19 │ Kenedix Realty Investment Corporation

BALANCE SHEETSAS OF OCTOBER 31, 2009 AND APRIL 30, 2009

In thousands of yen
As of October 31, 2009

As of April 30, 2009ASSETS
Current assets:
Cash and bank deposits¥

12,870,430¥

15,608,085

Rental receivables

184,068

Consumption tax refundable

136,065-

Other current assets

99,29673,324

13,289,859

15,941,977

Land

152,327,017

153,829,839

Buildings and structures

76,930,254

74,328,940

Machinery and equipment

1,228,084

901,145

Total current assets

260,568

Property and equipment, at cost:Tools, furniture and ﬁxtures

327,711

379,847(8,650,220)(7,543,943)

222,162,846

221,895,828

Ground leasehold

285,350

285,350

Organization costs

5,090

10,179Corporate bond issuance costs

39,64745,525

Unit issuance costs

23,68447,368Other assets

513,945

518,783

Less-accumulated depreciation
Net property and equipment
Other assets:

Total assets¥

236,320,421¥

469,905¥

238,745,010

LIABILITIES AND UNITHOLDERS' EQUITY
Liabilities
Current liabilities:
Trade and other payables¥

Short-term debt

24,500,000

Deposits received
Rents received in advance
Other current liabilities

614,834
19,000,000

15,10568,644

1,133,738

1,173,618

171,408

416,183

26,290,156

21,273,279

Corporate bonds

12,000,000

12,000,000

Long-term debt

60,720,000

67,750,000

Leasehold and security deposits received

10,228,542

10,306,968

Total current liabilities

Other liabilities
Total liabilities

14,554

16,665¥109,253,252¥

111,346,912¥

124,973,750¥

124,973,750

Unitholders' equity
Unitholders' capital
Units authorized: 2,000,000units
Units issued and outstanding: 200,000units
As of October31, 2009 and April 30, 2009, respectively
Retained earnings
Unrealized gain from deferred hedge transactions

2,102,249(8,830)Total unitholders' equity
Total liabilities and unitholders' equity

2,434,458(10,110)127,067,169¥

236,320,421

127,398,098¥

238,745,010

See accompanying notes to the ﬁnancial statements

Kenedix Realty Investment Corporation │ 20

STATEMENTS OF INCOME AND RETAINED EARNINGSFOR THE PERIOD FROM NOVEMBER 1, 2008 TO APRIL 30, 2009, AND THE PERIOD FROM MAY 1, 2009 TO OCTOBER 31, 2009

In thousands of yen
From May 1, 2009
to October 31, 2009

From November 1, 2008
to April 30, 2009

Operating Revenues:
Rental revenues¥

Total operating revenues

7,921,862¥

8,204,122

7,921,862

8,204,122

Property-related expenses

3,652,105

3,603,207

Loss on sale of real estate

440,771492,463

Asset management fees

423,183

434,811Administrative service and custodian fees

76,72778,432Other operating expenses

115,723

132,023

4,708,509

4,740,936

Operating Expenses:

Total operating expenses
Operating income¥

3,213,353¥

3,463,186¥

907,825¥

858,419

Non-Operating Expenses:
Interest expense
Financing related expense

147,899

107,828

Amortization of organization costs

5,090

5,089

Amortization of unit issuance costs

23,684

41,469Amortization of corporate bond issuance costs

5,878

5,782

Others, net

19,7299,270

2,103,248

2,435,329

1,057

970

2,102,191

2,434,359

58

99

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

21 │ Kenedix Realty Investment Corporation¥

2,102,249¥

2,434,458

STATEMENTS OF CHANGES IN UNITHOLDERS’ EQUITY
FOR THE PERIOD FROM NOVEMBER 1, 2008 TO APRIL 30, 2009 AND THE PERIOD FROM MAY 1, 2009 TO OCTOBER 31, 2009

In thousands of yen
Unitholders' Equity

Unitholders'
capitalBalance as of October 31, 2008¥

124,973,750

Retainedearnings¥

3,123,699

Unrealized gainfrom deferred hedgetransactions¥(9,872)

Total¥

128,087,577

Changes during the ﬁscal period
New unit issuance

-

-

-

-

Payment of dividends-(3,123,600)-(3,123,600)

Net income-

2,434,359-

2,434,359

Interest-rate swap

-

-

(238)

(238)

-

(689,241)(238)(689,479)

Total changes
during the ﬁscal period
Balance as of April 30, 2009¥

124,973,750¥

2,434,458¥(10,110)¥

127,398,098

Changes during the ﬁscal period
New unit issuance

-

-

-

-

Payment of dividends-(2,434,400)-(2,434,400)

Net income-

2,102,191-

2,102,191

Interest-rate swap

-

-

1,280

1,280

-

(332,209)

1,280(330,929)

Total changes
during the ﬁscal period
Balance as of October 31, 2009¥

124,973,750¥

2,102,249¥(8,830)¥127,067,169

See accompanying notes to the ﬁnancial statements

Kenedix Realty Investment Corporation │ 22

NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM NOVEMBER 1, 2008 TO APRIL 30, 2009, AND THE PERIOD FROM MAY 1, 2009 TO OCTOBER 31, 2009

1. ORGANIZATION AND BASIS OF PRESENTATIONORGANIZATION
Kenedix Realty Investment Corporation ("the Investment Corporation") was established on May 6, 2005, under the Law
concerning Investment Trusts and Investment Corporations of Japan ("the Investment Trust Law"). On July 21, 2005, theInvestment Corporation was listed on the Real Estate Investment Trust Market of the Tokyo Stock Exchange with a total of 75,400
investment units issued and outstanding. (Securities Code: 8972). Subsequently, the Investment Corporation raised funds throughpublic offerings including two global offerings. Consequently, as of October 31, 2009, the end of the ninth fiscal period, the numberof investment units issued and outstanding totaled 200,000 units.
The Investment Corporation is externally managed by Kenedix REIT Management, Inc. ("the Asset Management Company")
as its asset management company. In concert with the Asset Management Company, the Investment Corporation strives tomaximize cash distribution to investors by securing stable earnings and sustainable investment growth. To this end, the Investment
Corporation adopts a dynamic and flexible investment stance that accurately reflects its environment and market trends, andendeavors to ensure a timely response to each and every opportunity. The Investment Corporation endeavors to develop adiversified investment portfolio named "KENEDIX Selection," adopting a three-point investment criteria based on property type,area and size.
During the period ended October 31, 2009, the Investment Corporation sold 2 properties and acquired 1 property. At October 31,
2009, the Investment Corporation had total unitholders' capital of ¥124,974 million with 200,000 investment units outstanding.
The Investment Corporation owned a portfolio of 65 properties with total acquisition price of ¥220,159 million containing total
leasable area of 254,225m2. The occupancy ratio was approximately 94.7%. A portfolio of 65 properties consists of 58 officebuildings, 5 residential properties and 2 central urban retail properties. 55 properties are located in the Tokyo metropolitan areaand 10 properties are located in other regional areas.

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

23 │ Kenedix Realty Investment Corporation

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESA PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation of property and equipment is calculated on a straight-line basis over theestimated useful lives of the assets ranging as stated below:
From May 1, 2009 to October 31, 2009

From November 1, 2008 to April 30, 2009

Buildings and structures

2-49 years

2-49 years

Machinery and equipment

3-17 years

3-17 years

Tools, furniture and ﬁxtures

3-20years

3-20 years

B ORGANIZATION COSTS
Organization costs are amortized over a period of five years, comprised of ten fiscal periods, with an equal amount amortized ineach fiscal period.

C UNIT ISSUANCE COSTS
Unit issuance costs are amortized over a period of three years under the straight-line method.

D CORPORATE BOND ISSUANCE COSTS
Corporate bond issuance costs are amortized over a loan period under the straight-line method.

E ACCOUNTING TREATMENT OF TRUST BENEFICIARY INTERESTS IN REAL ESTATE
For trust beneficiary interests in real estate, which are commonly utilized in the ownership of commercial properties in Japan, allassets and liabilities within trust are recorded in the relevant balance sheet and income statement accounts.

F REVENUE RECOGNITION
Operating revenues consist of rental revenues including base rents and common area charges, and other operating revenues
including utility charge reimbursements, parking space rental revenues and other miscellaneous revenues. Rental revenues are
generally recognized on an accrual basis over the life of each lease. Utility charge reimbursements are recognized when earned andtheir amounts can be reasonably estimated. Reimbursements from tenants including utility charge reimbursements are recorded
on a gross basis and such amounts are recorded both as revenue and expense during the fiscal period, respectively.

G TAXES ON PROPERTY AND EQUIPMENT
Property-related taxes including property taxes, city planning taxes and depreciable property taxes are imposed on properties
on a calendar year basis. Under the Japanese tax rule, the seller of the property at the time of disposal is liable for these taxes on
the property from the date of disposal to the end of the calendar year in which the property is disposed. The seller, however, isreimbursed by the purchaser for these accrued property-related tax liabilities.
When the Investment Corporation purchases properties, it typically allocates the portion of the property-related taxes related
to the period following the purchase date of each property through the end of the calendar year. The amounts of those allocatedportions of the property-related taxes are capitalized as part of the acquisition costs of the related properties. In subsequentcalendar years, such property-related taxes are charged as operating expenses in the fiscal period in which the installments of suchtaxes are paid to the relevant tax authorities.

H INCOME TAXES
Deferred tax assets and liabilities are computed based on the difference between the financial statements and income tax bases ofassets and liabilities using the statutory tax rates.

Kenedix Realty Investment Corporation │ 24

NOTES TO FINANCIAL STATEMENTS

I DERIVATIVE FINANCIAL INSTRUMENTS
The Investment Corporation utilizes interest-rate swap agreements as derivative financial instruments only for the purpose ofhedging its exposure to changes in interest rates. The Investment Corporation deferred recognition of gains or losses resulting fromchanges in fair value of interest-rate swap agreements because its interest-rate swap agreements met the criteria for deferral hedging
accounting. But, the Investment Corporation adopted special treatment for interest-swap agreements if its interest-rate swap
agreements met the criteria for hedging accounting under this treatment, the net amount to be paid or received under the interest
rate swap contract is added to or deducted from the interest on the assets or liabilities for which the swap contract was executed.

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

3. SCHEDULE OF PROPERTY
In millions of yen
As of October 31, 2009
Acquisition
costs
Land

¥

Accumulated
depreciation

Buildings and structures

76,930Machinery and equipment
Tools, furniture and ﬁxtures
Total

-

152,327

Book value¥

152,327¥

68,73974,329

1,228

341

887

328

118

210
222,163¥ 229,440

¥

8,650

¥

Accumulated
depreciation

153,830

8,191¥ 230,813¥

As of April 30, 2009
Acquisition
costs

¥

Book value¥

153,830

7,133

67,196

901

290

611

380

121

259

7,544

¥ 221,896¥

4. SHORT-TERM AND LONG-TERM DEBTS
The following summarizes short-term and long term debt outstanding as of October 31, 2009:Classiﬁcation

Short-term debt

Current portion of long-term debt

Subtotal

25 │ Kenedix Realty Investment Corporation

Drawdown date

Repayment date

Weighted-averageinterest rate

Balance(In millions of yen)

November 4, 2008

November 2, 2009

0.94%

December 8, 2008

December 8, 2009

1.29%

¥

1,000
500
1,000

January 13, 2009

January 13, 2010

1.29%

February 27, 2009

February 26, 2010

0.99%

500

April 30, 2009

April 30, 2010

1.89%

2,000

October 26, 2009

October 26, 2010

1.84%

1,500

October 30, 2009

October 30, 2010

1.84%

3,500

April 2, 2007

April 2, 2010

1.57%

2,000

July 31, 2008

January 31, 2010

1.68%

2,500

August 1, 2005

July 31 ,2010

1.29%

9,500

October 31, 2008

October 31, 2010

1.57%

500
¥

24,500Classiﬁcation

Long-term debt

Drawdown date

Repayment date

Weighted-averageinterest rate

May 1, 2006

April 30, 20112.20%

May 1, 2006

April 30, 2016

2.73%

5,000

July 14, 2006

July 13, 2011

2.15%

1,000

September 1, 2006

August 31, 2013

2.12%

3,000

December 1, 2006

November 30, 2011

1.96%

2,500

April 2, 2007

April 2, 2012

1.88%

2,000

Subtotal
Total

¥

2,500

April 17, 2007

April 16, 2011

1.65%

1,500

January 10, 2008

January 10, 2012

1.50%

2,500

February 29, 2008

February 28, 2011

1.37%

2,000

February 29, 2008

August 31, 2011

1.43%

1,500

March 31, 2008

September 30, 2011

1.61%

3,000

March 31, 2008

September 30, 2011

1.56%

2,000

May 1, 2008

November 1, 2011

1.91%

1,000

June 30, 2008

February 28, 2011

1.99%

1,000

June 30, 2008

June 30, 2012

2.15%

1,500

June 30, 2008

December 28, 2012

2.26%

3,000

July 15, 2008

March 31, 2011

1.87%

2,000

July 31, 2008

January 31, 2011

1.87%

3,500

July 31, 2008

July 31, 2011

1.99%

3,500

September 1, 2008

September 1, 2011

1.78%

1,000

September 22, 2008

March 22, 2011

1.71%

1,250

September 30, 2008

March 31, 2011

1.82%

2,000

February 27, 2009

February 29, 2012

2.07%

490

February 27, 2009

August 31, 2012

2.04%

980

April 30, 2009

April 28, 2011

2.23%

1,500

April 30, 2009

April 28, 2011

2.23%

1,000

April 30, 2009

October 31, 2011

2.46%

3,500

April 30, 2009

April 27, 2012

2.46%

2,000

October 26, 2009

October 26, 2013

2.42%

1,000

October 30, 2009

October 30, 2013

2.45%

Subtotal
Corporate bonds

Balance(In millions of yen)

2,000
¥

March 15, 2007

March 15, 2012

1.74%

March 15, 2007

March 15, 2017

2.37%

¥

60,720
9,000
3,000

¥

12,000¥97,2205. LINE OF CREDIT
The Investment Corporation established the credit commitment lines with two lenders. The total borrowings under thecommitment line agreements are ¥3.5 billion. The Investment Corporation had outstanding balance of ¥5 billion as of October 31,
2009.
The commitment period of the commitment line agreement concluded with The Bank of Tokyo-Mitsubishi UFJ, Ltd. has already
expired. Furthermore, the expiration date of the commitment line agreement is March 31, 2011, set in the memorandum of
understanding executed on September 26, 2008. However, since the commitment period has already expired, the Investment
Corporation may not undertake new borrowings.
Since, the commitment period and the expiration date of the commitment line agreement concluded with Citibank Japan, Ltd has
already expired, the Investment Corporation may not undertake new borrowings.

Kenedix Realty Investment Corporation │ 26

NOTES TO FINANCIAL STATEMENTS

6. ASSETS PLEDGED AS COLLATERAL AND SECURED LOANS PAYABLE(As of October 31, 2009)

Assets pledged as collateralIn thousands of yen

Cash and bank deposits¥

4,815,094

Land¥

105,959,738

Buildings and structures¥

49,150,846

Machinery and equipment¥

555,870

Tools, furniture and ﬁxtures¥

125,800

Other assets

¥

1,264

Total

¥

160,608,612

Secured loans payable
Short-term loans debt¥

24,500,000

Long-term loans debt¥

60,720,000

Total

¥

85,220,000

7. PER UNIT INFORMATIONThe net asset value per unit as of October 31, 2009 and April 30, 2009 was ¥635,335 and ¥636,990. Net income per unit as of October 31, 2009
and April 30, 2009 was ¥10,510 and ¥12,171.
The weighted average number of units outstanding of 200,000 and 200,000 was used for the computation of the amount of net income per unit asof October 31, 2009 and. April 30, 2009.

8. INCOME TAXESThe Investment Corporation is subject to corporate income taxes at a regular statutory rate of approximately 40%. However, theInvestment Corporation may deduct from its taxable income amounts distributed to its unitholders, provided the requirements
are met under the Special Taxation Measure Law of Japan. Under this law, the Investment Corporation must meet a number oftax requirements, including a requirement it currently distribute in excess of 90% of its net income for the fiscal period in order tobe able to deduct such amounts. If the Investment Corporation does not satisfy all of the requirements, the entire taxable incomeof the Investment Corporation will be subject to regular corporate income taxes. Since the Investment Corporation distributed
approximately 100% of its distributable income in the form of cash distributions totaling ¥2,102 million and ¥2,434 million for theperiods ended October 31, 2009 and April 30, 2009. Such distributions were treated as deductible distributions for purposes ofcorporate income taxes. The effective tax rate on the Investment Corporation's income was 0.05% and 0.04% for the periods ended
October 31, 2009 and April 30, 2009. The following summarizes the significant difference between the statutory tax rate and theeffective tax rate:

Statutory tax rate ..............................................................................
Deductible cash distributions ......................................................
Other .......................................................................................................
Eﬀective tax rate ................................................................................

From May 1, 2009
to October 31, 200939.33%

From November 1, 2008
to April 30, 200939.33%(39.31)(39.31)

0.03

0.02

0.05%

0.04%

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

27 │ Kenedix Realty Investment Corporation

10. RELATED-PARTY TRANSACTIONSTRANSACTIONS WITH KENEDIX REIT MANAGEMENT, INC.
Kenedix REIT Management, Inc., a subsidiary of Kenedix, Inc., provides the Investment Corporation with property management
services and related services. For these services, the Investment Corporation pays Kenedix REIT Management, Inc. property
management fees in accordance with the terms of its Property Management Agreements. For these services, The Investment
Corporation paid ¥299 million to Kenedix REIT Management, Inc.

11. BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES AND PROPERTY-RELATEDEXPENSES
Rental and other operating revenues and property-related expenses for the periods from May 1, 2009 to October 31, 2009 andfrom November 1, 2008 to April 30, 2009 consist of the following:
In thousands of yen
From May 1, 2009
to October 31, 2009

From November 1, 2008
to April 30, 2009

Rental and other operating revenues:
Rental revenues¥

5,711,053¥

5,985,836

Common area charges

1,195,072

1,246,786

Subtotal

6,906,125

7,232,622

Parking space rental revenues

231,982

241,962

Utility charge reimbursement

617,328

559,130

166,427

170,408

1,015,737

971,500

Others:Miscellaneous
Subtotal
Total rental and other operating revenues¥

7,921,862¥

8,204,122

Property management fees and facility management fees

¥764,052¥799,004

Depreciation

1,451,833

1,429,329

Utilities

529,106

578,389

Taxes

536,723494,867

Insurance

16,098

16,533

Repairs and maintenance

171,075

138,371

Trust fees

38,19245,274

Loss on retirement of ﬁxed assets

23,394-

Others121,632

101,440

Total property-related expenses¥

3,652,105¥

3,603,207¥

1,982,000¥

2,670,000

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

2,348,605

Other sales expenses
Loss on sale of real estate

3,108,892

74,166¥440,771

53,571¥

492,463

Kenedix Realty Investment Corporation │ 28

NOTES TO FINANCIAL STATEMENTS

12. LEASESThe Investment Corporation, as lessor, has entered into leases whose fixed monthly rents are due in advance with lease term ofgenerally two years for office buildings and residential properties and with lease term ranging from two to ten years for retailproperties. The future minimum rental revenues under existing non-cancelable operating leases as of October 31, 2009 and April
30, 2009 are as follows:
In thousands of yen
As of October 31, 2009
Due within one year¥

Due after one year

1,059,032

As of April 30, 2009¥

7,538,786

Total

¥

8,597,818

1,314,069
7,930,499¥

9,244,568

13. DERIVATIVES AND HEDGE ACCOUNTINGThe Investment Corporation has entered into interest-rate swap agreements with several Japanese financial institutions to hedge its
variable rate long-term debt obligations. The Investment Corporation utilizes interest-rate swap agreements, which are derivative
financial instruments, only for the purpose of mitigating future risks of fluctuations of interest rates, but does not enter into suchtransactions for speculative or trading purposes. The Investment Corporation entered into such derivative transactions to hedge
risk in accordance with its Articles of Incorporation and the established risk management policies of the Asset Management
Company.
The following summarizes the notional principal amounts and the estimated unrealized loss from interest rate swap contracts as of
October 31, 2009:
The estimated unrealized loss does not include the interest rate swap contracts that met the criteria for the special treatment.
(As of October 31, 2009)
Type
Interest-rate swap:
Fixed rate payable and ﬂoating rate receivable29 │ Kenedix Realty Investment Corporation

Notional amount

Unrealized loss

¥29,500 million¥(15 million)

14. PROPERTY INFORMATION
Details of the property portfolio as of October 31, 2009 were as follows:TypeOﬃce Buildings

LocationCentral Urban Retail
Properties

Residential Properties

Tokyo
Metropolitan Area

Other Regional
Areas

Tokyo
Metropolitan Area

Other Regional
Areas

Tokyo Metropolitan
Area

49

9

4

1

2

Number of properties

Property information (In millions of yen)
Acquisition price¥

Percentage of total acquisition costs

165,246¥

75.06%

32,215
14.63%Net book value¥

167,657¥

32,019Appraisal value at year end¥

157,353¥

Percentage of total appraisal value¥

77.16%

8,519

¥

1,800

3.87%
¥

¥

0.82%

12,380
5.62%

8,318

¥

1,899

¥

12,55725,864¥7,109

¥

1,370

¥

12,24012.68%

3.49%

0.67%

6.00%

Financial results for the period ended October 31, 2009 (In thousands of yen)
Rental and other operating revenues¥

6,039,756¥

1,123,562¥

300,422¥

94,481¥

363,641

Rental revenues

5,302,542

927,112272,334

84,790319,348

Other revenues

737,214

196,451

28,0899,691

44,293

1,580,450

434,288

67,66242,85075,022

Property management fees

538,203

166,376

27,1228,201

24,150Taxes

417,328

74,10017,151

8,448

19,697

Utilities

397,552

103,967

2,982

1,923

22,683

Repairs and maintenance

98,68043,172

9,405

16,461

3,356

Insurance

9,767

4,757

761

482

330

118,920

41,915

10,242

7,336

4,806

NOI (Net Operating Income)

4,459,305

689,274

232,761

51,630288,618

Depreciation expenses

960,410317,126

86,143

22,33965,814

Operating income from property leasing
activities

3,498,895

372,149

146,617

29,291

222,804

Capital expenditures

294,11257,308

1,463

44,952

2,570

NCF (Net Cash Flow)

4,165,193

631,967

231,298

6,678

286,048

Property-related expenses

Trust fees and other expenses

Kenedix Realty Investment Corporation │ 30

NOTES TO FINANCIAL STATEMENTS

A breakdown of property-type as of October 31, 2009 was as follows:
Class of assets

Property type

Area

¥

Percentage of
total assets

167,657

70.9%

32,01913.5%

199,676

84.5%

Tokyo Metropolitan Area

8,318

3.5%

Other Regional Areas

1,899

0.8%

10,217

4.3%

12,557

5.3%¥

222,449

94.1%¥

13,871

5.9%

Total assets

236,320100.0%

Total liabilities

109,25346.2%

127,067

53.8%

Oﬃce Buildings

Tokyo Metropolitan Area

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

Other Regional Areas
Subtotal
Property andequipment

Residential Properties
Subtotal
Central Urban Retail
Properties

Tokyo Metropolitan Area

Total
Bank deposits and other assets

Net assets¥

15. SUBSEQUENT EVENTSPRIMARY OFFERING OF THE ISSUE OF NEW INVESTMENT UNITS
On October 29, 2009 and November 9, 2009, the Board of Directors of the Investment Corporation resolved to issue newinvestment units as detailed below. The payments were completed on November 16, 2009 through public offering. As a result of
the issuance of additional investment units, the Investment Corporation had total unitholders' capital of ¥133,129,755,470 with
233,550 investment units outstanding as of November 16, 2009.

① Issuance of New Investment Units through Public Offering
Total Number of Units Issued:
33,550units
Issue Price (Offer Price):¥252,200 per unit
Total Amount of the Issue Price (Offer Price):¥8,461,310,000
Paid-in Value (Issue Value):¥243,100 per unit
Net Proceeds:¥8,156,005,000
Payment date:November 16, 2009
Starting date of the computation of cash distribution: November 1, 2009
② Use of Funds
The Investment Corporation has applied the net proceeds from the public offering of new investment units to acquire theproperties.

31 │ Kenedix Realty Investment Corporation

STATEMENTS OF CASH FLOWS UNAUDITEDFOR THE PERIOD FROM NOVEMBER 1, 2008 TO APRIL 30, 2009, AND THE PERIOD FROM MAY 1, 2009 TO OCTOBER 31, 2009

In thousands of yen
From May 1, 2009
to October 31, 2009

From November 1, 2008
to April 30, 2009

Cash Flows from Operating Activities:
Income before income taxes¥

2,103,248¥

2,435,329

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

1,613,633

1,571,996

Interest expense

907,825

858,419

Loss on retirement of ﬁxed assets

23,394-

Changes in assets and liabilities:
Rental receivables

76,500(73,290)

Consumption tax refundable(136,065)

180,365

Accrued consumption tax(240,048)

252,054

Trade and other payables(136,412)(114,984)

Rents received in advance(39,880)(64,577)

Property and equipment due to sale

2,348,605

3,108,890

Others, net(192,155)(320,267)

Subtotal

6,328,645

7,833,935(912,655)(872,143)

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

(649)

(605)

5,415,341

6,961,187

Cash Flow from Investing Activities:
Purchases of property and equipment(4,110,567)(923,618)

Proceeds from leasehold and security deposits received

613,790441,191

Payments of leasehold and security deposits received(692,215)(777,846)

Payments of time deposits-(1,390,000)

Payments of restricted bank deposits(16,919)(563)

Proceeds from restricted bank deposits

1,034

820,124-(1,178)(4,204,877)(1,831,890)

Proceeds from short-term debt

5,000,000

12,000,000

Payment of short-term debt

(5,000,000)(7,000,000)

Proceeds from long-term debt

3,000,000

9,500,000

Payment of long-term debt

(4,530,000)(14,500,000)

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

Payment of dividends
Net cash used in ﬁnancing activities(2,434,003)(3,121,451)(3,964,003)(3,121,451)

Net change in cash and cash equivalents(2,753,539)

2,007,846

Cash and cash equivalents at the beginning of period

13,711,495

11,703,649

Cash and cash equivalents at the end of period¥

10,957,956¥

13,711,495

See related notes

Kenedix Realty Investment Corporation │ 32

STATEMENTS OF CASH FLOWS UNAUDITEDSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Unaudited)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments which are highly liquid,readily convertible to cash and with insignificant risk of market value fluctuation, with maturities of three months or less from thedate of purchase.

CASH AND CASH EQUIVALENTS (Unaudited)
Cash and cash equivalents consisted of the following as of October 31, 2009 and April 30, 2009:
In thousands of yen
As of October 31, 2009
Cash and bank deposits ..............................................................................................

¥

12,870,430

As of April 30, 2009¥

15,608,085........................................................

(522,474)(506,590)

More than 3 months ﬁxed deposits (Note 2) ..............................................................

(1,390,000)(1,390,000)

Restricted bank deposits held in trust(Note 1)

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

¥

Notes: 1. Restricted bank deposits held in trust are retained for repayment of tenant leasehold and security deposits.
2. More than 3 months ﬁxed deposits are ﬁxed deposit which has deposit term of more than 3 months.

33 │ Kenedix Realty Investment Corporation

10,957,956¥

13,711,495