy of English translations or the selection of the portion(s)of any document(s) translated into English.
The financial statements of KENEDIX-REIT have been prepared in accordance with generally accepted accounting principles in Japan (Japanese GAAP), which
may materially differ in certain respects from generally accepted accounting principles of other jurisdictions.
This semiannual report contains forward-looking statements. These statements appear in a number of places in this semiannual report and include statements
regarding the intent, belief, or current and future expectations of KENEDIX-REIT or KENEDIX Real Estate Fund Management, Inc. with respect to its business, financial condition and results of operations. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,”“plan,” “anticipate,” “believe,” ”estimate,” “predict,” “potential,” or the negative of these terms or other similar terminology. These statements are not guarantees of future performance and are subject to various risks and uncertainties. Actual results, performance or achievements, or those of the industries in which we
operate, may differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. In addition, theseforward-looking statements are necessarily dependent upon assumptions, estimates and data that may be incorrect or imprecise and involve known and unknown
risks and uncertainties. Accordingly, readers of this document should not interpret the forward-looking statements included herein as predictions or representationsof future events or circumstances.
Potential risks and uncertainties also include those identified and discussed in this document. Given these risks and uncertainties, readers of this document are
cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of information produced herein. We disclaim any obligation
to update or, except in the limited circumstances required by the Tokyo Stock Exchange, announce publicly any revisions to any of the forward-looking statements
contained in these documents.