Semiannual Report
14th Fiscal Period
November 1, 2011 – April 30, 2012

http://www.kdx-reit.com/eng/

Disclaimer
This semiannual report includes translations of certain documents originally filed and made available in Japan in accordance with the Financial Instruments and Exchange Act of Japan. This
English-language semiannual report has been prepared solely for the convenience of readers outside Japan and is not intended to constitute a document for an offer to sell, or seeking an offer
to buy, any securities of KENEDIX-REIT.
English terms for Japanese legal, accounting, tax and business concepts used herein may not be precisely identical to the concept of the equivalent Japanese terms. With respect to any andall terms herein, including without limitation, financial statements, if there exist any discrepancies in the meaning or interpretation thereof between the original Japanese documents and English
translation contained herein, the original Japanese documents will always govern the meaning and interpretation.
Neither KENEDIX-REIT, Kenedix REIT Management, Inc. nor any of their respective directors, officers, employees, partners, unitholders, agents, affiliates nor their advisors shall be responsible
or liable for the completeness, appropriateness, or accuracy of English translations or the selection of the portion(s) of any document(s) translated into English.
The financial statements of KENEDIX-REIT have been prepared in accordance with generally accepted accounting principles in Japan (Japanese GAAP), which may materially differ in certain
respects from the generally accepted accounting principles of other jurisdictions.
This semiannual report contains forward-looking statements. These statements appear in a number of places in this semiannual report and include statements regarding the intent, belief, or
current and future expectations of KENEDIX-REIT or Kenedix REIT Management, Inc. with respect to its business, financial condition and results of operations. In some cases, you can identify
forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “believe,” ”estimate,” “predict,” “potential,” or the negative of these terms or othersimilar terminology. These statements are not guarantees of future performance and are subject to various risks and uncertainties. Actual results, performance or achievements, or those of theindustries in which we operate, may differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. In addition, these forwardlooking statements are necessarily dependent upon assumptions, estimates and data that may be incorrect or imprecise and involve known and unknown risks and uncertainties. Accordingly,
readers of this document should not interpret the forward-looking statements included herein as predictions or representations of future events or circumstances.
Potential risks and uncertainties also include those identified and discussed in this document. Given these risks and uncertainties, readers of this document are cautioned not to place undue
reliance on forward-looking statements, which are only valid as of the date of the information published herein. We disclaim any obligation to update or, except in the limited circumstances
required by the Tokyo Stock Exchange, announce publicly any revisions to any of the forward-looking statements contained in these documents.

Building
the Next StageBuilding the Next Stage

Operating Revenues		

9,090

Operating Income		

8,067

8,358

8,136

10th Period

11th Period

12th Period

9,044

yen billion

4,086

million yen

Kenedix Realty Investment Corporation (KENEDIX-REIT) is a Japanese real estate
investment trust (J-REIT) listed on the Tokyo Stock Exchange (8972). Founded inyen billion

million yen

9,090

4,425

3,738

3,835

3,709

10th Period

11th Period

12th Period

4,086

May 2005, KENEDIX-REIT has grown to become one of the largest REITs in Japan
specializing in mid-sized office buildings. With a portfolio centered on the Tokyo
Metropolitan Area, KENEDIX-REIT is targeting a 400 billion yen portfolio over the

13th Period

14th Period(Ended Apr. 30, 2010) (Ended Oct. 31, 2010) (Ended Apr. 30, 2011) (Ended Oct. 31, 2011) (Ended Apr. 30, 2012)

13th Period

14th Period(Ended Apr. 30, 2010) (Ended Oct. 31, 2010) (Ended Apr. 30, 2011) (Ended Oct. 31, 2011) (Ended Apr. 30, 2012)

medium- to long-term.
KENEDIX-REIT is actively “Building the Next Stage,” which will continue to focus

Net Income		

2,540

on prudent investment primarily in mid-sized Tokyo office buildings. KENEDIX-REIT

The KENEDIX-REIT portfolio

3,052

2,567

2,607

10th Period

11th Period

12th Period

13th Period> Achieves

14th Period(Ended Apr. 30, 2010) (Ended Oct. 31, 2010) (Ended Apr. 30, 2011) (Ended Oct. 31, 2011) (Ended Apr. 30, 2012)

286.8
83
95.4

> Boasts

10,993billion yen

properties

303,284
251,566

10th Period

251,08011th Period

14 Corporate Governance

6 Strengthening Fundamentals to Boost Competitiveness15 Financial Section

12 KENEDIX-REIT Portfolio Table and Map

31 Unitholders’ Information

274,973

13th Period

303,284

14th Period

Interest-Bearing Debt Ratio / Interest-Bearing Debt

45.3

(as of April 30, 2012)

2 Interview with the CEO and President

12th Period

43.0%

10th Period

11th Period

45.3%

102,968

102,567

112,715

110,914137,372

million yen

million yen

million yen

million yen

million yen

10th Period

11th Period

12th Period

13th Period

14th Period

9,891

9,596

9,364

12th Period

13th Period

14th Period

49.5
54.6%

53.9%

54.1%

135,689

135,732

135,505150,272

150,063

million yen

million yen

million yen

million yen

million yen

10th Period

11th Period

12th Period

13th Period

14th Period

51.7%

49.5%

(Ended Apr. 30, 2010) (Ended Oct. 31, 2010) (Ended Apr. 30, 2011) (Ended Oct. 31, 2011) (Ended Apr. 30, 2012)

yen billion

95.4

%

94.4%

93.6%

94.6%

94.7%

95.4%

10th Period

11th Period

12th Period

13th Period

14th Period

40.3%(Ended Apr. 30, 2010) (Ended Oct. 31, 2010) (Ended Apr. 30, 2011) (Ended Oct. 31, 2011) (Ended Apr. 30, 2012)

yen

%

%

40.9%

9,364

Unitholders’ Equity Ratio / Unitholders’ Equity

Occupancy Ratio

40.9%

yen billion(Ended Apr. 30, 2010) (Ended Oct. 31, 2010) (Ended Apr. 30, 2011) (Ended Oct. 31, 2011) (Ended Apr. 30, 2012)

million yen(Ended Apr. 30, 2010) (Ended Oct. 31, 2010) (Ended Apr. 30, 2011) (Ended Oct. 31, 2011) (Ended Apr. 30, 2012)% occupancy

Contents

yen billion

261,928

10,881

2,540

2,309

Total Assets		> Exceeds

Distribution per Unit		

million yen

remains committed to delivering strong returns to investors without sacrificing
service to tenants.

yen billion(Ended Apr. 30, 2010) (Ended Oct. 31, 2010) (Ended Apr. 30, 2011) (Ended Oct. 31, 2011) (Ended Apr. 30, 2012)

Kenedix Realty Investment Corporation 1

Interview with the CEO and President

1bearing debt (LTV) ratio to preserve this investment capacity.

good use. KENEDIX-REIT was agilely able to take advantage• Steadily enhance the quality of the portfolio through theof timing to make favorable acquisitions. With many real

Please tell us about your aspirations as the new CEO andstrategic disposition of properties. The generated proceeds

estate private funds due for refinancing, there were

President of Kenedix REIT Management, Inc., the asset

can be utilized for investments in properties that bring evensimultaneously a number of commercial mortgage-backed

management company for Kenedix Realty Investment

more to the portfolio. This is another way we maintain our

securities (CMBS) due for redemption. During the 14th Fiscal

Corporation (KENEDIX-REIT).

conservative LTV ratio.

Period, we were able to acquire 9 properties at favorable

Question

Answer1• Improve leasing terms and conditions by, for example,

prices, totaling approximately 31.32 billion yen.

shortening initial rent-free periods. Active capital investment

Although J-REITs are still able to maintain competitivenessI became the CEO and President in February 2012. By April,will ensure our buildings have sought-after features thatby acquiring properties, the market is evolving. Competition is

the J-REIT market had already reached a total acquisition

justify a premium.

expected to intensify as new players enter the market.

price of 8.5 trillion yen so, looking ahead, we need to focus• Reduce financial and other costs.

Opportunities for external growth will likely become scarcer,

on building the next stage in step with this changing market.

We are aiming for steady results from measures that seek toso we want to take a new approach in the 15th Fiscal Period.

I will do my utmost to achieve KENEDIX-REIT’s key policy

balance external and internal growth with financial strategies.

There is no disputing that mid-sized office buildings areof becoming No. 1, both in terms of asset size and quality, in2plentiful and feature a high degree of liquidity. Amid

the mid-sized office building market, Japan’s most expansive

Questionreal estate sector. At the same time, I will promote initiatives

Having entered the second stage of growth in the wakeeven greater extent on strategies that take advantage of ourthat will enable KENEDIX-REIT to reach its medium- to long-of the global financial crisis, please share your thoughts

unparalleled experience in the area of mid-sized officeterm goal of obtaining a 100-building portfolio with total

on KENEDIX-REIT’s external growth during the 14th

buildings.

acquisition price of 400 billion yen. Beyond these objectives, I

Fiscal Period (ended April 30, 2012) and the outlook forwill focus on how we can contribute to society as a J-REIT

the 15th Fiscal Period (ending October 31, 2012).

that specializes in mid-sized office buildings. To achieve these2

intensifying competition in this market, we will focus to an

Question

3

Please discuss KENEDIX-REIT’s future property

aims and build the next stage, we will:

Answer• U tilize our investment capacity to acquire promising

Since November 2009, KENEDIX-REIT’s initiatives to enter aproperties, as well as enable new forms of external growthsecond stage of growth have been gathering momentum. As

Answersuch as the acquisition of equity stakes linked to properties.

part of these efforts, in July 2011, we raised funds through a

We will focus on ways to enable KENEDIX-REIT’s external

All the while, we will maintain our conservative interest-

public offering. This acquisition capacity was soon put togrowth while maintaining a conservative LTV ratio. We will“   Our goal is to become No.1 among the J-REITs of mid-sized officebuildings. While building up the portfolio, for the next stage, we will
shift our focus to quality by improving customer satisfaction and brandvalue through effective communication with tenants and competitive

acquisition and disposition strategies.

3

Profile: Naokatsu Uchida2005	Mitsubishi UFJ Trust and Banking Corporation,
Real Estate Project Origination Division2007 CEO of MAC Investment Management Inc.
2009 CEO of Joint Asset Management Co., Ltd.
2011	Senior Manager of Kenedix REIT Management, Inc.
Financial Planning Division2012 CEO and President of Kenedix REIT Management, Inc.

property management operations.
2 Kenedix Realty Investment Corporation

Kenedix Realty Investment Corporation 3

Interview with the CEO and President

which went into effect two years ago. The key reasons forbuildings that are highly energy efficient, reflecting increased

greatly improved its financial foundation with diversified

acquiring TMK Preferred Equity Securities are (1) to secureinterest in energy conservation and other environmental

funding methods, the flexibility of asset replacement following

preferred dividends derived from rent income which isissues. Determining the requirements of each property

release of collateral pledges, the diversification of debt

expected to yield over 10% per year and (2) to takedepends in large part on whether or not it meets the new

maturities and improved borrowing terms.

advantage of the future option to acquire the Senri Life Scienceearthquake resistance standards that came into effect withCenter Building should Senri Property TMK decide to sell it.

the 1981 Revision of the Building Standard Law. Our portfolio

Question

In addition to TMK Preferred Equity Securities, we areis competitive in terms of this. The current sluggishness in

What is critical to becoming the No.1 J-REIT in the mid-planning to engage in other equity investments with a total

rent levels has encouraged tenants to relocate from thesized office building market?

value of up to 5.0 billion yen. Through these initiatives,

suburbs to central Tokyo and to increase leased space. In

KENEDIX-REIT is taking steps to diversify its investment

light of these trends, I believe that we will enjoy strong

Answermethods in order to acquire properties. Such activities aredemand based on our position as competitive J-REIT

Looking ahead, I believe that it is important to deepenvital to building the next stage to continued growth in thespecializing on properties in the Tokyo Metropolitan Area.

communication. Particularly in the area of property

years ahead.

management—which is vital to our internal growth—we need

Certification for four of its existing properties and is taking

to encourage more effective communication with tenants. To

proactive steps to improve energy savings throughout its

that end, we are developing a system to meet tenant needs

Can you tell us more about the internal growth KENEDIX-

portfolio. In addition, by utilizing scale merits, we are reaping

in the area of property management based on customer

REIT is seeking?

the benefits of our efforts to assemble a portfolio with over 80

satisfaction surveys conducted every two years. We will

properties. Such actions not only differentiate us from ourfurther enhance the value of the KENEDIX-REIT brand bycompetitors, but also are meaningful to society.

developing this new communication system and by fostering

Answer5

5

For the first time in three years, KENEDIX-REIT’s occupancy

ing in portfolio reshuffling and investing in tokumei-kumiai
investment. In May 2012, KENEDIX-REIT sold the KDX Omori

7

Furthermore, KENEDIX-REIT received DBJ Green Building

Question

effectively utilize our purchasing power, which includes engag-

76close relationships with tenants.

ratio exceeded 95% across the entire portfolio at the end of

Questionthe 14th Fiscal Period (ended April 30, 2012). Boasting an

Please explain the benefits of recent efforts to strengthen

Question

occupancy ratio of 96.2% for office buildings located in theand upgrade KENEDIX-REIT’s financial foundation.

In conclusion, what message do you have for the investors?

five wards of central Tokyo, our core location, we are 5.4%
above the market average of 90.8%.

Answer6

Answer88

Under these circumstances, focusing on improvements in

Debt procurement through loans is one aspect of our efforts

KENEDIX-REIT works to maintain stable property acquisition

earnings through improved rent terms is the first key

to strengthen and upgrade KENEDIX-REIT financial

and financing activities on the back of previous capitalchallenge of KENEDIX-REIT’s internal growth initiatives.

foundation. We are able to borrow with greater agility thanks

increases. In addition, we have developed competitive

Moreover, we will systematically undertake upgrades toto securing two additional lenders, Mizuho Bank and Bank ofproperty management operations while improving investor

maximize the value of existing properties. Such actions include

Fukuoka, and we have reduced the average spread (including

understanding by means of our ongoing IR activities. Such

maintaining and improving facilities through our property

upfront fees) for new borrowings from 1.18% to 1.07% in theactions will enable KENEDIX-REIT to achieve continuing

methods with the acquisition of TMK Preferred Equity

management section in order to counteract the effect ofyear ended April 30, 2012. We have also taken steps toprogress in the years ahead.

Securities issued by Senri Property TMK. What was theaging while augmenting and updating building specifications

reduce finance costs. In September 2011 and March 2012,

aim of this new equity investment?

to meet social needs. These initiatives are underpinned by

we issued the Third and Fourth Series Unsecured Investment

4

construction performed in the 14th Fiscal Period, which

Corporation Bonds, respectively, thereby realizing the release

exceeded 1.0 billion yen for the first time in three years.

of pledges on all of our debt. Nearly 90% of our debt is long-

Naokatsu Uchida

Building for 4.2 million yen. Effectively using this money willbe the key to further strengthening the quality of the portfolio.

Question

4

In April 2012, KENEDIX-REIT diversified its investment

Answer

KENEDIX-REIT began searching for optimal investments in

In addition, domestic real estate needs are undergoingterm with an average interest rate of 2.02% (including upfront

CEO and President

response to changes in investment management guidelines,

major changes. In particular, demand is increasing forfees) at the end of the 14th Fiscal Period. KENEDIX-REIT has

Kenedix REIT Management, Inc.

4 Kenedix Realty Investment Corporation

Kenedix Realty Investment Corporation 5

Special Feature:

Strengthening Fundamentals to
Boost Competitiveness1

Building the Quality of the Portfolio

Office Portfolio

92.0

%

KENEDIX-REIT invests in assets with a medium- to long-term viewpoint and does not seek
to spin properties. We do, however, sell properties when their sale is deemed to benefit theoverall development of the investment portfolio.
The sale of the KDX Omori Building helped improve the portfolio. This enabled the acquisition of the View Flex Umeda Building which is
18.7 years newer and generates NOI of 6.8%, a full 1.3 percentage points higher than the disposed property.

Difference
betweenpropertyacquired andsold

Acquired
View Flex Umeda Building

e seek to steadily build the quality of the portfolio.

KENEDIX-REIT has invested a total of 73.2 billion yen, propelling

The 2008 financial crisis spread great turmoil

the portfolio to 283.3 billion yen (excluding KDX Omori Building)throughout the real estate market, but KENEDIX-

as of the end of the 14th Fiscal Period. The properties additionally

Location

Osaka, Osaka

REIT was one of the earliest J-REITs to resume

acquired after 2009 have greatly contributed to the increase of

Gross floor area

6,805.76 m2

property acquisition. This not only allowed us to acquire quality

revenue (NOI yield: from 4.3% to 4.6%) for the entire portfolio.

Age of building (Year built)

2.8 years (Jul. 2009)

properties at a discount, but it also cemented our reputation as a

Our focus is now on steadily improving portfolio quality throughAcquisition price

2,770 million yen

buyer of mid-sized office buildings.

selective acquisition and property replacement. KENEDIX-REIT

Appraisal value at acquisition

3,240 million yen

acquired the View Flex Umeda Building in March 2012 to replace

Difference between Acquisition
price and Appraisal value-470 million yen (-14.5%)

expanding our network and placing us in an enviable position.

the KDX Omori Building which was disposed subsequently in

Acquisition dateMar. 28, 2012 (14th Period)

Access to this vast property network allows KENEDIX-REIT toMay. As a further step, we are seeking to diversify our investment

Actual NOI

188 million yen

methods: one such initiative is the investment in preferred equity

Actual NOI/Acquisition price

6.8%

make selective investments that maximize unitholder value.

Appraisal NOI

172 million yen

Appraisal NOI/Acquisition price

6.2%

W

Increasingly, sellers and brokers are contacting us directly,

Since the 9th Fiscal Period (ended October 31, 2009),

securities from Senri Property TMK.

Portfolio Growth (by acquisition price)(Billion yen)

Office Buildings

Portfolio Breakdown by Property TypeCentral Urban Retail Properties

Residential Properties

Re-growth
period300

283.3*

Stable period

250

CentralUrban Retail
Properties
4.3%

200

150

Residential
Properties
3.3%

GrowthperiodOthers 0.2%

Office Buildings

92.0%

50

CentralTokyo

0

End of 1st(2005/10)

End of 5th(2007/10)

End of 10th(2010/4)* Acquisition price as of April 30, 2012 includes Others (Hotels) of 0.6 billion yen.

End of 14th
(2012/4)

Other Tokyo
Metropolitan
Area 19.9%

59.9%

Note:・The above percentages are calculated using the acquisition
prices rounded down to the first decimal place.
・Central Tokyo includes Chiyoda, Chuo, Minato, Shibuya andShinjuku war.ds.

+1.1%

Location
Gross floor area
Age of building (Year built)
Sales priceAppraisal value(as of Apr. 30, 2012)
Difference between Acquisition
price and Appraisal value
Date of sale
Actual NOI
Actual NOI/Sales priceAppraisal NOI
Appraisal NOI/Sales priceOta-ku, Tokyo
7,334.77 m2
21.5 years (Oct. 1990)
4,200 million yen
3,790 million yen
410 million yen (+10.8%)
May 11, 2012 (15th Period)
229 million yen
5.5%
216 million yen
5.1%> Diversifying Our Investment Methods
Description of Preferred Equity Securities
The Senri Life Science Center Building is a49,260.78m2 complex built in 1992. As a move to

Other Regional
Areas 20.0%+1.3%

KDX Omori Building

Note: Actual NOI for View Flex Umeda Building based on the Net Operating Income (p.a.) which was calculated by taking into consideration the Operating income and expenses (after property
tax and city planning tax) under the terms and conditions of the contracts with tenants valid as of Feb. 29, 2012.
Amounts for KDX Omori Building were annualized based on Actual NOI in the 14th Period.
Appraisal NOI for View Flex Umeda Building shows the Net Operating Income (p.a.) calculated with the direct capitalization method at the time of acquisition, and Appraised NOI for KDX
Omori Building shows the Net Operating Income (p.a.), stated in the appraisal report as of end of Apr. 2012, which was calculated with the direct capitalization method.
Amounts less than 1 million yen are omitted, and percentages are rounded to first decimal place.
Average age is calculated as of Apr. 30, 2012, and rounded to the first decimal place.
For KDX Omori Bldg., the sales agreement was signed on Feb. 23, 2012 (14th Period) and the building was sold on May 11, 2012 (15th Period).

Portfolio Breakdown by Region (office buildings)
100-18.7 years

Soldstrengthen the property pipeline, KENEDIX-REIT
made an indirect investment in this property throughthe acquisition of preferred equity securities from
Senri Property TMK. This stake will deliver a highyield and provide KENEDIX-REIT with the future
opportunity to acquire the property should it be
sold.

Senri Property TMK
Assets¥8.81 billion Liabilities¥6.83 billion
Specified assets: ¥8.02 billion Specified bonds &(Note)
Specific purpose borrowings:
Other:¥0.79 billion¥6.83 billion
Preferred Equity ¥1.88 billion
Specified equity:¥0.1 billion

Acquired preferred equity securities (worth 0.891 billion yen).
Note: Appraisal value of specified assets (as of Feb. 1, 2012) is12.3 billion yen.

Figures for the 14th period reflect the sale of the KDX Omori Building, but not the Senri Property TMK transaction.

Acquired in December 2011

A75 Kabutocho Nikko Building

A76 Ikebukuro Nikko Building

A77 Kabutocho Nikko Building II

A78 Tachikawa Ekimae Building

Location: Chuo-ku, Tokyo
Acquisition price: 11,270 million yen

Location: Toshima-ku, Tokyo
Acquisition price: 1,653 million yen

Location: Chuo-ku, Tokyo
Acquisition price: 1,280 million yen

Location: Tachikawa, Tokyo
Acquisition price: 1,267 million yen

6 Kenedix Realty Investment Corporation

A79 Nagoya Ekimae Sakura-dori
Building

A80 Nagoya Nikko Shoken
Building

Location: Nagoya, Aichi
Acquisition price: 7,327 million yen

Location: Nagoya, Aichi
Acquisition price: 4,158 million yen

A81 Sendai Nikko Building

D01 Kanazawa Nikko Building

Location: Sendai, Miyagi
Acquisition price: 950 million yen

Location: Kanazawa, Ishikawa
Acquisition price: 645 million yen

Kenedix Realty Investment Corporation 7

Special Feature:

2

95.4

Improving Occupancy Through Effective Portfolio Management

Central Tokyo Office Occupancy:
KENEDIX-REIT Versus the Market

(%)
100

98

96.2%
96

94

92

90.8%

90

End of 10th(2010/4)

End of 12th
(2011/4)

End of 14th
(2012/4)

Note: Based on office buildings in the 5 wards of Central Tokyo. Kenedix REITManagement created the chart using data provided by Miki Shoji, whose
figures cover both existing and new buildings. Standard floor plans were used
to calculate the KENEDIX-REIT office portfolio.

We strive to maintain high levels of customer

months. We also took the opportunity to renovate somesatisfaction, but some tenants eventually move out

common areas.

for various reasons, including downsizing. WhenTo minimize the vacancy period, we approach this issue on several

the inevitable strikes, KENEDIX-REIT works to help

fronts. With older buildings, we may perform improvements, suchnew tenants move in. That way, we can shorten the vacancy

as seismic reinforcement, to provide more value and make theperiod and generate leasing income as rapidly as possible.

property more attractive. Our leasing activities focus on these

The KDX Harumi Building provides a case in point. Five floors

higher specs and leverage the leasing capabilities of the asset

accounting for 46.3% of total floor space were leased by NTT

management company, working in close collaboration with(tsubo)2,000

DATA Corporation. When notice was given that the lease would

leasing brokers.

60

1,500

be cancelled on April 27, 2011, we promptly began leasing

Before40

1,000

activities in order to limit the vacancy period. As a result, occupancy

20

500

rebounded from 42.5% to 70.3% in April 2012. The KDX

00

Kayabacho Building provides another example. Working closely

-20

-500

with brokers and the Asset Management Company, we were-40

-1,000able to restore occupancy to 100% from a low of 72.2% in just 6-60-1,500-80-2,000(# of tenants)
80

End of 8th(2009/4)%

Trend of Tenant Turnover

KENEDIX-REIT Office Portfolio Occupancy
The Market (Average Office Building Occupancy)

End of 6th(2008/4)> Shortening the Vacancy Period: Rapidly Replacing Tenants to Boost Occupancy

8th Period(08/11-09/04)

Move-ins
Move-outs
Area occupied (move ins – move outs)

10th Period(09/11-10/04)

12th Period(10/11-11/04)

14th Period(11/11-12/04)

Note: Based on number of floors. If one tenant leases more than one floor, each floor iscounted as one.

Standard floor elevator lobby

Lease-ups During the 14th Fiscal Period• Shorten vacancy periods• Execute appropriate value-ups• Leverage the leasing capabilities of the AssetManagement Company

Leasing policies

y focusing on mid-sized office buildings in the Tokyo

How do we do it? The short answer is that we’re fanatical about

Metropolitan Area, KENEDIX-REIT has acquired

tenant service and have a clear portfolio management strategy.

unsurpassed know how. The results are shown to the left.

The full answer involves much more. The Asset Management

Our office portfolio beats the market with higher lev-

Company has its own internal property management division,els of occupancy. In April 2012, the KENEDIX-REIT office portfolio

ensuring prompt understanding and the accurate reflection of70

occupancy ratio in the 5 wards of Central Tokyo stood at 96.2%,

tenant needs. We upgrade buildings in line with tenant

60

over 5 percentage points above the overall market, which stood at

expectations. What they value is what we value. Our heightened

90.8%. The Asset Management Company has consistently main-

responsiveness also shows.

B

After

A20 KDX Kayabacho Building
A60 KDX Harumi Building

Changes in the occupancy ratios of 2 properties (1 year performance)
(%)
100

80

50

100.0%

72.2%

90

Vacancy period: 6 months

70.3%

Termination
notice(2 floors)

Termination
notice(5 floors)

40

Vacancy period: 6 months

42.5%

30

2011/04

tained an occupancy ratio higher than 95% for its office buildings

05

06

07

08

09

10

11

12

2012/01

02

03

04

in the central 5 wards, beating overall market occupancy every
period since the 7th period ended October 2008.

KENEDIX-REIT’s Environmental Initiatives

K

ENEDIX-REIT has teamed up with J.D. Power Asia
Pacific to conduct surveys of its tenants. The findings
provide useful insight and help determine future
improvements. The fourth survey, conducted in the 13th

Kenedix Realty Investment Corporation became the first J-REIT

25 years ago, KENEDIX-REIT was able to achieve a high customer

to receive DBJ Green Building Certification on June 9, 2011.

Disaster-prevention & anticrime measuressatisfaction ranking of 81.7%. By making improvements to raise

The View Flex Umeda Building became our fourth property to

Tenant comfort & convenience

the competitiveness of our properties, we are able to maintain aacquire certification on March 28, 2012.

Harmony with the environment & community

high occupancy rate, regardless of building age.
We focus on the most sought after properties by specializing in

Changes in Depreciation & Improvement Works(Budget/Actual)
Depreciation (Budget & Actual)
Improvement (Budget & Actual)(Million yen)
2,000

DBJ Green Building Criteria

Fiscal Period, was revealing. Even with buildings built more than

The Development Bank of Japan Inc. awards green certification
at four different levels after evaluating five areas.

Collaboration with tenants & investors
Environmental IR activities

buildings suitable for mid-sized office buildings. 92.2% of Tokyo

Received DBJ Green Building Certification

Participation in GRESB Evaluation

offices are occupied by small businesses, thus guaranteeing a large

Received DBJ Green Building Certification for the 4 properties.

(Asset Management Company)

supply of potential tenants. Maintaining excellent relationships★★ Silver

GRESB is a benchmark to analyze and evaluate sustainability of real estate companies,
REIT and private real estate fund in terms ofenvironmental and social performance.

★ Bronzewith leasing agents means they are out in the market
1,500

1,429 1,451

1,477 1,440
1,406 1,442

1,578 1,599 1,593
1,275

1,000

500

1,083

1,030
571

698
441

1,213

826

462

recommending our buildings and spaces. Our leasing agents
provide us with helpful market information. They also proactively
hold open houses to secure new tenants.
Capital spending on improvements hit a high of 1.1 billion yen
in the 14th Fiscal Period and KENEDIX-REIT is budgeting over
1.2 billion yen in each of the two subsequent periods. Work has

0

8th
9th
10th
11th
12th
13th
14th
15th
16th
Actual Actual Actual Actual Actual Actual Actual Budget Budget(As of April 30, 2012)8 Kenedix Realty Investment Corporation

already begun on the replacement of air conditioning systems,
conversion to high-efficiency LED lighting, installation of motion

KDX Harumi Building

KDX Nagoya Sakae
Building

KDX KobayashiDoshomachi Building

View Flex
Umeda Building

Global Real Estate Sustainability
Benchmarksensors and other energy-saving improvements.
Kenedix Realty Investment Corporation 9

Special Feature:

3

Financial Stability

Conservative LTV Ratio

S

45.3

> Reducing Financing Costs With Long-term Loans%

Changes in Average Interest Rate / Average Life
Average Life
Average Interest Rate

ince being listed, KENEDIX-REIT has worked to maintainTo ensure the ability to smoothly acquire assets, KENEDIX-REIT

(%)

(yrs)

a sound and stable financial foundation. This foundation

generally limits its interest-bearing debt (LTV) ratio to approximately

2.20

4.0

allows us to make acquisitions when opportunities arise.

45%, though this may be allowed to rise slightly to take advantage

In July 2011, we executed the 4th Public Offering,of exceptional opportunities. A conservative LTV ratio maintains

2.10

3.0

all collateral pledges against our properties. KENEDIX-REIT now

When the opportunity arises to acquire properties, we havepossesses available options as financing methods due to thevarious financing options. For example, the funding for the

release of collateral for all the properties in July 2011.

acquisition of eight properties on December 26, 2011 was

With the release of collateral pledges, we were able to diversify

arranged by Sumitomo Mitsui Banking Corporation with the

our financing options, including the issuance of investment

Development Bank of Japan Inc. as a co-arranger. By continuing tocorporation bonds, thereby significantly improving our credit

focus on diversified financing methods, we are achieving external

standing. As a result, I believe we were able to reduce finance

growth. We have the agility to respond quickly and swiftly makecosts. Simultaneously, KENEDIX-REIT is reducing financial riskfavorable acquisitions. At the same time, we are committed towith the diversification of debt maturities.

generating stable distributions for our investors.

borrowings to 2.5 years (up from 2.3 years
in the previous period) while lowering

2.02%

financial stability and preserves funding flexibility.

raising approximately 14 billion yen and resulting in the release of

the average interest rate
2.0

2.00

(including upfront fees) to

2.5

2.02% (down from 2.17%).

years 1.0

1.90

0.0

1.80

11th Period(2010/10)

12th Period(2011/04)

13th Period(2011/10)

14th Period(2012/04)> Diversifying Financing Methods> Maintaining a Conservative Interest-Bearing Debt (LTV) Ratio➔ Raised

Changes in Interest Bearing Debt (LTV) Ratio

6.3 billion yen by leveraging the committed term loan facility established in

December 2011.

(%)
50

47.0％

45.6％
45

41.2％
40

➔ Extended the average life of our(Upfront fee included)

38.7％

37.5％

41.4％

38.9％

Conservative LTV level
41.1％
40.9％
40.9％

45.3%

43.0％

➔ Issued the 4th Investment Corporation Bonds worth

40.3％

1.5 billion yen (maturity of

35.3％
35

5.5 years), to redeem the 1st Investment Corporation Bonds due March 15, 201230

End of
End of
End of
End of
End of
End of
End of
End of
End of
End of
End of
End of
End of
End of
1st period 2nd period 3rd period 4th period 5th period 6th period 7th period 8th period 9th period 10th period 11th period 12th period 13th period 14th period
2005/10
2006/4
2006/10
2007/4
2007/10
2008/4
2008/10
2009/4
2009/102010/4
2010/10
2011/4
2011/10
2012/4(9.0 billion yen).

Note: Interest bearing debt ratio = Interest-bearing debt at end of period/Total assets> Obtained a 7-year Loan from Sumitomo Mitsui Banking Corporation and theDevelopment Bank of Japan
Diversification of Debt Maturity (As of April 30, 2012)> Expanding Our Lender Base to 10 Banks

New Finance in the 14th Period
Borrowings
Investment Corporation Bonds(Billion yen)
25

➔ Secured loans from two new lenders:Mizuho Bank (1.0 billion yen) and Bank of Fukuoka (0.5 billion yen).

Repayment
20

7.5

2.5

1.2
9.8

7.3

11.2

13.3

13.1
10.6

15th
period16th
period

7.0

4.5

0

14th
periodDebt with maturityof 7 years

10.0

11.2

5

17th
period18th
period19th
period20th
period21st
period

0.5
3.0

22nd
period23rd
period24th
period1.5
25th
period

3.0
2.4
26th
period27th
period28th
periodNote: The chart illustrates total debt amounts that mature in each period, including principal repayment based on contract (rounded to the first decimal place).
The debts that were financed during 14th period (including refinanced portions) are indicated in light green.

Proportion of Floating-Rate Debt vs Fixed-Rate Debt
Floating Rate
¥28.5 billion
20.7%
Fixed Rate
¥108.9 billion
79.3%

10 Kenedix Realty Investment Corporation

As of
As of
Oct. 31, 2011 Apr. 30, 2012

Bank

2.5

6.3
1.5

10

Borrowing Amounts (Billion yen)

Breakdown of Lenders

7.5

15

Bank of Fukuoka 0.4%

Resona Bank 5.6%
Mitsubishi UFJ
Trust and Banking

Sumitomo Mitsui
Banking
Corporation

7.0%

Debt Balance by Maturity
Short-term Borrowings¥14.7 billion
10.7%
Long-term
Borrowings andInvestment Corporation
Bonds¥110.8 billion
80.7%

Mizuho Trust & Banking 0.8%

Current Portionof Long-term Borrowings¥11.9 billion
8.6%

Mizuho Bank 0.8%

24.4%

Bank of Tokyo
Mitsubishi UFJ

12.4%

1

Sumitomo Mitsui Banking
Corporation

22.4

Aozora Bank

Development Bankof Japan

13.5%

15.0%

20.3%

32.0

+9.6

2 Development Bank of Japan

16.4

26.7

+10.3

3 Aozora Bank

14.0

19.7

+5.7

4 Sumitomo Mitsui Trust Bank

15.8

17.7

+1.9

5 Bank of Tokyo Mitsubishi UFJ

11.3

16.3

+5.0

Mitsubishi UFJ Trust and6Banking

7.2

9.2

+2.0

7 Resona Bank

5.3

7.3

+2.0

8 Mizuho Trust & Banking

1.0

1.0

0

–

1.0

+1.0

10 Bank of Fukuoka

–

0.5

+0.5

11 Norinchukin Bank

4.0

–

-4.0

97.4

131.4

+34.0

9 Mizuho Bank

Sumitomo Mitsui
Trust Bank

ChangeTotal

Note: Figures are rounded to the first decimal place.

Kenedix Realty Investment Corporation 11

Portfolio Table

Portfolio Map (As of April 30, 2012)(As of April 30, 2012)

Office(TokyoMetropolitan
Area)

Office(Other Regional
Areas)

Residential

Central Urban Retail

OthersInvestment Security

No.
Property NameA01
KDX Nihonbashi 313 Building
A03
Higashi-Kayabacho Yuraku Building
A04
KDX Hatchobori Building
A05
KDX Nakano-Sakaue Building
A06
Harajuku F.F. Building
A07
FIK Minami Aoyama
A08
Kanda Kihara Building
A13
KDX Kojimachi Building
A14
KDX Funabashi Building
A15
KDX Hamacho Building
A16
Toshin 24 Building
A17
KDX Ebisu Building
A18
KDX Omori Building (Note 2)
A19
KDX Hamamatsucho Building
A20
KDX Kayabacho Building
A21
KDX Shinbashi Building
A22
KDX Shin-Yokohama Building
A23
KDX Yotsuya Building
A26
KDX Kiba Building
A27
KDX Kajicho Building
A28
KDX Nogizaka Building
A29
KDX Higashi-Shinjuku Building
A30
KDX Nishi-Gotanda Building
A31
KDX Monzen-Nakacho Building
A32
KDX Shiba-Daimon Building
A33
KDX Okachimachi Building
A34
KDX Hon-Atsugi Building
A35
KDX Hachioji Building
A37
KDX Ochanomizu Building
A38
KDX Nishi-Shinjuku Building
A39
KDX Toranomon Building
A40
Toranomon Toyo Building
A41
KDX Shinjuku 286 Building
A45
KDX Roppongi 228 Building
A46
Hiei Kudan-Kita Building
A47
KDX Shin-Yokohama 381 Building (Note 3)
A48
KDX Kawasaki-Ekimae Hon-cho Building
A49
Nissou Dai-17 Building
A50
Ikejiri-Oohashi Building
A51
KDX Hamacho Nakanohashi Building
A52
KDX Kanda Misaki-cho Building
A55
Shin-toshin Maruzen Building
A56
KDX Jimbocho Building
A57
KDX Gobancho Building
A59
KDX Iwamoto-cho Building
A60
KDX Harumi Building
A61
KDX Hamamatsucho Dai-2 Building
A62
Koishikawa TG Building
A63
Gotanda TG Building
A64
KDX Nihonbashi 216 Building
A66
KDX Shinjuku Building
A67
KDX Ginza 1chome Building
A68
KDX Nihonbashi Honcho Building
A71
KDX Iidabashi Building
A72
KDX Higashi-Shinagawa Building
A73
KDX Hakozaki Building
A74
KDX Shin-Nihonbashi Building
A75
Kabutocho Nikko Building
A76
Ikebukuro Nikko Building
A77
Kabutocho Nikko Building II
A78
Tachikawa Ekimae Building
A12
Portus Center Building
A24
KDX Minami Semba Dai-1 Building
A25
KDX Minami Semba Dai-2 Building
A36
KDX Niigata Building
A42
Karasuma Building
A44
KDX Sendai Building
A53
KDX Hakata-Minami Building
A54
KDX Kitahama Building
A58
KDX Nagoya Sakae Building
A69
KDX Kobayashi-Doshomachi Building
A70
Kitananajo SIA Building
A79
Nagoya Ekimae Sakura-dori Building
A80
Nagoya Nikko Shoken Building
A81
Sendai Nikko Building
A82
View Flex Umeda Building
Office Subtotal (76 properties)
B03
Court Mejiro
B19
Residence Charmante Tsukishima
B34
Gradito Kawaguchi (Note 2)
B18
Venus Hibarigaoka
Residential Subtotal (4 properties)
C01
Frame Jinnan-zaka
C02
KDX Yoyogi Building
Central Urban Retail Subtotal (2 properties)
D01
Kanazawa Nikko Building
Others Subtotal (1 property)
Total (83 properties)
Senri Property TMK Preferred Securities

Location
Chuo-ku, Tokyo
Chuo-ku, Tokyo
Chuo-ku, Tokyo
Nakano-ku, Tokyo
Shibuya-ku, Tokyo
Minato-ku, Tokyo
Chiyoda-ku, Tokyo
Chiyoda-ku, Tokyo
Funabashi, Chiba
Chuo-ku, Tokyo
Yokohama, Kanagawa
Shibuya-ku, Tokyo
Ota-ku, Tokyo
Minato-ku, Tokyo
Chuo-ku, Tokyo
Minato-ku, Tokyo
Yokohama, Kanagawa
Shinjuku-ku, Tokyo
Koto-ku, Tokyo
Chiyoda-ku, Tokyo
Minato-ku, Tokyo
Shinjuku-ku, Tokyo
Shinagawa-ku, Tokyo
Koto-ku, Tokyo
Minato-ku, Tokyo
Taito-ku, Tokyo
Atsugi, Kanagawa
Hachioji, Tokyo
Chiyoda-ku, Tokyo
Shinjuku-ku, Tokyo
Minato-ku, Tokyo
Minato-ku, Tokyo
Shinjuku-ku, Tokyo
Minato-ku, Tokyo
Chiyoda-ku, Tokyo
Yokohama, Kanagawa
Kawasaki, Kanagawa
Yokohama, Kanagawa
Meguro-ku, Tokyo
Chuo-ku, Tokyo
Chiyoda-ku, Tokyo
Shinjuku-ku, Tokyo
Chiyoda-ku, Tokyo
Chiyoda-ku, Tokyo
Chiyoda-ku, Tokyo
Chuo-ku, Tokyo
Minato-ku, Tokyo
Bunkyo-ku, Tokyo
Shinagawa-ku, Tokyo
Chuo-ku, Tokyo
Shinjuku-ku, Tokyo
Chuo-ku, Tokyo
Chuo-ku, Tokyo
Shinjuku-ku, Tokyo
Shinagawa-ku, Tokyo
Chuo-ku, Tokyo
Chuo-ku, Tokyo
Chuo-ku, Tokyo
Toshima-ku, Tokyo
Chuo-ku, Tokyo
Tachikawa, Tokyo
Sakai, Osaka
Osaka, Osaka
Osaka, Osaka
Niigata, Niigata
Kyoto, Kyoto
Sendai, Miyagi
Fukuoka, Fukuoka
Osaka, Osaka
Nagoya, Aichi
Osaka, Osaka
Sapporo, Hokkaido
Nagoya, Aichi
Nagoya, Aichi
Sendai, Miyagi
Osaka, Osaka
Shinjuku-ku, Tokyo
Chuo-ku, Tokyo
Kawaguchi, Saitama
Sapporo, Hokkaido
Shibuya-ku, Tokyo
Shibuya-ku, Tokyo
Kanazawa, Ishikawa

Toyonaka, Osaka

Acquisition price (mn yen)
5,940
4,450
3,680
2,533
2,450
2,270
1,950
5,950
2,252
2,300
5,300
4,640
3,500
3,460
2,780
2,690
2,520
1,950
1,580
2,350
1,065
2,950
4,200
1,400
6,090
2,000
1,305
1,155
6,400
1,500
4,400
9,850
2,300
3,300
7,600
5,800
3,760
2,710
2,400
2,310
1,380
2,110
2,760
1,951
1,864
10,250
2,200
3,080
2,620
2,010
6,800
4,300
4,000
4,670
4,590
2,710
2,300
11,270
1,653
1,280
1,267
5,570
1,610
1,560
1,305
5,400
2,100
4,900
2,220
7,550
2,870
2,005
7,327
4,158
950
2,770
264,401
1,250
5,353
1,038
1,800
9,441
9,900
2,479
12,379645
645
286,866
891

Year Built (Note 1)
Apr. 1974
Jan. 1987
Jun. 1993
Aug. 1992
Nov. 1985
Nov. 1988
May 1993
May 1994
Apr. 1989
Sep. 1993
Sep. 1984
Jan. 1992
Oct. 1990
Sep. 1999
Oct. 1987
Feb. 1992
Sep. 1990
Oct. 1989
Oct. 1992
Mar. 1990
May 1991
Jan. 1990
Nov. 1992
Sep. 1986
Jul. 1986
Jun. 1988
May 1995
Dec. 1985
Aug. 1982
Oct. 1992
Apr. 1988
Aug. 1962
Aug. 1989
Apr. 1989
Mar. 1988
Mar. 1988
Feb. 1985
Jul. 1991
Sep. 1988
Sep. 1988
Oct. 1992
Jul. 1990
May 1994
Aug. 2000
Mar. 2008
Feb. 2008
Apr. 1992
Nov. 1989
Apr. 1988
Oct. 2006
May 1993
Nov. 1991
Jan. 1984
Mar. 1990
Jan. 1993
Nov. 1993
Nov. 2002
Nov. 1998
Mar. 1986
Oct. 2001
Feb. 1990
Sep. 1993
Mar. 1993
Sep. 1993
Jul. 1983
Oct. 1982
Feb. 1984
Jun. 1973
Jul. 1994
Apr. 2009
Jul. 2009
Oct. 1989
Apr. 1986
Aug. 1974
Mar. 1989
Jul. 2009
Avg. 21.9 years
Mar. 1997
Jan. 2004
Feb. 2006
Mar. 1989
Avg. 11.8 years
Mar. 2005
Aug. 1991
Avg. 9.8 years
Mar. 1989
Avg. 23.1 years
Avg. 21.0 years

Occupancy Ratio
94.6%
100.0%
100.0%
98.3%
100.0%
100.0%
100.0%
100.0%
100.0%
95.0%
100.0%
100.0%
100.0%
100.0%
100.0%
99.5%
97.9%
100.0%
100.0%
100.0%
100.0%
99.7%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
88.6%
100.0%
95.1%
100.0%
65.1%
91.4%
91.5%
100.0%
86.4%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
70.3%
87.6%
100.0%
100.0%
100.0%
97.7%
100.0%
100.0%
100.0%
89.2%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
89.5%
86.0%
90.4%
64.1%
100.0%
96.7%
86.0%
89.2%
100.0%
95.6%
100.0%
92.8%
92.7%
75.4%
95.5%
95.1%
95.2%
100.0%
100.0%
95.0%
96.9%
100.0%
100.0%
100.0%
100.0%
100.0%
95.4%

A60 KDX Harumi Building
B3

MejiroCentral
Tokyo

A29

Tokyo
Metropolitan
Government
A55

A52

Shinjuku-ku
A23

A8
A27

A15

A57

C2

Shibuya-ku

A59

Chiyoda-ku

A46

A41

A66

A37
A56

Shinjuku

A46 Hiei Kudan-Kita
Building

Ueno

A71

A38

A40 Toranomon Toyo
Building

A68

The Imperial
Palace
Tokyo

A13

A51
A74 A75
A73
A77
A64
A1 A20 A3

A6
A4
A67

Office Buildings
Residential Properties

A45
A28
C1

Chuo-ku

A40 A39
A21

A7

B19

Central Urban Retail Properties
JR Yamanote Line

Shibuya

A61

Tokyo Tower

A17

A60

A19
A32

JR Chuo Line

Minato-ku

Hamamatsu-cho

ShinagawaTokyo Metropolitan
Area
SaitamaTokyo
Chiba
Kanagawa

Jun. 1992

Notes: 1. The year built refers to the date of construction completion recorded in the land register. The average age subtotal and total data are calculated using the weighted-average based on acquisition prices as of April 30, 2012,
and are rounded down to the first decimal place.
2. KDX Omori Building was sold on May 11, 2012, and Gradito Kawaguchi was sold on June 26, 2012.
3. KDX Shin-Yokohama 381 Building and KDX Shin-Yokohama 381 Building Annex Tower are indicated collectively as one property. Year of construction of existing tower is shown. Upon calculating the weighted-average
portfolio age, the completion date (April 2009) for the KDX Shin-Yokohama 381 Building Annex Tower is not considered.
4. Amounts indicated have been rounded down.

12 Kenedix Realty Investment Corporation

This page only presents properties in Central Tokyo.

A66 KDX Shinjuku Building

A37 KDX Ochanomizu
Building

A67 KDX Ginza 1chome
Building
Kenedix Realty Investment Corporation 13

Corporate Governance

Financial Section

With the aim of becoming an “autonomous J-REIT,”KENEDIX-REIT endeavors to build a corporate governancesystem that fosters highly transparent asset management
operations and fair transactions.

Corporate Governance System of Kenedix REITManagement

Contents

Kenedix REIT Management endeavors to control the various risks

Independent Auditor’s ReportF

Balance SheetsG

related to investment management by preparing management

Ensuring management independence and transparency is extremely
important in undertaking fair transactions and indispensable forpromoting sound management practices. In order to comply witheach legal regulation and realize asset management operations
that are fair and highly transparent, Kenedix REIT Management,
the asset management company of KENEDIX-REIT, is mindful ofthe following items, shown in the chart below. In particular, theCompliance Officer and the Asset Management Committee(AMC) function as two integral aspects of the decision-making
process, ensuring compliance with rules and regulations thatgovern J-REITs, organization-wide support and implementation.

guidelines and adhering to fundamental investment management
concepts, including investment policies, transaction rules withinterested parties, and policies of distribution and disclosure.
Furthermore, based on a review conducted by the Compliance
Officer, important items that include transactions with interested

Statements of Income and Retained Earnings /Statements of Changes in Net Assets
H
Notes to Financial Statements

I

Statements of Cash Flows (Unaudited)S

parties are subject to strict protocols that involve deliberations
and resolutions undertaken by the AMC and the Compliance
Committee (whose members include one outside lawyer). Finaldecisions regarding such transactions are made by the Board of
Directors.

Financial Summary (Unaudited)
Historical Operating Trends
For the 10th–14th Fiscal Periods

AMC’s Role in Advancing Decision Making
PeriodOn a weekly basis, AMC members receive reports on tenant

Corporate Governance System of KENEDIX-REIT
KENEDIX-REIT has established a Board of Directors—a meeting of
which is held on a regular basis—that is fully capable of undertaking
operating decisions and functioning as a body that supervises theexecutive officer. Through the functions of the Board of Directors,
KENEDIX-REIT grasps and oversees the status of Kenedix REITManagement’s business operations.

mn yen

8,067

8,358

8,136

9,044

9,090

8,067

8,242

8,136

8,498

9,090

improvements, and deliberate and approve property acquisitions

Operating expenses

mn yen

4,329

4,522

4,427

4,618

5,004

(Property-related expenses)

mn yen

3,714

3,817

3,767

3,961

4,284

Operating income

mn yen

3,738

3,835

3,709

4,425

4,086

Ordinary income

mn yen

2,568

2,608

2,346

3,040

2,551

approval vets issues and ensures a flow of communication that is

Net income (a)mn yen

2,567

2,607

2,309

3,052

2,540

logical and meaningful to the decision-making process.

Total assets (b)mn yen251,566

251,080

261,928

274,973

303,284(+6.5)(-0.2)(+4.3)(+5.0)(+10.3)102,968

102,567

112,715

110,914137,372

and dispositions. While each division takes action to fulfill its
respective areas of responsibility, the process of discussion and

Deliberation and
Resolution

Deliberation and
Resolution

Resolution or Reporting

Creation of management guidelines

Asset Management
Committee(AMC)

Compliance Committee(including 1 outside
lawyer)Approval for transactions withinterested parties
Approval for transactions outsideof management guidelines

Board ofDirectors(Period-on-period change)%

Unitholders’ capitalmn yen(Period-on-period change)

Number of investment units issued andoutstanding (e)Unitholders’ equity per unit (d)/(e)(+5.9)(-0.4)(+9.9)(-1.6)(+23.9)135,689

135,732

135,505150,272

150,063(+6.8)(+0.0)(-0.2)(+10.9)(-0.2)

133,129

133,129

133,129

147,153

147,153%(+6.5)

(0.0)

(0.0)

(+10.5)

(0.0)

unit

233,550

233,550

233,550

286,550

286,550
523,668yen

580,987

581,170

580,199

524,419mn yen

2,567

2,541

2,310

2,749

2,683

yen

10,993

10,881

9,891

9,596

9,364

(Earnings distributed per unit)

yen

10,993

10,881

9,891

9,596

9,364

(Distribution in excess of earnings per unit)

yen

—

—

—

—

—

Return on assets (annualized) (Notes 1 and 2)%

1.1 (2.1)

1.0 (2.1)

0.9 (1.8)

1.1 (2.2)

0.9 (1.8)

Return on net assets (annualized) (Notes 2 and 3)%

2.0 (3.9)

1.9 (3.8)

1.7 (3.4)

2.1 (4.2)

1.7 (3.4)

53.9

54.1

51.7

54.6

49.5

(+0.2)(+0.1)(-2.3)(+2.9)(-5.2)

40.9

40.9

43.0

40.3

45.3

Total distribution (f)Distribution per unit (f)/(e)(Period-on-period change)

Payout ratio (Note 4) (f)/(a)%%%(-0.2)(-0.1)(+2.2)(-2.7)(+5.0)

99.9

97.4

100.0

90.0

105.6

Other reference

Reporting쎲 AMC is the crux of cross-organizational management and communication. Attendees of the AMC
meetings comprise leaders and managers, and meetings related to property or other material
decisions are attended by the CEO and President of Kenedix REIT Management, the General
Manager of the Financial Planning Division (CFO), the General Manager of the Investment
Management Division (CIO), the General Manager of the Property Management Division and theCompliance Officer.

Meetings of Committees in Each Fiscal Period
1st

2nd

3rd

4th

5th

6th

7th

8th

9th

10th

11th

12th

13th

Compliance Committee

7

7

7

8

6

8

9

8

8

10

7

7

8

6

Asset Management Committee

21

35

39

39

38

38

52

44

36

39

32

37

44

40

14th

Kenedix REIT Management Board of Directors

9

7

9

8

9

7

10

8

10

12

11

9

11

9

KENEDIX-REIT Board of Directors

11

7

7

9

7

7

7

8

8

8

8

7

9

10

14 Kenedix Realty Investment Corporation%

mn yenInterest-bearing debt ratio at end of period (c)/(b)왘

mn yenUnitholders’ equity (d)(Period-on-period change)

Resolution%(Period-on-period change)

Net assets ratio at end of period (d)/(b)Approval for transactions that follow management guidelines,
excluding those with interested parties(Period)

14th Period(as of Apr. 30, 2012)

mn yentransactions are detrimental to the interests of investors, that the rules for deals with interested
parties are obeyed and that the deals are implemented in accordance with established guidelines.
The Compliance Officer also works to ensure that service providers are in compliance with therules and regulations that govern J-REITs.

왘

13th Period(as of Oct. 31, 2011)(Rental revenues)

쎲 The Compliance Officer previews the REIT’s major pending decisions to ensure that noCompliance
Officer

12th Period(as of Apr. 30, 2011)

Operating revenues

Decision Making at Kenedix REIT Management왘

11th Period(as of Oct. 31, 2010)

movements, receive proposals on renovations and other

Interest-bearing debt (c)Corresponding
Division10th Period(as of Apr. 30, 2010)

movements and plans, discuss measures to deal with negative(Period-on-period change)

Preview

Unit

Number of properties

properties

Total leasable floor aream2

Occupancy at end of period

70

67

71

74

83

271,260.81

267,737.33

286,237.93

300,016.89

340,589.96

%

94,4

93.6

94.6

94.7

95.4

Depreciation expenses for the period

mn yen

1,477

1,440

1,406

1,442

1,578

Capital expenditures for the period

mn yen

330

312

574

674

918

Leasing NOI (Net Operating Income) (Note 5)

mn yen

5,830

5,864

5,776

5,980

6,384

FFO (Funds From Operation) (Note 6)

mn yen

4,044

3,995

3,716

3,950

4,119

yen

17,318

17,106

15,914

13,786

14,374

FFO per unit (Note 7)

Notes: 1. Return on assets = Ordinary income/(Total assets at beginning of period + Total assets at end of period)/2 × 100
2. Annualized values for the 10th Fiscal Period are calculated based on a period of 181 days, 184 days for the 11th Period, 181 days for the 12th Fiscal Period, 184 days
for the 13th Fiscal Period and 182 days for the 14th Fiscal Period.
3. Return on net assets = Net income/(Total net assets at beginning of period + Total net assets at end of period)/2 × 100
4. Payout ratio is rounded down to the first decimal place.
5. Leasing NOI = Rental revenues – Rental expenses + Depreciation expenses for the period
6. FFO = Net income + Depreciation expenses for the period – Profit on sale of trust beneficiary interests in real estate or real estate + Loss on sale of trust beneficiaryinterests in real estate or real estate
7. FFO per unit = FFO/Number of investment units issued and outstanding (figures below ¥1 rounded down)
8. Where applicable, figures are rounded down to the nearest million.

Kenedix Realty Investment Corporation 15

Balance Sheets
Kenedix Realty Investment Corporation
As of April 30, 2012 and October 31, 2011

In thousands of yen

ASSETS
Current assets:
Cash and bank deposits (Note 12)
Rental receivables
Consumption tax refundable
Other current assets (Note 7)   Total current assets
Property and equipment, at cost: (Notes 3,11 and 13)
Land
Buildings and structures (Note 5)
Machinery and equipment
Tools, furniture and fixtures
Construction in progressLess-accumulated depreciation    Net property and equipment
Other assets:
Ground leasehold (Notes 11 and 13)
Investment securities (Note 12)
Corporate bond issuance costs
Unit issuance costs
Other assets (Notes 11 and 13)   Total assets
LIABILITIES AND NET ASSETS
Liabilities
Current liabilities:
Trade and other payables
Current portion of corporate bonds (Notes 4 and 12)
Short-term debt and current portion of long-term debt (Notes 4 and 12)
Deposits received
Rents received in advance
Provision for loss due to disaster
Other current liabilities   Total current liabilities
Corporate bonds (Notes 4 and 12)Long-term debt (Notes 4 and 12)
Leasehold and security deposits received   Total liabilities
Net Assets
Unitholders’ equity
Unitholders’ capital   Units authorized: 2,000,000 units   Units issued and outstanding: 286,550 units   As of April 30, 2012 and October 31, 2011, respectively
Surplus
Voluntary retained earnings   Reserve for reduction entry
Retained earnings
Total surplus
Total unitholders’ equity    Total net assets (Note 8)
Total liabilities and net assets

As of April 30, 2012

As of October 31, 2011

¥ 14,019,939
176,474
220,72970,447
14,487,589¥ 18,338,535
173,773—
77,564
18,589,872

201,938,266
97,166,954
1,540,138
429,679
6,894(15,326,838)
285,755,093

177,220,871
89,329,995
1,354,493
406,173
1,874(13,751,870)
254,561,536

358,655
896,655
39,40583,991
1,662,657¥303,284,045

359,429—
30,906111,272
1,320,426¥274,973,441¥    775,125—
26,580,000
27,2491,887,967—
220,298
29,490,639
6,000,000
104,792,500
12,937,903
153,221,042¥    802,437
9,000,000
24,050,000
2,814
1,281,807
2,334
272,91335,412,305
4,500,000
73,364,000
11,424,682
124,700,987

147,153,820

147,153,820

368,796
2,540,387
2,909,183
150,063,003
150,063,003¥303,284,045

65,796
3,052,838
3,118,634
150,272,454
150,272,454¥274,973,441

See accompanying notes to the financial statements.

16 Kenedix Realty Investment Corporation

Kenedix Realty Investment Corporation 17

Statements of Income and Retained Earnings

Notes to Financial Statements

Kenedix Realty Investment Corporation
For the period from November 1, 2011 to April 30, 2012 and the period from May 1, 2011 to October 31, 2011

Kenedix Realty Investment Corporation
For the period from November 1, 2011 to April 30, 2012 and the period from May 1, 2011 to October 31, 2011

In thousands of yen

1.

From November 1, 2011 to April 30, 2012

From May 1, 2011 to October 31, 2011

¥9,090,653—
9,090,653¥8,498,949
545,282
9,044,231

ORGANIZATION

4,284,757
491,073
80,726
147,751
5,004,307
4,086,346

3,961,611
487,406
81,852
88,0394,618,908
4,425,323

the Real Estate Investment Trust Market of the Tokyo Stock Exchange with a total of 75,400 investment units issued and outstanding.

1,058,930
444,047
27,282
9,001(4,723)
1,534,537
2,551,809

1,036,388
298,043
27,282
6,881
16,322
1,384,916
3,040,407—

13,97010,0002,541,809
1,526
2,540,283
104¥2,540,387—
3,054,377
1,560
3,052,817
21¥3,052,838

Operating revenues:
Rental revenues (Notes 10 and 11)
Gain on sale of real estate property (Note 10)   Total operating revenues
Operating expenses:
Property-related expenses (Notes 10 and 11)
Asset management fees
Administrative service and custodian fees
Other operating expenses   Total operating expenses
Operating income
Non-operating expenses:
Interest expense
Financing-related expenses
Amortization of unit issuance costs
Amortization of corporate bond issuance costs
Others, net   Total non-operating expenses
Ordinary income

ORGANIZATION AND BASIS OF PRESENTATION

Kenedix Realty Investment Corporation (”the Investment Corporation”) was established on May 6, 2005 under the Act on Investment
Trusts and Investment Corporations of Japan (“the Investment Trust Act”). On July 21, 2005, the Investment Corporation was listed on(Securities Code: 8972). Subsequently, the Investment Corporation raised funds through public offerings and other means including
three global offerings. Most recently, the Investment Corporation additionally issued 51,400 investment units on July 20, 2011 throughpublic offerings including global offerings, and 1,600 investment units on August 8, 2011 by way of third-party allotment. As a result, asof April 30, 2012, the end of the fourteenth fiscal period, the number of investment units issued and outstanding totaled 286,550 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 to maximize 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, and endeavors to ensure a timely
response to each and every opportunity. The Investment Corporation endeavors to develop a diversified investment portfolio named“KENEDIX Selection,” adopting a three-point investment criteria based on property type, area and size.
During the period ended April 30, 2012, the Investment Corporation acquired four office buildings (total acquisition price of ¥15,470

Extraordinary income
Gain on donation of noncurrent assets
Extraordinary losses
Litigation settlement
Income before income taxes
Income taxes (Note 7)
Net income
Retained earnings at the beginning of period
Retained earnings at the end of period
See accompanying notes to the financial statements.

million) located in the Tokyo Metropolitan Area, four office buildings (total acquisition price of ¥15,205 million) and one others (acquisition
price of ¥645 million) located in the Other Regional Areas. The Investment Corporation also acquired preferred equity securities (investment of ¥891 million) as a new investment method for external growth. The Investment Corporation issued the Fourth Series Unsecured
Investment Corporation Bonds (totaling ¥1,500 million and maturing in 5.5 years) on March 8, 2012, and used the procured funds as a
portion of source of funds to repay the First Series Unsecured Investment Corporation Bonds which matured on March 15, 2012. As of
April 30, 2012, the Investment Corporation had total unitholders’ capital of ¥147,154 million with 286,550 investment units outstanding.
The outstanding investment corporation bonds as of the end of the fiscal period under review (fiscal period ended April 30, 2012) totaled¥6,000 million. The Investment Corporation owned a portfolio of 83 properties with a total acquisition price of ¥286,867 million containing
a total leasable area of 340,589.96m2. The occupancy ratio was approximately 95.4%. A portfolio of 83 properties consists of 76 officebuildings, 4 residential properties, 2 central urban retail properties and one others. 66 properties are located in the Tokyo Metropolitan

Statements of Changes in Net Assets

Area and 17 properties are located in other regional areas.

Kenedix Realty Investment Corporation
For the period from November 1, 2011 to April 30, 2012 and the period from May 1, 2011 to October 31, 2011

BASIS OF PRESENTATIONThe Investment Corporation maintains its accounting records and prepares its financial statements in accordance with accounting
principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements ofIn thousands of yen

International Financial Reporting Standards. The financial statements are prepared in accordance with the Investment Trust Act.

Unitholders’ Equity

The financial statements are basically a translation of the Japanese audited financial statements of the Investment Corporation. In

Surplus

Balance as of April 30, 2011
Changes during the fiscal period
New unit issuance
Payments of dividends
Net income   Total changes during the fiscal period
Balance as of October 31, 2011
Changes during the fiscal period Provision of reserve for reduction entry
Payments of dividends
Net income   Total changes during the fiscal period
Balance as of April 30, 2012

Unitholders’capitalVoluntary retained
earnings
Reserve for
reduction entry

Retainedearnings

Total
surplusTotal
unitholders’equityTotal¥133,129,755¥ 65,796¥2,310,063¥2,375,859¥135,505,614¥135,505,614

14,024,065——
14,024,065
147,153,820————
65,796—(2,310,042)
3,052,817
742,775
3,052,838—(2,310,042)
3,052,817
742,775
3,118,634

14,024,065(2,310,042)
3,052,817
14,766,840
150,272,454

14,024,065(2,310,042)
3,052,817
14,766,840
150,272,454————¥147,153,820

303,000——
303,000¥368,796(303,000)(2,749,734)
2,540,283(512,451)¥2,540,387—(2,749,734)
2,540,283(209,451)¥2,909,183——(2,749,734)(2,749,734)
2,540,283
2,540,283(209,451)(209,451)¥150,063,003 ¥150,063,003

preparing the accompanying financial statements, certain reclassifications have been made to the financial statements issued domesticallyin order to present them in a format which is familiar to readers outside Japan. Certain information in the business report and supplementary schedule has been omitted. Additional information has been added to the Japanese audited financial statements for the convenience of readers outside Japan and this includes disclosing the prior year’s comparatives as supplemental information in the English
translated financial statements although the Japanese audited financial statements only need to disclose the current year’s information.

See accompanying notes to the financial statements.

18 Kenedix Realty Investment Corporation

Kenedix Realty Investment Corporation 19

2.

(J) INCOME TAXES
Deferred tax assets and liabilities are computed based on the difference between the financial statements and income tax bases of

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

assets and liabilities using the statutory tax rates.

(A) SECURITIESNon-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving averagemethod.

(K) CONSUMPTION TAXES
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes. Non-deductible consumption
taxes applicable to the acquisition of assets are included in the cost of acquisition for each asset.

(B) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation of property and equipment is calculated on a straight-line basis over the estimated useful lives of the assets ranging as stated below:(L) DERIVATIVE FINANCIAL INSTRUMENTS
The Investment Corporation utilizes interest-rate swap agreements as derivative financial instruments only for the purpose of hedging its

From November 1, 2011 to April 30, 2012

From May 1, 2011 to October 31, 2011

Buildings and structures

2-49 years

2-49 years

Machinery and equipment

3-17 years

3-17 years

Tools, furniture and fixtures

3-20 years

3-20 years(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, all assets
and liabilities within trust are recorded in the relevant balance sheets and statements of income and retained earnings.
(F) LEASEHOLD RIGHTS

exposure to changes in interest rates. The Investment Corporation deferred recognition of gains or losses resulting from changes in fairvalue of interest-rate swap agreements because its interest-rate swap agreements met the criteria for deferral hedging accounting.
However, 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, whereby 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. The hedge
effectiveness for interest-rate swap contracts is assessed each fiscal period except for those that meet the criteria of special treatment.
(M) 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

Fixed term leasehold with special agreement on buildings sales, and the building are amortized over a contractual period of forty-eight

As of April 30, 2012

years and nine months under the straight-line method.

As of October 31, 2011

Acquisition
costs

Accumulated
depreciation

Book
value

Acquisition
costs

Accumulated
depreciation

Book
value

(G) PROVISION FOR LOSS DUE TO DISASTER

Land¥201,938¥­    —

¥201,938¥177,221¥­    —

¥177,221

For cost of repairs on impaired fixed assets due to the massive earthquake off the east coast of Japan, the amount reasonably estima-

Buildings and structures

97,167

14,52682,641

89,33013,021

76,309ble at the end of period is recognized as “provision for loss due to disaster” under current liability.

Machinery and equipment

1,540

590

950

1,354

540

814

Tools, furniture and fixtures

430

211

219

406

190

216

(H) REVENUE RECOGNITION

Construction in progress

7

—

7

2

—

2

¥301,082¥15,327¥285,755¥268,313¥13,751¥254,562

Operating revenues consist of rental revenues including base rents and common area charges, and other operating revenues including

Total

utility charge reimbursements, parking space rental revenues and other miscellaneous revenues. Rental revenues are generally recognized on an accrual basis over the life of each lease. Utility charge reimbursements are recognized when earned and their amounts canbe reasonably estimated. Reimbursements from tenants including utility charge reimbursements are recorded on a gross basis and suchamounts are recorded both as revenues and expenses during the fiscal period, respectively.

4.

SHORT-TERM DEBT, LONG-TERM DEBT AND CORPORATE BONDS

The following summarizes short-term debt, long-term debt and corporate bonds outstanding as of April 30, 2012:(I) TAXES ON PROPERTY AND EQUIPMENT
Property-related taxes including property taxes, city planning taxes and depreciable property taxes are imposed on properties on aClassification

Short-term debt

calendar year basis. These taxes are generally charged to operating expenses for the period, for the portion of such taxes corresponding to said period. 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, is reimbursed by theCurrent portion of long-term debt

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 theperiod following the purchase date of each property through the end of the calendar year. The amounts of those allocated portions of
the property-related taxes are capitalized as part of the acquisition costs of the related properties. Capitalized property-related taxes
amounted to ¥23,881 thousand and ¥44,439 thousand as of April 30, 2012 and October 31, 2011, respectively. In subsequent

Subtotal

Drawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)

July 29, 2011
October 31, 2011
December 26, 2011
January 31, 2012
June 30, 2008
February 27, 2009
October 29, 2010
December 8, 2009
June 30, 2008
January 13, 2010
February 18, 2010
April 28, 2011

July 31, 2012
October 31, 2012
October 31, 2012
January 31, 2013
June 30, 2012
August 31, 2012
October 31, 2012
December 8, 2012
December 28, 2012
January 15, 2013
February 18, 2013
April 30, 2013

1.04%
0.99%
0.91%
0.84%
2.15%
2.04%
1.45%
1.67%
2.26%
1.90%
1.90%
1.50%

¥  1,500
4,500
7,500
1,200
1,500
880
2,500
500
3,000
1,000
1,500
1,000
26,580calendar years, such property-related taxes are charged as operating expenses in the fiscal period to which the installments of suchtaxes correspond.

20 Kenedix Realty Investment Corporation

Kenedix Realty Investment Corporation 21

Classification

Long-term debt

Subtotal
Corporate bonds

Drawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)

May 1, 2006
September 1, 2006
October 26, 2009
October 30, 2009
January 29, 2010
February 18, 2010
April 2, 2010
July 30, 2010
July 30, 2010
July 30, 2010
October 29, 2010
November 12, 2010
November 12, 2010
November 12, 2010
December 1, 2010
December 1, 2010
December 1, 2010
January 31, 2011
January 31, 2011
February 28, 2011
February 28, 2011
March 22, 2011
March 31, 2011
March 31, 2011
March 31, 2011
April 28, 2011
April 28, 2011
July 13, 2011
July 29, 2011
July 29, 2011
August 31, 2011
September 1, 2011
September 30, 2011
September 30, 2011
September 30, 2011
September 30, 2011
December 26, 2011
December 26, 2011
December 26, 2011
December 26, 2011
December 26, 2011
December 26, 2011
January 10, 2012
January 31, 2012
March 12, 2012
March 12, 2012
March 28, 2012
March 28, 2012
March 30, 2012
April 27, 2012

April 30, 2016
August 31, 2013
October 26, 2013
October 30, 2013
January 30, 2015
February 18, 2015
April 2, 2015
July 31, 2013
January 31, 2014
July 31, 2014
October 31, 2013
November 12, 2013
November 12, 2015
November 12, 2017
November 12, 2013
November 12, 2015
November 12, 2017
January 31, 2014
January 29, 2016
August 31, 2015
January 29, 2016
September 22, 2014
September 30, 2013
January 29, 2016
March 31, 2016
October 31, 2015
January 29, 2016
July 14, 2014
July 31, 2014
July 31, 2014
February 27, 2015
August 29, 2014
September 30, 2013
March 31, 2014
September 30, 2014
March 31, 2015
October 31, 2014
October 31, 2014
October 31, 2015
October 31, 2015
October 31, 2016
October 31, 2016
January 29, 2016
January 30, 2015
March 12, 2014
March 12, 2015
March 28, 2017
March 28, 2019
September 30, 2015
October 30, 2015

2.73%
2.12%
2.42%
2.45%
2.17%
2.19%
2.22%
1.49%
1.66%
1.73%
1.46%
1.58%
1.79%
2.02%
1.45%
1.55%
2.21%
1.57%
1.94%
1.91%
1.95%
1.63%
1.53%
1.91%
1.39%
1.86%
1.89%
1.54%
1.14%
1.40%
1.09%
1.15%
1.15%
1.16%
1.27%
1.29%
1.24%
1.26%
1.34%
1.32%
1.44%
1.42%
1.27%
1.19%
0.98%
1.08%
1.36%
1.77%
1.21%
1.27%

5,000
3,000
900
1,800
1,080
4,813
1,800
500
3,700
3,700
500
2,700
2,000
2,300
800
1,000
700
1,300
800
3,000
500
2,700
2,000
2,000
1,000
1,500
1,000
1,000
3,200
300
1,500
1,000
1,000
2,500
1,000
2,500
2,500
5,000
4,500
2,500
4,500
2,500
2,500
1,500
6,300
1,000
500
2,400
2,000
1,000
104,793
3,000
1,500
1,500
6,000
¥137,373

March 15, 2007
September 15, 2011
March 8, 2012

March 15, 2017
September 13, 2013
September 8, 2017

2.37%
1.59%
2.00%

Subtotal
Total

5.

6.

PER UNIT INFORMATION
Yen
From November 1, 2011 to April 30, 2012

From May 1, 2011 to October 31, 2011

Net asset value per unit

¥523,689¥524,420

Net income per unit¥  8,865¥ 11,593

Weighted average number of units (units)286,550

263,341

The weighted average number of units outstanding of 286,550 and 263,341 were used for the computation of the amount of net
income per unit as of April 30, 2012 and October 31, 2011. Net income per unit after adjusting for residual units is not included because
there were no residual investment units.

7.

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 of tax requirements, including a requirement that it currently distribute in excess of 90% of its net income for the fiscal period in order to be able todeduct such amounts. If the Investment Corporation does not satisfy all of the requirements, the entire taxable income of the Investment
Corporation will be subject to regular corporate income taxes. Since the Investment Corporation distributed in excess of 90% of its
distributable income in the form of cash distributions totaling ¥2,683 million (including ¥143 million as the reversal of reserve for reduction
entry) and ¥2,750 million for the periods ended April 30, 2012 and October 31, 2011. Such distributions were treated as deductible
distributions for purposes of corporate income taxes. The effective tax rate on the Investment Corporation’s income was 0.06% and0.05% for the periods ended April 30, 2012 and October 31, 2011. The following summarizes the significant difference between thestatutory tax rate and the effective tax rate:
As of April 30, 2012

As of October 31, 2011

Statutory tax rate

39.33%

39.33%

Deductible cash distributions(41.52)(35.41)

Provision of reserve for reduction entry—(3.90)

Others2.25

0.03

Effective tax rate

0.06%

0.05%

The significant components of deferred tax assets and liabilities as of April 30, 2012 and October 31, 2011 were as follows:
In thousands of yen
As of April 30, 2012

As of October 31, 2011

Deferred tax assets:
Enterprise tax payable

¥ 43

¥ 49

Amortization of leasehold rights

749

558

792

607

Subtotal deferred tax assets
Valuation allowance

749

558

Total deferred tax assets

¥ 43

¥ 49

The Act to Revise the Income Tax Act, etc., in Order to Construct a Tax System Addressing Changes in the Socio-Economic Structure(Act No. 114 of 2011) and the Act on Special Measures for Securing Necessary Financial Resources to Implement Measures to Rebuild
Areas Devastated by the Great East Japan Earthquake (Act No. 117 of 2011) were promulgated on December 2, 2011. In accordancewith the promulgation, the effective statutory tax rate used to calculate the deferred tax assets and deferred tax liabilities concerning the
temporary differences, etc. expected to be reversed in the accounting periods starting on April 1, 2012 and after will be changed to
36.59%, and the effective statutory tax rate used to calculate the deferred tax assets and deferred tax liabilities concerning the tempo-

REDUCTION ENTRY

rary differences, etc. expected to be reversed in the accounting periods starting on April 1, 2015 and after will be changed to 34.16%,

The amount of reduction entry of property and equipment acquired by government subsidy

respectively. The effect of the announced reduction of the effective statutory tax rate is immaterial.

In thousands of yen

Buildings and structures

22 Kenedix Realty Investment Corporation

As of April 30, 2012

As of October 31, 2011

¥26,230¥26,230

Kenedix Realty Investment Corporation 23

8.

NET ASSETSThe Investment Corporation issues only non-par value units in accordance with the Investment Trust Act. 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 Act.

9.

11.

PROPERTY INFORMATION

Details of the property portfolio as of April 30, 2012 were as follows:
Central Urban
Retail Properties

OthersOther Regional
Areas

Tokyo
Metropolitan Area

Other
Regional Areas

3

1

2

1

¥52,295¥7,641¥1,800¥12,380¥  6450.22%

Office Buildings

Location

Tokyo
Metropolitan Area

Other Regional
Areas

Tokyo
Metropolitan Area

61

15¥212,106

Number of properties

RELATED-PARTY TRANSACTIONS

Residential
Properties

Type

Property information (In millions of yen)

TRANSACTIONS WITH KENEDIX REIT MANAGEMENT, INC.

Acquisition price

Kenedix REIT Management, Inc., a consolidated subsidiary of Kenedix, Inc., provides the Investment Corporation with property

Percentage of total acquisition price73.94%

18.23%

2.66%

0.63%

4.32%

management services and related services. For these services, the Investment Corporation pays Kenedix REIT Management, Inc.

Net book value

212,908

51,228

7,154

1,807

12,331686

property management fees in accordance with the terms of its Property Management Agreements. For these services, the Investment

Appraisal value

198,385

45,084

6,368

1,520

11,0001,100Percentage of total appraisal value

75.30%

17.11%

2.42%

0.58%

4.17%

0.42%

Corporation paid ¥368 million to Kenedix REIT Management, Inc.

Financial results for the period from November 1, 2011 to April 30, 2012 

10.

Rental and other operating revenues(In thousands of yen)

¥6,556,908¥1,837,212¥223,760¥91,396¥337,886¥43,491

BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES AND 		

Rental revenues

5,866,539

1,580,734

201,997

81,614

302,654

38,385GAIN ON SALE OF REAL ESTATE PROPERTYOther revenues

690,369

256,478

21,763

9,782

35,232

5,106

1,837,809

680,462

55,90738,804

82,14010,790Property management fees

611,800

244,101

21,915

8,075

22,564

3,484

Taxes

515,644

162,372

15,367

7,959

20,817

2,469

Utilities

463,428

170,475

2,583

2,175

21,504

3,635

Repairs and maintenance109,087

29,595

5,736

11,203

9,746

-

8,137

4,861

419

323

199

145

Rental and other operating revenues, property-related expenses and gain on sale of real estate property for the periods from November 1,
2011 to April 30, 2012 and from May 1, 2011 to October 31, 2011 consist of the following:
In thousands of yen
From November 1, 2011 to April 30, 2012

From May 1, 2011 to October 31, 2011

Insurance

Rental and other operating revenues:
Rental revenues
Common area charges   Subtotal

Property-related expenses¥6,581,677¥6,121,318

Trust fees and other expenses

129,71369,058

9,887

9,069

7,310

1,057

4,719,099

1,156,750

167,853

52,592

255,746

32,701

1,490,246

1,353,952

NOI (Net Operating Income)

8,071,923

7,475,270

Depreciation expenses

1,042,550

373,895

67,017

23,12866,871

5,384

Operating income from property leasing activities

3,676,549

782,855

100,836

29,464

188,875

27,317

Others:Parking space rental revenues

271,260

249,514

Capital expenditures

707,836

145,90722,144160

11,42831,125

Utility charge reimbursement621,582

633,845

NCF (Net Cash Flow)¥4,011,263¥1,010,843¥145,709¥52,432¥244,318¥ 1,576

Miscellaneous

125,888

140,320   Subtotal

1,018,730

1,023,679

Total rental and other operating revenues¥9,090,653¥8,498,949

Property management fees and facility management fees

¥911,939¥832,724

Class of assets

Property type

Area

Depreciation

1,578,845

1,442,935

Property and equipment

Office Buildings

Utilities

663,800

617,943

Taxes

724,628

703,543  Subtotal

Insurance

14,084

14,655Residential Properties

Repairs and maintenance

165,367

152,453

Trust fees

47,27743,614

Loss on retirement of fixed assets

3,719

—

175,098

153,744¥4,284,757¥3,961,611

OthersTotal property-related expenses¥       —

¥5,800,000

Cost of investment property—

5,122,100

Other sales expenses—

132,618¥       —

¥  545,282    Gain on sale of real estate property

24 Kenedix Realty Investment Corporation

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

Percentage of total assets

Tokyo Metropolitan Area

¥212,908

70.2%

Other Regional Areas

51,22816.9%

264,136

87.1%

Tokyo Metropolitan Area

7,154

2.4%

Other Regional Areas

1,807

0.6%

8,961

3.0%

12,331

4.0%

12,331

4.0%

686

0.2%

  Subtotal
Central Urban Retail Properties

Tokyo Metropolitan Area  Subtotal
Others  Subtotal

Gain on sale of real estate property:
Revenue from sale of investment property

A breakdown of property-type as of April 30, 2012 was as follows:

Total
Investment securities

Other Regional Areas

686

0.2%

286,114

94.3%

897

0.3%

Bank deposits and other assets

16,273

5.4%

Total assets

303,284

100.0%

Total liabilities

153,22150.5%

Net assets¥150,063

49.5%

Kenedix Realty Investment Corporation 25

12.

NOTE 1: METHODS TO DETERMINE THE ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS AND OTHER MATTERSRELATED TO SECURITIES AND DERIVATIVE TRANSACTIONSFINANCIAL INSTRUMENTS

Fourteenth Fiscal Period (November 1, 2011 to April 30, 2012)ASSETS(A) OVERVIEW

a Cash and bank deposits(1) POLICY FOR FINANCIAL INSTRUMENTS

Since these items are settled in a short period of time, their carrying value approximates fair value.

The Investment Corporation procures essential funds for acquiring properties and undertaking the repayment of loans primarily throughbank loans and the issuance of corporate bonds and new investment units. The Investment Corporation uses derivatives for the
purpose of hedging its exposure to changes in interest rates and does not enter into derivatives for speculative or trading purposes.
Management of surplus funds is undertaken in a prudent manner that considers fully such factors as safety, liquidity, interest rate
conditions and cash flows.

LIABILITIESa Short-term debt
Since these items are settled in a short period of time, their carrying value approximates fair value.
b Corporate bonds
The fair value of corporate bonds is based on quoted market prices.

(2) TYPES OF FINANCIAL INSTRUMENTS AND RELATED RISKc Long-term debt

Investment securities are preferred equity securities of TMK as set forth by the Act on Securitization of Assets and are exposed to credit

The fair value of long-term debt is based on the present value of the total of principal and interest discounted by the interest rate to berisk of the issuer and risk of fluctuation of value of its property.

applied if similar new loans were entered into. The fair value of long-term debt bearing interest at variable rate, which is subject to fixed

Debt and corporate bonds are used primarily for procuring funds necessary for the acquisition of properties and have a redemption dateinterest rates resulting from interest-rate swaps and special treatment applied to said swaps, is based on the present value of the totalof a maximum of seven years following the accounting date. Although a certain portion of said liabilities are subject to interest rateof principal and interest, which is handled together with applicable interest-rate swaps, discounted by the interest rate to be applied if

fluctuation risk, the Investment Corporation utilizes derivatives (interest-rate swap transactions) in order to reduce such risk.

similar loans were entered into.

Interest-rate swap transactions are used as derivative financial instruments. Utilizing interest-rate swap transactions, the Investment
Corporation fixes its interest expense for long-term debt bearing interest at a variable rate. With regard to hedge accounting methods,

DERIVATIVE TRANSACTIONS

hedging instruments and hedged items, hedge policy, and the assessment of the effectiveness of hedging activities, please see 2. (L)(1) ITEMS THAT ARE NOT APPLIED TO HEDGE ACCOUNTING

Derivative Financial Instruments.

Not applicable(2) ITEMS THAT ARE APPLIED TO HEDGE ACCOUNTING(3) RISK MANAGEMENT FOR FINANCIAL INSTRUMENTS

Contracted amount(In thousands of yen)(a) Monitoring of market risk (the risks arising from fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap transactions in order to minimize risk arising from fluctuations in interest rates onfunds procured. The Investment Corporation periodically reviews the value of the property and financial condition of the issuer withregard to investment securities.
(b) M onitoring of liquidity risk (the risk that the Investment Corporation may not be able to meet its obligations on scheduled due
dates) associated with funds procurement
Although loans and other liabilities are subject to liquidity risk, the Investment Corporation reduces such risk by spreading out payment
due dates and by using diversified fund procurement methods. Liquidity risk is also managed by such means as regularly checking theHedge accounting
methodInterest-rate swaps:
Special treatment ofReceive/floating andinterest-rate swaps
pay/fixed

The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available,
fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions
and factors could result in a different fair value.

Long-term debt

¥17,500,000¥16,500,000*¥17,500,000¥16,500,000

Calculation method for
applicable fair value

NOTE 2: FINANCIAL INSTRUMENTS FOR WHICH IT IS EXTREMELY DIFFICULT TO DETERMINE THE FAIR VALUEClassification

Carrying value (In thousands of yen)Preferred equity securities¥896,655

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above financial instruments are not included in the above table.

NOTE 3: REDEMPTION SCHEDULE FOR RECEIVABLES
Due within 1 year or less
(In thousands of yen)

The carrying value of financial instruments on the balance sheet as of April 30, 2012 and estimated fair value are shown in the following table.
The following table does not include financial instruments for which it is extremely difficult to determine the fair value (Refer to Note 2 below).
In thousands of yen
Carrying value

Estimated fair value

Difference¥ 14,019,939¥ 14,019,939¥     —

Subtotal

14,019,939

14,019,939—

a Short-term debt

14,700,000

14,700,000—b Corporate bonds(including current portion of corporate bonds)

6,000,000

5,874,300(125,700)c Long-term debt(including current portion of long-term debt)

116,672,500

117,265,101

592,601

Subtotal¥137,372,500¥137,839,401¥466,901———

Derivative Transactions (*)

Fair value(In thousands of yen)*S
 pecial treatment of interest-rate swaps is reported at the fair value of applicable long-term debt. This is because such swaps are handled together with hedged
long-term debt.

(B) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

a Cash and bank deposits

Maturing after 1 year

Hedged items

Totalbalance of cash reserves.
(4) SUPPLEMENTARY EXPLANATION OF THE ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

Type of derivativetransactions

Cash and bank deposits¥14,019,939

Total¥14,019,939

NOTE 4: REDEMPTION SCHEDULE FOR DEBT AND CORPORATE BONDS
In thousands of yen
Due within 1 year
or less

Due after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Due after
5 years

Short-term debt

¥14,700,000¥        —¥        —¥        —¥        —¥        —Corporate bonds—

1,500,000——

3,000,000

1,500,000

Long-term debt

11,880,000

27,846,000

33,746,500

30,300,000

7,500,000

5,400,000(*) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing net liability position.

26 Kenedix Realty Investment Corporation

Kenedix Realty Investment Corporation 27

Statements of Cash Flows (Unaudited)
Kenedix Realty Investment Corporation
For the period from November 1, 2011 to April 30, 2012 and the period from May 1, 2011 to October 31, 201113.

In thousands of yen

INVESTMENT AND RENTAL PROPERTIES

Fourteenth Fiscal Period (November 1, 2011 to April 30, 2012)
The Investment Corporation owns real estate for rental purposes mainly in the Tokyo Metropolitan Area for the purpose of generating
rental revenues.

As of October 31, 2011

Net change¥254,921,755¥31,192,664

As of April 30, 2012

¥286,114,419

From May 1, 2011
to October 31, 2011

¥ 2,541,809¥ 3,054,377

1,872,257

1,724,828

CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes 
Adjustments to reconcile income before income taxes to
net cash provided by operating activities:

The carrying value in the balance sheets and corresponding fair value of those properties are as follows:
Carrying value (In thousands of yen)

From November 1, 2011
to April 30, 2012

Fair value as of April 30, 2012
(In thousands of yen)

¥263,867,000

Notes:	1. The carrying value represents the acquisition cost less accumulated depreciation.
2. T he fair value is the appraisal value or the survey value determined by outside appraisers. The fair value of KDX Omori Building is based on the sales priceof ¥4,200,000 thousand under the sales and purchase agreement dated February 23, 2012.
3. A
 mong changes in the amount of real estate for rental purposes that occurred during the fiscal period under review, principal increases and decreases were
the acquisition of nine properties totaling ¥31,851,609 thousand and depreciation amounting to ¥1,578,845 thousand.

   Depreciation and amortization  Interest income(674)(1,063)  Interest expense

1,058,930

1,036,388   Loss on retirement of fixed assets

3,719

—

  Litigation settlement

10,000——(13,970)(2,702)

12,640   Gain on donation of noncurrent assets
Changes in assets and liabilities:  Rental receivables

Income and loss in the fiscal period ended April 30, 2012 for real estate for rental purposes is listed in the Note “10. BREAKDOWN   Consumption tax refundable(220,729)

310,485

OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES AND GAIN ON SALES OF REAL ESTATE   Accrued consumption tax(66,864)

28,956PROPERTY.”   Trade and other payables(30,365)

74,415   Rents received in advance

606,160(590,901)—

5,122,100

14.

   Property and equipment due to sale
SUBSEQUENT EVENTSSALES OF PROPERTYThe Investment Corporation has concluded a purchase and sales agreement on February 23, 2012 and sold the following property on
May 11, 2012.

  Others, net(572,096)(258,096)   Subtotal

5,199,445

10,500,159

674

1,063

(1,044,716)(1,037,432)—(28,598)

Interest income received
Cash payments of interest expense
Payments for loss on disaster

Property NameKDX Omori Building (Office Building)

Litigation settlement paid

(10,000)—

Type of Assets for Sale

Trust beneficiary interest in real estate

Cash payments of income taxes(1,352)(1,171)

Location (Address)

1-6-8 Omori-kita, Ohta-ku, Tokyo

Buyer

Tokyo Property Service Co., Ltd. (Note)

Net cash provided by operating activities

4,144,051

9,434,021

Sales Price¥4,200 million(32,830,637)(15,230,474)

Gain on sale of real estate property is estimated to be ¥597 million for the fifteenth fiscal period. The aforementioned sales price excludes
sales costs, adjusted amounts for property and city-planning tax, consumption tax, regional consumption tax, etc.
Note: Tokyo Property Service Co., Ltd. has changed its company name from OOIKOUGYOU CO., LTD. on March 16, 2012.

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
Purchase of investment securities(891,000)—

Proceeds from leasehold and security deposits received

2,494,697

1,210,624

Proceeds from collection of lease and guarantee deposits
Payments of leasehold and security deposits received
Proceeds from withdrawal of time deposits—

669(900,339)(684,035)—

464,000

Payments of restricted bank deposits(131,125)—

Proceeds from restricted bank deposits

40,729100,404(20)—(32,217,695)(14,138,812)

8,700,000

6,000,000

Others, net
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt
Payments of short-term debt

(4,200,000)(4,500,000)

Proceeds from long-term debt

38,700,000

14,000,000

Payments of long-term debt

(9,241,500)(18,801,500)—

13,938,969

Proceeds from issuance of investment corporation bonds

1,481,583

1,485,336

Redemption of investment corporation bonds(9,000,000)—

Payments of investment unit issuance costs(28,322)—

Payment of dividends(2,747,109)(2,310,038)

Net cash (used in) provided by financing activities

23,664,652

9,812,767

Net change in cash and cash equivalents(4,408,992)

5,107,976

Cash and cash equivalents at the beginning of period

17,928,003

12,820,027

Cash and cash equivalents at the end of period¥13,519,011¥17,928,003

Proceeds from issuance of investment units

28 Kenedix Realty Investment Corporation

See related notes.

Kenedix Realty Investment Corporation 29

Unitholders’ Information

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (UNAUDITED)

Kenedix Realty Investment Corporation

CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments which are highly liquid,readily convertible to cash and with insignificant risk of market value fluctuation, with maturities of three months or less from the date of

Fiscal Periods:
Stock Listing:Transfer Agent:purchase.
Auditor:Six months ending April 30 and October 31
Real Estate Investment Trust Market of the Tokyo Stock Exchange (Security Code: 8972)
Sumitomo Mitsui Trust Bank, Limited
1-4-1 Marunouchi, Chiyoda-ku, Tokyo Japan
Ernst & Young ShinNihon LLC

CASH AND CASH EQUIVALENTS (UNAUDITED)Cash and cash equivalents consisted of the following as of April 30, 2012 and October 31, 2011:
IR Schedule (14th and 15th Fiscal Periods)

In thousands of yen

Cash and bank deposits
Restricted bank deposits (Note)
Cash and cash equivalents

As of April 30, 2012

As of October 31, 2011

¥14,019,939¥18,338,535(500,928)(410,532)¥13,519,011¥17,928,003

Note: Restricted bank deposits are retained for repayment of tenant leasehold and security deposits.

Apr.
2012

Jun.
2012

Jul.
2012

Oct.
2012

Dec.
2012

Jan.
2013

End ofthe 14th Period

Performance forthe 14th Period isannounced

Distributions forthe 14th Period arepaid

End ofthe 15th Period

Performance forthe 15th Period isannounced

Distributions forthe 15th Period are
paid

General Breakdown of Unitholders
Foreign corporations
and individuals

Other domestic
corporations

Financial institutions(including securities companies)

Individuals
and others

43.4%

1.6%

43.1%

11.8%

124,469 units

4,639 units

123,531 units

33,911 units

End of the 14th Period
End of the 13th Period

38.5%

1.8%

47.8%

12.0%

110,189 units

5,186 units

136,919 units

34,256 units

Top Ten Unitholders (As of April 30, 2012)
Name

Japan Trustee Services Bank, Ltd. (Trust Account)
The Nomura Trust and Banking Co., Ltd. (Trust Account)
Trust & Custody Services Bank, Ltd. (Securities Investment Trust Account)
The Master Trust Bank of Japan, Ltd. (Trust Account)
The Bank of New York, Treaty JASDEC AccountNomura Bank (Luxembourg) S.A.
JP Morgan Chase Bank 385174
Goldman Sachs and Company Regular AccountState Street Bank and Trust Company
Trust & Custody Services Bank, Ltd. (Money Trust Tax Account)
Total

Units Held

Share of Outstanding Units

51,691
22,545
20,971
13,574
11,255
9,283
6,820
4,239
3,191
3,130
146,699

18.03%
7.86%
7.31%
4.73%
3.92%
3.23%
2.38%
1.47%
1.11%
1.09%
51.19%

Note: The respective shares are rounded down to the second decimal place.

Unit Price Performance(Yen)(Units)
20,000 •• 1,000,000

Trading Volume
Closing Price

11,000 •• 900,000

8,000 •

• 800,000

7,000 •

• 700,000

6,000 •

• 600,000

5,000 •

• 500,000

4,000 •

• 400,000

3,000 •

• 300,000

2,000 •

• 200,000

1,000 •

• 100,000

0•

•0
July

Oct.

2005

30 Kenedix Realty Investment Corporation

Apr.

Oct.

2006

Apr.

Oct.

2007

Apr.

Oct.

2008

Apr.

Oct.

2009

Apr.

Oct.

2010

Oct.

Apr.

2011

Apr.

2012

Kenedix Realty Investment Corporation 31

Semiannual Report
14th Fiscal Period
November 1, 2011 – April 30, 2012

http://www.kdx-reit.com/eng/

Disclaimer
This semiannual report includes translations of certain documents originally filed and made available in Japan in accordance with the Financial Instruments and Exchange Act of Japan. This
English-language semiannual report has been prepared solely for the convenience of readers outside Japan and is not intended to constitute a document for an offer to sell, or seeking an offer
to buy, any securities of KENEDIX-REIT.
English terms for Japanese legal, accounting, tax and business concepts used herein may not be precisely identical to the concept of the equivalent Japanese terms. With respect to any andall terms herein, including without limitation, financial statements, if there exist any discrepancies in the meaning or interpretation thereof between the original Japanese documents and English
translation contained herein, the original Japanese documents will always govern the meaning and interpretation.
Neither KENEDIX-REIT, Kenedix REIT Management, Inc. nor any of their respective directors, officers, employees, partners, unitholders, agents, affiliates nor their advisors shall be responsible
or liable for the completeness, appropriateness, or accuracy of English translations or the selection of the portion(s) of any document(s) translated into English.
The financial statements of KENEDIX-REIT have been prepared in accordance with generally accepted accounting principles in Japan (Japanese GAAP), which may materially differ in certain
respects from the generally accepted accounting principles of other jurisdictions.
This semiannual report contains forward-looking statements. These statements appear in a number of places in this semiannual report and include statements regarding the intent, belief, or
current and future expectations of KENEDIX-REIT or Kenedix REIT Management, Inc. with respect to its business, financial condition and results of operations. In some cases, you can identify
forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “believe,” ”estimate,” “predict,” “potential,” or the negative of these terms or othersimilar terminology. These statements are not guarantees of future performance and are subject to various risks and uncertainties. Actual results, performance or achievements, or those of theindustries in which we operate, may differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. In addition, these forwardlooking statements are necessarily dependent upon assumptions, estimates and data that may be incorrect or imprecise and involve known and unknown risks and uncertainties. Accordingly,
readers of this document should not interpret the forward-looking statements included herein as predictions or representations of future events or circumstances.
Potential risks and uncertainties also include those identified and discussed in this document. Given these risks and uncertainties, readers of this document are cautioned not to place undue
reliance on forward-looking statements, which are only valid as of the date of the information published herein. We disclaim any obligation to update or, except in the limited circumstances
required by the Tokyo Stock Exchange, announce publicly any revisions to any of the forward-looking statements contained in these documents.

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