Kenedix Realty Investment Corporation （8972）

12th Period Results (April 2011)

p18: Correction was made to the color indications for “No change” and“Increase in rent” in the upper right graph.
p22: Updated the “Breakdown of Lenders” as of October 31, 2011.

November 2011
Kenedix REIT Management,Inc.
http://www.kdx-reit.com/eng/

KRI strategy in the post：earthquake environment
Post-earthquake market conditions for mid-sized offices

KRI Strategies

 Substantial decline in trading volume after theTransaction
Marketearthquake, though activities and information
flows are recovering The earthquake had limited impact on asset

pricing, i.e., appraisal value. Cap rate
expectation appears unchanged

New acquisitions
Positive environment for acquisitions

Competitive advantages derived from focusedstrategy on “mid-sized office buildings” and solid
acquisition track record with financing capability

Continued focus on central Tokyo, whiletargeting other major cities for selective
investments

 Tenants are increasingly “selective” about

Leasing Market

office building quality⇒ Location, age, technical specifications(including seismic resistance standards)⇒ Rent levels may to have bottomed out for
quality buildings

Portfolio management
Increased efficiency & work speed byinternalizing property management functions



Economies of scale to achieve cost reductions inbuilding maintenance and to optimize efficiency

Capital expenditure using sufficient construction
budget Tenants’ moving their main offices out ofTokyo is limited (Osaka, etc.) because ofconcentration risks
 Investors’ increasing appreciation of J-REITs:

Financial Market

timely disclosure, information transparency,
asset diversification, trading liquidity, etc.
⇒Lenders’ positive attitude unchanged⇒Prices declined after 3.11, followed bystrong recovery almost to the pre-earthquake
levels in late March

Environmental / energy-saving initiatives
Introduction of energy measures

Capital expenditure for electric reduction at peaktime
⇒ earlier-than scheduled installation of LED etc.



Third-party assessments for initiatives⇒ “DBJ Green Building” certificate

 BOJ doubled the J-REIT equity purchasefacility after the earthquake J-REIT follow-on offerings resumed

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see
disclaimer in the final page of this documents.

1

SECTION 1

12th Period Results (April 30, 2011)

12th Period (2011/4) Financial results: Performance highlights
Actual performance and year-on-year comparison
11th period

Of w hich gain on sales of real estate properties

Property perform ance

Variance

Major factors-221(Refer to ①# in the table to the right）
Gain on sale of KDX Shinjuku-Gyoen Bldg in 11th period

8,136

116

-

-116

4,522

4,427

-95

(Refer to ②# in the table to the right）

2,377

2,360

-17

Decreased due to seasonal factors of utility (-73) etc.

1,440
64

1,406
-

-33
-64

Operating incom e

3,835

3,709

-125

Part of existing property is fully depreciated
Loss on sale of Court Shin-Okachimachi in 11th period(Refer to ③# in the table to the right）

Non-operating expenses

1,231

1,366

134

-

1,205

1,352

146

Extraordinary gains

-

26

26

Extraordinary losses

-

61

61

2,607

2,309

-297

New borrow ings during 12th period is \ 11.5billion
Subsidy income (ecology renovation for KDX ShinYokohama Bldg）
Loss on disaster （ 35） ,reduction of noncurrent assets （ 26)
-

65

-

-65

Of w hich expanses related to rent business(excluding depreciation)
Of w hich depreciation
Of w hich loss on sales of real estate properties

Of w hich interest expense etc.

Net incom e
Provision for reserve for reduction entry

10,881 yen

9,891 yen-990 yen

Leasing NOI (Net Operating Income)

5,864

5,776

-88

FFO (Funds From Operation)

3,995

3,716

-279

Distribution per unit

In 11th period, accumulate 80% of gains on land sales of 2
properties（ number of units issued 233,550 units ）-ActualResults

Variance

8,136

Operating expenses

4,429

4,427

-2

-

Operating incom e

3,646

3,709

63

-

1,378

1,366

-12

-

1,359

1,352

-7

Low er refininancing cost than the forecasts

-

-35

-35

Due to the East Japan Earthquake

2,271

2,309

38

-

Extraordinary gains/losses
Net incom e
Reversal of reserve for reduction entry
Distribution per unit (Yen)

-189

323

-197

-158

②

-73

148

-101

-70

③

-117

176

-96

-89

* Leasing NOI =Rental revenues – Rental
expenses ＋ Depreciation expense for the period* FFO (Funds From Operation) =Net income＋
Depreciation expense for the period – Gain on
sales of real estate properties + Loss on sales ofreal estate properties

61

65

-

-65

10,000 yen

9,891 yen-109 yen

Recording E/O loss related to theEast Japan Earthquake and special
account for disaster loss

Major factors
Acquisition of Kitananajo SIA Bldg （＋20M） ,Actual leasing results w ere better than the forecasts

8,075

Of w hich interest expense etc.

①

(in millions of yen)

Operating revenue

Non-operating expenses

Newacquisition-

Comparison between forecasts and 12th period results
Forecast（ 2010/12/13)

Sold during
11th period

Utilityetc.

Continuous
holding（ 2011/4）

8,358

Operating expenses(in millions of yen)

(Reference) Major components of variance12th period（ 2010/10）
Operating incom e(in millions of yen)In accordance with “Income taxes
treatment of various expenses incurred inrelation to the East Japan Earthquake”(notice on law interpretation) issued by
NTA on April 18, 2011, provision for
special account for disaster loss of ¥30
million is recorded as deductible expense.

Planned reversal of reserve w as cancelled-

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see
disclaimer in the final page of this documents.

3

13th period (2011/10) /14th period (2012/4) Earnings forecasts(announced on July 5, 2011)
Forecasts for 13th period / 14th period(in millions of yen)

12th period results

13th period forecasts

14th period forecasts（ 2011/4）（ 2011/10）（ 2012/4）

Operating incom e

8,136

8,964

-

535

Of w hich gain on sales of real estate properties

Additional explanation
8,458- 13th period, expected gain on sale from KDX Hirakaw acho Bldg

4,427

Operating expenses
Of w hich expanses related to rent business(excluding depreciation)

2,360

Of w hich depreciation

-

1,406

1,448

1,463

Operating incom e

3,709

4,214

3,782

Non-operating expenses

1,366
1,352

1,360

1,271

2,346

2,799

2,472 -Of w hich interest expense etc.
Ordinary incom e
Extraordinary gains/losses
Net incom e

-

-35

-

2,309

2,798

2,471 -

-

130

-195

Provision for (reversal of) reserves for
reduction entry

9,891 yen

Distribution per unit (yen)（ Ref.） Changes in number of properties（ Ref.） Acquisition and disposition of properties

9,300 yen

67→71 properties

71→74 properties【 Acquisition】
・ 2 properties of Kyodo
Bldg (Ginza No.8,
Honcho 1chome）
・ KDX KobayashiDoshomachi Bldg
・ Kitananajo SIA Bldg

【 Acquisition】
・ 2 properties of Kyodo Bldg
(Iidabashi, Shin-Nihonbashi）
・ P's Higashi-Shinagaw a Bldg
・ Nihonbashi Dai-2 Bldg
【 Disposition】
・ KDX Hirakaw acho Bldg

Sale of Hirakawacho Bldg
Estimated decrease in NOI for
13th period due to sale of KDX
Hirakawacho Bldg (on June 30,2011) is ¥80 million.

- Disaster loss incurred in 12th period

9,300 yen (Number of units issued) 12th period:233,550 units, 13th・ 14th period: 286,550 units
74 properties【 Acquisition】【 Disposition】
none-

Internal reserves from gain from land sale
The assumption is made that the reserve for reduction entry will be accumulated related tothe expected capital gains from the sale of KDX Hirakawacho Building (¥535 million) in theamount up to the reduction entry limit stipulated in Article 66-2 of the Special Taxation
Measures Law (up to 80% of the gain on land sale) and to the extent it meets the conduit
requirements stipulated in Article 67-15 of the Special Taxation Measures Law (more than
90% of distributable profit) and assumed a reserve for reduction entry in amount of ¥130
million for the 13th period.

Note： The above figures are projected under certain assumptions at this time, and actual net profit and distribution may differ fromthose projections due to changes in circumstances. Also, this projection is not intended to imply that the projected amount will be paid.
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see
disclaimer in the final page of this documents.

4

SECTION 2

External growth strategy

Portfolio that focuses on office buildings
Portfolio overview(as of July 31, 2011)

Portfolio growth (by acquisition value)

(¥B)

400

# of properties: 74
Total size: ¥255.5B

350
OfficePortfolio breakdown by property type

Central urban retail300

Residential

Stability-emphasized

Central urban
retail4.8%

255.5

Residential
3.6%

250

200

Office
91.4％

150

233.7

100

69.1

Office buildings: 68 properties
Total size: ¥233.7B

50

37.7

Portfolio breakdown by region（office buildings）

0

12.3
18.9

Other Regional
Areas
15.8%

12.3
9.4

End of 1st(2005/10)

End of End of 3rd End of 4th End of 5th End of 6th End of 7th End of 8th End of 9th End of
End of
End of
2nd(2006/10) (2007/4) (2007/10) (2008/4) (2008/10) (2009/4) (2009/10)
10th
11th
12th
(2006/4)(2010/4) (2010/10) (2011/4)

Jul-11Other Tokyo
Metropolitan Area
22.5%

(Reference) Office market in Tokyo’s 5 central wards (by number of buildings)
More
than
5,000
3.0%

Less
than
500
66.2%

3,000‐
5,000
2.2%

1,0003,000
12.3%

500～
1,000
16.3%

Unit: tsubo

Less 1yr
0.4%More 30yrs
35.8%

1yr-less
5yrs 2.8%
5yrsless10yrs
3.4%
10yrs-less
20yrs
18.0%

20yrs-less
30yrs
39.6%

Note： The data is based on the office buildingsthat CBRE follows for analysis and does
not cover all office buildings that arelocated within the 5 central wards in Tokyo(March 2011)
Source： “Mid-sized office building market trend“,
CBRE, May 2011 (report compiled at
KDRM’s request)

Central
Tokyo
61.5％

Notes :
・Total sizes are rounded to the nearest ¥100M
・The above percentages are calculated using theacquisition prices rounded to the first decimal place.
・Central Tokyo includes Chiyoda, Chuo, Minato,
Shibuya and Shinjuku wards

Building Age

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see
disclaimer in the final page of this documents.

6

Acquisition/disposition in 12th period (2011/4)¾ Focus on mid-sized office buildings in the Tokyo
Metropolitan Areas¾ Selective investments in other major cities
Kitananajo SIA Building (acquisition)

Total acquisitions in 12th period ¥13.2B
Tokyo Metropolitan Area ¥8.3B
Other Regional Areas ¥4.9B
KDX Hirakawacho Building (disposition)

Location：Kita-ku, Sapporo, Hokkaido
GFA：5,503.90 ㎡
Year Built：October 1989
Acquisition Price：¥2,005M
Acquisition Date：March 25, 2011
Number of Tenant：20(as of April 30, 2011)¾ One-minute walk from Sapporo
Station, facing the North Exit Plazaof the Station¾ Standard floor space of 363㎡
(110 tsubo)

Location: Chiyoda-ku, Tokyo
GFA： 8,002.97 m2
Year Built： March 1988
Acquisition Price： ¥5,180M
Acquisition Date： August 1, 2005
Sales Price： ¥5,800M
Settlement Date： June 30, 2011

Rental Revenue¥167,316 thousand（fiscal period ended 2011/4）

Number of End-Tenants

18 （as of April 30, 2011)

Occupancy Ratio

100.0%¾Located at the heart of central Tokyo, Hirakawacho Chiyoda-ku¾The sales agreement was executed and sold as originallyplanned, despite occurrence of the earthquake･ Part of portfolio strategy for optimization of property mix by consideringsuch factors as market trends, profitability and characteristics ofindividual assets･ Increase in cash (liquidity) positions for future asset acquisitions
・Sale price likely to exceed KRI’s estimated book value, potentiallyresulting in profits from the transaction

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see
disclaimer in the final page of this documents.

7

Track record of property acquisition and disposition
Disposition

Properties acquired during the 12th fiscal period
Total acquisition price ¥13.17B

Property
name
物件名

共同ビル
Kyodo
Building
No.8)（ (Ginza
銀座No
. ８)

共同ビル
Kyodo
Building(Honcho（ 本町11chome)
丁目)

KDX KobayashiKDXDoshomachi
小林道修町ビル
Building

北七条SIAビル
SIA Building(Reference)（ 参考）
Total of 4
4 properties
物件合計

Property
name
物件名

KDX
KDX Hirakawacho
Building
平河町ビル

Location
所 在

Chuo-ward,Tokyo
東京都中央区

Chuo-ward,Tokyo
東京都中央区

Chuo-ward,Osaka
大阪市中央区

Kita-ward,
Sapporo札幌市北区-

Location
所 在

Chiyoda-ward,Tokyo
東京都千代田区Dec. 20102010年12月

Mar. 20112011年3月-

譲渡予定時期
Settlement
date

Nov. 20112010年11月

Acquisition
date
取得時期

Kitananajo

Contract
date:
2011/4/5
契約締結:
2011年4月5日
Settlement
2011/6/30
譲渡予定:date:2011年6月30日

Acquisition
price (A)
取得価格

¥4.3B
43.0億円¥4.0B
40.0億円¥2.87B
28.7億円¥2.0B
20.0億円13¥13.17B
1.7億円

Sales price
譲渡予定価格¥5.8B
58.0億円Appraisalvalue at the
取得時
time鑑定評価額
of acquisition(B)¥4.52B
45.2億円¥4.33B
43.3億円¥2.97B
29.7億円¥2.05B
20.5億円13¥13.87B
8.7億円

Appraisal
value
鑑定評価額
(Apr
2011)
(2011/4)¥4.91B
49.1億円Difference (A)- (B)

鑑定と取得
価格の差

-4.9%

-7.6%

-3.4%

-2.2%

-5 .0 %

鑑定と譲渡予定% of change
価格の差+18.1%

Seller
売主

Third
party
第三者

Third
party
第三者

Related party
利害関係者

Third
party
第三者

-

Buyer
買主

Third
party
第三者

Appraisal NOI1
金額 (注1)¥217.1M
217.1百万円¥216.3M
216.3百万円¥211.5M
211.5百万円¥131.4M
131.4百万円

7 76¥776.5M.5 百万円Appraisal NOI2
金額(注2)¥253.3M
253.3百万円

鑑定NOI/
Appraisal
NOI/
Acquisition
price
取得価格

5.1%

5.4%

7.4%

6.6%

5.9%

Appraisal
NOI/
鑑定NOI/
Sales price
譲渡予定価格

4.4%

鑑定NOI

鑑定NOI

Note 1: Appraisal NOI is the net operating income (annual) for the direct capitalization method used in real estate appraisal report at the time of acquisition for each property.
Note 2: Appraisal NOI of KDX Hirakawacho Building is the net operating income (annual) for the direct capitalization method used in real estate appraisal report of April 30, 2011.
Note 3: Values are rounded down to the first decimal place. Ratios are rounded to the first decimal place.
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

8

Property acquired during the 13th fiscal period (2011/10)
Properties Acquired during the 13th period (acquired on July 22, 2011)
Kyodo Building(Iidabashi)

P’s Higashi-Shinagawa
Building

Nihonbashi Dai-2
Building

Kyodo Building (ShinNihonbashi)

Total
Acquisition Price (A)
(¥M)

4,670

4,590

2,710

2,300

14,270Appraisal Value (B)(¥M) (Note 1)

4,750

4,770

2,850

2,480

14,850Differnce (A)-(B)
(%)

-1.7

-3.8

-4.9

-7.3

-3.9

Aprraisal NOI
(%)

5.2

5.7

6.1

5.5

5.6

Total Leasable Area(㎡)

4,429.22

7,107.50

3,992.60

2,658.79

18,188.11

Location

Shinjuku ward,
Tokyo

Shinagawa ward, Tokyo

Chuo ward, Tokyo

Chuo ward, Tokyo－

Note 1: Appraisal report of April 30, 2011
Note 2: Values are rounded down to the first decimal place. Ratios are rounded to the first decimal place.

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

9

Property Acquisition Strategies going forward:
original network and diversified investment structure
Changes in ratio of Seller Type

Expanding/deepening the original network¾ Financial institutions
Relationships with lenders & securities companies
for possible access to funds’ exit opportunities¾ Private investment funds
Potential opportunities in relation to debt maturities¾J-REITs
Potential off-market opportunities through close
relationships with other REITs¾ Corporations
Potential off-market transactions in relation to financial
restructuring and/or off-balance sheet needs

Note: The point of acquisition of KDX Nagoya Sakae Building is deemed to be in the 6th period when
the sale and purchase agreement for land and building was signed (April 25, 2008), and the totalacquisition price of land and building (7.55 billion yen) is recorded as the acquisition price.

Diversified investment structure (TK investments)¾ Tokumei-kumiai (*) investment etc.
(Joint Investment with sponsor)

Debt
Property
EquityInvestment＋¾ Securing properties throughwarehousing fundSponsors etc.

Disposition with a view toacquiring a new property¾ Preference to disposition of residential andcentral urban retail assets¾ Office buildings may be disposed based onroom for asset replacement

Focusing on“mid-sized office buildings”*Japanese silent partnership

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see
disclaimer in the final page of this documents.

10

Memo

SECTION 3

Portfolio management strategy

Management of existing properties:
Timely response to the East Japan Earthquake
Immediate response by internalizing PM functions
The 3.11 East Japan Earthquake

March 12 (Sat)March 13, the first release.
No damage found that may
cause materially adverse
impacts on operations

Timely disclosure

Began inspections on
status of properties

Property
inspections

March 13 (Sun)

Requested property
inspections to a thirdparty expert

About 90 % ofproperties were
investigatedApril 2011
April 21, the second release.
Minor damages reported, mostly cracks in exterior and interior walls, etc. forsome properties⇒Announced the budget for repair works related to the earthquake for theamount of ¥110M in total(This accounts for about 0.04% of the total acquisition price of all 71
portfolio properties as of April 21, 2011)

All properties (70 as of 3/13)
inspected

Inspection by HI International Consultant Ltd. was conducted on 61 of allproperties (total properties 71 as of 3/25)→ Confirmed no material damage to building structures

Repair,construction, etc

renewal/repair works commenced＜Timely assessment & reporting of damage＞＜Crisis management for natural disasters＞＜KDX Sendai Building＞

9 Timely reporting in a prescribed format for natural
disaster situations
9 How to respond to the earthquake intensity five or
more in the seismic scale in areas where we holdassets＜KDX Shinjuku Building＞

March 11 (Fri.): initial report on human March 11 (Fri.): received 3 reports on the same day
casualties (none) andMarch 12 (Sat.): received a progress reportinitial report on damage March 13 (Sun.): received a progress report, a directsurvey received
report from the impacted site, followed by timely
status updates
March 12 (Sat.): 2nd report on damage
survey and, later on the March 14 (Mon.): received photos of the damaged areas,same day, the final
analyzed the pictures by the engineering group in
survey report received
the Property Management Division→ Crisis management system (earthquake, fire,
terrorism) already in place to report “immediately” tothe Asset Management Company

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see
disclaimer in the final page of this documents.

13

Management of existing properties:
Material impacts from the earthquake
Total costs relating to the East Japan Earthquake
Budget for earthquake related construction works : ¥110M① Construction works completed¥5M→ Recorded as extraordinary loss for fiscal period ended April 2011
② Anticipated cost for immediate repair and maintenance works ¥30M
→ Recorded as casualty loss reserves for fiscal period ended April 2011
③ Construction budget for fiscal period ending October 2011 ¥75M(note)→ Details, including schedules, are to be determined
Note: This is an estimate, thus subject to substantial change in the future

KDX Sendai Building
Location： Aoba-ku Sendai, Miyagi
Year Built： February 1984

KDX Shin-Yokohama 381 Building
Location： Kohoku-ku Yokohama, Kanagawa
Year Built： March 1988

Status of buildings built under old
seismic resistance standards (note)
KDX Nihonbashi 313 Building
Location： Chuo-ku, Tokyo
Year Built： April 1974¾

Expansion joint disconnect¾Wall cracks

Toranomon Toyo Building
Location： Minato-ku Tokyo
Year Built： August 1962¾
External stairs handrail(4F apart)¾¾¾¾

photo: April 18

EV・Parking machine repaired （March 14）
External stairs handrail breakage
External wall crack （partial damage on tiles）
Internal wall crack

Before repair
After repair(6F apart)¾ Expansion joint hardware coming off・ related
distortion and interior damage¾ Cracks in rest room walls¾ Cracks in other internal walls

No material damage.

Note: The building was built in compliance with the old seismic
resistance standard.
KDX Nihonbashi 313 Building received the antiseismic assessment
result from an expert that the building has the quake resistanceequivalent to those under the new seismic resistance standard.
Toranomon Toyo Building completed antiseismic reinforcement work.

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see
disclaimer in the final page of this documents.

14

Management of existing properties:
Energy saving measure in office buildings
How we respond to potential power shortage in summer 2011
¾ 15% reduction in energy consumption, mostly at properties with more than 500kW contracted supply within TEPCO and Tohoku EPCO areas¾ Systematic energy saving measures in both common areas and occupied areas, at which over 80% of electric power used for air-conditioning, lighting
and power outlets¾ KRI seeks 15% energy reduction by basing its saving measures on the government recommendations that assume maximum of 25% reduction■ Energy saving measures: details

Capex for energy savings during peak hours① LED light inevacuation signs→installed in offices
and central urban
retails (64 properties)

88% ofelectric
energy use intypical officebuildings② LED lights fordown lights etc.

③ Motion detection
sensor and others→ installed in EV halls,
hallways, rest rooms andconference rooms (9properties)→installed lighting systems
with motion detection sensors
in stairways (6 properties)

Power savings by all of ①～③ is expected to be about 78Kw (-73%)( Before implementation: approx. 107Kw → After: approx. 29Kw)■Anticipated timetable for energy savings in “large consumer” properties

Development of public awareness(Requesting energy saving to tenants )Cooperation request

Campaign poster
by Ministry of Environment

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disclaimer in the final page of this documents.

Promotional stickers
by ECCJ

15

Management of existing properties:
Tenant turnover and occupancy (office)Annualized turnover ratios for office tenants (actual and forecast）
13%
12%

10.9%

11%

10.0%

10%

9.0%

9%
8%
7%
6%

10.5%
8.4%

8.3%

11th period(2010/10)

12th period(2011/4)

1 tenant will move out
in KDX Harumi
Building(about 2.0%)

7.0%
7th period(2008/10)

9th period(2009/10)

8th period（2009/4）

10th period（2010/4）

13th period
Forec as t(2011/10)

Note：The ratio is calculated and annualized as follows: total rentable area of the tenants who cancelled the lease agreement during the six-month period from the
beginning to end of each period) / (Average rentable area of all office buildings owned by KRI as of each month-end during the relevant period) x 2
13th period (2011/10）forecast is based on prior cancellation notices received in 12th period (2011/4)

Changes in office occupancy ratios (by area)

Number of tenant turnovers
（No.）

80

7th period

8th period

Move inMove out

9th period

10th period

As of April 30,2011
11th period

12th period

60
40
20

49

51

66

64

48

57

0
-20

-44

-47

-58

-58

-49

-45

-40

98%
96%
94%
92%
90%
88%
86%
84%
82%
80%

95.5%
（Tokyo Metropolitan
Area）

94.2%

（Total office buildings）

90.4%（Other Regional
Areas）

2008/5-60

2008/11

2009/5

2009/112010/5

2010/11

Reference：
Total portfolio
94.6％

Average monthly occupancy ratios in the last 3 years (from 7th to 12th period)-80
7th period
8th period
9th period
10th period
11th period
12th period（08/05～08/10） （08/11～09/04） （09/05～09/10） （09/11～10/04） （10/05～10/10） （10/11～11/4）

Total officebuildings

94.1%

Tokyo
Metropolitan
Area

95.4%

Other
Regional
Areas

89.7%

Note： Based on number of floors. If one tenant leases more than one floor, each floor is counted as one
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see
disclaimer in the final page of this documents.

16

Management of existing properties:
Trends in office rents for new tenants
Rents for new tenants% change in rents between new & previous tenants and # of contracts

CentralTokyo(5 wards)

8th period(2009/4)

9th period(2009/10)

10th period(2010/4)

11th period(2010/10)

12th period(2011/4)

Changes

0.0%-19.3%-22.8%-19.0%-20.9%

Increase in
rent

8

0

0

0

1

Decreasein rent

9

17

16

18

16

Changes

-1.8%

-8.4%

-15.5%-20.0%-18.6%

4

3

1

0

0

6

15

11

6

17

Changes-7.7%-16.4%-15.0%-16.6%-14.0%

Increase in
rent

4

2

6

1

1

Decreasein rent

7

11

18

13

10

Changes-2.7%-14.4%-17.5%-18.3%-18.3%

Increase in
rent

16

5

7

1

2

Decreasein rent

22

43

45

37

43

Other Tokyo Increase inMetropolitan
rent
Area
Decreasein rent

Other
Regional
Areas

Total of
OfficeBuildings

Nov-April monthly trends in new tenants (office)(# of tenants)

Notes: Number of tenants whose lease contracts commenced during the above listed months.
Those tenants who have occupied more than one floor are accounted by each floor

Notes：
Ratios represent the simple percentage differences in average monthly rents (per tsubo) for previous
tenants and new tenants in the respective buildings. The analysis excludes those buildings thatwere acquired during the relevant fiscal periods and based on floors for offices (above 2nd floor)

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see
disclaimer in the final page of this documents.

17

Management of existing properties: changes in office rent levels
Rent renewals
12th period (2011/4): rent renewal trends for existing tenants

Status of rent renewals (# of contracts, % change)
8th period(2009/4)

9th period 10th period 11th period 12th period(2009/10) (2010/4) (2010/10) (2011/4)

Changes

-2.7%

-5.7%

-9.0%

-10.8%-13.8%

Increase in rent

12

6

4

6

5

Decrease in rent

14

30

63

55

33

Increase in rent

80%

60%

45.8%
14.0%
0%

4,084

4,000
1,840

38.9%

24.0%

20%

8,000

2,000

74.1%

77.9%

40%

9,095

6,000

57.9%

66.4%

10,395

10,000No Change

47.6%<Changes in monthly rent>

12,000Decrease in rent

100%

Note: Percentage change in rents are calculated by dividing the total monthly rents of
those tenants who have renewed their leases with either decrease or increase in rental
levels by total monthly rents before the renewal. Those tenants whose rents areunchanged at renewal are excluded(thousand of yen)

Declining “rent decrease” and increase in “no change”

1,685

2,264

1,620

1,133

291

0

24.0%

8.1%

9.6%

6.6%

3.1%

8th period

9th period

10th period

11th period

Note: Any renewed contracts, including contracts extended before theexpiration date. Ratio calculation based on leased floor area

-2,000-4,000-3,528-6,000-8,000-7,018-10,000-10,836-12,000-14,000

Exempt fromrenewal78.2%

Renewal21.8%-14,907-16,000-18,000-20,000

1.9%
12th period

Decreasein rent,
24.0%

Increasein rent,
1.9%

No
Change,74.1%-19,400-22,000
4th period

5th period

6th period

7th period

8th period

9th period

10th period

11th period

12th period

Note: The changes in monthly rent are summation of differences before and after the rent
renewal and calculated separately for tenants with rent increase and decrease
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see
disclaimer in the final page of this documents.

18

Historical appraisal value of office building
Historical appraisal profit/loss ratio and amount of office

Historical variation for appraisal value of office

(百万円)
¥M

2011/4-9.9%-¥22,153M

Appraisal profit/loss amount (left)

2nd period(Apr 2006)

4th period(Apr 2007)

6th period(Apr 2008)

8th period(Apr 2009)

10th period(Apr 2010)

12th period(Apr 2011)

Note: Percentage change in appraisal values as of the end of each period compared with theprevious period. The appraisal value for the properties that were acquired in the previous
periods were the values as at the time of acquisition

Items of appraisal
鑑定評価上の項目
valuation

鑑定キャップレート（平均）Change in cap rates(average)
の変動幅

Note:

2nd period(Apr 2006)

4th period(Apr 2007)

0.2%

th

0.1%

th

0.0%

th

0.0%

6th period(Apr 2008)

8th period(Apr 2009)

10th period(Apr 2010)

12th period(Apr 2011)

Note: Latent gain/loss is calculated by subtracting office properties’ book values from appraisal
values for respective periods; the ratio by dividing the latent gain/loss by total book valueEndof 8thEndof 9thEndof 10th End
of 11thEndof 12th
第8期末
第9期末
第10期末
第11期末
第12期末
PeriodPeriodPeriodPeriodPeriod（2009/4期）(2009/10期)(2010/4期)(2010/10期)(2011/4期)(2009/4)(2009/10)(2010/4)(2010/10)(2011/4)

End of 8
End of 9
End of 10
End of 11
End of 12
⇒第8期末
⇒第9期末
⇒第10期末⇒第11期末⇒第12期末PeriodPeriodPeriodPeriodPeriod（2009/4期）(2009/10期)(2010/4期)(2010/10期)(2011/4期)(2009/4)(2009/10)(2010/4)(2010/10)(2011/4)thAppraisal profit/loss ratio (right)

th

0.0%

(5.0%→5.2%) (5.2%→5.3%) (5.3%→5.3%) (5.3%→5.3%) (5.3%→5.3%)

Change in cap rate (difference with value at the end of the previous period) of office buildings
end of each period. Based on acquisition price.
The cap rate of buildings acquired in the each period is considered the value at the end of theprevious period and calculated

Appraisal profit/

含み損益額（百万円）
loss amount (¥M)

-4,499-16,907-20,280-21,939-22,153

Appraisal
profit/loss ratio
含み損益率

-2.4%

-8.5%

-9.5%

-10.3%-9.9%※ “Change in appraisal value as of end of each period compared with the previous
period”, “appraisal profit/loss amount”, “appraisal profit/loss ratio” are based on officebuildings 12th period excepted buildings sold.
The Appraisal profit/loss amount is rounded to the nearest ¥1M

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

19

Memo

SECTION 4

Financial Strategy

Stable financial management:
conservative LTV and fixed-rate debts
Changes in LTV
50%
45%Conservative LTV level

47.0%

45.6%

41.2% 41.4% 41.1% 40.9% 40.9%

43.0%

38.9%

40%

37.5%

Credit ratings and Investment Corporation bonds(as of April 30, 2011)

38.7%

Rating Agency

35%

35.3%
30%

1st per iod 2nd pe riod 3rd per iod 4th period(200 5/1 0) (200 6/4 ) (200 6/1 0) (200 7/4 )5th period(200 7/1 0)

Japan Credit Rating Agency（JCR）
6th period 7th period(2008/4） (200 8/1 0)

8th period(200 9/4 )Note: LTV = total debt / Total assets

Fixed-rate debt/balance by maturity (as of April 30, 2011)
Proportion of floating-rate debt vsfixed-rate debt
Floating
interest rate
debt
¥18.5B
16.4%
Fixed interest
rate debt¥94.2B
83.6%

Average interest rate *1.80%

Average life

2.2 yrs

Proportion of long-term debt

92.3%

Rating

9th period 10th perio d 11th perio d 12th perio d(200 9/1 0) (201 0/4 ) (201 0/1 0) (201 1/4 )

A

Size

Interest
rate

Maturity

1st Bond ¥9.0B
2nd Bond ¥3.0B

1.74%
2.37%

5ｙｒｓ
10yrs

Bonds

（Stable）
Maturitydate
2012/3/15
2017/3/15

Breakdown of lenders（As of October 31, 2011)

Debt balance by maturity period
Short-termborrowings
¥8.7B
7.7%
Current portionLong-termof Long-termborrowings andborrowings
investment¥27.5B
corporation
24.4%
bonds
¥76.6B
67.9%

Note: The average interest rate above does notinclude upfront fees (if included, 2.21%). Fixed
rate debt includes borrowings that wereconverted to fixed through interest rate swap

Note: borrowing amounts are rounded to the first decimal place

Note: Borrowing amounts are rounded to the first decimal place

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see
disclaimer in the final page of this documents.

22

Stable financial management: focus to diversify debt maturities
Diversification of debt maturities (as of April 30, 2011)
Average life 2.2yrs (*)
Average spread 1.28% (**)
(including upfront fee for borrowings)* Average life is weighted by borrowing amount(rounded to the first decimal place)** The average spread is weighted by borrowing
amount and by adding annualized upfront fee to the
spread cost for total debt costs (rounded to thesecond decimal place)

Note: the chart illustrates total debt amounts that mature in each period (rounded to the first decimal place). The debts that were financed after 12th period (including
refinanced portions) are highlighted in red box, indicating final maturity periods and repayment amounts (short-term refinances are shaded with light yellow)

Borrowings in 12th period ⇒ extension of debt maturities and reduction in spreads
Maturity diversification for borrowings in 12th period

Track record of borrowings in
12th period (2011/4)
Average life 3.4yrs (***)
Average spread 1.42% (****)(including upfront fee for borrowings)（Reference)
8th (2009/4) and 9th (2009/10) periods:
Average life 1.8yrs, spread 2.23%

Note: The chart illustrates maturities of borrowings that were raised in 12th period (rounded to the first decimal place)*** Average life is weighted by borrowing amount(rounded to the first decimal place)**** The average spread is weighted by borrowing
amount and by adding annualized upfront fee to the
spread cost for total debt costs (rounded to thesecond decimal place)

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see
disclaimer in the final page of this documents.

23

Memo

Appendix

Track record of property acquisition after the financial crisis
取得物件実績
Acquired 13 office buildings worth ¥43.1B after thefinancial crisis
10th period (2010/4)

12th period (2011/4)

KDX ShinKDX
KDX
Koishikawa Gotanda TG Yokohama
TG Building Building 381 Building Nihonbashi Shinjuku
Building
216(Annex
Building
Tower)

Kyodo
Building(GinzaNo.8)

Kyodo
Building(Honcho1chome)13th period (2011/10)

Kitananajo
Kyodo
P’s Higashi- Nihonbashi
Kyodo
KDX
SIA
Building Shinagawa
Dai-2
Building
KobayashiBuilding(ShinDoshomachi Building (Iidabashi) Building
Nihonbashi)
Building

Total

Acquisition Price(¥M) (A)

3,080

2,620

1,100

2,010

6,800

4,300

4,000

2,870

2,005

4,670

4,590

2,710

2,300

43,055

Appraisal Value atthe time ofacquisition (¥M) (B)

3,260

2,830

1,210

2,110

7,420

4,520

4,330

2,970

2,050

4,750

4,770

2,850

2,480

45,550Differnce(A)-(B) (%)

-5.5

-7.4

-9.1

-4.7

-8.4

-4.9

-7.6

-3.4

-2.2

-1.7

-3.8

-4.9

-7.3

-5.5

Appraisal NOI at thetime of acquisition
（％）

5.8

6.3

6.8

5.3

5.3

5.1

5.4

7.4

6.6

5.2

5.7

6.1

5.5

5.7

November 2009

Acquisition Date
SellerAcquisition Funds

Asset Size (Note)

Thirdy
party

Third
party

Relatedparty

December February
2009
2010

November 2010

December
2010

March
2011

Related
party

Third
party

Related
party

Third
party

Public offering and cash on hands

Third
party
New debt¥235.7 B (as of April 30, 2010)
10th period (2010/4)

Third
party

New debt and cash on hands

July 2011
Third
party

Third party Third party Third party

Public offering and cash on hands¥246.4B (as of April 30, 2011)
12th period (2011/4)

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

¥255.5B (as of July 31, 2011)
13th period (2011/10)

26

Appraisal values and cap rates as of the end of 12th period

Notes:
1. Acquisition prices, appraisal values, and book values are rounded down to nearest ¥M. Ratios are rounded to the first decimal place
2. Total cap rates for each property type are the weighted-average based on the acquisition prices
3. KDX Shin-Yokohama 381 Building (existing tower) and KDX Shin-Yokohama 381 Building Annex Tower are indicated as one property
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

27

Changes of Office Buildings’ Appraisal Value at the End of
Periods
Changes in average appraisal cap rates of office buildings(Other Regional Areas)

Appraisal CR (%)

Appraisal CR (%)

Changes in average appraisal cap rates of office buildings(Tokyo Metropolitan Area)

7th period(Oct 2008)

8th period(Apr 2009)

9th period(Oct 2009)

10th period(Apr 2010)

11th period(Oct 2010)

12th period(Apr 2011)

Note :The average cap rates are calculated as weighted averages of the acquisition price ofthe 47 properties KRI held in Tokyo Metropolitan Area through 7th period to 12th
period . KDX Shin-Yokohama 381 Building is excluded from calculation due to theconsolidated operation of its existing building and newly-developed building.

7th period(Oct 2008)

8th period(Apr 2009)

9th period(Oct 2009)

10th period(Apr 2010)

11th period(Oct 2010)

12th period(Apr 2011)

Note: The average cap rates are calculated as weighted averages of the acquisition priceof the 9 properties that KRI held in Other Regional Areas through 7th Period to 12th
Period.

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

28

Portfolio overview (office buildings)(As of Jun 15, 2011)■Office Buildings (65 properties)

Tokyo Metropolitan Area
Other Regional Areas

Office Building

Tokyo Metropolitan Area

Office Building

Area

No.

Name

A-7

FIK Minami Aoyama Building

Location

Acquisition
Price
(¥M)1

Year built2

Occupancy at endof 12th period(%)3

Minato-ward, Tokyo

2,270

Nov-88100.0%

A-14 KDX Funabashi Building

Funabashi, Chiba

2,252

Apr-89100.0%

A-61 KDX Hamamatsucho Dai-2 Building

Minato-ward, Tokyo

2,200

Apr-92100.0%

A-55 Shin-toshin Maruzen Building

Shinjuku-ward, Tokyo

2,110

Jul-90100.0%

A-64 KDX Nihonbashi 216 Building

Chuo-ward, Tokyo

2,010

Oct-06100.0%

A-33 KDX Okachimachi Building

Taito-ward, Tokyo

2,000

Jun-88100.0%

A-57 KDX Gobancho Building

Chiyoda-ward, Tokyo

1,951

Aug-00100.0%

Chiyoda-ward, Tokyo

1,950

May-93

93.5%

A-23 KDX Yotsuya Building

A-8

Kabnda Kihara Building

Shinjuku-ward, Tokyo

1,950

Oct-89100.0%

A-59 KDX Iwamoto-cho Building

Chiyoda-ward, Tokyo

1,864

Mar-08100.0%

A-26 KDX Kiba Building

Koto-ward, Tokyo

1,580

Oct-92100.0%

A-38 KDX Nishi-Shinjuku Building

Shinjuku-ward, Tokyo

1,500

Oct-92

87.6%

A-31 KDX Monzen-Nakacho Building

Koto-ward, Tokyo

1,400

Sep-86

84.3%

A-52 KDX Kanda Misaki-cho Building

Chiyoda-ward, Tokyo

1,380

Oct-92

86.9%

A-34 KDX Hon-Atsugi Building

Atsugi, Kanagawa

1,305

May-95100.0%

A-35 KDX Hachioji Building

Hachioji, Tokyo

1,155

Dec-85100.0%

A-28 KDX Nogizaka Building

Minato-ward, Tokyo

1,065

May-91

56.2%

A-58 KDX Nagoya Sakae Building

Nagoya, Aichi

7,550

Apr-0993.7%

A-12 Portus Center Building

Sakai, Osaka

5,570

Sep-93

95.8%

A-42 Karasuma Building

Kyoto, Kyoto

5,400

Oct-82

94.2%

A-53 KDX Hakata-Minami Building

Fukuoka, Fukuoka

4,900

Jun-73

75.4%

A-69 KDX Kobayashi-Doshomachi Building

Osaka, Osaka

2,870

Jul-0991.0%

A-54 KDX Kitahama Building

Osaka, Osaka

2,220

Jul-94

92.8%

A-44 KDX Sendai Building

Sendai, Miyagi

2,100

Feb-84

99.1%

A-70 Kitananajo SIA Building

Sapporo, Hokkaido

2,005

Oct-89100.0%

A-24 KDX Minami Semba Dai-1 Building

Osaka, Osaka

1,610

Mar-93

95.6%

A-25 KDX Minami Semba Dai-2 Building

Osaka, Osaka

1,560

Sep-93100.0%

A-36 KDX Niigata Building

Niigata, Niigata

1,305

Jul-83

66.7%

224,636

Ave 21.4 years

94.2%

Office Building (65 properties) Subtotal

Notes：
1 Acquisition price is the purchase price for trust beneficiary interests etc. acquired by the Investment Corporation
2 Year built is the date of construction completion recorded in the land register. Average age subtotal is shown as
the weighted-average portfolio age based upon acquisition prices with a base date of Apr.30, 2011, and isrounded down to the nearest first decimal place. The weighted-average ager of the 71 properties held as of
Apr.30, 2011 is 20.4 years (As of Apr. 30, 2011)
3 Occupancy ratio is calculated by dividing leased area by leasable area and rounded to the first decimal place.
Average occupancy ratio of 71 properties held as of Apr.30,2011 is 94.6%
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

29

Portfolio overview(central urban retail/residential properties)（As of Jun 15, 2011）■ Central Urban Retail Properties (2 properties)

Reference: Historical cap rate (by asset type / annualized base)■ Residential properties (4 properties)

Notes:
1 Acquisition price is the purchase price for trust beneficiary interests etc. acquired by the Investment Corporation
2 Year built is the date of construction completion recorded in the land register. Average age subtotal is shown as theweighted-average portfolio age based upon acquisition prices with a base date of Apr.30, 2011, and is rounded down
to the nearest first decimal place.
3 Occupancy ratio is calculated by dividing leased area by leasable area and rounded to the first decimal place.

7th
period8th
period9th
period10th
period11th
period12th
periodOffice Buildings

5.3%

5.5%

5.2%

5.1%

4.9%

4.7%

Central Urban
Retail Properties

4.8%

4.7%

4.6%

4.5%

4.5%

4.6%

Residential
Properties

5.3%

5.2%

5.0%

5.2%

4.8%

4.9%

Total

5.3%

5.4%

5.2%

5.1%

4.9%

4.7%

Notes:
1 Each ratio is after deduction of fixed property tax in each period
2 Each ratio is rounded to the first decimal place

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

30

Emphasis on mid-sized office buildings in Tokyo Metropolitan
Area（As of July 31, 2011）
Office portfolio: 68 properties, with a total acquisition price ¥233.7B
Hokkaido,
1property, ¥2.0B

Acquisition price(Tokyo Metropolitan Area)

Composition of office portfolio

Tokyo 23 wards
49 properties ¥171.8B

Acquisition price(Other Regional Areas)

Acquisition pricemore than ¥10.0B(1 property )¥7.5B–¥10.0B¥10.2B(3 properties)¥25.0B

Central Tokyo1
39 properties¥143.9B

Niigata,
1property ¥1.3B

Other 18 wards
10 properties¥27.9B

Miyagi,1property ¥2.1 B

Osaka, Kyoto,
6 properties ¥19.2 B¥5.0B–¥7.5B(9 properties)¥53.2B¥1.0B–¥2.5B(30 properties)¥57.1B¥2.5B–¥5.0B(25 properties)¥88.0B

Properties ¥2.5B to ¥7.5B consist 60.4%

Fukuoka,
1property ¥4.9 B

Tokyo
Other
Regional
Areas
15.8%

Chiba,
1property ¥2.2 B

Aichi,
1property ¥7.5 B

Other Tokyo
Metropolitan
Area
22.5%

Central
Tokyo
61.5%

Kanagawa,
6 properties ¥21.3 B
Hachioji,
1property ¥1.1 B

Notes：
1 Central Tokyo : Chiyoda, Chuo, Minato, Shibuya and Shinjuku
2 Acquisition price is rounded to the nearest ¥100M. Ratios indicate the total acquisition price ofproperties in each area in proportion to the total acquisition price for all properties combined and arerounded down to the first decimal place

Number of
Property

Acquisition
Price
（¥B）

57
11
68

196.6
37.0
233.7

Tokyo Metropolitan Area
Other Regional Areas

Total

Ratio
（%）

84.1
15.8
100.0

Values show the total acquisition price of the properties in each category
and the ratios indicate the total acquisition price of properties in eachcategory in proportion to the total acquisition price for all properties
combined
Note: Amount is rounded down to the nearest million yen.
Percentages are rounded down to the first decimal place.

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

31

Management of existing properties:Rent and tenants of officebuildings
Average Rent
Average rent for office buildings

End tenants of office buildings
Changes
End of 12th
compared withperiod2010/4(2011/4)

End of 10th
period(2010/4)

End of 11th
period(2010/10)

Changescompared with
2009/10Central Tokyo (5 wards)¥19,900¥19,300△2.9%¥18,900△2.3%

Other Tokyo Metropolitan Area

¥14,300¥14,100△1.4%¥13,700△3.1%

Other Regional Areas¥10,700¥10.600△1.3%¥10,500△0.7%

Total office buildings¥17,000¥16,600△2.4%¥16,200△2.3%(Monthly rent per tsubo)

Note:

Variety of tenants(As of end of 12th period)
Personal Use
Mining33
1
Public Sector 4.8%
0.1%
(Others)2
0.3%

Average rent level covers offices mainly above 2nd floor of the 61 properties which the Investment Corporation has
owned at the end of 10th period excluding KDX Shinjuku-Gyoen Building which was sold in the 11th period. Starting fromthe 11th period, A-47KDX Shin-Yokohama 381 Building is calculated collectively with the KDX Shin-Yokohama 381
Building Annex Tower (A-65) as 1 property. The average rent level of each property is the value obtained by dividing thesum of the monthly rent (including common area charges) per each property by the total leased area of each property,
and is rounded down to 100 yen.

Construction35
5.1%

Service Industry
269
38.9%

Industrial Goods
86
12.4%

Retail, Food &Beverage171
24.7%

Tenant distribution in Tokyo Metropolitan Area (end of 12th period)
Real Estate Financial
42
26
6.1%
3.8%

100 tsubo

200 to 300
tsubo

300 to 400
tsubo¥30,000~40,000

2

1

1

－

－

－

1

¥20,000~30,000

41

31

9

3

－

2

－

¥10,000~20,000

165

79

16

7

5

5

2

Number of Tenants(Number of Properties)

691 Tenants(65 Properties)~¥10,000

30

2

2

2

－

－

－

Share of the Largest Tenant

1.9%

Total Share of the Top 3 Tenants

5.1%

Rent/spaceNote:

400 to 500 500 to 1,000
1,000 to
tsubo
tsubo
2,000 tsubo

Transportation &Telecommunication
26
3.8%

100 to 200
tsubo

Based on rents as stated in lease agreements (including common area charges) for 406 office tenants in Tokyo Metropolitan
Area

Note：Percentage figures in the above pie charts represent
the proportion of each type of end tenants as apercentage of the total (691 tenants)

Note:

The ratio of top-end tenants within the entire portfolio(based on leased area)

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

32

Management of existing property: antiseismic structure ofowned property (case examples)
Seismic isolation structure
General antiseismic structure

Seismic control structure

Antiseismic inforcement

Seismic isolated structure

After renovation

Earthquake
vibration

KDX Nagoya Sakae
Building

Earthquake
vibration

Conceptual
diagramKDX Omori Building

After renovation Before renovation

Toranomon Toyo
Building

KDX Harumi Building

Location: Naka-ku, Nagoya, Aichi

Location: Ota-ku, Tokyo

Location: Chuo-ku, Tokyo

Location: Minato-ku, Tokyo

Year Built: April 2009

Year Built: October 1990

Year Built: February 2008

Year Built: August 1962

Adopt seismic isolation structure
by incorporating seismic isolation
device between lower base andupper base・ Buildings with seismic isolation
structure for abovegroundfloorsAdopt seismic control structure withseismic damper installed in second
floor through ninth floor

・ The oldest property in the portfolio

・ Seismic isolation devise isinstalled in foundation ofunderground floor

・ Built before new earthquake
resistance standard became effective→Previous owner:
Completed antiseismic
reinforcement work by Taisei
Corporation in October 2005

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see
disclaimer in the final page of this documents.

33

Management of existing properties—earthquake-proof etc.
PML of Portfolio: 5.30% (74 properties held)※ PML according to Research Result by NKSJ Risk Management, Inc. as of June 2011.

Seismic Safety Standard on Property Acquirement
Properties to be acquired should meet the New Standard for
Earthquake Resistant Design (1981)
The PML (Probable Maximum Loss) for Each newly acquired
property should be under 20%, the portfolio PML should be kept
less than 10% after acquisition.
However, Investment objects include properties which:
1. Are still Profitable even after the Earthquake Insurance contract.
2. Will reach the standard above after seismic reinforcement work.

Ensuring the Safety of existing Properties
Condition assessments are conducted after acquisition of new
properties, such as Deterioration diagnosis of buildings, Surveyof compliance to Building Standards Law, Surveys of hazardous
materials that the building contains, Soil survey as well as theformulation of short-term and long-term repair plan.
Such surveys are commissioned to external institutions to ensure
their professionalism, objectivity and transparency.
Furthermore, the reassessment of property’s condition andrenewal of short-term &long-term repair plans are conducted
towards properties acquired for a considerable long time.

Notes
1 ｢New standard for Earthquake Resistant Design was formulated on the base of the revision of enforcement order of Building Standard Law in 1981.
The anti-seismic performance of buildings has been greatly improved since the enforcement of the law due to the newly added provisions such as① New provision on tie-hoop ratio of Reinforced-Concrete Pillars (above 0.2%);② Resetting of horizontal seismic coefficient and elastic shear modulus, etc.
③ New requirement on the secondary design in seismic calculation
2

PML (Probable Maximum Loss) can be divided into PML of individual property and PML of the entire portfolio. Although there is no unified definition of PML, wedefine PML here as the ratio of the loss occurred in case of the severest earthquake (e.g. severe earthquake that happens only once in 475 years = the probabilityof which happening in 50 years is 10%) that could happen during the life-span of the property (50 years = ), to the refinancing cost of the estimated restoration
expenses.

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

34

Management of existing property: Environment responsive(Implementation of third-party assessment)
Getting certified under DBJ Green Building Rating System<Outline of DBJ Green Building
Rating System>
Certification for environmentally- and sociallyconscious property (“Green Building”) based onfour ratings using the total scoring model
developed by DBJ.

(Silver)(Silver)(Bronze)

KDX Harumi Building

KDX Nagoya Sakae
Building

KDX KobayashiDoshomachi Building

Location

Chuo-ku, Tokyo

LocationNaka-ku, Nagoya, Aichi

Location

Chuo-ku, Osaka, Osaka

Structure

S/SRC

Structure

S

Structure

S/SRC

FloorsB1 11F

Floors

11F

FloorsB1 F12

GFA

9,594.00m2

GFA

10,723.83m

2Description (image)

Ratings

One of the leading Japanese buildings with
Platinum excellent approaches to environmental andsocial consciousness.
Gold

Buildings with extremely forward-looking
approaches to environmental and social
consciousness.

SilverBuildings with highly forward-looking
approaches to environmental and social
consciousness.

BronzeBuildings with forward-looking approaches
to environmental and social consciousness.

2

GFA

12,694.32m

Year Built

February 2008

Year Built

April 2009

Year Built

July 2009

Acquisition
dateJune 30, 2008

Acquisition
date(Land) April 25, 2008
(Bldg) July 1, 2009

Acquisition
date

December 1, 2010

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products. Please see
disclaimer in the final page of this documents.

35

Stable financial management : Borrowing list
Short-termborrowings

LenderCurrent portion of long-term borrowings

Drawdowndate

Last
repayment
date

Mitsubishi UFJ Trust and Banking Corporation

1,500

2010/7/30

2011/7/31

Mitsubishi UFJ Trust and Banking Corporation

1,000

2010/10/29

2011/10/31

Mitsubishi UFJ Trust and Banking Corporation

2,700

2011/1/31

2012/1/31

Mitsubishi UFJ Trust and Banking Corporation

2,000

2011/3/25

2012/3/23

The Norinchukin Bank

1,500

2011/4/18

2011/11/30

Short-term borrowing subtotal

8,700

Mitsubishi UFJ Trust and Banking Corporation

1,000

2006/7/14

2011/7/13

Sumitomo Mitsui Banking Corporation（2,200）、The Chuo Mitsui Trust and Banking Co.,Ltd.（1,000）、Resona Bank., Ltd.（300）

3,500

2008/7/31

2011/7/31

The Bank of Toky o-Mitsubishi UFJ, Ltd

1,500

2008/2/29

2011/8/31

The Chuo Mitsui Trust and Banking Co., Ltd

1,000

2008/9/1

2011/9/1

Sumitomo Mitsui Banking Corporation（3,000）、The Chuo Mitsui Trust and Banking Co., Ltd.(2000)

5,000

2008/3/31

2011/9/30

Aozora Bank.,Ltd

3,500

2009/4/30

2011/10/31

The Bank of Toky o-Mitsubishi UFJ, Ltd

1,500

2010/10/26

2011/10/31

The Chuo Mitsui Trust and Banking Co., Ltd

1,000

2008/5/1

2011/11/1

The Norinchukin Bank

2,500

2006/12/1

2011/11/30

Sumitomo Mitsui Banking Corporation

2,500

2008/1/10

2012/1/10

Sumitomo Mitsui Banking Corporation

460

2009/2/27

2012/2/29

2,000

2007/4/2

2012/4/2

2,000

2009/4/30

2012/4/27

1,500

2008/6/30

2012/6/30

920

2009/2/27

2012/8/31

2,500

2010/10/29

2012/10/31

The Chuo Mitsui Trust and Banking Co., Ltd.
Aozora Bank., Ltd
Current portion of long-term borrowings subtotal
Resona Bank., Ltd.
Dev elopment Bank of Japan Inc.
The Bank of Toky o-Mitsubishi UFJ, Ltd
Resona Bank., Ltd.

Note

27,460500

2009/12/8

2012/12/8

Dev elopment Bank of Japan Inc.

3,000

2008/6/30

2012/12/28

The Chuo Mitsui Trust and Banking Co., Ltd.

1,000

2010/1/13

2013/1/15

Aozora Bank., Ltd

1,500

2010/2/18

2013/2/18

Mitsubishi UFJ Trust and Banking Corporation

1,000

2011/4/28

2013/4/30

500

2010/7/30

2013/7/31

Dev elopment Bank of Japan Inc.

3,000

2006/9/1

2013/8/31

Aozora Bank., Ltd

2,000

2011/3/31

2013/9/30

Resona Bank., Ltd.

Note

Sumitomo Mitsui Banking Corporation

940

2009/10/26

2013/10/26 Note

Sumitomo Mitsui Banking Corporation

1,880

2009/10/30

2013/10/30 Note2013/10/31

Resona Bank., Ltd.
Long-term borrowings

Balance(¥M)

As of April 30, 2011500

2010/10/29

The Bank of Toky o-Mitsubishi UFJ, Ltd(1,500)、The Chuo Mitsui Trust and Banking Co., Ltd.(800)、Aozora Bank., Ltd(400)2,700

2010/11/12

2013/11/12

3y rs

The Bank of Toky o-Mitsubishi UFJ, Ltd(500)、The Chuo Mitsui Trust and Banking Co., Ltd.(200)、Aozora Bank., Ltd(100)800

2010/12/1

2013/11/12

3y rs

The Chuo Mitsui Trust and Banking Co., Ltd.

3,700

2010/7/30

2014/1/31

Sumitomo Mitsui Banking Corporation

1,300

2011/1/31

2014/1/31

Sumitomo Mitsui Banking Corporation

3,700

2010/7/30

2014/7/31

The Chuo Mitsui Trust and Banking Co., Ltd.

2,700

2011/3/22

2014/9/22

Sumitomo Mitsui Banking Corporation

1,128

2010/1/29

2015/1/30

Note

Sumitomo Mitsui Banking Corporation（2,128）、Dev elopment Bank of Japan Inc.(1,573)、The Chuo Mitsui Trust and Banking Co., Ltd.(925)、Aozora Bank., Ltd(463)5,0882010/2/18

2015/2/18

Note

Sumitomo Mitsui Banking Corporation

1,900

2010/4/2

2015/4/2

Note

Aozora Bank., Ltd

3,000

2011/2/28

2015/8/31

Aozora Bank., Ltd

1,500

2011/4/28

2015/10/31

Sumitomo Mitsui Banking Corporation（1,200）、Resona Bank., Ltd.(800)2,000

2010/11/12

2015/11/12

5y rs

Sumitomo Mitsui Banking Corporation（800）、Resona Bank., Ltd.(200)

1,000

2010/12/1

2015/11/12

5y rs

800

2011/1/31

2016/1/29

The Bank of Toky o-Mitsubishi UFJ, Ltd
The Bank of Toky o-Mitsubishi UFJ, Ltd

500

2011/2/28

2016/1/29

The Bank of Toky o-Mitsubishi UFJ, Ltd

2,000

2011/3/31

2016/1/29

The Bank of Toky o-Mitsubishi UFJ, Ltd

1,000

2011/4/28

2016/1/29

Resona Bank., Ltd.

1,000

2011/3/31

2016/3/31

Dev elopment Bank of Japan Inc.

5,000

2006/5/1

2016/4/30

Dev elopment Bank of Japan Inc.

2,300

2010/11/12

2017/11/12

7y rs

Dev elopment Bank of Japan Inc.

700

2010/12/1

2017/11/12

7y rs

Long-term borrowings subtotal

64,556

Total

100,716

Notes:
1 Repayment Method: repayment of every 6 months (amortization)
2 The amount are rounded to the first decimal place

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

36

KRI Unitholders
Change in investment units by unitholders
Individuals and Others
1st period

Financial Inst.(Incl.Securities)

16.0
29.0

8.5

47.0

15.6

Foreign Co. and Individuals
12.4

49.0

22.7

2nd period

Other Domestic Co.

Top 10 unitholders at end of 12th period (as of 2011/4/30)# ofunits held
(unit)Name(%)

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

40,95217.53%

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

28,88012.36%The Nomura Trust and Banking Co., Ltd. (Invetment Trust Acct.)

23,2309.94%

3rd period

10.6

4th period

6.8

46.5

6.4

40.3

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

8,181

3.50%

5th period

5.7

48.4

5.1

40.8

Nomura Bank (Luxembourg) S.A.

7,098

3.03%

6th period

5.4

49.4

5.0

40.2

The Bank of NY Treaty JASDEC Account

7,012

3.00%

7th period

8.1

45.6

5.4

41.0

BNP PARIBAS SECURITIES SERVICESLUXEMBOURG/JASDEC/HENDERSON HHF SICAV

5,900

2.52%

8th period

10.8

42.5

45.4

State Street Bank and Trust Company 505223

3,785

1.62%

9th period

8.2

43.1

1.2

47.5

1.58%

9.9

38.1

2.1

49.9

BNP PARIBAS SECURITIES SERVICES SINGAPORE/BP2SSYDNEY/JASDEC/AUSTRALIANRESIDENTS

3,708

10th period
11th period

8.7

12th period

8.0

34.6

6.8

48.0

1.3

The Chase Manhattan Bank N.A. London SL omnibus account
49.5
1.6

47.2

0%

20%

40.0

1.9

40%

1.31%
56.44%

Note: Rounded to the second decimal place

43.1

60%

3,076
131,82280%(Reference) Reporting of major unitholders

100%

Name

Note: Rounded to the first decimal place
DIAM Co., Ltd

Submittedon# of units held
(unit)

2011/5/30

25,72325,723

2011/2/7

22,648
16,107

2011/2/21

15,352
12,822

DIAM Co., Ltd
Mizuho Asset Management Co., Ltd

Type of unitholders End of 12th (as of 2011/4/30)# ofUnitholders

Individual and Others

Ratio
(%)

M izuho Asse t M anage me nt Co., Ltd.

# of Units
held(unit)

Ratio
(%)

6,297

94.9%

18,795

8.0%

Financial Inst.(Incl.Securities co.)

47

0.7%

110,317

47.2%

Other Domestic Co.

99

1.5%

3,757

1.6%

Foreign Co. and Individuals

193

2.9%

100,681

43.1%

6,636

100.0%

233,550

100.0%

Total
Note: Rounded to the first decimal place

Sinko Inv e stme nt Trust M anage me nt Co., Ltd.
Nomura Securities Co., Ltd.

6,541

Nomura Asse t M anage me nt Co., Ltd.

1,616
714
200

NOM URA INTERNATIONAL PLC
Nomura Se curitie s Co., Ltd.
NOM URA SECURITIES INTERNATIOAL, Inc.
The Sumitomo Trust and Banking Co.,Ltd2011/1/21

Nikko Asse t M anage me nt Co., LTd.
Fidelity Investments Japan Limited

13,76013,7602010/12/22

12,546
8,536
4,010

Fide lity Inv e stme nts Japan Limite d
FM R LLC

Notes:
1 Report submitted after PO on 2009/11/16 to 2011/5/30(excluding unitholders thathave less than 10,000 units)
2 Total unitholders increased from 200,000 units to
233,550 units due to PO on 2009/11/16

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

37

Disclosure and IR activities
IR activities for Individual Investors

IR activities for Domestic and International Investors

Disclosure using KRI website

Using KRI website in English / 1on1 meetings

Opening communication page towards private investors
starting mail delivery service

Disclosure in English website on same day(Press release and Financial results)

Page of “Investor Relations”【Reference】 Number of meetings (Including conference calls)

12th period(Apr 2011)
AccessItems

11th period IR

Top page

47,678Domestic Institutional Investor

44

List of portfolio

8,409

Domestic regional investors

5

Press Release

7,393International Investors (Europe)

15

Disclosure Materials

6,591International Investors (US)27

KDRM Site top

4,089

International Investors (Asia)

25

Distributions

3,843

Total

116

Others (occupancy ratio etc.)

13,666Mail delivery service

IR through website & Paper media

IR seminar and large meeting for individual investors

Attending events follows including WEB seminar (Number of Participants: totaled approx. 347)
Events Attended

J-REIT Fair for Individual Investors（Sponsored by ARES）

Date

Venue

2011/3/11

Tokyo International
Form

Web Briefing Sessions towards Individual Investors 2011/2/22（Operated by Nomura Investor Relations）
J-REIT Fair in Osaka（Sponsored by Tokyo Stock Exchange）
Seminar for Individual Investors（Operated by Nomura Investor Relations）

2011/1/29
2010/12/20• NIKKEI News Paper(Electronic version)「J-REIT Special Edition」

WebsiteOsaka Business Park
MATSUSHITA IMP HALL

• Toyo Keizai (Weekly)(Issuance started on 2010/12/20)

Nomura Main Building

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

38

J-REIT market（Investors trend）
Banks

Trading Value by Investor Type (J-REIT)(¥100M)

Buy(left)

Foreign investors
Sell(left)Net(right)(¥100M)

Buy

Sell

Net

（億円）
(¥100M)Jan 2010

Apr 2010

Jul 2010

Oct 2010

Jan 2011

Apr 2011

Investment trust(¥100M)Jan 2010

Apr 2010

Jul 2010

Oct 2010

Jan 2011

Buy

Sell

Net

Apr 2011

Source: Tokyo Stock Exchange （Data from 2010/01 to 2011/04）

Jan 2010

Apr 2010

Jul 2010

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

Oct 2010

Jan 2011

Apr 2011

39

Unit price performance/Transaction volume since IPO
Kenedix Realty Investment Corporation (KRI) price/volume performance

VolumeUnit price(unit)
出来高(口)
Unit投資口価格（円）
price (JPY) Volume

Volume
出来高（口）(unit)
8,000

1,000,000
追加上場時公募価格
PO(¥873,180/unit)
873,180円

7,000

900,000

追加上場時公募価格
PO593,096円(¥593,096/unit)

800,000
6,000

上場時公募価格
PO(¥580,000/unit)
580,000円

PO
追加上場時公募価格(¥252,200/unit)
252,200円

5,000

700,000

6,000
5,000
4,000

Volume
出来高
11/11取得発表後
Announced
11/11
property acquisition
終値：323,000円(¥323,000/unit)

12/15
393,000

400,000

10/5 BOJ
announced monetary
10/5
日銀金融緩和策発表
easing policy (¥337,000/unit)
終値： 337,000円

3,000

600,000

2,000
4,000

投資口
Unit
price
価格(円)
(JPY)

Unit
price
ＫＲＩ終値

350,000
3/11East
Japan
3/11
地震発生
Earthquake
終値：360,500円(¥360,500/unit)

3/15
295,000

300,000

250,000

500,000

1,000
400,000

3,000

0

200,000

300,000
2,000
200,000
1,000

100,0000
2005/7/21 2006/2/1

Note: Date from 2010/5/6 to 2011/5/30. Investment Unit Price based on Closing price.

0
2006/8/9 2007/2/20 2007/8/28 2008/3/12 2008/9/18 2009/4/3 2009/10/15 2010/4/27 2010/11/8 2011/5/24

Notes:
1 Period : IPO to 2011/5/31
2 Price: Closing price (excluding over 8,000 trading volume (2008/10/20:19,728 units))• As of Jun 15th, 2011
Highest price (trading price): ¥988,000 (2007/5/31)
Lowest price (trading price): ¥100,300 (2008/10/20)• Average Trading Volume during 2011: 716 Units(2011/1/4～2011/5/31)

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

40

Summary financial results for 12th period (Apr 2011)- Income statement and Cash flow statement
Comparison between 12th period (to Apr. 2011) and 11th period (to Oct. 2010)（※1）

11th period

12th period

Difference

7,159
5,861
1,298
1,082
242
742
98
8,242
116
8,358
804
634
648
149
140
1,440
3,817
4,424
5,864
64
458
182
4,522
3,835
4
879
114
211
5
8
11
1,231
2,608
2,608
0
2,607
0
2,607

7,208
5,908
1,300
928
250
583
69
8,136
8,136
811
561
643
123
220
1,406
3,767
4,369
5,776
448
211
4,427
3,709
3
935
113
303
5
8
0
1,366
2,346
26
26
35
26
61
2,311
1
2,309
0
2,310

49
47
2
-154
8
-159
-29
-106
-116
-221
7
-73
-5
-26
80
-33
-50
-55
-88
-64
-10
29
-95
-125
-1
56
-1
92
-10
135
-262
26
26
35
26
61
-297
1
-298
-297

Rental and other operating revenues
Rental revenues-real esate
Common area charges
Other lease business revenue
Parking space rental revenues
Utility charge reimbursements
Miscellaneous
Total rental and other operating revenues A
Gain on sale etc.
Operating revenues
Property management fee
Utilities
Taxes
Repairs and maintenance cost
Others （*1）
Depreciation
Total expence related to rent business B
Rental business profit（A－B）
Net operating Income（NOI）
Loss on disposal of real estate
Asset management fee
Others （*2）
Operating expenses
Operating income
Non operating income
Interest expenses
Interest expense on investment corporation bonds
Borrow ing related expense
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Other non-operating expenses
Non-operating expenses
Ordinary income
Subsidy
Extraordinary income
Loss on disaster
Loss on reduction of noncurrent assets
Extraordinary loss
Income before income taxes
Income taxes
Net income
Retained earnings brought forw ard
Unappropriated retained earnings

Basis for calculating cash distribution (¥)
I Retained earnings at the end of period
II Total distribution(Distribution per unit)
III Voluntary retained earnings
Provision for reserve for reduction entry
IV Retained erarnings bring to next periodNote

New properties +293M

Due to seasonal variability of Electricity charges ets.

Gain on sales of KDX Shinjiku-Gyoen Building

Due to seasonal factors of utility (-73) etc

Lease fee of KDX Kobayashi-Doshomachi Building \33M, brokerage etc
Decrease due to as part of existing property is fully depreciatedNew properties +171M

Loss on sale of Court Shin-Okachimachi in the 11th FY
Management fee, Arrorney fee etc

Total new borrowing during the 12th FY is \11.5 billion
Total new borrowing during the 12th FY is \11.5 billion

Subsidy income (ecology renovation for KDX Shin-Yokohama Bldg
Cost of repairs on impaired fixed assets due to the East Japan Earthquake of 2011
Due to energy-saving construction of KDX Shin-Yokohama Building

Cash flow statement (¥M)

11th period

12th period

2,607,121,406
2,541,257,550(10,881)2,310,063,344
2,310,043,050(9,891)65,795,848
68,00820,29411th period

Net cash provided by operating activities
Net cash provided by investing activities
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Notes:
1 Other expenses: Insurance: trust fee etc
2 Other operating expenses: Director’s compensation, asset custody fees, administrative fees. Numbers showing differences is rounded
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

6,664
-615
-2,966
3,081
12,285
15,36712th period

3,546-13,701
7,607-2,547
15,367
12,82041

Summary financials for 12th period (Apr 2011)- Balance sheet
11th period As of Oct. 31, 2010(¥M)

Current assets
Cash and bank deposits
Entrusted deposits
Other current assets
Fixed assets
Property, plant and equipment
Buildings
Land
Buildings in trust
Lands in trust
Intangible assets
Leasehold rightLeasehold right in trust
Right of using w ater facilities in trust
Investment and other assets
Leasehold and gurantee deposits
Long-term prepaid expenses
Deffered assets
Investment corporation bond issuance costs
Investment unit issuance expenses
Total asset

16,528
10,416
5,828
283
234,489
233,438
13,66029,10456,730133,943
286
285
1
764
11
752
61
27
33
251,080

Current liabilities
Accounts payables
Short-term loans payable
Current portion of investment corporation bond
Other account payables
Provision for loss on disaster
Advanced received
Derivative liabilities
OthersFixed liabilities
Investment corporation bonds
Long-term loans payable
Tenant leasehold and security deposit
Tenant leasehold security deposit in trust
Liabilities
Total unitholders' capital
Reserve for reduction entry
Unappropriated retained earnings
Unrealized gain from deferred hedge transactions
Equities
Toal liabilities and unitholders' equity

43,881
499
41,550
212
1,166
7
445
71,466
12,00049,017
1,547
8,902
115,347
133,1292,607-4135,732
251,08012th period As of Apr. 30, 2011

(%)

(¥M)

6.6

(%)

14,352
7,925
5,869
557
247,529
245,826
13,45629,104
61,259142,006
361
285
74
1
1,341
134
1,207
47
22
25
261,928

93.4

0.0

100.0
17.5

5.5

94.5

Property, plant and equipment: +¥12,388M
4 New properties in 12th period

0.0

100.0

47,942409
36,160
9,000
208
30
1,872
261
78,481
3,000
64,555
1,521
9,403
126,423
133,12965
2,309
135,505
261,928

28.5

45.9

54.1
100.0

18.3

Short-term loans payable: -¥5,390M
Decrease mainly due to transferring to long-term payable

30.0

Long-term Loans Payable: +¥15,538M
Increase mainly due to new borrowing for property
acquisitions

48.3

Reserve for reduction entry due to advanceacquisition of land: +¥65M
51.7
100.0

Key indicators
Unitholders’ equity per share of common stocks
Interest bearing debt ratio at end of period
Unitholders’ equity to total asset
Number of properties at end of period
Total leasable floor
Occupancy ratio at end of period

11th period

12th period

Difference¥581,170
40.9%
54.1%
67
267,737.33㎡
93.6%¥580,199
43.0%
51.7%
71
286,237.93㎡
94.6%

¥-971
+2.2%
-2.3%
+4
+18,500.6㎡
+1.0%

Note

New borrowing during the 12th period \11.5B
4 New properties in the 12th period
4 New properties in the 12th period

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

42

(Reference data 1) Office building market environment
23 wards of Tokyo: rent level for large buildings and mediumsized buildings

1.

Rent for medium-sizedbuilding is less volatile
than large building

2.

Break down of office buildings by GFA (tsubo)

More than 3,000 tsubo
5.1%

Large buildings
Medium-sized buildings

500-3,000
tsubo
28.2%
Less than
500tsubo
66.7%

Broad stock of mid-sized
office buildings

Note:
The above data covers rental office buildings located in Tokyo’s central 5 wards that were surveyed by CB Richard Ellis ResearchInstitute. The above data may not include the data of all properties in the said 5 wards (as of 2011/03)
Source: Survey conducted by CB Richard Ellis Research Institute based on KRI’s request “Market survey of Midium-sized building” (2011/05)
Note： Large building is a building with a gross floor area of 3,000 tsubo or more, while medium-sized building is a building with a gross floorarea of 1,000 to 3,000 tsubo
Source：Created by KDX based on the data complied by CBRE (the latest values as of 2011/3)

3.

(JPY/month・tsubo)

Asked rentMonthly data

Vacancy rate（％）
10

24,00022,0004. Changes in rent levels by region

Changes in the offered rent and vacancy ratio in Central Tokyo

8.12

8.91

9.04

9.10

9.19

(JPY ‘000/tsubo)

Tokyo

Osaka

Fukuoka

Nagoya

9
8.92
8

8.09

20,0007

18,000¥17,419/tsubo

6

6.10

5
16,0004.72¥11,902/tsubo¥11,113/tsubo¥9,551/tsubo

4

4.22

3

14,000
2.89

2.65

2

12,0001
0

10,0002003/12

2004/12

2005/12

2006/12

2007/12

2008/12

2009/122010/122011/1

2011/2

2011/3

Note： Survey covers buildings with more than 100 tsubo in Tokyo’s central 5 wards (Chiyoda, Chuo, Minato, Shinjuku, and Shibuya)
Source：Miki Shoji “Latest Office Building Markets in Tokyo’s central 5 wards” (the latest values as of 2011/4)

2011/4

Note： Targeting the properties with a gross floor area of 100 tsubo or more in Tokyo’s central 5 wards (Chiyoda, Chuo, Minato, Shinjuku, and Shibuya)
Source： Created by KRI based on the data complied by Miki Shoji (the latest values as of 2011/4)

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

43

(Reference data 2) About Tokyo Metropolitan Area
2. Population transition of Tokyo

1. Economic foundation etc. of Tokyo(10 thousands)(Timing)(Item)

Japan

Tokyo

2008

Nominal GDP¥494,198.7B¥89,714.9B

1,300
1,257
1,250

2006

# of office

5,910,000

690,0002006# of employee

58.63M

8.7M

October 1,
2009

Total Population

127,51M

12.86

October 1,
2009

Population of
productive age(15-64years old)

81.49M

8.65M

1,206

3. Gross Metropolitan Products estimate (2008)(10B US$)
2,000

1,177

1,150

1,100

Source: Created by KDRM based on the data complied by “Kurashi to toukei 2010(Life and statistics 2010)” on the Tokyo
metropolitan government website

1,500

1,200

1995

2000

2005

Source: Created by KDRM on the data complied by Ministry of Internal Affairs and Communications Statistics Bureau,“Japan Statistical Handbook 2010”

4. No. of Headquarters of Fortune 500 companies (2010)
60
50

Tokyo New York

Tokyo

40
30

1,000
Paris

LondonParis

20

New York London

500
10
0

0
Source: UK Economic Outlook November 2009, PricewaterhouseCoopers
Note:
Figures are calculated by PricewaterhouseCoopers at PPP

Source: Fortune Global 500, 2009, Fortune Magazine

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

44

Management Structure of Asset Management Company
Decision-making process
Deliberation&
Resolution

Deliberation&
Resolution

Preview

Resolution/Reporting

Creation of management guidelines

Corresponding

Compliancedivision

officer

Asset

Approval for transactions with interested parties
Approval for transactions outside ofmanagement guidelines

Management
committee

Compliancecommittee

Approval for transactinos that follow
management guidelines excluding those withinterested parties

Resolution
Boardmeeting
Reporting< Reference >Asset management company’s management fee structure

Rules on transactions with interested parties Transactions with interested parties¾ Asset acquisition: Must not acquire properties for more than appraised price(except for properties pre-acquired by Kenedix Inc. pursuant to the MOU)
¾ Asset disposal: Must not sell properties for less than appraised price＜Reference＞
Meetings held by the various committees, Board of Directors of the AssetManagement Company / Investment Corporation

 Asset management fee¾ Management fee I : 0.15% of total assets¾ Management fee II : 3.0% of distributable amount eachfiscal period¾ Acquisition fee : 0.5% of acquisition price (0.25% ifinterested parties)¾ Disposition fee : capped at 0.5% of transfer price

7th
Period8th
Period9th
Period10th
Period11th
Period12th
PeriodCompliance committee

9

8

8

10

7

7

Asset management
committee

52

44

36

39

32

37

Board of directors

10

8

10

12

11

9

Board of directors ofInvestment Corporation

7

8

8

8

8

7

 Property management fees
¾ Rental management fee: 2% of rent revenues + 2% of
operating revenues from the property (after deducting operating
expenses and before deducting depreciation)¾ Management transfer fee: amount determined in proportion to
the acquisition/sale price(e.g. ¥1-3B → ¥2M, ¥5-10B → ¥2.4M）¾ Construction supervision fee: amount determined in proportion
to the construction costs(e.g. ¥1-5M →5%, ¥10-100M → ¥450,000＋3%)

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

45

Change in shareholders of AM and Memorandum ofUnderstanding
Structure of the Investment Corporation
Unitholders

Memorandum of Understanding (revised in Aug.2010)
Kenedix, Inc./
Kenedix Advisors Co., Ltd.

Real Estate market(the Asset Management Company)
90% Investment

Original network of theAsset Manager

10％ Investment

Kenedix Asset Management, Inc

KDX/KDA Private funds

Kenedix REIT Management, Inc.

Properties held by KDX(incl. development projects)

Brokerage

KDX/KDA’s
warehousing fundWarehousing function
by KDX

Corporate sector

Commit asset management

Financial institutions

Real estate fund

Kenedix Realty Investment
Corporation (J-REIT)

Construction Companies
and developers

Investment

Support-line
Potential acquisition channels

15%
Investment

85%
Investment

MAX-REALTY
15%
Investment
Kenedix, Inc.

35%
Investment

XYMAX
Corporation

Sumitomo
Mitsui
Banking Co.
etc.

Asset Management
ITOCHU
Corporation(Asset Manager)(the Investment
Corporation)

Note: MAX-REALTY is an asset management company founded by XYMAX
Corporation, Sumitomo Mitsui Banking Corporation and others, based on theconcept of “combining real estate and finance consulting knowledge in to one.”The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

46

Kenedix REIT Management, Inc. -Organizational chart
Key members
3 Auditors (part-time)
Haruo Funabashi,
Kenichi Yamasaki,
Ninji Hayashi♦

Haruo Funabashi
Auditor(part-time)

Shareholders’meeting♦

Auditors

After joining the Ministry of
Finance, he served ascommissioner of Tokyo
Customs, Deputy
Commissioner of the
National Tax Administration,
Secretary General of the
Securities and Exchange
Surveillance Commission,
Director General, Minister’s
Secretariat of the National
Land Agency before joining
Kenedix as an auditor♦

Taisuke Miyajima

Board ofdirectors

Worked for Mitsubishi Trust and Banking(debt capital market group, Los Angeles
branch). Seven years of experience in realestate investment advisory division after
joining Kenedix, Inc.
Transferred to Kenedix REIT Management
to become CEO and president

CEO & President♦

Compliance officer
Yuji Kamimura♦

Asset management
committee

Compliancecommittee

Koju Komatsu♦

General Manager,
Investment Management
Division

Representative
director
Taisuke Miyajima♦♦

Worked for c.7 years for Chuo Mitsui
Trust and Banking（Property Sales
Department, Property Investment
Advisory Department, Asset Finance
Department）
Worked for Cititrust & Banking before
Joining Kenedix, Inc．
Property appraiser

Worked for Asahi Urban Development
Corporation, Nihonjisho, others before hejoined Kenedix
Executive Officer & General Manager of
REIT Management Division, Kenedix
Advisors before joining Kenedix REITManagement

Masashi Ohwa

Investment
management div.

Property
management div.

Financialplanning div.

Business
administration div.

Director & General Manager,
Property Management
Division♦

Asset
Investment
group

Asset
Management
group

Property
Managementgroup• Property
acquisition anddisposition• Research andAnalysis of realestate markets• Property
Management• Assessment ofproperty
management/riskmanagement• Property
leasing• Property
Management

Engineeringgroup• Construction
Management

Finance andaccounting
group

Business
administrationgroup• Formulation of• Investor
budget, financial
Relationsstatements
activities• Negotiations with • Procurement of
funds
regulatory
agencies andconcerned bodies• Running
unitholders’ anddirectors’
meetings• Administration/
Accounting/
Human
Resources

IR
group

♦

Worked for 12 years at Chuo Mitsui Trustand Banking, where he was responsible forsecuritization
Joined Kenedix, Inc. after 4 years ofexperience in various securitized paper
investments at Sumitomo Life Insurance

Masahiko Tajima
Director & General Manager,
Financial Planning Division♦♦

Worked for 27 years at Shinsei Bank, Ltd.
Joined Kenedix REIT Management after 8
years of experience as a compliance officer
at Shinsei Bank.

Yuuji Kamimura
Compliance Officer

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell, any specific products.
Please see disclaimer in the final page of this documents.

47

Disclaimer
The contents of this document, including summary notes, quotes, data and other information,
are provided solely for informational purposes and not intended for the purpose ofsoliciting investment in, or as a recommendation to purchase or sell, any specificproducts.
Please be aware that matters described herein may change or cease to exist without priornotice of any kind. This document contains forward-looking statements and anticipationsof future results, based on current assumptions and beliefs in light of currently available
information and resources. Risks and uncertainties, both known and unknown, including
those relating to the future performance of the real estate market in Japan, interest rate
fluctuations, competitive scenarios, and changing regulations or taxation, may cause
Kenedix Realty Investment Corporation (KRI)'s actual results, performance, achievements
and financial performance to be materially different from those explicitly or implicitly
expressed in this document.
With respect to any and all terms herein, including without limitation, this document, theinformation provided is intended to be thorough. However, no assurance or warranties are
given with respect to the accuracy or completeness thereof.
Neither KRI nor Kenedix REIT Management (KDRM) shall be liable for any errors, inaccuracies,
loss or damage, or for any actions taken in reliance thereon, or undertake any obligation to
publicly update the information contained in this document after the date of thisdocument.

The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as a recommendation to purchase or sell,
any specific products. Please see disclaimer in the final page of this documents.