Financial Statements（Sixth Fiscal Period:From November 1, 2007 to April 30, 2008）
Report of Independent Auditors
Balance Sheets
Statements of Income and Retained Earnings
Statements of Changes of Unitholders’ Equity
Statements of Cash Flows
Notes to Financial Statements

Kenedix Realty Investment Corporation

Kenedix Realty Investment Corporation

BALANCE SHEETSAs of April 30, 2008 and October 31, 2007
In thousands of yen
As of April 30, 2008

As of October 31, 2007

AssetsCurrent assets:
Cash and bank deposits
Rental receivables
Consumption tax refundable
Other current assets
Total current assets
Property and equipment, at cost:
Land
Buildings and structures
Machinery and equipment
Tools, furniture and fixtures
Less-accumulated depreciation¥

Net property and equipment
Other assets:
Ground leasehold
Organization costs
Corporate bond Issuance costs
Unit Issuance costs
Other assets
Total assets
Liabilities and Unitholders' Equity
Liabilities
Current liabilities:
Trade and other payables
Short-term debt
Deposits received
Rents received in advance
Other current liabilities
Total current liabilities
Corporate bonds
Long-term debt
Leasehold and security deposits received
Other liabilities

12,323,340
141,91047,552
58,16912,570,971

150,671,196
69,663,667
787,653
314,867(4,953,431)

131,547,185
72,108,105
861,811670,095(4,622,859)

216,483,952

200,564,337

285,350
20,35957,184130,306
146,065

285,350
25,44862,997
171,775
83,112

230,520,243¥

213,763,990¥

793,006
31,750,000
4,504
1,172,675
305,962
34,026,147
12,000,000
46,000,000
10,176,842
3,092

¥

526,994
19,500,000
1,985
1,141,333
75,60021,245,912
12,000,000
44,000,000
8,749,709
6,434

Unitholders'equity
Unitholders'capital
Units Authorized:2,000,000units
Units Issued and outstanding:200,000units
as of April 30, 2008 and October 31, 2007,respectively
Retained earnings
Unrealized gain from deferred hedge transactions
Total unitholders' equity

See notes to financial statements¥¥

Total liabilities

Total liabilities and unitholders' equity

13,192,761
159,004
45,262
13,397,027¥

102,206,081

86,002,055

124,973,750

124,973,750

3,342,285(1,873)2,792,084(3,899)128,314,162

127,761,935

230,520,243¥

213,763,990

Kenedix Realty Investment Corporation

STATEMENTS OF INCOME AND RETAINED EARNINGSFor the period from May 1, 2007 to October 31, 2007, and the period from November 1, 2007 to April 30, 2008
In thousands of yen
From November 1, 2007

From May 1, 2007

to April 30, 2008

to October 31, 2007

Operating Revenues:
Rental revenues¥

Profit on sale of real estate

7,630,465¥

7,208,246

952,230-

8,582,695

7,208,246

Property-related expenses

3,447,634

3,205,728

Loss on sale of real estate

439,333-

Asset management fees

424,142

369,009

Administrative service and custodian fees

75,14872,565

Other operating expenses

130,783

90,0184,517,040

3,737,320

4,065,655

3,470,926

Interest expense

618,126

595,160

Financing related expense

28,471

24,339Total operating revenues
Operating Expenses:

Total operating expenses
Operating income
Non-Operating Expenses:

Amortization of organization costs

5,090

5,090

Amortization of unit issuance costs

41,46941,469Amortization of corporate bond issuance costs

5,814

5,878

Others, net

22,9285,925

3,343,757

2,793,065

1,556

1,024

3,342,201

2,792,041

84

43

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

3,342,285¥

2,792,084

Kenedix Realty Investment Corporation

Statements of Changes in Unitholders’ Equity
For the period from May 1, 2007 to October 31, 2007 and the period from November 1, 2007 to April 30, 2008
(Thousands in Yen)
Unitholders' Equity
Unrealized gainfrom deferred

Balance as of May 1, 2007¥

Unitholders'

Retained

hedge

capitalearnings

transactions

88,729,652¥

2,148,118

¥

-

Total
¥

90,877,770

Changes during the fiscal period
New unit issuance

36,244,098

36,244,098

Payment of dividends-(2,148,074)-(2,148,074)

Net income-

2,792,040-

2,792,040

Interest-rate swap--

(3,899)(3,899)36,244,098

643,966(3,899)36,884,165

Total changes during the fiscal period
Balance as of October 31, 2007¥

124,973,750¥

2,792,084¥(3,899)¥127,761,935

Changes during the fiscal period
New unit issuance

-

-

-

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

Net income-

3,342,201-

3,342,201

Interest-rate swap

-

-

2,026

2,026

-

550,2012,026

552,227

Total changes during the fiscal period
Balance as of April 30, 2008
See notes to financial statements¥

124,973,750¥

3,342,285¥(1,873)¥

128,314,162

Kenedix Realty Investment Corporation

STATEMENTS OF CASH FLOWSFor the period from May 1, 2007 to October 31, 2007 and the period from November 1, 2007 to April 30, 2008
In thousands of yen
From November 1, 2007

From May 1, 2007

to April 30, 2008

to October 31, 2007

Cash Flows from Operating Activities:
Income before income taxes¥

3,343,757¥

2,793,065

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

1,509,898

1,465,288

618,126

595,160(17,093)(66,786)

Consumption tax refundable

47,552

254,489

Accrued consumption tax

215,992-

Trade and other payables

263,920

103,499

Rents received in advance

31,342

224,961Interest expense
Changes in assets and liabilities:
Rental receivables

30,755,698-

Loss on retirement of fixed assets

Sale of trust beneficiary interests in real estate

45,289-Others, net(66,119)(56,018)

36,748,362

5,313,658(603,866)(606,962)

(659)

(543)

36,143,837

4,706,153(48,150,727)(23,439,729)

2,132,300

1,779,663

Subtotal
Cash payments of interest expense
Cash payments of income taxes
Net cash provided by operating activities
Cash Flow from Investing Activities:
Purchases of property and equipment
Proceeds from leasehold and security deposits received
Payments of leasehold and security deposits received(705,167)(599,597)(1,130,321)(111,083)

Proceeds from restricted bank deposits

71,434

435,530

Others, net(10,915)(762)(47,793,396)(21,935,978)

Payments of restricted bank deposits

Net cash used in investing activities
Cash Flows from Financing Activities:
Proceeds from short-term debt

1,500,000

5,250,000

Payment of short-term debt

(2,250,000)(17,250,000)

Proceeds from long-term debt

15,000,000

2,000,000-(3,000,000)

Payment of long-term debt-

36,101,994

Payment of dividends

Proceeds from issuance of units(2,789,908)(2,147,444)

Net cash provided by financing activities

11,460,092

20,954,550

Net change in cash and cash equivalents(189,467)

3,724,725

Cash and cash equivalents at the beginning of period

11,331,325

7,606,600

Cash and cash equivalents at the end of period
See notes to financial statements¥

11,141,858¥

11,331,325

Kenedix Realty Investment Corporation

Notes to Financial Statements
For the period from May 1, 2007 to October 31, 2007, and the period from November 1, 2007 to April 30 ,2008

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 aregistered asset management company, Kenedix REIT Management, Inc.("the Asset Management Company"), a wholly-owned subsidiary of
Kenedix, Inc.(“Kenedix”)
On May 6, 2005, the Investment Corporation was originally formed with ¥200 million of initial capital contributions from Kenedix, the 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.
On May 1, 2006, the Investment Corporation raised ¥42,172 million of equity capital through a public offering of 73,660 investment units and 26
properties with an aggregate purchase price of ¥58,033 million were acquired with additional debt proceeds of ¥16,000 million.
On May 26, 2006, the Investment Corporation completed third-party allotment of 3,970 investment units, generating an additional ¥2,273 million.
During the period ended October 31, 2006, the Investment Corporation sold 2 properties and acquired 5 properties.
On March 15, 2007, the Investment Corporation issued the investment corporation bonds. Their total amounts is ¥12,000 million and term are
five years and ten years.
During the period ended April 30, 2008, the Investment Corporation sold 23 residential properties (initial total acquisition price of ¥30,343
million) to a wholly owned subsidiary of Kenedix, Inc. and acquired 9 office buildings (total acquisition price of ¥31,980 million) from a wholly owned
subsidiary of Kenedix, Inc. on February 1, 2008. In addition, the Investment Corporation acquired 5 office buildings (total acquisition price of¥14,121 million).
At April 30, 2008, the Investment Corporation had total unitholders’ capital of ¥124,974 million with 200,000 investment units outstanding. The
Investment Corporation owned a portfolio of 68 properties with total acquisition price of ¥212,849 million containing total leasable area of 248,625
m2. The occupancy ratio was approximately 95.9%. A portfolio of 68 properties consists of 58 office buildings, 7 residential properties and 3
central urban retail properties. 55 properties are located in the Tokyo metropolitan area and 13 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 Corporation Law, the Financial Instruments and Exchange Law of Japan and related regulations, and in conformity with accounting
principles and practices generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards or accounting principles generally accepted in the United States ofAmerica.
The accompanying financial statements are a basically translation of the audited financial statements that were prepared for Japanese domestic
purposes from the accounts and records maintained by the Investment Corporation and filed with the Kanto Local Finance Bureau of the Ministryof Finance as required by the Financial Instruments and Exchange Law. In preparing the accompanying financial statements, relevant notes
have been added and certain reclassifications have been made from the financial statements issued domestically in order to present them in aform that is more familiar to readers outside Japan. The Investment Corporation’s fiscal period is a six-month period which ends at the end of April
and October of each year, respectively. The Investment Corporation does not prepare consolidated financial statements because it has no
subsidiaries.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(a) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments which are highly liquid, readily
convertible to cash and with insignificant risk of market value fluctuation, with 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, 2007
From May 1, 2007
to April 30, 2008
to October 31, 2007
Buildings and structures ......................................................................................................

2-46 years

2-46 years

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

3-17 years

3-17 years

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

3-20years

3-15 years(c) 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.
(d) Unit Issuance Costs
Unit issuance costs are amortized over a period of three years under the straight-line method.
(e) Corporate Bond Issuance Costs
Investment corporation bonds issuance costs are amortized over a loan period under the straight-line method.
(f)Accounting Treatment of Trust Beneficiary Interests in Real Estate
For trust beneficiary interests in real estate, which are commonly utilized in the ownership of commercial properties in Japan and throughwhich the Investment Corporation holds all of its real property, all assets and liabilities within trust are recorded in the relevant balance sheet
and income 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 onan accrual basis over the life of each lease. Utility charge reimbursements are recognized when earned and their amounts can bereasonably estimated. Reimbursements from tenants including utility charge reimbursements are recorded on a gross basis and suchamounts 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 thedate of disposal to the end of the calendar year in which the property is disposed. The seller, however, is reimbursed by the purchaser forthese accrued property-related tax liabilities.
When the Investment Corporation purchases properties, it typically allocates the portion of the property-related taxes related to the period
following the purchase date of each property through the end of the calendar year. The amounts of those allocated portions of theproperty-related taxes are capitalized as part of the acquisition costs of the related properties. Capitalized property-related taxes amounted
to ¥174 million and ¥82 million as of April 30, 2008 and October 31, 2007. In subsequent calendar years, such property-related taxes arecharged 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 valueof interest-rate swap agreements because its interest-rate swap agreements met the criteria for deferral hedging accounting. But, theInvestment Corporation adopted special treatment for interest-swap agreements if its interest-rate swap agreements met the criteria forhedging accounting under this treatment, the net amount to be paid or received under the interest rate swap contract is added to or deductedfrom the interest on the assets or liabilities for which the swap contract was excuted.

(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
the accompanying 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, 2008 and October 31, 2007:
In thousands of yen

As of April 30, 2008

As of October 31, 2007

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

¥ 13,192,761¥ 12,323,340

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

（2,050,903）(992,015)

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

¥ 11,141,858¥ 11,331,325

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, 2008
Acquisition costs

Accumulated
depreciation

As of October 31, 2007
Book value

Acquisition costs

Accumulated
depreciation

Book value

Land
Buildings andstructures
Machinery andequipment
Tools, furnitureand fixtures¥ 150,671−¥ 150,671¥ 131,547−¥ 131,547

69,664¥ 4,678

64,986

72,108¥ 4,335

67,773

788

198

589

862

169

693

315

77

237

670

119

551

Total

¥ 221,437¥ 4,953¥216,484¥ 205,187¥ 4,623¥ 200,564

5. SHORT-TERM AND LONG-TERM DEBTS
The following summarizes short-term and long-term debt outstanding as of April 30, 2008:
Classification

Drawdown Date
July 31, 2007

Repayment Date

(As of April 30, 2008)
Weighted-average

Balanceinterest rate

(In millions of yen)

July 31, 2008

1.13%

¥

2,000

September 20, 2007

September 20, 2008

1.13%

1,250

October 31, 2007

October 31, 2008

1.10%

1,000

January 10, 2008

January 10, 2009

1.15%

1,000

February 29, 2008

February 28, 2009

1.20%

500

August 1, 2005

July 31, 2008

0.87%

9,500

November 1, 2005

October 31, 2008

1.09%

3,500

Unsecured current potion of

December 8, 2005

December 7, 2008

1.10%

2,000

long-term debt

March 1, 2006

February 28, 2009

1.45%

2,000

March 16, 2006

March 16, 2009

1.48%

2,500

May 1, 2006

April 30, 2009

1.63%

6,500

Unsecuredshort-term debt

SubtotalAugust 1, 2005

31,750July 31, 2010

1.29%

9,500

May 1, 2006

April 30, 2011

2.20%

2,500

May 1, 2006

April 30,2016

2.73%

5,000

July 14, 2006

July 13, 2011

2.15%

1,000

September 1, 2006

August 31, 2013

2.12%

3,000

December 1, 2006

November 30, 2011

1.96%

2,500

April 2, 2007

April 2, 2010

1.57%

2,000

Unsecured

April 2, 2007

April 2, 2012

1.88%

2,000

long-term debt

April 17, 2007

April 16, 2011

1.65%

1,500

October 31, 2007

October 31, 2009

1.34%

2,000

January 10, 2008

January 10, 2012

1.50%

2,500

February 29, 2008

February 28, 2009

1.37%

2,000

February 29, 2008

August 31, 2011

1.43%

1,500

March 31, 2008

September 30, 2011

1.61%

3,000

March 31, 2008

September 30, 2011

1.56%

2,000

April 25, 2008

October 25, 2009

1.56%

1,000

April 25, 2008

October 25, 2009

1.46%

3,000

Subtotal
Corporate bonds

March 15, 2007

March 15, 2012

March 15, 2007

March 15, 2017

46,000
1.74%

9,000

2.37%

3,000

Subtotal
Total

12,000¥89,7506. UNSECURED LINE OF CREDIT
The Investment Corporation established a credit commitment line with two lenders.

The total borrowings available under the commitment line

agreements are ¥5 billion. Currently, the Investment Corporation has a balance of ¥0.5 billion based on the concered agreements. The unusedborrowings under the commitment line agreement are ¥4.5 billion.

7. PER UNIT INFORMATIONThe net asset value per unit as of April 30, 2008 and October 31, 2007 was ¥641,571 and ¥638,810. Net income per unit as of April 30, 2008
and October 31, 2007 was ¥16,711 and ¥14,334.
The weighted average number of units outstanding of 200,000 and 194,772 was used for the computation of the amount of net income per unit
as of April 30, 2008 and October 31, 2007.

8. INCOME TAXESThe Investment Corporation is subject to corporate income taxes at a regular statutory rate of approximately 40%. However, the Investment
Corporation may deduct from its taxable income amounts distributed to its unitholders, provided the requirements are met under the Special
Taxation Measure Law of Japan. Under 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 3,342 million and ¥2,792 million for the periods ended April 30, 2008 and October 31, 2007.

Such distributions were treated as

deductible distributions for purposes of corporate income taxes. The effective tax rate on the Investment Corporation’s income was 0.05% and0.03% for the periods ended April 30, 2008 and October 31, 2007. The following summarizes the significant difference between the statutory tax
rate and the effective tax rate:
From November 1, 2007
to April 30, 2008

From May 1, 2007
to October 31, 2007

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

39.39%

39.39%

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

(39.37)(39.37)

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

0.03

0.01

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

0.05%

0.03%

9. UNITHOLDERS’ EQUITYThe Investment Corporation issues only non-par value units in accordance with the Investment Trust Law.
price of new units is designated as stated capital.

The entire amount of the issue

The Investment Corporation is required to maintain net assets of at least ¥50 million as

required by the Investment Trust Law.

10. RELATED-PARTY TRANSACTIONS(a) Transactions with Kenedix
Kenedix provides the Investment Corporation with intermediate services. For these services, The Investment Corporation will pay ¥120 million of
brokerage fee to Kenedix. This includes the book value of the fixed assets.

(b) 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

From November 1, 2007
to April 30, 2008

From May 1, 2007
to October 31, 2007

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

¥ 183,364¥ 256,842

Management transfer fees (note 1) ..........................................................................

65,40010,800Construction management fees (note 2) ....................................................................

3,600

40,197

Notes:
1. Management transfer fees include ¥28,353 thousands that were capitalized as costs of the real estate at the time of acquisition.
2. Construction management fees include ¥37,588 thousands that were capitalized as costs of the real estate.
(c) Transactions with Y.K. KRF11
Y.K. KRF11 is a wholly owned subsidiary of Kenedix.
¥17,260 million.

On February 1, 2008 the Investment Corporation acquired 6 properties from KRF11 for

The purchase price of these properties was determined based on an independently appraised value at the time of acquisition.

(d) Transactions with Y.K. KWO Fourth
Y.K. KWO4 is a wholly owned subsidiary of Kenedix.
for ¥7,600 million.

On February 1, 2008 the Investment Corporation acquired 1 property from KWO Fourth

The purchase price of these properties was determined based on an independently appraised value at the time of acquisition.

(e) Transactions with Y.K. Cistern Capital
Y.K. Cistern Capital is a wholly owned subsidiary of Kenedix. On February 1, 2008 the Investment Corporation acquired 1 property from
Cistern Capital for ¥4,900 million.

The purchase price of these properties was determined based on an independently appraised value at thetime of acquisition.
(f) Transactions with Y.K. KRF1
Y.K. KRF1 is a wholly owned subsidiary of Kenedix.

On February 1, 2008 the Investment Corporation acquired 1 property from KRF1 for¥2,220 million. The purchase price of these properties was determined based on an independently appraised value at the time of acquisition.
(g) Transactions with G.K. KRF20
G.K. KRF20 is a wholly owned subsidiary of Kenedix.

On February 1, 2008 the Investment Corporation sold 23 properties to KRF20 ¥ 31,490

million. The sales price of these properties was determined based on an independently appraised value at the time of acquisition.

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

From November 1, 2007

From Ｍａｙ 1, 2007

to April 30, 2008

to October 31, 2007

Rental and other operating revenues:
Rental revenues ………………………………………………………………

¥5,626,515¥ 5,336,255

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

1,144,196

998,453

Subtotal ………………………………………………………………………..

6,770,711

6,334,708

Parking space rental revenues …………………………………………..

240,631

222,255

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

458,128

476,613

Miscellaneous ……………………………………………………………..

160,995

174,670

Subtotal …………………………………………………………………….

859,754873,538

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

¥7,630,465¥ 7,208,246

Property management fees and facility management fees

¥750,333¥ 704,418

Depreciation …………………………………………………………………

1,430,126

1,392,013

Utilities ………………………………………………………………………….

450,237

454,313

Taxes ……………………………………………………………………………

395,277

329,928

Others:Insurance ……………………………………………………………………..

16,806

17,219Repairs and maintenance ……………………………………………………..

149,231

119,710

Trust fees ……………………………………………………………………..

57,312

55,386

Others …………………………………………………………………………

149,083

132,741

Loss on retirement of fixed assets…………………………………………….

49,229-Total property-related expenses ……………………………………………...

¥3,447,634¥ 3,205,728

Profit on sale of real estate:
Revenue from sale of investment properties …………………………

18,788,000

Cost of investment properties ……………………………………………

17,705,426

Other sales expenses …………………………………………………….

130,344

Profit on sale of real estate ……………………………………………….

952,230−

Loss on sale of real estate
Revenue from sale of investment properties ……………………………

12,702,000

Cost of investment properties …………………………………………….

13,050,272

Other sales expenses ……………………………………………………..

91,061

Loss on sale of real estate ………………………………………………..

439,333−

12. 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, 2008 and October 31, 2007 are as follows:
In thousands of yen

As of April 30, 2008
Due within one year .................................................................................................

As of October 31, 2007

¥ 1,689,845

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

9,711,097

Total ................................................................................................................

¥ 11,400,942¥

1,561,805¥

12,078,054

10,516,248

13. DERIVATIVES AND HEDGE ACCOUNTINGThe Investment Corporation has entered into interest-rate swap agreements with several Japanese financial institutions to hedge its variable
rate long-term debt obligations. The Investment Corporation utilizes 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 principal amounts and the estimated unrealized loss from interest rate swap contracts as of April 30,
2008:
The estimated unrealized loss does not include the interest rate swap contracts that met the criteria for the special treatment.
(As of April 30, 2008)
Type
Interest-rate swap:
Fixed rate payable and floating rate receivable

Notional amount¥45,300 million

Unrealized loss¥(3 million)

14. PROPERTY INFORMATION
Details of the property portfolio as of April 30, 2008 were as follows:
Type

Office Buildings

Central Urban Retail Properties

Residential Properties

Tokyo

Other

Tokyo

Other

Tokyo

Other

Metropolitan

Regional

Metropolitan

Regional

Metropolitan

Regional

Location

Area

Areas

Area

Areas

Area

Areas

Number of properties

47

11

6

1

2

1

¥151,635¥32,445¥10,909¥1,800¥12,380¥3,68071.24%

15.24%

5.13%

0.85%

5.82%

1.73%

Net book value

154,851

32,643

10,9391,921

12,746

3,669

Appraisal value at year end

172,31133,45011,0781,700

14,4703,810

72.76%

14.12%

4.68%

0.72%

6.11%

1.61%

4,988,545

1,188,511

354,844

94,118370,185

108,000

Property information(In millions of yen)
Acquisition price
Percentage of total acquisition costs

Percentage of total appraisal value
Financial results for the period ended April 30,2008(In thousands of yen)
Rental and other operating revenues
Rental revenues

4,466,949

990,690317,341

83,083334,715

108,000

Other revenues

521,596

197,82137,503

11,03535,470-Property-related expenses

1,226,318

407,959

59,56440,865

121,055

13,741

Property management fees

456,620

184,386

31,086

9,315

24,881

4,128

Taxes

236,618

73,482

9,070

8,632

19,4098,160

Utilities

320,633

88,627

3,567

2,206

22,683-

Repairs and maintenance

74,92933,504

5,536

10,835911-

Insurance

8,795

4,876

913

523

382

103

128,723

23,084

9,392

9,354

52,7891,350

NOI (Net Operating Income)

Trust fees and other expenses

3,762,227

780,552

295,280

53,253249,130

94,259Depreciation expenses

793,033

264,549

94,391

22,97375,712

9,856

Operating income from property leasing activities

2,969,194

516,003200,889

30,280173,418

84,403

Capital expenditures

919,625

222,469

-

803

2,469

-

NCF (Net Cash Flow)

2,842,602

558,083

295,280

52,450246,661

94,259A breakdown of property-type as of April 30, 2008 was as follows:
Balance at the end of
Property typeArea
Tokyo Metropolitan Area

Office Buildings

Other Regional Areas
Subtotal
Tokyo Metropolitan Area

Residential Properties

Other Regional Areas

Subtotal

Percentage of(In millions of yen)

total assets¥154,851

67.2

32,643

14.2

187,494

81.3

10,939

4.8

1,921

0.8

12,860

5.6

Tokyo Metropolitan Area

12,746

5.5

Other Regional Areas

3,669

1.6

Subtotal
Central Urban Retail Properties

period16,415

7.1

Total

216,769

94.0

Bank deposits and other assets

13,751

6.0

Total assets

230,520

100.0

Total liabilities

102,206

44.3

Net assets¥128,314

55.7

15. SUBSEQUENT EVENTS
Acquisition of Property
On May 15, 2008, the Board of Directors of the Asset Management Company resolved to acquire KDX Harumi Building (office building, withtotal floor area of 12,694.32 ㎡) from Y.K.KW Property 11 on June 30, 2008, for ¥10,250 million (excluding the acquisition costs, property tax,
city-planning tax and consumption tax, etc).