Memo
Kenedix
Office Investment Corporation

26th Fiscal Period Results (Ended April 2018)
June 18, 2018
Ticker Symbol: 8972

Kenedix Real Estate Fund Management, Inc.

0

Table of contents
Section 1

Executive summary / highlights

Section 2

26th fiscal period results (2018/4),

P. 2

27th fiscal period earning forecasts (2018/10) and28th fiscal period earning forecasts (2019/4)

P. 6

Section 3

Portfolio overview

P. 9

Section 4External growthP. 12

Section 5

Internal growthP. 17

Section 6

Financial strategy

P. 25

Appendix 1 Properties (to be) acquired / sold and asset reshuffle

P. 28

Appendix 2 Supplemental material / data

P. 34

Appendix 3 Characteristics of KDO

P. 47

1

Section 1

Executive summary / highlights

2

Highlights and future initiatives
Highlights
External
growthFuture initiatives

Continue to improve the portfolio quality by selective investment
and asset reshuffle

A series of initiatives in and after the 26th fiscal period (2018/4)• Aim for further enhancement of our unitholder
value• Asset reshuffle by Kenedix group collaboration • Asset reshuffle through mutual transaction‒ Selectively invest in mid-sized office buildings, etc. withstrong competitive advantage within each area
‒ Secure gain on sale by regional diversification andlocational improvement‒ Acquire relatively new property in central Tokyothrough public offering for the first time in 3 and ahalf years‒ Dispose of a central urban retail property and a
relatively old small-sized office building• Disposition of non-core asset (residence)‒ Dispose of residential property with low
profitability and secure gain on saleInternal
growthExternal
growthEffects of asset reshuffle through mutual transaction
Gain on sale ofreal estate

Increase in NOI
after depreciation

Rejuvenation of averagebuilding age

1,090 mn yen+258 mn yen

12.2 yrs

Continue upward trend in revenues by improving actual
occupancy rate and unit rent

Selective investment
and asset reshuffle
by utilizing
borrowing capacity

Growth ofunitholder value• Difference between occupancy rate and actual occupancy rate reduced to 1.1% due to decrease in turnover ratio
and gradual expiration of free rent periods• Upward rent trend seen in regional areas with upward rent revision on a steady increase every period
Increase in actual occupancy rate
End of the 26th fiscal period(owned office buildings)
98.0% (+1.5% period over period)※Occupancy rate(contracted area based): 99.1%

Financialstrategy

Ratio of upward
rent revision (by contract)
25th fiscal period

26th fiscal period

16.9%

24.7%

Increase by rent revision
Total monthly rent of the 26th fiscal period(increased portion)+6.8 mn yen

Internal
growthFinancialstrategy

Rise in unit rent
throughvarious measures

Stable financial
management
and reduction offinancial cost

Maintain stable financial base and continue to reduce financial cost

• Continue to reduce financial cost and extend remaining period to maturity• Decrease LTV level through the May 2018 public offering and expect to improve financial stability and secureborrowing capacity to acquire properties
Average remaining period to
Average interest rate on
LTV (interest-bearing debt)
interest-bearing debt
maturity on interest-bearing debt
End of the 26th fiscal
period (2018/4)

Estimate after
the public offering

End of the 26th fiscal period

End of the 26th fiscal period

1.07%

43.9%

42.3%

(-0.03% period over period)

5.2 years(+0.2 years period over period)

3

Dividend and reserve for reduction entry
Raised dividend by approx. 10% year over year in the 26th fiscal period (2018/04), and reserve for reduction entry accumulated to 2,134 million yen
Realize forecast dividend and expect further accumulation of reserve for reduction entry from gain on sale in and after the subsequent periods

DPU and Reserve for reduction entry history (Note 1)
Gain on saleof real estate
5 mnyen(13 yen per unit)

Gain on saleof real estate
550 mn yen(1,358 yen per unit)

Gain on saleof real estate
527 mn yen(1,231 yen per unit)

Gain on saleof real estate
563 mn yen(1,314 yen per unit)

12,900yen 12,960yen

13,200yen

13,200yen

436yen614yen12,500yen
11,733yen
13yen

DPU

11,335yen

24th
fiscal第24期
period
（17/4期）(2017/4)
実績
Actual25th
fiscal第25期
period（17/10期）(2017/10)
実績
ActualReversal ofreserve for
reduction entry

5,000yen

1,165yen

Reserve for
reduction
entry per unit

26th第26期
fiscal period(2018/4)（18/4期）
forecast
Actual予想
実績

5,271yen

Provision overgain on sale inrange of conduit
requirements

12,764yen

12,586yen

27th
fiscal第27期
period（18/10期）(2018/10)
予想
Forecast

28th
fiscal第28期
period（19/4期）(2019/4)予想
Forecast

6,475yen
5,776yen

699yen795yen• Priority use for distribution of forecast
dividend in each fiscal period• In the presence of residual, the amount is
to be added to reserve for reduction entry
up to a ceiling of the forecast of each fiscal
periodUtilization policy ofreserve for reduction entry• Response to one-time decrease in revenue
due to exit of major tenants

1,436yen• Response to one-time decline in dividend
resulted from investment for future growth

3,835
yen

(Note2)

Total of Reserve
for reduction
entry (Note2)(announced on May 14, 2018)

1,165yen

11,720yen

Utilization policy ofgain on sale of real estatein 27th/28th fiscal period forecasts

24thfiscal第24期
period
（17/4期）(2017/4)
実績
Actual25th
fiscal第25期
period（17/10期）(2017/10)
実績
Actual

26th
fiscal第26期
period
（18/4期）(2018/4)
実績
Actual

27th
fiscal第27期
period（18/10期）(2018/10)
予想
Forecast

28th
fiscal第28期
period（19/4期）(2019/4)予想
Forecast

2,024 mn yen

1,552 mn yen

2,134 mn yen

2,475 mn yen

2,775 mn yen• Response to dilution of dividend due to a
public offering during the fiscal period

Note 1: Through the May 2018 public offering (incl. the subsequent third-party allotment), the total number of investment units issued and outstanding increases from 404,885 units as of the end of 26th fiscal period (2018/4) to 428,510
units as of the end of the 27th fiscal period (2018/10). The same applies hereinafter. Figures per unit are calculated based on the number of investment units issued and outstanding as of the end of each fiscal period
Note 2: The balance of reserve for reduction entry is calculated by either adding provision of reserve for reduction entry or subtracting reversal of reserve for reduction entry stated on Basis for Calculating Cash Distribution for the
relevant fiscal period to/from the balance of reserve for reduction entry on the balance sheet as of the end of the relevant fiscal periods

4Portfolio appraisal profit and NAV per unit
Appraisal profit expanded to 47.2 billion yen due to an increase in appraisal value and proactive asset reshuffle
Raised NAV per unit by 5.9% year over year

Changes in portfolio appraisal profit amount and ratio (Note 1)

Changes in NAV per unit (Note 2)• Both appraisal profit amount and ratio reached a record highsince listing at the end of the 26th fiscal period (2018/4)(bn yen)Appraisal profit amount (left axis)

60.0

Appraisal profit ratio (right axis)

(yen)

14.0

650,000

+5.9%

11.9%
596,000

600,000
10.0

577,000

8.6%

40.0

557,000

8.0
6.5%

30.0

631,000

615,000

12.0

10.9%

50.0

（%）

550,000
6.0

4.5%
20.0
4.0
10.0

500,000

2.0
17.4

25.4

33.1

41.5

47.2

22nd fiscal
period(2016/4)

23rd fiscal
period(2016/10)

24th fiscal
period(2017/4)

25th fiscal
period(2017/10)

26th fiscal
period(2018/4)0.0

0.0

450,000
22nd fiscal
period(2016/4)

23rd fiscal
period(2016/10)

24th fiscal
period(2017/4)

Note 1: Appraisal profit amount is calculated by subtracting book values from appraisal values for all properties owned as of the end of relevant fiscal periods.
In addition, appraisal profit ratio is calculated by dividing appraisal profit amount by book value as of the end of relevant fiscal periods (truncated to the first decimal place)
Note 2: NAV per unit is truncated to the nearest thousand yen after subtracting the amount of DPU

25th fiscal
period(2017/10)

26th fiscal
period(2018/4)

5

Section 2

26th fiscal period results (2018/4),
27th fiscal period earning forecasts (2018/10) and28th fiscal period earning forecasts (2019/4)

6

26th fiscal period (2018/4) financial results
Net income increased by 1,239 million yen period over period mainly due to an increase in rental NOI andbooking of gain on sale of real estate
26th fiscal period (2018/4) actual
25th fiscal
period(2017/10)
Actual26th fiscal
period(2018/4)
Forecast(mn yen)
26th fiscal
period(2018/4)
Actual26th (actual) 26th (actual)
vsvs25th (actual) 26th (forecast)Difference
Difference(announced on
Dec. 14, 2017)

A

B

C

C-A

Operating revenue

13,901

14,792

14,823

1

+921

+31

Operating expense

8,244

7,933

7,974

2

-269

+41

Operating income

5,657

6,858

6,848

3 +1,190-10

Ordinary income

4,590

5,804

5,829

+1,239+24

Net income

4,588

5,803

5,828

+1,239+25

DPU (yen)

12,50012,90012,960+460+60Provision (+) /reversal (-) of reserve
for reduction entry

-471

+580

+581

-

+1

Gain / loss on sale ofreal estate

-568

551

550

+1,118-0

Rental NOI

9,413

9,577

9,539

3

+125

Interest expense, etc.

1,022

995

983

4

-38

Comparison against 25th fiscal period (2017/10) actual(see page 35 for details)

1Booking of gain on sale of real estate+550 mn yen

2

Disappearance of loss on sale of real estate-568 mn yen

3

Increase in rental NOI+125 mn yen

C-B

Increase in revenues from existing properties
Increase in revenues from asset reshuffle in and after
25th fiscal periods
Increase in repair/maintenance expense
Change in utility revenue/expense
4

Reduction in interest expense, etc.

+333 mn yen+172 mn yen-315 mn yen-47 mn yen-38 mn yen

Comparison against 26th fiscal period (2018/4) forecasts(see page 35 for details)

11

Decrease in rental NOI
Change in utility revenue/expense
Increase in repair/maintenance expense-37 mn yen+73 mn yen-126 mn yen

-37
-11

7

27th (2018/10) and 28th (2019/4) fiscal periods earnings forecasts
Net income expected to increase by 168 million yen period over period, estimating an increase in rental NOI for
the 27th fiscal period (2018/10)

27th (2018/10) and 28th (2019/4) fiscal periods forecasts (mn yen)
26th fiscal
period(2018/4)
Actual27th fiscal
period(2018/10)
Forecast

A

B

C

B-A

28th
(forecast)vs
27th(forecast)Difference
C-B

Operating revenue

14,823

15,33415,086

1 +511

1 -248Operating expense

7,974

8,279

8,069

2 +304

2 -209Operating income

6,848

7,054

7,016

3 +206-38

Ordinary income

5,829

5,998

5,957

+168

-40

27th
28th fiscal(forecast)periodvs(2019/4)
26th (actual)
Forecast
Difference

Net income

5,828

5,997

5,956

+168

-40

DPU (yen)

12,96013,20013,200+240-

Provision (+) /reversal (-) of reserve
for reduction entry

+581

+340

+299

-

-

Gain / loss on sale ofreal estate

550

527

563

-22

+35

9,539

10,0029,943

3 +463

-59

983

1,012

1,021

+28

+9

Rental NOIInterest expense, etc.

Comparison between 26th fiscal period (2018/4) actualand 27th fiscal period (2018/10) forecasts(see page 36 for details)

12Increase in rent revenue+557 mn yen

Increase in rent revenues
Increase in utility revenue+388 mn yen+169 mn yen

Increase in utility expense, etc.
Increase in utility expense
Increase in taxes

3

Increase in rental NOI
Increase in revenues from existing properties
Increase in revenues from asset reshuffle in and after
26th fiscal periods
Decrease in repair/maintenance expense
Increase in taxes
Increase in depreciation expense
Change in utility revenue/expense+316 mn yen+234 mn yen+82 mn yen+463 mn yen+40 mn yen+348 mn yen+302 mn yen-82 mn yen-77 mn yen-65 mn yen

Comparison between 27th fiscal period (2018/10) forecasts
and 28th fiscal period (2019/4) forecasts(see page 36 for details)

1

Decrease in utility revenue, etc.
Decrease in utility revenue
Decrease in revenue based on conservative estimate

1 Decrease in utility expense, etc.
2
Decrease in utility expense
Decrease in repair/maintenance expense-253 mn yen-181 mn yen-72 mn yen-187 mn yen-117 mn yen-70 mn yen
8Section 3

Portfolio overview

9Portfolio growth and changes in number of properties
Expect to expand the portfolio to 415 billion yen after the public offering through selective investment andasset reshuffle
Aim to continuously expand the portfolio by keeping an eye on real estate market trends and opportunities
Portfolio growth (based on total acquisition price) and the number of properties (Note 1) (Note 2)(bn yen)
500

Centralurban
Office(leftaxis)retail (left axis)

Residential (left axis)

Office (leftaxis)
Centralurban
retail (left axis)

Other (left axis)# of properties (right axis)

PO

97
94

Fiscal period with public offering (PO)

83

84

83

68
64

69

67

65

97

98

(# of properties)
97
96
100
90

PO

407

415
80

PO

71

70
67

99

85

74

72

97

89

77

400

97

PO

70

300

60
PO
PO

50

PO

200

40

35
31

PO

30
100

20
69
10

0

1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
12th
13th
14th
15th
16th
17th
18th
19th
20th
21st
22nd
23rd
24th
25th
26th
After
fiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscaltheperiod period period period period period period period period period period period period period period period period period period period period period period period period period public(2005/10) (2006/4) (2006/10) (2007/4) (2007/10) (2008/4) (2008/10) (2009/4) (2009/10) (2010/4) (2010/10) (2011/4) (2011/10) (2012/4) (2012/10) (2013/4) (2013/10) (2014/4) (2014/10) (2015/4) (2015/10) (2016/4) (2016/10) (2017/4) (2017/10) (2018/4) offering0(Note 3)Note 1: The amount and the number of properties are shown as of the end of each fiscal period. Figures are truncated to the nearest billion yen
Figures in this material are truncated to the nearest unit unless otherwise stated
Note 2: Classification by use of owned properties has been changed from the 26th fiscal period (2018/4) due to changes in the management guideline on December 1, 2017. The same applies hereinafter
Note 3: Calculated by adding the anticipated acquisition price of CROSS PLACE Hamamatsucho, the property to be acquired, and subtracting the acquisition price of KDX Hamamatsucho Dai-2 Building and Frame Jinnanzaka, the properties to be sold, to/from the total acquisition price at the end of the 26th fiscal period (2018/4)

10

Portfolio diversification
Portfolio mainly consisted of mid-sized office buildings with advanced tenant diversification
Plan to maintain approx. 80% investment ratio in the Tokyo metropolitan area
Breakdown by asset type (Note 1)
Central urban retail
2.4%(1 property)

Breakdown by region (Note 2)
Other
その他
0.7%
0.7%
(1 property)

Office Bldg.
オフィスビル(other)
（その他）
14.5%
14.5%
(7 properties)

End of 26th
fiscal period(2018/4)
97 properties

Other regional areas
18.9%

Tokyo central 5 wards
51.8%

Office Bldg.
(mid-sized)
82.3%
82.3%
(88 properties)

Office Bldg.

96.8% (95 properties)

End of 26th
fiscal period(2018/4)
Other Tokyo
metropolitan area
29.2%

Tokyo metropolitan area

81.0%

Breakdown of the number of tenants by leased floor area (Note 3)
300 tsubo or more
6.7%
200 - less than
300 tsubo
5.1%
100 - less than
200 tsubo
22.0%

End of 26th
fiscal period(2018/4)# of tenants:
1,188

Less than 100 tsubo
66.2%
Less than 200 tsubo

88.2%

Note 1: Portfolio breakdown by asset type based on acquisition price (truncated to the first decimal place)
Note 2: Portfolio breakdown by region based on acquisition price (truncated to the first decimal place)
Note 3: Based on the number of tenants in each office building. Tenants leasing more than one property are counted as 1 tenant for each building without aggregating by name-base11Section 4External growth

The terms used in Section 4 are as follows unless otherwise stated. Yields are rounded to the first decimal place• Estimated NOI yield: Calculated by dividing "NOI after excluding extraordinary factors for the year of the acquisition estimated by the Asset Management Company" by (anticipated) acquisition price• Estimated NOI yield after depreciation: Calculated by dividing estimated NOI after depreciation (estimated NOI – estimated depreciation expenses) by (anticipated) acquisition price• Appraisal NOI yield: Calculated by dividing "NOI calculated based on the direct capitalization method described in the relevant appraisal report as of the date of acquisition" by (anticipated) acquisition price• NOI yield after depreciation (actual): Calculated by dividing the sum of the rental operating income (NOI after depreciation (actual)) for the 24th (2017/4) and 25th (2017/10) fiscal periods by acquisition price• Amount of enhancement of appraisal profit/loss is calculated by the sum of total appraisal profit of acquired properties and the total appraisal loss of sold properties

12

Summary of the May 2018 Public Offering
Summary of the public offering
Offering structure

Domestic pubic offering

Effects of the public offering (Note 1)• Acquisition of a prime property in central Tokyo through mutual transaction• Stable growth of DPU and increase of reserve for reduction entry by utilizing gain on sale

Number of investment units
issued and outstanding
before the offering

404,885 units

Total number of new
investment units issued

23,625 units(incl. third-party allotment)

Number of investment units
428,510 units
issued and outstanding after(incl. third-party allotment)
the offering
Issue price• Generation of borrowing capacity to acquire properties due to a decrease in LTV level andsecurement of flexibility for selective investment
DPU growth

Reserve for
reduction entry

25th Fiscal Period to 27th
Total of 27th / 28th Fiscal
Fiscal Period
Periods

LTV after
the public offering

Borrowing capacity
to acquire properties

42.3%

Approx.

(-1.6% against
26th fiscal period)

21.5 bn yen

Per unit+5.6%+0.6 bn yen

646,425 yen(in the case of LTV45% limit)

Paid-in value (issue amount) 625,209 yen

Portfolio after the public offering (Note 2)
Aggregate paid-in value(total issue amount)

14,770 mn yen(incl. third-party allotment)

Launch date

May 14, 2018

Number ofproperties
Asset size

Pricing date

May 21, 2018

Payment datePublic offering: May 28, 2018
Third-party allotment: June 15,
2018

Ratio of Tokyo
96 properties metropolitan
area 81.4%

415.8 bn yen

4.8%
NOI yield after
Ratio of 5 minutes
84.0%
depreciation 3.6%
walking distancefrom nearest station

NOI yield(Note 3)(Note 3)Note 1: For the details of LTV after the public offering and borrowing capacity to acquire properties, please refer to page 26
Note 2: “After the public offering” refers to when the payment of the May 2018 public offering (incl. the subsequent third-party allotment), the acquisition and disposition through mutual transaction scheduled in and after the 27th fiscal
period (2018/10) have completed
Note 3: NOI yield and NOI yield after depreciation after the public offering are calculated by dividing “actual amounts for the 26th fiscal period (2018/4)” for the owned properties at the end of the 26th fiscal period (2018/4), and“Estimated amounts after excluding extraordinary factors for the year of the acquisition” for the property to be acquired by (anticipated) acquisition price, respectively

13Planned asset reshuffle in and after the 27th fiscal period (2018/10)
KDX
Nishi-Shinbashi Building

Asset reshuffle unique to the Investment Corporation with an abundant track record of mutual transactions with multiple
developers, etc.
Secured the acquisition funds through the public offering and achieved a transaction that enhanced the portfolio quality
Jikei University
School of Medicine

Overview of CROSS PLACE Hamamatsucho
Atago
Green Hills

Asset reshuffle through mutual transactions• Dispose of a central urban retail property and a relatively old
small-sized office building and acquire a relatively new property
in central Tokyo through mutual transaction with a domestic
general business corporation group

Atago Police Station

Acquired Property
CROSS PLACE Hamamatsucho

Tokyo Prince
Hotel

Keio University
Shiba-Kyoritsu
CampusTokyo Tower
MinatoCity Hall

KDX Hamamatsucho
Center Building

Property to beacquiredZojoji
Sale Property
KDX Hamamatsucho
Dai-2 Building
Prince Park Tower
Tokyo
MIELPARQUE
Hall
Shibakoen
KDX
Shiba-Daimon
Building

KDX
Hamamatsucho
Building

Properties to be sold

CROSS PLACE
Hamamatsucho

KDX Hamamatsucho
Dai-2 Building(Scheduled date of acquisition
on July 2, 2018)(Scheduled date of sale on
July 2, 2018)

Frame Jinnan-zaka(Scheduled date of sale on
July 2, 2018 andNov. 1, 2018)

Kyu-shiba-rikyu
GardenHamazakibashi JCT

Asset reshuffle
Total 304
tsubo
118.39tsubo

Anticipatedacquisition priceAppraisal value(as of March 31, 2018)

20,700 mn yen
22,400 mn yen

Estimated NOI yield

3.7%

Estimated NOI yield after
depreciation

3.0%

Appraisal NOI yield

3.9%

Completion dateFebruary 2015

Occupancy rate100%

(as of February 28, 2018)

88.92
tsubo

96.67
tsubo

• Accessible by multiple train routes withtraffic convenience in about 3 minutes from
Daimon Station, about 4 minutes from
Onarimon Station and about 7 minutes
from Hamamatsucho Station on foot• An office building with a 72-hour
emergency power generator and a quakeabsorbing structure that reduces shocks ofan earthquake• Standard floor area of about 304 tsubo; aflexible floor plan which can be divided into
three, adjusting to various tenant needs

Gain on saleof real estate (Note 1)

Increase in NOI
after depreciation

Rejuvenation of
average building age(Note 2)(as of July 2, 2018)

1,090 mn yen+258 mn yen

12.2 yrs

Note 1: The gain on sale is the estimate based on the estimated book value and expenses of the sale. With regards to Frame Jinnan-zaka, the sale of 49.0% of quasi co-ownership interest is to be executed on July 2, 2018 andthe remaining 51.0% is to be executed on November 1, 2018. The total of the gain on sale is stated while each figure to be recognized on the 27th fiscal period (2018/10) and on the 28th fiscal period (2019/4),
respectively
Note 2: The difference between estimated NOI after depreciation of the property to be acquired and the sum of the rental operating income of the 25th fiscal period (2017/10) and the 26th fiscal period (2018/4) of the properties tobe sold

14

A series of initiatives in the 26th fiscal period (2018/4)

Acquisition

Continuously enhanced portfolio quality and profitably through tactful disposition and selective investment
Increase in NOI after depreciation and enhancement of appraisal profit expected through a series of initiatives
Acquisition of mid-sized officebuilding through support from sponsor

Joint acquisition with Kenedix group

Total acquired• Acquired mid-sized office buildings with strong
competitive advantage as a part of portfolio
restructuring in Yokohama area

• Joint acquisition with Kenedix Private
Investment Corporation and Kenedix, Inc.’s
private fundTotal AcquisitionPrice

JN Bldg.

(quasi co-ownership interest)

Acquisition price9,500 mn yen

Acquisition price

14,720 mn yen

Appraisal value

9,860 mn yen

Appraisal value

14,900 mn yen

Estimated NOI yield

4.1%

Estimated NOI yield 4.0%

Estimated NOI yield
after depreciation

3.0%

Estimated NOI yield
3.5%
after depreciation

Appraisal NOI yield

4.6%

Appraisal NOI yield 4.4%

(as of April 30, 2018)

Disposition throughasset reshuffle within the area

Disposition

24.2 bn yen

Mitsubishijuko
Yokohama Bldg.

• Disposition through asset reshuffle aimed forregional diversification and locational
improvement, securing gain on sale from 2
properties(as of April 30, 2018)

Total appraisal
profitIncrease in NOI after
depreciation+0.5 bn yen

0.5 bn yen

Disposition of a non-core asset

Total sold

• Secured gain on sale through disposition of anon-core asset (residence) with low
profitability

Total Acquisition
Price

Residence Charmante
Tsukishima

KDX ShinKDX Ikejiri- Yokohama 214
Oohashi Bldg.
Bldg.

0.7 bn yen

Effects througha series of
initiatives

Estimated NOI
after depreciation

9.9 bn yen

Total disposition
price4,830 mn yen

Disposition price

4,900 mn yen

NOI after
depreciation(actual)

Total book value

4,574 mn yen

Book value

4,481 mn yen

0.2 bn yen

Total appraisal
value

4,130 mn yen

Appraisal value

4,900 mn yen

Total appraisal loss

(compartmentalized ownership)(as of October 31, 2017)(as of October 31, 2017)

Average NOI yield
after depreciation 3.4%
(actual)NOI yield after
depreciation(actual)2.2%

Enhancement ofappraisal profit/loss+0.5 bn yen
Gain on sale ofreal estate

0.5 bn yen

20 mn yen

15

Memo

16

Section 5Internal growth17Changes in occupancy and turnover ratio for office buildings
Actual occupancy rate further improved due to low turnover ratio and gradual expiration of free rent periods
Seek opportunity for unit rent growth upon tenant turnover in the 27th fiscal period (2018/10) as turnover ratio increases

Occupancy rate performance of office buildings (Note 1)
Average occupancy rateduring fiscal period(%)

Occupancyrate
稼働率（契約面積ベース）(contracted area based)

27th fiscal period(estimate)
99.2%

Actualoccupancy rate
実質稼働率（FR面積控除後）(excl. free rent area)
99.0

100.0

96.8

• No turnover of major tenants (cancelled floor of over 1,000
tsubo) is expected for both of the actual and estimate

99.1

97.8

1.1%

2.5%

96.8

Turnover ratio (annualized) of officebuildings (Note 2) (Note 3)

98.0

8.0%

3.2%
95.0

96.5

3.4%

4.3%

Average actual occupancy
rate during fiscal period

93.4

92.5

5.7%

27th fiscal period(estimate)
97.7%

94.6

5.1%

3.6%
3.2%

90.0

Average occupancy rate during fiscal period for office buildings

23rd
fiscal period
96.2%
85.0
End
of 22nd
第22期
fiscal period（16/4期）末(2016/4)

24th
fiscal period
97.1%

End
of 23rd
第23期
fiscal period（16/10期）末(2016/10)

25thfiscal period
98.4%

End
of 24th
第24期
fiscal period（17/4期）末(2017/4)

26th
fiscal period
99.2%

End
of 25th
第25期
fiscal period（17/10期）末(2017/10)

Endof 26th
第26期
fiscal period（18/4期）末(2018/4)

23rd
fiscal第23期
period（16/10期）(2016/10)

24th
fiscal第24期
period
（17/4期）(2017/4)

25th
fiscal第25期
period（17/10期）(2017/10)

26th
fiscal第26期
period
（18/4期）(2018/4)

27th
fiscal第27期
period（18/10期）(2018/10)
想定
Estimate

Note 1: Occupancy rate (contracted area based) is calculated by dividing contract based leased area by leasable area, and actual occupancy rate (excl. free rent area) is calculated by subtracting free rent area from leased area
then dividing that area by leasable area. The figures are rounded to the first decimal place. Average occupancy rate of office buildings during each fiscal period is a simple average of month-end occupancy rates of owned
office buildings during each period. The estimated average occupancy rate for the 27th fiscal period (2018/10) is the figure that is used as part of the assumptions for the earnings forecasts
Note 2: Annualized turnover ratio is calculated and annualized as follows: (Total leased area of the end-tenants who cancelled their lease agreements during the six-month period from the beginning to the end of each period) /(Average leasable area of all office buildings owned by KDO as of each month-end during the relevant period) x 2. Figures are rounded to the first decimal place
Note 3: Estimate for the 27th fiscal period (2018/10) is based on the cancellation notice, etc. received by May 31, 201818

Rent trend upon tenant turnover and reasons for move-ins/outs for office buildings
Increase rate in unit rent for new lease contracts in regional areas has been on the rise backed by a favorable rental property market
Relocation demand for floor expansion has remained strong among mid- and small-sized companies
Increase rate in unit rent upon tenant turnover (Note 1)
東京経済圏（都心5区を含む）
Tokyo
metropolitan area (incl. central 5 wards)
地方経済圏
Regional
areas

23.1%

20.3%
17.4%

15.8%

16.1%
13.6%

% of count ofrent increase
upon tenant
turnover

Change in reasons for move-ins/outs (Note 2)

16.0%

12.9%

11.4%

11.9%

第22期
22nd
fiscalperiod
（16/4期）(2016/4)

第23期
23rd
fiscalperiod（16/10期）(2016/10)

第24期
24th
fiscalperiod
（17/4期）(2017/4)

第25期
25th
fiscalperiod（17/10期）(2017/10)

26th第26期
fiscalperiod
（18/4期）(2018/4)

54.4%

60.9%

52.3%

50.8%

70.0%

Increase/decrease in monthly rent upon tenant turnover (Note 1)
10.0

Total amount of increase in rent (mn yen)
賃料増加分合計（百万円）

Total
amount of decrease in rent (mn yen)
賃料減少分合計（百万円）

5.0
5.8

5.0

5.3

5.0

3.5

-7.0

-3.1

-8.3

-1.5

-1.0

0.0

-5.0

-10.0

22nd
fiscal第22期
period
（16/4期）(2016/4)

23rd
fiscal第23期
period（16/10期）(2016/10)

24th
fiscal第24期
period
（17/4期）(2017/4)

25th
fiscal第25期
period（17/10期）(2017/10)

26th第26期
fiscalperiod
（18/4期）(2018/4)◼ Reasons for moving into our properties# ofmove-ins
24th fiscal 第24期
period51(2017/4) （17/4期）■ Floor 拡張移転
expansion ■縮小移転
Floor reduction■ Other/unknown
その他/不明80.4%

25th fiscal 第25期
period51（17/10期）(2017/10)
26th fiscal 第26期
period26(2018/4) （18/4期）

7.8% 11.8%

76.5%

5.9% 17.6%

96.2%

3.8%

25th fiscal period(2017/10)

26th fiscal period(2018/4)

80.9 tsubo

76.7 tsubo

Average contracted floor area
(Floor expansion)◼ Reasons for moving out of our properties# of
拡張移転 縮小移転 その他/不明
move-outs ■ Floor expansion ■ Floor reduction ■ Other/unknown
24th fiscal 第24期
43.9%
39.0%
17.1%
period41（17/4期）(2017/4)
25th fiscal 第25期
25
period （17/10期）(2017/10)
26th fiscal 第26期
26
period （18/4期）(2018/4)

Average cancelled floor area
(Floor expansion)

48.0%

40.0%

50.0%

12.0%

46.2%

3.8%

25th fiscal period(2017/10)

26th fiscal period(2018/4)

124.1 tsubo

81.2 tsubo

Note 1: Total amount of increases/decreases in monthly rent before and after rent revision for each fiscal period is respectively aggregated for the spaces where rents paid by new tenants and by previous tenants canbe compared. The increase rate in unit rent is calculated by comparing previous unit rents and new unit rents paid by new tenants for the contracts of which the rent has increased
Note 2: The above data is based on the hearing survey, etc. compiled by the Asset Management Company with regard to reasons for office relocation of relevant tenants. We classify responses of survey into 3 categories: "Floor
expansion", "Floor reduction" and "Other/unknown", and calculate the proportion of each category. For move-ins, the figures are based on the number of tenants on office floors on the second floor or above. For move-outs,
the figures are based on the number of tenants on all floors except for residential floors

19

Status of rent revisions with existing tenants
Increasing trend in the percentage of count of upward rent revisions due to the spread of existing tenants’ awareness of the upward
market rent trend
Upward rent trend seen in areas other than the Tokyo central 5 wards, with upward rent revisions on a steady increase every period
Changes in rent upon rent revisions (based on monthly rent) (Note 1)• Steady rent increase as a result of proactive upward rent negotiations

Status of rent revisions (based on percentage of count and leased floor area)
賃料増額件数割合
Percentage of count of upward rent revision (Note 2)
24.7%

Increase
増賃額 in rent

(thousand yen)

Decrease in rent
減賃額
15.8%

17.8%

16.9%

14.6%

Rent
Decrease
(3)
4.5%

Rent
Increase(72)
24.4%
Based onleased area
26th fiscal
period(2018/4)
292

22nd fiscal
23rd fiscal
24th fiscal
25th fiscal
26th fiscal
第22期
第23期
第24期
第25期
第26期
periodperiodperiodperiodperiod(2016/4) （16/10期）(2016/10)(2017/4)(2017/10)(2018/4)（16/4期）（17/4期）（17/10期）（18/4期）

8,560

8,492
7,034

6,826

Changes in count of rent increases and rent increase rate (Note 3)

5,071• Count of rent increases prominently increased in areas other than the Tokyo central 5 wards
3,387

-472
-636

22nd
fiscal第22期
period
（16/4期）(2016/4)

No change
(217)
71.1%

-729

23rd
fiscal第23期
period（16/10期）(2016/10)-409-1,06524th
fiscal第24期
period
（17/4期）(2017/4)-2,032

都心5区
Tokyo
central 5 wards
50

48

26th
fiscal第26期
period
（18/4期）(2018/4)

27th
fiscal第27期
period（18/10期）(2018/10)
以降確定分
onwardconfirmed

51
41

43

20

18

30

30

25

26

31

22nd
fiscal第22期
period
（16/4期）(2016/4)

23rd
fiscal第23期
period（16/10期）(2016/10)

24th
fiscal第24期
period
（17/4期）(2017/4)

25th
fiscal第25期
period（17/10期）(2017/10)

26th
fiscal第26期
period
（18/4期）(2018/4)

6.5%

10.8%

7.8%

6.2%

Confirmed as of
May 31, 201825th
fiscal第25期
period（17/10期）(2017/10)72

都心5区以外Other
areas

Rent increase rate
12.8%
(incremental average)

18

25

Note 1: Total amount of increases/decreases in monthly rent before and after rent revisions for each fiscal period is aggregated, respectively. Figures are rounded to the nearest thousand yen
Note 2: Calculated by dividing the count of upward rent revisions by the total count of rent revisions for each fiscal period, comparing the monthly rent before and after rent revisions for the relevant fiscal period. Figures arerounded to the first decimal place
Note 3: Rent increase rate is calculated by dividing the sum of increase in monthly rent by the sum of monthly rent before revision. Figures are rounded to the first decimal place

20

Rent gap of KDO office buildings
The contract rents aiming for upward rent revision account for 73.1%, increased by 3.0% period over periodMarket rent continues to rise with upward rent trend also seen in areas other than Tokyo central 5 wards
Breakdown of rent gaps (based on monthly rent) (Note 1)

Breakdown of rent gaps by rent revision schedule(as of the end of 26th fiscal period (2018/4), based on monthly rent) (Note 3)

The gap between
the contracted
rent and themarket rent (Note 2)(mn yen)

▲4.2%

▲5.6%

Over
-10%
-10%超

500

400

Over
+10%
+10%超

50

234

36

mn yenBetween 0%
and +10%
mn
yen

255

mn yen211

mn yen300

Between-10% and 0%59

mn yenmn yen70.1%

460
mn yenEndof 25th
第25期
fiscal period（17/10期）末(2017/10)

Tokyo central 5 wards
Other areas

47

170

Lower thanmarket rent level
73.1%

100

525

40 of 91 properties(rent increase rate: +3.9%)
19 of 46 properties(rent increase rate: +3.1%)
21 of 45 properties(rent increase rate: +4.7%)

95
70.5%

100

112

mn yenEndof 26th
第26期
fiscalperiod
（18/4期）末(2018/4)

140

0

107

75.1%

133

72.2%

117

77.7%

135

30
18
37

58.2%

31
第26期
End
of 26thfiscalperiod
（18/4期）末(2018/4)（注4）(Note 4)Overall

238

200

Lower than
-10%

Lower thanmarket rent level

42

37

681

631

50

56

209

49

Number ofproperties withincreased
market rent in
the owned
properties

0%～+10%+10%以内72
Over +10%

Higher thanmarket rent level-10%～0%-10%以内

第27期
27th
fiscalperiod（18/10期）(2018/10)
到来分

第28期
28th
fiscalperiod（19/4期）(2019/4)
到来分

第29期
29th
fiscalperiod（19/10期）(2019/10)
到来分

第30期
30th
fiscalperiod（20/4期）(2020/4)
到来分

第31期
31st
fiscalperiod（20/10期）(2020/10)
以降到来分
onwardNote 1: A new contracted rent (standard floor) for each property estimated by CBRE as of the end of each fiscal period is deemed the market rent; the gap between the contracted rent for each tenant as of the end of the fiscal period
and the market rent is recognized as a rent gap. No gap is classified into "Between 0% and +10%"
Note 2: Calculated as the weighted average, based on leasable floor area, of the gap between the average contracted rent of the standard floor for the office buildings owned by KDO as of the end of each fiscal period and the market
rent for each property estimated by CBRE at the time of appraisal
Note 3: Regarding the office buildings owned by KDO as of the end of the 26th fiscal period (2018/4), distribution of the rent gaps between the contracted rent for each tenant and the market rent estimated by CBRE as of the end of the
26th fiscal period (2018/4) by the timing of rent revisions for each tenant. The rents equal to market rents are classified into "Between 0% and +10%"21
Note 4: The breakdown of rent gaps for the contracts that planned to expire in the 26th fiscal period (2018/4) as of the end of the 25th fiscal period (2017/10)

Construction expense (actual/budget)
Reinforce property competitiveness by flexibly implementing appropriate measures to improve property value
Plan to continue to undergo repair/renovation by value-upgrading works for the 27th fiscal period (2018/10)
Repair/renovation work budget for the 27th fiscal period(2018/10) (Note)

Changes in depreciation and construction expense(actual/budget)

Items■ Repair/maintenance ■ Capex ■ Depreciation(mn yen)
2,500

2,293

2,288

2,274

2,230
2,000

498
1,500

(including common areas)

846

43.5%

Replacement works

Air-conditioning facilities

66

3.4%

Other major facilities

521

26.8%

Eco-friendly works(Installation of LED lightings, etc.)

77

4.0%

Outer wall repair

49

2.5%

Maintenance / repair works

387

19.9%

27th fiscal period(2018/10)
total

Percentage todepreciation
expense (%)

1,946

82.0%

Note: Figures are approximate estimates as of thedate in which repair plan was prepared

582
451
436

Percentage of
total expense(%)

Value-upgrading works

2,372

2,295

Estimatedamount(mn yen)

767
451

1,000
1,447
500

1,120

1,165

1,018

953

Properties to undergo major repair/renovation for the 27th
fiscal period (2018/10)• Value-upgrading works (renovation of common areas, restrooms, etc.):

886

KDX Sakura-dori Building, KDX Nishi-Shinbashi Building, KDX Shinjuku Building,
KDX Takadanobaba Building, Toshin 24 Building, KDX Shin-Yokohama Building,
KDX Karasuma Building, KDX Takanawadai Building, Hiei Kudan-Kita Building0• Replacement works of air-conditioning facilities:
22nd
fiscal第22期
period
（16/4期）(2016/4)
実績
actual23rd
fiscal第23期
period（16/10期）(2016/10)
実績
actual24th
fiscal第24期
period
（17/4期）(2017/4)
実績
actual25th
fiscal第25期
period（17/10期）(2017/10)
実績
actual

26th
fiscal第26期
period
（18/4期）(2018/4)
実績
actual

27th
fiscal第27期
period（18/10期）(2018/10)
予算
budgetKDX Ikebukuro West Building, Senri LSC Building, KDX Yokohama Nishiguchi
Building• Outer wall repair:
KDX Funabashi Building, KDX Shin-Osaka Building, KDX Hon-Atsugi Building,
KDX Ebisu Building22End-tenants of KDO office buildings
The largest tenant occupies 2.4% of total leased floor area, and tenants other than the top 3 each occupy lessthan 1.0%
A highly diversified tenant base with the top 10 tenants occupying around 10% of the total leased floor area
List of top end-tenants for office buildings

Average rent for office buildings by area

(as of the end of the 26th fiscal period (2018/4))(as of the end of the 26th fiscal period (2018/4)) (Note 2)

Leasedarea(tsubo)% share ofleased floorarea (Note 1)

3,408.4

2.4%

Mitsubishijuko Yokohama Bldg.

1,550.8

1.1%

KDX Kawasaki-Ekimae
Hon-cho Bldg.

1,469.2

1.1%

KDX Musashi-Kosugi Bldg.
KDX Hiroshima Bldg.

4 ADK Arts Inc.

1,427.8

1.0%

KDX Toranomon 1chome Bldg.

5 JASTEC Co., Ltd.

1,304.6

0.9%

KDX Takanawadai Bldg.

6 Yokohama City

1,237.7

0.9%

Mitsubishijuko Yokohama Bldg.
JN Bldg.

Tenant name

1 Mitsubishi Heavy Industries, Ltd.
Tenant A2(wholesale, retail and dining)
3

Tenant B(service provider)7

Customer relation
telemarketing, CO,LTD

1,201.3

0.9%

KDX Higashi Umeda Bldg.

8

Tenant C(service provider)

1,080.1

0.8%

KDX Musashi-Kosugi Bldg.

Medical Corporation
9
DOYUKAI

1,022.4

0.7%

Koishikawa TG Bldg.

912.2

0.7%

Harajuku F.F. Bldg.

14,614.5

10.5%

10

Tenant D(wholesale, retail and dining)
Total# of properties

Average rent
(yen/tsubo)Tokyo
metropolitan area

77

15,700(+300 yen period over period)

Japan

95

14,800(+300 yen period over period)

Name of property

Tenant diversification by type of business(based on # of tenants) (Note 3)
Transportation,
Communication
Real estate 33, 2.9%45, 4.0%
Construction
46, 4.1%
Finance,Insurance
56, 5.0%

Public sector(other)4, 0.4%Mining1, 0.1%
Infrastructure
1, 0.1%# of tenants
1,123

Individual
61, 5.4%

Service provider
465, 41.4%

Manufacturing
154, 13.7%

Wholesale,
Retail, Dining
257, 22.9%

Note 1: Leased area of each end-tenant against the total leased floor area of KDO’s portfolio as of the end of the 26th fiscal period (2018/4). Figures are rounded to the first decimal place
Note 2: Average rent is calculated by dividing the total amount of contracted rents of office buildings for each area by the total leased floor area, rounded down to the nearest hundred
Note 3: The chart shows the breakdown of tenants by type of business based on the total number of tenants in office portfolio (aggregated by name-base) as of the end of the 26th fiscal period (2018/4). Figures are rounded to
the first decimal place

23

Efforts for ESG
1

Environment-related certifications

GRESB Real Estate Assessment (Note 1)• Acquired "Green Star" rating, the highest rating, for
6 consecutive years as a result of our efforts for
improving sustainability performance, and earned
the highest-rated “5 Stars” (five-star scale)• Participated from 2011 as the first J-REIT
participant

DBJ Green Building Certification (Note 2)• A total of 19 properties in our portfolio wereawarded DBJ Green Building Certification,
including KDX Toranomon 1chome Bldg. whichearned Property with the best classenvironmental and social awareness (five stars)

Certification for CASBEE for Real Estate (Note 3)• ARK Mori Bldg., KDX Toranomon 1chome Bldg.
and KDX Kobayashi-Doshomachi Bldg. wereranked S, the highest rating, by CASBEE

BELS Certification (Note 4)• In October 2014, KDX Musashi-Kosugi Bldg.
was awarded a BELS Certification (threestars) for the first time in history as a J-REIT
owned property• In April 2016, KDX Iidabashi Square wasawarded a BELS Certification (three stars)

Contribution to society
Cooperation to Campaign for
United Nations Refugee Support

2• The Investment Corporation supports Japan for
UNHCR that is the official support contact point inJapan on behalf of UNHCR, a refugee support
organization of United Nations• The Investment Corporation provides the association
with vacant space in its own properties for free for use
in "Campaign for United Nations Refugee Support”

3

Sustainability committee

Establishment of sustainability committee• The initiatives for sustainability are promoted under the leadership of the
Sustainability Committee established in the Asset Management Company• The Committee holds meetings to discuss policies, targets, approaches onsustainability issues and monitors the progress, in consideration of society andmanagement status of the Investment Corporation• What is discussed at the Sustainability Committee is reported to the AssetManagement Committee at the Asset Management Company, and the proposals
are executed upon approval of the management.
Note 1: GRESB (Global Real Estate Sustainability Benchmark) is a benchmark to evaluate sustainability performance ofprivate and listed real estate portfolio, etc. from environmental and social perspectives
Note 2: The DBJ Green Building Certification System is a system certifying real estate with environmental and social
considerations (Green Building) using a scoring model originally developed by Development Bank of Japan Inc.
(DBJ) in order to select and certificate buildings that meet the demands of the time. The certification has thefollowing 5 ranks: "five stars", "four stars", "three stars", "two stars" and "one star"
Note 3: CASBEE is an evaluation system for rating the environmental performance of buildings, developed under the
auspices of the Ministry of Land, Infrastructure, Transport and Tourism. The system rates the overall environmental
performance of buildings from two perspectives; the evaluation of the environmental quality and performance ofbuildings themselves and the external environmental load of buildings
Note 4: BELS (Building-Housing Energy-efficiency Labeling System) is the third-party certification system to rate houses
and buildings in accordance with the obligation to make effort to label energy saving performance as stipulated in
the Act on Improving Energy Consumption Performance for Architectural Structures24Section 6

Financial strategy

25

Status of debt financing
Keep reducing financial cost and extending average remaining period to maturity
Decreased LTV through the May 2018 Public Offering and generated borrowing capacity to acquire properties
Refinance record for the 26th fiscal period (2018/4)

Average remaining period to maturity and interest rate (Note 1)(%)
1.8(Total amount of 12.0 bn yen) (Note 2)

Weighted
average remaining period to maturity (right axis)
平均残存年数（右軸）1.77(year)

Weighted
average interest rate (incl. up-front fee) (left axis)
平均金利（融資実行手数料を含む）（左軸）

6• Reduced financial cost through refinancing and extended
remaining period to maturity

1.65
1.46

4

1.39
1.25
1.19
1.2

1.16

3
1.10

1.07

1.0
3.1

3.6

4.1

4.3

4.7

4.9

4.7

Historical LTV (interest-bearing debt ratio) level (Note 3)

40.0
36.0

5.0

2

5.2

End
of 17th End
of 18th Endof 19th Endof 20th Endof 21st Endof 22nd Endof 23rd Endof 24th Endof 25th End
of 26th
第17期
第18期
第19期
第20期
第21期
第22期
第23期
第24期
第25期
第26期
（13/10期）末（14/4期）末（14/10期）末（15/4期）末（15/10期）末（16/4期）末（17/4期）末（18/4期）末fiscalperiod fiscal
period fiscal
period fiscal
period fiscal
period fiscal
period （16/10期）末fiscal period fiscal
period （17/10期）末fiscal period fiscal
period(2013/10)(2014/4)(2014/10)(2015/4)(2015/10)(2016/4)(2016/10)(2017/4)(2017/10)(2018/4)

(%)
52.0

44.0

Average interest
rate

1.21%

0.78%

Average borrowing
period3.9 yrs

6.8 yrs

1
2.3

48.0

Conditions
after refinancing

1.45

1.4

0.8

Conditions
before refinancing

5

1.6

47.2

48.4

0

Borrowing capacity toacquire properties (Note 5)(in the case of LTV45% limit)

Approx. 21.5 bn yen

42.8

42.8

42.8

43.1

42.6

43.3

43.9
42.3

Appraisal-value
based LTV 39.5

• Long-term borrowings account for 8.0 bn yen in the refinance (averageinterest rate of 1.00%, average borrowing period of 9.7 years)

Major indices related to financial stability
Ratio offixed interest rate (Note 6)
Continue to hedge against apotential rise in interest rates

96.0%

Status of credit rating(JCR)

AA- (stable)

End第18期
of 18th End第19期
of 19th End第20期
of 20th End第21期
of 21st End第22期
of 22nd End第23期
of 23rd End第24期
of 24th End第25期
of 25th End第26期
of 26th 公募増資後
After the（14/4期）末（14/10期）末（15/4期）末（15/10期）末（16/4期）末（16/10期）末（17/4期）末（17/10期）末（18/4期）末（注4）
fiscalperiod fiscal
period fiscal
period fiscal
period fiscal
period fiscal
period fiscal
period fiscal
period fiscal
period public
offering(2014/4)(2014/10)(2015/4)(2015/10)(2016/4)(2016/10)(2017/4)(2017/10)(2018/4)(Note 4)Note 1: Average remaining period to maturity and interest rate are the weighted average based on the balance of debt outstanding as of the end of each fiscal period (with the average remaining period to maturity rounded to
the first decimal place and the average interest rate rounded to the second decimal place)
Note 2: Average interest rate and borrowing period are the weighted average of the interest rate of borrowings (incl. up-front fee) and borrowing period based on the balance of borrowings, respectively (with the averageinterest rate rounded to the second decimal place and the average borrowing period rounded to the first decimal place). Total borrowings that reached maturity in the 26th fiscal period (2018/4) amount to 12.75 bn yen,of which 0.75 bn yen was repaid by cash on hand
Note 3: LTV (interest-bearing debt ratio) is calculated by dividing the balance of interest-bearing debt by the amount of total assets as of the end of each fiscal period. Appraisal-value based LTV is calculated by dividing thebalance of interest-bearing debt by the sum of the amount of total assets and appraisal profit/loss of owned properties as of the end of each fiscal period (rounded to the first decimal place)
Note 4: LTV after the public offering is calculated by dividing the balance of interest-bearing debt at the end of the 26th fiscal period (2018/4) by the estimated total assets after the public offering
Note 5: Estimated borrowing amount of debt which can be additionally procured from financial institutions or new issuance of investment corporation bonds for property acquisition by new debt financing, assuming that the LTV
can be increased to a certain value
Note 6: Includes the borrowings with floating interest rate fixed by interest rate swap but excludes those hedged by interest rate cap (rounded to the first decimal place)26

Diversification of debt maturities
Reduced refinancing risk through extension of remaining period to maturity and diversification of debt maturities

Balance of interest-bearing debt by maturity(bn yen)
24.0• Interest-bearing debt by maturity (excl. short-term borrowings)
Short-term borrowings

6.0 bn yen

Corporate bonds

7.8 bn yen
Balance of debt maturing

Long-term borrowings 172.0 bn yen

20.0

27th
fiscal period(2018/10)

28thfiscal period(2019/4)

29th
fiscal period(2019/10)

30thfiscal period(2020/4)

11.3 bn yen

7.5 bn yen

6.2 bn yen

8.5 bn yen

1.15%

1.30%

0.97%

1.08%

Total interest-bearing debt 185.8 bn yen
Average interest cost
16.0
14.0
13.3
12.0

2.0

13.0
11.8

11.5

11.5

1.8
4.0

10.0

9.9

9.5

9.0

8.5

8.3

8.1

8.0

2.0

1.0
6.2

6.2
5.5

11.8
10.1

9.5
4.0

2.0

10.8
10.1

8.5

7.5
6.2

9.5

1.0

4.7

9.9

10.0

3.8

13.0
11.0

8.3

7.1

7.0
5.5
3.8

10.8

11.5

6.2

4.7

0.0
27th
28th
29th
30th
31st
32nd
33rd
34th
35th
36th
37th
38th
39th
40th
41st
42nd
43rd
44th
45th
46th
fiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiod(2018/10) (2019/4) (2019/10) (2020/4) (2020/10) (2021/4) (2021/10) (2022/4) (2022/10) (2023/4) (2023/10) (2024/4) (2024/10) (2025/4) (2025/10) (2026/4) (2026/10) (2027/4) (2027/10) (2028/4)

27

Appendix 1

Properties (to be) acquired / sold and asset reshuffle

The terms used in Appendix 1 are as follows. Figures are rounded to the first decimal place
・Estimated NOI yield: Calculated by dividing “NOI after excluding extraordinary factors for the year of the acquisition estimated by the Asset Management Company” by (anticipated) acquisition price・Estimated NOI yield after depreciation: Calculated by dividing estimated NOI after depreciation (estimated NOI – estimated depreciation expenses) by (anticipated) acquisition price・Appraisal NOI yield: Calculated by dividing “NOI calculated based on the direct capitalization method described in the relevant appraisal report as of the date of acquisition” by (anticipated) acquisition price,based on appraisal reports as of April 30, 2018 for properties acquired in the 26th fiscal period (2018/4) and as of March 31, 2018 for properties acquired in and after the 27th fiscal
period (2018/10)
・NOI yield (actual): For properties sold in the 26th fiscal period, NOI yield (actual) is calculated by dividing the sum of the actual NOI for the 24th (2017/4) and the 25th (2017/10) fiscal periods byacquisition price. For properties to be sold in and after the 27th fiscal period (2018/10), NOI yield (actual) is calculated by dividing the sum of the actual NOI for the 25th (2017/10) andthe 26th (2018/4) fiscal periods by acquisition price・NOI yield after depreciation (actual): For properties sold in the 26th fiscal period, calculated by dividing the sum of the rental operating income (NOI after depreciation (actual)) for the 24th (2017/4) and the25th (2017/10) fiscal periods by acquisition price. For properties sold in and after the 27th fiscal period, calculated by dividing the sum of the rental operating income(NOI after depreciation (actual)) for the 25th (2017/10) and the 26th (2018/4) fiscal periods by acquisition price・(Anticipated) disposition price NOI yield: Calculated by dividing the sum of the above actual NOI by (anticipated) disposition price28

Properties acquired / sold during the 26th fiscal period (2018/4)
Properties acquired

Properties sold

Mitsubishijuko
Yokohama Bldg. (Note 1)

JN Bldg.

Yokohama, Kanagawa

Yokohama, Kanagawa

Total floor area

109,472.69 m2

15,883.21 m2

Completion dateFebruary 1994

Occupancy rate100%
(as of April 30, 2018)(as of April 30, 2018)

Property nameLocation# of tenants
Acquisition price

Property name(compartmentalized ownership) (Note 2)

Yokohama, Kanagawa

Total floor area

18,115.39 m2

3,482.96 m2

6,478.89 m2

September 2007

Completion date

January 2004

September 1988

November 1989

92.8%

(Note 3)

4,481 mn yen

2,353 mn yen

2,221 mn yen

Disposition price

4,900 mn yen

2,400 mn yen

2,430 mn yen

9.4%

2.0%

9.4%

22

5
(as of April 30, 2018)

14,720 mn yen

9,500 mn yen

14,900 mn yen

9,860 mn yen(as of April 30, 2018)

Hulic Co., Ltd.

Undisclosed

Acquisition route

Support-line

Acquisition dateSellerEstimated NOI yield

KDX Shin-Yokohama
214 Bldg.

Meguro-ku, Tokyo(as of April 30, 2018)

Location

KDX Ikejiri-Oohashi
Bldg.

Chuo-ku, Tokyo(as of April 30, 2018)

Appraisal value

Residence Charmante
Tsukishima

Book value

Difference from book value(disposition price - bookvalue) / book value

4,900 mn yen

1,740 mn yen

2,390 mn yen(as of October 31, 2017)(as of October 31, 2017)(as of October 31, 2017)

Buyer

G.K. KRF 68

Undisclosed

Undisclosed

Support-line

Acquisition date

May 1, 2006

February 1, 2008

December 2, 2014

December 7, 2017

January 31, 2018

Disposition date

December 1, 2017

December 28, 2017

December 28, 2017

4.0%

4.1%

NOI yield (actual)

4.0%

3.7%

5.4%

2.2%

2.8%

4.2%

4.3%

3.7%

4.9%

Estimated NOI yield
after depreciation

3.5%

3.0%

Appraisal NOI yield

4.4%

4.6%

Appraisal value

NOI yield after
depreciation (actual)
Disposition price NOI
yield

Note 1: Acquired the trust beneficiary interest in 23% of quasi co-ownership interest of proprietary ownership for Mitsubishijuko Yokohama Building. Total floor area, Occupancy rate and # of tenants forthe entire building are shown in the table
Note 2: Sold a compartmentalized-ownership for Residence Charmante Tsukishima (exclusive floor area ratio: 56.86%) and total floor area for the entire building is shown in the table
Note 3: The book values are as of their respective disposition dates

29

Properties (to be) acquired / sold in and after the 27th fiscal
period (2018/10)
Property to be acquired

Property nameLocation

Properties to be sold

CROSS PLACE Hamamatsucho
Minato-ku, Tokyo

Property nameLocation

KDX Hamamatsucho
Dai-2 Bldg.

Frame Jinnan-zaka

Minato-ku, Tokyo

Shibuya-ku, Tokyo

Total floor area

12,280.77 m2

Total floor area

2,478.90 m2

6,302.58 m2

Completion dateFebruary 2015

Completion date

April 1992

March 2005

100%

Book value (Note 1)

2,230 mn yen

9,134 mn yen

Occupancy rate
# of tenants
Anticipated Acquisition priceAppraisal value
SellerAcquisition route

Planned acquisition date(as of February 28, 2018)15(as of February 28, 2018)

20,700 mn yen
22,400 mn yen(as of March 31, 2018)

Domestic generalbusiness corporation
Proprietary network of theAsset Management Company
July 2, 2018

Total anticipated disposition price

12,550 mn yen

Difference from book value(anticipated disposition price - book value)/bookvalue

Appraisal value
Buyer
Acquisition date

Planned disposition date

10.4%
2,200 mn yen

11,100 mn yen(as of April 30, 2018)(as of April 30, 2018)

Domestic generalbusiness corporation

SPC composed by domestic generalbusiness corporation

September 1, 2008

August 1, 2005

July 2, 2018

July 2, 2018 (49.0% of quasi
co-ownership interest)
November 1, 2018 (51.0% of quasi
co-ownership interest)

Estimated NOI yield

3.7%

NOI yield (actual)

4.3%

4.0%

Estimated NOI yield after depreciation

3.0%

NOI yield after depreciation (actual)

3.8%

2.9%

Appraisal NOI yield

3.9%

Anticipated disposition price NOI yield (Note 2)

3.9%

Note 1: Indicate the assumed book value as of the planned disposition date, however indicate the total assumed book value for Frame Jinnan-zaka
Note 2: Calculated by dividing the total actual NOI for the 25th fiscal period (2017/10) and the 26th fiscal period (2018/4) by the total anticipated disposition price30

Asset reshuffle through mutual transactions with developers
Acquired prime properties from real estate developers through mutual transactions on anegotiation basis by capturing their needs
Heiwa Real Estate Co., Ltd. (Feb. 2017)
Property sold
KDX
Nihonbashi
Kabutocho Bldg.

Property acquired

KDX Nishi-Shinbashi Bldg.

Mori Building Co., Ltd. (Dec. 2016)

NIPPON TOCHI-TATEMONO Co., Ltd. (Mar. 2016)

Property acquired

Property sold

ARK Mori Bldg.

BUREX Toranomon(compartmentalized ownership)

Asset reshuffle• Disposed of a property which may lose its
competitiveness due to progress of redevelopment,
and acquired a property with significant growthpotential arising from the planned opening of a new
subway station and several redevelopment projects.

• Acquired a property with expected increase in NOI after
depreciation, stable revenues using the fixed rent master
lease scheme, capital gain on sale, etc. The property ishighly competitive office building located in ARK Hills,
high-profile landmark.

Propertysold

Propertyacquired

Properties sold
KDX
Toranomon
Toranomon
Toyo
Bldg.
Bldg.

Asset reshuffle

Asset reshuffle

Propertyacquired

Property acquired
KDX
Toranomon
1chome Bldg.

• As the properties had issues in profitability reflecting an age
passage and future reconstruction, KDO requested several
companies that expressed interest in these 2 owned properties tosubmit mutual transaction proposals and chose NIPPON TOCHITATEMONO Co., Ltd., resulting in an acquisition of the relatively
new property with high specification.

Propertysold

Propertyacquired

Properties sold(2 properties
total/average)

Acquisition/disposition
8,400 mn yen
price

12,400 mn yen

Acquisition/disposition
4,169 mn yen
price2,440 mn yen

Acquisition/disposition
price15,550 mn yen

15,420 mn yen

Appraisal value (Note 1)

9,070 mn yen

12,400 mn yen

Appraisal value (Note 1)

4,430 mn yen

2,440 mn yen

Appraisal value (Note 1)

17,100 mn yen

14,840 mn yen

3.6%

2.6%

3.8%

3.4%

3.2%

3.6%

NOI yield after
depreciation (Note 2)

NOI yield after
depreciation (Note 2)

NOI yield after
depreciation (Note 2)

Note 1: Appraisal values are as of April 30, 2018 for properties acquired and as of the date of disposition for properties soldNote 2: NOI yield after depreciation of properties acquired is calculated by deducting estimated depreciation expenses from "NOI after excluding extraordinary factors for the year of theacquisition estimated by the Asset Management Company" then dividing by acquisition priceNOI yield after depreciation of properties sold is calculated by dividing the sum of rental operating income of two previous fiscal periods at disposition by the total acquisition price31

Asset reshuffle in Yokohama and Shibuya area
Asset reshuffle aimed for enhancement of location, property age, profitability and appraisal
profit/loss with an eye on future competitiveness
Asset reshuffle in Yokohama area
Properties acquired
Mitsubishijuko
Yokohama Bldg.

JN Bldg.

(quasi co-ownership interest)

Asset reshuffle in Shibuya area
Properties sold

Property acquired

Property soldKDX
KDX
Shin-Yokohama Shin-Yokohama
381 Bldg.
214 Bldg.

KDX Shibuya
Nanpeidai Building

KDX
Ikejiri-Oohashi Bldg.

Asset reshuffle

Asset reshuffle

Property sold•KDX Shin-Yokohama 381 Bldg.

KDX
Shin-Yokohama
381 Bldg. Shin-Yokohama

Property soldKDX Shin-Yokohama 214 Bldg.

Station•

Disposed of 2 properties locatedin Shin-Yokohama at approx.
9.4% above appraisal value：Property acquired

Sakuragicho
Station：Property sold：Portfolio property(existing)

Kannai Station

Property acquired
KDX Shibuya Nanpeidai Bldg.
ShibuyaStationShibuya
Exit/Ent.

OhashiJCT

Sumitomo Fudosan
Shibuya Garden
Tower(Note 1)

Property acquired

Property sold(actual)Property acquired(estimate)

JN Building

2.7%

3.3%

Minatomirai
Station

Property soldKDX Ikejiri-Oohashi Bldg.

NOI yield after depreciation

Mitsubishijuko Yokohama Bldg.
KDX
Yokohama Bldg.
KDX Yokohama
NishiguchiBldg.
Yokohama
Toshin24
StationBldg.

Tokyu Den-en-toshi LineJR
Yamanote
Line

Property acquired

Asset reshuffle from “ShinYokohama” to “Minato Mirai 21”
increasing recognition as site for
office buildings and “Kannai”
where public offices concentrate

Enhancement ofappraisal profit/loss (Note 2)+1.4 bn yen•

Acquired a property within walking distance from Shibuya station at a price approx.
5.6% below appraisal value and disposed of a property located away from the station
with low profitability and a high appraisal loss ratio of approx. 26% at a price approx.
38% above appraisal value
NOI yield after depreciation(Note 1)
Property sold(actual)Property acquired(estimate)

2.8%

3.2%

Enhancement ofappraisal profit/loss (Note 2)+0.8 bn yen

Note 1: NOI yield after depreciation of property acquired is calculated by deducting estimated depreciation expenses from "NOI after excluding extraordinary factors for the year of the acquisition estimated by the Asset Management
Company" then dividing by the total acquisition price as of the date of acquisition
NOI yield after depreciation of property sold is calculated by dividing the sum of total rental operating income of two previous fiscal periods at disposition by the total acquisition priceNote 2: Amount of enhancement of appraisal profit/loss is calculated by the sum of total appraisal profit of properties acquired as of the date of acquisition and the total appraisal loss of properties sold as of the date of disposition

32

Asset reshuffle in and after the 20th fiscal period (2015/4)
Achieved improvements of the portfolio profitability and quality through strategic asset
reshuffle based on continuous selective investment
20th fiscal
period (2015/4)
KDX
Yokohama
Nishiguchi
Bldg.

KDX
BUREX
Shin-Yokohama
Toranomon
214 Bldg.

21st fiscal
period (2015/10)

22nd fiscal
period (2016/4)

23rd fiscal
period (2016/10)

24th fiscal
period (2017/4)

25th fiscal
period (2017/10)

KDX Hamamatsucho
Center Bldg.

KDX Toranomon
1chome Bldg.

KDX Shin-Nihonbashi
Ekimae Bldg.

ARK Mori Bldg.
(Compartmentalized Ownership)

KDX Sapporo
Kitaguchi Bldg.

26th fiscal
period (2018/4)
Mitsubishijuko
Yokohama Bldg.
(quasi co-ownership interest)

Total
acquired

Acquisition

Average
Appraisal
NOI yield after
depreciation(Note 1)

Pentel Bldg. KDX MinamiKDX Sakura- KDX Ginza(compartmentalized- Honmachi
dori Bldg.
East Bldg.
ownership)Bldg.

KDX Shin-Osaka
Bldg.

KDX Nagoya
Nichigin-mae Bldg.

KDX Nihonbashi
Edo-dori Bldg.

BR Gotanda
KDX NishiShinbashi Bldg. (Compartmentalized Ownership・partial land leasehold)

KDX Shibuya
Nanpeidai Bldg.

JN Bldg.

4.0%
Total appraisal
profit(Note 2)

8.7 bn yen
Total
Acquisition
price21.7 bn yen
KDX Hamacho
Bldg.

KDX Minami
Semba Dai-2
Bldg.

8.5 bn yen

19.0 bn yen

Nagoya Nikko
Shoken Bldg.

KDX Toranomon
Bldg.

5.1 bn yen

14.7 bn yen

5.3 bn yen

KDX Kanda
BUREX KDX Nihonbashi
Misaki-cho
Toranomon Kabutocho Bldg.
Bldg.

KDX ShinYokohama
381 Bldg.

24.2 bn yen
KDX IkejiriOohashi
Bldg.

KDX ShinYokohama
214 Bldg.

98.7 bn yen
Total
sold

Disposition

Average
Appraisal
NOI yield after
depreciation(Note 1)

Sendai Nikko Bldg.

Venus Hibarigaoka

KDX Nogizaka
Bldg.

Toranomon Toyo
Bldg.

KDX Roppongi
228 Bldg.

Residence Charmante
Tsukishima (Residence)

KDX
Gobancho Bldg

(compartmentalized
ownership)

3.6%
Total appraisal
loss(Note 2)

1.8 bn yen
Total
Acquisition
price

6.6 bn yen

5.2 bn yen

14.2 bn yen－

19.6 bn yen

5.8 bn yen

9.9 bn yen

61.4 bn yen

Note 1: Average appraisal NOI yield after deprecation is calculated as below.
(for acquired properties) = Total appraisal NOI after depreciation at acquisition ÷total acquisition price(for sold properties) = Total appraisal NOI after depreciation at disposition ÷total acquisition price(Rounded to the nearest first decimal place)
Note 2: For properties acquired, indicates the sum of the difference between appraisal value (at acquisition for properties acquired in 26th fiscal period (2018/4)) as of the end of 25th fiscal period and acquisition price. For properties sold,indicates the sum of the difference between appraisal value at disposition and book value (as of the end of 25th fiscal period for properties sold in 26th fiscal period (2018/4)) at disposition. However, BUREX Toranomon and KDX
Shin-Yokohama 214 Bldg. are calculated as properties sold and are not included in the figures for properties acquired.

33

Appendix 2

Supplemental material / data34

26th fiscal period (2018/4) financial results(mn yen)
25th Fiscal
PeriodItems

Operating revenue
Gain on sale of real estate

26th (actual) 26th (actual)
vsvs25th (actual) 26th (forecast)

26th Fiscal
Period26th Fiscal
Period2017/10

2018/42018/4

ActualForecast(announced on
Dec.14, 2017)

ActualDifference

Difference

A

B

C

C-A

C-B

13,901

14,792

14,823

921

31

-

551

550

550

-0

Dividend income

61

44

50

-10

6

Operating expense

8,244

7,933

7,974

-269

41

568

-

-

-568

-

Loss on sale of real estate

5,657

6,858

6,848

1,190

-10

Non-operating income

0

0

0

0

0

Non-operating expense

1,067

1,054

1,019

-48

-35

Ordinary income

4,590

5,804

5,829

1,239

24

Net income

4,588

5,803

5,828

1,239

25

Provision (+) / reversal (-) ofreserve for reduction entry

-471

+580

+581

-

1

Total distributions

5,061

5,223

5,247

186

24

DPU (yen)

12,50012,90012,960460

60# of total units outstanding

404,885

404,885

404,885

0

0

9,413

9,577

9,539

125

-37

FFO (Note 2)

7,451

7,560

7,574

123

14

Depreciation

2,293

2,307

2,295

1

-11

98

97

97

-1

0

179,600-

185,850

6,250

43.3%

-

43.9%

0.6%

Book value (Period-end)

382,081-396,308

14,226

Appraisal value (Period-end)

423,623-

443,523

19,900Net assets

212,851-

213,642790

Operating income

P/L, etc.

Rental NOI(Note 1)

Related information# of properties
Total interest-bearing debt
LTV

Comparison against 25th fiscal period (2017/10) actual■Operating revenue
・Rent/common area charge+921 mn yen+506 mn yen (Properties acquired: +447(26th), +65 (25th),
Existing properties: +333,
Properties sold: -198 (26th), -141 (25th)

・Utilities
・Other revenues
・Gain on sale of real estate-121 mn yen-4 mn yen+550 mn yen (Properties sold in 26th (Residence Charmante
Tsukishima・KDX Ikejiri-Oohashi Bldg.・KDX ShinYokohama 214 Bldg.))-10 mn yen (TK Dividend: KRF43 Shinjuku Sanei Bldg.)

・Dividend income■Operating expense
・Utilities
・Taxes・Repair/maintenance cost
・Property/facility management fee
・Other expenses
・Loss on sale of real estate-269 mn yen-74 mn yen+7 mn yen+315 mn yen+30 mn yen+21 mn yen-568 mn yen (25th: Disappearance of loss on sale of KDX ShinYokohama 381 Bldg.)■Non-operating expense
・interest expense/
financing-related expense
・Non-deductible consumption
taxes, etc.

-48 mn yen-38 mn yen-10 mn yen

Comparison against 26th fiscal period (2018/4) forecasts(announced on Dec. 14, 2017)■Operating revenue
・Rent/common area charge
・Other revenues
・Dividend income+31 mn yen-7 mn yen
+32 mn yen+6 mn yen (TK Dividend: KRF43 Shinjuku Sanei Bldg.)■Operating expense
・Utilities
・Repair/maintenance cost・Other expenses+41 mn yen-67 mn yen+126 mn yen-18 mn yen

Note 1: Rental NOI = Operating revenue – Gain on sale of real estate – Dividend income – Expenses related to rental business (excluding depreciation)
Note 2: FFO = Net income + Depreciation – Gain on sale of real estate + Loss on sale of real estate35

27th fiscal period (2018/10) and 28th fiscal period (2019/4)
earning forecasts(mn yen)
27th (forecast) 28th (forecast)vsvs26th (actual) 27th (forecast)

26th Fiscal
Period27th Fiscal
Period28th Fiscal
Period2018/42018/10

2019/4

ActualForecast

Forecast

Difference

Difference

A

B

C

B-A

C-B

14,823

15,33415,086511-248

Gain on sale of real estate

550

527

563

-22

35

Dividend income

50

58

42

7

-16

Operating expense

7,974

8,279

8,069

304

-209

-

-

-

-

-

6,848

7,054

7,016

206

-38

Non-operating income

0

0

0

-0

-0

Non-operating expense

1,019

1,056

1,058

37

2

Ordinary income

5,829

5,998

5,957

168

-40

Net income

5,828

5,997

5,956

168

-40

Provision (+) / reversal (-) ofreserve for reduction entry

+581

+340

+299

-

-

Total distributions

5,247

5,656

5,656

409

-

DPU (yen)

12,96013,20013,200240

0# of total units outstanding

404,885

428,510428,510

23,6250Rental NOI (Note 1)

9,539

10,002

9,943

463

-59

(Note 2)

Items

Operating revenue

Loss on sale of real estate
Operating income

P/L, etc.
RelatedInformation

FFO

7,574

7,842

7,781

267

-60

Depreciation

2,295

2,372

2,388

77

15

# of properties

97

97

96

-

-1

(Reference) Estimatedproperty and city planning
taxes

-

1,230

1,229

Comparison between 26th fiscal period (2018/4) actualand 27th fiscal period (2018/10) forecasts■Operating revenue
・Rent/common area charge+511 mn yen+388 mn yen (Properties (to be) acquired: +322 (27th), +195 (26th)
Properties (to be) sold: -106 (27th), -63 (26th),
Existing properties: +40)
+169 mn yen
・Utilities
・Other revenues-31 mn yen-22 mn yen (26th: Disappearance of gain on sale of properties
・Gain on sale of real estate
sold: -550, 27th: Gain on sale of properties to besold: +527)+7 mn yen (TK Dividend: KRF43 Shinjuku Sanei Bldg.)
・Dividend income+304 mn yen■Operating expense+77 mn yen (Properties (to be) acquired: +49 (27th), +21 (26th)
・Depreciation
Properties (to be) sold: -16 (27th), -24 (26th), Other:+47)+234 mn yen
・Utilities
・Taxes+82 mn yen (Properties sold: -17 (26th), Properties acquired: +19(26th), Existing properties: +79)
-302 mn yen
・Repair/maintenance cost
・Property/facility management fee+33 mn yen+154 mn yen
・Asset management fee
・Other expenses+26 mn yen+37 mn yen■Non-operating expense
・Interest expense/
financing-related expense+28 mn yen
・Non-deductible consumption
taxes, etc.
+9 mn yenComparison between 27th fiscal period (2018/10) forecasts
and 28th fiscal period (2019/4) forecasts■Operating revenue
・Rent/common area charge

・Utilities
・Other revenues
・Gain on sale of real estate・Dividend income■Operating expense
・Utilities
・Repair/maintenance cost・Other expenses■Non-operating expense
・Interest expense/
financing-related expense
・Non-deductible consumption
taxes, etc.

-248 mn yen-73 mn yen (Properties to be acquired: +165 (27th), Properties tobe sold: -54 (27th), -111 (28th)
Existing properties (Decrease in revenue based onconservative estimate) : -72-181 mn yen-13 mn yen+35 mn yen (27th: Disappearance of gain on sale of properties tobe sold:-527, 28th: Gain on sale of properties to besold: +563）-16 mn yen (TK Dividend: KRF43 Shinjuku Sanei Bldg.)-209 mn yen-117 mn yen-70 mn yen-22 mn yen+2 mn yen
+9 mn yen
-7 mn yen

Note 1: Rental NOI = Operating revenue – Gain on sale of real estate – Dividend income – Expenses related to rental business (excluding depreciation)
Note 2: FFO = Net income + Depreciation – Gain on sale of real estate + Loss on sale of real estate

36

Portfolio overview (1)(as of the end of the 26th fiscal period (2018/4))
Office Buildings (95 properties)
Type Area

No.

Name

Location

Acquisition Completion End of 26th fiscal
price
period occupancy
date(Note 2)(mn yen) (Note 1)
rate (%) (Note 3)
5,940 1974/4
100.0Type Area

No.

Name

Location

Acquisition Completion End of 26th fiscal
price
period occupancy
date(Note 2)(mn yen) (Note 1)
rate (%) (Note 3)
2,620 1988/4
100.0

A063 KDX Gotanda Building

Shinagawa-ku, Tokyo

Chuo-ku, Tokyo

4,450

1987/1

100.0

A064 KDX Nihonbashi 216 Building

Chuo-ku, Tokyo

2,010

2006/10A004 KDX Hatchobori Building

Chuo-ku, Tokyo

3,680

1993/6100.0

A066 KDX Shinjuku Building

Shinjuku-ku, Tokyo

6,800

1993/5

98.3

A005 KDX Nakano-Sakaue Building

Nakano-ku, Tokyo

2,533

1992/8100.0A067 KDX Ginza 1chome Building

Chuo-ku, Tokyo

4,300

1991/11100.0A006 Harajuku F.F. Building

Shibuya-ku, Tokyo

2,450

1985/11100.0

A068 KDX Nihonbashi Honcho Building

Chuo-ku, Tokyo

4,000

1984/1

100.0

A007 KDX Minami Aoyama Building

Minato-ku, Tokyo

2,270

1988/11100.0

A071 KDX Iidabashi Building

Shinjuku-ku, Tokyo

4,670

1990/3100.0

A008 Kanda Kihara Building

Chiyoda-ku, Tokyo

1,950

1993/5100.0

A072 KDX Higashi-Shinagawa Building

Shinagawa-ku, Tokyo

4,590

1993/1

100.0

A013 KDX Kojimachi Building

Chiyoda-ku, Tokyo

5,950

1994/5100.0

A073 KDX Hakozaki Building

Chuo-ku, Tokyo

2,710

1993/11100.0

A014 KDX Funabashi Building

Funabashi, Chiba

2,252

1989/4100.0

A074 KDX Shin-Nihonbashi Building

Chuo-ku, Tokyo

2,300

2002/11100.0

A016 Toshin 24 Building

Yokohama, Kanagawa

5,300

1984/990.4

A078 KDX Tachikawa Ekimae Building

Tachikawa, Tokyo

1,267

1990/2100.0

A017 KDX Ebisu Building

Shibuya-ku, Tokyo

4,640

1992/1

100.0

A083 KDX Fuchu Building

Fuchu, Tokyo

6,120

1996/3

99.1

A019 KDX Hamamatsucho Building

Minato-ku, Tokyo

3,460

1999/9100.0

A084 KDX Kasuga Building

Bunkyo-ku, Tokyo

2,800

1992/6100.0

A020 KDX Kayabacho Building

Chuo-ku, Tokyo

2,780

1987/10100.0A085 KDX Nakameguro Building

Meguro-ku, Tokyo

1,880

1985/10100.0A021 KDX Shinbashi Building

Minato-ku, Tokyo

3,728

1992/2100.0

A086 KDX Omiya Building

Saitama, Saitama

2,020

1993/4100.0

A022 KDX Shin-Yokohama Building

Yokohama, Kanagawa

2,520

1990/9100.0A087 Itopia Nihonbashi SA Building

Chuo-ku, Tokyo

2,200

1995/7100.0

A026 KDX Kiba Building

Koto-ku, Tokyo

1,580

1992/10100.0A088 KDX Shinjuku 6-chome Building

Shinjuku-ku, Tokyo

1,900

1990/3100.0

A027 KDX Kajicho Building

Chiyoda-ku, Tokyo

2,350

1990/3100.0

A089 KDX Takanawadai Building

Minato-ku, Tokyo

5,250

1985/10

94.0

A029 KDX Higashi-Shinjuku Building

Shinjuku-ku, Tokyo

2,950

1990/1

100.0

A090 KDX Ikebukuro Building

Toshima-ku, Tokyo

3,900

2009/3100.0

A030 KDX Nishi-Gotanda Building

Shinagawa-ku, Tokyo

4,200

1992/11100.0

A091 KDX Mita Building

Minato-ku, Tokyo

3,180

1993/3100.0

A031 KDX Monzen-Nakacho Building

Koto-ku, Tokyo

1,400

1986/9100.0

A092 KDX Akihabara Building

Chiyoda-ku, Tokyo

2,600

1973/12100.0

A032 KDX Shiba-Daimon Building

Minato-ku, Tokyo

6,090

1986/7100.0

A093 KDX Iidabashi Square

Shinjuku-ku, Tokyo

4,350

1994/1

100.0

A033 KDX Okachimachi Building

Taito-ku, Tokyo

2,000

1988/6

100.0

A094 KDX Musashi-Kosugi Building

Kawasaki, Kanagawa

12,0002013/5100.0

A034 KDX Hon-Atsugi Building

Atsugi, Kanagawa

1,305

1995/5

84.5

A095 KDX Toyosu Grand Square

Koto-ku, Tokyo

8,666

2008/4

98.0

A035 KDX Hachioji Building

Hachioji, Tokyo

1,155

1985/12100.0

A096 KDX Takadanobaba Building

Toshima-ku, Tokyo

3,650

1988/10100.0A037 KDX Ochanomizu Building

Chiyoda-ku, Tokyo

6,400

1982/8100.0

A099 KDX Ikebukuro West Building

Toshima-ku, Tokyo

1,934

1988/7100.0

A038 KDX Nishi-Shinjuku Building

Shinjuku-ku, Tokyo

1,500

1992/10

100.0

A101 KDX Yokohama Building

Yokohama, Kanagawa

7,210

1994/3100.0

A041 KDX Shinjuku 286 Building

Shinjuku-ku, Tokyo

2,300

1989/8100.0

A102 KDX Yokohama Nishiguchi Building

Yokohama, Kanagawa

2,750

1988/10100.0A046 Hiei Kudan-Kita Building

Chiyoda-ku, Tokyo

7,600

1988/3

97.5

A107 KDX Ginza East Building

Chuo-ku, Tokyo

3,600

1991/8100.0

A048 KDX Kawasaki-Ekimae Hon-cho Building Kawasaki, Kanagawa

3,760

1985/2

100.0

A108 Pentel Building

Chuo-ku, Tokyo

3,350

1990/11100.0

A051 KDX Hamacho Nakanohashi Building

Chuo-ku, Tokyo

2,310

1988/9100.0

A109 KDX Hamamatsucho Center Building

Minato-ku, Tokyo

3,950

1985/12100.0A055 Shin-toshin Maruzen Building

Shinjuku-ku, Tokyo

2,110

1990/7

100.0

A112 KDX Toranomon 1chome Building

Minato-ku, Tokyo

15,5502013/10100.0A056 KDX Jimbocho Building

Chiyoda-ku, Tokyo

2,760

1994/5100.0

A113 KDX Shin-Nihonbashi Ekimae Building

Chuo-ku, Tokyo

3,829

1992/5100.0A059 KDX Iwamoto-cho Building

Chiyoda-ku, Tokyo

1,864

2008/3100.0

A114 KDX Nihonbashi Edo-dori Building

Chuo-ku, Tokyo

1,350

1985/3100.0

A060 KDX Harumi Building

Chuo-ku, Tokyo

10,2502008/2100.0

A115 ARK Mori Building

Minato-ku, Tokyo

4,169

1986/3100.0

A061 KDX Hamamatsucho Dai-2 Building

Minato-ku, Tokyo

2,200

1992/4100.0

A116 KDX Nishi-Shinbashi Building

Minato-ku, Tokyo

8,400

1992/8100.0

A062 Koishikawa TG Building

Bunkyo-ku, Tokyo

3,080

1989/11

100.0

A117 BR Gotanda

Shinagawa-ku, Tokyo

2,200

1991/9100.0

Tokyo Metropolitan Area

Chuo-ku, Tokyo

A003 Higashi-Kayabacho Yuraku Building

Office Buildings

Tokyo Metropolitan Area

Office Buildings

A001 KDX Nihonbashi 313 Building

100.0Note 1: Acquisition price is only the acquisition (investment) price of the trust beneficiary interest, etc. (excluding any expenses, taxes, etc.) acquired by KDO. Figures are truncated to the nearest million yen
Note 2: Completion date shows the newly-built year-month recorded in the real estate register. The average value shown in the subtotal or total section is a weighted average number calculated based on acquisition price with a base dateof the end of the 26th fiscal period (2018/4). Figures are truncated to the first decimal place
Note 3: Occupancy rate is calculated by dividing leased area as of the end of the 26th fiscal period (2018/4) by leasable area and is rounded to the first decimal place
37Portfolio overview (2)(as of the end of the 26th fiscal period (2018/4))
Office Buildings (95 properties)
A119 KDX Shibuya Nanpeidai Building

Shibuya-ku, Tokyo

A120 KDX Yoyogi Building

Shibuya-ku, Tokyo

1991/8100.0

A121 Ginza 4chome Tower
A122 Mitsubishijuko Yokohama Building

Chuo-ku, Tokyo

9,800

2008/11

100.0

Yokohama, Kanagawa

14,7201994/2100.0

A123 JN Building

Yokohama, Kanagawa

9,500

2007/992.8

A012 Portus Center Building

Sakai, Osaka

5,570

1993/9100.0

A042 KDX Karasuma Building

Kyoto, Kyoto

5,400

1982/10100.0A044 KDX Sendai Building

Sendai, Miyagi

2,100

1984/2100.0

A053 KDX Hakata-Minami Building

Fukuoka, Fukuoka

4,900

1973/6

99.5

A054 KDX Kitahama Building

Osaka, Osaka

2,220

1994/789.2

A058 KDX Nagoya Sakae Building

Nagoya, Aichi

7,550

2009/4100.0

A069 KDX Kobayashi-Doshomachi Building

Osaka, Osaka

2,870

2009/7100.0

A070 KDX Sapporo Building

Sapporo, Hokkaido

2,005

1989/10

97.8

A079 KDX Nagoya Ekimae Building

Nagoya, Aichi

7,327

1986/4100.0

A082 KDX Higashi Umeda Building

Osaka, Osaka

2,770

2009/7100.0

A097 KDX Utsunomiya Building

Utsunomiya, Tochigi

2,350

1999/289.0

A098 KDX Hiroshima Building

Hiroshima, Hiroshima

1,300

1990/1

100.0

A100 Senri Life Science Center Building

Toyonaka, Osaka

13,0001992/6

99.8

A104 KDX Minami-Honmachi Building

Osaka, Osaka

2,200

2009/12

98.8

A106 KDX Sakura-dori Building

Nagoya, Aichi

5,900

1992/8100.0

A110 KDX Shin-Osaka Building

Osaka, Osaka

4,550

1992/5100.0

A111 KDX Nagoya Nichigin-mae Building

Nagoya, Aichi

3,500

2006/996.2

A118 KDX Sapporo Kitaguchi Building

Sapporo, Hokkaido

1,800

1992/9

100.0

No.

Name

Location

Other Regional Areas

Office Buildings (95 properties) Subtotal(Note 2)

394,455 Ave. 23.5 yrs

99.1

Central Urban Retail Property (1 property)
Type

Area

No.

Name

Tokyo
Metropolitan
Area

Central Urban
RetailProperty

C001 Frame Jinnan-zaka

Location

Shibuya-ku, Tokyo

Central Urban Retail Property (1 property) Subtotal

Acquisition
price(mn yen) (Note 1)

Completion
date(Note 2)End of 26th fiscal
period occupancy
rate (%) (Note 3)

9,900

2005/3

95.2

9,900

13.0 yes

95.2

Type

Area

No.

OthersD002

Name

Location

Acquisition
price(mn yen) (Note 1)

End of 26th fiscal
period occupancy
rate (%) (Note 3)

Completion
date(Note 2)

Shinjuku 6chome Building
Shinjuku-ku, Tokyo(Land)

2,880

-

100.0

Others (1 property) Subtotal

2,880

-

100.0

407,235

Ave.
23.2 yrs

99.0%(97 properties, excl. investment securities) Total• The total number of end tenants for 95 office buildings is 1,188(1,123 if tenants are aggregated based on their names)

Investment Security (1 security)
Name

Location of
specified asset

Silent partnership equity interest of G.K. KRF 43

Shinjuku-ku, Tokyo

Type

Investment
Security

2,479

Area

Tokyo
Metropolitan Area

Office Buildings

2003/12End of 26th fiscal
period occupancy
rate (%) (Note 3)
100.0

Completion
date

Tokyo
Metropolitan
Area

Type

Others (1 property)
Acquisition
price(mn yen) (Note 1)
3,500

Acquisition
price(mn yen)Completion date ofspecified asset

1,107

Investment Security (1 security) Total

1979/12

1,107

Historical rent-based NOI yield(by asset type, annualized-based) (Note 4) (Note 5)（%）

22nd fiscal
period(2016/4)

23rd fiscal
period(2016/10)

24th fiscal
period(2017/4)

25th fiscal
period(2017/10)

26th fiscal
period(2018/4)

Office buildings
Central urban retailproperties
Residential property

4.4

4.5

4.7

4.7

4.8

3.8

4.2

3.9

4.3

3.4

4.0

4.1

4.2

3.8

3.5

Others

4.3

4.3

4.3

4.3

4.3

Total

4.4

4.5

4.6

4.7

4.8

Note 1: Acquisition price is only the acquisition (investment) price of the trust beneficiary interest, etc. (excluding
any expenses, taxes, etc.) acquired by KDO. Figures are truncated to the nearest million yen
Note 2: Completion date shows the newly-built year-month recorded in the real estate register. The average value
shown in the subtotal or total section is a weighted average number calculated based on acquisition pricewith a base date of the end of the 26th fiscal period (2018/4). Figures are truncated to the first decimal
place
Note 3: Occupancy rate is calculated by dividing leased area as of the end of the 26th fiscal period (2018/4) byleasable area and is rounded to the first decimal place
Note 4: NOI yield calculation for the properties acquired during each fiscal period without taxation on property andcity planning taxes are assumed as if they are imposed. Acquisition price for newly acquired/soldproperties is calculated by multiplying the ratio of actual operating days to the relevant fiscal period's
operating days
Note 5: Each yield is rounded to the first decimal place

38

Reasons for moving-in/out
The percentage of move-ins for floor expansion purposes has maintained high occupancy and the percentage of move-outs forfloor expansion purposes has been also on the rise
Demonstrating that well-performing mid/small-sized companies have a strong need to relocate their offices for floor expansion
Reasons for moving into our properties (Note 1)
Floor拡張移転
expansion
20th
fiscal第20期
period（15/4期）(2015/4)
21st
fiscal第21期
period（15/10期）(2015/10)

Reasons for moving out of our properties (Note 1)

縮小移転
その他/不明Floor reduction
Other/unknown

拡張移転
Floor expansion

77.3%

9.1% 13.6%

20thfiscal第20期
period（15/4期）(2015/4)

81.6%

10.2% 8.2%

21stfiscal第21期
period（15/10期）(2015/10)

縮小移転
Floor reductionその他/不明
Other/unknown

32.6%

13.3%

60.5%

Move-out due to
office integration

7.0%

73.3%

(Note 2)

13.3%

14.0%

22nd
fiscal第22期
period
（16/4期）(2016/4)

37.8%

51.4%

10.8%

77.0%

9.8% 13.1%

23rd
fiscal第23期
period（16/10期）(2016/10)

40.0%

46.0%

14.0%

24th
fiscal第24期
period
（17/4期）(2017/4)

80.4%

7.8% 11.8%

24thfiscal第24期
period
（17/4期）(2017/4)

43.9%

39.0%

17.1%

25th
fiscal第25期
period（17/10期）(2017/10)

76.5%

22nd
fiscal第22期
period
（16/4期）(2016/4)

74.0%

23rd
fiscal第23期
period（16/10期）(2016/10)

26th
fiscal第26期
period
（18/4期）(2018/4)

12.0%

5.9%

17.6%

96.2%

3.8%

Average contracted floor area of incoming tenants (tsubo)

25th
fiscal第25期
period（17/10期）(2017/10)

48.0%

26th
fiscal第26期
period
（18/4期）(2018/4)

50.0%

40.0%

12.0%

46.2%

3.8%

Average cancelled floor area of exiting tenants (tsubo)

22nd fiscal
period(2016/4)

23rd fiscal
period(2016/10)

24th fiscal
period(2017/4)

25th fiscal
period(2017/10)

26th fiscal
period(2018/4)

Floor expansion

116.6

84.4

79.0

80.9

76.7

Floor reduction

385.0

96.4

39.1

126.7

-

22nd fiscal
period(2016/4)

23rd fiscal
period(2016/10)

24th fiscal
period(2017/4)

25th fiscal
period(2017/10)

26th fiscal
period(2018/4)

Floor expansion

96.6

108.7

119.6

124.1

81.2

Floor reduction

198.5

107.8

79.7

63.1

87.6

Note 1： The above data is based on the survey compiled by the Asset Management Company with regard to reasons for office relocation of relevant tenants. We classify responses of the survey into
three categories; "Floor expansion", "Floor reduction" and "Other/unknown". For move-in, the figures are based on the number of tenants on office floors on the second floor or above. For
move-out, the figures are based on the number of tenants on all floors except for residential floors
Note 2: Among 73.3% of tenants who answered "Floor reduction" as the reason for moving out during the 21st fiscal period (2015/10), about 20.0% of them moved out to integrate/consolidate theiroffices targeting optimization of office functions

39

Historical changes in LTV and status of interest-bearing debt financing
Historical LTV (interest-bearing debt ratio) level (Note)
(%)
52.0
47.0

45.6

48.0

45.3

44.0

41.2

32.0

47.5

47.2

48.4

43.0

41.1

40.9

40.9

42.8

42.8

42.8

43.1

43.3

43.9

42.3

Appraisal-value
鑑定ベース 39.5
basedLTV
LTV

38.7
37.5
End
of 1st第1期
fiscalperiod(05/10期）末(2005/10)

42.6

40.3

38.9

40.0
36.0

41.4

46.2

45.8

35.3
End
of 2nd
第2期
fiscalperiod
（06/4期）末(2006/4)

Endof 3rd
第3期
fiscal period（06/10期）末(2006/10)

Endof 4th
第4期
fiscalperiod（07/4期）末(2007/4)Endof 5th
第5期
fiscal period（07/10期）末(2007/10)

Endof 6th
第6期
fiscalperiod（08/4期）末(2008/4)

Endof 7th
第7期
fiscal period（08/10期）末(2008/10)

Endof 8th
第8期
fiscalperiod（09/4期）末(2009/4)

Endof 9th
第9期
fiscal period（09/10期）末(2009/10)

Endof 10th
第10期
fiscalperiod（10/4期）末(2010/4)

Endof 11th End
of 12th End
of 13th
第11期
第12期
第13期
fiscal period fiscal
period （11/10期）末fiscal period（10/10期）末（11/4期）末(2010/10)(2011/4)(2011/10)

Endof 14th
第14期
fiscalperiod（12/4期）末(2012/4)

Endof 15th
第15期
fiscal period（12/10期）末(2012/10)

Endof 16th
第16期
fiscalperiod（13/4期）末(2013/4)

Endof 17th
第17期
fiscal period（13/10期）末(2013/10)

Endof 18th
第18期
fiscalperiod
（14/4期）末(2014/4)

Endof 19th
第19期
fiscal period（14/10期）末(2014/10)

Endof 20th
第20期
fiscalperiod（15/4期）末(2015/4)

Endof 21st
第21期
fiscal period（15/10期）末(2015/10)

Endof 22nd
第22期
fiscalperiod
（16/4期）末(2016/4)

Endof 23rd
第23期
fiscal period（16/10期）末(2016/10)

Endof 24th
第24期
fiscalperiod
（17/4期）末(2017/4)

Endof 25th
第25期
fiscal period（17/10期）末(2017/10)

Endof 26th 公募増資後
After the
第26期
fiscalperiod public
offering（18/4期）末（注4）(2018/4)

Note: The interest-bearing debt ratio (LTV) is calculated by dividing ending balance of interest-bearing debt by ending balance of total assets (rounded to the first decimal place)Appraisal-value based LTV is calculated by dividing ending balance of interest-bearing debt by the sum of ending balance of total assets and appraisal profit/loss (rounded to the first decimal place)

Investment corporation bonds issued as of the end of
the 26th fiscal period (2018/4) (total of 7.8 bn yen)

Outstanding borrowings by financial institutions as of the endof the 26th fiscal period (2018/4)

14 lending financial institutions

三井住友銀行

Corporate bonds
5th bonds
6th bonds

Issued period
2013/92014/7

Issuedamount
1.8 bn yen
2.0 bn yen

Interest rate
1.00%
1.18%

5 years
10 years

2016/4

1.0 bn yen

0.90%

12 years

8th bonds

2017/7

1.0 bn yen

0.26%

5 years

2.1%
6.3%

25.9%

6.6%

Total
borrowings
6.9%
from financial
institutions
11.2% 178.0 bn yen

2.0 bn yen

25.9%

34,800mn yen

19.5%

Development Bank of■Japan
三井住友信託銀行

30,550mn yen

17.2%

Sumitomo Mitsui Trust■ あおぞら銀行
Bank

19,900mn yen

11.2%

みずほ銀行
Bank
■ Aozora

12,350mn yen

6.9%

Bank
■ Mizuho
りそな銀行

11,700mn yen

6.6%■ Resona Bank

11,250mn yen

6.3%■ Mizuho Trust & Banking

3,800mn yen

2.1%

The Bank of Fukuoka

2,500 mn yen

1.4%

The Nishi-Nippon CityBank

1,700mn yen

1.0%

The Hiroshima Bank

1,000mn yen

0.6%

The 77 Bank

1,000mn yen

0.6%

Higashi-Nippon Bank

800mn yen

0.4%

The Mie Bank

500mn yen

0.3%

みずほ信託銀行

19.5%
2017/7

46,200 mn yen■ MUFG Bank

日本政策投資銀行

7th bonds

9th bonds■ Sumitomo Mitsui Banking

三菱UFJ銀行

Term

0.64%

10 years

17.2%

40

Historical appraisal profit/loss of portfolio
Appraisal profit increased to 47.2 billion yen as a result of increase in appraisal value andproactive asset reshuffle
Historical changes in portfolio's appraisal profit/loss amount and ratio and average appraisal cap rate (Note 1)（bn yen）（%）
Appraisal profit/loss amount
含み損益額（左軸）
(left
axis)

500
50.0

Appraisal profit/loss ratio
含み損益率（右軸）(right
axis)

25.0

40.0
400

20.0

30.0
300
10.9
8.9

20.0
200

9.2

8.6
5.1

-0.2
0.0
0
-0.1

5.5

10.0

4.5

3.7
0.8

5.0

2.9
10.9

15.0

6.5

6.1

100
10.0

11.9

17.8

20.0

1.9

11.6

0.6

-5.7

-18.5

-22.3

-24.1

-24.4

-24.2

-22.6

-25.4

-25.9

-22.8

-16.4

-7.3

10.9

17.4

25.4

33.1

41.5

47.2
0.0

0.5

-2.0

-10.0
-100

-5.0

-2.6
-4.9
-7.9

-8.3

-200
-20.0

-9.4
-30.0
-300

-10.3

-9.9

-9.5

-8.7

-7.6

-10.0

-8.9

1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
12th
13th
14th
15th
16th
17th
18th
19th
20th
21st
22nd
23rd
24th
25th
26th
第1期
第2期
第3期
第4期
第5期
第6期
第7期
第8期
第9期
第10期
第11期
第12期
第13期
第14期
第15期
第16期
第17期
第18期
第19期
第20期
第21期
第22期
第23期
第24期
第25期
第26期
fiscal （06/4期）
fiscal （06/10期）
fiscal （07/4期）
fiscal （07/10期）
fiscal （08/4期）
fiscal （08/10期）
fiscal （09/4期）
fiscal （09/10期）
fiscal （10/4期）
fiscal （10/10期）
fiscal （11/4期）
fiscal （11/10期）
fiscal （12/4期）
fiscal （12/10期）
fiscal （13/4期）
fiscal （13/10期）
fiscal （14/4期）
fiscal （14/10期）
fiscal （15/4期）
fiscal （15/10期）
fiscal （16/4期）
fiscal （16/10期）
fiscal （17/4期）
fiscal （17/10期）
fiscal （18/4期）
fiscal（05/10期）
periodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiodperiod-15.0

periodAverage (2005/10) (2006/4) (2006/10) (2007/4) (2007/10) (2008/4) (2008/10) (2009/4) (2009/10) (2010/4) (2010/10) (2011/4) (2011/10) (2012/4) (2012/10) (2013/4) (2013/10) (2014/4) (2014/10) (2015/4) (2015/10) (2016/4) (2016/10) (2017/4) (2017/10) (2018/4)
appraisal 5.2%
5.2%
5.1%
5.0%
4.9%
4.8%
4.9%
5.1%
5.3%
5.3%
5.3%
5.3%
5.2%
5.1%
5.1%
5.1%
5.0%
4.9%
4.8%
4.7%
4.6%
4.5%
4.4%
4.3%
4.3%
4.2%
cap rate(Note 2)

Note 1： Portfolio appraisal profit/loss amount is the sum of differences between appraisal value and book value for the properties owned as of the end of relevant fiscal period. Appraisal profit/loss ratio is
calculated by dividing appraisal profit/loss by book value as of the end of relevant fiscal period. Figures are rounded to the first decimal place
Note 2： Average appraisal cap rate is a weighted average based on appraisal value for the properties owned as of the end of relevant fiscal period and listed in the appraisal report with the base date forappraisal as of the end of each fiscal period. Figures are rounded to the first decimal place41

Appraisal value and cap rate
as of the end of the 26th fiscal period (2018/4) (1)
No.

Name

Appraiser

Acquisition price(mn yen)(A)

End of the 26th fiscal period(As of Apr. 30, 2018)
Book value(mn yen)Appraisal value(mn yen)(B)(C)

End of the 25th fiscal period(As of Oct. 31, 2017)

DirectAppraisal value
capitalization
vsmethod cap rate Book value (Note 1)(D)(C)÷(B)-1

Directcapitalization
method cap rate

Period-end appraisal value

Appraisal value(mn yen)Direct capitalization
method cap rate

Difference

(E)

(F)

(C)－(E)

Increasedecrease
rate (Note 1)

Difference(C)÷(E)-1(D)－(F)A001

KDX Nihonbashi 313 Building

Daiwa

5,940

5,810

6,740

3.9%

16.0%

6,740

3.9%

-

-

-

A003

Higashi-Kayabacho Yuraku Building

JREI

4,450

4,061

5,050

4.3%

24.3%

5,050

4.3%

-

-

-

A004

KDX Hatchobori Building

Daiwa

3,680

3,280

3,360

4.2%

2.4%

3,360

4.2%

-

-

-

A005

KDX Nakano-Sakaue Building

Daiwa

2,533

2,329

2,470

4.4%

6.0%

2,470

4.4%

-

-

-

A006

Harajuku F.F. Building

JREI

2,450

2,403

3,140

4.7%

30.6%

3,140

4.7%

-

-

-

A007

KDX Minami Aoyama Building

JREI

2,270

2,220

2,710

4.2%

22.0%

2,710

4.2%

-

-

-

A008

Kanda Kihara Building

Daiwa

1,950

1,775

1,680

4.2%

-5.4%

1,680

4.2%

-

-

-

A012

Portus Center Building

Daiwa

5,570

4,016

5,080

5.6%

26.5%

5,080

5.6%

-

-

-

A013

KDX Kojimachi Building

JREI

5,950

5,507

4,980

3.8%

-9.6%

4,980

3.8%

-

-

-

A014

KDX Funabashi Building

JREI

2,252

2,256

2,550

5.3%

13.0%

2,490

5.4%

60

2.4%

-0.1%

A016

Toshin 24 Building

JREI

5,300

4,815

4,970

4.5%

3.2%

4,970

4.6%

-

-

-0.1%

A017

KDX Ebisu Building

JREI

4,640

4,382

5,080

4.1%

15.9%

4,970

4.1%

110

2.2%

-

A019

KDX Hamamatsucho Building

Daiwa

3,460

3,059

3,400

3.9%

11.1%

3,400

3.9%

-

-

-

A020

KDX Kayabacho Building

JREI

2,780

2,685

2,660

4.5%

-0.9%

2,620

4.5%

40

1.5%

-

A021

KDX Shinbashi Building

JREI

3,728

3,737

4,750

3.8%

27.1%

4,600

3.8%

150

3.3%

-

A022

KDX Shin-Yokohama Building

JREI

2,520

2,253

2,420

4.9%

7.4%

2,370

5.0%

50

2.1%

-0.1%

A026

KDX Kiba Building

JREI

1,580

1,438

1,210

5.0%

-15.9%

1,210

5.0%

-

-

-

A027

KDX Kajicho Building

Daiwa

2,350

2,247

2,260

4.3%

0.6%

2,260

4.3%

-

-

-

A029

KDX Higashi-Shinjuku Building

Daiwa

2,950

3,018

3,790

4.4%

25.6%

3,780

4.4%

10

0.3%

-

A030

KDX Nishi-Gotanda Building

JREI

4,200

3,812

3,650

4.4%

-4.3%

3,650

4.4%

-

-

-

A031

KDX Monzen-Nakacho Building

Daiwa

1,400

1,307

1,120

4.8%

-14.4%

1,100

4.8%

20

1.8%

-

A032

KDX Shiba-Daimon Building

JREI

6,090

5,974

5,020

4.3%

-16.0%

4,950

4.3%

70

1.4%

-

A033

KDX Okachimachi Building

Daiwa

2,000

2,027

2,020

4.3%

-0.4%

2,020

4.3%

-

-

-

A034

KDX Hon-Atsugi Building

Daiwa

1,305

1,130

1,290

5.5%

14.1%

1,290

5.5%

-

-

-

A035

KDX Hachioji Building

Daiwa

1,155

1,221

1,120

5.2%

-8.3%

1,120

5.2%

-

-

-

A037

KDX Ochanomizu Building

JREI

6,400

6,354

6,850

4.1%

7.8%

6,850

4.1%

-

-

-

A038

KDX Nishi-Shinjuku Building

JREI

1,500

1,517

1,450

4.5%

-4.4%

1,450

4.5%

-

-

-

A041

KDX Shinjuku 286 Building

JREI

2,300

2,352

2,620

4.1%

11.4%

2,620

4.1%

-

-

-

A042

KDX Karasuma Building

Daiwa

5,400

5,093

5,270

4.8%

3.5%

5,240

4.8%

30

0.6%

-

A044

KDX Sendai Building

Daiwa

2,100

1,954

1,860

5.4%

-4.8%

1,860

5.4%

-

-

-

A046

Hiei Kudan-Kita Building

Daiwa

7,600

7,449

7,900

3.9%

6.0%

7,900

3.9%

-

-

-

A048

KDX Kawasaki-Ekimae Hon-cho Building

JREI

3,760

3,512

3,100

4.9%

-11.7%

3,100

5.0%

-

-

-0.1%

A051

KDX Hamacho Nakanohashi Building

JREI

2,310

2,248

1,970

4.5%

-12.4%

1,960

4.5%

10

0.5%

-

A053

KDX Hakata-Minami Building

JREI

4,900

4,491

4,250

5.9%

-5.4%

4,070

6.0%

180

4.4%

-0.1%

※Notes are shown on page 44

42

Appraisal value and cap rate
as of the end of the 26th fiscal period (2018/4) (2)
No.

Name

Appraiser

Acquisition price(mn yen)(A)

End of the 26th fiscal period(As of Apr. 30, 2018)
Book value(mn yen)Appraisal value(mn yen)(B)(C)

End of the 25th fiscal period(As of Oct. 31, 2017)

DirectAppraisal value
capitalization
vsmethod cap rate Book value (Note 1)(D)(C)÷(B)-1

Directcapitalization
method cap rate

Period-end appraisal value

Appraisal value(mn yen)Direct capitalization
method cap rate

Difference

(E)

(F)

(C)－(E)

Increasedecrease
rate (Note 1)

Difference(C)÷(E)-1(D)－(F)

A054

KDX Kitahama Building

JREI

2,220

2,062

1,620

5.3%

-21.4%

1,610

5.4%

10

0.6%

-0.1%

A055

Shin-toshin Maruzen Building

JREI

2,110

2,092

1,680

4.4%

-19.7%

1,680

4.4%

-

-

-

A056

KDX Jimbocho Building

JREI

2,760

2,857

2,360

4.4%

-17.4%

2,360

4.4%

-

-

-

A058

KDX Nagoya Sakae Building

Daiwa

7,550

6,668

5,260

4.5%

-21.1%

5,260

4.5%

-

-

-

A059

KDX Iwamoto-cho Building

JREI

1,864

1,648

1,510

4.5%

-8.4%

1,510

4.6%

-

-

-0.1%

A060

KDX Harumi Building

JREI

10,250

8,804

8,470

4.2%

-3.8%

8,470

4.3%

-

-

-0.1%

A061

KDX Hamamatsucho Dai-2 Building

Daiwa

2,200

2,233

2,200

3.8%

-1.5%

2,200

3.8%

-

-

-

A062

Koishikawa TG Building

JREI

3,080

2,996

3,460

4.3%

15.5%

3,460

4.3%

-

-

-

A063

KDX Gotanda Building

JREI

2,620

2,701

3,210

4.5%

18.8%

3,120

4.5%

90

2.9%

-

A064

KDX Nihonbashi 216 Building

JREI

2,010

1,840

2,200

4.0%

19.6%

2,160

4.0%

40

1.9%

-

A066

KDX Shinjuku Building

JREI

6,800

6,860

8,810

3.7%

28.4%

8,560

3.8%

250

2.9%

-0.1%

A067

KDX Ginza 1chome Building

Daiwa

4,300

4,180

5,710

3.6%

36.6%

5,710

3.6%

-

-

-

A068

KDX Nihonbashi Honcho Building

Daiwa

4,000

3,932

4,670

4.0%

18.7%

4,660

4.0%

10

0.2%

-

A069

KDX Kobayashi-Doshomachi Building

JREI

2,870

2,124

2,670

6.4%

25.7%

2,670

6.4%

-

-

-

A070

KDX Sapporo Building

Daiwa

2,005

1,931

2,490

4.9%

28.9%

2,400

4.9%

90

3.8%

-

A071

KDX Iidabashi Building

Daiwa

4,670

4,519

5,500

4.1%

21.7%

5,490

4.1%

10

0.2%

-

A072

KDX Higashi-Shinagawa Building

Daiwa

4,590

4,721

4,490

4.2%

-4.9%

4,460

4.2%

30

0.7%

-

A073

KDX Hakozaki Building

Daiwa

2,710

2,682

3,300

4.4%

23.0%

3,300

4.4%

-

-

-

A074

KDX Shin-Nihonbashi Building

Daiwa

2,300

2,056

2,830

3.8%

37.6%

2,820

3.8%

10

0.4%

-

A078

KDX Tachikawa Ekimae Building

JREI

1,267

1,326

1,650

5.1%

24.4%

1,620

5.2%

30

1.9%

-0.1%

A079

KDX Nagoya Ekimae Building

JREI

7,327

8,013

9,420

4.2%

17.5%

9,170

4.3%

250

2.7%

-0.1%

A082

KDX Higashi Umeda Building

Daiwa

2,770

2,467

3,660

4.4%

48.4%

3,650

4.4%

10

0.3%

-

A083

KDX Fuchu Building

Daiwa

6,120

5,875

7,930

4.8%

35.0%

7,890

4.8%

40

0.5%

-

A084

KDX Kasuga Building

JREI

2,800

2,709

3,630

4.3%

34.0%

3,630

4.3%

-

-

-

A085

KDX Nakameguro Building

Daiwa

1,880

1,858

2,770

4.4%

49.1%

2,680

4.4%

90

3.4%

-

A086

KDX Omiya Building

Daiwa

2,020

2,189

2,850

5.0%

30.2%

2,850

5.0%

-

-

-

A087

Itopia Nihonbashi SA Building

Daiwa

2,200

2,249

2,860

4.3%

27.1%

2,660

4.3%

200

7.5%

-

A088

KDX Shinjuku 6-chome Building

Daiwa

1,900

1,881

3,030

4.3%

61.0%

2,950

4.3%

80

2.7%

-

A089

KDX Takanawadai Building

JREI

5,250

5,550

6,170

4.3%

11.2%

6,170

4.3%

-

-

-

A090

KDX Ikebukuro Building

Daiwa

3,900

3,680

4,830

4.0%

31.2%

4,810

4.0%

20

0.4%

-

A091

KDX Mita Building

JREI

3,180

3,139

3,460

4.2%

10.2%

3,460

4.2%

-

-

-

A092

KDX Akihabara Building

JREI

2,600

2,532

3,090

4.1%

22.0%

3,090

4.1%

-

-

-

A093

KDX Iidabashi Square

Daiwa

4,350

4,922

5,700

4.0%

15.8%

5,680

4.0%

20

0.4%

-

A094

KDX Musashi-Kosugi Building

JREI

12,000

11,245

15,400

4.2%

36.9%

14,900

4.3%

500

3.4%

-0.1%

※Notes are shown on page 44

43Appraisal value and cap rate
as of the end of the 26th fiscal period (2018/4) (3)
No.

Name

Appraiser

Acquisition price(mn yen)(A)

End of the 26th fiscal period(As of Apr. 30, 2018)
Book value(mn yen)Appraisal value(mn yen)(B)(C)

End of the 25th fiscal period(As of Oct. 31, 2017)

DirectAppraisal value
capitalization
vsmethod cap rate Book value (Note 1)(D)(C)÷(B)-1

Directcapitalization
method cap rate

Period-end appraisal value

Appraisal value(mn yen)Direct capitalization
method cap rate

Difference

Increasedecrease
rate (Note 1)

Difference

(E)

(F)

(C)－(E)(C)÷(E)-1(D)－(F)

A095

KDX Toyosu Grand Square

Daiwa

8,666

8,113

9,440

4.6%

16.3%

9,240

4.6%

200

2.2%

-

A096

KDX Takadanobaba Building

Daiwa

3,650

3,617

4,330

4.4%

19.7%

4,310

4.4%

20

0.5%

-

A097

KDX Utsunomiya Building

Daiwa

2,350

2,263

2,500

5.7%

10.5%

2,500

5.7%

-

-

-

A098

KDX Hiroshima Building

JREI

1,300

1,390

1,640

5.5%

17.9%

1,600

5.6%

40

2.5%

-0.1%

A099

KDX Ikebukuro West Building

Daiwa

1,934

2,023

2,090

4.3%

3.3%

2,090

4.3%

-

-

-

A100

Senri Life Science Center Building

Daiwa

13,00012,772

13,500

4.6%

5.7%

13,300

4.6%

200

1.5%

-

A101

KDX Yokohama Building

Daiwa

7,210

7,571

8,790

4.4%

16.1%

8,440

4.4%

350

4.1%

-

A102

KDX Yokohama Nishiguchi Building

Daiwa

2,750

2,723

3,150

4.5%

15.7%

3,140

4.5%

10

0.3%

-

A104

KDX Minami-Honmachi Building

JREI

2,200

2,058

2,940

4.5%

42.8%

2,900

4.5%

40

1.4%

-

A106

KDX Sakura-dori Building

Daiwa

5,900

6,226

8,240

4.6%

32.3%

8,050

4.6%

190

2.4%

-

A107

KDX Ginza East Building

JREI

3,600

3,617

3,740

4.2%

3.4%

3,740

4.2%

-

-

-

A108

Pentel Building

Daiwa

3,350

3,571

3,803

3.9%

6.5%

3,793

3.9%

10

0.3%

-

A109

KDX Hamamatsucho Center Building

Daiwa

3,950

4,023

4,300

3.8%

6.9%

4,300

3.8%

-

-

-

A110

KDX Shin-Osaka Building

Daiwa

4,550

4,549

5,060

4.1%

11.2%

5,040

4.1%

20

0.4%

-

A111

KDX Nagoya Nichigin-mae Building

JREI

3,500

3,508

4,120

4.3%

17.4%

3,980

4.4%

140

3.5%

-0.1%

A112

KDX Toranomon 1chome Building

JREI

15,55015,528

17,100

3.5%

10.1%

17,000

3.5%

100

0.6%

-

A113

KDX Shin-Nihonbashi Ekimae Building

JREI

3,829

3,951

4,070

3.9%

3.0%

4,070

3.9%

-

-

-

A114

KDX Nihonbashi Edo-dori Building

JREI

1,350

1,379

1,440

4.3%

4.4%

1,440

4.3%

-

-

-

A115

ARK Mori Building

Daiwa

4,169

4,189

4,430

3.7%

5.7%

4,430

3.7%

-

-

-

A116

KDX Nishi-Shinbashi Building

Daiwa

8,400

8,435

9,070

3.5%

7.5%

8,880

3.5%

190

2.1%

-

A117

BR Gotanda

JREI

2,200

2,313

2,400

4.4%

3.7%

2,400

4.4%

-

-

-

A118

KDX Sapporo Kitaguchi Building

Daiwa

1,800

1,810

1,960

4.8%

8.2%

1,890

4.8%

70

3.7%

-

A119

KDX Shibuya Nanpeidai Building

Daiwa

3,500

3,575

3,710

3.6%

3.8%

3,710

3.6%

-

-

-

A120

KDX Yoyogi Building

JREI

2,479

2,442

2,210

4.7%

-9.5%

2,160

4.7%

50

2.3%

-

A121

Ginza 4chome Tower

JREI

9,800

9,566

13,600

3.3%

42.2%

13,600

3.3%

-

-

-

A122

Mitsubishijuko Yokohama Building (Note 2)

Daiwa

14,72014,77014,9004.0%

0.9%

14,900

4.0%

-

-

-

A123

JN Building (Note 2)

Daiwa

9,500

9,851

9,860

4.2%

0.1%

9,860

4.2%

-

-

-

394,455

384,155

429,073

4.3%

11.7%

424,933

4.3%

4,140

1.0%

-

9,900

9,179

11,100

3.7%

20.9%

11,100

3.7%

-

-

-

9,900

9,179

11,100

3.7%

20.9%

11,100

3.7%

-

-

-

2,880

2,973

3,350

3.7%

12.7%

3,320

3.7%

30

0.9%

-

Subtotal: Others (Note 3)

2,880

2,973

3,350

3.7%

12.7%

3,320

3.7%

30

0.9%

-

Total (Note 3)

407,235

396,308

443,523

4.2%

11.9%

439,353

4.3%

4,170

0.9%

-0.1%

Subtotal: Office Buildings (Note 3)
C001

Frame Jinnan-zaka

JREI

Subtotal: Central Urban Retail Property (Note 3)
D002

Shinjuku 6chome Building (Land)

Daiwa

Note 1: Ratios for appraisal value vs book value and increase-decrease rate are rounded to the first decimal place
Note 2: For the properties newly acquired in the 26th fiscal period (2018/4), appraisal values included in relevant appraisal report obtained at the time of acquisition are considered asappraisal values as of the end of the previous fiscal period in calculating change in appraisal value period over period
Note 3: Cap rates for subtotals and the entire portfolio are weighted averages based on appraisal values

44

KDO unitholders(as of the end of the 26th fiscal period (2018/4))
Changes in unit holding ratio by type of unitholders (Note)

Top 10 unitholders (Note)■Individuals andothers ■Financial
inst. (incl. securities cos.) ■Other
domestic cos. ■Foreigncos. and individuals
個人・その他
金融機関（含む証券会社）
その他国内法人
外国法人・外国個人

End
End
of
of 24th
24rd
第24期
fiscalfiscalperiod
period
（17/4期）末(2017/4)(2017/4)

3.7%

59.2%

End
End
of
of 25th
25th
第25期
fiscalfiscalperiod
period（17/10期）末(2017/10)(2017/10)

3.6%

62.7%

1.1%

32.7%

End
End
of
of 26th
26th
第26期
fiscalfiscalperiod
period
（18/4期）末(2018/4)(2018/4)

3.4%

63.0%

1.0%

32.7%

Number of unitholders(person)End of 24th
fiscal period(2017/4)

End of 25th
fiscal period(2017/10)

End of 26th
fiscal period(2018/4)

5,209

5,056

4,776

City / Trust Bank

11

10

11

Regional Bank

21

21

26

Credit Union andOthers36

44

46

Life / Nonlife,
Securities

20

23

25

Total

88

98

108

Other Domestic Cos.

100

104

94

Foreign Cos. and Individuals

243

252

257

Total

5,640

5,510

5,235

Individuals and Others

Financial Inst.
(Incl. Securities
Cos.)

Note: Ratios are rounded to the first decimal place# ofunits held
(unit)

Percentage
share

The Master Trust Bank of Japan, Ltd. (Trust Acct.)

79,985

19.8%

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

76,151

18.8%

Trust & Custody Services Bank, Ltd.
(Securities Investment Trust Acct.)

26,729

6.6%

The Nomura Trust and Banking Co., Ltd.
(Investment Trust Acct.)

23,187

5.7%

JP MORGAN CHASE BANK 385628

11,6102.9%State Street Bank and Trust Company 505012

7,942

2.0%

State Street Bank and Trust Company 505001

6,315

1.6%

Nomura Bank (Luxembourg) S.A.

5,285

1.3%

BARCLAYS CAPITAL SECURITIES LIMITED

5,150

1.3%

State Street Bank West Client – Treaty 505234

4,791

1.2%

247,145

61.0%

Name

36.0%

1.1%

Total

45

Historical changes in unit price
KDO unit price has continued to outperform TSE REIT Index
Historical changes in unit price (January 4, 2012 – June 8, 2018)(yen)
本投資法人投資口価格
KDO unit price

800,000
PO

Public offering

Nov. 2014

May 2018

POPO• FTSE EPRA/NAREIT
Global Real Estate Investors index

May 2014
Nov. 2013

600,000

Inclusion into indices

POPO

400,000

200,0000
2012/1• S&P Global Property Index/
S&P Global REIT Index
2012/7

2013/1

2013/7

2014/1

2014/7

2015/1

2015/7

2016/1

2016/72017/1

2017/7

2018/1Comparison between rebased unit price and TSE REIT Index (January 4, 2012 – June 8, 2018)
KDO unit price (rebasing January 4, 2012 = 100)
本投資法人投資口価格（2012年1月4日=100）
350

TSE REIT Index (rebasing January 4, 2012 = 100)
東証REIT指数（2012年1月4日=100）• TSE REIT Core Index

300(started on March 26, 2018)

250
200
150
100

50
2012/1

2012/7

2013/1 2013/7

2014/1 2014/7

2015/1 2015/7

2016/1

2016/72017/1 2017/7

2018/146

Appendix 3

Characteristics of KDO

47

Characteristics of mid-sized office building market
A wide selection of prime properties available
Expect to generate stable rent revenues given a broad tenant baseBusiness office by the number of employees
100 people(Tokyo)30-99

Office market by total floor area
(proportion of number of buildings) (Note 1)
5,000 tsubo or more
10.2%
3,000- less than
5,000 tsubo
6.8%

people5.6%500less than
1,000
tsubo
47.4%

or more2.3%

10-29
people17.0%
1-9 people
75.2%

1,000less than
3,000 tsubo
35.6%

Mid-sized
office buildings

Mid/small-sizedcompanies

83.0%

Note 1: The above data is the proportion of number of buildings
based on size. It covers rental office buildings located inTokyo central 5 wards that were surveyed by CBRE(as of the end of September 2016)
Source: Based on the survey CBRE conducted at the request of theAsset Management Company

92.2%# of office building transactions bytransaction price10.0 bn yen
or more19.6%

Less than
1.0 bn yen
19.4%

Source: Compiled by the Asset Management Company basedon "2014 Economic Census for Business Frame
Tokyo (revised results) (as of March 27, 2017)"

5.0-lessthan
10.0 bn yen
16.6%
1.0-lessthan
5.0 bn yen
44.4%

Mid-sized
office buildings (Note 2)

61.0%

Note 2: The transaction prices of mid-sized office buildings are generally around 1.0 bn yen to 10.0 bn yen
Source: Compiled by the Asset Management Company based on "the number of office building transactions by transaction
size (FY2008-FY2017)" from "Real Estate Transactions Study" by Urban Research Institute Corporation, a thinktank of Mizuho Trust & Banking Co., Ltd.

48

Tokyo 23 wards office stock by size and age
Approx. 80% of mid/small-sized office buildings are 20 years or older; new supply is limited
Proper repair/maintenance and management are important in order to keep mid/small-sized officebuildings competitive
300-less than 5,000 tsubo (total floor area)

5,000 tsubo or more (total floor area)
延床5,000坪以上（大規模ビル）

延床300坪以上5,000坪未満（中小規模ビル）(mid/small-sized office buildings)
Mid/small-sized

Large-sized70

Mid/small-sized:
5.94 mn tsubo
Average age:
30.7 years# of properties:
8,162

Large-sized:
6.68 mn tsubo
Average age:
23.0 years# of properties:
737

65
60
55
50

Office buildings withformer earthquake
resistance standards
1.55 mn tsubo (26%)
20 years or older
4.86 mn tsubo (82%)(large-sized buildings)

Age of property (year)

Office buildings withformer earthquake
resistance standards
1.22 mn tsubo (18%)

45
40
35

Large supply
during the
bubble period

20 years or older
3.34 mn tsubo (50%)

30

Large supply in 199425
20

Large supply in 2003
15

Less than 20 years
1.07 mn tsubo (18%)

Less than 20 years
3.33 mn tsubo (50%)

105Large supply in 20120

500,000

300,000

100,000

100,000

300,000

500,000(Tsubo)Source： Compiled by the Asset Management Company based on “Tokyo 23 Wards New Supply of Office Buildings & Office Pyramid 2018" published by XYMAX REAL ESTATE
INSTITUTE Corporation on December 7, 201749

Office building market
Rents for mid-sized office buildings are generally more stable than for large-sized office buildings
Change in asking rent and vacancy rate in Tokyo central 5 wards (Jan 2002 - May 2018) (Note 1)
(%)
10.0

Vacancy rate (left axis)
空室率（左軸）平均賃料（右軸）
Average asking rent (right axis)(yen/tsubo)
24,000

Max: 9.43%(2012/6)

Max: 22,901 yen/tsubo(2008/8)

8.0

22,00020,019 yen/tsubo

6.0

4.0

2.0

18,000

Min: 2.49%(2007/11)
2.68%
2002

2003

2004

2005

2006

2007

2008

20,000

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

99.4

99.6

97.0

97.4

16,000Note 1: Include office buildings with a standard floor area of 100 tsubo or more in Tokyo business districts (Chiyoda, Chuo, Minato, Shinjuku and Shibuya wards)
Source: Miki Shoji “Latest Office Building Markets in Tokyo (Central 5 wards)”

Comparison of occupancy rates of KDO office buildings and market average (Note 2) (Note 3)
(%)
100

97.0

97.4
96.0

95.7
95

96.5

96.3

96.2

97.3
95.3

95.9

95.4

95.3

91.5
93.2

90

92.2

93.4

92.4
91.2

91.2

91.1

91.2

90.8

Marketoccupancy rate
マーケット稼働率
本投資法人稼働率
KDO’s occupancy rate

85
80

95.3

91.3

95.9
94.4

97.2

98.1

97.2

95.5
94.7

94.9

95.8

96.4

96.6

KDX Iidabashi Square
Move-out of the tenant which
occupied the whole building

90.8

KDX Nihonbashi Kabutocho Bldg.
Move-out of the tenant which
occupied the whole buildingEndof 7th End
of 8th End
of 9th Endof 10th End
of 11th End
of 12th End
of 13th End
of 14th End
of 15th End
of 16th Endof 17th End
of 18th Endof 19th Endof 20th Endof 21st Endof 22nd Endof 23rd Endof 24th Endof 25th End
of 26th
第7期
第8期
第9期
第10期
第11期
第12期
第13期
第14期
第15期
第16期
第17期
第18期
第19期
第20期
第21期
第22期
第23期
第24期
第25期
第26期
fiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscal（08/10期）末（09/4期）末（09/10期）末（10/4期）末（10/10期）末（11/4期）末（11/10期）末（12/4期）末（12/10期）末（13/4期）末（13/10期）末（14/4期）末（14/10期）末（15/4期）末（15/10期）末（16/4期）末（16/10期）末（17/4期）末（17/10期）末（18/4期）末period(2008/10)

period(2009/4)

period(2009/10)

period(2010/4)

period(2010/10)

period(2011/4)

period(2011/10)

period(2012/4)

period(2012/10)

period(2013/4)

period(2013/10)

period(2014/4)

period(2014/10)

period(2015/4)

period(2015/10)

period(2016/4)

period(2016/10)

period(2017/4)

period(2017/10)

period(2018/4)

Note 2: Market occupancy rate refers to the average values of Tokyo central 5 wards for each corresponding month published by Miki Shoji
Note 3: KDO's average occupancy rate refers to the weighted average occupancy rate of the office buildings in Tokyo central 5 wards that KDO owns as of the end of each fiscal period

50Characteristics of KDO office buildings(as of the end of the 26th fiscal period (2018/4))
By acquisition price(based on acquisition price, office buildings)
10.0 bn yen
or more(65.5 bn yen)
16.6%

7.5-less than
10.0 bn yen(51.5 bn yen)
13.1%

5.0-less than
7.5 bn yen(79.2 bn yen)
20.1%

By distance from the nearest station on foot(based on acquisition price, office buildings)

6 mins or more
(14 properties)
66.1 bn yen
16.8%
5 mins(6 properties)
18.8 bn yen
4.8%

Less than
2.5 bn yen(66.5 bn yen)
16.9%

Average
4.1 bn yen/property
2.5-less than
5.0 bn yen(131.6 bn yen)
33.4%

4 mins(15 properties)
61.0 bn yen
15.5%

83.2%
locatedwithin
5 minutes
on foot

Percentage share of our properties that comply withnew earthquake resistance standard (Note 1) (Note 2)

1 min(21 properties)
94.7 bn yen
24.0%

2 mins(18 properties)
56.5 bn yen
14.3%

3 mins(21 properties)
97.1 bn yen
24.6%

Equivalent to new earthquake resistance standard

3 properties (3.9%)

Portfolio
PML
2.27%

Implemented earthquake-resistance reinforcement:
KDX Hakata-Minami Building, KDX Akihabara Building
Evaluated as a property complying with equivalent standard of the newearthquake resistance standard:
KDX Nihonbashi 313 Building(Note 3)New earthquake resistance standard

93 properties (96.1%)
Note 1: "New Earthquake Resistance Standard" was formulated based on the revision of enforcement order of Building Standard Law in 1981 (cabinet order No. 144 on April 24, 1981). The anti-seismic
performance of buildings has been greatly improved since the enforcement of the law due to the newly added provisions including the followings: New provision on tie-hoop ratio of ReinforcedConcrete Pillars (0.2% or more); Resetting of horizontal seismic coefficient to elastic shear modulus; New requirement on the secondary design in seismic calculation
Note 2: Percentage share is calculated based on leasable area as of the end of the 26th fiscal period (2018/4). For the properties owned through quasi co-ownership interest, leasable area for such
portion is used in calculation
Note 3: PML value is as of April 2018 and is based on the research implemented by Sompo Risk Management & Health Care Inc. PML value is probable maximum loss ratio due to an earthquake. PML
value can be divided into ratios of an individual property and the entire portfolio, respectively. Although there is no unified definition of PML value, we define PML value here as ratio of loss
occurred in case of the severest earthquake (e.g. severe earthquake that happens only once in 475 years = severe earthquake of which the probability of happening in 50 years is 10%) that51
could happen during the lifespan of a property (50 years = expected lifetime of general property), to replacement value of estimated restoration expenses

Overview of the 7th CS survey results (Aug. 2017)High intention for continuous occupancy even at aged buildings
Competitiveness dependent on timely equipment upgrade and renovation
CS survey overview

Intention for continuous occupancy (Note)• Together with J.D. Power Asia Pacific, we continuously implement CS survey
on hardware (e.g. facility and equipment) and software (e.g. response totenants) for existing tenants in office buildings (persons in charge of generalaffairs and employees) on a biennial basis
6th survey
7th survey
Aug. 2015 (21st fiscal period) Aug. 2017 (25th fiscal period)

Timing# of properties

85 properties

89 properties# of distributions

Person in charge: 884
Employee: 4,736

Person in charge: 973
Employee: 5,052

Collection rate

Person in charge: 82%
Employee: 78%

Person in charge: 81%
Employee: 81%

7th CS survey results: reasons for satisfaction (Note)• The ratio of tenants with intention for continuous occupancy increased by 5% fromthe previous survey 今後も入居し続けたい
Definitely want to stay
Rather would stay
まあ今後も入居し続けたい
Rather not stay
Do not want to stay
あまり入居し続けたくない
入居し続けたくない
N/A
不明
2015年調査2015 survey
（第6回）
(6th)
723
(723件)
2017年調査2017
survey
（第7回）
(7th)
790
(790件)

55%

36%

6% 2%
1%

61%

35%

4%

96% of tenants showed intention
for continuous occupancy

Intention for continuous occupancy by building age (Note)• Confirmed high intention for continuous occupancy regardless of building age

Cleaning staff
Property
5%
manager
6%

Office(Space, window /daylighting, airconditioning, etc.)
20%

Renovation
11%

Security, disasterprevention scheme
12%

Building
maintenancemanager17%

築15年未満Less than
15 years15-less than
20 years
築20年未満Hardware49%
Software51%

Exterior,
entrance
12%

Restroom
9%
Other
Elevator Common areas
3%
5%

Note: Result on survey that interviewed persons in charge of general affairs

50%

56%

40%

10%

44%

築25年未満20-less than
25 years

64%

34%

2%

築25年以上25 yearsor more

63%

33%

3%
1%

Properties with大規模completedlarge-scale renovation
works
リニューアル済

62%34%

96% of tenants showed intention forcontinuous occupancy at properties withcompleted large-scale renovation works

4%52Property sourcing and acquisition methods
Acquisition track record supported by our property sourcing network using multiple pipelines
Surely capture a wide variety of acquisition opportunities through our diversified acquisition methods
Multiple pipelines
Support-line(Kenedix, Inc., the sponsor)••

Brokerage
The sponsor’s principal investment (incl. development
projects)•

Unique network of
the Asset Management Company

The sponsor’s private funds

•
•
•
•

Real estate funds
Financial institutions
Construction companies / Developers
Corporate sector

Diversified acquisition methods
Joint acquisition with
Kenedix group

Utilizing bridge funds

Brokerage by sponsor

Mitsubishijuko Yokohama Bldg.
(quasi co-ownership interest)

KDX Mita Bldg.

JN Bldg.

Percentage share ofproperties acquired from
related parties (Note)

46.2%

Acquisition throughcorporate acquisition

KDX Shin-Nihonbashi
Ekimae Bldg.

Strategic mutualtransaction with
developers

KDX Toranomon
1chome Bldg.

Percentage share ofproperties acquired fromthird parties (Note)

EquityInvestment

KDX
Nishi-Shinbashi
Bldg.

Senri Life Science
Center Bldg.

53.8%

Note: Percentage share of properties is calculated by the sum of acquisition price for each acquisition source divided by the total acquisition price for the properties which KDO owns asof the end of the 26th fiscal period (2018/4). Figures are rounded to the first decimal place

53

Management structure of KFM
KFM’s decision-making process
Proposal

Preview

Each Divisionof eachREIT / Fund
Department

Compliance
Officer(Common)Constituent members of decision making bodyCompliance
Committee
President & CEO●

Compliance Officer●

Director (full-time)●

AM Committee(Office REIT
Department)

ReportCompliance
Committee(Common)Asset Management
Committee(each REIT / Fund
Department)

Board of Directors(Common)Rules on transactions with related parties
Asset acquisition

Must not acquire properties for more than appraisal value(except for the case of warehousing)

Asset disposal

Must not sell properties for less than appraisal value by real estate appraiser

Asset management fee structure●

Head of Asset Investment Div.,
Office REIT Dept.
Head of Asset Management Div.,
Office REIT Dept.
Head of Planning Div.,
Office REIT Dept.
Head of Finance & Accounting
Dept.

●

External member (real estateappraiser) (Note 1)

Deliberation and
Resolution●

Head of Office REIT Dept.

External member (lawyer)

Deliberation and
Resolution

●
●
●
●
●

• KDO changes management fees I, II and III of its Articles of Incorporation to introduce a new
asset management fee structure to further enhance the linkage with unitholder profits from the27th fiscal period (2018/10)
Management fee I

Total assets×0.13%

Management fee II

Distributions per unit each fiscal period (Note 2) ×23,000

Management fee III

Increase in distributions per unit (Note 3) ×Number of outstanding investment
units×10%

Acquisition fee

0.5% of acquisition price (0.25% for related party transaction)

Disposition fee

Capped at 0.5% of disposition priceNote 1: Certain proposals such as borrowings do not require attendance of the external member
Note 2: Calculated by dividing the pre-tax income before deducting Asset Management Fees II and III by the number of outstanding investment units as of the end of the relevant fiscal period. In casethere is a loss carried forward, the loss is deducted from the pre-tax income
Note 3: Obtained by subtracting simple average of DPU for the most recent four fiscal periods from DPU. If the amount subtracted does not exceed zero, the Asset Management Fee III shall be zero54

Our sponsor
Total AUM of 2,046 billion yen, with more than about 13 years in J-REIT management experience
One of the major independent real estate investment companies in Japan, managing multiple J-REITs

Fund management by Kenedix Group (as of the end of March 2018)
Private REIT

Mid-sized officebuildings,
etc.

Residential &healthcare
properties &
accommodation

Retail properties& retail
distribution
centers

Large-sized officebuildings &accommodation

407.2 bn yen

193.1 bn yen

206.1 bn yen

102.5 bn yen

Private fund

Variousasset types
583.7 bn yen

J-REIT(sub sponsor)

2,046.0

Total
bn yen(as of the end of March 2018)
Oversea REIT
1.8%
(35.8 bn yen)

Variousasset types
517.3 bn yen

4

J-REIT (main sponsor) 806.5 bn yen

Kenedix Group's assets under management

Privatefund / REIT
29.9%
(611.2 bn yen)

(Note 1)

Kenedix Office
Investment
Corporation

Kenedix Residential
Next Investment
Corporation

Kenedix Retail
REIT Corporation

Listed in 2005/7

Listed in 2012/4

Listed in 2015/2

Kenedix
PrivateInvestment
Corporation

Variousprivatefunds

Japan Logistics
Fund, Inc.

Asset under management (Note 2)
J-REIT(main sponsor)
J-REIT（メインスポンサー）
Privatefund
私募ファンド

2,000
20,00016,0001,600

100% owned by
Kenedix, Inc

Kenedix, Inc.
(advisory)
Kenedix Real
Estate FundManagement, Inc.
(discretionary)

J-REIT
64.7%(1,323.8 bn yen)

Premier
Investment
Corporation(bn yen)Kenedix Real Estate Fund Management, Inc.

Consolidated real estate
3.7%(75.0 bn yen)

The Asset
Management
Company ofeach REIT
partially owned
by Kenedix, Inc.

16,443

17,0302015年
The
end of
Dec.
2015
12月末

2016年
The
end of
Dec.
2016
12月末

20,033

20,4602017年
The
end of
Dec.
2017
12月末

2018年
The
end of
Mar.
2018
3月末

14,806

12,000
1,200
8,000
800
4,000
400
0

Note 1: Include Kendedix Group’s consolidated real estate of 75.0 billion yen and exclude an oversea REIT of 35.8 billion yen
Note 2: Calculated by including Private fund in J-REIT (main sponsor) and Oversea REIT in J-REIT (sub sponsor)

J-REIT(sub sponsor)
J-REIT（サブスポンサー）
Consolidated
real estate
連結対象不動産

2014年
The
end of
Dec.
2014
12月末

55

Allocation rule for property information in the KDX Groupand management guidelines
Kenedix Group's fund management structure

Overview of preferential study rights for property information• For mid-sized office buildings (Note 1), KDO’s main investment targets, KDO will havethe first opportunity to consider property acquisition among the other REITs andprivate funds managed by KFM if the following conditions are satisfied:

Kenedix, Inc.

Private funds
Location

Total floor area per building (m2)Tokyo 23 wards

2,000 or more, 13,000 or lessOutside Tokyo 23 wards

3,000 or more, 20,000 or less(primarily, advisory)

Support-line

100% owned by
Kenedix, Inc.

OfficeREIT Dept.

Residential
REIT Dept.

RetailREIT Dept.

PrivateREIT Dept.

PrivateFund Dept.

Kenedix Office
Investment
Corp.

Kenedix
Residential
Next
Investment
Corp.

Kenedix Retail
REIT Corp.

Kenedix
PrivateInvestment
Corp.

Private funds

Mid-sized
officebuildings

1st

-

-

2nd

3rd

Other officebuildings

2nd

-

-

1st

3rd

-

1st

-

2nd

3rd

3rd

-

1st / 2nd

2nd / 1st

4th

-

-

1st

-

2nd

Kenedix Real Estate Fund Management, Inc.
Kenedix Office
Investment Corp.
(KDO)

Kenedix
Residential Next
Investment Corp.
(KDR)

Kenedix Retail
REIT Corp.
(KRR)

Kenedix Private
Investment Corp.
(KPI)

Private funds(discretionary)

KDO management guidelines (revised on December 1, 2017)
Targeting portfolio

Officebuildings

Of office buildings, rental office buildings whose main use
under the Building Standards Act is office and whose total floorarea (Note 1) of the entire building fulfills the following:・Tokyo 23 wards: Total floor area 13,000 m2 or less・Outside Tokyo 23 wards: Total floor area 20,000 m2 or lessTargetinvestment ratio

80%～100%(Note 2)Central urban
retailproperties

Of office buildings, those that do not fall under the category of
the above
Central urban
retail properties

OthersRetail properties with high tenant substitutability located inhighly bustling districts (Note 2)

Residential
properties(Note 3)0%～20%

Land with third-party leasehold (limited proprietary right ofland) or buildings with floor area whose use under the BuildingStandards Act is not subject to investment (Note 3) that are notoffice buildings or central urban retail properties

Note 1: Total floor area of the entire building stated in the certificate of all registered matters
Note 2: Tokyo central 5 wards (Chiyoda-ku, Chuo-ku, Minato-ku, Shinjuku-ku and Shibuya-ku) or central
parts of government-designated cities
Note 3: Residential properties, logistics and warehouse facilities, amusement parks, medical, nursing andhealth care-related facilities and golf courses

Logistics
facilities

Note 1: Office building refers to a property or an asset backed by that in which office use
weighs the largest share of total floor area based on floor area use in accordancewith the Building Standards Law
Note 2: Specifically for residential properties with total floor area below 20,000 m 2 for Tokyo
23 wards and below 30,000 m 2 for outside of Tokyo 23 wards
Note 3: Retail property is categorized as "retail property" if retail stores occupy the largest
floor area and as "service property" if service stores occupy the largest floor area.
KRR and KPI have the first and second preferential study rights, respectively, in“retail property". KPI and KRR have the first and second preferential study rights,
respectively, in “service property"56

Organization chart (as of June 18, 2018)
Organization chart

Office REIT Department: Key members• Worked for Mitsubishi Corporation for approx. 26 years• Appointed President & CEO of Kennedy-Wilson Japan inOct. 1996• Appointed adviser of Kenedix, Inc. in Mar. 2013 after servingas President & CEO, Chairman, Representative Director,
and Chairman of Board of Directors in Kenedix, Inc.
• Appointed President & CEO, Kenedix Real Estate FundManagement, Inc. in Oct. 2013
• Appointed Chairman, Representative Director in Mar. 2017

Shareholders' Meeting
Corporate Auditors

Ryosuke Homma
Chairman,
Representative Director

Jiro Takeda
Director & COO,
Head of
Office REIT Dept.

Board of Directors• Worked for Sumitomo Mitsui Trust Bank, Limited
for approx. 12 years• Joined Kenedix REIT Management and served as
Head of the Financial Planning Department for
approx. 7 years after working for Sumitomo Life
Insurance Company• Appointed President & CEO, Kenedix Real Estate
Fund Management, Inc. in Mar. 2017 after serving
as Director & CFO, Head of the Corporate
Planning Department of Kenedix, Inc., etc.

Masahiko Tajima
President & CEO

Chairman,
Representative Director

Compliance Committee

Compliance Officer /Compliance Dept.

Internal Audit Dept.

PrivateREIT Dept.

Head of
Office REIT Dept.
(Director & COO)

Headof Residential
REIT Dept.

Headof Retail REIT
Dept.

Head
of Private
REIT Dept.

(Director & COO)

(Director & COO)

(Director & COO)

Asset Management
Committee of Office REIT Dept.

AssetManagement Div.
Planning Div.

PrivateFund Dept.

Headof Private
Fund Dept.

Business
Administration Dept.

RetailREIT Dept.

Finance &Accounting Dept.

Office REIT Dept.

Residential
REIT Dept.

Asset
Investment Div.

Hiroshi Sato
Head ofAsset Investment Div.,
Office REIT Dept.

President & CEO

Chisei KajiHead ofAsset Management Div.,
Office REIT Dept.

Hiroaki Momoi
Head ofPlanning Div.,
Office REIT Dept.

• Worked for Sumitomo Mitsui Trust Bank, Limited forapprox. 7 years• Joined Kenedix as Head of Fund Management Div. 1
and served for approx. 3 years after working for Sanko
Estate Co., Ltd., GMAC Commercial Mortgage Japan,
K.K. and Hudson Japan, K.K.
• Appointed Head of Planning Div., Office REIT Dept.,
Kenedix Real Estate Fund Management, Inc. on Mar.
29, 2017• Appointed Director & COO, Head of Office REIT Dept.
on Apr. 1, 2018
• Worked for Sumitomo Mitsui Trust Bank, Limited forapprox. 12 years• Joined Kenedix, Inc. in Feb. 2007
• Appointed Head of Private Fund Dept. and Head ofInvestment Management Div., Private Fund Dept.,
Kenedix Real Estate Fund Management, Inc. in Oct.
2013
• Appointed Head of Asset Investment Div., Office
REIT Dept. on Mar. 1, 2018

• Worked for Mitsui Fudosan Building Management for
approx. 9 years (Sales Division and others)• Joined Kenedix, Inc. after having engaged in asset
management for approx. 10 years at Tokyo Realty
Investment Management, Inc.
• Appointed Head of Asset Management Div., Office
REIT Dept., Kenedix Real Estate Fund Management,
Inc. on Mar. 1, 2016 after having worked in
Investment Management Div. Office REIT Dept. forapprox. 1 year
• Worked for Nippon Life Insurance Company, Real
Estate Division for approx. 9 years• Joined Kenedix, Inc. in Aug. 2014 after working for
Secured Capital Japan Co., Ltd.
• Appointed Head of Planning Div., Office REIT Dept.,
Kenedix Real Estate Fund Management, Inc. on Apr.
1, 2018 after having worked in Planning Div., Office
REIT Dept. and Finance & Accounting Dept. forapprox. 3 and a half years• Worked for Sumitomo Mitsui Trust Bank, Limited forapprox. 15 years (Engaged in real estate finance,etc.)• Joined Kenedix, Inc. after having engaged in realestate investment banking and having served as
director responsible for asset management businessat Touchstone Capital Securities Co., Ltd.
• Appointed Head of Finance & Accounting Dept.,
Tetsushi Ichikawa
Kenedix Real Estate Fund Management, Inc. on Oct.
Head of1, 2013 after serving as Head of Finance Group for
Finance & Accounting Dept.,
Business Administration Dept. Kenedix Residential Partners, Inc.
• Appointed Head of Business Administration Dept. on
Apr. 1, 2015 (concurrent)

57

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 prior notice of any kind. This document
contains forward-looking statements and anticipations of future results, based on current assumptions and beliefs in light ofcurrently available information and resources. Risks and uncertainties, both known and unknown, including those relating to the
future performance of the real estate market in Japan, interest rate fluctuations, competitive scenarios, and changing
regulations or taxation, may cause Kenedix Office Investment Corporation (KDO)'s actual results, performance, achievements
and financial performance to be materially different from those explicitly or implicitly expressed in this document.

With respect to any and all terms herein, including without limitation, this document, the information provided is intended to bethorough. However, no assurance or warranties are given with respect to the accuracy or completeness thereof.
Neither KDO nor Kenedix Real Estate Fund Management, Inc. (KFM) shall be liable for any errors, inaccuracies, loss ordamage, or for any actions taken in reliance thereon, or undertake any obligation to publicly update the information contained inthis document after the date of this document.
Revised editions of this document will be posted on our website (http://www.kdo-reit.com/en/) if there should be majorcorrections going forward.

58

59