Financial Section
Independent Auditor’s Report

17

Balance Sheet

18

Statement of Income and Retained Earnings

20

Statement of Changes in Net Assets

20

Statement of Cash Flows21

Notes to the Financial Statements

22

Financial Summary (Unaudited)
Historical Operating Trends
For the 24th–28th Fiscal Periods

PeriodOperating revenues(Rental revenues)
Operating expenses(Property-related expenses)
Operating income
Ordinary income
Net income (a)Total assets (b)(Period-on-period change)
Interest-bearing debt (c)(Period-on-period change)
Unitholders’ equity (d)(Period-on-period change)
Unitholders’ capital(Period-on-period change)
Number of investment units issued and outstanding (e)Unitholders’ equity per unit (d)/(e)Total distribution (f)Distribution per unit (f)/(e)(Earnings distributed per unit)(Distribution in excess of earnings per unit)
Return on assets (annualized) (Notes 1 and 2)
Return on net assets (annualized) (Notes 2 and 3)
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)Other references
Number of properties
Total leasable floor area
Occupancy ratio at end of period
Depreciation expenses for the period
Capital expenditures for the period
Leasing NOI (Net Operating Income) (Note 5)
FFO (Funds From Operation) (Note 6)
FFO per unit (Note 7)

Unit

millions of yen
millions of yen
millions of yen
millions of yen
millions of yen
millions of yen
millions of yen
millions of yen%
millions of yen%
millions of yen%
millions of yen
%
unit
yen
millions of yen
yen
yen
yen
%
%
%
%
%

properties
m2%
millions of yen
millions of yen
millions of yen
millions of yen
yen

28th Period
27th Period
26th Period
25th Period
24th Period(as of(as of(as of(as of(as ofApr. 30, 2017) Oct. 31, 2017) Apr. 30, 2018) Oct. 31, 2018) Apr. 30, 2019)15,03913,327
9,137
6,527
5,901
4,751
4,750
410,166(–0.7)
174,600(–2.0)
212,986(+0.1)
206,199(0.0)
404,885
526,041
4,750
11,733
11,733—
1.2 (2.3)
2.2 (4.5)
51.9(+0.4)
42.6(–0.6)
99.9

13,901
13,840
8,244
6,720
5,657
4,590
4,588
414,933(+1.2)
179,600(+2.9)
212,851(–0.1)
206,199(0.0)
404,885525,708
5,061
12,50012,500—1.1 (2.2)
2.2 (4.3)
51.3(–0.6)
43.3(+0.7)
110.2

14,823
14,222
7,974
6,977
6,848
5,829
5,828
422,993(+1.9)
185,850(+3.5)
213,642(+0.4)
206,199(0.0)
404,885
527,661
5,247
12,96012,960—1.4 (2.8)
2.7 (5.5)
50.5(–0.8)
43.9(+0.7)
90.0

15,42014,802
8,271
7,105
7,148
6,109
6,107
437,221(+3.4)
183,050(–1.5)
229,313(+7.3)
220,970(+7.2)
428,510535,141
5,766
13,45813,458—1.4 (2.8)
2.8 (5.5)
52.4(+1.9)
41.9(–2.1)
94.4

15,212
14,595
8,039
6,880
7,172
6,179
6,178
436,753(–0.1)
182,050(–0.5)
229,440(+0.1)
220,970(0.0)
428,510535,437
5,878
13,71913,719—1.4 (2.9)
2.7 (5.4)
52.5(+0.1)
41.7(–0.2)
95.1

97
459,567.57
97.9
2,288
1,018
9,088
7,034
17,37398
456,932.16
99.1
2,293
953
9,413
7,451
18,404

97
466,031.33
99.0
2,295
886
9,539
7,574
18,70897471,041.45
99.1
2,358
925
10,055
7,934
18,516

96468,528.20
99.2
2,369
1,231
10,084
7,983
18,630Notes: 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 24th Fiscal Period are calculated based on a period of 181 days, 184 days for the 25th Fiscal Period, 181 days for the 26th Fiscal
Period, 184 days for the 27th Fiscal Period and 181 days for the 28th 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 properties + Loss on sale of real estate properties
7. FFO per unit = FFO / Number of investment units issued and outstanding (figures below ¥1 rounded down)

16Kenedix Office Investment Corporation17

Balance Sheet
Kenedix Office Investment Corporation
As of April 30, 2019

In thousands of yen

AssetsCurrent assets
Cash and deposits (Notes 3 and 14)
Cash and deposits in trust (Notes 3 and 14)
Operating accounts receivable
Prepaid expenses
Other
Total current assets
Non-current assets
Property, plant and equipment (Notes 4 and 16)
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Buildings in trust (Note 7)
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Total property, plant and equipment, net
Intangible assets (Note 4)
Leasehold right (Note 16)
Leasehold right in trust (Note 16)
Other
Total intangible assets
Investments and other assets
Investment securities (Note 14)
Lease and guarantee deposits
Lease and guarantee deposits in trust
Long-term prepaid expenses
Other (Notes 9, 14, and 15)
Total investments and other assets
Total non-current assets
Deferred assets
Investment corporation bond issuance costs
Investment unit issuance costs
Total deferred assets
Total assets
See accompanying notes to the financial statements.

18

As of April 30, 2019

As of October 31, 2018

¥ 19,675,112
10,959,133
298,778
49,708
6,788
30,989,522¥ 14,050,532
10,973,654
360,261
111,536
14,60625,510,591

17,776,419(5,616,212)
12,160,207
32,618(14,691)
17,927424,662(247,818)
176,843
93,446(57,649)
35,79627,520,902
121,511,168(29,185,084)
92,326,083
343,278(157,234)
186,043
1,604,492(691,969)
912,523
487,000(308,088)
178,912
269,059,794
1,511
402,576,545

17,693,312(5,316,656)
12,376,655
32,618(13,848)
18,770421,857(235,745)
186,11186,586(54,482)
32,10327,520,902
122,006,776(27,897,343)
94,109,432
353,520(159,867)
193,653
1,623,898(708,259)
915,639
476,862(293,197)
183,665
272,828,051
2,933
408,367,919

285,257
350,749
2,424
638,431285,257
351,524
2,889
639,671

1,130,524
10,000122,889
1,178,564
19,4872,461,465
405,676,443

1,114,806
10,000122,889
1,256,374
113,1112,617,181
411,624,771

51,346
36,68488,031¥436,753,997

39,86045,85585,715¥437,221,079

In thousands of yen

Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable (Notes 6 and 14)
Current portion of long-term loans payable (Notes 6, 14 and 15)
Accounts payable-otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Deposits received
Total current liabilities
Non-current liabilities
Investment corporation bonds (Notes 6 and 14)
Long-term loans payable (Notes 6, 14 and 15)
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Other (Notes 14 and 15)
Total non-current liabilities
Total liabilities
Net Assets
Unitholders’ equity
Unitholders’ capital
Surplus
Voluntary retained earnings
Reserve for reduction entry
Total voluntary retained earnings
Unappropriated retained earnings
Total surplus
Total unitholders’ equity
Valuation and translation adjustments
Deferred gains or losses on hedges (Notes 14 and 15)
Total valuation and translation adjustments
Total net assets (Note 10)
Total liabilities and net assets

As of April 30, 2019

As of October 31, 2018

1,575,141
4,200,000
16,700,000
529,777
78,660794
475,104
2,368,366
3,477
25,931,323¥

8,000,000
153,150,000
1,993,121
18,035,523
203,786
181,382,431
207,313,754

6,000,000
157,300,000
1,953,387
18,150,520
12,281
183,416,189
207,907,498

220,970,508

220,970,508

2,475,385
2,475,385
6,178,677
8,654,063
229,624,572

2,134,387
2,134,387
6,107,886
8,242,273
229,212,781(184,329)(184,329)
229,440,242¥436,753,997

100,798
100,798
229,313,580¥437,221,079¥

1,341,577
6,000,000
13,750,000
775,971
62,766795
193,775
2,364,110
2,311
24,491,309

Kenedix Office Investment Corporation

19

Statement of Income and Retained Earnings
Kenedix Office Investment Corporation
For the period from November 1, 2018 to April 30, 2019

In thousands of yen

Operating revenues
Rent revenue - real estate (Note 12)
Other lease business revenue (Note 12)
Gain on sale of real estate properties (Note 12)
Dividends income
Total operating revenues
Operating expenses
Expenses related to rent business (Note 12)
Asset management fees
Directors’ compensation
Asset custody fees
Administrative service fees
Audit fees
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Dividends and redemption-prescription
Interest on refund
Total non-operating income
Non-operating expenses
Interest expenses
Interest expenses on investment corporation bonds
Financing-related expenses
Amortization of investment corporation bond issuance costs
Amortization of investment unit issuance costs
Other non-operating expenses
Total non-operating expenses
Ordinary income
Income before income taxes
Income taxes (Note 9)
Current
Deferred
Total income taxes
Net income
Unappropriated retained earnings

From November 1, 2018
to April 30, 2019

From May 1, 2018
to October 31, 2018¥12,794,187
1,801,706
565,286
51,08815,212,268¥12,730,773
2,071,972
532,490
85,21915,420,456

6,880,478
967,813
8,400
23,11657,50811,80090,167
8,039,284
7,172,984

7,105,951
978,238
8,400
22,68956,337
11,80088,304
8,271,721
7,148,734

67
664
3
736

66
788
330
1,185

808,013
25,392
124,518
3,564
9,171
23,143993,8036,179,916
6,179,916

833,92130,783
133,349
4,159
9,171
29,411
1,040,795
6,109,124
6,109,124

1,238
0
1,238
6,178,677¥ 6,178,677

1,240
(2)
1,238
6,107,886¥ 6,107,886

See accompanying notes to the financial statements.

Statement of Changes in Net Assets
Kenedix Office Investment Corporation
For the period from November 1, 2018 to April 30, 2019

In thousands of yen

Valuationandtranslation
adjustments

Unitholders’ equity

Balance as of April 30, 2018
Changes during the fiscal period
Issuance of new investment units
Provision of reserve for reduction entry
Dividends of surplus
Net income
Net changes of items otherthan unitholders’ equity
Total changes during
the fiscal period
Balance as of October 31, 2018 (Note 5)
Changes during the fiscal period
Provision of reserve for reduction entry
Dividends of surplus
Net income
Net changes of items otherthan unitholders’ equity
Total changes during
the fiscal period
Balance as of April 30, 2019 (Note 5)

Surplus
Voluntary
retained
Unappropriatedearnings
retained
Reserve for
earnings
Unitholders’reduction entry(Note 19)
capital¥206,199,945¥1,552,849¥ 5,828,847

Deferred
gains orlosses onhedges¥ 60,587

Total
net assets¥213,642,230

14,770,562————
581,538———(581,538)(5,247,309)
6,107,886——(5,247,309)
6,107,886

14,770,562—(5,247,309)
6,107,886————

14,770,562—(5,247,309)
6,107,886

—

—

—

—

—

40,211

40,211

14,770,562¥220,970,508

581,538¥2,134,387

279,038¥ 6,107,886

860,576¥ 8,242,273

15,631,139¥229,212,781

40,211¥100,798

15,671,350¥229,313,580———

340,998——(340,998)(5,766,887)
6,178,677—(5,766,887)
6,178,677—(5,766,887)
6,178,677————(5,766,887)
6,178,677

—

—

—

—

—

(285,128)(285,128)—¥220,970,508

340,998¥2,475,385

70,791¥ 6,178,677

411,790¥ 8,654,063

411,790¥229,624,572(285,128)¥(184,329)

126,662¥229,440,242

See accompanying notes to the financial statements.

20

Total
surplus¥ 7,381,696

Total
unitholders’equity¥213,581,642

Statement of Cash Flows
Kenedix Office Investment Corporation
For the period from November 1, 2018 to April 30, 2019

In thousands of yen

Cash flows from operating activities
Income before income taxes
Depreciation
Amortization of long-term prepaid expenses
Interest income
Interest expenses
Amortization of investment unit issuance costs
Amortization of investment corporation bond issuance costs
Decrease (increase) in operating accounts receivable
Decrease (increase) in consumption taxes receivable
Decrease (increase) in prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accounts payable-other
Increase (decrease) in accrued consumption taxes
Increase (decrease) in advances received
Increase (decrease) in deposits received
Decrease in property, plant and equipment due to sale
Decrease in property, plant and equipment in trust due to sale
Decrease (increase) in long-term prepaid expenses
Other, net
SubtotalInterest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Purchases of property, plant and equipment in trust
Purchases of intangible assets
Repayments of tenant leasehold and security deposits
Proceeds from tenant leasehold and security deposits
Repayments of tenant leasehold and security deposits in trust
Proceeds from tenant leasehold and security deposits in trust
Payments of restricted deposits in trust
Proceeds from restricted deposits in trust
Net cash provided by (used in) investing activities
Cash flows from financing activities
Increase in short-term loans payable
Decrease in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from issuance of investment corporation bonds
Redemption of investment corporation bonds
Proceeds of investment unit issuance
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of period (Note 3)

From November 1, 2018
to April 30, 2019

From May 1, 2018
to October 31, 2018

¥ 6,179,916
2,370,002
124,268(67)
833,406
9,171
3,564
61,483—
61,827(159,947)(246,833)
281,328
4,255
1,186
—
4,652,797(46,458)(25,452)
14,104,448
67(817,511)(805)
13,286,198¥ 6,109,124
2,358,994
133,099(66)
864,704
9,171
4,159(52,044)
166,118(34,767)(34,206)
322,777
75,19223,930(257)
2,230,835
4,483,951(82,492)(61,519)
16,516,704
66(881,064)(692)
15,635,014(91,813)(958,884)(155)(46,949)
86,145(560,271)
676,423(8,705)—(904,210)(150,523)(21,870,082)—(140,072)
55,327(213,521)
1,561,793(13,149)
2,829(20,767,399)

3,200,000(5,000,000)
6,850,000(8,050,000)
1,984,949——(5,765,583)(6,780,634)
5,601,354
23,282,416¥ 28,883,770

2,000,000(2,000,000)
8,500,000(9,500,000)—(1,800,000)
14,715,536(5,247,420)
6,668,115
1,535,730
21,746,685¥ 23,282,416

See accompanying notes to the financial statements.

Kenedix Office Investment Corporation

21

Notes to the Financial Statements
Kenedix Office Investment Corporation
For the period from November 1, 2018 to April 30, 2019

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 the Tokyo Stock Exchange. The Investment
Corporation is engaged in the ownership and operation of selected
mainly office buildings in Japan, with a focus on mid-sized officebuildings in the Tokyo metropolitan area. The Investment
Corporation was incorporated on May 6, 2005 as an investment
corporation under the Law Concerning Investment Trusts andInvestment Corporations of Japan, or the Investment Trust Law.
On July 21, 2005, the Investment Corporation was listed on theReal Estate Investment Trust Market of the Tokyo Stock Exchangewith a total of 75,400 investment units issued and outstanding(Securities Code: 8972). Subsequently, the Investment Corporation
raised funds through eight public offerings. Pursuant to theInvestment Trust Law, the Investment Corporation is externallymanaged by a registered asset management company, Kenedix
Real Estate Fund Management, 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 securing­stable 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 andevery opportunity.
During the period ended October 31, 2018, the Investment
Corporation acquired one office building (KDX Hamamatsucho
Place (*1): acquisition price of ¥20,700 million) and sold one officebuilding (KDX Hamamatsucho Dai-2 Building: initial acquisition
price of ¥2,200 million) and one central urban retail property(Frame Jinnan-zaka (49.0% of quasi co-ownership interest): initialacquisition price of ¥4,851 million (*2)) with a disposition price of¥7,297 million.
During the period ended April 30, 2019, the Investment
Corporation sold one central urban retail property (Frame­Jinnan-zaka (51.0% of quasi co-ownership interest): initial­acquisition price of ¥5,049 million (*3)) with a disposition priceof ¥5,253 m­ illion.
At the end of the twenty-seventh and twenty-eighth fiscal­periods (fiscal periods ended October 31, 2018 and April 30,2019), the Investment Corporation had total unitholders’ capital

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(A) Securities
Non-marketable securities classified as other securities are carriedat cost. Cost of securities sold is determined by the moving
average method. Concerning silent partnership (tokumei kumiai,of ¥220,970 million with 428,510 investment units outstanding,respectively. The Investment Corporation owned a portfolio of 97
properties (consisting of 95 office buildings, one central urban retailproperty and one other property) and 96 properties (consisting of
95 office buildings and one other property) with total acquisition
prices of ¥420,884 million and ¥415,835 million at the end of thetwenty-seventh and twenty-eighth fiscal periods, respectively. The
occupancy ratios were approximately 99.1% and 99.2% at theend of the twenty-seventh and twenty-eighth fiscal periods,
respectively.
(*1) T he property name was changed from “CROSS PLACE Hamamatsucho” to“KDX Hamamatsucho Place” on April 1, 2019.
 he acquisition price is an amount equivalent to 49.0% of quasi c­ o-ownership(*2) T
interest in ¥9,900 million, which is the acquisition price of the entire building
initially acquired.
 he acquisition price is an amount equivalent to 51.0% of quasi c­ o-ownership(*3) T
interest in ¥9,900 million, which is the acquisition price of the entire building
initially acquired.

Basis of Presentation
The accompanying financial statements have been prepared inaccordance with the provisions set forth in the Investment Trust
Act of Japan, the Financial Instruments and Exchange Law ofJapan 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 acceptedin the United States of America.
The accompanying financial statements are basically a translation of the audited financial statements that were prepared forJapanese domestic purposes from the accounts and records
maintained by the Investment Corporation and filed with the Kanto
Local Finance Bureau of the Ministry of Finance as required by the
Financial Instruments and Exchange Law. In preparing the accompanying financial statements, relevant notes have been added andcertain reclassifications have been made to the financial statements issued domestically in order to present them in a form thatis more familiar to readers outside Japan. The Investment
Corporation’s fiscal period is a six-month period that ends at theend of April and the end of October each year. The Investment
Corporation does not prepare consolidated financial statements
because it has no subsidiaries.

“TK”) interests, the method of incorporating the amount of equity
equivalent to the portion that corresponds to the net gain or lossof the TK is adopted.

(B) Property, Plant and Equipment (including trust assets)
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:
Buildings
Structures
Machinery and equipment
Tools, furniture and fixtures

22

From November 1, 2018 to April 30, 2019

2– 49 years
2– 45 years
3– 17 years
3– 20 years

From May 1, 2018 to October 31, 2018

2– 49 years
2– 45 years
3– 17 years
3– 20 years

(C) Intangible Assets (including trust assets)
Intangible assets are amortized by the straight-line method.
Leasehold right: Fixed-term land leasehold is amortized over acontractual period of 48 years and 9 months under the straightline method.
(D) Long-term Prepaid Expenses
Long-term prepaid expenses are amortized by the straight-line
method.
(E) Investment Unit Issuance Costs
Investment unit issuance costs are amortized over a period of
three years under the straight-line method.
(F) Investment Corporation Bond Issuance Costs
Investment corporation bond issuance costs are amortized over amaturity period under the straight-line method.
(G)	Accounting Treatment of Trust Beneficiary Interests inReal Estate
For trust beneficiary interests in real estate, which are commonly
utilized in the ownership of commercial properties in Japan, allassets and liabilities in trust are recorded in the relevant balance
sheets and statements of income and retained earnings.
(H) Revenue Recognition
Operating revenues consist of rental revenues including baserents, common area charges and other operating revenues,
which include utility charge reimbursement, parking space rental­revenues and other miscellaneous revenues. Rental revenues are
generally recognized on an accrual basis over the life of eachlease. Utility charge reimbursements are recognized when earned
and their amounts can be reasonably estimated. Reimbursementsfrom tenants including utility charge reimbursements are recorded
on a gross basis and such amounts are recorded both as­revenues and expenses during the fiscal period.
(I) Taxes on Property, Plant and Equipment
Property-related taxes including property taxes, city planning taxes
and depreciable property taxes are imposed on properties on acalendar 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 sellerof property at the time of disposal is liable for these taxes on theproperty from the date of disposal to the end of the calendar year
in which the property is disposed. The seller, however, is generally
reimbursed by the purchaser for these accrued property-related
tax liabilities.
When the Investment Corporation purchases properties, it­typically allocates the portion of the property-related taxes related
to the period following the purchase date of each property throughthe end of the calendar year. The amounts of those allocatedportions of the property-related taxes are capitalized as part of theacquisition costs of the related properties. Capitalized property-­
related taxes amounted to ¥28,631 thousand as of October 31,
2018. There were no capitalized property-related taxes as ofApril 30, 2019. 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.
(J) Income Taxes
Deferred tax assets and liabilities are computed based on the
difference between the financial statements and income tax basesof assets and liabilities using the statutory tax rates.
(K) Consumption Taxes
Transactions subject to consumption taxes are recorded at
amounts exclusive of consumption taxes. Non-deductible consumption taxes applicable to the acquisition of assets are includedin the cost of acquisition for each asset.
(L) Derivative Financial Instruments
The Investment Corporation utilizes interest-rate swap and­interest-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 thecriteria for deferral hedging accounting. However, the Investment
Corporation adopted special treatment for interest-swap andinterest-rate cap contracts if they met the criteria for hedging
accounting under this treatment. The hedge effectiveness forthe interest-rate swap and interest-rate cap contract is assessed
each fiscal period except for those that meet the criteria of­special treatment.
(M) 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 ofmarket value fluctuation, with maturities of three months or lessfrom the date of purchase.
(N) Presentation of Amounts
Amounts of less than one thousand yen have been truncated in
the Japanese financial statements prepared in accordance withJapanese GAAP and filed with regulatory authorities in Japan.
Unless otherwise noted, amounts are rounded down and ratios
are rounded off in the accompanying financial statements.
Totals shown in the accompanying financial statements do notnecessarily agree with the sums of the individual amounts.

Kenedix Office Investment Corporation23

3. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following as of April 30, 2019 and October 31, 2018.
In thousands of yen

As of October 31, 2018

As of April 30, 2019

Cash and deposits
Cash and deposits in trust
Restricted deposits in trust (Note)
Cash and cash equivalents in trust¥14,050,532
10,973,654(1,741,770)¥23,282,416¥19,675,112
10,959,133(1,750,475)¥28,883,770

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

4. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Property, plant and equipment and intangible assets consist of the following as of April 30, 2019.
In thousands of yen

Type of asset

Balance atthe beginningof period

Buildings
Structures
Machinery andequipment
Tools, furniture andfixtures¥ 17,693,312
32,618Land
Property,plant andequipment

Structures in trust
Machinery andequipment in trust
Tools, furniture andfixtures in trust

Other
Total intangible assets
Total

¥

83,107—— ¥ 17,776,419—
32,618¥ 5,616,212
14,691¥ 299,555 ¥ 12,160,207
842
17,927424,662

247,818

12,07293,446

57,649

3,167

—

—

6,860

—

—

—

1,623,898

60,425476,862

15,869353,520

5,952

272,828,051

2,933

397,292,042

443,047,319
290,050

363,784
6,123

659,958¥443,707,278——

1,231,453¥

27,520,902

45,848,050—¥1,552,040 ¥121,511,168
16,194343,278

79,831

1,604,492
487,000

5,731

3,768,257

5,936,372¥29,185,084

157,234

269,059,794

1,421

—
1,138,680

5,423,478

1,511

393,007,244

50,007

912,523

308,088

18,617————2,052,968——

363,784

13,034——660,113¥5,423,478 ¥439,515,408

21,681¥36,300,430

155¥1,231,608

290,050
6,278¥

36,278,749

Note: The amount of decrease during the period is primarily attributable to the sales of the one real estate property.

24

39,911,677

691,969155— ¥315,639

186,043438,855,294¥

35,79627,520,902¥1,973,293 ¥ 92,326,083

30,342,376
4,792

3,854

1,511

362,664,867

402,576,545

774

350,749

— ¥

620

Note

178,912

269,059,794

2,368,608¥

Remarks

176,843

11,0505,423,478—

Netbalance atthe endof period

Depreciation
for the period

86,586

92,773

Depreciation
Accumulated
depreciation

2,805¥1,056,432¥

Balance atthe endof period

421,857

45,755,276

Subtotal
Total property, plant and equipment
Intangible
assets¥¥122,006,776

Land in trust
Construction inprogress in trust

Leasehold rightLeasehold rightin trust

Decreaseduringthe period

27,520,902

Subtotal
Buildings in trust

Increaseduringthe period

285,257
2,424

1,394
638,431¥2,370,002 ¥403,214,977

NoteProperty, plant and equipment and intangible assets consist of the following as of October 31, 2018.
In thousands of yen

Type of asset

Buildings
Structures
Machinery andequipment
Tools, furniture andfixtures¥ 17,943,798
32,618Intangible
assets

Other
Total intangible assets
Total

—

¥ 5,316,656
13,848¥ 299,675 ¥ 12,376,655
875
18,770421,857

235,745

11,818Remarks

540

86,58654,482

2,987

32,103

1,983,122

27,520,902——

27,520,902

47,975,686

105,275

2,325,684

45,755,276

5,620,733

315,356

40,134,543¥118,523,178¥ 4,974,504¥1,490,907 ¥122,006,776¥27,897,343

345,717

23,362

15,559353,520

159,867

10,615

193,653

1,592,359

108,240

76,701

1,623,898

708,259

51,309915,639

466,546

15,822

5,506

476,862

293,197

18,235

16,539,695

3,620,482

272,828,051——

183,665
272,828,051 Notes 1 and 2

83

2,850

—

2,933

—

—

2,933

380,836,725

21,664,475

5,209,158

397,292,042

29,058,667

2,042,251

368,233,375

21,769,751

7,534,843

443,047,319

2,357,607

408,367,919¥¥

428,812,411
290,050—— ¥290,050

34,679,400
¥

4,792

Note 2¥1,962,090 ¥ 94,109,432 Notes 1 and 2

259,908,839¥

Note 2

186,111—

Subtotal
Total property, plant and equipment
Leasehold rightLeasehold rightin trust

10,207

Depreciation
for the period

3,532

Structures in trust
Machinery andequipment in trust
Tools, furniture andfixtures in trust
Land in trust
Construction inprogress in trust

411,649¥ 342,022 ¥ 17,693,312—
32,618

Accumulated
depreciation

83,593

Subtotal
Buildings in trust

91,535—Netbalance atthe endof period

29,504,025

LandProperty,plant andequipment¥

Depreciation

Balance atthe endof period

Decreaseduringthe period

Increaseduringthe period

Balance atthe beginningof period¥— ¥285,257

363,784——

363,784

12,260774

351,524

6,123

—

—

6,123

3,234

612

2,889

659,958¥429,472,370—¥21,769,751—
659,958¥7,534,843 ¥443,707,278

20,287¥34,699,687

1,386
639,671¥2,358,994 ¥409,007,590

Note 1: The amount of increase during the period is primarily attributable to the acquisition of the one real estate property.
Note 2: The amount of decrease during the period is primarily attributable to the sales of the two real estate properties.

5. UNITHOLDERS’ EQUITY
Total number of authorized investment units and total number of investment units issued and outstanding are as follows:
From May 1, 2018
to October 31, 2018

From November 1, 2018
to April 30, 2019

Total number of authorized investment units
Total number of investment units issued and outstanding

2,000,000
428,5102,000,000
428,510

6. 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 ofApril 30, 2019:
Classification

Short-term loans payable

Subtotal
Current portion of long-term loans payable

Drawdown date

Last repayment dateJuly 31, 2018
August 31, 2018
November 30, 2018
November 30, 2018
January 31, 2019
January 31, 2019

July 31, 2019
August 31, 2019
November 30, 2019
November 30, 2019
January 31, 2020
January 31, 2020

July 10, 2014
July 14, 2014
July 31, 2014
August 29, 2014
September 30, 2013
September 30, 2013
November 12, 2018

July 10, 2019
July 31, 2019
July 31, 2019
July 31, 2019
September 30, 2019
September 30, 2019
November 30, 2019

Weighted-averageinterest rate

0.36%
0.31%
0.36%
0.31%
0.31%
0.31%
0.64%
0.68%
0.62%
0.65%
1.06%
1.06%
0.31%

Balance(In thousands of yen)¥¥

1,000,000
1,000,000
1,000,000
200,000
500,000
500,000
4,200,000
500,000
1,000,000
1,000,000
1,000,000
1,800,000
900,000
500,000

Kenedix Office Investment Corporation25

Classification

Current portion of long-term loans payable

SubtotalLong-term loans payable

26

Drawdown date

Last repayment date

Weighted-averageinterest rate

January 31, 2014
March 12, 2014
March 20, 2014
March 29, 2019
March 29, 2019

January 31, 2020
March 12, 2020
March 12, 2020
March 31, 2020
March 31, 2020

0.93%
0.92%
0.91%
0.36%
0.31%

August 30, 2013
November 12, 2013
November 12, 2013
November 29, 2013
November 29, 2013
January 10, 2014
January 31, 2014
March 12, 2014
March 20, 2014
March 20, 2014
March 20, 2014
April 22, 2014
July 10, 2014
July 10, 2014
July 31, 2014
July 31, 2014
July 31, 2014
September 1, 2014
September 1, 2014
September 3, 2014
September 3, 2014
September 22, 2014
September 30, 2014
October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
January 30, 2015
January 30, 2015
February 18, 2015
February 18, 2015
February 18, 2015
February 18, 2015
February 27, 2015
March 12, 2015
March 31, 2015
April 30, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
September 30, 2015
October 30, 2015
October 30, 2015
October 30, 2015
October 30, 2015
October 30, 2015
November 12, 2015
January 29, 2016

August 31, 2020
November 12, 2020
November 12, 2020
November 30, 2020
November 30, 2020
January 31, 2021
January 31, 2021
March 12, 2023
September 20, 2021
March 20, 2022
March 12, 2023
October 31, 2020
July 10, 2021
July 10, 2021
July 31, 2020
October 31, 2020
July 31, 2022
August 31, 2021
August 31, 2021
August 31, 2022
August 31, 2022
September 30, 2020
September 30, 2021
October 31, 2021
October 31, 2023
October 31, 2023
October 31, 2023
October 31, 2024
October 31, 2024
January 31, 2021
January 31, 2025
February 28, 2022
February 28, 2022
February 29, 2024
February 28, 2025
February 28, 2025
February 28, 2025
March 31, 2025
April 30, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
September 30, 2024
October 31, 2024
October 30, 2025
October 30, 2025
October 30, 2025
October 30, 2025
November 30, 2025
January 31, 2022

1.42%
1.07%
1.07%
1.12%
1.12%
1.21%
1.13%
1.36%
1.01%
1.20%
1.35%
0.95%
0.90%
0.90%
0.74%
0.76%
1.01%
0.89%
0.89%
0.98%
0.98%
0.80%
0.89%
0.80%
1.07%
1.13%
1.07%
1.26%
1.26%
0.71%
1.16%
0.91%
0.91%
1.16%
1.31%
1.15%
1.22%
1.27%
0.83%
0.87%
0.87%
0.87%
0.87%
0.87%
0.87%
1.07%
0.99%
1.11%
1.11%
1.11%
1.12%
1.17%
0.59%

Balance(In thousands of yen)¥

3,700,000
1,800,000
3,000,000
1,000,000
500,000
16,700,000¥ 1,500,000
2,000,000
500,000
1,000,000
900,000
1,300,000
2,300,000
1,800,000
4,000,000
3,000,000
2,000,000
2,900,000
2,000,000
500,000
2,700,000
300,000
2,200,000
800,000
500,000
1,000,000
950,000
2,700,000
1,000,000
3,000,000
2,000,000
1,500,000
1,000,000
2,000,000
1,000,000
1,500,000
1,500,000
1,250,000
350,000
1,700,000
1,250,000
2,100,000
1,000,000
2,500,000
2,300,000
500,000
500,000
500,000
500,000
500,000
500,000
2,000,000
1,000,000
1,500,000
2,000,000
2,500,000
2,500,000
1,000,000
2,500,000

Classification

Long-term loans payable

Subtotal

Drawdown date

Last repayment date

Weighted-averageinterest rate

January 29, 2016
January 29, 2016
January 29, 2016
February 18, 2016
February 18, 2016
March 31, 2016
April 28, 2016
April 28, 2016
April 28, 2016
July 29, 2016
August 2, 2016
October 31, 2016
October 31, 2016
October 31, 2016
October 31, 2016
October 31, 2016
December 12, 2016
December 28, 2016
January 16, 2017
January 31, 2017
March 28, 2017
June 30, 2017
August 10, 2017
August 31, 2017
September 21, 2017
September 21, 2017
September 21, 2017
September 21, 2017
September 21, 2017
October 31, 2017
November 13, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 28, 2017
December 28, 2017
December 28, 2017
March 12, 2018
March 26, 2018
March 26, 2018
July 31, 2018
August 20, 2018
August 20, 2018
August 20, 2018
August 20, 2018
August 20, 2018
August 31, 2018
August 31, 2018
August 31, 2018
October 31, 2018
October 31, 2018
October 31, 2018
March 28, 2019
March 29, 2019

January 31, 2022
January 29, 2026
January 29, 2026
February 18, 2026
February 18, 2026
March 31, 2026
April 30, 2024
April 30, 2026
April 30, 2026
July 31, 2026
July 31, 2026
October 31, 2024
October 31, 2026
October 31, 2026
October 31, 2026
October 31, 2026
November 30, 2026
December 28, 2026
January 31, 2027
January 31, 2027
March 31, 2027
June 30, 2027
July 28, 2027
August 31, 2023
March 31, 2024
September 30, 2025
March 31, 2027
September 21, 2027
September 30, 2027
October 31, 2027
November 13, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
December 28, 2025
December 28, 2026
December 28, 2027
March 31, 2028
March 31, 2027
March 31, 2028
July 31, 2028
August 31, 2025
August 31, 2028
August 31, 2028
August 31, 2028
August 31, 2028
August 31, 2025
August 31, 2025
August 31, 2028
October 31, 2028
October 31, 2028
October 31, 2028
March 31, 2029
March 31, 2029

0.64%
1.07%
1.02%
1.00%
1.00%
0.90%
0.65%
0.84%
0.87%
0.61%
0.54%
0.67%
0.88%
0.76%
0.73%
0.83%
0.98%
0.95%
0.86%
0.85%
0.85%
0.85%
0.80%
0.54%
0.56%
0.68%
0.73%
0.87%
0.85%
0.81%
0.93%
0.90%
0.82%
0.97%
0.94%
0.87%
0.90%
0.87%
0.74%
0.88%
0.86%
0.91%
0.81%
0.90%
0.99%
0.70%
1.00%
1.00%
1.00%
0.97%
0.70%
0.72%
1.01%
1.01%
0.91%
1.01%
0.84%
0.84%

Balance(In thousands of yen)¥

500,000
2,000,000
1,800,000
1,000,000
500,000
1,000,000
2,000,000
2,000,000
1,000,000
1,500,000
1,000,000
1,000,000
2,500,000
1,000,000
4,000,000
1,500,000
500,000
1,500,000
500,000
700,000
500,000
1,500,000
3,500,000
1,000,000
1,000,000
1,500,000
1,000,000
1,000,000
2,500,000
2,500,000
3,000,000
1,400,000
1,200,000
1,000,000
1,000,000
1,000,000
800,000
600,000
500,000
500,000
500,000
1,500,000
1,000,000
1,000,000
500,000
500,000
1,000,000
1,000,000
500,000
500,000
500,000
300,000
700,000
1,500,000
1,000,000
500,000
1,400,000
2,950,000
153,150,000

Kenedix Office Investment Corporation27

Classification

Investment corporation bonds

Subtotal
Total

Drawdown date

Last repayment date

Weighted-averageinterest rate

July 25, 2014
April 28, 2016
July19, 2017
July19, 2017
February 15, 2019

July 25, 2024
April 28, 2028
July 19, 2022
July 16, 2027
February 15, 2024

1.18%
0.90%
0.26%
0.64%
0.39%

Balance(In thousands of yen)¥

2,000,000
1,000,000
1,000,000
2,000,000
2,000,000
8,000,000¥182,050,000

The following summarizes short-term loans payable, long-term loans payable and investment corporation bonds outstanding as of
October 31, 2018:
Classification

Short-term loans payable

Subtotal
Current portion of long-term loans payable

SubtotalLong-term loans payable

28

November 30, 2017
January 31, 2018
January 31, 2018
March 30, 2018
July 31, 2018
August 31, 2018

Last repayment dateNovember 30, 2018
January 31, 2019
January 31, 2019
March 29, 2019
July 31, 2019
August 31, 2019

Weighted-averageinterest rate

November 12, 2013
November 29, 2013
March 28, 2012
March 28, 2012
March 12, 2014
March 31, 2014
March 30, 2016
July 10, 2014
July 14, 2014
July 31, 2014
August 29, 2014
September 30, 2013
September 30, 2013

November 12, 2018
November 30, 2018
March 28, 2019
March 28, 2019
March 31, 2019
March 31, 2019
March 31, 2019
July 10, 2019
July 31, 2019
July 31, 2019
July 31, 2019
September 30, 2019
September 30, 2019

0.82%
0.84%
1.77%
1.77%
0.78%
0.76%
0.17%
0.64%
0.68%
0.62%
0.65%
1.06%
1.06%

August 30, 2013
November 12, 2013
November 12, 2013
November 29, 2013
November 29, 2013
January 10, 2014
January 31, 2014
January 31, 2014
March 12, 2014
March 12, 2014
March 20, 2014
March 20, 2014
March 20, 2014
March 20, 2014
April 22, 2014
July 10, 2014
July 10, 2014
July 31, 2014
July 31, 2014
July 31, 2014
September 1, 2014
September 1, 2014
September 3, 2014
September 3, 2014
September 22, 2014
September 30, 2014

August 31, 2020
November 12, 2020
November 12, 2020
November 30, 2020
November 30, 2020
January 31, 2021
January 31, 2020
January 31, 2021
March 12, 2020
March 12, 2023
March 12, 2020
September 20, 2021
March 20, 2022
March 12, 2023
October 31, 2020
July 10, 2021
July 10, 2021
July 31, 2020
October 31, 2020
July 31, 2022
August 31, 2021
August 31, 2021
August 31, 2022
August 31, 2022
September 30, 2020
September 30, 2021

1.42%
1.07%
1.07%
1.12%
1.12%
1.21%
0.93%
1.13%
0.92%
1.36%
0.91%
1.01%
1.20%
1.35%
0.95%
0.90%
0.90%
0.74%
0.76%
1.01%
0.89%
0.89%
0.98%
0.98%
0.80%
0.89%

Drawdown date

0.36%
0.31%
0.36%
0.36%
0.36%
0.32%

Balance(In thousands of yen)¥

2,000,000
500,000
500,000
1,000,000
1,000,000
1,000,000
6,000,000¥ 1,000,000
200,000
1,400,000
1,000,000
450,000
2,500,000
1,000,000
500,000
1,000,000
1,000,000
1,000,000
1,800,000
900,000
13,750,000¥ 1,500,000
2,000,000
500,000
1,000,000
900,000
1,300,000
3,700,000
2,300,000
1,800,000
1,800,000
3,000,000
4,000,000
3,000,000
2,000,000
2,900,000
2,000,000
500,000
2,700,000
300,000
2,200,000
800,000
500,000
1,000,000
950,000
2,700,000
1,000,000

Classification

Long-term loans payable

Drawdown date

Last repayment date

Weighted-averageinterest rate

October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
October 31, 2014
January 30, 2015
January 30, 2015
February 18, 2015
February 18, 2015
February 18, 2015
February 18, 2015
February 27, 2015
March 12, 2015
March 31, 2015
April 30, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
August 31, 2015
September 30, 2015
October 30, 2015
October 30, 2015
October 30, 2015
October 30, 2015
October 30, 2015
November 12, 2015
January 29, 2016
January 29, 2016
January 29, 2016
January 29, 2016
February 18, 2016
February 18, 2016
March 31, 2016
April 28, 2016
April 28, 2016
April 28, 2016
July 29, 2016
August 2, 2016
October 31, 2016
October 31, 2016
October 31, 2016
October 31, 2016
October 31, 2016
December 12, 2016
December 28, 2016
January 16, 2017
January 31, 2017
March 28, 2017
June 30, 2017
August 10, 2017
August 31, 2017
September 21, 2017
September 21, 2017
September 21, 2017
September 21, 2017
September 21, 2017

October 31, 2021
October 31, 2023
October 31, 2023
October 31, 2023
October 31, 2024
October 31, 2024
January 31, 2021
January 31, 2025
February 28, 2022
February 28, 2022
February 29, 2024
February 28, 2025
February 28, 2025
February 28, 2025
March 31, 2025
April 30, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
August 31, 2022
September 30, 2024
October 31, 2024
October 30, 2025
October 30, 2025
October 30, 2025
October 30, 2025
November 30, 2025
January 31, 2022
January 31, 2022
January 29, 2026
January 29, 2026
February 18, 2026
February 18, 2026
March 31, 2026
April 30, 2024
April 30, 2026
April 30, 2026
July 31, 2026
July 31, 2026
October 31, 2024
October 31, 2026
October 31, 2026
October 31, 2026
October 31, 2026
November 30, 2026
December 28, 2026
January 31, 2027
January 31, 2027
March 31, 2027
June 30, 2027
July 28, 2027
August 31, 2023
March 31, 2024
September 30, 2025
March 31, 2027
September 21, 2027
September 30, 2027

0.80%
1.07%
1.13%
1.07%
1.26%
1.26%
0.71%
1.16%
0.91%
0.91%
1.16%
1.31%
1.15%
1.22%
1.27%
0.83%
0.87%
0.87%
0.87%
0.87%
0.87%
0.87%
1.07%
0.99%
1.11%
1.11%
1.11%
1.12%
1.17%
0.59%
0.64%
1.07%
1.02%
1.00%
1.00%
0.90%
0.65%
0.84%
0.87%
0.61%
0.54%
0.67%
0.88%
0.76%
0.73%
0.83%
0.98%
0.95%
0.86%
0.85%
0.85%
0.85%
0.80%
0.54%
0.56%
0.68%
0.73%
0.87%
0.85%

Balance(In thousands of yen)¥

3,000,000
2,000,000
1,500,000
1,000,000
2,000,000
1,000,000
1,500,000
1,500,000
1,250,000
350,000
1,700,000
1,250,000
2,100,000
1,000,000
2,500,000
2,300,000
500,000
500,000
500,000
500,000
500,000
500,000
2,000,000
1,000,000
1,500,000
2,000,000
2,500,000
2,500,000
1,000,000
2,500,000
500,000
2,000,000
1,800,000
1,000,000
500,000
1,000,000
2,000,000
2,000,000
1,000,000
1,500,000
1,000,000
1,000,000
2,500,000
1,000,000
4,000,000
1,500,000
500,000
1,500,000
500,000
700,000
500,000
1,500,000
3,500,000
1,000,000
1,000,000
1,500,000
1,000,000
1,000,000
2,500,000

Kenedix Office Investment Corporation

29

Classification

Long-term loans payable

Subtotal
Investment corporation bonds

Subtotal
Total

Drawdown date

Last repayment date

Weighted-averageinterest rate

October 31, 2017
November 13, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 7, 2017
December 28, 2017
December 28, 2017
December 28, 2017
March 12, 2018
March 26, 2018
March 26, 2018
July 31, 2018
August 20, 2018
August 20, 2018
August 20, 2018
August 20, 2018
August 20, 2018
August 31, 2018
August 31, 2018
August 31, 2018
October 31, 2018
October 31, 2018
October 31, 2018

October 31, 2027
November 13, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
November 30, 2027
December 28, 2025
December 28, 2026
December 28, 2027
March 31, 2028
March 31, 2027
March 31, 2028
July 31, 2028
August 31, 2025
August 31, 2028
August 31, 2028
August 31, 2028
August 31, 2028
August 31, 2025
August 31, 2025
August 31, 2028
October 31, 2028
October 31, 2028
October 31, 2028

0.81%
0.93%
0.90%
0.82%
0.97%
0.94%
0.87%
0.90%
0.87%
0.74%
0.88%
0.86%
0.91%
0.81%
0.90%
0.99%
0.70%
1.00%
1.00%
1.00%
0.97%
0.70%
0.72%
1.01%
1.01%
0.91%
1.01%

July 25, 2014
April 28, 2016
July 19, 2017
July 19, 2017

July 25, 2024
April 28, 2028
July 19, 2022
July 16, 2027

1.18%
0.90%
0.26%
0.64%

Balance(In thousands of yen)¥

2,500,000
3,000,000
1,400,000
1,200,000
1,000,000
1,000,000
1,000,000
800,000
600,000
500,000
500,000
500,000
1,500,000
1,000,000
1,000,000
500,000
500,000
1,000,000
1,000,000
500,000
500,000
500,000
300,000
700,000
1,500,000
1,000,000
500,000
157,300,000¥ 2,000,000
1,000,000
1,000,000
2,000,000
6,000,000¥183,050,000

7. REDUCTION ENTRY
The amount of reduction entry of property, plant and equipment acquired by government subsidy is as follows:
In thousands of yen

Buildings in trust¥26,230¥26,230

8. PER UNIT INFORMATION

Net asset value per unit
Net income per unit
Weighted-average number of units (units)

As of October 31, 2018

As of April 30, 2019

Yen

From November 1, 2018
to April 30, 2019

¥535,437¥ 14,418
428,510

From May 1, 2018
to October 31, 2018

¥535,141¥ 14,373
424,933

The weighted-average number of units outstanding of 428,510 and 424,933 as of April 30, 2019 and October 31, 2018, respectively, wasused for the computation of the amount of net income per unit. Net income per unit after adjusting for residual units is not included because
there were no residual investment units.

30

9. 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 distributein excess of 90% of its net income for the fiscal period in order tobe able to deduct such amounts. If the Investment Corporation
does not satisfy all of the requirements, the entire taxable incomeof the Investment Corporation will be subject to regular corporate

Statutory tax rate
Deductible cash distributions
Provision of reserve for reduction entry
Others
Effective tax rateincome taxes. The Investment Corporation distributed in excessof 90% of its distributable income in the form of cash distributions
totaling ¥5,878 million and ¥5,766 million for the fiscal periods
ended April 30, 2019 and October 31, 2018, respectively. Therefore, such distributions were treated as deductible distributions forpurposes of corporate income taxes. The effective tax rate on theInvestment Corporation’s income was 0.02% for the fiscal periods
ended April 30, 2019 and October 31, 2018, respectively. The
following table summarizes the significant differences between thestatutory tax rate and the effective tax rate.

From November 1, 2018
to April 30, 201931.51%(29.97)(1.53)
0.01
0.02%

From May 1, 2018
to October 31, 201831.51%(29.74)(1.76)
0.01
0.02%

The significant components of deferred tax assets and liabilities as of April 30, 2019 and October 31, 2018 are as follows:
In thousands of yen

Deferred tax assets
Enterprise tax payable
Amortization of leasehold right
Deferred gains or losses on hedges
Subtotal
Valuation allowance
Total deferred tax assets

As of April 30, 2019

As of October 31, 2018

¥

¥

30
4,117
64,376
68,524(68,493)
¥
30

30
3,873
—
3,904
(3,873)¥30

10. 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.

11. RELATED-PARTY TRANSACTIONS(A) Parent Company, Major Corporate Unitholders and Other
Twenty-eighth fiscal period (From November 1, 2018 to April 30, 2019) and Twenty-seventh fiscal period (From May 1, 2018 to
October 31, 2018):
Not applicable(B) Affiliated Companies and Other
Twenty-eighth fiscal period (From November 1, 2018 to April 30, 2019) and Twenty-seventh fiscal period (From May 1, 2018 to
October 31, 2018):
Not applicable(C) Fellow Subsidiary Companies and Other
Twenty-eighth fiscal period (From November 1, 2018 to April 30, 2019) and Twenty-seventh fiscal period (From May 1, 2018 to
October 31, 2018):
Not applicable(D) Directors, Major Individual Unitholders and Other
Twenty-eighth fiscal period (From November 1, 2018 to April 30, 2019) and Twenty-seventh fiscal period (From May 1, 2018 to
October 31, 2018):
Not applicable

Kenedix Office Investment Corporation

31

12. BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, AND GAIN AND LOSSON SALE OF REAL ESTATE PROPERTY
Rent revenue - real estate, expenses related to rent business, and gain and loss on sale of real estate property for the fiscal periods from
November 1, 2018 to April 30, 2019 and from May 1, 2018 to October 31, 2018 consist of the following:
In thousands of yen

Rental and other operating revenues
Rent revenue - real estate
Rental revenues
Common area charges
Subtotal
Others:Parking space rental revenues
Utility charge reimbursement
Miscellaneous
Subtotal
Total rent revenue - real estate
Property-related expenses
Expenses related to rent business
Property management fees and facility management fees
Utilities
Taxes
Repairs and maintenanceInsurance
Trust fees
OthersDepreciation
Total expenses related to rent business
Gain on sale of real estate properties
Revenue from sale of investment properties
Cost of investment properties
Other sales expenses
Gain on sale of real estate properties

From November 1, 2018
to April 30, 2019

From May 1, 2018
to October 31, 2018¥10,984,209
1,809,977
12,794,187¥10,893,102
1,837,671
12,730,773

509,859
1,030,420
261,426
1,801,706¥14,595,893

519,171
1,230,853
321,947
2,071,972¥14,802,746¥ 1,382,522
1,121,738
1,224,581
403,049
20,14932,642
326,404
2,369,390¥ 6,880,478¥ 1,378,278
1,241,455
1,225,685
568,517
19,88632,791
280,955
2,358,382¥ 7,105,951¥ 5,253,000
4,652,797
34,915¥ 565,286¥ 7,297,000
6,714,787
49,722¥ 532,490

13. LEASESThe 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. The future minimum rental revenues under existing non-cancelable operating leases as of April 30, 2019 andOctober 31, 2018 are as follows:
In thousands of yen

Due within one year
Due after one year
Total

32

As of April 30, 2019¥2,210,585
6,719,211¥8,929,796

As of October 31, 2018

¥1,621,774
5,956,433¥7,578,208

14. FINANCIAL INSTRUMENTS
Twenty-eighth fiscal period (from November 1, 2018 to April 30, 2019)(A) Overview(1) Policy for financial instruments
The Investment Corporation procures essential funds for acquiringproperties and undertaking the repayment of loans primarily
through bank loans and the issuance of investment corporation
bonds and new investment units. The Investment Corporation
uses derivatives for the purpose of hedging its exposure tochanges in interest rates and does not enter into derivatives for
speculative or trading purposes. Management of surplus funds isundertaken 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 theissuer and risk of fluctuation of value of its property.
Loans payable and investment corporation bonds are usedprimarily for procuring funds necessary for the acquisition ofproperties and have a redemption date of a maximum of approximately 10 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
transactions) in order to reduce such risk.
Interest-rate swap transactions are used as derivative financial
instruments. Utilizing interest-rate swap transactions, theInvestment Corporation fixes its interest expense for long-termloans payable bearing interest at a variable rate. With regard tohedge accounting methods, hedging instruments and hedged
items, hedge policy, and the assessment of the effectiveness ofhedging activities, please see Note 2 (L) “Derivative Financial
Instruments.”(3) Risk management for financial instruments(a)	Monitoring of market risk (the risks arising from­fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap transactions
in order to minimize risk arising from fluctuations in interest rates
on funds procured. The Investment Corporation periodicallyreviews 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 onscheduled due dates) associated with procurement offunds
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 as­regularly checking the balance of cash reserves.
(4)	Supplementary explanation of the estimated fair valueof financial instruments
The fair value of financial instruments is based on their quoted
market price, if available. When there is no quoted market priceavailable, 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 fairvalue. Moreover, the contract amounts, etc. of derivative transactions in “(B) Estimated Fair Value of Financial Instruments” do notindicate the market risk of derivative transactions.

(B) Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet as of April 30, 2019 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(1) Cash and deposits(2) Cash and deposits in trust
Subtotal(1) Short-term loans payable(2) Current portion of investment corporation bonds(3) Current portion of long-term loans payable(4) Investment corporation bonds(5) Long-term loans payable
Subtotal
Derivative transactions (*)

Carrying value

Estimated fair value¥ 19,675,112
10,959,133
30,634,246
4,200,000—
16,700,000
8,000,000
153,150,000¥182,050,000(184,329)¥ 19,675,112
10,959,133
30,634,246
4,200,000—
16,737,975
8,096,200
155,121,843¥184,156,018(184,329)

Difference

¥

—
—
—
—
—
37,97596,2001,971,843¥2,106,018—(*) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing the net liability position.

Kenedix Office Investment Corporation33

*1	Methods to determine the estimated fair value of financial instruments and other matters related to securities and­derivative transactions
Assets(1) Cash and deposits and (2) Cash and deposits in trust
Since these items are settled in a short period of time, their carrying value approximates fair value.
Liabilities(1) Short-term loans payable
Since these items are settled in a short period of time, their carrying value approximates fair value.
(2) Current portion of investment corporation bonds and (4) Investment corporation bonds
The fair value of investment corporation bonds is based on quoted market prices.
(3) Current portion of long-term loans payable and (5) 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 15 “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¥1,130,524

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above TK interests are not included in
the preceding table.
*3 Redemption schedule for receivables

Due within 1 year or less
(In thousands of yen)

Cash and deposits
Cash and deposits in trust
Total¥19,675,112
10,959,133¥30,634,246*4 Redemption schedule for loans payable and investment corporation bonds
In thousands of yen

Short-term loans payable
Investment corporation bonds
Long-term loans payable
Total

Due within 1 year
or less

Due after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years¥ 4,200,000—
16,700,000¥20,900,000

¥

¥

¥

¥

—
—
19,600,000¥19,600,000——
21,700,000¥21,700,000—
1,000,000
10,950,000¥11,950,000—
2,000,000
10,200,000¥12,200,000

Due after
5 years¥—
5,000,000
90,700,000¥95,700,000

Twenty-seventh fiscal period (from May 1, 2018 to October 31, 2018)(A) Overview(1) Policy for financial instruments
The Investment Corporation procures essential funds for acquiringproperties and undertaking the repayment of loans primarily
through bank loans and the issuance of investment corporation
bonds and new investment units. The Investment Corporation
uses derivatives for the purpose of hedging its exposure tochanges in interest rates and does not enter into derivatives for
speculative or trading purposes. Management of surplus funds isundertaken 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 theissuer and risk of fluctuation of value of its property.

34

Loans payable and investment corporation bonds are usedprimarily for procuring funds necessary for the acquisition ofproperties and have a redemption date of a maximum of approximately 10 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 usedas derivative financial instruments. Utilizing interest-rate swap andinterest-rate cap transactions, 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 assessmentof the effectiveness of hedging activities, please see Note 2 (L)“Derivative Financial Instruments.”

(3) Risk management for financial instruments(a)	Monitoring of market risk (the risks arising from­fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap and­interest-­rate cap transactions in order to minimize risk arising fromfluctuations in interest rates on funds procured. The Investment
Corporation periodically reviews the value of the property andfinancial condition of the issuer with regard to investment­securities.
(b)	Monitoring of liquidity risk (the risk that the Investment
Corporation may not be able to meet its obligations onscheduled due dates) associated with procurement offunds
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 as­regularly checking the balance of cash reserves.

(4)	Supplementary explanation of the estimated fair valueof financial instruments
The fair value of financial instruments is based on their quoted
market price, if available. When there is no quoted market priceavailable, 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 fairvalue. Moreover, the contract amounts, etc. of derivative transactions in “(B) Estimated Fair Value of Financial Instruments” do notindicate the market risk of derivative transactions.

(B) Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet as of October 31, 2018 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(1) Cash and deposits(2) Cash and deposits in trust
Subtotal(1) Short-term loans payable(2) Current portion of investment corporation bonds(3) Current portion of long-term loans payable(4) Investment corporation bonds(5) Long-term loans payable
Subtotal
Derivative transactions (*)

Carrying value

Estimated fair value¥ 14,050,532
10,973,654
25,024,186
6,000,000—
13,750,000
6,000,000
157,300,000¥183,050,000
100,798¥ 14,050,532
10,973,654
25,024,186
6,000,000—
13,768,881
6,050,100
157,675,962¥183,494,943
100,798

Difference

¥

—
—
—
—
—
18,881
50,100375,962¥444,943—(*) The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing the net liability position.

*1	Methods to determine the estimated fair value of financial instruments and other matters related to securities and­derivative transactions
Assets(1) Cash and deposits and (2) Cash and deposits in trust
Since these items are settled in a short period of time, their carrying value approximates fair value.
Liabilities(1) Short-term loans payable
Since these items are settled in a short period of time, their carrying value approximates fair value.
(2) Current portion of investment corporation bonds and (4) Investment corporation bonds
The fair value of investment corporation bonds is based on quoted market prices.
(3) Current portion of long-term loans payable and (5) 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 15 “DERIVATIVE TRANSACTIONS.”

Kenedix Office Investment Corporation35

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

Carrying value (In thousands of yen)

Investment securities¥1,114,806

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above TK interests are not included in
the preceding table.
*3 Redemption schedule for receivables

Due within 1 year or less
(In thousands of yen)

Cash and deposits
Cash and deposits in trust
Total¥14,050,532
10,973,654¥25,024,186*4 Redemption schedule for loans payable and investment corporation bonds
In thousands of yen

Short-term loans payable
Investment corporation bonds
Long-term loans payable
Total

Due within 1 year
or less¥ 6,000,000—
13,750,000¥19,750,000

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

¥

¥

¥

¥

—
—
18,600,000¥18,600,000——
21,300,000¥21,300,000—
1,000,000
17,050,000¥18,050,000——
9,300,000¥9,300,000

Due after
5 years¥—
5,000,000
91,050,000¥96,050,000

15. DERIVATIVE TRANSACTIONS
The following summarizes the contracted amount and the fair value of interest-rate swap contracts as of April 30, 2019:(1) Hedge accounting not applied
Not applicable(2) Hedge accounting applied
Contracted amount (In thousands of yen)

Hedge accounting method

Type of derivative transactions

Hedged items

Principle method

Interest-rate swaps:
Receive/floating andpay/fixed

Long-term loans
payableSpecial treatment ofinterest-rate swaps

Interest-rate swaps:
Receive/floating andpay/fixed

Long-term loans
payableTotal

Maturing after
1 year¥ 28,250,000 ¥ 28,250,000

88,750,000

74,050,000¥117,000,000 ¥102,300,000

Fair value(In thousands of yen)Calculation method for
applicable fair value¥(184,329)

Based on theamount provided
by counterparty
financial institutions*¥(184,329)(*) Interest-rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fair value is included in thefair value of the hedged long-term loans payable.

36

The following summarizes the contracted amount and the fair value of interest-rate swap contracts as of October 31, 2018:(1) Hedge accounting not applied
Not applicable(2) Hedge accounting applied
Contracted amount (In thousands of yen)

Hedge accounting method

Type of derivative transactions

Hedged items

Principle method

Interest-rate swaps:
Receive/floating andpay/fixed

Long-term loans
payableSpecial treatment ofinterest-rate swaps

Interest-rate swaps:
Receive/floating andpay/fixed

Long-term loans
payableTotal

Maturing after
1 year

¥ 23,900,000 ¥ 23,900,000

93,900,000

82,550,000¥117,800,000 ¥106,450,000

Fair value(In thousands of yen)Calculation method for
applicable fair value¥100,798

Based on theamount provided
by counterparty
financial institutions*¥100,798(*) Interest-rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fair value is included in thefair value of the hedged long-term loans payable.

16. INVESTMENT AND RENTAL PROPERTIES
Twenty-eighth fiscal period (from November 1, 2018 to April 30, 2019)
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:

As of October 31, 2018

Net change

As of April 30, 2019

Fair value
As of April 30, 2019
(In thousands of yen)¥409,004,701¥(5,792,000)¥403,212,700¥474,257,000

Carrying value (In thousands of yen)

*1: The carrying value represents the acquisition cost less accumulated depreciation.
*2: Fair value at the end of the fiscal period is the appraisal 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 decrease factors were the sales of one
property totaling ¥4,652,797 thousand and depreciation amounting to ¥2,369,390 thousand.

Income and loss in the fiscal period ended April 30, 2019 for real estate for rental purposes is listed in Note 12 “BREAKDOWN OF RENTALAND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, AND GAIN AND LOSS ON SALE OF REAL ESTATEPROPERTY.”
Twenty-seventh fiscal period (from May 1, 2018 to October 31, 2018)
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, 2018

¥396,308,119

Net change¥12,696,581

As of October 31, 2018

¥409,004,701

Fair value
As of October 31, 2018
(In thousands of yen)

¥465,637,000*1: The carrying value represents the acquisition cost less accumulated depreciation.
*2: Fair value at the end of the fiscal period is the appraisal value determined by outside appraisers. Fair value at the end of the fiscal period under review of Frame
Jinnan-zaka (51.0% of quasi co-ownership interest) that was sold on November 1, 2018 is calculated based on the sale price (¥5,253,000 thousand) in the transaction
agreement on May 14, 2018.
*3: Among changes in the amount of real estate for rental purposes that occurred during the fiscal period under review, principal increase/decrease factors were theacquisition of one property totaling ¥20,841,117 thousand, the sales of two properties totaling ¥6,714,787 thousand and depreciation amounting to ¥2,358,382
thousand.

Income and loss in the fiscal period ended October 31, 2018 for real estate for rental purposes is listed in Note 12 “BREAKDOWN OFRENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, AND GAIN AND LOSS ON SALE OF REAL ESTATEPROPERTY.”

Kenedix Office Investment Corporation

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17. SEGMENT AND RELATED INFORMATION
Twenty-eighth fiscal period (from November 1, 2018 to April 30, 2019)(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
revenues on the statement of income and retained earnings.
(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 revenues on the statement ofincome and retained earnings.
(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 ofproperty, 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 revenues on the statementof income and retained earnings.
Twenty-seventh fiscal period (from May 1, 2018 to October 31, 2018)(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
revenues on the statement of income and retained earnings.
(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 revenues on the statement ofincome and retained earnings.
(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 ofproperty, 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 revenues on the statementof income and retained earnings.

18. SIGNIFICANT SUBSEQUENT EVENTS
Not applicable38

19. DISTRIBUTIONS

I. Retained earnings at the end of period
II. Total distributions
Distributions per unit
III. Voluntary reserve (provision)
Provision of reserve for reduction entry
IV. 	Retained earnings brought forward to
the next period
Method of calculating distribution amount

Yen

Twenty-eighth fiscal period(From November 1, 2018 to April 30, 2019)¥6,178,677,968¥5,878,728,690¥
13,719Twenty-seventh fiscal period(From May 1, 2018 to October 31, 2018)¥6,107,886,067¥5,766,887,580¥
13,458¥ 299,949,278¥ 340,998,487¥—
In accordance with the policy stipulated in
Article 35 (1) of its Articles of Incorporation,
the Investment Corporation determines thatthe amount of distribution shall exceed theamount equivalent to 90% of its distributableprofit as stipulated in Article 67-15 of the Act
on Special Measures Concerning Taxation,and shall be up to the amount of its profits
as the ceiling. Following this policy, theInvestment Corporation has decided that, of
the amount remaining after the provision ofreserve for reduction entry as stipulated in
Article 66-2 of the Act on Special Measures
Concerning Taxation is deducted from unappropriated retained earnings, it shall distribute the outstanding ¥5,878,728,690 as profit
distribution.
In addition, the Investment Corporation
decided not to distribute cash in excess of
distributable profit, stipulated in Article 35 (2)of its Articles of Incorporation.

¥—
In accordance with the policy stipulated in
Article 35 (1) of its Articles of Incorporation,
the Investment Corporation determines thatthe amount of distribution shall exceed theamount equivalent to 90% of its distributableprofit as stipulated in Article 67-15 of the Act
on Special Measures Concerning Taxation,and shall be up to the amount of its profits
as the ceiling. Following this policy, theInvestment Corporation has decided that, of
the amount remaining after the provision ofreserve for reduction entry as stipulated in
Article 66-2 of the Act on Special Measures
Concerning Taxation is deducted from unappropriated retained earnings, it shall distribute the outstanding ¥5,766,887,580 as profit
distribution.
In addition, the Investment Corporation
decided not to distribute cash in excess of
distributable profit, stipulated in Article 35 (2)of its Articles of Incorporation.

Kenedix Office Investment Corporation

39