(Securities Code: 3453)(Date of Notice) August 1, 2023
(Commencement Date of Electronic Provision Measures) July 20, 2023

To Our Unitholders
Moyuru Watanabe
Executive Director
Kenedix Retail REIT Corporation
2-1-6 Uchisaiwaicho, Chiyoda-ku, Tokyo

Notice Concerning the Fifth General Meeting of Unitholders
You are cordially invited to attend the Fifth General Meeting of Unitholders
of Kenedix Retail REIT Corporation (“the Investment Corporation”). The
Meeting will be held as described below.
You can also exercise your voting rights in writing. Please review the“Reference Material for the General Meeting of Unitholders” set forth below,
vote on the proposals in the enclosed Voting Rights Exercise Form, andreturn it by no later than 5:00 p.m. Friday, August 18, 2023.
In addition, the Investment Corporation has established a “deemed approval”
provision in Article 15 of its current Articles of Incorporation pursuant to
Article 93, paragraph 1 of the Act on Investment Trusts and Investment
Corporations (Act No. 198 of 1951; as amended, “the Investment TrustsAct”).
Accordingly, if you are unable to attend the Meeting and are unable tovote using the Voting Rights Exercise Form, please note that you will bedeemed as having attended the meeting and approved each of the agenda.
(Excerpt from the Investment Corporation’s Current Articles ofIncorporation)
Article 15 (Deemed Approval)
1. A unitholder’s non-attendance at the General Meeting of Unitholders andnon-voting shall be deemed as the unitholder’s approval of the agenda items
submitted to the General Meeting of Unitholders (provided that whensubmitted agenda items contradict each other, such agenda items shall beomitted).
2. Unitholder votes that are deemed as having approved agenda items
pursuant to the preceding Paragraph will be added to the votes cast byattending unitholders.
In holding the Meeting, the Investment Corporation has taken measures toelectronically provide reference materials for the Meeting and has uploaded― 1 ―“Notice Concerning the Fifth General Meeting of Unitholders” on the“General Meeting of Unitholders” page on its website. Please visit and referto the link below.
Investment Corporation’s website:
https://www.krr-reit.com/en/
The Investment Corporation has also uploaded its reference materials for the
Meeting on the Tokyo Stock Exchange (“TSE”) website. To access thereference materials, please visit the TSE website and search the entity name
“Kenedix Retail REIT Corporation” or the security code “3453,” go to “Basic
Information” and select “Documents for Public Inspection/PR information”
tabs.
TSE’s website (Listed Company Information Service)(https://www2.jpx.co.jp/tseHpFront/JJK010010Action.do?Show=Show)
1. Date and Time
2:30 p.m., Monday, August 21, 2023
(Attendees will be allowed into the venue from 2:00 p.m.)
2. Place
2-1-1 Uchisaiwaicho, Chiyoda-ku, Tokyo
Iino Hall and Conference Center Room A1+A2+A3, Iino Building 4F
3. Agenda of the Meeting
Resolution Agenda:
Agenda Item No. 1: Approval of the Merger Agreement
Agenda Item No. 2: Termination of the Asset Management Agreement with
Kenedix Real Estate Fund Management, Inc.
Agenda Item No. 3: Partial amendments to the Articles of Incorporation---------------------------------------------------------------------------------------------Note:(Requests)
・For those attending the Meeting, please present the enclosed Voting Rights
Exercise Form at the reception desk.
・Unitholders voting by proxy can vote by having another individual
unitholder who holds voting rights attend the Meeting and act as theirproxies. In such a case, please submit a Power of Representation Form anda Voting Rights Exercise Form at the reception desk.
・Unitholders are reminded to bring this notice when attending the Meeting,so as to enable us to save our resources.
(Information)
・If neither approval nor disapproval of a proposal is indicated in a Voting
Rights Exercise Form returned to the Investment Corporation, it shall be― 2 ―counted as a vote for approval of the proposal.
・Please note that, should there be any corrections to the reference materials
up to the day before the Meeting, the Investment Corporation will post therelevant sections before and after the corrections on the Investment
Corporation and TSE websites above.
・Please kindly note that no gifts will be handed out to unitholders attending
the Meeting.
・Please note that, in light of the COVID-19 infections in Japan, theInvestment Corporation may take measures in order to prevent the
COVID-19 infections at the Meeting.

― 3 ―Reference Material for the General Meeting of Unitholders
Agenda and Reference Matter
Agenda Item No. 1: Approval of the Merger Agreement
On June 13, 2023, the Investment Corporation, Kenedix Office Investment
Corporation (“KDO”) and Kenedix Residential Next Investment Corporation(“KDR”; and the Investment Corporation, KDO and KDR are individually orcollectively referred to as “Each REIT”) resolved to undertake an absorption-typemerger, with November 1, 2023 as the effective date, whereby KDO will be thesurviving corporation and KDR and the Investment Corporation will be thedissolving corporations in the merger (the “Merger”), and executed a merger
agreement (the “Merger Agreement”) to that effect. All unitholders are requested
to agree to the purpose for the Merger as described below and approve the Merger
Agreement.
1.

Reason for the absorption-type merger
The Japanese economy is making a moderate recovery as movement
restrictions to prevent the spread of COVID-19 infections was removed, andits economic and social activities are being normalized. However, there areuncertain factors in the economic conditions in and outside Japan such aschanges in the global affairs, emergence of geopolitical risks and effects ofeconomic sanctions related to these risks as a result of the invasion of
Ukraine by Russia, continuous global inflation related to rising commodity
prices and fuel costs, increase of the policy interest rates by major countries,
and bankruptcies of overseas financial institutions.
In such environment, the current real estate investment trust securities
market (the “J-REIT market”) is unstable and affected by the concern forrising operational costs due to inflation and the fear for the rise in the longterm interest rates due to future changes of the monetary policies by the
Bank of Japan.
The asset management company of Each REIT, Kenedix Real Estate FundManagement, Inc. (“KFM”), was established as follows: Kenedix
Residential Partners, Inc. established in March 2011 merged with Kenedix
Office Partners, Inc. and Kenedix Advisors, Inc. (both established in
November 2003) in October 2013 in an absorption-type merger, andchanged its corporate name to the current name of the asset managementcompany. Each REIT has received sponsor support from Kenedix, Inc., theparent company of KFM, and its group companies and has achieved
operational results.
KDO was listed on the J-REIT market of the Tokyo Stock Exchange, Inc.
(the “Tokyo Stock Exchange”) in July 2005, as “Kenedix Realty Investment― 4 ―Corporation” which conducted diversified investment in office buildings,
residential properties, and retail facilities, etc. and began operation with aportfolio of 29 properties and a total acquisition price of 61 billion yen.
Subsequently, KDO amended its management guidelines to convert its
diversified REIT into office specialized REIT in December 2006. Moreover,
KDO clarified its plan to build a portfolio centered on mid-sized officebuildings and amended its articles of incorporation to change the corporatename to the current name of the investment corporation in February 2014.
KDO has increased the size of its assets to 97 properties and the totalacquisition price of 453.3 billion yen (excluding the silent partnership equity
interest whose underlying asset is Shinjuku Sanei Building) (as of April 30,2023) through a period of approximately 18 years after it was listed bymainly investing in and managing mid-sized office buildings in Tokyo
Metropolitan Area where economic activities are densely integrated with
abundant tenant demand and rich stocks of properties.
KDR was listed in April 2012, as “Kenedix Residential Investment
Corporation” which mainly invests in residential properties such as rental
housing, and began operation with a portfolio of 20 properties and a totalacquisition price of 30.4 billion yen. In March 2018, KDR undertook an
absorption-type merger, whereby KDR became the surviving corporation
and Japan Senior Living Investment Corporation became the dissolving
corporation in the merger, and changed its corporate name to the current
name of the investment corporation and amended its articles of incorporationin order to add healthcare facilities and hotels to its main investment target
in addition to the existing residential properties.
KDR mainly invests in residential properties and healthcare facilities which
are spaces where people live and stay. KDR has increased the size of its
assets to 182 properties and a total acquisition price of 304.2 billion yen (asof April 30, 2023) through a period of approximately 11 years after it waslisted, by investing in and managing the real estates which are expected tohave a strong demand from tenants or users and gain stable and lasting
profits in accordance with regional analysis and separate analysis based on
characteristic features or site locations of each real estate property.
The Investment Corporation was listed in February 2015, as “Kenedix Retail
REIT Corporation” which focuses its investments in “shopping centers fordaily needs” that are located within residential districts or adjacent to majorroads or streets and provide daily goods and services, and began operations
with a portfolio of 18 properties and a total acquisition of 80.8 billion yen. In
June 2018, the Investment Corporation amended its articles of incorporation
to, from the perspective of keeping pace with the changing trends of supply
chain such as the growth of e-commerce, add distribution centers thatprovide products that complements shopping centers in its investment target― 5 ―in addition to the existing shopping centers.
The Investment Corporation has increased the size of its assets to 70
properties and the total acquisition price of 270.3 billion yen (as of April 30,2023) through a period of approximately 8 years after it was listed, byinvesting in and managing shopping centers and distribution centers that are
expected to contribute to improve the profit stability and the profitability ofthe portfolio based on its policy to focus its investment in shopping centers
for daily needs.
Each REIT has implemented various measures to ensure the acquisition of
stable profits and the continued growth of investment assets by leveraging
each characteristic.
However, the real estate market’s evaluations of the mid-sized officebuildings, which are KDO’s main investment target, have not changed
because of their scarcity and liquidity. Thus, the capitalization rate remains
low and it remains hard to acquire mid-sized office buildings. Moreover,recently, unit prices of KDO are significantly below NAV per unit due to theconcern for the market outlook regarding secondary vacancies and rent
decline due to large supplies of large office buildings, and there are limited
opportunities for external growth that involve public offering. Therefore,
there are issues with ensuring continued future growth. As for KDR,
although KDR has conducted public offerings for five consecutive years,
there is the possibility that the acquisition competition may escalate and theacquisition opportunities may decrease due to the relatively stableprofitability of residential properties, and recently unit price is below NAV
per unit. Moreover, KDR’s LTV is relatively high in the J-REIT market, andKDR has concerns regarding the increase in costs when interest rates arerising. As for the Investment Corporation, although it has a rich real estate
pipeline, it has been increasingly difficult to acquire shopping centers fordaily needs since the COVID-19 pandemic. In addition, there are concerns
over increase in costs caused by inflation, and there are issues such as
limited room for the future internal growth as a whole due to the long-term
fixed rents.
Moreover, Each REIT is watching the trends of interest levels and pricelevels such as costs of utilities, which may have an impact on the
profitability of their portfolios in the future, and Each REIT recognizes thissituation as their common issues.
In such circumstances, Each REIT agreed to start negotiation for merger andcarefully deliberated on the issues in order to deal with the issues describedabove, respond flexibly to environmental changes and attain continued
growth. As a result, Each REIT came to the same conclusion that the Merger
will contribute to maximize unitholders’ value by leading to the continued
growth by expanding investment target sectors, improving their presence and― 6 ―stability in the market by increasing the sizes of their assets, and enabling
more commitment for sustainability. Therefore, the Merger Agreement wasmade and entered into by and among Each REIT.
Each REIT considers that the Merger has the following rationale:i) Sustainable growth driven by expansion of investment target sectors
The New REIT (defined below) will continue to focus on their maininvestment target, i.e. mid-sized office buildings, residential properties,
healthcare facilities, and shopping centers for daily needs, and it will start toadditionally focus on logistics facilities and hotels, in which Each REIT has
conducted only limited investments until now, to increase opportunities foracquisitions. In addition, the Merger will enable asset reshuffling among
different asset types, disposing of properties with less competitiveness or
profitability, allow flexibly to the changes of the external environment
surrounding the real estate market, and activate the investments in theinvestment target sectors that are expected to grow, and thus leading to theimprovement of portfolio profitability. As described above, the New REIT
aims to attain continued growth beyond the boundary of the strategic
management for the existing specialized REIT through a strategic
management that ensures a wide range of opportunities for acquisitions andflexibility related to the expansion of the investment target sectors.
ii) Improvement in the market presence and ability
Through the Merger, the asset size of the investment corporation after the
Merger (the “New REIT”) will be ranked third in the J-REIT market (Note1) and this will significantly improve the presence in the market andliquidity of investment units, and the portfolio is expected to own a total of
350 properties (Note 2) after the Merger. Having the largest expected
number of properties in the J-REIT market will enhance diversification andcontribute to improve the stability of the portfolio. In addition, a property
manager that leverages the advantage of its scale will contribute to increase
resilience against the pressure of the rising costs.
iii) Further commitment to sustainability
Each REIT has recognized sustainability as a significant issue and has taken
the initiative in implementing various initiatives. Specifically, KDO has
become the first investment corporation in the J-REIT market to participate
in GRESB Real Estate Assessment, KDR was the first J-REIT to issue social
bonds, and the Investment Corporation was the first J-REIT to introduce
investment unit performance fee. The New REIT plans to integrate andelevate expertise accumulated by Each REIT through the Merger and aims
to be a leading company in the sustainability initiatives. Moreover, the New― 7 ―REIT plans to further enforce the sustainability initiatives under the
management system with a high degree of specialization and diversity byintroducing a new management fee structure that is linked to unitholder
value and sustainability metric, improving governance through theenhancement of supervisory officers, and promoting diversity.
Furthermore, the New REIT sets the following growth strategies: capturing
new opportunities for growth through the expansion of its investment target
sectors, strengthening its earnings power through the reshuffling of its assets
which adapt to environmental changes and acquiring upside earnings
through active management.
Under these growth strategies, as described in the press releases “NoticeConcerning Acquisition of Properties (River City 21 East Towers II and 2
Other Properties) and Disposition of Properties (Harajuku F.F. Building and1 Other Property)” dated June 13, 2023 by Each REIT, and “NoticeConcerning Acquisition of Property (York Mart Higashi-Michinobe)” dated
the same day by the Investment Corporation, the New REIT aims tostrengthen its earning power by acquiring a total of four properties:
residential property, hotel, distribution center (land) and shopping center fordaily needs, and by disposing of two office buildings.

(Note 1) The amount of asset size after the Merger is calculated by totaling the asset
size of Each REIT. The asset size of KDO is assumed to be the total ofacquisition price of the properties in the portfolio as of April 30, 2023, plus
the acquisition (scheduled) price reflecting the acquisitions and sales(including one that are scheduled) of the properties from May 1, 2023 to theeffective date of the Merger. The asset size of KDR and the Investment
Corporation is considered to be the appraisal values of the properties as ofthe end of the latest fiscal period (relating to KDR, as of January 31, 2023
(provided, however, that, this includes the acquisitions of Sunny Life
Tachikawa and Rehabili-home Bon Sejour Minamisenzoku; relating to theInvestment Corporation, as of March 31, 2023). The asset sizes of the otherinvestment corporations in the J-REIT market are calculated based on theasset sizes including any properties that the other investment corporations
announced the acquisition and sale thereof in the J-REIT market as of April
30, 2023 (acquisition (scheduled) price basis). Therefore, it is notguaranteed that the New REIT will have the third largest asset size in the JREIT market as of the effective date of the Merger. In regard to the asset
size after the Merger, because it is planned that assets of KDR and theInvestment Corporation will be succeeded at market price based on thepurchase method by KDO as the acquiring corporation, the asset size will
not be a simple sum of the total (scheduled) acquisition price of KDO andthe total appraisal values of KDR and the Investment Corporation as of theend of the latest accounting period.
(Note 2) The number of properties of the portfolio after the Merger is based on thenumber of properties of KDO, KDR and the Investment Corporation as of― 8 ―June 13, 2023 and reflecting the change in the number of the acquisitions
and sales of the properties (including ones that are scheduled) by theeffective date of the Merger. KDX Chofu Building is treated as one
property in the calculation of the number of properties of the portfolio after
the Merger though KDO owns its office tower and the Investment
Corporation owns its retail wing respectively as of June 13, 2023. The
numbers of the properties of the other investment corporations in the JREIT market is calculated based on the number of properties including
those that the other investment corporations announced acquisition and sale
thereof in the J-REIT market as of April 30, 2023. Therefore, it is notguaranteed that the portfolio of the New REIT will have the largest numberof properties in the J-REIT market as of the effective date of the Merger.

2.

Summary of the contents of the Merger Agreement
As described in Attachment 1 hereto.

3.

Summary of the contents of the matters set forth in Items 1 to 3, Paragraph 1,
Article 193 of the Regulation for Enforcement of the Act on Investment
Trusts and Investment Corporations(1) Matters regarding appropriateness of the consideration for merger(ⅰ) Matters regarding appropriateness of total of the consideration for merger tobe delivered upon the absorption-type merger, provisions for number ofinvestment units of the surviving corporation delivered to the unitholders ofthe dissolving corporation in lieu of their investment units by the surviving
corporation for the absorption-type merger or calculation method of numberof such investment units and allocation of investment units of the surviving
corporation to unitholders of the dissolving corporation(a) Number of investment units of KDO or amount of money to be allocatedfor each investment unit of the Investment Corporation and KDRi) Allocation of new investment units
KDO(Surviving
corporation in theabsorption-typemerger)
Allocationofinvestment
units under
the Merger

1

KDR(Dissolving
corporation in theabsorption-typemerger)Investment
Corporation(Dissolving
corporation in theabsorption-typemerger)

1.34

1.68

(Reference)
Before theInvestment Unit

(Reference)
Before theInvestment Unit

― 9 ―Split (defined in(Note 2) below;
hereinafter the
same)
0.67

Split
0.84

(Note 1) The number of new KDO’s investment units to be issued as a result of the
Merger (the number of units taking into account the Investment Unit Split ofKDO): 2,446,037(Note 2) KDO plans to split one investment unit into 2 investment units with October 31,
2023 as the record date for splitting the investment units and November 1,
2023 as the effective date of the split (the “Investment Unit Split”); theallocation ratio shown above and the number of the new investment units,
which KDO will allocate and deliver are subject to the Investment Unit Split
taking effect. If 0.67 KDO’s investment units are allocated and deliveredagainst 1 KDR’s investment unit and 0.84 KDO’s investment units areallocated and delivered against 1 investment unit of the Investment
Corporation on the basis of the merger ratio before the Investment Unit Split,
there will be many unitholders of KDR and the Investment Corporation being
allocated fractions of less than one KDO’s investment unit. To make itpossible for unitholders of KDR and the Investment Corporation to continue
holding KDO’s investment units after the Merger, a split of KDO’s investment
units will be carried out before the allocation towards unitholders of KDR andthe Investment Corporation, in the ratio of two KDO’s investment units to one
KDO’s investment unit for the purpose of delivering to all unitholders of KDR
and the Investment Corporation at least one KDO’s investment unit, and 1.34
KDO’s investment unit post- Investment Unit Split will be allocated anddelivered for every one KDR’s investment unit and 1.68 KDO’s investment
unit post- Investment Unit Split will be allocated and delivered every one
investment unit of the Investment Corporation.

ii) Delivery of Payment upon the Merger
In addition to the above mentioned investment units, KDO intends to
pay unitholders of KDR and the Investment Corporation (theunitholders stated or recorded in the final unitholders’ registers of KDR
and the Investment Corporation on the day before the effective date of
the Merger (excluding Each REIT and unitholders of KDR and theInvestment Corporation who has demanded the purchase of theirinvestment units pursuant to Article 149-3 of the Investment Trusts Act)(excluding those who have withdrawn such demand for purchase)(hereinafter referred to as the “Unitholders Subject to Allocation”))), in
lieu of cash distributions (distributions of profits) for the last fiscal
period of KDR and the Investment Corporation which ends the day
before the effective date of the Merger (for the Investment Corporation,
the last fiscal period after the changes made by Agenda Item No. 3), thePayment upon the Merger in the form of cash distributions based on― 10 ―

distributable income of KDR and the Investment Corporation for thatsame period of an amount (disregarding fractions of a yen) which is thequotient resulting from a division of the amount of distributable incomeof KDR and the Investment Corporation on the day before the effective
date of the Merger by the number of issued investment units of KDR
and the Investment Corporation on that date as reduced by the numberof investment units held by unitholders other than the Unitholders
Subject to Allocation. The Payment upon the Merger will be paid
within a reasonable period from the effective date of the Merger. As
described in Agenda Item No. 3, the Investment Corporation isplanning to submit a proposal for the change of the articles ofincorporation to the Meeting on the condition that the Merger
Agreement is approved at Each REIT’s General Meeting of Unitholders.
The proposal is to change the current fiscal year end from March 31
and September 30 to April 30 and October 31 and change the last day
of 17th fiscal period which starts from April 1, 2023 from September
30, 2023 to October 31, 2023. If this proposal for the change of thearticles of incorporation is approved at the Meeting, the last fiscal
period of the Investment Corporation before the effective date of the
Merger, the 17th fiscal period, will last for 7 months, from April 1,
2023 to October 31, 2023, and cash distribution will not be made with arecord date of September 30, 2023 (as written above, the Payment upon
the Merger that meets the distributions amount for the same period will
be paid).
(b)

Basis for Calculation
KDO has appointed SMBC Nikko Securities Inc. (“SMBC Nikko
Securities”), KDR has appointed Mitsubishi UFJ Morgan Stanley
Securities Co., Ltd. (“Mitsubishi UFJ Morgan Stanley Securities”), andthe Investment Corporation has appointed Nomura Securities Co., Ltd.
(“Nomura Securities”) respectively, as their financial advisors for the
Merger. Each REIT has requested their respective financial advisors to
conduct financial analysis with regard to the merger ratio used in the
Merger in order to calculate the merger ratio used in the Merger in a fairmanner.
The summaries of the analyses respectively conducted by SMBC Nikko
Securities, Mitsubishi UFJ Morgan Stanley Securities, and Nomura
Securities indicate figures prior to taking into consideration theInvestment Unit Split, by KDO, of one investment unit into two
investment units as mentioned above in “(a) Number of investment unitsof KDO or amount of money to be allocated for each investment unit of
the Investment Corporation and KDR”.
― 11 ―

(SMBC Nikko Securities)
SMBC Nikko Securities has determined to adopt four individual
valuation methods to calculate the merger ratio based on its own analysis
on the financial information of Each REIT as well as the terms andconditions of the Merger. Because the investment units of Each REIT are
respectively listed on the Tokyo Stock Exchange and the market prices
are available, SMBC Nikko Securities conducted the historical unit priceanalysis. Because there are multiple listed investment corporations
comparable to Each REIT and analogical estimates of the investment unit
values based on the comparable investment corporations are possible,
SMBC Nikko Securities also conducted the comparable trading multiple
analysis. In addition, SMBC Nikko Securities conducted the dividend
discount model analysis (“DDM”) as a method of valuation and analysisof the investment unit values based on dividends that unitholders of Each
REIT are expected to receive in the future, and for the purpose ofreflecting the market values of the properties held by Each REIT, SMBC
Nikko Securities also conducted the adjusted net asset value analysis.
The calculated ranges of the merger ratio shown below are those of KDR
and the Investment Corporation with the investment unit value for each
investment unit of KDO as one (1).
In the historical unit price analysis, the simple average of the closing
prices of investment units for the one month period, three-month period
and six-month period from June 12, 2023, which is set as the base date
for calculation, has been adopted, after taking into account the recent
status of market transactions of the investment units of Each REIT.
In the future profit plans of Each REIT assumed in DDM by SMBC
Nikko Securities, there is no fiscal year in which a significant increase or
decrease in income is expected in Each REIT’s profit plan.
For details concerning the supplemental explanation regarding theassumptions and disclaimers of SMBC Nikko Securities’ analysis, pleaserefer to (Note 1) at the end of this this section.
KDR

Investment
Corporation

0.66～0.69

0.79～0.82

0.57～0.95

0.70～1.16

0.45～0.96

0.68～1.20

0.56

0.66

Valuation Approach
Historical Unit Price
Analysis
Comparable Trading
Multiple Analysis
DDM Analysis
Adjusted Net Asset Value
Analysis― 12 ―

(Mitsubishi UFJ Morgan Stanley Securities)
Mitsubishi UFJ Morgan Stanley Securities conducted the analyses of themerger ratio by comprehensively taking into account the results of theanalyses based on the following four valuation approaches. Because theinvestment units of Each REIT are respectively listed on the Tokyo Stock
Exchange, Mitsubishi UFJ Morgan Stanley Securities conducted thehistorical unit price analysis as a method of evaluation based on the unit
prices formed in the securities market. In addition, Mitsubishi UFJ
Morgan Stanley Securities conducted the comparable trading multiple
analysis as a method of evaluation based on investment unit values ofother listed investment corporations which operate business similar tothat of Each REIT. Moreover, Mitsubishi UFJ Morgan Stanley Securities
conducted the discounted cash flow analysis (“DCF”) as an intrinsic
method of evaluation of the investment unit values based on mediumand-long term future business activities of Each REIT. Furthermore,
Mitsubishi UFJ Morgan Stanley Securities conducted the net asset value
approach as a static method of evaluation of the investment unit values
reflecting the market values of Each REIT’s assets. The summary of theanalyses conducted by Mitsubishi UFJ Morgan Stanley Securities is asfollows. The calculated ranges of the merger ratio shown below are thoseof KDR and the Investment Corporation with the investment unit value
for each investment unit of KDO as one (1).
In the historical unit price analysis, each closing price of investment units
for the one month period, three-month period, six-month period andtwelve-month period from June 12, 2023, which is set as the base date forcalculation, has been used for the analyses, after taking into account the
recent status of market transactions of the investment units of Each REIT.
In the future profit plans of Each REIT assumed in DCF by Mitsubishi
UFJ Morgan Stanley Securities, there is no fiscal year in which asignificant increase or decrease in income is expected in Each REIT’s
profit plan.
For details concerning the supplemental explanation regarding theassumptions and disclaimers of Mitsubishi UFJ Morgan Stanley
Securities’ analysis, please refer to (Note 2) at the end of this section.
KDR

Investment
Corporation

0.61～0.71

0.76～0.86

0.62～0.83

0.74～1.03

Valuation Approach
Historical Unit Price
Analysis
Comparable Trading
Multiple Analysis― 13 ―

DCF Analysis
Valuation Approach

0.51～0.72
0.56

0.56～0.78
0.66(Nomura Securities)
Nomura Securities adopted the following four valuation approaches tomake calculations of the Merger ratio. Because the investment units ofEach REIT are respectively listed on the Tokyo Stock Exchange and themarket prices are available, Nomura Securities conducted the average
historical unit price analysis. Because there are multiple listed investment
corporations comparable to Each REIT and analogical estimates of theinvestment unit values based on the comparable investment corporations
are possible, Nomura Securities also conducted the comparable trading
multiple analysis. In addition, Nomura Securities conducted DCF toreflect the status of the future business activities in the calculations.
Moreover, Nomura Securities conducted the adjusted market value of net
asset value analysis to reflect the effects of selling the investment units at
the market price on the net assets in the calculations. The summary of theanalyses conducted by Nomura Securities is as follows and the calculated
ranges of the merger ratio shown below are those of KDR and theInvestment Corporation with the investment unit value for each
investment unit of KDO as one (1).
In the average historical unit price analysis, the base date for calculationis June 12, 2023. The simple average of the closing prices for the basedate for calculation, the period of five business days from the base date
for calculation, the one-month period, three-month period and six-month
period from the base date for calculation has been adopted.
In the future profit plans of Each REIT assumed in DCF by Nomura
Securities, there is no fiscal year in which a significant increase or
decrease in income is expected in Each REIT’s profit plan.
For details concerning the supplemental explanation regarding theassumptions and disclaimers of Nomura Securities’ analysis, please refer
to (Note 3) at the end of this section.
KDR

Investment
Corporation

0.66～0.69

0.79～0.82

0.57～0.72

0.57～0.95

0.57～0.70

0.79～1.13

0.56

0.66

Valuation Approach
Average Historical Unit
Price Analysis
Comparable Trading
Multiple Analysis
DCF Analysis
Adjusted Market Value of
Net Asset Value Analysis― 14 ―

(Note 1) In analyzing the above merger ratio, SMBC Nikko Securities has relied on theinformation provided by Each REIT and publicly available information assumingthat all such materials and information are accurate and complete, without
independent verification of the accuracy or completeness of those materials andinformation. In addition, SMBC Nikko Securities did not make any independentvaluation, appraisal, or assessment of the assets or liabilities (including offbalance-sheet assets and liabilities and any other contingent liabilities) of Each
REIT, nor has SMBC Nikko Securities requested any such appraisal or assessment
from a third-party institution. Further, SMBC Nikko Securities has assumed thatthe financial projections provided by Each REIT have been prepared in areasonable manner to reflect the best currently available estimates and judgments
by the management of Each REIT. The analysis of the above merger ratio by
SMBC Nikko Securities was based on the above information that was available asof June 12, 2023. SMBC Nikko Securities has prepared its analysis solely for the
Board of Directors of KDO for the purpose of deliberating the Merger, and theanalysis may not be relied upon or used for any other purpose or by any other third
party. In addition, SMBC Nikko Securities will not provide any opinion or
recommendation on voting by any of the unitholders of Each REIT with respect tothe Merger or any other proposed transaction.
(Note 2) In analyzing the above merger ratio, Mitsubishi UFJ Morgan Stanley Securities
has relied on the information provided by Each REIT and publicly available
information assuming that all such materials and information are accurate andcomplete, without independent verification of the accuracy or completeness of
those materials and information. In addition, Mitsubishi UFJ Morgan Stanley
Securities did not make any independent valuation, appraisal, or assessment of theassets or liabilities (including off-balance-sheet assets and liabilities and any othercontingent liabilities) of Each REIT, nor has Mitsubishi UFJ Morgan Stanley
Securities requested any such appraisal or assessment from a third-party institution.
Further, Mitsubishi UFJ Morgan Stanley Securities has assumed that the financial
projections provided by Each REIT have been prepared in a reasonable manner toreflect the best currently available estimates and judgments by the management ofEach REIT. The analysis of the above merger ratio by Mitsubishi UFJ Morgan
Stanley Securities was based on the above information that was available as ofJune 12, 2023.
Mitsubishi UFJ Morgan Stanley Securities has prepared its analysis solely for the
Board of Directors of KDR for the purpose of deliberating the Merger, and theanalysis may not be relied upon or used for any other purpose or by any other third
party. In addition, Mitsubishi UFJ Morgan Stanley Securities will not provide any
opinion or recommendation on voting by any of the unitholders of Each REIT
with respect to the Merger or any other proposed transaction.
(Note 3) In calculating the merger ratio, Nomura Securities has assumed that the publicly
available information and all information provided to Nomura Securities areaccurate and complete. Nomura Securities has not independently verified theaccuracy or completeness of such information. Nomura Securities did not makeany independent valuation, appraisal, or assessment of the assets or liabilities(including derivative products, off-balance-sheet assets and liabilities, and anyother contingent liabilities) of Each REIT (including analysis and valuation of― 15 ―

individual assets or liabilities), nor has Nomura Securities requested any suchappraisal or assessment from a third-party institution. Nomura Securities assumed
that respective financial projections of Each REIT (including profit plans andother information) have been considered or prepared in a reasonable manner basedon the best currently available good-faith estimates and judgments by the
management of Each REIT. The calculations of Nomura Securities reflect the
information and economic terms and conditions obtained by Nomura Securities asof June 12, 2023. Nomura Securities has prepared its calculations for the sole
purpose of serving as a reference for the governing body of the Investment
Corporation to deliberate the merger ratio.

(c)

Background to Calculations
As a result of discussions and negotiations over an extended period
comprehensively taking into consideration such factors as the financial
performance and state of the assets and liabilities of Each REIT, eachfuture business prospect, the merits of the Merger and the result of thefinancial analyses performed by respective financial advisors of Each
REIT, Each REIT determined that the above merger ratios are fair andexecuted the Merger Agreement.
The names of the financial advisors appointed by Each REIT are as
described in “(b) Basis for Calculation” above, and none of Each REIT
obtained an opinion from its own financial advisor.

(d)Relationships with the Financial Advisors
None of SMBC Nikko Securities, Mitsubishi UFJ Morgan
Stanley Securities and Nomura Securities is deemed a related party of
Each REIT pursuant to (i) Article 8, Paragraph 17 of the Regulation on
Terminology, Forms, and Preparation Methods of Financial Statements(Ministry of Finance Order No. 59 of November 27, 1963; including
subsequent amendments); and (ii) Article 67, Paragraph 4 of theOrdinance on Accounting at Investment Corporations (Cabinet Office
Ordinance No. 47 of 2006; including subsequent amendments, “theInvestment Corporations Accounting Ordinance”) and none of them has
any material interests to be disclosed with respect to the Merger.

(e)Measures to Ensure Fairnessi) Measures to ensure fairness in assessing the propriety of the Merger
and the merger ratio
Each REIT is entrusting its asset management functions to KFM. KFM
has organized the responsible managers (KDO: Head of Office REIT
Department / KDR: Head of Residential REIT Department /theInvestment Corporation: Head of Retail REIT Department) and asset
management departments (KDO: Office REIT Department / KDR:
― 16 ―

Residential REIT Department / the Investment Corporation: Retail REIT
Department) consisting of different members for Each REIT
individually in assessing the Merger and providing advice and support
to the Board of Directors of Each REIT, and established a complete
system to block transmission of information by setting up an appropriate
information wall between each of the asset management department. In
addition, when it is necessary to communicate information causing
concerns over conflict of interest between each of the asset management
department in the course of assessing the Merger, such information iscommunicated through each of the abovementioned financial advisors
appointed by Each REIT individually, in order to prevent asset
management departments from having direct contact with each other.
In the course of assessing the Merger, each responsible manager andeach of the asset management department reported on a timely basis thestatus of its assessment to the Board of Directors of Each REIT eachcomposed of one executive director and supervisory directors (KDO:
three persons / KDR: three persons / the Investment Corporation: two
persons), whose independence from the asset management company isensured in terms of the Investment Trusts Act, and all material mattersof its assessments were deliberated and approved by the Board of
Directors of Each REIT.
In addition, since executive directors of Each REIT concurrently serve
as directors of KFM and have a conflict of interest with KFM, they havenot participated in resolutions for approval of the Merger Agreement atmeetings of the Board of Directors of Each REIT regarding the approvalof the conclusion of the Merger Agreement.
In connection with the Merger, KFM will receive management fees for
the Merger and management fees relating to the management after the
Merger takes effect from KDO, which will be the surviving corporationin the absorption-type merger, pursuant to the provisions of KDO’s
articles of incorporation and the asset management agreement with
KDO, but the amount of both fees will not be affected by the merger
ratio of the Merger.
Furthermore, KDO appointed Anderson Mori & Tomotsune, KDR
appointed Miura & Partners, and the Investment Corporation appointed
Morrison & Foerster Law Offices, respectively, as its legal advisor for
the Merger, and received advice concerning the methodology andprocess relating to the procedures and decision-making process for the
Merger.
ii) Measures to ensure fairness in the calculation of the merger ratio
As described in (a) through (c) above, Each REIT has requested its― 17 ―

respective financial advisor to perform financial analysis in regard to
the merger ratio, and the merger ratio was determined bycomprehensively taking into account the results of such analyses
together with other factors.
In order to ensure the fairness of the Merger and for the benefit of its
unitholders, KDO obtained from SMBC Nikko Securities, an
independent third-party financial advisor, a merger ratio calculation
report providing an analysis from a financial perspective based on
certain assumptions in regard to the allocation of investment units
under the Merger. Given the above, KDO’s Board of Directors
concluded that sufficient measures have been taken to ensure thefairness of the Merger.
In order to ensure the fairness of the Merger and for the benefit of its
unitholders, KDR obtained from Mitsubishi UFJ Morgan Stanley
Securities, an independent third-party financial advisor, a merger ratio
calculation report providing an analysis from a financial perspective
based on certain assumptions in regard to the allocation of investment
units under the Merger. Given the above, KDR’s Board of Directors
concluded that sufficient measures have been taken to ensure thefairness of the Merger.
In order to ensure the fairness of the Merger and for the benefit of its
unitholders, the Investment Corporation obtained from Nomura
Securities, an independent third-party financial advisor, a merger ratio
calculation report providing an analysis from a financial perspective
based on certain assumptions in regard to the allocation of investment
units under the Merger. Given the above, the Investment Corporation’s
Board of Directors concluded that sufficient measures have been taken
to ensure the fairness of the Merger.
Each REIT did not, however, obtain written opinions (so-called“fairness opinions”) from their respective financial advisors to theeffect that the merger ratio is reasonable from a financial perspective
for their respective unitholders.
(ⅱ) Reason for choosing cash as part of the consideration for merger
Following the Merger, KDO, the surviving corporation in the absorptiontype merger, intends to pay Unitholders Subject to Allocation, in lieu of cash
distributions (distributions of profits) for the last fiscal period of KDR andthe Investment Corporation which ends the day before the effective date of
the Merger (for the Investment Corporation, the last fiscal period after thechanges made by Agenda Item No. 3), the Payment upon the Merger in theform of cash distributions based on distributable income of KDR and theInvestment Corporation for that same period of an amount (disregarding― 18 ―

fractions of a yen) which is the quotient resulting from a division of theamount of distributable income of KDR and the Investment Corporation on
the day before the effective date of the Merger by the number of issued
investment units of KDR and the Investment Corporation on that date as
reduced by the number of investment units held by unitholders other than theUnitholders Subject to Allocation. The Payment upon the Merger will be
paid within a reasonable period from the effective date of the Merger.
(ⅱi) Matters regarding appropriateness of provisions for unitholders’ capital of
the surviving corporation in the absorption-type merger
The amount of the total unitholders’ capital and the capital surplus of KDO
to be increased upon the Merger shall be as follows; provided, however, that
Each REIT may change such amount upon agreement through consultation,
taking into consideration the financial conditions of Each REIT on the day
before the effective date.
(a) Unitholders’ Capital: 0 yen(b) Capital Surplus: The amount obtained by deducting the amount set
forth in (a) above from the amount of increase or
decrease in the unitholders’ equity, etc., set forthin Article 22, Paragraph 1 of the Investment
Corporations Accounting Ordinance)(2) Matters to be referred to regarding the consideration for merger(ⅰ) Provisions in the Articles of Incorporation of the surviving corporation
As described in Attachment 2 hereto. KDO will hold a general meeting ofunitholders to seek approval to amend its Articles of Incorporation as of theeffective date of the Merger, in accordance with Attachment 3 as separately
agreed upon by KDO, KDR and the Investment Corporation, subject to theMerger becoming effective.
(ⅱ) Matters concerning the method of realizing the investment units to bedelivered as consideration for the merger(a) Market to trade the investment units
Tokyo Stock Exchange Real Estate Investment Trust Market(b)Intermediary, brokerage, or agency service for the trade of the investment
units
Securities companies, etc. that are trading participants or members of thestock exchange mentioned in (a) above.

― 19 ―

(ⅱi) Matters concerning the market price of the investment units to be delivered
as consideration for the merger
KDO’s highest and lowest monthly unit prices (closing prices) for the last six
months are as follows:
January February March
April
May
June
Month
2023
2023
2023
2023
2023
2023
Highest318,000 319,500 321,000 314,500 316,000 347,500(yen)Lowest302,500 310,000 301,000 294,500 298,100 300,500(yen)(3) Matters concerning financial statements, etc.
(ⅰ) Matters concerning the surviving corporation in the absorption-type merger(a) Details of financial statements, asset management reports, and financial
statements of cash distributions pertaining to the final fiscal period
As described in Attachment 4 hereto.
(b)

Details of material asset disposals, assumption of material debts and otherevents that materially affect the condition of assets after the last day of the
final fiscal periodi) Split of investment units
KDO decided at the Board of Directors Meeting held on June 13, 2023,
to conduct the Investment Unit Split as follows.
a) Purpose of the Investment Unit Split
The Merger will be effected by way of an absorption-type merger
with KDO as the surviving corporation, with KDR and theInvestment Corporation having a merger ratio of 0.67 and 0.84,
respectively, against one for KDO, before taking into account theInvestment Unit Split. However, with this merger ratio, 0.67 KDO’s
investment units will be allotted against one KDR investment unit
and 0.84 KDO’s investment units will be allotted against one
investment unit of the Investment Corporation, resulting in a numberof KDR and the Investment Corporation’s unitholders that will
receive KDO’s investment units of less than one unit. For this reason,in order to enable the unitholders of KDR and the Investment
Corporation to continue to hold KDO’s investment units after the
Merger, KDO decided to split KDO’s investment units at a ratio of
two investment units per one investment unit, for the purpose of― 20 ―

providing at least one KDO’s investment unit to all unitholders of
KDR and the Investment Corporation.
b) Method of the Investment Unit Split
KDO will implement a two for one split of the investment units heldby unitholders of KDO stated or recorded on the registry ofunitholders as of October 31, 2023, which is the day before theeffective date of the Merger. The Investment Unit Split will takeeffect immediately before the Merger taking effect on November 1,
2023, which is the effective date of the Merger, provided that themerger agreement pertaining to the Merger has not been terminatedor expired by the day before the effective date of the Merger.
ii) Disposition of assets
KDO entered into a sale and purchase agreement with Kenedix, Inc.
dated June 13, 2023 with respect to the disposition of trust beneficiaryinterest in real estate pertaining to one office building (Harajuku F.F.
Building), with November 1, 2023 as the scheduled disposition date.
KDO also entered into a sale and purchase agreement with Kenedix,
Inc. dated June 13, 2023 with respect to the disposition of trust
beneficiary interest in real estate pertaining to one office building(KDX Nagoya Sakae Building), with November 1, 2023 as thescheduled disposition date. The execution of these dispositions issubject to the effectiveness of the Merger and other conditions being
met.
(ii) Matters concerning the dissolving corporation in the absorption-type merger(the Investment Corporation)
Details of material asset disposals, assumption of material debts and otherevents that materially affect the condition of assets after the last day of the
final fiscal period(a)Change of the fiscal period
In connection with the Merger, the Investment Corporation has decided tosubmit to the Meeting a proposal to amend its articles of incorporation tochange the fiscal period-ends from March 31 and September 30 (current) to
April 30 and October 31. If the aforementioned amendment is approved at
the Meeting, the last fiscal period of the Investment Corporation before theeffective date of the Merger is expected to be from April 1, 2023 to October
31, 2023.

(b)

Acquisition of assets― 21 ―

The Investment Corporation entered into a sale and purchase agreementwith SMFL MIRAI Partners Company, Limited dated June 13, 2023 withrespect to the acquisition of trust beneficiary interest in real estate
pertaining to one retail facility (York Mart Higashi-Michinobe), with
September 25, 2023 as the scheduled acquisition date.
The Investment Corporation also entered into a sale and purchaseagreement with SMFL MIRAI Partners Company, Limited dated June 13,2023 with respect to the acquisition of trust beneficiary interest in realestate pertaining to one logistics facility (Akishima Distribution Center(Land)), with November 1, 2023 as the scheduled acquisition date. The
execution of this acquisition is subject to the effectiveness of the Merger
and other conditions being met.
(iii) Matters concerning the dissolving corporation in the absorption-type merger(KDR)
Details of material asset disposals, assumption of material debts and otherevents that materially affect the condition of assets after the last day of the
final fiscal period(a)4.

Acquisition of assets
KDR entered into a sale and purchase agreement with KST5 Co., Ltd. dated
June 13, 2023 with respect to the acquisition of trust beneficiary interest inreal estate pertaining to one residential property (River City 21 East Towers
II), with November 1, 2023 as the scheduled acquisition date. KDR also
entered into a sale and purchase agreement with G.K. RRB dated June 13,2023 with respect to the acquisition of trust beneficiary interest in realestate pertaining to one hotel (remm roppongi building), with November 1,
2023 as the scheduled acquisition date. The execution of these acquisitions
is subject to the effectiveness of the Merger and other conditions being met.

This agenda item is subject to the approval of Agenda Item No. 3 “Partial
Amendments to the Articles of Incorporation,” as originally proposed.

― 22 ―

Agenda Item No. 2: Termination of the Asset Management Agreement with
Kenedix Real Estate Fund Management, Inc.
In relation to the Merger, the Investment Corporation has decided to terminate its
current asset management agreement with KFM as of the Effective Date of the
Merger, subject to the Merger taking effect, and therefore requests approval ofsuch termination.
KDO has an asset management agreement in place with KFM, and KFM is
expected to continue to manage the assets of KDO, the surviving corporation,
following the Merger.
This agenda item is subject to the Merger taking effect.

― 23 ―

Agenda Item No. 3: Partial Amendments to the Articles of Incorporation
1. Reasons for Amendments(1) To amend the current fiscal year end of the Investment Corporationfrom March 31 and September 30 to April 30 and October 31 in orderto make the fiscal year end of the last fiscal period before the Merger
take effect October 31, 2023, which is the day before the Effective
Date of the Merger, and to amend the Investment Corporation’s 17th
fiscal period to a seven-month period from April 1, 2023 to October
31, 2023 (Concerning Article 38 of the current Articles ofIncorporation).
(2) Since the current calculation method for Management Fee II is basedon the assumption of a six-month fiscal period, to adjust thecalculation method for cases where the fiscal period is not six months,
and to clarify the amount and payment deadline for Management Fee
II for the 17th fiscal period (Concerning (2) of Attachment of thecurrent Articles of Incorporation).
(3) This agenda item is subject to the approval of the Merger Agreement
at KDO’s general meeting of unitholders scheduled to be held on
August 22, 2023, the approval of the Merger Agreement at KDR’sgeneral meeting of unitholders scheduled to be held on August 21,
2023, and the approval of Agenda Item No. 1 “Approval of the
Merger Agreement,” as originally proposed.

― 24 ―

2. Details of Amendments
Details of the amendments are as follows.
(Underlined parts indicate the proposed amendments.)
Current Articles of Incorporation
Article 38 (Fiscal Period and Closing Date)
The fiscal period of the Investment Corporation
shall be the periods from April 1 to September
30 of each year and from October 1 to March 31of the following year (hereinafter, the last day ofeach fiscal period is referred to as a “Closing
Date”.)

Proposed Amendments
Article 38 (Fiscal Period and Closing Date)
The fiscal period of the Investment Corporation
shall be the periods from May 1 to October 31 ofeach year and from November 1 to April 30 of
the following year (hereinafter, the last day ofeach fiscal period is referred to as a “Closing
Date”.). However, for the 17th fiscal period, it
shall be the period from April 1, 2023 to October
31, 2023.

Attachment

Attachment

Asset Management FeesManagement Company

to

the

Asset Asset Management FeesManagement Company

to

the

Asset

(Omitted)(Omitted)(2) Asset Management Fee II(2) Asset Management Fee II
Asset Management Fee II shall be theAsset Management Fee II shall be the amountamount calculated for each fiscal period bycalculated for each fiscal period by using theusing the following formula (rounded down
following formula (rounded down to theto the nearest yen).
nearest yen).
<Formula>
Net income before deducting AssetManagement Fee II x Distributions per unit
before deducting Asset Management Fee II x
0.0013%<Formula>
Net income before deducting AssetManagement Fee II x Distributions per unit
before deducting Asset Management Fee II x
0.0013%― 25 ―

Current Articles of Incorporation

Proposed Amendments
However, if any specific fiscal period of theInvestment Corporation exceeds or falls shortof six (6) months due to a change in the fiscal
period set forth in Article 38 or for any otherreason, the Asset Management Fee II shall becalculated by converting the Distribution perunit before deducting Asset Management Fee
II into an amount equivalent to six (6)-month
period (which shall be deemed to be 183days). The Asset Management Fee II for the
17th fiscal period (actual number of days:
214 days) will be the amount calculated
according to the following formula (rounded
down to the nearest yen).
<Formula>
Net income before deducting AssetManagement Fee II x Distributions per unit
before deducting Asset Management Fee II /214 x 183 x 0.0013%

Payment of Asset Management Fee II shallbe due within one (1) month after theapproval by the Board of Directors offinancial statements, etc. for the relevant
fiscal period.
(Omitted)

Payment of Asset Management Fee II shallbe due within one (1) month after theapproval by the Board of Directors (whichshall be the board of directors of thesurviving corporation or newly-establishedcorporation in a merger, if the Investment
Corporation is dissolved due to a merger) offinancial statements, etc. (including similar
financial documents, if no financial
statements, etc. are prepared) for the relevant
fiscal period.
(Omitted)― 26 ―

Reference Matter
Rules and regulations identified under “Deemed Approval,” as stipulated under
Article 93, Paragraph 1 of the Investment Trusts Act and Article 15 of the current
Articles of Incorporation, will not apply to any agendum submitted to the General
Meeting of Unitholders if such agendum conflict in intent with any otheragendum. The Investment Corporation believes that Agenda Item No.1 throughNo.3 do not conflict in intent.

― 27 ―