Financial Statements(Second Fiscal Period: From November 1, 2005 to April 30, 2006)

Report of Independent Auditors
Balance Sheets
Statements of Income and Retained Earnings
Statements of Cash Flows
Notes to Financial Statements

Kenedix Realty Investment Corporation

BALANCE SHEETSAs of April 30, 2006 and October 31, 2005
In thousands of yen

As of April 30, 2006

As of October 31, 2005

AssetsCurrent assets:
Cash and bank deposits￥

7,843,092￥

5,175,750

Rental receivables

47,704

94,432

Consumption tax refundable

138,323

910,191

Other current assets

90,17034,737

8,119,289

6,215,110

Land

52,329,667

44,730,358

Buildings and structures

30,980,765

25,483,112

Machinery and equipment

442,540

373,723

Tools, furniture and fixtures

600,118

592,488

Less-accumulated depreciation(918,354)(268,161)

83,434,736

70,911,520

Organization costs

40,71745,807

Others458,296

153,040

Total current assets
Property and equipment, at cost:

Net property and equipment
Other assets:

Total assets￥

92,053,038￥

188,956￥

77,325,477

Liabilities and Unitholders’ Equity
Liabilities
Current liabilities:
Trade and other payables￥

Short-term debt
Deposits received
Rents received in advance
Other current liabilities

260,400

11,500,000

10,000,000

4,463

71,142529,895

380,244

16,574

1,515

Total current liabilities
Long-term debt

12,239,888
30,500,000

10,713,301
19,000,000

Leasehold and security deposits received

3,528,348

2,976,381

OthersTotal liabilities

397,786

108,541

46,666,022

32,798,223

44,285,003

44,285,003

1,102,013

242,251

Unitholders' equity
Unitholders' capital
Units Authorized: 2,000,000 units
Units Issued and outstanding: 79,370 units
Retained earnings
Total unitholders' equity
Total liabilities and unitholders' equity

45,387,016￥

92,053,038

44,527,254￥

77,325,477

Kenedix Realty Investment Corporation

STATEMENTS OF INCOME AND RETAINED EARNINGSFor the period from May 6, 2005 to October 31, 2005 and the period from November 1 ,2005 to April 30, 2006
In thousands of yen

From November 1, 2005
to April 30, 2006
Operating Revenues:
Rental revenues
Total operating revenues
Operating Expenses:
Property-related expenses
Asset management fees
Administrative service and custodian fees
Other operating expenses
Total operating expenses￥

From May 6, 2005
to October 31, 2005

2,871,789
2,871,789￥

1,196,027
1,196,027

1,265,552
150,114
37,77774,363
1,527,806

518,875
56,23912,381
18,671
606,166

Operating income

1,343,983

589,861

Non-Operating Expenses:
Interest expense
Financing related expense
Amortization of organization costs
New unit issuance costs
Initial public offering related costs
Others, net
Income before income taxes

164,607
11,743
5,090
55,1194,410

57,74185,496
5,090
66,675
124,9786,789

1,103,014
1,015
1,101,999

243,092841
242,251

14-

Income taxes
Net income
Retained earnings at the beginning of period
Retained earnings at the end of period¥

1,102,013¥

242,251

Kenedix Realty Investment Corporation

STATEMENTS OF CASH FLOWSFor the period from May 6, 2005 to October 31, 2005 and the period from November 1, 2005 to April 30, 2006
In thousands of yen

From November 1,2005
to April 30,2006

From May 6, 2005
to October 31,2005

Cash Flows from Operating Activities:
Income before income taxes￥

1,103,014￥

243,092

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

661,924

275,432

Interest expense

164,607

57,741

Rental receivables

46,728(94,432)

Consumption tax refundable

771,868(910,191)

Trade and other payables(73,711)

260,400

Rents received in advance

149,650

380,244

Others, net(137,274)(51,157)

2,686,806

161,129(149,708)(57,082)(855)-

2,536,243

104,047(13,173,409)(71,179,681)

Proceeds from leasehold and security deposits received

772,228

3,008,243

Payments of leasehold and security deposits received(220,261)(31,862)

Payments of restricted bank deposits(82,013)(884,940)

Proceeds from restricted bank deposits

181,004-

Others, net(7,489)(10,000)(12,529,940)(69,098,240)

Proceeds from short-term debt

1,500,000

10,000,000

Proceeds from long-term debt

11,500,000

19,000,000-

44,285,003(239,970)-

12,760,030

73,285,003

Net change in cash and cash equivalents

2,766,333

4,290,810

Cash and cash equivalents at the beginning of period

4,290,810-

Changes in assets and liabilities:

Subtotal
Cash payments of interest expense
Cash payments of income taxes
Net cash provided by operating activities
Cash Flows from Investing Activities:
Purchases of property and equipment

Net cash used in investing activities
Cash Flows from Financing Activities:

Proceeds from issuance of units
Payment of dividends
Net cash provided by financing activities

Cash and cash equivalents at the end of period￥

7,057,143¥

4,290,810

Kenedix Realty Investment Corporation

Notes to Financial Statements
For the period from May 6, 2005 to October 31, 2005 and the period from November 1, 2005 to April 30, 2006

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Kenedix Realty 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. The Investment Corporation was incorporated as an investment corporation under the Law Concerning Investment Trusts
and Investment Corporations of Japan, or the Investment Trust Law. Pursuant to this law, the Investment Corporation is externally managed by alicensed asset management company, Kenedix REIT Management, Inc.("Asset Management Company"), a wholly-owned subsidiary of Kenedix,
Inc.(“Kenedix”)
On May 6, 2005, the Investment Corporation was originally formed with ¥200 million of initial capital contributions from Kenedix, Inc., AssetManagement Company and their executives and employees. On July 20, 2005, the Investment Corporation raised ¥41,869 million of equity
capital through an initial public offering of 75,000 investment units and was listed on the J-REIT section of the Tokyo Stock Exchange on thefollowing day.
On August 1, 2005, 29 properties with an aggregate purchase price of ¥61,083 million were acquired with additional debt proceeds of ¥23,000
million and substantial operations of the Investment Corporation were commenced from that date.
On August 16, 2005, the Investment Corporation completed third-party allotment of 3,970 investment units, generating an additional ¥2,216
million. Subsequent to that, the Investment Corporation acquired 2 additional properties in September, 2005. During the period ended April 30,
2006, the Investment Corporation acquired 4 additional properties by utilizing internal cash and bank borrowing.
At April 30, 2006, the Investment Corporation had total unitholders’ capital of ¥44,285 million with 79,370 investment units outstanding. The
Investment Corporation owned a portfolio of 35 properties with total acquisition costs of ¥81,435 million containing total leasable area of 104,869
m2. The occupancy ratio was approximately 94.9%.

A portfolio of 35 properties consists of 15 office buildings, 18 residential properties and 2

retail properties. 30 properties are located in the Tokyo Metropolitan Area and 5 properties are located in Other Regional Areas.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in the Investment Trust Law of Japan,
the Japanese Commercial Code, the Securities 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 from the application and disclosure
requirements of International Financial Reporting Standards or accounting principles generally accepted in the United States of America.
The accompanying financial statements are a 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 Securities and Exchange Law. In preparing the accompanying financial statements, relevant notes have been
added and certain reclassifications have been made from the financial statements issued domestically in order to present them in a form that ismore familiar to readers outside Japan. The Investment Corporation’s first fiscal period began on May 6, 2005 and ended on October 31, 2005.
The Investment Corporation’s fiscal period is a six-month period which ends at the end of April and October of each year, respectively. The
Investment Corporation does not prepare consolidated financial statements because it has no subsidiaries.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments which are highly liquid, readily
convertible to cash and with insignificant risk of market value fluctuation, with maturities of three months or less from the date of purchase.
(b) Property and Equipment
Property and equipment are stated at cost. Depreciation of property and equipment is calculated on a straight-line basis over the estimateduseful lives of the assets ranging as stated below:
From November 1, 2005
to April 30, 2006

From May 6, 2005
to October 31, 2005

Buildings and structures ......................................................................................................

2-46 years

2-46 years

Machinery and equipment ...................................................................................................

3-17 years

3-15 years

Tools, furniture and fixtures .................................................................................................

3-15 years

3-15 years(c) Impairment of Fixed Assets
Beginning the fiscal period ended October 31, 2005, the Investment Corporation adopted “Accounting Standard for Impairment of Fixed
Assets” (“Opinion on Establishment of Accounting Standard for Impairment of Fixed Assets” issued by the Business Accounting Deliberation
Council in Japan on August 9, 2002) and “Implementation Guidance for the Accounting Standards for Impairments of Fixed Assets” (“Financial
Accounting Guidance No. 6” issued by the Accounting Standards Board of Japan on October 31, 2003).

The new accounting standard wasapplicable for all reporting periods beginning after April 1, 2005. The Investment Corporation has not recognized an impairment loss on any ofthe properties during the fiscal periods ended October 31, 2005 and April 30, 2006.
(d) Organization Costs
Organization costs are amortized over a period of five years, comprised of ten fiscal periods, with an equal amount amortized in each fiscal
period.
(e) Unit Issuance Costs
Unit issuance costs are expensed as incurred. Underwriters’ commissions in connection with the issuance of unitholders’ equity are offset
against proceeds raised since the “Spread Method” was used for the unit issuance. Under the Spread Method, securities underwriters underwrite
the units at the issue price and offer them to investors at the offer price, which is different from the issue price. The difference between the offer
price and the issue price represents the underwriting commission received by the securities underwriters, eliminating the need for the issuer to pay
underwriting commissions. If securities underwriters had underwritten the units at the issue price and offered the units to investors at an offer
price equal to the issue price (known as the “Conventional Method”), a commission would have been incurred and it would have been expensed as
new unit issuance costs. Therefore, the Spread Method decreased new unit issuance costs by ¥1.631 billion and increased income before
income taxes by the same amount compared to the Conventional Method for the period from May 6, 2005 through October 31, 2005.
(f)

Accounting Treatment of Trust Beneficiary Interests in Real Estate
For trust beneficiary interests in real estate, which are commonly utilized in the ownership of commercial properties in Japan and throughwhich the Investment Corporation holds all of its real property, all assets and liabilities within trust are recorded in the relevant balance sheet andincome statement accounts.

(g) Revenue Recognition
Operating revenues consist of rental revenues including base rents and common area charges, and other operating revenues including utility
charge reimbursements, parking space rental revenues and other miscellaneous revenues. Rental revenues are generally recognized on an
accrual basis over the life of each lease. Utility charge reimbursements are recognized when earned and their amounts can be reasonably
estimated. Reimbursements from tenants including utility charge reimbursements are recorded on a gross basis and such amounts are recorded
both as revenue and expense during the fiscal period, respectively.
(h) Taxes on Property and Equipment
Property-related taxes including property taxes, city planning taxes and depreciable property taxes are imposed on properties on a calendar
year basis. Under the Japanese tax rule, the seller of the property at the time of disposal is liable for these taxes on the property from the date ofdisposal to the end of the calendar year in which the property is disposed. The seller, however, is reimbursed by the purchaser for these accrued
property-related tax liabilities.
When the Investment Corporation purchase 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 theproperty-related taxes are capitalized as part of the acquisition costs of the related properties.
¥32 million and ¥121 million as of April 30, 2006 and October 31, 2005.

Capitalized property-related taxes amounted to

In subsequent calendar years, such property-related taxes are charged

as operating expenses in the fiscal period in which the installments of such taxes are paid to the relevant tax authorities.
(i)

Income Taxes
Deferred tax assets and liabilities are computed based on the difference between the financial statements and income tax bases of assets

and liabilities using the statutory tax rates.
(j)Derivative Financial Instruments
The Investment Corporation utilizes interest-rate swap agreements as derivative financial instruments only for the purpose of hedging its

exposure to changes in interest rates. The Investment Corporation deferred recognition of gains or losses resulting from changes in fair value ofinterest-rate swap agreements because its interest-rate swap agreements met the criteria for deferral hedging accounting.
(k) Rounding of Amounts Presented
Amounts have been truncated in the Japanese financial statements prepared in accordance with Japanese GAAP and filed with regulatory
authorities in Japan, whereas amounts have been rounded to the nearest million in 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, 2006 and October 31, 2005:
In thousands of yen

As of April 30, 2006

As of October 31, 2005

Cash and bank deposits ...................................................................................

¥ 7,843,092¥ 5,175,750

Restricted bank deposits held in trust ..............................................................

(785,949)(884,940)

Cash and cash equivalents ..............................................................................

¥ 7,057,143¥ 4,290,810

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

4. SCHEDULE OF PROPERTY
In millions of yen
As of April 30, 2006
Acquisition costs
Land

Accumulated
depreciation¥ 52,330¥

As of October 31, 2005
Book value

Acquisition costs−¥ 52,330¥ 44,730

Accumulated
depreciation¥

Book value−¥ 44,730

Buildings andstructures

30,981847

30,13425,483

246

25,237

Machinery andequipment

442

32

410

374

10

364

Tools, furnitureand fixtures

600

39

561

592

12

580

¥ 84,353¥ 918¥ 83,435¥ 71,179¥ 268¥ 70,911

Total

5. SHORT-TERM AND LONG-TERM DEBTS
The following summarizes short-term and long term debt outstanding as of April 30, 2006 and October 31, 2005:(As of April 30, 2006)
Classification

Drawdown Date

Repayment Date

Weighted-averageinterest rate

Balance(In millions of yen)August 1, 2005

July 31, 2006

0.40%

¥

Unsecured

September 21, 2005

September 20, 2006

0.35%

6,000

short-term debt

November 1, 2005

October 31, 2006

0.35%

1,000

March 1, 2006

February 28, 2007

0.36%

500

Subtotal

Unsecured
long-term debt

4,000

11,500August 1, 2005

July 31, 2008

0.87%

9,500

August 1, 2005

July 31, 2010

1.29%

9,500

November 1, 2005

October 31, 2007

0.77%

1,500

November 1, 2005

October 31, 2008

1.09%

3,500

December 8, 2005

December 7, 2008

1.10%

2,000

March 1, 2006

February 28, 2009

1.45%

2,000

March 16, 2006

March 16, 2009

1.48%

2,500

Subtotal

30,500Total¥

42,000(As of October 31, 2005)
Classification

Drawdown Date

Repayment Date

Weighted-averageinterest rate

Balance(In millions of yen)Unsecured

August 1, 2005

July 31, 2006

0.39%

¥

short-term debt

September 21, 2005

September 20, 2006

0.32%

Unsecured

August 1, 2005

July 31, 2008

0.87%

9,500

long-term debt

August 1, 2005

July 31, 2010

1.29%

9,500

6,000

Subtotal

10,000Subtotal
Total

4,000

19,000¥29,0006. PER UNIT INFORMATIONThe net asset value per unit as of April 30, 2006 and October 31, 2005 was ¥571,840 and ¥561,008. Net income per unit as of April 30, 2006
and October 31, 2005 was ¥13,884 and ¥5,303.
The weighted average number of units outstanding of 79,370 and 45,683 was used for the computation of the amount of net income per unit asof April 30, 2006 and October 31, 2005.

7. INCOME TAXESThe Investment Corporation is subject to corporate income taxes at a regular statutory rate of approximately 40%.

However, the Investment

Corporation may deduct from its taxable income amounts distributed to its unitholders, provided the requirements are met under the Special
Taxation Measure Law of Japan. Under this law, the Investment Corporation must meet a number of tax requirements, including a requirement it
currently distribute in excess of 90% of its taxable income for the fiscal period in order to be able to deduct such amounts.

If the Investment

Corporation does not satisfy all of the requirements, the entire taxable income of the Investment Corporation will be subject to regular corporate
income taxes. Since the Investment Corporation distributed approximately 100% of its distributable income in the form of cash distributions
totaling ¥1,102 million and ¥242 million for the periods ended April 30, 2006 and October 31, 2005.

Such distributions were treated as deductible

distributions for purposes of corporate income taxes. The effective tax rate on the Investment Corporation’s income was 0.09% and 0.34% for
the periods ended April 30, 2006 and October 31,2005. The following summarizes the significant difference between the statutory tax rate andthe effective tax rate:
From November 1, 2005
to April 30,2006

From May 6, 2005
to October 31,2005

Statutory tax rate .....................................................................................................

39.39%

39.39%

Deductible cash distributions ...................................................................................

(39.35)(39.25)

Other ........................................................................................................................

0.05

0.20

Effective tax rate ......................................................................................................

0.09%

0.34%

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

9. RELATED-PARTY TRANSACTIONS(a) Transactions with Kenedix Advisors Co., Ltd. ("Kenedix Advisors")
Kenedix Advisors, a wholly-owned subsidiary of Kenedix, provides the Investment Corporation with property management services and related
services. For these services, the Investment Corporation pays Kenedix Advisors property management fees and other fees in accordance withthe terms of its Property Management Agreements. Transactions with Kenedix Advisors are as follows:
In thousands of yen

Property management fees ......................................................................................

From November 1, 2005
to April 30, 2006

From May 6, 2005
to October 31, 2005¥¥

104,453

43,711

Management transfer fees ........................................................................................

8,400

62,000Construction management fees ................................................................................

16,3062,334

(b) Transactions with Y.K. KDX1 (“KDX1”)
KDX1 is a wholly owned subsidiary of Kenedix, Inc.. On August 1, 2005 the Investment Corporation acquired 2 properties from KDX1 for¥4,483 million. On November 1, 2005, the Investment Corporation acquired additional property from KDX1 for ¥5,950 million. The purchaseprice of these properties was determined based on an independently appraised value at the time of acquisition.
(c) Transactions with Kenedix, Inc.
Kenedix, Inc. provides the Investment Corporation with real estate brokerage services. For these services, the Investment Corporation pays
Kenedix brokerage fees. Transactions with Kenedix are as follows:
In thousands of yen

From November 1, 2005
to April 30, 2006
Brokerage fees ........................................................................................................

From May 6, 2005
to October 31, 2005-

¥ 786,890

10. BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES AND PROPERTY-RELATED EXPENSES
Rental and other operating revenues and property-related expenses for the periods from May 6, 2005 to October 31, 2005 and from November
1, 2005 to April 30, 2006 consist of the following:
In thousands of yen

From November 1, 2005
to April 30, 2006

From May 6, 2005
to October 31, 2005

Rental and other operating revenues:
Rental revenues .................................................................................................

¥

2,220,814¥

930,805

Common area charges ......................................................................................

353,853

136,844

Subtotal .........................................................................................................

2,574,667

1,067,649

Others:Parking space rental revenues ...........................................................................

86,12930,728

Utility charge reimbursement ..............................................................................

152,653

76,389Miscellaneous ....................................................................................................

58,34021,261

Subtotal .........................................................................................................

297,122

128,378

Total rental and other operating revenues ...............................................................

¥

2,871,789¥

1,196,027

Property management fees and facility management fees .....................................

¥

322,416¥

124,553

Depreciation ............................................................................................................

650,193

268,161

Utilities .....................................................................................................................

146,890

68,784

Taxes .......................................................................................................................

9,328

−

Insurance .................................................................................................................

8,621

2,603

Repairs and maintenance .......................................................................................

55,11721,807

Trust fees .................................................................................................................

21,337

9,322

Others ......................................................................................................................
Total property-related expenses ..............................................................................

51,650¥1,265,552

23,645¥

518,875

11. LEASESThe Investment Corporation, as lessor, has entered into leases whose fixed monthly rents are due in advance with lease term of generally two
years for office buildings and residential properties and with lease term ranging from two to ten years for retail properties. The future minimum
rental revenues under existing non-cancelable operating leases as of April 30, 2006 and October 31, 2005 are as follows:
In thousands of yen

Due within one year .................................................................................................

As of April 30, 2006

As of October 31, 2005¥

811,080¥¥

4,084,712

Due after one year ...................................................................................................
Total ................................................................................................................

3,273,632

973,916
3,864,685¥

4,838,601

12. DERIVATIVES AND HEDGE ACCOUNTINGThe Investment Corporation has entered into interest-rate swap agreements with several Japanese financial institutions to hedge its variable
rate long-term debt obligations. The Investment Corporation utilizes interest-rate swap agreements, which are derivative financial instruments,
only for the purpose of mitigating future risks of fluctuations of interest rates, but does not enter into such transactions for speculative or trading
purposes. The Investment Corporation entered into such derivative transactions to hedge risk in accordance with its Articles of Incorporation andthe established risk management policies of the Asset Management Company.
The following summarizes the notional amounts and the estimated fair value of the interested-related positions outstanding as of April 30, 2006:(As of April 30, 2006)
Type
Interest-rate swap:
Fixed rate payable and floating rate receivable

Notional amount¥36,300 million

Fair value¥398 million

Unrealized gain
¥398 million

13. PROPERTY INFORMATION
Details of the property portfolio as of April 30, 2006 were as follows:
Type

Office Buildings

Location

Residential Properties

Retail Properties

Tokyo Metropolitan
Area

Other Regional
Areas

Tokyo Metropolitan
Area

Other Regional
Areas

Tokyo Metropolitan
Area

13

2

15

3

2

Number of properties
Property information(In millions of yen)
Acquisition price
Percentage of total acquisition costs¥ 41,269¥ 7,000¥ 18,135¥ 2,651¥ 12,380

50.7%

8.6%

22.3%

3.3%

15.2%

Net book value

42,018

7,127

18,7082,827

12,756

Appraisal value at year end

42,422

7,080

18,4382,660

13,500

50.4%

8.4%

21.9%

3.2%

16.1%

¥ 1,374,031¥ 398,814¥ 613,346¥ 92,236¥ 393,362

1,220,100

335,345572,382

84,423362,417

Percentage of total appraisal value
Financial results for the period ended April 30, 2006
(In thousands of yen)
Rental and other operating revenues
Rental revenues
Other revenues

153,931

63,46940,964

7,813

30,945

Property-related expenses

290,610

129,492

100,532

35,00559,720Property management fees

141,856

91,58147,444

15,381

26,154

Taxes

−

2,498

872

5,958

−

Utilities

89,75322,017

7,810

2,535

24,775

Repairs and maintenance

30,572

6,447

12,986

3,275

1,837

Insurance

2,905

3,269

1,399

646

402

Trust fees and other expenses

25,5243,680

30,021

7,210

6,552

NOI (Net Operating Income)

1,083,421

269,322

512,81457,231

333,642

Depreciation expenses

280,142

124,457

150,163

30,53364,898Operating income from property leasing activities

803,279

144,865

362,651

26,698

268,744

Capital expenditures

337,62143,986

24,837

17,70686,301

NCF (Net Cash Flow)

745,800

225,336487,977

39,525247,341

A breakdown of property-type as of April 30, 2006 was as follows:

Class of assets

Property type
Office Buildings

Area
Tokyo Metropolitan Area

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

Other Regional Areas
Subtotal

Property and equipment

Residential Properties

Tokyo Metropolitan Area
Other Regional Areas
Subtotal

Retail Properties

Tokyo Metropolitan Area
Subtotal

Total

Percentage of
total assets

42,018

45.6

7,127

7.7

49,14553.3

18,708

20.3

2,827

3.1

21,53523.4

12,75613.9

12,756

13.9

83,436

90.6

Bank deposits and other assets

8,617

9.4

Total assets

92,053100.0

Total liabilities

46,66650.7

45,387

49.3

Net assets¥

14. Subsequent Events
1.

Issuance of New Investment UnitsOn April 3, 2006 and April 19, 2006, the Board of Directors of the Investment Corporation resolved to issue new investment units asfollows. The payments were completed on May 1, 2006 and May 26, 2006, respectively. As a result of the issuance of additional
investment units, the Investment Corporation had total unitholders’ capital of ¥88,729,652,470, with 157,000 investment units outstanding
as of May 26, 2006.
(1)

Issuance of New Investment Units through Public Offering
Total number of newly issued units:(2)73,660 units

Japanese Primary Offering:

50,370 units

International Offering:

23,290 units

Offer price per unit:¥593,096

Total amount of offerings:¥43,687,451,360

Issue price per unit:¥572,519

Net proceeds:¥42,171,749,540

Payment date:

May 1, 2006

Delivery date of investment unit certificates:

May 2, 2006

Starting date of the computation for cash distribution:

May 1, 2006

Issuance of New Investment Units through Third-party Allotment
Total number of newly issued units:

3,970 per unit

Issue price per unit:¥572,519

Net proceeds:¥2,272,900,430

Payment date:

May 26, 2006

Delivery date of investment unit certificates:

May 26, 2006

Starting date of the computation for cash distribution:

May 1, 2006

2. Debt Financing
On May 1, 2006, the Investment Corporation obtained debt financing as follows:(1)

Series 7-A
Lenders:

Sumitomo Mitsui Banking Corporation
The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Amount Borrowed:¥2,000 million

Interest Rate:

0.36909％ floating rate of interest (Note)

Repayment Due Date:

April 30, 2007

Collateral:

Unsecured, unguaranteed

Note: The interest rate covers the period commencing May 1, 2006 through July 31, 2006.
calculated based on the three-month yen TIBOR +0.23%.

(2)

Thereafter, the interest rate shall be

Series 7-B
Lenders:

The Chuo Mitsui Trust and Banking Co., LimitedAozora Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Mitsubishi UFJ Trust and Banking Corporation
Resona Bank, Ltd.

Amount Borrowed:¥6,500 million

Interest Rate:

0.53909％ floating rate of interest (Note)

Repayment Due Date:

April 30, 2009

Collateral:

Unsecured, unguaranteed

Note: The interest rate covers the period commencing May 1, 2006 through July 31, 2006. Thereafter, the interest rate shall becalculated based on the three-month yen TIBOR +0.40%. Interest on variable interest rate loans has been fixed at 1.62875%
until April 30, 2009, through interest-rate swap transactions.

(3)

Series 7-C
Lenders:

Aozora Bank, Ltd.
Mitsui Sumitomo Insurance Co., Ltd.

Amount Borrowed:¥2,500 million

Interest Rate:

0.63909％ floating rate of interest (Note)
2.19875％ fixed rate of interest

Repayment Due Date:

April 30, 2011

Collateral:

Unsecured, unguaranteed

Note: The interest rate covers the period commencing May 1, 2006 through July 31, 2006. Thereafter, the interest rate shall becalculated based on the three-month yen TIBOR +0.50%. Interest on variable interest rate loans has been fixed at 2.19875%
until April 30, 2011, through interest-rate swap transactions.

(4)

Series 7-D
Lender:Development Bank of Japan

Amount Borrowed:¥5,000 million

Interest Rate:

2.73125％ fixed rate of interest

Repayment Due Date:

April 30, 2016

Collateral:

Unsecured, unguaranteed