of mid-sized office buildings
hancement ofd improvement inmely managementt diversification Rent growth
track record Flexible andent Rent growth Advanced
diversification Enhancing
etitiveness of properties
id-sized office buildings

Rent growth Advanced tenant dive
Enhancing competit
cationPeriods
in actual occupancy
rate and unit rent Abundant trackrecord No. 1 owner of mid-sized office build
Ation Enhancing competitiveness of properti
Flexible and timely management
Abundant track record Rent growth

Rise

Reduced financial cost andmentextended the remaining period toof maturity for 6 consecutive fiscal periods
d improvement inperiods No. 1 owner of mid-sized office buildings
bility Abundant track recor Enhancing competitiveness of properties
timely management Rent Advanced tenant diversification
dvanced tenanton Rent growth Flexible and timely management
etitiveness of properties No. 1 owner of mid-sized office buildings
mid-sized office buildings Enhancing competitiveness of properties
operties
Rent growth Flexible and timely management
ficationof unitholder value Rent growthrd
f mid-sized office buildings Abundant track record Flexible and timely management
Fiscal Period
mely management A Rent growth Advanced tenant diversification
REPORTetitiveness of prop No. 1 owner of mid-sized office buildings SEMIANNUAL
May 1, 2016-October 31, 2016
record Flexible andEnhancing competitiveness of properties
TSE 8972
ent Rent growth A Period-end occupancy rate is maintained
Abundant track record Rent growthdiversification En
ent
etitiveness of properties
financial management and reduction of fin
Rent growth Flexible and timely management
distributions,
Enhancing competitiveness of properties
g to increase the reserve
and asset reshuffle Advanced tenant diversification
try No. 1 owner ofAtion Enhancing competitiveness of properbuildings AbundantFlexible and timely management Abundant trac
nd timely management Rent
Abundant track record Rent growthvanced tenant diversification
mid-sized office buildings
Enhancing competitiveness of properties
record Enhancing
ties
Rent growfinancial cost Abundantinvestme
ible and timely management
and asset reshuffle No. 1 owner od enhancement

23

Growthbly raising

StableSelectiveEnhancing competitiveness of proper
Advanced tenantin actual occupan
Enhancing competitiveness of properties Sustaina
No. 1 owner of midPeriod-end occupan
Advanced tenant diversification
extended theEnhancin

Rise

About KDO

Fle

Advance

Kenedix Office Investment Corporation (KDO) is a dynamic and proven J-REIT focusing on investments in mid-sized office buildings in the Tokyo Metropolitan Area. Since listing on the Tokyo Stock

No. 1 owner of mid

Exchange (8972) over a decade ago, KDO has deployed tactful property acquisition strategies inaccordance with the real estate market environment. Through steady expansion, KDO’s portfolio
has grown from 31 properties with a total acquisition price of 69.1 billion yen to 99 properties witha total acquisition price of 398.3 billion yen in October 2016.

As the No.1 J-REIT focusing on mid-sized office buildings, we will continue raising portfolio quality
through asset reshuffle and other initiatives, while advancing performance with internal growth,backed by sound financial management.

CHARACTERISTICS
Mid-sized office buildings• ‌Mid-sized office buildings refer to the type of office buildings with a “grossfloor area of 500-3,000 tsubo and 100-150 tsubo on each floor”, leased primarily to “SMEs consisted of less than 30 employees”• ‌These properties are abundant in number, high in liquidity and rich intenant base

Tokyo metropolitan area

“Selected” management of
mid-sized office buildings

Advanced tenant dFlexible and timely management• ‌Office buildings located within the Tokyo metropolitan area occupy
nearly 80% of the portfolio propertieso• ‌Diversified investment in several properties in core regional cities,
mitigating geographical concentration risk Abundant track record Redu
Advanced tenant d• ‌Selective investment in the properties with competitive advantages interms of location (within a walking distance from the nearest
railway station), specifications and seismic resistance

Period-end• ‌Management with an aim to maintain / improve customer satisfaction
with steady incr
by making use of a customer satisfaction (CS) survey and making efforts
to understand and address tenants’ needs and issues
No. 1 owner of mid-sized office buildings Actu
Flexible and tim
Enhancing competitiveness of properties

Selective

Enh
Advanced tenant diversification
inve
Advanced tenant diversification Flexib

rties No. 1 owner of mid-sized office buildings
t diversification Flexible and timely management Rent growth
ncy rate and unit rent Abundant track
ably raising distributions, and also working to increase the reserve for reduction entry-sized office buildings Abundant track record Flexible and timely management
ncy rate is maintained at high level, with steady increases in new leases for low-occupancy prop
and extendedne remaining period to maturity for 6 consecutive fiscal periods
ng competitiveness of properties Rent growth Advanced tenant diversification
ACHIEVEMENTS
exible and timely
management A Rent growth Advanced tenant diversification
Enhancing competitiveness of properties
ed tenant diversification
External growth
Continue to improve the portfolio quality by selective investment and asset reshuffle
Advanced tenant
diversification Flexible and timely management• Acquired 2 office buildings (5.1bn yen)
Located within the central 5 wards of Tokyoof financial base Rent growth
Negotiated transaction leveraging sponsor’s M&A
and improvement in portfolio profitability Advanced tenant diversificationd-sized office buildings Flexible and timely management Rent Advanced tenant diversifica
Abundant
track record
No. 1 owner of mid-sized offi
% (3.8 )Advanced tenant diversificationof unitholder value Rent grow
Enhancing competitiveness of properties Flexible and timely managem
Internal growth
No.trend
1 inowner
officebuildings
Enhancingcompetitiv
Further enhance upward
revenuesof
bymid-sized
improving actual
occupancy
rate and unit
rent
occupancy rates continued to improve with steady increases in new leases and gradual expiration of
Enhancing• ‌Actual
competitivenessof properties Flexible and timely management A Ren
the existing free rent periods• ‌Steady rent growth achieved through tenant turnover and rent revisions
Enhancingcompetitiveness of properties Rent growth Advanced tenant di
Abundant track record
distributions, and also
working to increase the reserve for reduction entry No. 1 owner of mid-sized offi+
mn yentenant diversification
54.4 Rent growth% Advanced
Flexible and timely %management
diversification
Enhancing competitiveness of propertiest Rent growthfinancial management and reduction
Financial strategy
tenant diversification Enhancing competitiveness of propertiesof financial cost Advanced
Maintain stable financial base and continue reducing financial cost
• ‌Reduced
cost and extended
the remaining period
to maturity
6 consecutive fiscal
uced financial costandfinancial
extended
the remaining
periodtoformaturity
forperiods
6 consecutive fiscal perio
diversification No. 1 owner of mid-sized office buildings Abundant track record Flexible andReduced financial cost

(23rd fiscal period ended October 2016)

Actualized enhancement
Estimated NOI yield (after depreciation)

4.2%

GrowthSustainably raising
93.4
60.9

Increase in actual occupancy rate of
office buildings
End of 23rd fiscal period

Percentage of the number of new contracts
signed with higher rents at tenant turnover ofoffice buildings

Increasing change in rent upon rent revisionsof office buldings

22nd fiscal period

Total monthly amount for 23rd fiscal period

23rd fiscal period%(+0.9% period over period)

Stable4.3* ‌Occupancy rate(contracted area based): 96.8%

Average interest rate on interest-bearing debt

Average remaining period to maturity

high level
1.19
4.9

LTV (interest-bearing debt ratio),
occupancy rate is maintained at%reases in new leases for low-occupancy
properties yrs%
ualized enhancement of financial base and improvement in portfolio profitability
mely management Rent growth Advanced tenant diversification
No. 1 owner of mid-sized office buildings Enhancing competitiveness of properties
End of 23rd fiscal period

End of 23rd fiscal period

End of 23rd fiscal period(-0.06% period over period)(+0.2 yrs period over period)(+0.3% period over period)

hancing competitiveness of properties
estment and asset reshuffle Rent growth
ble and timely management Rent growth

43.1

1

Message from Management

Building a Portfolio with
Robust Profitability to Realize
Sustainable Growth
Selective Investment Leveraging Our Expertise in Evaluating andManaging Mid-sized Office Buildings

Making Steady Progress, We Achieved Solid Results
amid a Favorable Environment in the 23rd Fiscal Period Ended October 2016
We again achieved steady growth and solid perfor-

with two real estate companies engaged in redevelop-

mance. During the 23rd fiscal period ended Octoberment projects. Specifically, with one company, we

2016, the environment for office building management

acquired a trust beneficiary interest in ARK Mori

proved favorable.

Building (compartmentalized ownership of the 34th andRegarding external growth, Kenedix Office
Investment Corporation (KDO) acquired two office

BUREX Toranomon. With the other company, we havebuildings following a corporate acquisition by our spon-

agreed to acquire Nishi-Shinbashi TS Building and sellsor company, both located in the central five wards of

KDX Nihonbashi Kabutocho Building. Aware of theTokyo. We invested in them after careful consideration

demand for properties from real estate companiesof their merits, based on our acquisition criteria.

seeking to advance redevelopment in the areas sur-

Accordingly, KDO’s portfolio grew to 99 properties withrounding the properties sold, we engaged persistently ina total asset size of 398.3 billion yen as of October 31,

negotiations on asset reshuffles. As a result, we deter-

2016, the end of the fiscal period under review.

mined that these transactions would serve to increase

In the 24th fiscal period ending April 2017, we havealready reached agreements on mutual transactions

2

35th floors) located in Minato-ku, Tokyo and sold

unitholder value more than continuing to hold the properties or taking part in their eventual redevelopment.

Naokatsu UchidaDirector and COO, General Manager of
Office REIT Division of
Kenedix Real Estate Fund Management, Inc.

Through these transactions, we expect to improve

In terms of financial management, we reduced

the portfolio quality, increase distributions, record afinancial costs and extended the average borrowing

gain on sale of real estate and increase cash on hand toperiod for a sixth consecutive fiscal period. Comparedhelp fund future property acquisitions.

with the end of the previous fiscal period ended April

Looking at internal growth, we see gradual expira-2016, the average interest rate on our interest-bearing

tion of the existing free rent periods, thus increasing

debt fell from 1.25% to 1.19%, and the average

the actual occupancy rate. Backed by firm demandremaining period to maturity lengthened from 4.7 years

from tenants relocating to larger office spaces, we are

to 4.9 years. We kept the loan-to-value (LTV) ratio at

seeing greater numbers of rent increases upon tenant

the conservative level of 43.1%.

turnover. Furthermore, we have made steady progress

The distributions per unit for the 23rd fiscal period

in raising rents upon rent revisions with existing ten-

resulted in 11,365 yen, surpassing the goal of 11,000

ants. These factors have lead to growing revenue

yen that we set a year and a half earlier. This also

increases from existing properties.

marked a better than 10% increase from the 21st fiscal

Most of KDO’s tenants are small- and mid-sized com-period distribution one year earlier.

panies. These companies are exhibiting stable performance, and I strongly feel that we are anticipating an
increase in well-performing tenants with a favorable business prospects. Accordingly, we expect the actual occupancy rate and unit rent to continue increasing for theimmediate future, leading to ongoing revenue growth.

3Message from Management

Achieving Steady Results and Progress by
Continuing to Make Selective Investment,
Enhancing Upward Trend in Revenues andReinforcing Our Financial BaseWe Aim for Further Portfolio Growth Maintaining Existing Strategies and Policies
To pursue external growth, we will continue to makeour buildings with renovations, including air conditioning

selective investment and reshuffle assets, thereby

system upgrades. Through effective and strategic capital

improving the quality of our portfolio. The market envi-

expenditure, we aim to accelerate internal growth.

ronment for office buildings has not changed greatly

In terms of financial strategy, we will continue ourfrom six months ago. Opportunities to acquire proper-

policy of stable financial management. While maintain-

ties at justifiable prices remain limited, and some proper-

ing our LTV at a conservative level, we will respond nim-ties that we bid on ultimately sell at prices far in excess

bly to property acquisition opportunities.

of the levels permitted by our acquisition criteria.

relatively high interest rates, we believe that we can fur-now decreasing, and we are seeing signs that property

ther reduce financial costs through refinancing and otherprices may be close to a peak. We will keep a close eyemeans. In the near term, we expect reductions in finan-

on market changes as we employ a variety of acquisition

cial costs to contribute to distributions.

methods and continue to carefully invest in selective
mid-sized office buildings.

Moving forward, we will make selective investment
in newly acquired properties, reshuffle our assets, fur-

To promote internal growth, we are working to fur-ther increase revenue from existing properties andther increase revenue from existing properties by contin-

reduce financial costs. Through the combination of

uously raising the actual occupancy rate and unit rent.

these efforts, we aim for sustained distribution growth.

We plan to continue enhancing the competitiveness of

4

Furthermore, as we still have some borrowings withAt the same time, office building transactions are

Highlights for the 23rd Fiscal Period Ended October 2016

Distributions:

+10.3
+6.9
25.4
compared with fiscal period ended October 2015%

Net asset value per unit:

compared with fiscal period ended October 2015 (note)%

Appraisal profit of owned properties:

bn yenNote: Net‌
asset value (NAV) per unit is calculated based on appraisal value and differs from the accounting item net assets per unit. NAV per unit is truncated to the nearest
thousand yen after deducting distributions per unit

Maximizing Unitholder Profit by Managing Mid-sized Office Buildings That Tenants
Prefer Using Our Wealth of Accumulated Insight and Management Expertise
Beginning in 2018, a large supply of office buildings is

potentially impacting small and mid-sized buildings as ten-

expected to hit the market. Following the last supply surge

ants move between properties. Still, we expect the impact

in 2012, the vacancy rate in the central five wards of Tokyo

to be minor.

rose to 9.4%. However, we believe that adjustment period

We believe that our most important success factor is

was exceptional, exacerbated by weakened business senti-

ensuring the properties we manage continue to be preferred

ment in the wake of the financial crises and the Great Eastby tenants over other small- and mid-sized buildings.

Japan Earthquake.
This time around, demand for office buildings is relatively

There is a wide range of mid-sized office buildings in theTokyo Metropolitan Area, with considerable variation instrong. Barring an extraordinary confluence of factors thatmanagement conditions and building quality. For KDO, thisdeeply damage business sentiment, we do not expect theenvironment makes it easy to achieve differentiation fromupcoming supply surge to be great cause for concern.

other small- and mid-sized office buildings by leveraging ourFurthermore, the new supply of office buildings will be

wealth of management knowhow. I believe that we will bemainly large-scale buildings. These properties target differ-able to sustain our stable performance and pursue internal

ent tenants than mid-sized office buildings, both in terms ofgrowth even if the leasing market slows.

contracted floor area and unit rent. We therefore expectthat the new buildings will not directly impact KDO.
Some people say that competition among large buildings

Going forward, KDO aspires to meet the expectations of
its investors as the No. 1 owner of mid-sized office buildings and fulfill its social mission of promoting mid-sized

to attract tenants could conceivably lead to vacancies else-

office buildings with heightened environmental value

where through so-called secondary or tertiary vacancy,

through such initiatives as reducing energy consumption.

5

cing competitiveness of properties No. 1 owner of mid-sized office buildings
Advanced tenant diversification Flexible and timely management Rent growth
Externalin Growth
actual occupancy rate and unit rent Abundant track
ess of properties Sustainably raising distributions, and also working to increase the rNo. 1 owner of mid-sized office buildings Abundant track record Flexible and timely
Period-end occupancy rate is maintained at high level, with steady increases in new
Advanced tenant diversificationand extended
extended the remaining period to maturity for 6 consecutive fiscal periods
Enhancing competitiveness of properties Rent growth Advanced t
Flexible and timely management A Rent growth Advanced teAdvanced tenant diversification Enhancing competitiveness of prop
Advanced tenant diversification Flexible and timely managemeof financial b
and improvement in portfolio profitability Advanced te
No. 1 owner of mid-sized office buildings Flexible and timely management Ren
Abundant track record
Advanced tenant diversification
Enhancing competitiveness of properties
No. 1 owner of mid-sized office bu
Enhancing competitiveness of properties Flexible andEnhancing competitiveness of properties Rent g
Abundant track record
distrib
working to increase the reserve for reduction entry
Flexible and timely management Rent growth Adva
Advanced tenant diversification
Enhancing competitiveness of
exible and timely management Rent growthfinancial management and redu
of financial cost Advanced tenant diversification Enhancing comp
Abundant track record Reduced financial cost and extended the remaining period to maturit
Advanced tenant diversification No. 1 owner of mid-sized office buildings Abund

Rise

Reduced financial cost

Actualized enhancement

Continue to improve
the portfolio qualityGrowthby
selective investment andasset reshuffle Sustainably raising
Stablehigh level

Period-end occupancy rate is maintained at,with steady increases in new leases for low-occupancy properties
id-sized office buildings Actualized enhancement of financial base and improvem
Flexible and timely management Rent growth Advanced tenant diversif
competitiveness of properties No. 1 owner of mid-sized office buildings Enhancing competi

Selective

Enhancing competitiveness of properties
investment and asset reshuffle Rent growth6
ed tenant diversification Flexible and timely management Rent growthProperty acquisition in 23rd fiscal period (2016/10)• ‌Acquired 2 office buildings located within the central 5 wards of Tokyo• ‌Properties sourced through corporate acquisition by our sponsor, a unique approachleveraging Kenedix Group’s strength

KDX Shin-Nihonbashi Ekimae Building

KDX Nihonbashi Edo-dori Building

Location

Chuo-ku, Tokyo

Location

Chuo-ku, Tokyo

Acquisition price

3,829 mn yen

Acquisition price1,350 mn yen

Appraisal value at thetime of acquisition

3,930 mn yen

Appraisal value at thetime of acquisition

1,410 mn yen

Transportation

Right above Shin-Nihombashi Station on
the JR Sobu Main Line
About 4-minute walk from Mitsukoshimae
Station on the Tokyo Metro Ginza /Hanzomon Lines

About 2-minute walk from Shin-Nihombashi
Station on the JR Sobu Main Line
About 2-minute walk from Kodemmacho
Station on the Tokyo Metro Hibiya Line

Transportation

The Nihombashi Honcho area in which the two properties are located is an area that has convenient access to where a number ofroutes can be utilized and has grown together with the adjacent Nihombashi Muromachi area, as commercial districts where traditional retailers set up stores including Nihombashi Mitsukoshi Main Store. It has been also developed as one of the leading officeareas in Tokyo where many companies have located their headquarters and branches. It is still continuously growing even now
with several redevelopment projects currently underway.

ho

ac

JR

ine
id L
Rap
u
b
So

m

• ‌The estimated NOI yield after depreciation for the two
properties exceeds that of our existing portfolio

Kanda

KDX Shin-Nihonbashi Ekimae
4 Building

ori
oD
Ed

m
de

Itopia Nihonbashi SA Building

shim

ae

i
ash
omb
Nih
n
i
Sh

suko
Mit

• ‌Regardless of expected decrease in occupancy rate bytenant move-outs, aiming to recover at an early stage
through management improvements such as setting ofadequate rents, early renaming of the buildings, renovating restrooms based on requests from tenants, etc.

KDX Nihonbashi Edo-dori BuildingKo• ‌Located in the Nihombashi area in Chuo-ku, Tokyo
where KDO has a wealth of experience owning andmanaging properties

17

田

e
a Lin
Ginz
etro
oM
Toky

• ‌Acquired 2 office buildings that a company acquired byour sponsor had possessed

神

ori
wa D
Sho

Transaction highlights

Bank ofJapan
Head
officeMitsukoshi

Mitsu

kosh

imae

KDX Nihonbashi Honcho Building

KDX Shin-Nihonbashi Buildingnezomon Li
etro Han
Tokyo M7

External Growth
Asset reshuffle in 24th fiscal period (2017/4)• ‌Acquiring prime properties from real estate developers through mutual transactions by
capturing their needs in relation to redevelopment projects
Transaction with Mori Building Co., Ltd. (December 1, 2016)
The property acquired is a highly competitive high-profile landmark office building due to continuous renovations located in ARK Hills. KDO
decided to acquire this property on expectations that this transaction would help increase NOI and NOI after depreciation, stabilize revenues using
the fixed rent master lease scheme, and earn a capital gain on sale.

Property acquired

ARK Mori Building(compartmentalized ownership) (Note)

Location

Property soldAseet
reshuffle

Minato-ku, Tokyo

Acquisition price

4,169 mn yen

Location
Property acquisition

Minato-ku, Tokyo

Disposition price

2,440 mn yen

4,310 mn yen

Appraisal value as of
October 31, 2016

2,440 mn yen

About 2-minute walk from Roppongi-itchome
Station on the Tokyo Metro Namboku Line
About 3-minute walk from Tameike-sanno Stationon the Tokyo Metro Ginza / Namboku Lines

Initial acquisition price

1,750 mn yen

Appraisal value as of
October 31, 2016
Transportation

BUREX Toranomon

Note : Acquiring‌
the trust beneficiary interest in 40% quasi co-ownership of compartmentalized ownership for the 34th and 35th floors of ARK Mori Building.

Transaction with HEIWA REAL ESTATE CO., LTD. (planned on February 1, 2017)
The property to be acquired is an office building located in Nishi-Shinbashi / Toranomon area which has a significant growth potential arising from theplanned opening of a new subway station on the Tokyo Metro Hibiya Line and several redevelopment projects underway, while the property to be
sold, which has been built for more than 18 years, may lose its competitiveness due to the environmental changes accompanied by the progress ofredevelopment projects. Thus, KDO decided to conduct the transaction.

Property to be acquired

Nishi-Shinbashi TS Building

Location

Property to be soldAseet
reshuffle

Minato-ku, Tokyo

Location

Chuo-ku, Tokyo

Disposition price

12,400 mn yen

8,480 mn yen

Appraisal value as of
October 31, 2016

12,400 mn yen

About 8-minute walk from Toranomon Station on
the Tokyo Metro Ginza Line and Kamiyacho
Station on the Tokyo Metro Hibiya Line as well as
Onarimon Station and Uchisaiwaicho Stationon the Toei Mita Line

Initial acquisition price

11,270 mn yen

Acquisition price8,400 mn yen

Appraisal value as of
October 31, 2016
Transportation

KDX Nihonbashi Kabutocho
Building

Property acquisition

Effect of asset reshuffle
NOI yield after depreciation+180 yen/period

Gain on sale of real estate

Achieved cash on hand• ‌Aim to improve portfolio quality

1.6 bn yen+1.8 bn yen

Properties acquired(estimate)(Note 1)

(Note 2)

3.6 %

2.4 %

(Note 4)8

Distributions per unit

• ‌Contribute to distribution via
improved portfolio
profitability

Properties sold(actual)Mid-long term estimate(Note 3)by utilizing the gain on sale andaccomplish further growth withachieved cash

(Note 5)Note 1: Calculated‌by dividing the sum of the rental operating income (NOI after depreciation (actual)) for 21st (2015/10) and 22nd (2016/4) fiscal period by the acquisition price,rounded to the first decimal place.
Note 2: Calculated‌by dividing estimated NOI after depreciation (NOI after excluding extraordinary factors for the year of the acquisition estimated by the Asset Management
Company — estimated depreciation expenses) by the acquisition price, rounded to the first decimal place.
Note 3: Deducting‌the sum of NOI after depreciation (actual) for the properties sold from the sum of estimated NOI after depreciation for the properties acquired calculated in
Note 2, then semi-annualize the said full-year amount and divide by the total number of investment units issued (as of the end of 23rd fiscal period (2016/10)) to calculate
the difference in DPU.
Note 4: The‌amount of gain on sale of real estate is the estimate based on the assumed book value and disposition related expenses, etc.
Note 5: Cash‌on hand is calculated by deducting the acquisition and disposition related expenses (estimated amounts) from the total of acquisition and disposition price.

Track record and effect of property acquisitions and dispositions• Actualized‌
enhancement of financial base and improvement in portfolio profitability
through flexible and timely acquisitions / dispositions with the view to market conditions
Track record of property acquisitions / dispositions
Total acquisition priceTotal disposition price(based on acquisition price)

Increased amountPO

Fiscal period with public offering

Proactive portfolio expansion through public offerings
for three consecutive periods

Improving portfolio quality throughfurther proactive asset reshuffle(bn yen)
45

PO

PO

38

35
30

33

31

PO
21

13

15

12

15
8

12
2

5

4

3

5

0

-0
-2

19

-3

-1

-4

-6

-0

-5

-13

-14
-15
16th
fiscal period(2013/4)

17th
fiscal period(2013/10)

18th
fiscal period(2014/4)

19th
fiscal period(2014/10)

20thfiscal period(2015/4)

21st
fiscal period(2015/10)

22ndfiscal period(2016/4)

23rd
fiscal period(2016/10)

24th
fiscal period(2017/4)
Estimate (Note1)

Changes in related indices
NOI yield (Note 2)
16th
fiscal period(2013/4)

4.3 %+0.3 %NOI yield after depreciation (Note 2)
24th
fiscal period (estimate)(2017/4)

4.6 %

16th
fiscal period(2013/4)

Appraisal profit/loss of portfolio
16thfiscal period(2013/4)-25.9 bn yen+51.3
bn yen23rd
fiscal period(2016/10)

25.4 bn yen+0.3 %

3.1 %24th
fiscal period (estimate)(2017/4)

3.4 %Reserve for reduction entry
16th
fiscal period(2013/4)

497 mn yen+1,527mn yen23rd
fiscal period(2016/10)

2,024 mn yen

Note 1: Total‌acquisition price for the properties (to be) acquired / sold in the 24th fiscal period (2017/4) as of December 14, 2016.
Note 2: ‌NOI yield and NOI yield after depreciation calculation for the properties acquired during each fiscal period without property taxes are assumed as if the taxes are imposed.
For the properties acquired / sold during each fiscal period, they are calculated by multiplying the ratio of actual operating days corresponding to each fiscal period's operatingdays against NOI and acquisition price, rounded to the first decimal place.

9

cing competitiveness of properties No. 1 owner of mid-sized office buildings
Advanced tenant diversification Flexible and timely management Rent growthInternalinGrowth
actual occupancy rate and unit rent Abundant track
ess of properties Sustainably raising distributions, and also working to increase the rNo. 1 owner of mid-sized office buildings Abundant track record Flexible and timely
Period-end occupancy rate is maintained at high level, with steady increases in new
Advanced tenant diversificationand extended
extended the remaining period to maturity for 6 consecutive fiscal periods
Enhancing competitiveness of properties Rent growth Advanced t
Flexible and timely management A Rent growth Advanced teAdvanced tenant diversification Enhancing competitiveness of prop
Advanced tenant diversification Flexible and timely managemeof financial b
and improvement in portfolio profitability Advanced te
No. 1 owner of mid-sized office buildings Flexible and timely management Ren
Abundant track record
Advanced tenant diversification
Enhancing competitiveness of properties
No. 1 owner of mid-sized office bu
Enhancing competitiveness of properties Flexible andEnhancing competitiveness of properties Rent g
Abundant track record
distrib
working to increase the reserve for reduction entry
Flexible and timely management Rent growth Adva
Advanced tenant diversification
Enhancing competitiveness of
exible and timely management Rent growthfinancial management and redu
of financial cost Advanced tenant diversification Enhancing comp
Abundant track record Reduced financial cost and extended the remaining period to maturit
Advanced tenant diversification No. 1 owner of mid-sized office buildings Abund

Rise

Reduced financial cost

Further enhance upward
trend in revenues Growth
by improving
actual occupancy rate
Sustainably raisingand unit rent
StableActualized enhancement

high level

Period-end occupancy rate is maintained at,with steady increases in new leases for low-occupancy properties
id-sized office buildings Actualized enhancement of financial base and improvem
Flexible and timely management Rent growth Advanced tenant diversif
competitiveness of properties No. 1 owner of mid-sized office buildings Enhancing competi

Selective

Enhancing competitiveness of properties
investment and asset reshuffle Rent growth10
ed tenant diversification Flexible and timely management Rent growthChanges in occupancy rate of office buildings• ‌Period-end occupancy rate is maintained at high level, with steady increases in new leases
for low-occupancy properties• ‌Spread between actual occupancy rate and occupancy rate has shrunk to 3.4% with
gradual expiration of existing free rent periods
Occupancy rate performance of office buildings
Occupancy rate (contracted area based)

Actual occupancy rate (excl. free rent area)

(%)
100.0

96.8

96.4
95.4

96.8

94.7

95.0

3.4%

4.3%

3.5%
3.8%

93.4

4.2%

92.9

92.5

91.6
90.0

90.5
Office buildings: Average occupancy rate during fiscal period
20th fiscal period
95.9%

85.0

End of 19th
fiscal period (2014/10)

21st fiscal period
95.5%

End of 20th
fiscal period (2015/4)

22nd fiscal period
95.9%

End of 21stfiscal period (2015/10)

23rd fiscal period
96.2%

End of 22nd
fiscal period (2016/4)

End of 23rd
fiscal period (2016/10)

Note:	‌Occupancy rate (contracted area based) is calculated by dividing contract based leased area by leasable area and actual occupancy rate (excluding free rent area) is calculated by
dividing leased area subtracting free rent area by leasable area. The figures are rounded to the first decimal place. Average occupancy rate of office buildings during fiscal period isa simple average of month-end occupancy rates of owned office buildings during each period.

Rent trend upon tenant turnover of office buildings• ‌Rents for new lease contracts have been on the rise backed by favorable rental property
market• ‌The proportion of the number of new leases signed with increased rent post move-out has
been growing steadily
Increase / decrease in monthly rent upon tenant turnover (Note)
Total amount of increase in rent (mn yen)

Total amount of decrease in rent (mn yen)

Proportion of the number of new leases with increased rents upon tenant turnover

51.6%
32.1%

60.9%

37.5%
4.5

2.0

54.4%
5.8

5.0

1.7
-3.0

-3.1
-7.0

-7.7
-12.3
19th fiscal period(2014/10)

20th fiscal period(2015/4)

21st fiscal period(2015/10)

22nd fiscal period(2016/4)

23rd fiscal period(2016/10)

Note:	‌Total amount of increase / decrease in rent is the total of positive / negative gaps between the new and the previous rent for the same areas in each period where the new andprevious rents can be compared, the positive gaps are counted in to the amount of increase in rent and the negative gaps are counted as decrease.

11Internal Growth
Status of rent revisions with existing tenants of office buildings• ‌Upward rent trend has gained steam, with upward rent revisions on a steady increase
Change in rent upon rent revisions (based on monthly rent) (Note)
Increase in rent

Decrease in rent

Increase in rent - decrease in rent

(thousand yen)
10,000

8,000

7,770

6,000

7,134
5,071

4,000

2,000

3,998

3,502

4,341

1,107

1,176

0

-636
-2,0003,892-3,350-729-106
Confirmed as ofNovember 30,
2016-2,395-4,000-4,527-6,00020th fiscal period(2015/4)

21st fiscal period(2015/10)

22nd fiscal period(2016/4)

23rd fiscal period(2016/10)

24th fiscal Period(2017/4)
onward confirmed

Note: Total‌amount of increases / decreases in monthly rent before and after rent revisions for each fiscal period is aggregated, respectively. Figures are rounded to the nearest
thousand yen.

• ‌The portion of upward rent revision has been increasing despite the decrease in thenumber of contracts subject to rent revisions
Status of rent revisions (based on leased area)* Brackets indicate the number of contracts subject to rent revisions

22nd
fiscal period(2016/4)309

No change (257)
80.7%

12

Increase (48)18.1%

Increase (48)24.0%

Decrease (4)1.2%

Decrease (2)
3.4%

23rd
fiscal period(2016/10)267

No change (217)72.7%

Initiatives for enhancing competitiveness of properties• ‌Renovations have enhanced competitiveness of properties, facilitating attraction of tenantson the favorable rental terms
Renovation of KDX Yokohama Building
BeforeAfter

Enhancing competitivenessby renovation of common areas
Problems with the building
Diminishing competitiveness due toaging deterioration of the building andobsolescence of the design

Rise in competitiveness throughrenovation

Refresh corner

Common areas and the service facilities
for tenants were fully renovatedContracted rent with new tenants+15 %Community room

Leasing of KDX Iidabashi Square

Renovation contributing
to full occupancy

•

‌
The
building was fully renovated in April 2016 following the move-out of
the tenant that had occupied the whole building

•

‌
The
contracted rate reached 57.9% as of June 1, 2016 after leasing contracts signed with 4 tenants and has reached 100% after leasing contracts signed with 2 additional tenants and a convenience store thatoccupies the 1st floor (total of 7 tenants)

Changes in occupancy rate
End of Apr. 2016

End of Oct. 2016

Dec. 1, 201647.7 %

93.6 %

100 %Tenants of KDO office buildings• ‌Proportion which largest tenant occupies among total leased floor area is 1.1%
while other than the top 5 tenants each occupying less than 1.0%
Tenant diversification by type of business (based on # of tenants) (Note 1) and % of leased floor area of the top 10 tenants (Note 2)
Public sector (other)3
0.3%
Mining1
0.1%
Infrastructure1
0.1%

Transportation, Communication35
3.1%

Construction
43
3.8%
Real estate44
3.9%
Individual
53
4.7%
Financial, Insurance
57
5.1%
Manufacturing
157
14.0%

# of tenants
1,120% of leased floor area of the
top 10 tenants:

Service provider
451
40.3%

8.4 %

Wholesale, Retail, Dining
275
24.6%

Note 1: The‌
outer pie chart shows the breakdown of tenants by type of business based on the total number of tenants in office portfolio (aggregated by name-base) as of the end of 23rd
fiscal period (2016/10). Figures are rounded to the first decimal place.
Note 2: The‌
inner pie chart shows % of leased area of each tenant against total leased floor area of KDO portfolio as of the end of the 23rd fiscal period (2016/10). Figures are rounded to
the first decimal place.

13

Financial Strategy
Status of debt financing• ‌Reduced financial cost and extended the remaining period to maturity for 6 consecutive
fiscal periods• ‌Maintained stable financial base by keeping LTV at a conservative level and high ratio of
fixed interest rate
Refinance record for 23rd fiscal period (2016/10)(Total of 13.5bn yen) (Note)

Average remaining period to maturity
and interest rate (Note)
Weighted average remaining period to maturity (right axis)
Weighted average interest rate (incl. up-front fee) (left axis)
(%)
1.80

(year)
6.0

1.77
Beforerefinancing

Average interest rate

After
refinancing

1.60

0.83%

1.49%

5.0

1.65

1.46

4.0

1.45
1.39

1.40

3.0

1.25
Average borrowing
period8.6 years

4.1 years

2.0

1.19

1.20

1.0

2.3

3.1

3.6

4.1

4.3

4.7

4.9

1.00

0
End of 17th End of 18th End of 19th End of 20th End of 21st End of 22nd End of 23rd
fiscal period fiscal period fiscal period fiscal period fiscal period fiscal period fiscal period(2013/10)(2014/4)(2014/10)(2015/4)(2015/10)(2016/4)(2016/10)

Note: Average‌interest rate and borrowing period are weighted average
numbers of interest rate (including up-front fee) and borrowing period
based on borrowing amount, respectively (rounded to the second/
first decimal place).

Note: ‌Average remaining period to maturity and interest rate are weighted averages based on
outstanding debts as of the end of each fiscal period (Average remaining period to maturity
and interest rate are rounded to the first and second decimal places respectively).

Major indices related to the stability of financial structure as of the end of 23rd fiscal period (2016/10)
LTV (interest-bearing debt ratio) (Note 1)

Ratio of fixed interest rate (Note 2)

Status of credit rating

Conservative financial managementwith a target LTV of 45%

Continue to hedge against apotential rise in interest rates

Rating outlook revised in March 2016

43.1%

95.5%

JCR A+ (Positive)* LTV based on appraisal: 40.6%
Note 1: LTV‌is calculated by dividing balance of interest-bearing debt by the amount of total assets as of the end of the fiscal period, rounded to the first decimal place.
Note 2: Includes‌the borrowings with floating interest rate fixed by interest rate swap but excludes those hedged by interest rate cap, rounded to the first decimal place.

Balance of interest-bearing debt by maturity
Short-term borrowings (1.5 bn yen)

Corporate bonds (9.3 bn yen)

Long-term borrowings (167.3 bn yen)

Total debt 178.1 bn yen(bn yen)
20.0

15.0

10.0

1.5

1.5

1.8

3.0

2.0

5.0

7.2

14.0

8.2

9.5

7.5

6.2

8.5

10.1

9.5

11.8

9.9

7.1

3.8

4.5

3.7

7.0

8.3

8.5

10.3

11.5

0
24th
25th
26th
27th
28th
29th
30th
31st
32nd
33rd
34th
35th
36th
37th
38th
39th
40th
41st
42nd
43rd
fiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalfiscalperiodperiodperiodperiod period
periodperiodperiodperiodperiod period
periodperiod period
periodperiodperiodperiodperiodperiod(2017/4) (2017/10) (2018/4) (2018/10) (2019/4) (2019/10) (2020/4) (2020/10) (2021/4) (2021/10) (2022/4) (2022/10) (2023/4) (2023/10) (2024/4) (2024/10) (2025/4) (2025/10) (2026/4) (2026/10)

14

1.0
46th
fiscalperiod(2028/4)

Dividend and NAV per unit
• ‌Raised dividend by more than 10% year on year in the 23rd fiscal period (2016/10),
beating the initial target of 11,000 yen• ‌Aiming for normalized dividend of 12,500 yen
Historical changes in dividend• Normalized‌
dividend for the 24th fiscal period (2017/4) is assumed to be around
11,400 yen• Reserve‌for reduction entry, a provision for one-time expense / loss in the future, was
5,000 yen per unit as of the end of 23rd fiscal period (2016/10)

Aiming for
12,500 yen
Normalized
dividend+10.3%
11,365 yen
10,707 yen
10,300 yen

11,500 yen

11,400 yen

10,920 yen
Reversal ofreservefor reduction
entry

10,585yen

Reserve for
reduction entry
per unit (Note)

21st fiscal
period(2015/10)
Actual22nd fiscal
period(2016/4)
Actual

3,814 yen

5,000 yen

23rd fiscal
period(2016/10)
InitialActualforecast

5,000 yen

24th fiscal
Period(2017/4)
Forecast

5,000 yen

What is normalized dividend?
A dividend free from temporary impact
related to property acquisitions /dispositions or decline in earnings due toturnover of major tenants, etc.

Note: The‌balance of reserve for reduction entry is calculated by either adding provision of reserve for reduction entry or subtracting reversal of reserve for reduction entry to / from thebalance of reserve for reduction entry on the balance sheet as of the end of relevant fiscal period.

NAV per unit: Historical performance (Note 1)• Achieved‌
6.9% increase over the past year

+6.9%

577,000 yen

557,000 yen
540,000 yen

Portfolio
appraisal
profit / loss (Note 2)

21st
fiscal period(2015/10)

22ndfiscal period(2016/4)

23rd
fiscal period(2016/10)+10.9
bn yen+17.4
bn yen+25.4
bn yenNote 1: NAV‌
per unit is truncated to the nearest thousand yen after subtracting the amount of DPU.
Note 2: Appraisal‌
profit / loss is calculated by subtracting book values from appraisal values for all properties owned
as of the end of relevant fiscal period.

15

Portfolio (As of October 31, 2016)
The properties acquired during the 23rd fiscal period are marked with a red box.

No.

Property Name

Location

Acquisition
Price (mn yen)
(Note 1)

OfficeBuilding(TokyoMetropolitan
Area)

16

Year Built(Note 2)

Occupancy
Rate(Note 3)A-1

KDX Nihonbashi 313 Building

Chuo-ku, Tokyo

5,940

Apr. 1974

94.6%

A-3

Higashi-Kayabacho Yuraku Building

Chuo-ku, Tokyo

4,450

Jan. 1987

100.0%
100.0%A-4

KDX Hatchobori Building

Chuo-ku, Tokyo

3,680

Jun. 1993

A-5

KDX Nakano-Sakaue Building

Nakano-ku, Tokyo

2,533

Aug. 1992

94.8%

A-6

Harajuku F.F. Building

Shibuya-ku, Tokyo

2,450

Nov. 1985

100.0%A-7

KDX Minami Aoyama Building

Minato-ku, Tokyo

2,270

Nov. 1988

100.0%

A-8

Kanda Kihara Building

Chiyoda-ku, Tokyo

1,950

May 1993

100.0%

A-13 KDX Kojimachi Building

Chiyoda-ku, Tokyo

5,950

May 1994

100.0%

A-14 KDX Funabashi Building

Funabashi, Chiba

2,252

Apr. 1989

100.0%

A-16 Toshin 24 Building

Yokohama, Kanagawa

5,300

Sep. 1984

100.0%

A-17 KDX Ebisu Building

Shibuya-ku, Tokyo

4,640

Jan. 1992

100.0%

A-19 KDX Hamamatsucho Building

Minato-ku, Tokyo

3,460

Sep. 1999

100.0%

A-20 KDX Kayabacho Building

Chuo-ku, Tokyo

2,780

Oct. 1987

100.0%

A-21 KDX Shinbashi Building

Minato-ku, Tokyo

3,728

Feb. 1992

100.0%

A-22 KDX Shin-Yokohama Building

Yokohama, Kanagawa

2,520

Sep. 1990

89.1%

A-26 KDX Kiba Building

Koto-ku, Tokyo

1,580

Oct. 1992

88.1%

A-27 KDX Kajicho Building

Chiyoda-ku, Tokyo

2,350

Mar. 1990

100.0%

A-29 KDX Higashi-Shinjuku Building

Shinjuku-ku, Tokyo

2,950

Jan. 1990

100.0%

A-30 KDX Nishi-Gotanda Building

Shinagawa-ku, Tokyo

4,200

Nov. 1992

74.8%

A-31 KDX Monzen-Nakacho Building

Koto-ku, Tokyo

1,400

Sep. 1986

100.0%

A-32 KDX Shiba-Daimon Building

Minato-ku, Tokyo

6,090

Jul. 1986

100.0%
100.0%

A-33 KDX Okachimachi Building

Taito-ku, Tokyo

2,000

Jun. 1988

A-34 KDX Hon-Atsugi Building

Atsugi, Kanagawa

1,305

May 1995

96.7%

A-35 KDX Hachioji Building

Hachioji, Tokyo

1,155

Dec. 1985

85.5%

A-37 KDX Ochanomizu Building

Chiyoda-ku, Tokyo

6,400

Aug. 1982

100.0%

A-38 KDX Nishi-Shinjuku Building

Shinjuku-ku, Tokyo

1,500

Oct. 1992

100.0%

A-41 KDX Shinjuku 286 Building

Shinjuku-ku, Tokyo

2,300

Aug. 1989

100.0%

A-45 KDX Roppongi 228 Building

Minato-ku, Tokyo

3,300

Apr. 1989

100.0%

A-46 Hiei Kudan-Kita Building

Chiyoda-ku, Tokyo

7,600

Mar. 1988

100.0%

A-47 KDX Shin-Yokohama 381 Building

Yokohama, Kanagawa

5,800

Mar. 1988

100.0%

A-48 KDX Kawasaki-Ekimae Hon-cho Building

Kawasaki, Kanagawa

3,760

Feb. 1985

100.0%

A-50 KDX Ikejiri-Oohashi Building

Meguro-ku, Tokyo

2,400

Sep. 1988

100.0%

A-51 KDX Hamacho Nakanohashi Building

Chuo-ku, Tokyo

2,310

Sep. 1988

100.0%

A-52 KDX Kanda Misaki-cho Building

Chiyoda-ku, Tokyo

1,380

Oct. 1992

100.0%

A-55 Shin-toshin Maruzen Building

Shinjuku-ku, Tokyo

2,110

Jul. 1990

100.0%

A-56 KDX Jimbocho Building

Chiyoda-ku, Tokyo

2,760

May 1994

100.0%

A-57 KDX Gobancho Building

Chiyoda-ku, Tokyo

1,951

Aug. 2000

100.0%

A-59 KDX Iwamoto-cho Building

Chiyoda-ku, Tokyo

1,864

Mar. 2008

100.0%

A-60 KDX Harumi Building

Chuo-ku, Tokyo

10,250Feb. 2008

93.2%

A-61 KDX Hamamatsucho Dai-2 Building

Minato-ku, Tokyo

2,200

Apr. 1992

100.0%

A-62 Koishikawa TG Building

Bunkyo-ku, Tokyo

3,080

Nov. 1989

100.0%

A-63 Gotanda TG Building

Shinagawa-ku, Tokyo

2,620

Apr. 1988

100.0%

A-64 KDX Nihonbashi 216 Building

Chuo-ku, Tokyo

2,010

Oct. 2006

100.0%

A-66 KDX Shinjuku Building

Shinjuku-ku, Tokyo

6,800

May 1993

100.0%

A-67 KDX Ginza 1chome Building

Chuo-ku, Tokyo

4,300

Nov. 1991

98.2%

A-68 KDX Nihonbashi Honcho Building

Chuo-ku, Tokyo

4,000

Jan. 1984

100.0%

A-71 KDX Iidabashi Building

Shinjuku-ku, Tokyo

4,670

Mar. 1990

100.0%

A-72 KDX Higashi-Shinagawa Building

Shinagawa-ku, Tokyo

4,590

Jan. 1993

100.0%

A-73 KDX Hakozaki Building

Chuo-ku, Tokyo

2,710

Nov. 1993

100.0%

A-74 KDX Shin-Nihonbashi Building

Chuo-ku, Tokyo

2,300

Nov. 2002

100.0%

A-75 KDX Nihonbashi Kabutocho Building

Chuo-ku, Tokyo

11,270Nov. 1998

100.0%

A-78 KDX Tachikawa Ekimae Building

Tachikawa, Tokyo

1,267

Feb. 1990

100.0%

A-83 KDX Fuchu Building

Fuchu, Tokyo

6,120

Mar. 1996

85.2%

A-84 KDX Kasuga Building

Bunkyo-ku, Tokyo

2,800

Jun. 1992

100.0%

A-85 KDX Nakameguro Building

Meguro-ku, Tokyo

1,880

Oct. 1985

100.0%

No.

Property Name

Location

Acquisition
Price (mn yen)
(Note 1)

OfficeBuilding(TokyoMetropolitan
Area)

OfficeBuilding(Other Regional
Areas)

Residential
Property
Other(Note 2)

Occupancy
Rate(Note 3)

A-86 KDX Omiya Building

Saitama, Saitama

2,020

Apr. 1993

100.0%

A-87 Itopia Nihonbashi SA Building

Chuo-ku, Tokyo

2,200

Jul. 1995

97.0%
100.0%

A-88 KDX Shinjuku 6-chome Building

Shinjuku-ku, Tokyo

1,900

Mar. 1990

A-89 KDX Takanawadai Building

Minato-ku, Tokyo

5,250

Oct. 1985

94.0%

A-90 KDX Ikebukuro Building

Toshima-ku, Tokyo

3,900

Mar. 200990.3%

A-91 KDX Mita Building

Minato-ku, Tokyo

3,180

Mar. 1993

100.0%

A-92 KDX Akihabara Building

Chiyoda-ku, Tokyo

2,600

Dec. 1973

100.0%

A-93 KDX Iidabashi Square

Shinjuku-ku, Tokyo

4,350

Jan. 1994

93.6%

A-94 KDX Musashi-Kosugi Building

Kawasaki, Kanagawa

12,000

May 2013

100.0%

A-95 KDX Toyosu Grand Square (Note 4)

Koto-ku, Tokyo

8,666

Apr. 2008

98.0%

A-96 KDX Takadanobaba Building

Toshima-ku, Tokyo

3,650

Oct. 1988

93.1%

A-99 KDX Ikebukuro West Building

Toshima-ku, Tokyo

1,934

Jul. 1988

100.0%

A-101 KDX Yokohama Building

Yokohama, Kanagawa

7,210

Mar. 1994

95.0%

A-102 KDX Yokohama Nishiguchi Building

Yokohama, Kanagawa

2,750

Oct. 1988

100.0%

A-103 KDX Shin-Yokohama 214 Building

Yokohama, Kanagawa

2,200

Nov. 1989

95.6%

A-105 BUREX Toranomon

Minato-ku, Tokyo

1,750

Jul. 2011

100.0%

A-107 KDX Ginza East Building

Chuo-ku, Tokyo

3,600

Aug. 1991

100.0%

A-108 Pentel Building

Chuo-ku, Tokyo

3,350

Nov. 1990

100.0%

A-109 KDX Hamamatsucho Center Building

Minato-ku, Tokyo

3,950

Dec. 1985

100.0%

A-112 Nittochi Toranomon Building

Minato-ku, Tokyo

15,550Oct. 2013100.0%

A-113 KDX Shin-Nihonbashi Ekimae Building

Chuo-ku, Tokyo

3,829

May. 1992

67.2%

A-114 KDX Nihonbashi Edo-dori Building

Chuo-ku, Tokyo

1,350

Mar. 1985

73.7%

A-12 Portus Center Building

Sakai, Osaka

5,570

Sep. 1993

96.7%

A-42 KDX Karasuma Building

Kyoto, Kyoto

5,400

Oct. 1982

100.0%

A-44 KDX Sendai Building

Sendai, Miyagi

2,100

Feb. 1984

100.0%

A-53 KDX Hakata-Minami Building

Fukuoka, Fukuoka

4,900

Jun. 1973

97.6%

A-54 KDX Kitahama Building

Osaka, Osaka

2,220

Jul. 1994

89.3%

A-58 KDX Nagoya Sakae Building

Nagoya, Aichi

7,550

Apr. 2009

96.6%

A-69 KDX Kobayashi-Doshomachi Building

Osaka, Osaka

2,870

Jul. 2009100.0%

A-70 KDX Sapporo Building

Sapporo, Hokkaido

2,005

Oct. 1989

100.0%

A-79 KDX Nagoya Ekimae Building

Nagoya, Aichi

7,327

Apr. 1986

100.0%

A-82 KDX Higashi Umeda Building

Osaka, Osaka

2,770

Jul. 2009100.0%

A-97 KDX Utsunomiya Building

Utsunomiya, Tochigi

2,350

Feb. 1999

100.0%

A-98 KDX Hiroshima Building

Hiroshima, Hiroshima

1,300

Jan. 1990

90.5%

A-100 Senri Life Science Center Building

Toyonaka, Osaka

13,000Jun. 1992

83.3%

A-104 KDX Minami-Honmachi Building

Osaka, Osaka

2,200

Dec. 200992.5%

A-106 KDX Sakura-dori Building

Nagoya, Aichi

5,900

Aug. 1992

99.1%

A-110 KDX Shin-Osaka Building

Osaka, Osaka

4,550

May 1992

100.0%

A-111 Nichigin-mae KD Building

Nagoya, Aichi

92.2%

Office Building Subtotal (94 properties)

Central Urban
RetailProperties

Year Built

C-1

Frame Jinnan-zaka

Shibuya-ku, Tokyo

3,500

Sep. 2006

367,937

Avg. 22.5 years

96.8%

9,900

Mar. 2005

100.0%C-2

KDX Yoyogi Building

Shibuya-ku, Tokyo

2,479

Aug. 1991

100.0%

C-4

Ginza 4chome Tower

Chuo-ku, Tokyo

9,800

Nov. 2008

100.0%

22,179Avg. 11.4 years

100.0%

5,353

Jan. 2004

100.0%

5,353

Avg. 12.8 years

Central Urban Retail Properties Subtotal (3 properties)
B-19 Residence Charmante Tsukishima

Chuo-ku, Tokyo

Residential Property Subtotal (1 property)
D-2

Shinjuku 6chome Building (Land)

Shinjuku-ku, Tokyo

2,880

Other Subtotal (1 property)       Total (99 properties)

Investment Security

G.K. KRF 43 Silent Partnership Equity Interest

2,880

Shinjuku-ku, Tokyo

100.0%—

100.0%—

100.0%

398,350

Avg. 21.8 years

1,107

Dec. 1979

96.9%

Note 1: A cquisition price is only the acquisition (investment) price of the trust beneficiary interests, etc. (excl. any expenses, taxes, etc.) acquired by KDO. Figures are truncated to
the nearest million yen.
Note 2: Y ear built shows the completion date recorded in the land register. The average value shown in the subtotal or total section is a weighted average number calculated
based on acquisition price with a base date of October 31, 2016. Figures are truncated to the first decimal place.
Note 3: O ccupancy rate is calculated by dividing leased area as of October 31, 2016 by leasable area and is rounded to the first decimal place.
Note 4: A cquisition price of KDX Toyosu Grand Square equals to the 25% quasi co-ownership of the property.

17

Management Team(As of October 31, 2016)

2

3

4
1
5

1 Naokatsu Uchida

General Manager of Planning Dept., Office REIT Division• ‌Worked for Mitsubishi UFJ Trust and Banking Corporation for approximately 17 years (Real Estate Division, Real Estate Project Origination
Division)• ‌After working as CEO for Joint Asset Management Co., Ltd., joined
Kenedix Office Partners, Inc. and was a member of the Financial
Planning Division for approximately 2 years• ‌Appointed Executive Officer of Kenedix Office Investment Corp. (to thepresent) after serving as President of Kenedix Office Partners, Inc.
• ‌Appointed Director and COO, General Manager of Office REIT Division
on October 1, 2013

• ‌After working for Sakura Bank for 6 years, worked at Sakura Securities,
Daiwa Securities SMBC, and Goldman Sachs in investment banking
business for 10 years• ‌Joined Kenedix Office Partners, Inc. after having worked for Goldman
Sachs Realty Japan• ‌Appointed General Manager of Financial Planning Division, Kenedix
Office Partners, Inc. in August 2012
• ‌Appointed General Manager of Planning Dept., Office REIT Division on
October 1, 2013

2 Akimitsu Uezu
General Manager of Asset Investment Dept., Office REIT Division• ‌Joined Investment Management Dept., Kenedix REIT Management,
Inc. in July 2006 and worked for 2 years after having engaged in realestate transactions at judicial scrivener’s office and real estate company• ‌Appointed General Manager of Asset Investment Dept., Office REIT
Division on March 1, 2016 after having worked as General Manager ofAsset Investment Dept., Kenedix Residential Partners, Inc. and Directorof Space Design, Inc.

3 Chisei Kaji
General Manager of Asset Management Dept., Office REIT Division• ‌Worked for Mitsui Fudosan Building Management for 9 years (Sales
Division and others)• ‌Joined Kenedix Real Estate Fund Management, Inc. after having
engaged in asset management for 10 years at Tokyo Realty Investment
Management Inc.
• ‌Appointed General Manager of Asset Management Dept., Office REIT
Division on March 1, 2016 after having worked in Investment
Management Dept., Office REIT Division for 1 year18

4 Hikaru Teramoto

Director and COO, General Manager of Office REIT Division

5 Tetsushi Ichikawa
General Manager of Finance & Accounting Dept.,
Business Administration Dept.
• ‌Worked for Sumitomo Mitsui Trust Bank for 15 years (Engaged in realestate finance, etc.)• ‌Joined Kenedix after having engaged in real estate investment banking
and having served as director responsible for asset management business at Touchstone Capital Securities• ‌Appointed General Manager of Finance & Accounting Dept. on October
1, 2013 after serving as General Manager of Finance Group for Kenedix
Residential Partners, Inc.
• ‌Appointed General Manager of Business Administration Dept. on April
1, 2015 (concurrent)Corporate Governance
Investment and Management Decision-making System
As the asset management company, Kenedix Real Estate Fund Management, Inc. (KFM) creates guidelines
governing our asset management. These asset management guidelines define our investment policy, related-party
transaction rules, distribution policy and disclosure policy.
The structure of the decision-making process is outlined below.

Decision-making Process

Proposal

Deliberation
andResolution

Preview

Deliberation
andResolution

Deliberation
andResolution

1
2

Office REIT
Division

Compliance
OfficerCompliance
Committee

34

1,2,3,4

KDO Asset
Management
Committee

1(Note 1),
2

ReportThe Investment
Corporation’s
Board of Directors

3, 4

Board ofDirectors(Note 2)

5

1: Related-party Transaction (acquisition and sale)

2: Establishing and revising asset management plans

4: Transaction the Compliance Officer judges as the need and one outside management guidelines

3: Establishing and revising management guidelines

5: Acquisition and saleNote 1: In‌ case that the said transaction falls under the prescribed minor transaction, the said transaction is implemented with the resolution of approval of KDO AssetManagement Committee, without requirement of the resolution for approval of the Investment Corporation’s Board of Directors and the consent of the Executive Directorof the Investment Corporation based on the said resolution.
Note 2: The‌above 3 and 4 are also reported to the Investment Corporation’s Board of Directors.

Environmental Initiatives
KFM undertakes investment management operations in accordance with the following environmental policies.
Environmental Policies
1. Compliance with Environmental Laws and Regulations‌
KFM
will promote environment-friendly investment management
operations by adhering to environmental laws and regulations.
2. Promotion of Energy Conservation Measures
KFM‌will systematically advance energy conservation measuresat its managed properties, maintaining a strong awareness of
the importance of natural and energy resources.

4. Disclosure of Environmental Information‌KFM will work to disclose necessary information to a variety ofconcerned parties including investors, tenants and business partners, in such areas as its environmental policies and measures.
5. Environmental Education‌KFM will take steps to improve the environmental consciousnessof its officers and employees through internal education.

3. Reduction of Environmental Burden
KFM‌
will undertake initiatives to reduce CO2 and waste emissions as well as promote recycling at its managed properties,
underscoring its commitment to alleviating its environmental
burden. In addition, KFM will take sufficient care when handlingharmful substances and environmental pollutants.

Thanks to continuous efforts, we have won a range of certifications,
including the highest ranked Green Star rating from the Global Real
Estate Sustainability Benchmark (GRESB) Real Estate Assessment
for the fifth consecutive years.
The full renovation of KDX Iidabashi Square was chosen as a subjectof innovation case study for its innovative approach towards
improved sustainability.

19

Financial Section
Contents
Independent Auditor’s Report

21

Balance Sheets

22

Statements of Income and Retained Earnings 23
Statements of Changes in Net Assets

23

Statements of Cash Flows24

Notes to Financial Statements

25

Financial Summary (Unaudited)
Historical Operating Trends
For the 19th–23rd Fiscal Periods
Unit

19th Period(as of Oct. 31, 2014)

20th Period(as of Apr. 30, 2015)

21st Period(as of Oct. 31, 2015)

22nd Period(as of Apr. 30, 2016)

23rd Period(as of Oct. 31, 2016)

Operating revenues

mn yen12,92814,13013,74014,362

13,491(Rental revenues)

mn yen11,295

12,836

13,226

12,812

13,429Operating expenses

mn yen

7,899

7,593

7,800

8,260

7,703

(Property-related expenses)

mn yen

5,557

6,377

6,668

6,533

6,754

Operating income

mn yen

5,028

6,537

5,940

6,102

5,788

Ordinary income

mn yen

3,570

5,111

4,565

4,816

4,603

Net income (a)mn yen

3,569

5,110

4,564

4,815

4,601

Total assets (b)mn yen388,169

407,799407,217

408,813413,031

Period(Period-on-period change)

Interest-bearing debt (c)%mn yen(Period-on-period change)%

Unitholders’ equity (d)mn yen(Period-on-period change)%

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

Number of investment units issued andoutstanding (e)Unitholders’ equity per unit (d)/(e)(+9.3)(+5.1)(–0.1)(+0.4)(+1.0)

187,685

174,600

174,100

175,100

178,100(+11.9)(-7.0)(–0.3)(+0.6)(+1.7)

180,844

211,951

211,914

212,555

212,825(+6.3)(+17.2)(–0.0)(+0.3)(+0.1)

176,632

206,199

206,199

206,199

206,199%(+6.2)(+16.7)

(0.0)

(0.0)

(0.0)

unit

355,010404,885

404,885

404,885

404,885yen

509,407523,484

523,394

524,977

525,644mn yen

3,571

4,600

4,170

4,335

4,601

Distribution per unit (f)/(e)yen

10,06011,363

10,30010,707

11,365(Earnings distributed per unit)

yen

10,06011,363

10,30010,707

11,365(Distribution in excess of earnings per unit)

yen

—

—

—

—

—

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

1.0 (1.9)

1.3 (2.6)

1.1 (2.2)

1.2 (2.4)

1.1 (2.2)

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

2.0 (4.0)

2.6 (5.2)

2.2 (4.3)

2.3 (4.6)

2.2 (4.3)

46.6

52.0

52.0

52.0

51.5

(-1.3)(+5.4)(+0.1)(-0.0)(-0.5)

48.4

42.8

42.8

42.8

43.1

Total distribution (f)Net assets ratio at end of period (d)/(b)(Period-on-period change)

Interest-bearing debt ratio at end of period (c)/(b)(Period-on-period change)

Payout ratio (Note 4) (f)/(a)%%%(+1.1)(-5.5)(–0.1)(+0.1)(+0.3)

100.0

90.0

91.3

90.0

99.9

Other references
Number of properties

properties

Total leasable floor aream2

Occupancy ratio at end of period
Depreciation expenses for the period

94

97

97

97

99

437,233.24

453,999.44

453,681.06

457,774.90

462,533.92

%

95.6

96.5

94.9

96.9

96.9

mn yen

2,022

2,221

2,218

2,230

2,274

Capital expenditures for the period

mn yen

550

329

469

1,120

1,165

Leasing NOI (Net Operating Income) (Note 5)

mn yen

7,760

8,680

8,775

8,509

8,949

FFO (Funds From Operation) (Note 6)

mn yen

7,116

6,909

6,487

6,302

6,877

yen

20,045

17,06516,023

15,565

16,985

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 19th Fiscal Period are calculated based on a period of 184 days, 181 days for the 20th Fiscal Period,
184 days for the 21st Fiscal Period, 182 days for the 22nd Fiscal Period, 184 days for the 23rd 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 – Property-related expenses + Depreciation expenses for the period
6 FFO = Net income + Depreciation expenses for the period – Gain on sale of real estate property + Loss on sale of real estate property
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.

20

21

Balance Sheets
Kenedix Office Investment Corporation
As of October 31, 2016 and April 30, 2016
In thousands of yen

ASSETS
Current assets:
Cash and bank deposits (Notes 3 and 13)
Operating accounts receivable
Consumption taxes receivable
Other current assets (Note 8)   Total current assets
Property, plant and equipment, at cost: (Notes 4 and 15)
Buildings and structures (Note 6)
Machinery and equipment
Tools, furniture and fixtures
Accumulated depreciationLand    Net property, plant and equipment
Investments and other assets:
Leasehold right (Note 15)
Investment securities (Note 13)
Investment corporation bond issuance costs
Investment unit issuance costs
Other assets    Total investments and other assets   Total assets
Liabilities and Net Assets
Liabilities
Current liabilities:
Operating accounts and other payables Short-term loans payable and current portion of long-term loans payable(Notes 5 and 13)
Current portion of investment corporation bonds (Notes 5 and 13)
Deposits received
Advances received
Other current liabilities   Total current liabilities
Non-current liabilities:
Investment corporation bonds (Notes 5 and 13)
Long-term loans payable (Notes 5 and 13)
Tenant leasehold and security deposits
Other non-current liabilities   Total non-current liabilities   Total liabilities
Net Assets
Unitholders' equity
Unitholders' capital   Units authorized:2,000,000 units   Units issued and outstanding:404,885 units   As of October 31, 2016 and April 30, 2016, respectively
Surplus
Voluntary retained earnings   Reserve for reduction entry
Unappropriated retained earnings
Total surplus
Total unitholders' equity
Valuation and translation adjustments
Deferred gains or losses on hedges (Note 14)   Total valuation and translation adjustments  Total net assets (Note 9)   Total liabilities and net assets

22 See accompanying notes to the financial statements.

As of October 31, 2016

As of April 30, 2016

¥ 20,710,565
330,775—
115,403
21,156,743¥ 20,602,996
341,787
53,57859,744
21,058,105

138,160,941
2,091,284
524,435(29,568,985)
277,637,658
388,845,334

136,422,576
2,041,893
514,082(27,295,009)
273,049,253
384,732,795

351,685
1,093,584
36,49854,1591,493,754
3,029,682¥413,031,761

352,460
1,089,761
42,378110,641
1,427,315
3,022,554¥408,813,455¥  1,614,589¥  1,170,894

22,700,000

22,200,000

4,500,000
2,896
2,143,523
422,783
31,383,793

3,000,000
54,1602,115,825
91,25728,632,136

4,800,000
146,100,000
17,921,592
977
168,822,570
200,206,363

6,300,000
143,600,000
17,721,596
4,328
167,625,924
196,258,060

206,199,945

206,199,946

2,024,673
4,601,756
6,626,429
212,826,375

1,544,522
4,815,255
6,359,777
212,559,723

(977)
(977)
212,825,397¥413,031,761(4,328)(4,328)
212,555,395¥408,813,455

Statements of Income and Retained Earnings
Kenedix Office Investment Corporation
For the period from May 1, 2016 to October 31, 2016 and the period from November 1, 2015 to April 30, 2016
In thousands of yen

Operating revenues:
Rent revenue - real estate (Note 11)
Gain on sale of real estate property (Note 11)
Dividends income   Total operating revenues
Operating expenses:
Expenses related to rent business (Note 11)
Loss on sale of real estate property (Note 11)
Asset management fees
Administrative service and custodian fees
Other operating expenses   Total operating expenses
Operating income
Non-operating expenses:
Interest expenses
Financing-related expenses
Amortization of investment unit issuance costs
Amortization of investment corporation bond issuance costs
Others, net   Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes (Note 8)
Net income
Unappropriated retained earnings

From May 1, 2016
to October 31, 2016

From November 1, 2015
to April 30, 2016

¥13,429,773—
61,73913,491,513¥12,812,029
1,510,169
40,015
14,362,213

6,754,675—
755,591
78,143
114,926
7,703,337
5,788,175

6,533,203
766,005
759,990
78,413
122,520
8,260,131
6,102,082

941,102
176,51056,4815,879
5,082
1,185,056
4,603,119
4,603,119
1,363
4,601,756¥ 4,601,756

993,892
183,756
56,481
5,263
46,171
1,285,563
4,816,519
4,816,519
1,264
4,815,255¥ 4,815,255

See accompanying notes to the financial statements.

Statements of Changes in Net Assets
Kenedix Office Investment Corporation
For the period from May 1, 2016 to October 31, 2016 and the period from November 1, 2015 to April 30, 2016
In thousands of yen
Valuation andtranslation
adjustments

Unitholders’ equity
Surplus
Voluntary retained
earnings

Balance as of October 31, 2015
Changes during the fiscal period
Provision of reserve for reduction entry
Dividends of surplus
Net income Net changes of items other thanunitholder’s equity   Total changes during the fiscal period
Balance as of April 30, 2016
Changes during the fiscal period
Provision of reserve for reduction entry
Dividends of surplus
Net income Net changes of items other thanunitholder’s equity   Total changes during the fiscal period
Balance as of October 31, 2016

Total
unitholders’equityDeferred gains
or losses onhedgesTotal net assets¥ 4,564,342¥ 5,714,837 ¥211,914,783— ¥211,914,783

394,027——(394,027)(4,170,315)
4,815,255—(4,170,315)
4,815,255

—
—
—

—
—
¥206,199,946—
394,027¥1,544,522—
250,913¥ 4,815,255——
644,940
644,940¥ 6,359,777 ¥212,559,723———

480,151——(480,151)(4,335,103)
4,601,756—(4,335,103)
4,601,756——¥206,199,945—
480,151¥2,024,673—(213,499)¥ 4,601,756——
266,652
266,652¥ 6,626,429 ¥212,826,375

Unitholders’capitalReserve for
reduction entry

Unappropriatedretainedearnings¥206,199,946¥1,150,495

—
—
—

Total
surplus—(4,170,315)
4,815,255—(4,335,103)
4,601,756—(4,170,315)
4,815,255(4,328)(4,328)(4,328)640,612¥(4,328) ¥212,555,395————(4,335,103)
4,601,756

3,350
3,350
3,350
270,002¥(  977) ¥212,825,397

See accompanying notes to the financial statements.

23

Statements of Cash Flows
Kenedix Office Investment Corporation
For the period from May 1, 2016 to October 31, 2016 and the period from November 1, 2015 to April 30, 2016
In thousands of yen
From May 1, 2016
to October 31, 2016

From November 1, 2015
to April 30, 2016

¥4,603,119¥4,816,519

2,508,463

2,470,695

(38)

(697)

941,102

993,892

Cash Flows from Operating Activities:
Income before income taxes Adjustments to reconcile income before income taxes to
net cash provided by (used in) operating activities:  Depreciation and amortization  Interest income  Interest expenses
Changes in assets and liabilities:  Decrease (increase) in Operating accounts receivable

11,011(3,500)  Decrease (increase) in Consumption taxes receivable

53,578(53,578)  Increase (decrease) in Accrued consumption taxes

343,665(407,556)  Increase (decrease) in Operating accounts and other payables

287,690(203,532)  Increase (decrease) in Advances received

29,973

157,163—

14,591,896  Decrease in property, plant and equipment due to sale  Others, net(351,949)(123,666)   Subtotal

8,426,615

22,237,636Interest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities

38

697

(953,601)(989,130)

(805)

(869)

7,472,246

21,248,334(6,173,576)(20,403,242)

Cash Flows from Investing Activities:
Purchases of property, plant and equipment
Purchase of intangible assets—(5,913)

Proceeds from tenant leasehold and security deposits

1,065,383

1,851,210

Payments of tenant leasehold and security deposits(918,051)(1,496,099)—(600,262)

Payments of restricted bank deposits in trust
Proceeds from restricted bank deposits in trust
Net cash provided by (used in) investing activities

552,921—(5,473,322)(20,654,306)—

1,500,000

Cash Flows from Financing Activities:
Increase in short-term loans payable
Decrease in short-term loans payable(1,000,000)(1,500,000)

Proceeds from long-term loans payable

16,500,000

18,300,000

Repayments of long-term loans payable(12,500,000)(18,300,000)

Proceeds from issuance of investment corporation bonds—

990,472

Payments of investment corporation bond issuance costs(4,010)—

Dividends paid

(4,334,422)(4,169,538)

Net cash provided by (used in) financing activities(1,338,432)(3,179,066)

Net increase (decrease) in cash and cash equivalents

660,491(2,585,038)

Cash and cash equivalents at the beginning of period

19,175,542

21,760,581

Cash and cash equivalents at the end of period (Note3)¥19,836,034¥19,175,543

See accompanying notes to the financial statements.

24Notes to Financial Statements
Kenedix Office Investment Corporation
For the period from May 1, 2016 to October 31, 2016 and the period from November 1, 2015 to April 30, 2016

1.

ORGANIZATION AND BASIS OF PRESENTATION
Organization
Kenedix Office Investment Corporation (“the Investment Corporation”) is a real estate investment corporation whose units are listed on theTokyo Stock Exchange. The Investment Corporation is engaged in ownership and operation of selected office buildings, residential andretail properties in Japan, with a focus on mid-sized office buildings in the Tokyo Metropolitan Area. The Investment Corporation was incorporated on May 6, 2005 as an investment corporation under the Law Concerning Investment Trusts and Investment Corporations of Japan,
or the Investment Trust Law. On July 21, 2005, the Investment Corporation was listed on the Real Estate Investment Trust Market of theTokyo Stock Exchange with a total of 75,400 investment units issued and outstanding (Securities Code: 8972). Subsequently, theInvestment Corporation raised funds through seven public offerings and other means including global offerings. Pursuant to the Investment
Trust Law, the Investment Corporation is externally managed by a registered asset management company, Kenedix Real Estate FundManagement, Inc. (“the Asset Management Company”), a subsidiary of Kenedix, Inc. (“Kenedix”). 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.
During the period ended April 30, 2016, the Investment Corporation acquired one office buildings (Nittochi Toranomon Building: acquisition price of ¥15,550 million) located in the Tokyo Metropolitan Area, one office building (Nichigin-mae KD Building: acquisition price of¥3,500 million ) located in Other Regional Areas, and sold KDX Toranomon Building (initial acquisition price of ¥4,400 million) andToranomon Toyo Building (initial acquisition price of ¥9,850 million) (with a total combined disposition price of ¥15,420 million).
During the period ended October 31, 2016, the Investment Corporation acquired two office buildings (KDX Shin-Nihonbashi Ekimae building : acquisition price of ¥3,829 million , KDX Edo-dori Building:acquisition price of ¥1,350 million ) located in the Tokyo Metropolitan Area.
At the end of the twenty-second and twenty-third fiscal periods, the Investment Corporation had total unitholders’ capital of ¥206,200
million with 404,885 investment units outstanding, respectively. The Investment Corporation owned a portfolio of 97 properties (consistingof 92 office buildings, one residential property, three central urban retail properties and one other property), 99 properties (consisting of 94
office buildings, one residential property, three central urban retail properties and one other property) with total acquisition prices of¥393,171 million and ¥398,350 million at the end of the twenty-second and twenty-third fiscal periods, respectively. The occupancy ratios
were approximately 96.9% at the end of the twenty-second and twenty-third fiscal periods.

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

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(A) Securities
Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving averagemethod. Concerning silent partnership (tokumei kumiai, “TK”) interests, the method of incorporating the amount of equity equivalent to the
portion that corresponds to the net gain or loss of the TK is adopted.

(B)	Property, PLANT and Equipment
Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment is calculated on a straight-line basis overthe estimated useful lives of the assets ranging as stated below:
From May 1, 2016 to October 31, 2016

From November 1, 2015 to April 30, 2016

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

25(C)	Investment Unit Issuance Costs
Investment unit issuance costs are amortized over a period of three years under the straight-line method.

(D)	Investment corporation bond Issuance Costs
Investment corporation bond issuance costs are amortized over a maturity 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 andliabilities in trust are recorded in the relevant balance sheets and statements of income and retained earnings.

(F) Leasehold Right
Fixed term leaseholds on the building and special agreements on building sales are amortized over a contractual period of 48 years and 9months under the straight-line method.

(G)	Revenue Recognition
Operating revenues consist of rental revenues including base rents, common area charges, and other operating revenues, which include
utility charge reimbursements, parking space rental revenues and other miscellaneous revenues. Rental revenues are generally recognizedon an accrual basis over the life of each lease. Utility charge reimbursements are recognized when earned and their amounts can be reasonably estimated. Reimbursements from tenants including utility charge reimbursements are recorded on a gross basis and such amounts
are recorded both as revenues and expenses during the fiscal period.

(H) Taxes on Property, plant and equipment
Property-related taxes including property taxes, city planning taxes and depreciable property taxes are imposed on properties on a calendar
year basis. These taxes are generally charged to operating expenses for the period, for the portion of such taxes corresponding to the said
period. Under Japanese tax rules, the seller of 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 the purchaser for theseaccrued property-related tax liabilities.
When the Investment Corporation purchases properties, it typically allocates the portion of the property-related taxes related to the period following the purchase date of each property through the end of the calendar year. The amounts of those allocated portions of the property-related taxes are capitalized as part of the acquisition costs of the related properties. Capitalized property-related taxes amounted to¥13,334 thousand and ¥83,802 thousand as of October 31, 2016 and April 30, 2016, respectively. In subsequent calendar years, such property-related taxes are charged as operating expenses in the fiscal period to which the installments of such taxes correspond.

(I)	Income Taxes
Deferred tax assets and liabilities are computed based on the difference between the financial statements and income tax bases of assets
and liabilities using the statutory tax rates.

(J) 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.

(K) Derivative Financial Instruments
The Investment Corporation utilizes interest-rate swap and interest-rate cap contracts as derivative financial instruments only for the purpose of hedging its exposure to changes in interest rates. The Investment Corporation deferred recognition of gains or losses resulting
from changes in fair value of interest-rate swap and interest-rate cap contracts because these contracts met the criteria for deferral hedging
accounting. However, the Investment Corporation adopted special treatment for interest-swap and interest-rate cap contracts if they met
the criteria for hedging accounting under this treatment, whereby the net amount to be paid or received under the interest-rate swap andinterest-rate cap contract is added to or deducted from the interest on the assets or liabilities for which the swap and cap contract was executed. The hedge effectiveness for the interest-rate swap and interest-rate cap contract is assessed each fiscal period except for those thatmeet the criteria of special treatment.

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

(M)	Rounding of Amounts Presented
Amounts have been truncated in the Japanese financial statements prepared in accordance with Japanese GAAP and filed with regulatory
authorities in Japan. Unless otherwise noted, amounts of twenty-third fiscal and twenty-second fiscal period are rounded down and rounded off, respectively, and ratios are rounded off in the accompanying financial statements.
Totals shown in the accompanying financial statements do not necessarily agree with the sums of the individual amounts.

26

3.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consisted of the following as of October 31, 2016 and April 30, 2016
In thousands of yen
As of October 31, 2016

Cash and bank deposits

As of April 30, 2016

¥20,710,565

Restricted bank deposits in trust (Note)
Cash and cash equivalents in trust¥20,602,996(874,531)(1,427,453)¥19,836,034¥19,175,543

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

4.

SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT
In millions of yen
As of October 31, 2016

Buildings and structures

As of April 30, 2016

Acquisition
costs

Accumulated
depreciation

Book
value

Acquisition
costs

Accumulated
depreciation

Book
value

¥138,160¥28,327¥109,833¥136,423¥26,134¥110,289

Machinery and equipment

2,091

956

1,134

2,042

895

1,147

Tools, furniture and fixtures

524

284

239

514

266

248

Land

277,637—

277,637

273,049—

273,049

Total¥418,414¥29,568¥388,845¥412,028¥27,295¥384,733

5.

SHORT-TERM LOANS PAYABLE, LONG-TERM LOANS PAYABLE AND INVESTMENT CORPORATION BONDS

The following summarizes short-term loans payable, long-term loans payable and investment corporation bonds outstanding as of October
31, 2016:
Classification

Short-term loans payable
Current portion of long-term loans
payableDrawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)March 31, 2016

March 31, 20170.41%¥  1,500

November 12, 2015

November 30, 2016

0.41%

2,000

December 10, 2012

December 12, 2016

0.98%

500

December 28, 2012

December 28, 2016

1.01%

2,000

January 15, 2013

January 15, 2017

0.97%

1,000

January 31, 2014

January 31, 2017

0.67%

1,200

March 28, 2012

March 28, 2017

1.36%

500

June 29, 2012

June 30, 2017

1.29%

1,500

July 29, 2016

July 31, 2017

0.38%

1,000

August 2, 2016

August 31, 2017

0.38%

1,000

August 2, 2016

August 31, 2017

0.23%

1,000

September 21, 2012

September 21, 2017

1.16%

5,000

September 21, 2012

September 21, 2017

1.16%

1,000

September 21, 2012

September 21, 2017

1.16%

1,000

October 31, 2012

October 31, 2017

1.10%

SubtotalLong-term loans payable

2,500
22,700November 12, 2010

November 12, 2017

2.02%

December 1, 2010

November 12, 20172.21%¥  2,300
700

March 28, 2012

March 28, 2019

1.77%

1,400

March 28, 2012

March 28, 2019

1.77%

1,000

October 31, 2012

October 31, 2018

1.25%

2,500

December 28, 2012

December 28, 2017

1.09%

500

December 28, 2012

December 29, 2017

1.09%

500

March 26, 2013

March 26, 2018

1.04%

1,000

March 26, 2013

March 26, 2018

1.04%

1,000

July 31, 2013

July 31, 2018

0.56%

500

August 19, 2013

August 19, 2018

0.95%

1,000

August 19, 2013

August 19, 2018

0.95%

1,000

August 19, 2013

August 19, 2018

0.95%

500

August 19, 2013

August 19, 2018

0.97%

500

August 19, 2013

August 19, 2018

0.95%

500

27

Classification

Long-term loans payable

28

Drawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)August 30, 2013

August 31, 20181.08%¥   700

August 30, 2013

August 31, 2018

1.08%

500

August 30, 2013

August 31, 2018

1.08%

300

August 30, 2013

August 31, 2020

1.42%

1,500

September 30, 2013

September 30, 2019

1.06%

1,800

September 30, 2013

September 30, 2019

1.06%

900

October 31, 2013

October 31, 2018

0.89%

500

November 12, 2013

November 12, 2018

0.82%

1,000

November 12, 2013

November 12, 2020

1.07%

2,000

November 12, 2013

November 12, 2020

1.07%

500

November 29, 2013

November 30, 2018

0.84%

200

November 29, 2013

November 30, 2020

1.12%

1,000

November 29, 2013

November 30, 2020

1.12%

900

January 10, 2014

January 31, 2021

1.21%

1,300

January 31, 2014

January 31, 2020

0.93%

3,700

January 31, 2014

January 31, 2021

1.13%

2,300

March 12, 2014

March 12, 2018

0.75%

2,250

March 12, 2014

March 31, 2019

0.78%

450

March 12, 2014

March 12, 2020

0.92%

1,800

March 12, 2014

March 12, 2023

1.36%

1,800

March 20, 2014

March 12, 2020

0.91%

3,000

March 20, 2014

September 20, 2021

1.01%

4,000

March 20, 2014

March 20, 2022

1.20%

3,000

March 20, 2014

March 12, 2023

1.35%

2,000

March 31, 2014

March 31, 2019

0.76%

2,500

April 22, 2014

October 31, 2020

0.95%

2,900

July 10, 2014

July 10, 2019

0.64%

500

July 10, 2014

July 10, 2021

0.90%

2,000

July 10, 2014

July 10, 2021

0.90%

500

July 14, 2014

July 31, 2019

0.68%

1,000

July 31, 2014

July 31, 2019

0.62%

1,000

July 31, 2014

July 31, 2020

0.74%

2,700

July 31, 2014

October 31, 2020

0.76%

300

July 31, 2014

July 31, 2022

1.01%

2,200

August 29, 2014

July 31, 2019

0.65%

1,000

September 1, 2014

August 31, 2021

0.89%

800

September 1, 2014

August 31, 2021

0.89%

500

September 3, 2014

August 31, 2022

0.98%

1,000

September 3, 2014

August 31, 2022

0.98%

950

September 22, 2014

September 30, 2020

0.80%

2,700

September 30, 2014

September 30, 2021

0.89%

1,000

October 31, 2014

October 31, 2021

0.80%

3,000

October 31, 2014

October 31, 2023

1.07%

2,000

October 31, 2014

October 31, 2023

1.13%

1,500

October 31, 2014

October 31, 2023

1.07%

1,000

October 31, 2014

October 31, 2024

1.26%

2,000

October 31, 2014

October 31, 2024

1.26%

1,000

January 30, 2015

January 31, 2021

0.71%

1,500

January 30, 2015

January 31, 2025

1.16%

1,500

February 18, 2015

February 28, 2022

0.91%

1,250

February 18, 2015

February 28, 2022

0.91%

350

February 18, 2015

February 29, 2024

1.16%

1,700

February 18, 2015

February 28, 2025

1.31%

1,250

February 27, 2015

February 28, 2025

1.15%

2,100

March 12, 2015

February 28, 2025

1.22%

1,000

March 31, 2015

March 31, 2025

1.27%

2,500

April 30, 2015

April 30, 2022

0.83%

2,300

August 31, 2015

August 31, 2022

0.87%

500

August 31, 2015

August 31, 2022

0.87%

500

August 31, 2015

August 31, 2022

0.87%

500

Classification

Long-term loans payable

Drawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)August 31, 2015

August 31, 2022

0.87%¥   500

August 31, 2015

August 31, 2022

0.87%

500

August 31, 2015

August 31, 2022

0.87%

500

September 30, 2015

September 30, 2024

1.07%

2,000

October 30, 2015

October 31, 2024

0.99%

1,000

October 30, 2015

October 30, 2025

1.11%

2,500

October 30, 2015

October 30, 2025

1.12%

2,500

October 30, 2015

October 30, 2025

1.11%

2,000

October 30, 2015

October 30, 2025

1.11%

1,500

November 12, 2015

November 30, 2025

1.17%

1,000

January 29, 2016

January 31, 2022

0.59%

2,500

January 29, 2016

January 31, 2022

0.64%

500

January 29, 2016

January 29, 2026

1.07%

2,000

January 29, 2016

January 29, 2026

1.02%

1,800

February 18, 2016

February 18, 2026

1.00%

1,000

February 18, 2016

February 18, 2026

1.00%

500

March 30, 2016

March 31, 2019

0.17%

1,000

March 31, 2016

March 31, 2026

0.90%

1,000

April 28, 2016

April 30, 2024

0.65%

2,000

April 28, 2016

April 30, 2026

0.84%

2,000

April 28, 2016

April 30, 2026

0.87%

1,000

July 29, 2016

July 31, 2026

0.61%

1,500

August 2, 2016

July 31, 2026

0.54%

1,000

October 31, 2016

October 31, 2018

0.33%

1,000

October 31, 2016

October 31, 2024

0.67%

1,000

October 31, 2016

October 31, 2026

0.73%

4,000

October 31, 2016

October 31, 2026

0.88%

2,500

October 31, 2016

October 31, 2026

0.83%

1,500

October 31, 2016

October 31, 2026

0.76%

Subtotal

1,000
146,100

Current portion of Investment
corporation bonds

March 15, 2007

March 15, 20172.37%¥  3,000March 8, 2012

September 8, 2017

2.00%

1,500

September 12, 2013

September 12, 2018

1.00%¥  1,800

July 25, 2014

July 25, 2024

1.18%

2,000

April 28, 2016

April 28, 2028

0.90%

1,000

Subtotal

4,500

Investment corporation bonds

Subtotal

4,800   Total¥178,100

The following summarizes short-term loans payable, long-term loans payable and investment corporation bonds outstanding as of April 30, 2016:
Classification

Short-term loans payable
Current portion of long-term loans
payableDrawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)

July 31, 2015

July 31, 20160.51%¥  1,000March 31, 2016

March 31, 2017

0.45%

1,500

July 31, 2013

July 29, 2016

0.57%

1,500

December 26, 2011

October 31, 2016

1.42%

2,500

December 26, 2011

October 31, 2016

1.44%

2,500

December 26, 2011

October 31, 2016

1.44%

2,000

October 31, 2012

October 31, 2016

1.06%

2,500

October 31, 2012

October 31, 2016

1.05%

1,500

November 12, 2015

November 30, 2016

0.49%

2,000

March 28, 2012

March 28, 2017

1.36%

500

December 10, 2012

December 12, 2016

0.98%

500

December 28, 2012

December 28, 2016

1.01%

2,000

January 15, 2013

January 15, 2017

0.97%

1,000

January 31, 2014

January 31, 2017

0.67%

SubtotalLong-term loans payable

1,200
22,200November 12, 2010

November 12, 20172.02%¥  2,300

29

Classification

Long-term loans payable

30

Drawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)

December 1, 2010

November 12, 20172.21%¥   700

March 28, 2012

March 28, 2019

1.77%

1,400

March 28, 2012

March 28, 2019

1.77%

1,000

June 29, 2012

June 30, 2017

1.29%

1,500

September 21, 2012

September 21, 2017

1.16%

5,000

September 21, 2012

September 21, 2017

1.16%

1,000

September 21, 2012

September 21, 2017

1.16%

1,000

October 31, 2012

October 31, 2017

1.10%

2,500

October 31, 2012

October 31, 2018

1.25%

2,500

December 28, 2012

December 28, 2017

1.09%

500

December 28, 2012

December 29, 2017

1.09%

500

March 26, 2013

March 26, 2018

1.04%

1,000

March 26, 2013

March 26, 2018

1.04%

1,000

July 31, 2013

July 31, 2018

0.67%

500

August 19, 2013

August 19, 2018

0.95%

1,000

August 19, 2013

August 19, 2018

0.95%

1,000

August 19, 2013

August 19, 2018

0.95%

500

August 19, 2013

August 19, 2018

0.95%

500

August 19, 2013

August 19, 2018

0.97%

500

August 30, 2013

August 31, 2018

1.08%

700

August 30, 2013

August 31, 2018

1.08%

500

August 30, 2013

August 31, 2018

1.08%

300

August 30, 2013

August 31, 2020

1.42%

1,500

September 30, 2013

September 30, 2019

1.06%

1,800

September 30, 2013

September 30, 2019

1.06%

900

October 31, 2013

October 31, 2018

0.89%

500

November 12, 2013

November 12, 2018

0.82%

1,000

November 12, 2013

November 12, 2020

1.07%

2,000

November 12, 2013

November 12, 2020

1.07%

500

November 29, 2013

November 30, 2020

1.12%

1,000

November 29, 2013

November 30, 2020

1.12%

900

November 29, 2013

November 30, 2018

0.84%

200

January 10, 2014

January 31, 2021

1.21%

1,300

January 31, 2014

January 31, 2021

1.13%

2,300

January 31, 2014

January 31, 2020

0.93%

3,700

March 12, 2014

March 12, 2018

0.75%

2,250

March 12, 2014

March 31, 2019

0.78%

450

March 12, 2014

March 12, 2020

0.92%

1,800

March 12, 2014

March 12, 2023

1.36%

1,800

March 20, 2014

March 12, 2020

0.91%

3,000

March 20, 2014

September 20, 2021

1.01%

4,000

March 20, 2014

March 20, 2022

1.20%

3,000

March 20, 2014

March 12, 2023

1.35%

2,000

March 31, 2014

March 31, 2019

0.76%

2,500

April 22, 2014

October 31, 2020

0.95%

2,900

July 10, 2014

July 10, 2019

0.64%

500

July 10, 2014

July 10, 2021

0.90%

2,000

July 10, 2014

July 10, 2021

0.90%

500

July 14, 2014

July 31, 2019

0.68%

1,000

July 31, 2014

July 31, 2019

0.62%

1,000

July 31, 2014

July 31, 2020

0.74%

2,700

July 31, 2014

October 31, 2020

0.76%

300

July 31, 2014

July 31, 2022

1.01%

2,200

August 29, 2014

July 31, 2019

0.65%

1,000

September 1, 2014

August 31, 2021

0.89%

800

September 1, 2014

August 31, 2021

0.89%

500

September 3, 2014

August 31, 2022

0.98%

1,000

September 3, 2014

August 31, 2022

0.98%

950

September 22, 2014

September 30, 2020

0.80%

2,700

Classification

Long-term loans payable

Drawdown date

Last
repayment date

Weighted-averageinterest rate

Balance(In millions of yen)

September 30, 2014

September 30, 2021

0.89%¥  1,000

October 31, 2014

October 31, 2021

0.80%

3,000

October 31, 2014

October 31, 2023

1.07%

2,000

October 31, 2014

October 31, 2023

1.13%

1,500

October 31, 2014

October 31, 2023

1.07%

1,000

October 31, 2014

October 31, 2024

1.26%

2,000

October 31, 2014

October 31, 2024

1.26%

1,000

January 30, 2015

January 31, 2021

0.71%

1,500

January 30, 2015

January 31, 2025

1.16%

1,500

February 18, 2015

February 28, 2022

0.91%

1,250

February 18, 2015

February 28, 2022

0.91%

350

February 18, 2015

February 29, 2024

1.16%

1,700

February 18, 2015

February 28, 2025

1.31%

1,250

February 27, 2015

February 28, 2025

1.15%

2,100

March 12, 2015

February 28, 2025

1.22%

1,000

March 31, 2015

March 31, 2025

1.27%

2,500

April 30, 2015

April 30, 2022

0.83%

2,300

August 31, 2015

August 31, 2022

0.87%

500

August 31, 2015

August 31, 2022

0.87%

500

August 31, 2015

August 31, 2022

0.87%

500

August 31, 2015

August 31, 2022

0.87%

500

August 31, 2015

August 31, 2022

0.87%

500

August 31, 2015

August 31, 2022

0.87%

500

September 30, 2015

September 30, 2024

1.07%

2,000

October 30, 2015

October 31, 2024

0.99%

1,000

October 30, 2015

October 30, 2025

1.11%

1,500

October 30, 2015

October 30, 2025

1.11%

2,000

October 30, 2015

October 30, 2025

1.11%

2,500

October 30, 2015

October 30, 2025

1.12%

2,500

November 12, 2015

November 30, 2025

1.17%

1,000

January 29, 2016

January 31, 2022

0.59%

2,500

January 29, 2016

January 31, 2022

0.64%

500

January 29, 2016

January 29, 2026

1.07%

2,000

January 29, 2016

January 29, 2026

1.02%

1,800

February 18, 2016

February 18, 2026

1.00%

1,000

February 18, 2016

February 18, 2026

1.00%

500

March 30, 2016

March 31, 2019

0.17%

1,000

March 31, 2016

March 31, 2026

0.90%

1,000

April 28, 2016

April 30, 2024

0.65%

2,000

April 28, 2016

April 30, 2026

0.84%

2,000

April 28, 2016

April 30, 2026

0.87%

Subtotal
Current portion of Investment
corporation bonds

March 15, 2007

March 15, 20172.37%¥  3,000March 8, 2012

September 8, 20172.00%¥  1,500

September 12, 2013

September 12, 2018

1.00%

1,800

July 25, 2014

July 25, 2024

1.18%

2,000

April 28, 2016

April 28, 2028

0.90%

1,000

Subtotal
Investment corporation bonds

1,000
143,600

3,000

Subtotal

6,300   Total¥175,10031

6.

REDUCTION ENTRY

The amount of reduction entry of property, plant and equipment acquired by government subsidy
In thousands of yen

Buildings and structures

7.

As of October 31, 2016

As of April 30, 2016

¥26,230¥26,230PER UNIT INFORMATION
Yen
From May 1, 2016
to October 31, 2016

From November 1, 2015
to April 30, 2016

Net asset value per unit

¥525,644¥524,977

Net income per unit

¥ 11,365¥ 11,893

Weighted average number of units (units)404,885

404,885

The weighted average number of units outstanding of 404,885 as of October 31, 2016 and April 30, 2016, respectively was used for thecomputation of the amount of net income per unit. Net income per unit after adjusting for residual units is not included because there wereno residual investment units.

8.

INCOME TAXESThe Investment Corporation is subject to corporate income taxes at a regular statutory rate of approximately 32%. However, theInvestment Corporation may deduct from its taxable income amounts distributed to its unitholders, provided the requirements are met
under the Special Taxation Measures 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 to deduct suchamounts. 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. The Investment Corporation distributed in excess of 90% of its distributable income in
the form of cash distributions totaling ¥4,601 million and ¥4,335 million (deducting ¥480 million as the provision of reserve for reduction
entry) for the periods ended October 31, 2016, and April 30, 2016. Therefore such distributions were treated as deductible distributions forpurposes of corporate income taxes. The effective tax rate on the Investment Corporation’s income was 0.03% for the fiscal periods ended
October 31, 2016 and April 30, 2016. The following table summarizes the significant differences between the statutory tax rate and theeffective tax rate:
From May 1, 2016
to October 31, 2016

From November 1, 2015
to April 30, 2016

Statutory tax rate

31.74%

32.31%

Deductible cash distributions(31.73)(29.08)Provision of reserve for reduction entry—(3.22)

Others0.02

0.02

Effective tax rate

0.03%

0.03%

The significant components of deferred tax assets and liabilities as of October 31, 2016 and April 30, 2016 are as follows:
In thousands of yen
As of October 31, 2016

As of April 30, 2016

Deferred tax assets:
Enterprise tax payable
Deferred gains or losses on hedges
Amortization of leasehold rights
Subtotal deferred tax assets¥     39¥   31

310

1,374

2,908

2,663

3,257

4,068

Valuation allowance(3,218)

4,037

Total deferred tax assets¥     39¥   31

9.

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.

32

10.

	RELATED-PARTY TRANSACTIONS(1) Parent Company, major corporate unitholders’ and other	Twenty-third Fiscal Period (May 1, 2016 to October 31, 2016) and Twenty-second Fiscal Period (November 1, 2015 to April 30, 2016):
Not applicable(2) Affiliated companies and other	Twenty-third Fiscal Period (May 1, 2016 to October 31, 2016) and Twenty-second Fiscal Period (November 1, 2015 to April 30, 2016):
Not applicable(3) Fellow subsidiary companies and other	Twenty-third Fiscal Period (May 1, 2016 to October 31, 2016) and Twenty-second Fiscal Period (November 1, 2015 to April 30, 2016):
Not applicable(4) Directors, major individual unitholders’ and other	Twenty-third Fiscal Period (May 1, 2016 to October 31, 2016) and Twenty-second Fiscal Period (November 1, 2015 to April 30, 2016):
Not applicable

11.

BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES,GAIN AND LOSS ON SALE OF REAL ESTATE PROPERTY

Rental and other operating revenues, property-related expenses, gain and loss on sale of real estate property for the periods from May 1,2016 to October 31, 2016 and from November 1, 2015 to April 30, 2016 consist of the following:
In thousands of yen
From May 1, 2016
to October 31, 2016

From November 1, 2015
to April 30, 2016

Rental and other operating revenues：
Rent revenue - real estate:
Rental revenues
Common area charges¥ 9,450,736¥ 9,117,586

1,911,609

1,930,493

11,362,345

11,048,079

Parking space rental revenues

490,492

471,916

Utility charge reimbursement

1,136,867

990,852

440,067

301,182   Subtotal
Others:Miscellaneous   Subtotal

2,067,427

1,763,950    Total rent revenue - real estate

13,429,773

12,812,029

Property management fees and facility management fees

1,280,694

1,251,483

Depreciation

2,274,750

2,230,747

Utilities

1,110,302

1,071,935

Taxes

1,111,203

1,112,600

Property-related expenses:
Expenses related to rent business:

Insurance

18,01817,492

Repairs and maintenance582,716

451,262

Trust fees

32,34832,130

Others344,639

365,554¥ 6,754,675

6,533,203

Revenue from sale of investment property—

11,470,000

Cost of investment property—

9,899,061

Other sales expenses—

60,770—1,510,169

Revenue from sale of investment property—

3,950,000

Cost of investment property—

4,692,834

Other sales expenses—

23,171—¥   766,005    Total expenses related to rent business
Gain on sale of real estate property:    Gain on sale of real estate property
Loss on sale of real estate property:    Loss on sale of real estate property

33

12.

LEASES

The Investment Corporation, as lessor, has entered into leases whose fixed monthly rents are due in advance with lease terms of generally
two years for office buildings and residential properties and with lease terms ranging from two to ten years for retail properties. The future
minimum rental revenues under existing non-cancelable operating leases as of October 31, 2016 and April 30, 2016 are as follows:
In thousands of yen
As of October 31, 2016

As of April 30, 2016

Due within one year

¥ 1,444,094

Due after one year

9,350,987

9,544,086¥10,795,081¥11,030,389   Total13.

¥ 1,486,303

FINANCIAL INSTRUMENTS

Twenty-third Fiscal Period (from May 1, 2016 to October 31, 2016)(A) Overview(1) Policy for financial instruments
The Investment Corporation procures essential funds for acquiring properties and undertaking the repayment of loans primarily throughbank loans and the issuance of investment corporation bonds and new investment units. The Investment Corporation uses derivatives forthe 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.

(2) Types of financial instruments and related risk
Investment securities, which are Japanese silent partnership (tokumei kumiai, “TK”) interests, are exposed to credit risk of the issuer andrisk of fluctuation of value of its property.
Loans payable and investment corporation bonds are used primarily for procuring funds necessary for the acquisition of properties andhave a redemption date of a maximum of approximately 11 years and 6 months following the accounting date. Although a certain portion ofsaid liabilities are subject to interest rate fluctuation risk, the Investment Corporation utilizes derivatives (interest-rate swap and interest-rate
cap transactions) in order to reduce such risk.
Interest-rate swap and interest-rate cap transactions are used as derivative financial instruments. Utilizing interest-rate swap and interestrate cap transaction, the Investment Corporation fixes its interest expense for long-term loans payable bearing interest at a variable rate.
With regard to hedge accounting methods, hedging instruments and hedged items, hedge policy, and the assessment of the effectivenessof hedging activities, please see Note 2(K) “Derivative Financial Instruments”.

(3) Risk management for financial instruments(a) Monitoring of market risk (the risks arising from fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap and interest-rate cap transactions in order to minimize risk arising from fluctuations ininterest rates on funds procured. The Investment Corporation periodically reviews the value of the property and financial condition of theissuer with regard to investment securities.
(b) Monitoring of liquidity risk (the risk that the Investment Corporation may not be able to meet its obligations on scheduled due
dates) associated with procurement of funds
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 the balanceof cash reserves.

(4) Supplementary explanation of the estimated fair value of financial instruments
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.

34

(B) Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet as of October 31, 2016 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 *2
below).
In thousands of yen
Carrying value

a Cash and bank deposits

Estimated fair value

Difference¥ 20,710,565¥ 20,710,565¥       —20,710,565

20,710,565—

a Short-term loans payable

Subtotal

1,500,000

1,500,000—

b Investment corporation bonds(including current portion of investment
corporation bonds)

9,300,000

9,448,956

148,956

167,300,000

169,668,738

2,368,738¥178,100,000¥180,617,694¥2,517,694

(977)

(977)

—

c Long-term loans payable(including current portion of long-term loans
payable)Subtotal
Derivative Transactions (*)(*)The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing net liability position.

*1: Methods to determine the estimated fair value of financial instruments and other mattersrelated to securities and derivative transactions
ASSETSa Cash and bank deposits
Since these items are settled in a short period of time, their carrying value approximates fair value.

LIABILITIESa Short-term loans payable
Since these items are settled in a short period of time, their carrying value approximates fair value.
b Investment corporation bonds
The fair value of investment corporation bonds is based on quoted market prices.
c Long-term loans payable
The fair value of long-term loans payable is based on the present value of the total of principal and interest discounted by the interest rate
to be applied if similar new loans were entered into. The fair value of long-term loans payable bearing interest at a variable rate, which is
subject to fixed interest rates resulting from interest-rate swaps and special treatment applied to said swaps, is based on the present valueof the total of principal and interest, which is handled together with the applicable interest-rate swaps, discounted by the interest rate to be
applied if similar loans were entered into.

Derivative Transactions
Please refer to Note 14 “DERIVATIVE TRANSACTIONS”.

*2: Financial instruments for which it is extremely difficult to determine the fair value
Classification

Carrying value (In thousands of yen)

Investment securities¥1,093,584

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above TK interests are not includedin the preceding table.

*3: Redemption schedule for receivables
Due within 1 year or less
(In thousands of yen)

Cash and bank deposits¥20,710,565   Total¥20,710,565*4: Redemption schedule for loans payable and investment corporation bonds
In thousands of yen
Due within 1 year
or less

Short-term loans payable ¥ 1,500,000

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¥        —¥        —¥        —¥        —¥        —Investment corporationbonds

4,500,000

1,800,000———

3,000,000

Long-term loans payable¥21,200,000¥17,750,000¥13,750,000¥18,600,000¥21,300,000¥74,700,000

35Twenty-second Fiscal Period (from November 1, 2015 to April 30, 2016)(A)	Overview(1) Policy for financial instruments
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 ofhedging 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.

(2) Types of financial instruments and related risk
Investment securities, which are Japanese silent partnership (tokumei kumiai, “TK”) interests, are exposed to credit risk of the issuer andrisk of fluctuation of value of its property.
Loans payable and investment corporation bonds are used primarily for procuring funds necessary for the acquisition of properties andhave a redemption date of a maximum of approximately 12 years following the accounting date. Although a certain portion of said liabilities
are subject to interest rate fluctuation risk, the Investment Corporation utilizes derivatives (interest-rate swap and interest-rate cap transactions) in order to reduce such risk.
Interest-rate swap and interest-rate cap transactions are used as derivative financial instruments. Utilizing interest-rate swap and interestrate cap transaction, the Investment Corporation fixes its interest expense for long-term loans payable bearing interest at a variable rate.
With regard to hedge accounting methods, hedging instruments and hedged items, hedge policy, and the assessment of the effectivenessof hedging activities, please see Note 2(K) “Derivative Financial Instruments”.

(3) Risk management for financial instruments(a)	Monitoring of market risk (the risks arising from fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap and interest-rate cap transactions in order to minimize risk arising from fluctuations ininterest rates on funds procured. The Investment Corporation periodically reviews the value of the property and financial condition of theissuer with regard to investment securities.
(b)	Monitoring of liquidity risk (the risk that the Investment Corporation may not be able to meet its obligations on scheduled due
dates) associated with procurement of funds
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 the balance of
cash reserves.

(4) Supplementary explanation of the estimated fair value of financial instruments
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.

(B) Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet as of April 30, 2016 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 *2
below).
In thousands of yen
Carrying value

Estimated fair value

Difference¥ 20,602,996¥ 20,602,996¥       —20,602,996

20,602,996—

a Short-term loans payable

2,500,000

2,500,000—

b Investment corporation bonds(including current portion of investment
corporation bonds)

9,300,000

9,486,050

186,050

163,300,000

165,889,327

2,589,327¥175,100,000¥177,875,377¥2,775,377(4,328)(4,328)—a Cash and bank deposits
Subtotalc Long-term loans payable(including current portion of long-term loans
payable)Subtotal
Derivative Transactions (*)(*) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing net liability position.

36*1: Methods to determine the estimated fair value of financial instruments and other mattersrelated to securities and derivative transactions
ASSETSa Cash and bank deposits
Since these items are settled in a short period of time, their carrying value approximates fair value.

LIABILITIESa Short-term loans payable
Since these items are settled in a short period of time, their carrying value approximates fair value.
b Investment corporation bonds
The fair value of corporate bonds is based on quoted market prices.
c Long-term loans payable
The fair value of long-term loans payable is based on the present value of the total of principal and interest discounted by the interest rate
to be applied if similar new loans were entered into. The fair value of long-term loans payable bearing interest at a variable rate, which is
subject to fixed interest rates resulting from interest-rate swaps and special treatment applied to said swaps, is based on the present valueof the total of principal and interest, which is handled together with the applicable interest-rate swaps, discounted by the interest rate to be
applied if similar loans were entered into.

Derivative Transactions
Please refer to Note 14 “DERIVATIVE TRANSACTIONS”.

*2: Financial instruments for which it is extremely difficult to determine the fair value
Classification

Carrying value (In thousands of yen)

Investment securities¥1,089,761

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above TK interests are not includedin the preceding table.

*3: Redemption schedule for receivables
Due within 1 year or less
(In thousands of yen)

Cash and bank deposits¥20,602,996   Total¥20,602,996*4: Redemption schedule for loans payable and investment corporation bonds
In thousands of yen
Due within 1 year
or less

Short-term loans payable ¥ 2,500,000

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¥       —

¥       —

¥       —

¥       —

¥       —Investment corporation
bonds

3,000,000

1,500,000

1,800,000——

3,000,000

Long-term loans payable¥19,700,000¥19,250,000¥16,050,000¥14,700,000¥19,600,000¥74,000,000

37

14.

DERIVATIVE TRANSACTIONS

The following summarizes the contracted amount and the fair value of interest-rate swap and the interest-rate cap contracts as of October 31, 2016:a Hedge accounting not applied
Not applicableb Hedge accounting applied
Hedge accounting
methodType of derivativetransactions

Contracted amount(In thousands of yen)

Hedged items

Maturing after 1 year

Fair value(In thousands of yen)

Principle method

Interest-rate swaps:
Long-term loans
Receive/floating andpayablepay/fixed¥  2,500,000¥  2,500,000¥(977)

Special treatment ofinterest-rate swaps

Interest-rate swaps:
Long-term loans
Receive/floating andpayablepay/fixed

103,350,000

99,650,000*

Special treatment ofinterest-rate caps

Interest-rate caps
transaction

500,000

500,000*¥106,350,000¥102,650,000

Long-term loans
payable   TotalCalculation method for
applicable fair value

Based on theamount provided
by counterparty
financial
institutions¥(977)(*) Interest-rate swaps and interest-rate caps for which the special treatment is applied are accounted for together with the underlying hedged item. As aresult, their fair value is included in the fair value of the hedged long-term loans payable.

The following summarizes the contracted amount and the fair value of interest-rate swap and the interest-rate cap contracts as of April 30,
2016:
a Hedge accounting not applied
Not applicableb Hedge accounting applied
Hedge accounting
methodType of derivativetransactions

Contracted amount(In thousands of yen)

Hedged items

Maturing after 1 year

Fair value(In thousands of yen)

Principle method

Interest-rate swaps:
Long-term loans
Receive/floating andpayablepay/fixed¥  1,000,000¥  1,000,000¥(4,328)

Special treatment ofinterest-rate swaps

Interest-rate swaps:
Long-term loans
Receive/floating andpayablepay/fixed

109,350,000

102,150,000*

Special treatment ofinterest-rate caps

Interest-rate caps
transaction

2,000,000

500,000*¥112,350,000¥103,650,000

Long-term loans
payable   TotalCalculation method for
applicable fair value

Based on theamount provided
by counterparty
financial
institutions¥(4,328)(*) Interest-rate swaps and interest-rate caps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, theirfair value is included in the fair value of the hedged long-term loans payable.

15.

INVESTMENT AND RENTAL PROPERTIES

Twenty-third Fiscal Period (from May 1, 2016 to October 31, 2016)
The Investment Corporation owns real estate for rental purposes mainly in the Tokyo Metropolitan Area for the purpose of generating rental revenues.
The carrying value in the balance sheets and corresponding fair value of those properties are as follows:
Carrying value (In thousands of yen)
As of April 30, 2016

Net change

As of October 31, 2016

Fair value As of October 31,
2016 (In thousands of yen)

¥ 385,085,254¥ 4,111,765¥ 389,197,020¥ 414,605,000*1: The carrying value represents the acquisition cost less accumulated depreciation.
*2: The fair value is the appraisal value or the survey value determined by outside appraisers. The fair value of KDX Nihonbashi Kabutocho Building and BUREX
Toranomon are calculated based on the sales price of ¥12,400,000 thousand under the sales and purchase agreement dated November 1, 2016 and thesales price of ¥2,440,000 thousand under the sales and purchase agreement dated December 1, 2016, respectively.
*3: Among 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 two properties totaling ¥5,221,373 thousand and depreciation amounting to ¥2,274,750 thousand.

Income and loss in the fiscal period ended October 31, 2016 for real estate for rental purposes is listed in Note 11. “BREAKDOWN OF RENTALAND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, GAIN AND LOSS ON SALE OF REAL ESTATE PROPERTY”.
Twenty-second Fiscal Period (from November 1, 2015 to April 30, 2016)
The Investment Corporation owns real estate for rental purposes mainly in the Tokyo Metropolitan Area for the purpose of generating rental revenues.

38

The carrying value in the balance sheets and corresponding fair value of those properties are as follows:
Carrying value (In thousands of yen)
As of October 31, 2015

Net change

As of April 30, 2016

Fair value As of April 30,
2016 (In thousands of yen)

¥381,466,641¥3,618,614¥385,085,255¥402,555,000*1: The carrying value represents the acquisition cost less accumulated depreciation.
*2: The fair value is the appraisal value or the survey value determined by outside appraisers.
*3: Among 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 two properties totaling ¥19,321,019 thousand, the sale of two properties totaling ¥14,591,896 thousand and depreciation amounting to¥2,230,747 thousand.

Income and loss in the fiscal period ended April 30, 2016 for real estate for rental purposes is listed in Note 11. “BREAKDOWN OF RENTALAND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, GAIN AND LOSS ON SALE OF REAL ESTATE PROPERTY”.

16.

SEGMENT AND RELATED INFORMATION

Twenty-third Fiscal Period (from May 1, 2016 to October 31, 2016)(A) Segment Information
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has no reportablesegment subject to disclosure.

(B) Related Information(1) Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of the operating
revenue on the statement of income and retained earning.

(2) Information about each geographic area(a) Net sales
Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenue on the statement ofincome and retained earning.
(b) Property, plant and equipment
Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts for over 90% of the amount of property, plant and equipment on the balance sheet.

(3)	Information about each major customer
Disclosure is omitted because net sales to a single external customer account for less than 10% of the operating revenue on the statementof income and retained earning.
Twenty-second Fiscal Period (November 1, 2015 to April 30, 2016)(A) Segment Information
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has no reportablesegment subject to disclosure.

(B) Related Information(1) Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of the operating
revenue on the statement of income and retained earning.

(2) Information about each geographic area(a) Net sales
Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenue on the statement ofincome and retained earning.
(b) Property, plant and equipment
Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts for over 90% of the amount of property, plant and equipment on the balance sheet.

(3) Information about each major customer
Disclosure is omitted because net sales to a single external customer account for less than 10% of the operating revenue on the statementof income and retained earning.

17.

SIGNIFICANT SUBSEQUENT EVENTS

Not applicable.

39

Unitholders’ Information
Kenedix Office Investment Corporation
Fiscal Periods:
Six months ending April 30 and October 31
Stock Listing:	Real Estate Investment Trust Market of the Tokyo Stock Exchange (Securities Code: 8972)
Transfer Agent:	Sumitomo Mitsui Trust Bank, Limited
Auditor:Ernst & Young ShinNihon LLC

IR Schedule (23rd and 24th fiscal periods)
Oct.
2016

Dec.
2016

Jan.
2017

Apr.
2017

Jun.
2017

Jul.
2017

End of 23rd
fiscal period

Performance for23rd fiscal period
is announced

Distributions for23rd fiscal period
are paid

End of 24th
fiscal period

Performance for24th fiscal period
will be announced

Distributions for
24th fiscal period
will be paid

General Breakdown of Unitholders
Foreign corporations
and individuals
End of 23rd
fiscal period

Other domestic
corporations

Financial institutions(including securities companies)

Individuals
and others

37.1%

1.2%

57.5%

150,238 units

4,705 units

232,908 units

17,034 units

4.2%

End of 22nd
fiscal period

4.2%

39.9%

1.2%

54.8%

161,501 units

4,707 units

221,728 units

16,949 units

Total
404,885 units
Total
404,885 units

Note: The ratios are rounded to the first decimal place

Top Ten Unitholders (As of October 31, 2016)# of Units Held

Name

Percentage Share(Unit)(Note)

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

71,334

17.6%

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

56,155

13.9%
11.7%

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

47,407

Nomura Bank (Luxemburg) S.A.

22,0895.5%

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

19,845

4.9%

The Bank of New York Mellon SA/NV 10

9,842

2.4%

State Street Bank and Trust Company 505223

8,504

2.1%

State Street Bank and Trust Company 505001

6,726

1.7%

State Street Bank and Trust Company

6,262

1.5%

State Street Bank and Trust Company 505012
Total

5,722

1.4%

253,88662.7%

Note: The ratios are rounded to the first decimal place

Unit Price and Trading Volume(Units)Closing Price(Yen)

Trading Volume

20,0001,000,000

11,000900,000

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
2005

40

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

No. 1 owner oActualized enh

financial base andFlexible and tim
Advanced tenantvalue Abundant t
timely manageme
Advanced tenant
Enhancing compeNo.1 owner of mi

Actualized

http://www.kdo-reit.com/en/

Disclaimer:This semiannual report includes translations of certain documents originally filed and made available in Japan in accordance with the Securities andExchange Law of Japan.
The English language semiannual report was prepared solely for the convenience of readers outside Japan and is not intended to constitute a prospectus. This semiannual report should not be construed as an offer or solicitation to buy or sell any securities of Kenedix Office Investment
Corporation (KDO). English terms for Japanese legal, accounting, tax and business concepts used herein may not be precisely identical to the conceptof the equivalent Japanese terms. With respect to any and all 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.
None of KDO, Kenedix Real Estate Fund Management, Inc., 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 KDO have been prepared in accordance with generally accepted accounting principles in Japan (Japanese GAAP),
which may materially differ in certain respects from 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 andinclude statements regarding the intent, belief, or current and future expectations of KDO or Kenedix Real Estate Fund Management, Inc. withrespect 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 orother similar 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 the industries 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 forward-looking 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 thisdocument are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of information produced 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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No. 1 owner of
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Enhancing compe
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