Kenedix Realty Investment Corporation
6th Period Results (ending April 2008)
September 2008
Kenedix REIT Management, Inc.
http://www.kdx-reit.com/eng/

Updated the Financial Strategies section(page15-16) on
August 1,2008
Updated Portfolio overview(page27-28) on September
26,2008
Updated Kenedix REIT Management,Inc．－Organization
chart(page37) on September 26,2008

SECTION 1

Stronger Focus on Office Buildings

Increase in asset scale focused on office buildings
Acquisition of office buildings worth about¥50B a year
(¥B)
250

■Offices ■ Central Urban Retails ■Residentials

End of 6th period (2008/4)
CentralUrban
Retails
7.3%

Residentials
5.8%

217.2

Offices
86.7%

197.1
175.1

200

146.7

Changes in composition of portfolio properties(1st period = 100)

150

188.4
138.0
81.4

100

69.1

0

Central Urban Retails
Residentials

500

116.0

400

86.2
300

48.3
50

Offices

600

37.8
12.4

12.4

19.0

20.8

16.1

16.1

16.1

44.5

43.1

43.1

200
100

16.1
12.7

End of 1st period End of 2nd period End of 3rd period End of 4th period End of 5th period End of 6th period(2005/10)(2006/4)(2006/10)(2007/4)(2007/10)(2008/4)0
End of
End of
End of
End of
End of
End of
1st period 2nd period 3rd period 4th period 5th period 6th period(2005/10) (2006/4) (2006/10) (2007/4) (2007/10) (2008/4)

Note: The figures at the end of the 6th period includes the acquisition price of building planned to be acquiredof Sakae 4-chome Office Building (Tentative Name) (¥4,325M)
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

2

Overview of office buildings portfolio (end of 6th period)
Increasing focus on mid-sized office buildings in Tokyo metropolitan area
Geographical distribution of assets

Geographical composition of
portfolio assets(¥100M)

1,200

1,096

Central Tokyo
Other Tokyo metropolitan area
Other regional areas 761

1,000
800

Other regional areas

Central Tokyo

882

19.5%

577

600

22.3%

358

400 275

Other Tokyo
metropolitan area

200
End of
2nd
periodEnd of
3rd
periodEnd of4th
periodEnd of5th
periodEnd of6th
periodNote: Central Tokyo: Chiyoda, Chuo, Minato, Shibuya, Shinjuku

Changes in average acquisition prices(¥100M)

40.0
35.0

29.7

31.4

32.5

30.0

20.0

End of
4th period

End of
5th period

End of
6th period

2mins(10properties)￥31.8B

Tokyo Metropolitan Areaaccounts for 80.4%

Within 3 mins:
mins: 63.0%,
Within 6 mins:
mins: 95.3%

Composition of portfolio assets
by asset value

Composition of portfolio assets
by total floor area

¥7.5–10.0B(3properties)¥25.7B
¥5.0–7.5B(8properties)¥45.8B

25.0

7–10mins
6mins(3properties)(5properties)
8.8B
5mins ￥18.0B
1min(10properties)(14properties)￥27.3B￥54.5B
4mins(5properties)￥15.5B
3mins(11properties)￥32.5B

58.1%

0
End of
1st
periodDistance on foot from thenearest train station

Less than ¥1.0B(1property)¥0.7B¥1.0–2.5B(28properties)¥52.1B
¥2.5–5.0B(18properties)¥63.9B¥2.5B–
5B–¥7.5B accounts for
58.2%
Note: The figures at the end of the 6th period includes the acquisition price of building planned to be acquired of Sakae 4-chome
Office Building (Tentative Name) (¥4,325M)
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

More than 10,000m(5properties)¥31.7B

2

Less than 3,000m(15properties)¥28.9B2

23,000m –2
10,000m(38properties)¥127.6B

3,000m2–10,000m2
accounts for 67.7%
3

Office buildings acquired(including planned acquisitions in 7th period)
Tokyo metropolitan area

Acquisition of 16 office buildings (¥58.2B) in 6 months

Other regional areas

Office buildings acquired in 6th period

A-45 KDX Roppongi 228
Building

A-46 Hiei Kudan-Kita
Building

A-53 KDX Hakata-Minami A-54 KDX Kitahama
Building
Building

A-47 KDX ShinYokohama
381Building

A-48 KDX KawasakiEkimae Hon-cho
Building

A-55 Shin-toshin
A-56 KDX Jimbocho
Maruzen Building
Building

A-49 Nissou Dai-17
Building

A-50

A-52 KDX Kanda
A-51 KDX Hamacho
Nakanohashi Building
Misaki-cho Building

Ikejiri-Oohashi
Building

Office buildings to be acquiredin 7th period

A-57 KDX Gobancho
Building

A-58 Sakae 4-chome Office
Building (Tentative Name)

A-59 KDX Iwamoto-cho A-60 KDX Harumi
Building
Building

Appraisal-value based yields for properties acquired in 6th period and to be acquired in 7th period
Office buildings acquired in 6th period

4.9

5.1

5.5

5.4
5.0

4.8

Office building to be acquired in 7th period

5.3

4.7

Average

4.9

4.7

4.8

4.6

4.9
4.6

4.6

4.2

A-45

Tokyo
metropolitan area:
4.8%
Other regional
areas: 5.1%

A-46

A-47

A-48

Tokyo metropolitan area

A-49

A-50

A-51

A-52

Other regional areas

A-53

A-54

A-55

A-56

A-57

A-58

A-59

A-60

Note: Yield based on appraisal value that were calculated by data available from property appraisal reports and should not be
understood as data indicating actual or future profitability (NCF under direct capitalization method/Appraisal value)

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

4

Office development projects: Sakae 4-chome Office Building(Tentative Name)
Proactive involvement in development projects has allowed the company to secure high-quality newproperties

Sakae 4-chome Office Building (Tentative Name)
Image

♦

♦ Location: 4-chome Sakae,
Naka-ku,
Nagoya-shi♦ Site area
: 1,192.22m2♦ GFA: 10,848.45m2 (planned)♦ Planned completion : June 2009 (planned)

Location・3 minutes’ on foot from “Sakae” Station on Subway Higashiyama Line, Meijo
Line and Meitetsu Seto Line・The building facing “Hirokoji-dori,” one of the main streets in Nagoya City, with
an approx. 40m frontage♦ Structure♦ Number of stories♦ Acquisition price: S (portion RC): F11: Land
¥ 4,000M
Building ¥ 4,325M (planned)♦ Land acquisition date
: April 25, 2008
♦ Building acquisition date : July 1, 2009 (planned)♦ Building
・Typical floor area of about 200 tsubo
・A ceiling height of approx. 2.8m, OA floors (100mm),
HVAC (eliminating the need for additional heaters/air
conditioners), electric blinds, full-height glass windows, asecurity system using non-contact IC cards
・Rooftop garden, to realize a high level of environmental
design・Seismic isolation structure to deal with earthquake risks
・A new office building constructed by Takenaka
Corporation♦ Leasing activities
・The asset manager for this property will lead the activities
ahead of the completion of the construction
・Fixed rents will be received from the seller based on a master
lease contract concluded with the seller upon acquisition of thebuilding
Outline of the master lease contract with guaranteed fixed rent
Term: 1 year from July 2009 (when the building is acquired)
Guaranteed rents: ¥35,000/tsubo per month for retail floors¥18,000/tsubo per month for office floors

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

5Office development projects of Kenedix, Inc.：KDX Harumi Building
Investment in high-quality new properties by utilizing the first refusal right on properties developed by
Kenedix GroupKDX Harumi Building♦ Site area

: S・SRC: Harumi 3-chome, Chuo-ku, Tokyo ♦ Structure♦ Number of stories : B1 F11: 2,230.69 m2♦ GFA: 12,694.32 m2♦ Acquisition price: ¥10,250M♦ Completion: February 2008

♦ Acquisition date

: June 30, 2008

♦ Location♦ Building
・A new office building designed and constructed by Shimizu
Corporation
・A typical office floor area of approx. 261 tsubo
・A ceiling height of approx. 2.8m, OA floors (100mm), grid
system ceiling, HVAC (eliminating the need for additional
heaters/air conditioners), electric blinds, a security system using IC
cards, etc.
・Damping structure with seismic dampers allocated♦ Leasing activities
・The Investment Corporation will conclud a master lease contract,with partially guaranteed fixed rent, with Kenedix, Inc.
for 1 year from the acquisition date
Outline of the master lease contract with partially guaranteed fixedrent♦ Location
・9 minutes’ on foot from “Kachidoki” Station on Toei Oedo Line・Harumi Area is one of the new office areas in Tokyo bayside district
・The area is being transformed into a complex urban area (combining
business, commercial and residential areas) through district planning・Term of contract: 1 year from June 30, 2008
・Vacant portion by end-tenants: guaranteed fixed rents (*)* Office floors (6 – 11F):
Retail floor (1F):¥18,000/tsubo per month¥15,000/tsubo per month

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

6

Focusing on mid-sized office buildings
Increasing focus on mid-sized office buildings including replacement of the portfolio assets
Strategy

Increasingly focus on “midmid-sized officebuildings in Tokyo Metropolitan Area ”(including asset reshuffle with respect to type,area, size and age)

Sale of 23 residential properties
by the cross-deal
DisposalType# of properties
Tokyo metropolitan area
Other regional areas(Initial) acquisition price
Average acquisition
price

Residentials
23 properties
16 properties
7 properties(Reference) Amounts of properties acquired/disposed and funds raised
Nov. 2007 – Jun. 2008

February 1, 2008
approx ¥58.2B(16properties)

Acquisition
Offices
9 properties
7 properties
2 properties¥30.34B¥31.98B¥1.32B¥3.55B
55B▲¥34.0B(24properties)

Borrowings
Offices
Residentials
Central Urban Retails

-400

-200

0

200

400

600
(¥100M）

Sale of ZARA Tenjin Nishi-doriDisposal
Property name
Type
Area

June 2008(Reference)

Acquisition(Reference)
ZARA
Tenjin Nishiishi-dori KDX Harumi Building
Urban retails
OfficeOther regional Tokyo metropolitan
areas
area

Note: Borrowings includes ¥24.5B for acquisition of new properties.
Office Building does not include the (not yet acquired) building portion of Sakae 4-chome Office Building(Tentative Name).

(Reference) Property acquisition/disposition (by region)
Nov. 2007–Jun. 2008

Acquisition(Initial) *acquisition
price¥3.68B¥10.25B
優先交渉先の選定及び基本協定書の締結（2008/6/11)
Year Build

Nov. 2005

Tokyo metropolitan area
DisposalFeb. 2008
-400

-200

Other regional areas0

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

200

400

600

(¥100M）

7

Asset size expansion and future growth (acquisition by pipeline)
Aiming to be No.1 REIT specializing in mid-sized office buildings byasset size worth about ¥ 400B consisting primarily of mid-sized officebuildings■Original

77 properties¥197.1B

Kenedix Group■Pension/Private funds

Properties
owned byKenedix (incl.
development
properties)
Brokerage

Pension funds

64 properties

Support line

Selected acquisitions by pipeline (Jun. 2007 – Jun. 2008)
Information obtained
preferentially■KDX Proprietary investments(Development projects)

KDX Harumi Building

Sakae 4-chome Office
Building (Tentative Name)¥146.7B

Real estatemarketWarehousing

29 properties¥61.1BAt IPO(2005/8)

End of
3rd period(2006/10)

Original
network ofCorporate Sector
the Asset
Developer
Management
Financial Institution
Company

Toranomon Toyo
Building

Hiei Kudan-Kita
Building

KDX Iwamoto-cho
Building

KDX Gobancho
Building

End of
5th period(2007/10)

Growth performance by pipeline

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

Future vision

8

SECTION 2

Management of Existing Properties

Management of existing properties－track record for increasing the rent level of office buildings
Track record for increasing the rent level for new contracts
Changes in average rent increases (rents for
new tenants)
25%
21.6%
20%
16.5%
15%
16.2%
14.9%
10%

Breakdown of change rates for rentsof new contracts (6th period)（based on leased area）▲5-▲10%More than
0-▲5%30% increase
＋0～5%

5%

Tenants turnover in office portfolio(Actual and estimated: annualized)
1st
2nd
3rd
period period period

4th
period5th
period6th
period7th
period
(E)

12.2%

14.8%

8.2%

7.7%

5.9%

＋5～10%

0%
3rd
period4th
period5th
period6.1%

8.6% on average (annualized basis)＋20～30%＋10～20%6th
period2.7%(Reference) Proportion of new contracts (3rd – 6th periods)

Average variances by area (simple average for all cases)
Continued
Central Tokyo:
35.5% (7 rent increases, no rent decreases) occupancy
Other Tokyo metropolitan area: 13.2% (5 rent increases and 1
by existing
rent decrease)
Other regional areas: 8.3% (9 rent increases and 4 rent decreases) tenants

Average variances (incl. rent decreases):
3rd period：7.0% 5th period：11.4%

3rd period
4th period
5th period
6th period(87.2%)

4th period：14.0% 6th period：16.7%
Note: The above figures represent the simple average variances inrents for all new contracts

Note: The above percentages represent the variances from the average rents for
new tenants of the relevant office buildings (offices on 2nd floor or above)New
tenants(12.8%)

Note: The above chart shows the proportions in the total leased
floor area at the end of the 6th period

Track record for increasing the rent level for renewed contracts
Changes in ratios of rent increase cases andaverage rent increases

Breakdown of change rates for rentsof renewed contracts (6th period)

Ratios of rent increase cases
Average rent increases
7.8%

60%
40%

6.9%

8%

51.5%

6%

39.5%

4%

20%
0%

+20～30%7.5%+10～20%

Unchanged2%
13.0%
4th period0%
5th period

48.5%

51.5％
+5～10%

6th period

Note: The ratios of rent increase cases above reflect all upward rent revisions
achieved through negotiations irrespective of renewal terms. The ratios ofrent increase cases are based on leased floor area, whereas the averagerent increases are based on rents+0～5%(Reference) Renewal status for all
existing tenants (6th period)

Tenants with
their renewal
dates yet tohave reached(75.5%)

Tenants who
renewed theircontracts during
6th period(24.5%)

Note: The ratios above are based on the total leased
area at the end of the 6th period

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

10Management of existing properties—Cost reduction effect by the scale of portfolio
Cost reduction effect by the scale of portfolio investing primarily in mid-sized office buildings
Changes in budgets and actual
costs for constructions

Reduction of construction costs by tendering the installation of
airair-conditioning facilities (6th period)
合計：443百万円
Total: ¥443M(¥M)

BudgetActual costs

1,500

139

Average auction
price
５社入札額平均(5 Co.)

103

101

74

26
1,300
1,100

▲39.3%
削減率：39.3%

900

Construction
costs
工事発注額

70

50

79

58

合計：269百万円
Total:
¥269M
0

50

100

150

200

250

12

700

１74百万円の削減¥174M
reduction

300

350

400

500

(¥M)
450 （百万円）

KDX Nakano-Sakaue Building KDX Okachimachi Building
KDX Kiba Building
KDX中野坂上ビル
KDX御徒町ビル
KDX木場ビル
KDX茅場町ビル
KDX乃木坂ビル
KDX Kayabacho
Building
KDX
Nogizaka Building

Continued bids
for high-priced
construction
projects

A bid for a
package of
construction
projects

Proactive
involvement inconstruction
projects
subcontracted by
KRI (constructor)■ Continued bids for high-priced
construction projects
・# of successful bids in 5th period: 4 properties,
leading to a cost reduction of ¥190M (a rate of
reduction: 24.4%)
・# of successful bids in 6th period: 5 properties asmentioned above, leading to a cost reduction of¥174M (a rate of reduction: 39.3%)
・# of bids planned in 7th period: 5 properties

5th period

6th period

7th period

Notes:
1 A budget for construction consists of the budget estimated at beginning of period in theoperation/management plan purposes + the amount of budget for additional construction
projects acquired during the current period
2 The actual construction costs consist of construction costs publicly announced (Capex +repairs and maintenance costs, excluding the construction management fees)

Cost reductions achieved for
realreal-estate rental business

Future management
policies

Reduction in building management costs
Of 57 office buildings, 36 offices
have succeeded in reducing BM
costs→ about ¥132M reduced(on an annualized basis)

Considering groupmanagement by collective
building managementcompany

Reduction in electricity bills
Further decrease inconstruction costs(leading to a greater rateof cost reduction)

Of 57 office buildings, 32 offices
have purchased electricity in bulk
bloc
→about ¥12M reduced (on anannualized and estimated basis)

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

Aiming to improve the quality
and service level ofmanagement

11Management of existing properties—CS (Customer satisfaction) strategy based management
CS survey ＝ Survey on Customer Satisfaction
Survey to customers = tenants (Admin Dpt. staff and employees of tenants)
conducted through cooperation with J. D. Power Asia PacificTime for the survey

Dec. 2005(2nd period)

Jul. 2007(5th period )# of target properties*

20

44

Admin Dpt. 190
Employees 950

Admin Dpt. 446
Employees 2,348

Admin Dpt. 84%
84%
Employees 78%

Admin Dpt. 88%
88%
Employees 81%

Note: includes 1 urban retail property

Trends in actual construction works by purpose(\100M)
14
12

For CS

Employees

2nd survey

Response rate

Case study of CS oriented renovation works
CS results

1st survey

Survey Population(Reference)

Adomin
Dpt..
Dpt

z

△

○

KDX Hirakawacho
Building△○

Higashi-Kayabacho
Yuraku Building△○

KDX Hatchobori Building △○KDX Nakano-Sakaue
Building△△

Kanda Kihara Building△△

KDX Funabashi Building△○

KDX Kayabacho Building △

△

△

○

○

△

▲

▲

△

△

○

△

○

○

○

△

Property name
KDX Nihonbashi 313
Building

For VU/LU
10
8

KDX Kajicho Building

For ER/MEOther

KDX Monzen-Nakacho
Building
KDX Okachimachi
Building
KDX Toranomon Toyo
Building

64
20Karasuma Building
3rd period

4th period

5th period

6th period

7th period(planned)

For CS: to meet comprehensive requests based on CS survey as well as to meet
direct requests from tenants
For VU/LU etc.: construction works for improving value and/or increasing
occupancy (incl. conversions)
For ER/ME etc.: to meet requirements on engineering reports or for maintenance
Other: construction works to comply with KDX standard or others
Note: The data above has been compiled by the Investment Corporationfrom the actual construction works done in accordance with theoperation/management plans

KDX Minami Semba
Dai-1Building
Hakata-Ekimae Dai-2
Building

Outline of main construction works for improvementof Customer Satisfaction (CS) (6th period)
Drain pipe odor control; Overhaul of ventilation ducton the roof
Addition of air conditioners to the elevator hall on
the first basement floor; cleaning of ventilation ducts
on each floor
Installation of hand dryers to each rest room
(3F–9F)
Overhaul of poorly ventilated toilets
Renovation of common areas (6F - 10F) for the
6th period
Installation of automatic cleaning systems for
restrooms for men
Renovation of common areas
Replacement of air fans for restrooms on the 3F
and 7F floors
Instillation of Shielding to jalousie doors on theelevator halls on each floor; repair interiors
deteriorated with condensation on the 6F floor
Installation of roll screens on windows in rest rooms;
installation of hand dryers
Installation of slip resistance to outdoor staircases
Installation of hand dryers to rest rooms for men
and women on B1 and 4F–9F
Renewal of mixing faucets in the kitchens on eachfloor; installation of hand dryers for rest rooms on
1F–7F; installation of doors to rest rooms;
improvement for eliminating congestion on theelevator halls
Addition and upgrade of a board showing tenants at
the entrance
Installation of safety thumb turns to private areas

Building of an unmanned multilevel parking;renovation of rest rooms; installation of safety
thumb turns in private areas* Total satisfaction rating based on CS survey (general CSI), Total 1,000 points○ 700 points or over
△ 600 points to less than 700 points▲ 500 points to less than 600 points

KDX Hakata Building○○

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

12

Improving value/competitiveness of office buildings owned
through centralized property management
Comprehensive property management services provided by Kenedix Group(Property Management Division of Kenedix REIT Management, Inc.)

Raise rent levels
and profitability

Evaluation of respective office building owned and improvement of portfolio assets

Raise value and competitiveness ofproperties(4th – 7th period)

Evaluation items on hardware• A/C equpment• Security• Entrance• Water equipment for rest
rooms

4

• ・・・
Evaluation items on software２

Construction
works to raise CS (5th period & 6th period)

Soft

３

Reduction of
construction costthrough auction
process

All office buildings

５

Execution of effective construction works

Evaluation ofrespective property(7th period～)(3rd – 6th period)

Introduction of KDX
standard(4th period ～)• Responses from personnel
change of PM
4５３

Understanding the competitivenessand issues concerning
hardware/software of properties

２

• ・・・

１

(2nd period & 5th period)

１

Understand the needsof tenants through CS
survey• Level of comfort• Security system (safety
management)

Hard

Improve value of the portfolio
assets

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

13

SECTION 3

Financial Strategies

Stable Financial Strategy—
Diversified maturities and Fixed debt interest rates
Debt-financing with an emphasis
Diversify debt maturity
on diversifying repayments
Amount of debt maturing in each year (as(as of the end of August 1,
1, 2008)

Amounts of interestinterest-bearing debts
Changes in outstanding balances(¥100M)

1,000

140

900

120

Short-term borrowings
Inv estment corporation bonds
Long-term borrowings

800

35
90

100

700
600

80

150

60
40
20 32.5
0

500

115

100
65

85

400

85
60
35

300

50
30

30

30

200
100

2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016 2016
1H
2H
1H
2H
1H
2H 1H
2H
1H
2H
1H
2H
1H
2H
1H
2H
1H
2H

Long-term borrowings
Short-term borrowings0
1st
periodInvestment corporation bonds
Fixed borrowings (Over 5years) from DBJ

Notes:
1 Shows the amounts of debt maturing in each half
2 1H is from Apr. 1 to Sep. 30, 2H is from Oct. 1 to Mar. 31 of the following year and not identical with thefiscal period of the Investment Corporation (e.g. 2008, 1H is from Apr. 1, 2008 to Sep. 30, 2008)

Conservative policy centered on borrowings
Fixed debt interest rates
at an fixed interest rate
Proportion of loans at fixed interest rate* vs. variable interest
interest rates(as of the end of August 1,
1, 2008)
Floating interest rate debt
¥ 6.75B 6.8%

Average interest rate
Short-term : 1.17%
Long-term: 1.74%
DurationLong-term: 2.9 years

Fixed interest rate debt
¥ 92.5B 93.2%

Note： “Fixed interest rate debt”
includes borrowings that wereconverted to fixed from floating
through interest rate swap

2nd
period3rd
period4th
period5th
period6th
period4th
period5th
period6th
periodChanges in raratios
tios
100%

80%

60%

40%

20%

0%
1st
period2nd
periodLong-term borrowings

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

3rd
periodInvestment corporation bonds

Short-term borrowings

15

Stable financing strategy—Diversified financing methods
Conservative interest-bearing debt ratio （keptwithin the mid 30% to c. 50% range）

Changes in LTV

Breakdown of debt providers(as of Aug. 1, 2008, ¥100M)

(¥B)

120
100

Total interestinterest-bearing debt and LTV
45.6%
38.7%

37.5%

47.0%

50%

Citibank
1040%

Mitsui Sumitomo F&M
1730%

Resona Bank
43

38.9%
35.3%

80
60
88.5

40
20
0

62.0
29.0
1st
period

第1期末

75.5

89.75

2nd
period第2期末

3rd
period

第3期末

20%
10%

42.0
4th
period第4期末

5th
period第5期末

6th
period0%Credit rating
RatingRating acquired

Moody’s

A3 (stable) Feb. 2006
Japan Credit Rating Agency (JCR) A+ (stable) Dec. 2006
The only example of 10year bonds by a single-A
Investment Corporation Bonds
rated J-REIT
Interest rate Maturity Payment date
Size
Name
1st Bond ¥9B
1.74%
Mar. 15, 2007
5 yrs.
2nd Bond ¥3B

2.37%

10yrs.

Mar. 15, 2007

Investment
Corporation Bonds
120

Sumitomo Mitsui
Banking Corporation
189.5
Chuo Mitsui Trustand Banking
135

Norinchukin Bank
70
Mitsubishi UFJ
Trust and Banking
72
Bank ofTokyo-Mitsubishi UFJ
98

第6期末

Credit rating and issuance of investment corporation bonds
bonds

Rating agency

Chiba Bank
8

Development Bankof Japan
110

Aozora Bank
120

Commitment Line
LenderBank of TokyoMitsubishi UFJ
Citibank

AmountDuration¥2.5B

2008/3/21-2009/3/19¥2.5B

2008/1/11-2009/1/8

Secured diversified financing methods
Outline of shelf
shelf registration
Type
Investment
Corporation Bond
Investment unit
certificate

Assumed size Assumed issuance

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

¥100B

2 years from Feb. 15, 2007

¥100B

2 years from May 7, 2007

16

SECTION 4

Appendix

6th period financial results—performance highlights
Performance(¥M)

3rd period
results(to Oct. 2006)

4th period
results(to Apr. 2007)

5th period
results(to Oct. 2007)

6th period
results(to Apr. 2008)

Operating revenues

5,288

5,778

7,208

8,582

Disposal income

157

130

-

512

Rental business profit

2,734

3,040

4,002

4,182

+180 -

Depreciation

1,135

1,243

1,392

1,430

+38 -

Net operating income (NOI)

3,869

4,283

5,394

5,612

Net Operating Income： Rental revenues – Property-related+218 expenses+ Depreciation

FFO (Funds from operation)

3,102

3,261

4,184

4,259

+75 Net income + Depreciation – Profit/Loss on sale of real estate

Net income

2,124

2,148

2,792

3,342
3,342

157,000units

157,000units

200,000units

200,000units

FFO per unit

¥19,759¥20,772¥20,920¥21,297

Distribution per unit

¥13, 529¥13, 682¥13, 960¥16,711

3rd period
results(to Oct. 2006)

4th period
results(to Apr. 2007)

5th period
results(to Oct. 2007)

6th period
results(to Apr. 2008)

Total assets

160,314

188,400

213,763

230,520

Total unitholders’ equity

90,93390,877

127,761

128,314¥ 579,192¥ 578,839¥ 638,809¥ 641,570

Interest-bearing debt ratio

38.7%

47.0%

35.3%

38.9%

+3.6% Increase due to acquisition of new properties

Unitholders’ equity to total assets

56.7%

48.2%

59.8%

55.7%

▲4.1%

64

72

77

68

192,085.34m2

223,322.77m2

248,653.07m2

248,625.52m2

95.3%

95.9%

96.9%

95.9%

Number of units outstanding

Difference of
5th & 6th
periodNotes¥7,630M if the profit on disposal of real estate
1,374 (Reference)
deductedof the profit/loss from sale of 23 residentials: profit of+512 Breakdown¥952M and loss of ¥439M¥2,829M if the profit on disposal of real estate＋550 (Reference)
deducted

0 No new issue＋¥377 Increase for each period since 3rd period(Reference) ¥14,100 if the profit/loss on disposal of real estate＋¥2,753 deducted

Financial ratio

Total unitholders’ equity per unit

Number of properties
Total leasable floor area
Occupancy ratio

Difference of
5th & 6th
periodNotes＋16,756 Approx. 7.6% increase＋552 +¥ 2,761 Net asset value after distribution adjustment: ¥624,859-+ 14 offices (including Sakae 4-chome Office Building (TentativeName)) and ▲23 residentials
2
2 + 48,666.2m for office buildings, not including Sakae 4-chome▲27.55m Office Building (Tentative Name))
95.8% for offices, 98.7% for central urban retails, 95.4% for▲1.0% residentials▲9

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

18

7th period earnings forecasts
Operating forecasts for 7th period (to October 2008)
6th period
forecasts(announced on
Oct. 26, 2007)(¥M)

6th period
results(to Apr.
2008)

7th period
forecasts(to Oct.
2008)

Notes

Operating revenues

7,377

8,582

8,174 6th period results include ￥952M, the gain on disposal of residentials

Operating expenses

3,876

4,517

4,254 6th period results include ￥439M, the loss on disposal of residentials

1,849

2,017

2,166 -

1,418

1,430

1,449 -

3,501

4,065

3,919 6th period results include ¥ 512M, the gain on disposal of residentials

Non-operating expenses

682

730

924 -

Interest expense

582

618

822 Increase of Interest–bearing debt (+¥12B from 6th period)

Ordinary income

2,828

3,343

3,003 -Net income

2,827

3,342

3,002 -

Number of units outstanding

200,000

200,000

200,000 -Distribution per unit

¥14,100¥ 16,711

Approx. ￥14,100 when deducting the gain/loss of real
¥ 15,000 (Reference)
estateNOI (Rental revenues – Property-related expenses +Depreciation)

5,528

5,612

6,008 +¥395M, increase of rental operating income

FFO (Net income + Depreciation –Gain/Loss on disposal of real estate

4,100

4,259

4,451 +¥192M, no influence with disposal of properties(Reference) Gain/Loss on disposal of real estate-

512(Reference) Changes in the number of properties

77

77→68

Property-related expenses(excl. depreciation)
Depreciation
Operating income[Reference]- Gain/Loss on disposal of 23 residentials
of KDX Iwamoto-cho Building and KDX Harumi Building
70 Acquisition(to be acquired)

Preconditions of 7th period forecasts

Preconditions of 8th period forecasts

Funds for acquisition of KDX Harumi Building from borrowings andcash on hand

The estimated amount of property tax and city planning tax on 60
office buildings: + ¥98M from 7th period

As of the end of period, interest-bearing debt is expected to reachapprox. ¥ 101.7B, with interest-bearing debt ratio of approx. 42%

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

19

KRI unitholders
Investment units by unitholders
22.7

1st period

49.0

12.4

47.0

15.6

2nd period

Type of unitholders (as of April 30, 2008)
16.0

(%)

# of units
held (unit)

(%)

5,014

93.1%

10,855

5.4%

104

1.9%

98,863

49.4%

100

1.9%

9,968

5.0%

170

3.2%

80,31440.2%

100.0% 200,000

100.0%

Individual and Others
Financial Inst.
(Incl. Securities companies)
Other Domestic Corporation

29.0

8.5

# of
unitholder

34.6

3rd period

10.6

4th period

6.8

46.5

6.4

40.3

5th period

5.7

48.4

5.1

40.8

Total

6th period 5.4

49.4

5.0

40.2

Note: Second decimal place omitted for ratios

0

48.0

20

6.8

40

Individuals and Others
Other Domesctic Corporation

(%)

60

80

Foreign Corporation and Individuals

5,388

100

Financial Inst. (incl. Securities companies)
Foreign Corporation and Individuals

Top 10 unitholders (as of April 30, 2008)(Reference) Reporting of major unitholders# of units held
(unit)(%)

Japan Trustee Services Bank, Ltd. (Trust Acct.)
Trust & Custody Services Bank, Ltd. (Securities
Investment Trust Acct.)
NikkoCiti Trust and Banking Co., Ltd. (Investment
Trust Acct.)
The Master Trust Bank of Japan, Ltd. (Trust Acct.)
The Nomura Trust and Banking Co., Ltd.
(Investment Trust Acct.)
State Street Bank and Trust Company
Kenedix, Inc.
Goldman Sachs International

17,0698.53%

15,224

7.61%

14,797

7.39%

14,4507.22%

10,694

5.34%

9,094
7,850
7,040

4.54%
3.92%
3.52%

The Bank of New York, Treaty JASDEC Account
UBS AG London Asia Equities
JPMC Goldman Sachs Trust JASDEC Lending
Account
TOTAL

5,619
3,406

2.80%
1.70%

3,406

1.70%

108,649

54.32%

Name

Note: Second decimal place omitted for ratios

Nomura Securities Co., Ltd
Nomura Asset Management Co., Ltd.
Nomura Securities Co., Ltd.
Nomura International PLC
Nikko Asset Management Co., Ltd.
Nikko Asset Management Co., Ltd.
Nikko Citigroup Limited
Cohen & Steers Capital Management Inc.
Cohen & Steers Capital Management Inc.
Cohen & Steers Europe SA
Mizuho Securities Co., Ltd.
Mizuho Asset Management Co.,Ltd.
Mizuho Trust & Banking Co., Ltd.
Mizuho Securities Co., Ltd.

# of units
Submitted on held (unit)
2008/5/2
29,175

2007/10/5

2008/4/18

2007/7/23

18,41010,467298
15,027
14,585442
10,281
10,22437
11,258
10,223
818
217

Ratio
(%)
14.59%
9.21%
5.23%
0.15%
7.51%
7.29%
0.22%
5.14%
5.12%
0.02%
5.63%
5.11%
0.41%
0.11%

Notes:
1 Reports submitted from May 22, 2007 to May 2, 2008
2 Ratio held of 200,000 units outstanding

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

20

J-REITs investment trends by investor category
Trend of trading in JJ-REIT securities by investors

Foreign Corporations and Individuals
Buy

Sell

Banks
Buy

(¥100M)

Net(¥100M)

Sell

Net

1,000

5,000
500

4,000

0
-500

3,000

No
v

00
8
Ap
r2

20
07

7
20
0

7
Ju
n

20
0
Ja
n

20
06

20
06
Au
g

O

M
ar

00
5

1,000

ct
2

-1,500
20
05

2,000

M
ay

-1,000Investment Trusts
0(¥100M)

Buy

Sell

Net

800
600

-1,000400-2,000200
0-3,000

-200
-400

00
8
Ap
r2

20
07
No
v

n
Ju

20
0

7

7
20
0
n
Ja

20
06
Au
g

20
06
M
ar

00
5
ct
2
O

20
05
M
ay

20
08
Ap
r

20
07
No
v

20
07
Ju
n

20
07
Ja
n

20
06
Au
g

Ma
r

20
06

-600
Oc
t2
00
5

Ma
y

20
05

-4,000Source: Tokyo Stock Exchange (as Jun. 2008)

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

21

Disclosure and IR activities
Complete renewal of company website
Proactively held meetings with investors

Active information
disclosure through ourcompany website

Asset Management Reports(sent to existing investors)■You can check the
portfolio and individual
properties from the portfolio
list and map. The pages forindividual properties arelinked with Google map

Ability to sort press release by item

(Reference) Number of investor meetings
Domestic institutions

284

Domestic regional financial institutions

113

International investors (Europe)

106

International investors (US)118

International investors (other)

108

TOTAL

729

Note:
1
From Jun. 21, 2005 to Apr. 30, 2008
(including conference calls)

Domestic institutions

33

Domestic regional financial institutions

22

International investors (Europe)

13

International investors (US)29

International investors (other)

11

TOTAL

108

Note:
1 From Nov. 1, 2007 to Apr. 30, 2008

English Annual
Reports(Reference) Access to
KRI website
Press release
Portfolio
Disclosure material
KDRM site top
What’s New
Dividends
Occupancy rate
English Website
TOTAL TRAFFICEnglish(clicks)

12,439
9,001
5,685
5,465
4,774
3,345
2,559
2,297
45,565Note:
1 Six-months from Nov. 1, 2007 to Apr.
30, 2008

We have renewed our English website
in May 2008

Disclosure through English
Websitehttp://www.kdx-reit.com/eng/

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

22

Borrowings
The borrowings as of Aug. 1, 2008
Classification

Short-term
Borrowings

Current
portion of
long-term
borrowings

Long-term
Borrowings

Lender

The Chuo Mitsui Trust and Banking Co., Ltd
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust and Banking Corporation
Citibank Japan Ltd.
The Chuo Mitsui Trust and Banking Co., Ltd
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Total Short-Term Borrowings
The Norinchukin Bank, Resona Bank, Ltd.
Aozora Bank, Ltd., Resona Bank, Ltd.
The Chiba Bank, Ltd., Aozora Bank, Ltd., Mitsui Sumitomo Insurance Co.,Ltd
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Aozora Bank, Ltd, The Chuo Mitsui Trust and Banking Co., Ltd, The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust and Banking Corporation, Resona Bank, Ltd.
Total current portion of long-term borrowings
The Chuo Mitsui Trust and Banking Co., Ltd, Sumitomo Mitsui Banking Corporation, Mitsubishi UFJ Trustand Banking Corporation, Resona Bank, Ltd.
Aozora Bank, Ltd., Mitsui Sumitomo Insurance Co.,Ltd
Development Bank of Japan
Mitsubishi UFJ Trust and Banking Corporation
Development Bank of JapanThe Norinchukin Bank
Sumitomo Mitsui Banking Corporation
The Chuo Mitsui Trust and Banking Co., Ltd
The Norinchukin Bank
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Banking Corporation
Aozora Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation
The Chuo Mitsui Trust and Banking Co., Ltd
Sumitomo Mitsui Banking Corporation
Aozora Bank, Ltd., The Bank of Tokyo-Mitsubishi UFJ, Ltd.
The Chuo Mitsui Trust and Banking Co., Ltd
Aozora Bank, Ltd.
Resona Bank, Ltd.
Development Bank of Japan
Aozora Bank, Ltd.
Mitsubishi UFJ Trust and Banking Corporation, Sumitomo Mitsui Banking Corporation
Mitsubishi UFJ Trust and Banking Corporation, Sumitomo Mitsui Banking Corporation, The Bank ofTokyo-Mitsubishi UFJ, Ltd.
The Chuo Mitsui Trust and Banking Co., Ltd, Sumitomo Mitsui Banking Corporation, Resona Bank, Ltd.
Total Long-Term Borrowings
Total Borrowings

Balance
(¥M)

1,250
2,000
1,000
1,000
1,000
500
6,750
3,500
2,000
2,000
2,500
6,500

Interest rate(%)

Drawdown date

Repayment date

1.135
1.244
1.105
1.203
1.155
1.193

Sep. 20, 2007
Jun. 30, 2008
Oct. 31, 2007
May. 1, 2008
Jan. 10, 2008
Feb. 29, 2008

Sep. 20, 2008
Sep. 30, 2008
Oct. 31, 2008
Nov. 1, 2008
Jan. 10, 2009
Feb. 28, 2009

1.090
1.098
1.449
1.476

Nov. 1, 2005
Dec. 8, 2005
Mar. 1, 2006
Mar. 16, 2006

Oct. 31, 2008
Dec. 7, 2008
Feb. 28, 2009
Mar. 16, 2009

1.629

May. 1, 2006

Apr. 30, 2009

Aug. 1, 2005

16,500
9,500

1.288

2,500
5,000
1,000
3,000
2,500
2,000
2,000
1,500
2,000
2,500
2,000
1,500
3,000
2,000
1,000
3,000
1,000
1,000
1,500
3,000
2,000
2,500

2.199
2.731
2.149
2.124
1.964
1.574
1.875
1.646
1.339
1.503
1.366
1.429
1.609
1.559
1.563
1.463
1.905
1.987
2.150
2.263
1.867
1.681

3,500

1.870

3,500
64,00087,250

1.992

May. 1, 2006
Jul. 14, 2006
Sep. 1, 2006
Dec. 1, 2006
Apr. 2, 2007
Apr. 17, 2007
Oct. 31, 2007
Jan. 10, 2008
Feb. 29, 2008
Mar. 31, 2008

Jul. 31, 2010
Apr. 30, 2011
Apr. 30, 2016
Jul. 13, 2011
Aug. 31, 2013
Nov. 30, 2011
Apr. 2, 2010
Apr. 2, 2012
Apr. 16, 2011
Oct. 31, 2009
Jan. 10, 2012
Feb. 28, 2011
Aug. 31, 2011
Sep. 30, 2011

Apr. 25, 2008

Oct. 25, 2009

May. 1, 2008

Nov. 1, 2011
Feb. 28, 2011
Jun. 30, 2012
Dec. 28, 2012
Mar. 31, 2011
Jan. 31, 2010

Jun. 30, 2008
Jul. 15, 2008
Jul. 31, 2008

Jan. 31, 2011
Jul. 31, 2011

Notes:
1 All short-term borrowings carry floating interest rates
2 Long-term borrowings consist of (1) borrowings with fixed interest rates, (2) borrowings with floating interest rates, using interest rate swaps to minimize the risk of
future interest rate increase for (2) the interest rate after the interest rate swap (fixed interest rate) is listed
3 All borrowings are repayable in full on maturity
4 The interest rates are rounded down to the nearest fourth decimal place
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

23

Unit price performance/transaction volume
KRI unit price performance
Volume (unit)

Unit price (Yen)
Follow-on price
JPY 873,180

6,000

1,000,000
950,000

5,000

900,000
850,000

4,000

3,000

Listing price
JPY 580,000

800,000

Follow-on price
JPY 593,096

750,000
700,000
650,000

2,000

600,000
550,000

1,000

500,000
0Jul. 21, 2005

Feb. 28, 2006

Oct. 3, 2006
VolumePortfolio expansion

May. 16, 2007

Dec. 18, 2007

KRI closing price450,000
Jul. 30, 2008(as of Aug. 1, 2008)

Portfolio expansion+
Increase the ratio of office buildings

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

24Income statements

Rental and other operating revenues
Rental revenues
Common area charges
OthersParking space rental revenues
Utility charge reimbursements
Miscellaneous
Total rental and other operating revenues (A)Profit on side of trust beneficiary interests in realestateOperating revenues
Property management fees and management fees
Utilities
Taxes
Repairs and maintenance costs
Other expenses¹
Depreciation
Total property-related expenses (B)Rental business profit (A-B)
Net operating income (NOI)
Loss on disposal of real-estate

5th period
2007/5/1–2007/10/31
AmountOf(¥ thousand) operating(%)
6,334,707
5,336,255
998,452
873,538
222,255
476,613
174,669
7,208,246
7,208,246
704,418454,312329,927
119,710205,345
1,392,013
3,205,728
4,002,518
5,394,531-

6th period
2007/11/1–2008/4/30
AmountOf(¥ thousand) operating(%)
6,770,710
5,626,514
1,144,195
859,754240,631458,128
160,994
7,630,464
952,230

100.0

8,582,695
750,333
450,236395,277
149,230
272,430
1,430,125
3,447,634
4,182,830
5,612,956
439,333

Asset management fees

369,009424,141

Other operating expenses 2

162,583
3,737,320
3,470,925
11,934205,9314,517,040
4,065,654
8,712

Operating expenses
Operating income

Non Operating income
Interest expense
Investment coporation bonds interest
Financing related expense
Amortization of bond issuance costs
Amortization of unit issuance costs
Investment unit issue cost（※1） costs
Amortization of organization
Other non-operating expenses
Non-operating expenses
Non-operating expenses
Ordinary incom e
Income before income taxes
Income taxes
Deferred income taxes
Net incom e
Retained earnings at the beginning of period
Retained earnings at the end of period

Notes:
1 Other expenses:
2 Other operating expenses:

51.8
48.2
0.2

481,855

504,589

113,304

113,537

24,33828,471

5,877

5,813

41,46841,468

－
5,089

－
5,089

17,859689,794▲ 677,860
2,793,064
2,793,064
1,029▲5
2,792,040
43
2,792,084

31,640730,610▲ 721,897
3,343,757
3,343,757
1,773
▲ 217
3,342,201
84
3,342,285

9.6
▲9.3
38.7
38.7
0.0
38.7

100.0

Net operating days in each period♦ 08/4period ：182days(Nov. 1, 2007–Apr. 30, 2008)
07/10period：184days(May 1, 2007–Oct. 31, 2007)
To see Income statement by property, pleaserefer to the list in the Kessan Tanshin♦ Rental and other operating revenues:– A total of 77 properties held as of the end of the period to Oct. 2007
・ 23 residentials disposed in Feb. 2008
・14 office properties acquired in the period to Apr. 2008
– A total of 68 properties held as at the end of the period to Apr. 2008♦♦

Gain on disposal of real-estate and other properties: disposal of 13
residentials
Loss on disposal of real-estate and other properties: disposal of 10
residentials

Summary of the revisions to the 6th period (ended April 30, 2008) results forecast

52.6
47.4
0.1

Initial
RevisedResults(¥M) forecasts forecasts(08/4/30)(07/10/26) (07/12/11)

Operatingrevenues

8.5
▲ 8.4
39.0
39.0
0.0
38.9

7,377

7,935

Difference

Note

8,582

・The increased amount is made up of¥439M reflecting the total loss and gain
on disposal of properties and increased
revenues from 5 office properties+647 acquired additionally・Upward fluctuation of Net gain on
disposal of 23 residential properties(+16)

Operatingexpenses

3,876

3,961

4,517

The increased amount is made up of¥439M reflecting the total loss and gain
+556 on disposal of properties and increased
revenues from 5 office properties
acquired additionally

Operatingincome

3,501

3,974

4,065

+91 -

Net income

2,827

3,287

3,342

+55 acquired additionally

Dividend
per unit¥14,100 ¥16,400 ¥16,711

Primarily due to 5 office properties+¥311 -

Insurance premium, trust fees, etc.
Directors compensation, asset custodian fees, administrative service fees, audit fees etc.

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

25

Balance sheet
End of 6th period

ASSETS
Current assets

5th period
as of Oct. 31, 2007

6th period
as of Apr. 30, 2008

Amount(¥ thousand)Amount(¥ thousand)

12,570,970

Cash and bank deposits
Entrusted deposits

(%)

4.9

6,561,025
5,762,315

Other current assets
Fixed assets

247,630
200,932,798

Property and equipment at cost
Buildings

200,564,337
4,896,943

Land
Buildings in trust
Lands in trust
Intangible assets
Ground leasehold
Investments and other assets

6,379,367
6,813,393
94.0
93.8

204,266
216,915,367
216,483,952
9,520,811

94.1

0.1

124,742,605
285,3500.1

0.1

285,350
146,065

0.1(¥M)

23,326
121,5200.1

1,217
207,848

Organization costs

25,44820,358

Corporate bond issuance costs
Unit issuance costs

62,997
171,774

57,183130,305
100.0

230,520,243

100.0

Current liabilities
Trade and other payables

21,245,911
358,3289.9

34,026,147
441,418

14.8

Short-term debt
Other account payables

19,500,000
168,666

31,750,000
351,588

Rents received in advance

1,141,332

1,172,674

77,58464,756,142

310,465
68,179,934

OthersFixed liablities

30.3

④=③-①

④/② ⑤=③-②⑤/ ②

Acquisition
price

BV

Appraisal
value

Difference

(%)

(%)

184,080
16,05912,709212,848

187,493
16,415
12,860216,769

205,761
18,28012,778236,819

Acquisition
price

BV

Appraisalvalue

137,979
16,05943,052
197,090

140,411
16,541
43,896200,849

156,048
18,25044,358
218,656

21,681 11.8%
2,221 13.8%
69
0.5%
23,971 11.3%

Difference

18,2689.7%
1,865 11.4%-82 -0.6%
20,050
9.2%

Offices
Central urban retails
Residentials
Total

Difference(%)

18,069 13.1%
2,191 13.6%
1,306
3.0%
21,566 10.9%

Difference(%)

15,637 11.1%
1,709 10.3%
462
1.1%
17,8078.9%

0.1

213,763,989

TOTAL ASSETS

Offices
Central urban retails
Residentials
Total

③

(Reference) End of 5th period

123,629,101
285,3502,534
260,220

(¥M)

②

93.9

25,928,590
56,291,945

12,411
68,165

Deferred income tax asset
Deferred assets

5.8

7,918,083
64,120,208

285,350
83,110

Leasehold and security deposits
Long-term prepaid expenses

13,397,026

(%)

①

29.6

Corporate bonds
Long-term debt

12,000,000
44,000,000

12,000,000
46,000,000

Leasehold and security deposit received
Security deposit received in trust

647,396
8,102,312

1,271,027
8,905,814

Derivative liability
LIABILTIES

6,434
86,002,054

40.2

3,091
102,206,081

44.3

Total unitholders' capital
Retained earnings

124,973,750
2,792,084

58.4
1.3

124,973,750
3,342,285

54.2
1.4

Unrealized gain from deferred hedge transactions
EQUITIES▲ 3,899
127,761,934

▲ 0.0
59.8

▲ 1,873
128,314,161

▲0.0
55.7

TOTAL LIABILITIES AND UNITHOLDERS' EQUITY

213,763,989

100.0

230,520,243

100.0♦ Properties and equipment at cost
– Trust beneficiary interests in 55 properties
and investments in 13 real-estate properties
as at the end of 6th period (KDX Funabashi
Building, KDX Nogizaka Building, KDX
Nishi-Gotanda Building, KDX Okachimachi
Building , KDX Nishi-Shinjuku Building, KDX
Monzen-Nakacho Building, KDX Roppongi
228 Buildings, KDX Kwasaki-Ekimae Honcho Building, KDX Kanda-misakicho
Building, KDX Hakata-Minami Building、KDX
Jimbocho Building、KDX Gobancho
Building, Sakae 4-chome Office Building(Tentative Name)♦ Included current installments of long-term
debt (¥26B, 6th period)♦ Out of the interest rate swap transactions,
one was accounted for under deferred hedge
accounting (Notional principal amount ¥1.5B)

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

(Reference) NAV per IU
Based on BV
Based on BV(after adjustments for dividends)
After adjustments for unrealized profits*¥ 641,570¥ 624,859¥ 741,820＊Market value reflecting the unrealized profits of properties(Reference) Funds available for
additional acquisitions
End of 6th period

Total interest-bearing debt (¥100M) 897
LTV
38.9%
Pro forma debt based acquisition capability: Approx. ¥51.0B(Prop forma to achieve LTV 50% based on
the percentage as of end of 6th Period)

26

Portfolio overview (Office buildings and central urban retailproperties)
Office buildings as of the end of September 26, 2008 (60 properties)
Occupancy
Acquisition price
Area

1

(¥M)

# of props. Name

Location

A-60

Chuo ward, Tokyo

10,250KDX Harumi Building

Completion

Ratio

2

(% )

date

Feb. 2008

Occupancy
Acquisition price

3

Area

100.0%

A-40

Toranomon Toyo Building

Minato ward, Tokyo

9,850

Aug. 1962

100.0%

A-46

Hiei Kudan-Kita Building

Chiyoda ward, Tokyo

7,600

Mar. 1988

100.0%A-37

KDX Ochanomizu Building

Chiyoda ward, Tokyo

6,400

Aug. 1982

86.3%

A-32

KDX Shiba-Daimon Building

Minato ward, Tokyo

6,090

Jul. 1986

100.0%A-13

KDX Kojimachi Building

Chiyoda ward, Tokyo

5,950

May 1994

98.2%

A-1

KDX Nihonbashi 313 Building

Chuo ward, Tokyo

5,940

Apr. 1974

100.0%

A-16

Toshin 24 Building

Yokohama, Kanagawa

5,300

Sep. 1984

100.0%A-2

KDX Hirakawacho Building

Chiyoda ward, Tokyo

5,180

Mar. 1988

95.8%

A-47

KDX Shin-Yokohama 381 Building

Yokohama, Kanagawa

4,700Mar. 1988

97.5%

A-17

Ebisu East 438 Building

Shibuya ward, Tokyo

4,640

Jan. 1992

100.0%

Tokyo
metroporitan
area

OfficeOther
regional
areas

Tokyo
metroporitan
area

Completion
2

Ratio
3

Location

(¥M)

A-31

KDX Monzen-Nakacho Building

Koto ward, Tokyo

1,400

Sep. 1986

A-52

KDX Kanda Misaki-cho Building

Chiyoda ward, Tokyo

1,380

Oct. 1992

100.0%A-34

KDX Hon-Atsugi Building

Atsugi, Kanagawa

1,305

May 1995

100.0%A-35

KDX Hachioji Building

Hachioji, Tokyo

1,155

Dec. 1985

85.6%

A-28

KDX Nogizaka Building

Minato ward, Tokyo

1,065

May 1991

100.0%A-10

KDX Koishikawa Building

Bunkyo ward, Tokyo704

Oct 1992

100.0%

A-58

Sakae 4-chome Office Building (Tentative Name)

Nagoya, Aichi

8,325

Jun. 2009－

A-12

Portus Center Building

Sakai, Osaka

5,570

Sep. 1993

100.0%

A-42

Karasuma Building

Kyoto, Kyoto

5,400

Oct. 1982

96.7%

A-53

KDX Hakata-Minami Building

Fukuoka, Fukuoka

4,900

Jun. 1973

95.4%

A-43

KDX Hakata Building

Fukuoka, Fukuoka

2,350

Jul. 1982

100.0%A-54

KDX Kitahama Building

Osaka, Osaka

2,220

Jul. 1994

88.1%

date

(% )

100.0%

A-3

Higashi-Kayabacho Yuraku Building

Chuo ward, Tokyo

4,450

Jan. 1987

100.0%A-39

KDX Toranomon Building

Minato ward, Tokyo

4,400

Apr. 1988

100.0%A-30

KDX Nishi-Gotanda Building

Shinagawa ward, Tokyo

4,200

Nov. 1992

100.0%A-44

KDX Sendai Building

Sendai, Miyagi

2,100

Feb. 1984

96.6%
87.2%

A-48

KDX Kawasaki-Ekimae Hon-cho Building

Kawasaki, Kanagawa

3,760

Feb. 1985

100.0%A-24

KDX Minami Semba Dai-1 Building

Osaka, Osaka

1,610

Mar. 1993

A-4

KDX Hatchobori Building

Chuo ward, Tokyo

3,680

Jun. 1993

100.0%A-25

KDX Minami Semba Dai-2 Building

Osaka, Osaka

1,560

Sep. 1993

90.5%

A-18

KDX Omori Building

Ohta ward, Tokyo

3,500

Oct. 1990

100.0%A-36

KDX Niigata Building

Niigata, Niigata

1,305

Jul. 1983

60.5%

201,290

Average:
20.0 years

95.6%

A-19

KDX Hamamatsucho Buildng

Minato ward, Tokyo

3,460

Sep. 1999

100.0%A-45

KDX Roppongi 228 Building

MInato ward, Tokyo

3,300

Apr. 1989

80.4%

Office (Total 60 properties) Sub Total

Office1# of props. Name

A-29

KDX Higashi-Shinj uku Building

Shinjuku ward, Tokyo

2,950

Jan. 1990

82.2%

A-20

KDX Kayabacho Building

Chuo ward, Tokyo

2,780

Oct. 1987

100.0%A-56

KDX Jimbocho Building

Chiyoda ward, Tokyo

2,760

May 1994

0.0%

A-49

Nissou Dai-17 Building

Yokohama, Kanagawa

2,710

Jul. 1991

100.0%

Central urban retail properties as of the end of September 26 ,2008 (2 properties)
Occupancy

Acquisition price

Area

A-21

KDX Shinbashi Building

Minato ward, Tokyo

2,690

Feb. 1992

100.0%A-5

KDX Nakano-Sakaue Building

Nakano ward, Tokyo

2,533

Aug. 1992

94.8%

KDX Shin-Yokohama Building

Yokohama, Kanagawa

2,520

Sep. 1990

100.0%

A-22

CentralUrban
RetailTokyo
metropolitanarea1Completion

Ratio

date

2

(% )

3

# of props. Name

Location

(¥M)

C-1

Frame Jinnan-zaka

Shibuya ward, Tokyo

9,900

Mar. 2005

97.9%

C-2

KDX Yoyogi Building

Shibuya ward, Tokyo

2,479

Aug. 1991

91.7%

Central Urban Retail Office (Total 2 properties) Sub Total

12,379Average:
6.1 years

96.7%

A-6

Haraj uku F.F. Building

Shibuya ward, Tokyo

2,450

Nov. 1985

100.0%

Notes:

A-50

Ikejiri-Oohashi Building

Meguro ward, Tokyo

2,400

Sep. 1988

100.0%1

A-27

KDX Kajicho Building

Chiyoda ward, Tokyo

2,350

Mar. 1990

100.0%

Acquisition price is the purchase price for trust beneficiary interests etc. acquired by the Investment Corporation
exclusive of taxes, rounded down to the nearest million yen

2Completion date is the date of construction completion recorded in the land register. However, for A-58 Sakae 4chome Office Building (Tentative Name), the planned completion date is shown. Average age subtotals and total
is shown as the weighted-average portfolio age based upon acquisition prices with a base date of September 26,
2008 and are rounded down to the nearest first decimal place. (excluding A-58 Sakae 4-chome Office Building(Tentative Name)) The weighted-average age of the 68 properties held as of September 26, 2008 (excluding A-58
Sakae 4-chome Office Building (Tentative Name)) is 18.5 years

3

Ratios are calculated as of July 31, 2008. Occupancy ratio is calculated by dividing leased area by leasable area
and rounded to the first decimal place. Average occupancy ratio of 67 properties held as of July 31, 2008 was
95.5 (excl. A-58 Sakae 4-chome Office Building (Tentative Name))

4

The occupancy ratio of KDX Harumi Building takes into account the master lease agreement based on fixed rent
concluded with Kenedix, Inc. Furthermore, the occupancy ratios not taking into account of the master leaseagreement based on fixed rent are as follows; KDX Harumi Building:46.3%, Total Offices: 93.3%, Total Average
Portfolio: 93.5%(excluding A-58 Sakae 4-chome Office Building(Tentative Name)).

5

C-3 ZARA Tenjin Nishi-dori was sold on June 25, 2008

A-51

KDX Hamacho Nakanohashi Building

Chuo ward, Tokyo

2,310

Sep. 1988

100.0%A-15

KDX Hamacho Building

Chuo ward, Tokyo

2,300

Sep. 1993

100.0%A-41

KDX Shinj uku 286 Building

Shinjuku ward, Tokyo

2,300

Aug. 1989

100.0%A-7

FIK Minami Aoyama

Minato ward, Tokyo

2,270

Nov. 1988

100.0%A-14

KDX Funabashi Building

Funabashi, Chiba

2,252

Apr. 1989

100.0%A-61

KDX Hamamatsucho Dai-2 Building

Minato ward, Tokyo

2,200

Apr. 1992－

A-55

Shin-toshin Maruzen Building

Shinjuku ward, Tokyo

2,110

Jul. 1990

100.0%A-33

KDX Okachimachi Building

Taito ward, Tokyo

2,000

Jun. 1988

100.0%A-57

KDX Gobancho Building

Chiyoda ward, Tokyo

1,951

Aug. 2000

85.7%

A-8

Kanda Kihara Building

Chiyoda ward, Tokyo

1,950

May 1993

100.0%A-23

KDX Yotsuya Building

Shinjuku ward, Tokyo

1,950

Oct. 1989

100.0%A-59

KDX Iwamoto-cho Building

Chiyoda ward, Tokyo

1,864

Mar. 2008

92.7%

A-9

KDX Shinj uku-Gyoen Building

Shinjuku ward, Tokyo

1,610

Jun. 1992

100.0%A-26

KDX Kiba Building

Koto ward, Tokyo

1,580

Oct. 1992

88.0%

A-38

KDX Nishi-Shinj uku Building

Shinjuku ward, Tokyo

1,500

Oct. 1992

100.0%

6

A-11 Hakata-Ekimae Dai-2 Building was sold on July 30, 2008

7

A-61 KDX Hamamatsucho dai-2 Building was acquired on September 1,2008

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

27

Portfolio overview (Residential properties)
Residential properties as of the end of September 26, 2008 (7 properties)
Occupancy
Acquisition price

Residential

Area

Tokyo
metropolitan
area

Other
regional
areas

1

Ratio

Completion2

3# of props. Name

Location

(¥M)

date

B-19

Residence Charmante Tsukishima

Chuo ward, Tokyo

5,353

Jan. 2004

100.0%

B-3

Court Mejiro

Shinjuku ward, Tokyo

1,250

Mar. 1997

100.0%

Notes:

B-4

Apartments Motoazabu

Minato ward, Tokyo

1,210

Jan. 2004

89.1%

B-5

Apartments W akamatsu Kawada

Shinjuku ward, Tokyo

1,180

Feb. 2004

96.7%

1 Acquisition price is the purchase price for trust beneficiary interests etc. acquired by theInvestment Corporation exclusive of taxes, rounded down to the nearest million yen.

B-34

Gradito Kawaguchi

Kawagushi, Saitama

1,038

Feb. 2006

100.0%

B-25

Court Shin-Okachimachi

Taito ward, Tokyo

878

Oct. 2005

97.0%

B-18

Venus Hibarigaoka

Sapporo, Hokkaido

1,800

Mar. 1989

89.8%

(% )

2 Year built is the date of construction completion recorded in the land register. The total isshown as weighted-average portfolio age based upon acquisition price with a base dateof September 26, 2008 (rounded down to the nearest first decimal place)
3 Occupancy ratio is calculated by dividing leased area by leasable area and rounded to
the first decimal place. Ratios are calculated as of July 31, 2008

Average:

Residential (Total 7 properties) Sub Total
94.6%
12,709Residential
properties disposed as of February 1, 2008
(23 properties)
7.1 years
Acquisition price
Area

ResidentialTokyo
metropolitan
area

Other
regional
areas

1

(¥M)

# of props.

Name

Location

B-20

Regalo Ochanomizu I・ II

Bunkyo ward, Tokyo

3,600

3,670

B-1

Storia Sirokane

Minato ward, Tokyo

3,150

3,370

B-2

Tre di Casa M inami Aoyama

Minato ward, Tokyo

2,460

2,680

B-21

Regalo Shiba-Kouen

Minato ward, Tokyo

2,260

2,280

B-22

Chigasaki Socie Ni-bankan

Chigasaki, Kanagawa

1,160

1,140

B-6

Court Nihonbashi-Hakozaki

Chuo ward, Tokyo

1,130

1,220

B-23

Court Nishi-Shinjuku

Shinjuku ward, Tokyo

1,130

1,160

B-7

Side Denenchofu

Ohta ward, Tokyo

1,110

1,110

B-8

S-court Yokohama-Kannai II

Yokohama, Kanagawa

945

1,020

B-24

Regalo Komazaw a-Kouen

Setagaya ward, Tokyo

912

943

B-9

Court M otoasakusa

Taito ward, Tokyo

880

943

B-11

Bloom Omotesando

Shibuya ward, Tokyo

875

962

B-13

Human Heim Okachimachi

Taito ward, Tokyo

830

905

B-26

Primo Regalo Kagurazaka

Shinjuku ward, Tokyo

762

770

B-27

Primo Regalo Youga

Setagaya ward, Tokyo

730

737

B-28

Court Shimouma

Setagaya ward, Tokyo

638

644

B-29

Ashiya Royal Homes

Ashiya, Hyogo

2,330

2,420

B-30

Regalo Ibaraki I・ II

Ibaraki, Osaka

1,600

1,620

B-31

Collection Higashi-Sakura

Nagoya, Aichi

1,264

1,150

B-32

Renaissance 21 Hirao Jousui-machi

Fukuoka, Fukuoka

900

964

B-33

M ontore Nishikouen Bay Court

Fukuoka, Fukuoka

826

831

B-16

Abreast Hara

Nagoya, Aichi

444

494

B-17

Abreast Hirabari

Nagoya, Aichi

Residential (Total 23 properties) Sub Total

Sales price

407

457

30,34331,4902

Notes:
1 Acquisition price is the purchase price for trust beneficiary interests etc. acquired by theInvestment Corporation exclusive of taxes, rounded down to the nearest million yen
2 Sale price is the price for trust beneficiary interests sold by the Investment Corporation
exclusive of sales costs and taxes, rounded down to the nearest million yen-

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

28

Emphasis on mid-sized office buildings in Tokyo metropolitan
area
Office 59 properties, total acquisition price of ¥199.0B(as of August 1, 2008)

Tokyo’s 23 wards
41 Properties ¥140.0B

Acquisition price(Tokyo metropolitan area)
Acquisition price(Other regional areas)

Central Tokyo1
33 properties¥121.7B

Niigata
1 property ¥1.3B

Miyagi1 property ¥2.1B

Other 18 wards
8 properties¥18.3B

Greater Osaka area
5 properties ¥16.3B

Fukuoka
2 properties ¥7.2B

Tokyo
Ot h e rr e gio n alar e as
17.7%

Chiba
1 property ¥2.2B

Aichi
1 property ¥8.3B

Kanagawa
6 properties ¥20.2B

Ot h e r
T o kyoM e t r o po lit
an ar e a
21.1%

Hachioji, Tokyo
1 property ¥1.1B

Notes:
1
Central Tokyo: Chiyoda, Chuo, Minato, Shibuya and Shinjuku wards
2
The ¥8.3B price of Sakai 4-chome Office Building (Tentative Name) is the total of land acquired on Apr. 24, 2008 (¥4B)
and the building to be acquired on July 1, 2009 (¥4.3B)
3
Acquisition price are rounded to the nearest ¥100M. Ratios (%) indicate the total acquisition price for properties in each area inproportion to the total acquisition price for all properties combined and are rounded down to the first decimal place

Centra l
Tok y o61.1%

# ofproperties

Acquisition
price
(¥B)

Ratio
(%)

49
10
59

163.7
35.3
199.0

82.2
17.7
100.0

Tokyo metropolitan area
Other regional areas
Total

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

29

Focusing on office buildings
Portfolio overview

Type

End of 2nd period(Apr. 30, 2006)
35 properties approx. ¥81.4B
Residential
18properties
25.5%

Office15buildings
59.2%

Residential
30properties
24.5%

Office39buildings
66.2%

Centralurban retail3properties
9.1%

Centralurban retail2properties
15.2%
Tokyo metropolitan
area
88.1%

Other regional
areas
14.1%

Tokyo metropolitan
area
85.8%

Size

Area

Other regional
areas
11.8%

End of 4th period(Apr. 30, 2007)
72 properties approx. ¥175.1B¥7.5–10.0B(1 property)
¥9.9B
12.1%
¥5.0–7.5B(4 properties)¥22.6B
27.8%

Less than ¥1.0B(11properties)
¥8.2B
10.0%
¥1.0–2.5B(15properties)¥26.8B
33.0%¥2.5–5.0B(4 properties)¥13.8B
16.0%¥7.5–10.0B(1property)
¥9.9B
5.6%

Less than ¥1.0B(14 properties)￥10.7B
6.1%¥1.0–2.5B(34properties)¥56.4B
32.2%¥5.0–7.5B(8 properties)¥45.7B
26.1%¥2.5–5.0B(15properties)¥52.2B
29.8%

End of 6th period(Apr. 30, 2008)
68 properties approx. ¥217.2B
Residential
7properties
5.8%

Office58buildings
86.7%

Centralurban retail3properties
7.3%
Other regional
areas
19.4%

¥7.5–10.0B(4 properties)¥35.6B
16.4%¥5.0–7.5B(9 properties)¥51.1B
23.5%

Note: The portion (%) indicated in the circular graphs above the total acquisition prices for each category of assets and rounded down to thefirst decimal place
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

Tokyo metropolitan
area
80.5%

Less than ¥1.0B(2 properties)
¥1.5B
0.7%
¥1.0–2.5B(34 properties)¥61.1B
28.1%¥2.5–5.0B(19 properties)¥67.6B
31.1%

30

Management of existing properties—NOI yield and performance
NOI yields on rental properties (bytype, on an annualized basis)
4th period

Offices

5.3%
5.3%

5th period

5.5%(Reference) Analysis of theperformances for office buildings

6th period

5.6%
5.6%

6th period(Before Tax
adjusted)

5.8%
5.8%

Income and capital returns achieved

5.2%
5.2%

18 %
Income return

4.3%
4.3%

4.3%
4.3%

Capital return

5.4%
5.4%

5.3%
5.3%

5.3%
5.3%

5.4%
5.4%

5.3%
5.3%

5.5%
5.5%

5.2%
5.2%

5.6%

10 %

7.5

9.1

10 %

11.7

10.1

8%

Capital return

4%
6.2

5.9

4.9

6.6

7.1

2%

4.5

5.2

6.0

6.1

Offices
Osaka

Offices
other

0%

0%
Of f ices
Toky o5 wards

6.1

6%

0.9

6%
4%

(Reference) Increased occupancy ratios
ratios for properties
acquired with a low occupancy ratiosratiosIncome return

16 %

12 %
7.8

8%

2%

18 %

14 %

14 %
12 %

Residentials
Total

5.1%

Benchmark income and capital returns

Income and capital returns for KRI
16 %Centralurban retails

・Analysis by ＩＰＤ(Investment
Property Databank Ltd)Of f ices
Toky o23 wards

Of f ices
Osaka

Of f ices
other

Offices
OfficesTokyoTokyo
5 w ards 23 w ards

100%
Notes:
1 Annual return up to Oct. 2007
2 Targeting only the properties that have undergone
appraisals for two times or more (eliminating theimpact of transactions during the period)

80%
60%

Note:
1 Benchmark is IPD J REIT Universe(Reference) Unit rent for officebuildings

40%
KDX Hamacho Building
KDX Kiba Building
KDX Nishi-Gotanda Building
KDX Toranomon Building

20%
0%
06/3

06/6

06/9 06/12 07/3

07/6

07/9 07/12

Central Tokyo¥20,100

Other Tokyo metropolitan area

¥14,300

Other regional areas¥11,300

All office buildings¥16,600

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

31

Management of existing properties—
Stability of mid-sized office buildings (tenant, diversification)
Changes in the number of end-tenants for office buildings
End of 1st End of 2nd End of 3rd End of 4th End of 5th
periodperiodperiodperiodperiod(Reference) Changes in rent levels (market data)
End of 6th
period# of end-tenants

154

189

322

400

516

656

# of properties

12

15

29

39

44

58

Tokyo 23 wards: rent levels for large and medium-sized buildings (Jun. 1997 = 100)
(%)

110.0

Rents fluctuate less for
mid-sized buildings
than for large buildings

100.0

Ratio of thelargest endtenants

4.8%

Ratio of the 3largest tenants

10.7%

3.8%

2.0%

1.3%

1.2%

大型ビル
Large buildings

102.1%

Medium-sized
中型ビルbuilding

2.2%

96.5%
90.0

8.4%

4.4%

3.5%

3.3%

4.5%
80.0

Note: The above proportions indicate the shares of top end-tenants for office buildings (including
the end-tenants occupying office buildings and urban retails) in the whole portfolio
70.0
1997

(Reference) Creditworthiness of end-tenants• Average amount of security deposit per end-tenant at the end of 6th period: approx. ¥ 14M• Average monthly rent per end-tenant x c. 9 months• # of end-tenants delinquent in rent payments for 2 consecutive months during the past year
(5th and 6th periods): 3 tenants

Agriculture
1 tenant
0.2%

Service
185 tenants
36.9%
Carriers & Telecome
12 tenants
Real estate
2.4%
23 tenants
5.0%

2000

2001

2003

2004

2006

2007

Note: Large building: a building with a total floor area of 3,000 tsubo or more
Medium-sized building: a building with a total floor area of 1,000 to 3,000 tsubo
Source: Ikoma Data Service System (the latest values as of Mar. 2008)

Leasable are and occupancy ratio

Diversification in tenant mix
Individuals
13 tenants
2.6%
Official (Others)
2 tenants
0.4%

1998

Constructions
30 tenants
6.0%

（m2）

(%)
Total leasable area

Occupancy ratio

Manufactures
76 tenants
15.2%
Wholesale, retail & food
129 tenants
25.8%
Financials & Insurance
30 tenants
6.0%

1st
period2nd
period3rd
periodThe contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

4th
period5th
period6th
period32

(Reference data1) Market environment for office buildings
1．Breakdown of office based on number of employees per office

2．Distribution of office buildings by tsubo (Central Tokyo)

Potentially strong demand
for mid-sized office buildings
by tenants

Broad based stock of
mid-sized office buildings

30–99 100 employees
employees and above
5.0%
1.6%

10–29
employees
15.7%

Less than
500 tsubo
66.4%

Proportion of offices with
1–29 employees: 93.4%

1–9
employees
77.7%

500 –
3,000 tsubo
28.6%

Source: Survey conducted by Ikoma Data Service System based on KRI’s requests(survey as of end of Mar. 2007) “Macro market survey of Tokyo’s central 5 wards”
Note:
The above data covers rental office buildings located in Tokyo’s central 5 wards that weresurveyed by Ikoma Data Service System. Please note that the above data may not include thedata of all properties in the said 5 wards

Source: KDRM, based on Tokyo office statistics report as of 2006
(MPHPT Statistics Bureau)

3．Office building average rent and vacancy ratios (Central Tokyo)
22,0004．Reasons citied by companies in Tokyo if they were to relocate
2004

60

9.0

2006

8.0
7.0
6.0

20,0005.0
4.0

19,0003.0
2.0

18,00040(%)

21,000Vacancy rate (%)

Yen per tsubo (approx. 3.3m2)

3,000 tsubo or more
5.0%

20

1.0

.2
00
7
ec
D

.2
00
6
ec

ec
D

Average rent

D

.2
00
4
ec
D

ec
D

.2
00
3

ec
D

.2
00
1
ec
D

.2
00
5

0.0

.2
00
2

17,000Vacancy rate

Source: “Latest office building market conditions in Central Tokyo (suvey as of end of Jan.2008）”,
Miki Shoji Co., Ltd.

0
Expansion offloor space dueto the increaseof employees

Reorganization Restructuring of
Buildingof offices forinternal
additional
cost reduction
organizations
meeting rooms
and dressing
rooms, etc.

Source: “Real Estate White Paper 2006”, K.K. Ikoma Data Service System

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

33

(Reference data2) Market environment for office buildings
1. 23 wards of Tokyo: rent levels for large buildings andmedium-sized buildings

2. Cap rates realized with real-estate properties in Tokyoand local cities
10.0%

（\）
30,000

Tokyo

Osaka

Fukuoka

Sapporo

Large

8.0%

Medium-sized
25,000¥25,300
6.0%

5.8%
5.5%
5.0%

4.0%

4.0%

20,000¥18,400
15,000
1997

1999

2001

2003

2005

2.0%
2000

2007

3. Changes in rent levels by region

Osaka

Fukuoka

2003

2004

2005

2006

2007

4. Changes in vacancy ratios by region
(%)
14.0

(\)
Tokyo

2002

Notes: 1 Expected cap rates based on direct reduction approach for A class buildings that have been built for 5
years or less
2 Expected cap rates for properties in the Marunouchi and Otemachi areas used
Source: Created by Kenedix based on the data compiled by Japan Real Estate Institute (as of Apr. 2008)

Note: Large building is a building with a gross floor area of 3,000 tsubo or overmedium-sized building is a building with a gross floor area of 1,000 to 3,000 tsubo
Source: Ikoma Data Service System (the latest values as of Mar. 2008)

25,0002001

Sapporo¥21,998

Tokyo

Osaka

Fukuoka

Sapporo12.0

20,00010.0
15,000

8.1%
7.9%

8.0

¥12,882
10,000¥9,898¥8,8415,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Note: Targeting the rental properties with a gross floor area of 100 tsubo or over in 5 wards of Tokyo(Chiyoda, Chuo, Minato, Shinjuku, and Shibuya)
Source: Miki Shoji, Co., Ltd. (the latest values as at the end of Dec. 2007)

6.0

4.7%

4.0

2.7%

2.0
1997

1999

2001

2003

2005

2007

Note: Targeting the rental properties with a gross floor area of 100 tsubo or over in 5
wards of Tokyo (Chiyoda, Chuo, Minato, Shinjuku, and Shibuya)
Source: Miki Shoji, Co., Ltd. (the latest values as at the end of Dec. 2007)

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34

External growth strategies — Actual performances andaccomplishments by pipeline for Kenedix Group
Increased importance of
J-REITs within Kenedix Group

Assets by type of investor
100%

80%

60%

Office buildings acquired by pipeline (for the Investment
Corporation up to Jun. 2008)
Acquisitions
at the time of IPO/PO
Original
network

Acquisitions during the period
Original
network
Supportline

Support line

40%(\100M)

50

20%

Average acquisition price (by pipeline)

40
0%
00/12
Foreign investors

01/12

02/12

03/12

Japanese institutional investors

04/12

Pensions funds

05/12

06/12

Kenedix Group accounts

30

07/12
J-REITs

LPT

20
10

Assets by type of property

Original
network0(¥M)
800,000

734,980

Others700,000

Supportline

Flow of major properties’ acquisitions for Kenedix Group
Major uses

600,000

Apartment facilities

400,000

Office buildings

Mid-sized officebuildings

544,480

Commercial facilities

500,000

This investment
corporation

385,663

300,000

240,393

Logistics facilities

Japan Logistics
Fund, Inc.

Residential
and others

Pension funds
Private funds, etc.

Suburban retails

Challenger Kenedix
Japan Trust(Australian LPT)

200,000
100,000
0

68,477

83,799 105,880

01/12

02/12

19,040
00/12

03/12

04/12

05/12

06/12

07/12

Source: Kenedix, Inc. as of Dec. 31, 2007
Note:

Major investors

Distribution facilities

Includes properties of Japan Logistics Fund, which are entrusted to an affiliate of Kenedix, Inc.
for asset management, and properties held by KRI

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

35

Management structure of the asset management company
Decision making flow chart
Discussion& Review

Preview

Resolution/Reporting

Complianceofficer

Corresponding
Division

Creation of Asset Administration
Plan, etc.
Approval for transactions withinterested parties
Approval for transactions outside ofmanagement guidelines

Compliancecommittee*

Resolution
Assetmanagement
committee

Approval for transactions that follow
Management guidelines expecting
those with interested parties
Note:

ReportingBoard of Directors

Creation of management guidelines

One lawyer works as an external commission member

Policy on transaction with related parties¾ Asset acquisition: Must not acquire properties for morethan appraised price (except for properties pre-acquired by
Kenedix Inc. pursuant to the MOU)
¾ Asset disposal: Must not sell properties for less thanappraised price＜Reference＞
Meetings held by the various committees, Board of Directors of theasset management
management company/investmentcompany/investment corporation
1st
period2nd
period3rd
period4th
period5th
period6th
periodCompliance committee

7

7

7

8

6

8

Asset management
committee

21

35

39

39

38

38

Board of Directors

9

7

9

8

9

7

Board of Directors ofInvestment Corporation

11

7

7

9

7

7

< Reference >Asset management company’company’s management fee structure Asset management company’s management fee structure¾ Management fee I : 0.15% of total assets¾ Management fee II : 3.0% of money available for distribution in eachfiscal period¾ Acquisition fee: 0.5%of acquisition price(0.25% if interested parties)¾ Sale fee: capped at 0.5% of transfer price Property management fees
¾ Rental property management: 2% of rent revenues + 2% of theoperating revenues from the property (after operating expenses, andbefore depreciation expenses)¾ Management transfer: amount determined in proportion to theacquisition/sale price(e.g. ¥1 – 3B → ¥2M, or ¥5 – 10B → ¥2.4M）¾ Construction Management: amount determined in proportion to theconstruction costs(e.g. ¥1 – 5M →5% or ¥10 – 100M → ¥450,000＋3%)

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36

Kenedix REIT Management, Inc.—Organizational chart
Major members

Shareholders’meeting
Auditor (part-time)
Haruo Funabashi, Kenichi Yamasaki♦

Auditors
Board ofdirectors♦ After joining the Ministryof Finance, he served ascommissioner of Tokyo
Customs, Deputy
Commissioner of the
National Tax
Administration, Secretary
Haruo Funabashi General of the Securities
and Exchange
AuditorSurveillance(part-time)
Commission, Director
General, Minister’s
Secretariat of the
National Land Agency
before joining Kenedix as
an auditor♦

Compliance officer
Koju Komatsu

Investmentcommittee

Taisuke Miyajima
CEO & President

Compliancecommittee

Worked for Mitsubishi Trust and Banking (debt
capital market group, Los Angeles branch). Seven
years of experience in real estate investment advisorydivision after joining Kenedix, Inc.
Transferred to Kenedix REIT Management to become
CEO and president♦

Worked for 10 years for Sojitz Corporation（incl. Construction Department）♦

After joining Kenedix, he worked for Kenedix Advisors
before being transferred to Kenedix REIT Management

Kenji Ajitani
Director & General Manager,
Investment Management
Division

Representative
director
Taisuke Miyajima♦

Worked for Asahi Urban Development Corporation,
Nihonjisho, others before he joined Kenedix
Executive Officer & General Manager of REITManagement Division, Kenedix Advisors before joining
Kenedix REIT Management♦

Investment
management div.
Kenji Ajitani

Property
management div.
Masashi Ohwa

Financialplanning div.
Masahiko Tajima

Business
administration div.
Teruo Nozaki

Masashi Ohwa
Director & General Manager,
Property Management Division♦

Asset
Investmentgroup♦ Property
acquisition
anddisposition♦ Researchand Analysisof real estatemarkets

Asset
Management
group

Property
Managementgroup♦ Property
management♦ Property
leasing♦ Property♦ Assessment
managementof property
management/riskmanagement

Engineering
group

IR
group

♦ Construction ♦ Investor
Relationsmanagement
activities

Finance andaccounting
group

♦

Business
administrationgroup♦ Formulation ♦ Runningof budget,unitholders’ andfinancialdirectors’
statements,
meetings♦ Negotiations disclosure
with♦ Administration/♦ Procurement Accounting/regulatory
agencies and of funds
Human Resources
concerned
bodies♦Worked for 12 years at Chuo Mitsui Trust andBanking, where he was responsible for securitization
Joined Kenedix, Inc. after 4 years of experience invarious securitized paper investments at Sumitomo
Life Insurance
MBA from Columbia Business School

Masahiko Tajima
Director & General Manager,
Financial Planning Division♦♦

Worked for 27 years for Joined Shinsei Bank, Ltd.
Joined Kenedix REIT Management,after 8 years ofexperience as a compliance officer at Shinsei Bank.

Ｙｕｕｊｉ Kａｍｉｍｕｒａ
Compliance Officer

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37

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

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

38