Kenedix Realty Investment Corporation
4th Period Results (ending Apr. 2007)
June 2007
Kenedix REIT Management, Inc.
http://www.kdx-reit.com/eng/index.html

06071T291 - 81460391

Disclaimer
The contents of this document, including summary notes, quotes, data and other information, areprovided solely for informational purposes and not intended for the purpose of soliciting investmentin, or as a recommendation to purchase or sell, any specific products.
Please be aware that matters described herein may change or cease to exist without prior notice ofany kind. This document contains forward-looking statements and anticipations of 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 performanceof the real estate market in Japan, interest rate fluctuations, competitive scenarios, and changing
regulations or taxations, 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, the information
provided is intended to be thorough. However, no absolute assurance or warranties are given withrespect 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 this document.

1

06071T291 - 81460391

Management Policies of Kenedix Realty Investment (KRI)
Commitments since our
IPO in July 2005

Achievements

Future management policies

External growth

Portfolio management

Achieve asset size of¥200B by end of
2007

Portfolio size
increased to 77
properties worth¥197B♦ Improve portfolio quality including replacement ofproperties♦ Increase the ratio of office buildings further♦ Continue capital-cost-oriented investments

Internal growth

Maintain/improve thelevel of NOI yield

NOI yield in the 4th
Period: 5.3%

Financial performance

Aim to achieve asset size of ¥400B comprised
mainly with office properties in the mid-to-long term

Rating acquisition
and issuance ofinvestment
corporation bonds

Acquisition of A3/A+
rating, issuance of
5-year and 10-yearbonds

New investments♦ Investment emphasized on mid-sized office buildingsin the Tokyo metropolitan area
♦ Investment in development projects♦ Utilize further diversified asset acquisition strategies

Management
of ofexisting♦ Improve the level
NOI yieldassets
by raising the rent
level
♦ Improve the competitiveness of the properties
through adequate capital expenditure and CS
surveys

Steadily improve the amount of distribution perunit, and aim to be the No.1 REIT in the
mid-sized office market
2

SECTION 1

4th Period Financial Results (ending Apr. 2007)

06071T291 - 81460391

Highlights in the 4th period♦ ¥146.7B (64 properties) at the end of the 3rd period→¥197.0B (77 properties) at June 11, 2007
External
growth♦ Investment in 15 office buildings (approx.¥51.8B acquisition value) achieved in 6 months♦ Increased opportunities for external growth through revision of memorandum of understanding (MOU)
with Kenedix Group (April 2007)♦ 5.3% of portfolio NOI yield
Internal
growthFinancialperformance♦ Increases in new rents (average of 15%) based on high move out rates (14.8% annualized in the 4th
period) of mid-sized office buildings♦ Diversification of repayment dates and extension of repayment period by issuing (5-year and 10-year)
investment corporation bonds♦ Equity finance raised through 2nd global offering (May 22, 2007)♦ Conservative financing strategy

4th period
results♦ Results for the 4th period– Distribution per unit: ¥13,682– FFO per unit:¥20,7724

06071T291 - 81460391

4th period Financial Results—Performance Highlights
Income statement of rent business

Performance
3rd
period4th
periodNet income¥2,124m¥2,148m

Total assets¥160,314m¥188,400m

Disposal income
Rental and other operating revenues(A)

Net assets¥90,933m¥90, 877m

157,000 units

Net assets per unit
Distribution per unit

Number of units
outstanding

3rd
period4th
period¥5,288m¥5,778m

9.3%

¥157m

¥130m

(17.2%)¥5,131m¥5,647m

10.1%

Property-related expenses (B)¥2,397m¥2,607m

8.8%

157,000 units

Rental business profit (A-B)¥2,734m¥3,040m

11.2%¥579,192¥578,839

Net operating income (NOI)¥3,869m¥4,283m

10.7%¥13,529¥13,682

Depreciation¥1,135m¥1,243m

9.5%

64

72

-

2

2

-

Operating revenues

Number of properties
Total leasable floor area
Occupancy rate

192,085.34m
95.3%

Rate ofchange223,322.77m
95.9%

Financial Ratios
3rd
period4th
periodNotes

Interest-bearing debt ratio

38.7%

Increased by approx. 8.3% but expected to
47.0% decrease in the 5th Period due to capitalincrease by equity offering in May 2007

Equity ratio

56.7%

48.2% Decreased by approx. 8.5%.

FFO
FFO pay-out ratio
FFO per unit

¥3,102m
68.5%¥19,759¥3,261m

Net income + Depreciation for the period– Gain on real estate disposals

65.9% Distribution / FFO¥20,772 –5

06071T291 - 81460391

5th period Earnings Forecasts
Operating forecasts for 5th period (to October 2007)
2nd period results 3rd period results 4th period results(to April 2006)(to October 2006)(to April 2007)

5th period forecasts(to October 2007)

2,871

5,288

5,778

7,060

Operating expenses
Property-related expenses(excl. depreciation)
Depreciation
Operating income
Non-operating expenses
Interest expense

1,527
615

2,723
1,261

3,091
1,363

3,709
1,763

650
1,343
246
164

1,135
2,565
442
375

1,243
2,686
547
479

1,422
3,350
670
586

Ordinary income
Net income

1,103
1,101

2,125
2,124

2,148
2,148

2,681
2,680

Number of units outstanding

79,370157,000

157,000

200,000

Distribution per unit (Yen)
NOI
FFO

13,884
2,256
1,752

13,5293,869
3,102

13,682
4,283
3,261

13,4005,296
4,102(Reference) Trends in the numberof properties

32→35

59→64

64→72

72→77
(forecast)(\M)

Operating revenues

8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
OperatingOperatingrevenues
income
1st period (to October 2005)
3rd period (to October 2006)
5th period (to October 2007)

Notes¥130M profit booked on sale of residential properties in the
4th period
Property tax and city planning tax were ¥206M in the 4th
periodAssumption of the 5th period borrowings ¥63.5M,
investment corporation bond issue ¥12M
Assumption of the issue of new units through third-party
allotment (2,100 units) resolved in May 2007
Rental revenues – Property-related expenses + Depreciation
Net Income + Depreciation for the period –Gain on real estate disposals-

Preconditions of 5th period forecasts

Ordinary
Net
incomeincome
2nd period (to April 2006)
4th period (to April 2007)

5 properties acquired on June 1,
2007 operate for 5 months

LTV as of the end of period isapproximately 35%

No profit booked on sale ofproperties in the 3rd period and4th period

Property tax and city planning tax
increase ¥13.7M compared withthose in the 4th period

6

SECTION 2

Stronger Focus on Office Properties

New Investment Guidelines—Investment in Mid-Sized Office
Properties in the Tokyo Metropolitan Area

06071T291 - 81460391

New investment guidelines♦ Invest in mid-sized office properties in the Tokyo metropolitan area
♦ Consider to invest in only central urban retail located in major
flourishing areas♦ Aim to improve portfolio quality (location, size, specifications, etc.)
through replacement of properties

Strongportfolio
focusing on
mid-sized
officeproperties♦ Increase the ratio of office buildings in the portfolio further by
replacing properties based on their types
400
350
300

(¥B)

250
200

64 properties¥146.7B

150
100
50
0

72 properties¥175.0B

77 properties¥197.0B

70.0%

35 properties¥81.4B

58.7%

54.6%
17.9%
27.4%

59.2%
15.2%
25.5%

10.9%
30.2%

9.1%
24.5%

8.1%
21.8%

1st period(Oct 31, 05)

2nd period(Apr 30, 06)

3rd period(Oct 31, 06)

4th period(Apr 30, 07)

4th period results
announced(Jun 11, 07)

29 properties¥61.0B
52.7%
16.2%
31.0%

31 properties¥69.1B

Just after IPO(Aug 1, 05)

OfficeCentral urban retailPortfolio expansion

66.2%

Residential

Achieve
portfolio size of¥400B in the
mid-to-long term
・・・・ Future vision

Portfolio expansion＋
Improvement in quality of theportfolio
806071T291 - 81460391“KENEDIX Selection”−Office Properties
Investment in 15 office buildings (approx. ¥51.8B acquisition value) achieved in 6 months
Comparison of average gross floor area
for office buildings

Properties acquired in the 4th period

8,000

7,373

(m²)

7,000

A-30 KDX NishiGotanda Building

A-31 KDX MonzenNakacho Building

A-32 KDX ShibaDaimon Building

6,000
5,000

A-33 KDX Okachimachi A-34 KDX Hon-Atsugi
Building
Building

4,000
Properties
as of the endof 4th period(39 props.)

A-35 KDX Hachioji
Building

A-37 KDX Ochanomizu
Building

A-36 KDX Niigata
Building

A-38 KDX NishiShinjuku Building

5,187

4,906

A-39 KDX Toranomon
Building

Properties Current Properties
acquired in(44 props.)
the 5th period(5 props.)

Aiming to improve portfolio quality(location, size, specifications, etc.)

Properties acquired in the 5th period by June 11, 2007

Comparison of average acquisition price ofoffice buildings
4,400

4,500

A-41 KDX Shinjuku
286 Building

A-43 KDX Hakata
Building

A-42 KDX Kyoto
Karasuma Building

A-44 KDX Sendai
Building
Other regional areas

Tokyo metropolitan area

Appraisal-value based yield for properties acquired in the 4th and 5th periods (up toJune 11, 2007)
Properties acquired in the 5th(% )Properties acquired in the 4th period

5.2

5.4

5.4

6.1
5.1

5.8

period by June 11, 2007

6.5
4.9

5.1

4.5

4.6

5.1

5.5

5.7

5.8

4,000
(¥M)

A-40 Toranomon
Toyo Building

3,500
3,000

2,974

3,136

2,500
Properties
as of the endof 4th period(39 props.)

Properties Current Properties
acquired in(44 props.)
the 5th period(5 props.)

A-30 A-31 A-32 A-33 A-34 A-35 A-36 A-37 A-38 A-39 A-40 A-41 A-42 A-43 A-44
Tokyo metropolitan area

Other regional areas

Note： Yield based on appraisal value that were calculated by data available from property appraisal reports and should not be
understood as data indicating actual or future profitability (NCF under Direct capitalization method / Appraisal value)

9Strategies to Acquire Diversified Properties and Case Study ofAsset Management (KDX Nishi-Gotanda Building)

06071T291 - 81460391

Leverage of a strong asset base (portfolio) and our expertise on managing mid-sized office buildings

A-30 KDX Nishi-Gotanda Building♦

Location:♦♦♦

Rentable area:
3,875.43m2
Completion date: November 1992
Acquisition price: ¥4,200M■Annual revenue: Up approx. ¥43M

Estimated rent at
acquisition (3–8F)¥189M per year

Nishi-Gotanda,
Shinagawa Ward, Tokyo■Construction cost: Approx. ¥48M

Actual contracted
rent (3–8F)¥232M per year

4th period (Nov.1 2006 – Apr.30 2007)
October November

DecemberJanuary

February

March

April

May June

Renovation works for lease-up

Former owner

8F Vacant

All tenants on 3rd to 8th
floors (occupying about
926 tsubo) moved out at
the end of October.

6F Vacant

6F Vacant

5F Vacant

5F
Occupied
4F Vacant

7F Vacant

4F Vacant
3F VacantEntrance hall

Elevator hall

2F
Occupied
1F
Occupied

Negotiation forproperty acquisitionDue diligence ofproperty & Market
survey8F
Occupied
7F
Occupied
6F
Occupied
5F
Occupied
4F
Occupied
3F
Occupied2F
Occupied
1F
Occupied

7F Vacant

3F Vacant2F
Occupied
1F
Occupied

Acquisition

Leasing activities

By the end of Dec:
24 inquiries and 6
visitors for preview

Acquired with an
occupancy rate of
21.0% (6 vacant
floors)

8F VacantFeb: Hosted apreviews with 36
participants in 2
days

Jan: 33 inquires
and 8 visits forpreview

Conclusion of rental agreements

Mar: Acquired
Leasingagreement for
5F
Feb: Acquired
Leasingagreement for
6F-8F

Apr: Acquired
leasingagreement for3F and 4F

10

06071T291 - 81460391“KENEDIX Selection” —Acquired Properties Highlights
A-40 Toranomon Toyo Building♦

A-42 KDX Kyoto Karasuma Building

Location：Toranomon, Minato-ku,
Tokyo

♦

Location：Nakagyo-ku, Kyoto♦

Site area：1,788.67m2♦

Site area： 869.01m2♦

GFA：12,632.68m2♦

GFA： 8,346.83m2♦

Year built： October 1982♦

Year built： August 1962♦

Acquisition price ：¥5,400M♦

Acquisition price ： ¥9,850M♦

Acquisition date ：June 2007♦

Acquisition date ： June 2007♦

Occupancy at acquisition： 97%♦

Occupancy at acquisition：100%♦ Rent space on standard floors of c. 625m2, which is relatively
big for buildings in this area, making this office building quite
competitive♦ Full renovation of the air conditioning equipment and renewal
works of exterior walls in addition to seismic strengthening
works by Taisei Corporation completed in October 2005

♦ 2 minutes on foot from Kyoto Municipal Subway Karasuma
Line “Karasuma Oike” station. Highly visible building located at
the crossing of Karasuma-dori (high street running throughKyoto city center from North to South) and Sanjo-dori♦ Business district around Karasuma-dori with many mid- tohigh-rise office and retail buildings♦ Rent space on standard floors of c. 1,180m2 providing relative
high competitiveness based on its location and size merit1106071T291 - 81460391

Revision of MOU and Kenedix Development Projects
Revised MOU support line to improve information flow
The support line in the MOU was revised in April 2007 to reflect
the increased importance of REITs to the Kenedix Group

Before revision

After revision

Kenedix Group
proprietary investment properties(including development
projects) / brokerage deals

Kenedix Group
proprietary investment properties(including development
projects) / brokerage deals

Promotion of development
projects by Kenedix

Four office buildings expected
to be completed in 20081(Total project size: ¥35.5B)

Pensionfunds
KRI has first preference rights
to information regarding
Kenedix’s proprietary investment
properties meeting KRI’s
investment criteria, including
those that are currently being
developed
KDX Harumi Project<Reference> Kenedix’s commitment to developing investment properties

2003

2004

2005

2006

¥4.4B

¥6.4B

¥29.8B¥62.4B

Source: KENEDIX, INC.

2007 and 2008
(Planned)¥97.8B

Start of construction March 2007
Located in Chuo Ward, Tokyo Expected completion March 2008

Minami-Honmachi
2 chome project
Located in Chuo Ward, Osaka

Start of construction January 2008
Expected completion March 2009

Note：
1 We have no current plans to acquire any of these four
properties. However, we may consider acquiring one or moreof them in the future as we deem appropriate

1206071T291 - 81460391

Property Acquisition Opportunities through the Kenedix Group
Kenedix Group’s management strategy and key investment funds broken down by intended use ofproperties
The principal preferred investors for properties sourced by Kenedix by type of
property
Increased commitment toDiversified investment
Respond to global movements ofdevelopment projects

opportunities

funds and investment needs

Nursing/healthcare
facilities and hotels

Investments in overseas properties 1

Stone heaven

Major investors

Property use

KDX Harumi project 1, 3

Mid-sized officeproperties and central
urban retail properties 2

Kamatori Nursing Home (tentative) 1, 3

Wood creek

Industrial distribution
centers 1

Residential
and other properties 1

Urban andsuburban retailproperties 1

Japan Logistics
Fund, Inc.

Real estate
investment funds(pension funds,
private placement
funds, etc.)

Challenger
Kenedix Japan
Trust(Australian Listed
Property Trust)

Notes:
1 These properties have not been acquired by the REIT. The REIT does not plan to acquire them as of June 11, 2007
2 These are properties acquired by the REIT
3 This is a conceptual drawing based on the design specifications and therefore completed building may differ substantially from the drawing

13

SECTION 3

Management of Existing Properties

Turnover Ratio for Office Building and Newly-Contracted Rent
Levels (4th period)

06071T291 - 81460391

Actual rent increases for new contracts1, 2, 3
Newly-contracted rent levels(Leased floor area basis)

Rent
decrease
1 property
2%

4th period

Rent
increase
22 properties
98%

Distribution of increases in
newly-contracted rent levels(Leased floor area basis)
Over 30% increase
8.4%
20–30%
increase
25.6%
10–20% increase
27.2%

0–5% increase
21.4%

Past and estimate vacation rates for office
portfolio (annualized)
1stperiod2nd
period3rd
period4th
5th period
period (Forecast)

12.2%

2.7%

6.1%

14.8%

7.4%

5–10%
increase
17.4%

Average increase rate approx. 15%

Comparison between the rent for new contracts and the averagerent of relevant office building at the end of the previous monthshows that rents were increased by approx. 15% on average for
98% of all office properties.

Amount ofincrease/month¥7,593 thousand

Total increase/month

Rent increase realized at contract renewal

Out of the office buildings in Tokyo metropolitan area, officebuildings
withrentswitthat
are lower
than the leasing guideline
Rent
increaserealized
existing
tenants
were picked out (14.9% of the office portfolio). The data showsthat we have succeeded in approx. 30% of the cases to increase
rents by approx. 6%
Notes:
1
2
3

Amount ofincrease/month¥ 9,383 thousand¥ 1,790 thousand

4th period results (new rent contracts signed during the 4th period)
Comparison with typical floor (offices above floors 1 and 2, excluding special usage) average rents(The one case of rental decline in the Tokyo metropolitan area was signed at the same level as the previous tenant)
Limited to office usage above floor 2

15

06071T291 - 81460391

Maintain NOI Yield and Occupancy Rates
Portfolio’s leasing NOI yield1 (annualized)
3rd period

4th period results

4th period* (Before tax adjusted)

Office

5.2%

5.3%

5.5%

Central urban
retail

4.7%

5.2%

5.2%

Residential

4.7%

5.4%

5.5%

Total

5.2%

5.3%

5.5%

Development in gross rent levels(25 office buildings under management during the 3rd period)

Gross rent
revenue
3,200
Gross rent
revenue

Notes:
1 Leasing NOI yield: Real estate operating revenues (before depreciation) divided
by acquisition price
2 NOI yield after property tax and city planning taxes are recorded as expenses

Gross rent
revenue
Loss fromvacancies

Loss fromvacancies(¥M)

Loss fromvacancies

Trend of occupancy rate by type

3,000

Improvement in occupancy
rate for residential
properties

100%
95%
90%

2,800

85%

3rd period

Renewal period for
Frame Jinnan-zaka

80%
Oct-06Total

Dec-06
Feb-07
OfficeCentral urban retail

Apr-07
Residential

4th period

5th period(Forecast)Note:
1 Shows gross rent and loss from vacancies (incl. free rent) based on the ARGUS model ofthe 25 office buildings in our portfolio at the beginning of the 3rd period,

16

06071T291 - 81460391

Pursuit of Customer Satisfaction
Renovation works and rent increases during the 3rd period of properties that were subject to the 1st
CS survey
Total satisfaction
Description
Rent increases realized so far
Name of property

level* (2nd period)

KDX Nihonbashi 313
Building◎

KDX Hirakawacho
Building○

Higashi-Kayabacho
Yuraku Building○

KDX Nakano-Sakaue
Building△

Kanda Kihara
Building○

KDX Koishikawa
Building○(3rd period)(4th period)

Renovation of indoor stairways (① Increaseof illumination intensity, ② Installation of
new signs to indicate floor numbers, etc.)
Installation of an air conditioner in theelevator hall, renovation of bath rooms andinstallation of electric water heaters for bathrooms
Increased illumination intensity of elevatorhall, renovation of bath rooms (on 3F), andinstallation of a mechanical security system
Installation of security cameras andintercoms, and renovation of air conditioner
in the entrance hallInstallation of electric water heaters for bathrooms, renovation of electric and air
conditioning equipment
Replacement of doormats, installation of
additional lights in the elevator hall

Rent increase for passing rent of 3
floors (approx. 30%)
Rent increase for passing rent of 3
floors (approx. 4 to 8%) and newcontracts (approx. 13%)
Rent increase for passing rent (approx.
8%) and new contracts for 2 floors(approx. 13%)
Rent increase for new contracts(approx. 15%)
Rent increase for passing rent (approx.
6%)
Rent increase for passing rent of 6
floors (approx. 5%)
Improve profitability*Total satisfaction level◎ Mildly satisfied to satisfied○ Neutral to mildly satisfied△ Mildly unsatisfied to neutral

Planning to implement the
2nd CS survey of officebuildings during the 5th
periodDuring 4th period
and 5th period

Measures taken to improve profitability♦

Increase of rent level of new leaseagreements and ongoing leaseagreements♦

Reviewed reducing building management
costs

CS-based work record, budgets(¥B)

3rd period 4th period 5th periodCS–basedER–based2
Lease3/value increase
Other work
Total
Depreciation
1

1.7
1.6
2.2
0.9
6.4
11.3

1.3
0.6
7.8
1.5
11.3
12.4

0.6
3.2
10.0
1.3
15.1
14.2

Notes:
1 Work in accordance with tenant requirements based on customer
satisfaction survey, and with other individual tenant requirements
2 Based on engineering reports
3 Conversions, display rooms etc.

Increase in rental
revenue andproperty value
CS increase

CS survey
Ongoing internal
During 2nd During 5th
growthperiodImprove competitivenessof properties
During 3rd period and4th period
Maintenance andcapitalimprovement

periodIdentify theneeds of tenants

Tenant customer satisfaction survey♦

In conjunction with J. D. Power
Asia Pacific, Inc.

♦

Five satisfaction levels for eachcategory

17

SECTION 4

Financial Strategies / IR Strategies

06071T291 - 81460391

Continue with Stable Financing Strategy
Diversified financing methods to include issuance of investment corporation bonds and lengthened
average debt maturity
Debt Maturity

Diversified maturities to avoid refinancing
risk

Fixed interest
rate

Effectively fixed interest rates to mitigate
interest rate risk

Amount of debt maturing in each year (as of June 13, 2007)
200
162.5

150

110 115

100

72.5

90

Variable interest debt
¥10B
12.9%

110
20

50

90

50

30

30

Fixed interest debt
¥67B
87.0%

0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Current borrowings (¥65.0B)
Investment corporation bonds (¥12.0B)
Notes:
1
Debts due each year
2
After repayment of short-term floating-rate borrowings of ¥4.75B on June 13, 2007

Rating acquisition and issuance of investment corporation
bonds

Secured diversified financing methods Borrowing capacity
estimation

(¥B)
As of
4th
June 13,
period07

Shelf-registrations

Credit rating
Organization

RatingDate obtained

Moody’s Investors Service
Issuer Credit Rating ： A3 Feb. 2006
Japan Credit Rating Agency, Ltd. Senior Debt ：A+ Dec. 2006

Investment corporation bonds
SeriesInterest
Amount rate
PeriodFirst series
bonds

¥9.0B

Second series
¥3.0B
bonds

Notes：
1“Fixed interest debt” includes loans that were converted to fixed from floating through interest
rate swap and investment corporation bonds
2
Second decimal place omitted for ratios
3
After repayment of the short-term floating-rate borrowings of ¥4.75B on June 13, 2007

Drawdown date

Acquiredrating

5 years

Mar 15, 2007

A+ (JCR)
A3 (Moody’s)

2.37% 10 years

Mar 15, 2007

A+ (JCR)
A3 (Moody’s)

1.74%

Public offering of 10-year bonds
within the shortest period of timefrom IPO

Securities Planned
Term for planned
type
offering size issuance
Investment
Feb 15, 2007¥100B
corporation
Feb 14, 2009bonds
May 7, 2007Investment¥100B
May 6, 2009securities

Credit facility agreement
Debt cap Available until
LenderThe Bank of¥2.5B
Mar 19, 2008
Tokyo-Mitsubishi UFJ
Credit facility secured
from a highly-ratedbankTotal asset
Debt
D/E ratio
Borrowing
capacity
estimation up
to 50%

188
89
47%

2,22
77
35%

11

69

The estimation above
assumes repayment of theshort-term borrowings of¥11.5B after equity finance →Substantial increase inborrowing capacity1906071T291 - 81460391

Strengthen Management Capabilities of J-REIT
Price per unit ＝Distribution per unit
Dividend yield

J-REIT management capabilities
Distribution
per unit♦ Improvement in NOI level by increasing rents♦ Equity financing not undermining interest of existing
unitholders♦ Improvement in quality of the portfolio throughproperty replacement

Dividendyield♦ Further increase in the ratio of office buildings♦ Expansion in size through continued investments
focusing on optimal capital cost

We aim to steadily improve our
distributions per unit, and to
become the No.1 REIT thatemphasizes on midmid-sized officebuildings♦ Proactive IR activities

Cap rate

Capital cost

♦ NOI yield from property leasingin the 4th period: c. 5.3%

♦ Average interest rate on debt in the 4th
period: c. 1.5%
♦ Average leverage ratio in the 4th Period:c. 40%♦ Dividend yield level at the end of 4th
Period:c. 3.0%– Unit price as of the end of Period (Apr30, 2007): ¥898,000– Distribution per unit: ¥13,682♦ Depreciation in the 4th Period:c. -1.5%

Net asset worth per unit
4th Period (actual) c. ¥579,000
5th Period (Forecast) c. ¥625,000(after PO of new units on May 22, 2007)

one of the J-REITs with thehighest net asset worth

20

SECTION 5

Appendix

06071T291 - 81460391

KRI Unitholders
Investment units by unitholder
Individuals
and Others
22.7%

End of
1st period

Type of unitholder (as of April 30, 2007)

Other Domestic Foreign
Type ofCorporation Corporation and unitholder
Individuals
Individuals and Others
12.4%
16.0%
Financial Inst.
Financial Insto
Other Domestic Foreign Corporation(incl. Securities companies)(incl. Securities companies) Corporation and Individuals
Other Domestic
Corporation
47.0%
29.0%
8.5%
Foreign Corporation and
Financial Insto
Other Domestic Foreign Corporation
Individuals(incl. Securities companies) Corporation and Individuals
Total
6.8%
34.6%
48.0%
Financial Insto(incl. Securities companies)
49.0%

End of
2nd period

Individuals
and Others
15.6%

End of
3rd period

Individuals
and Others
10.6%

End of
4th period

Other Domestic Foreign Corporation
Individuals
Financial Instoand Others (incl. Securities companies) Corporation and Individuals
6.4%
40.3%
6.8%
46.5%

0%

20%

40%

60%

80%

# of
unitholder(% )# of units
held (unit)

(% )

4,682

93.5%

10,731

6.8%

100

2.0%

73,049

46.5%

84

1.7%

10,022

6.4%

142

2.8%

63,198

40.3%

5,008

100.0%

157,000

100.0%

100%(Reference) Reporting of major unitholders1# of units
Submitted on held (unit)

Top 10 unitholders (as of April 30, 2007）
Name

Japan Trustee Services Bank, Ltd. (Trust Acct.)
NikkoCititrust and Banking Co., Ltd. (Investment Trust Acct.)
State Street Bank & Trust Company
Trust & Custody Services Bank, Ltd. (Securities Investment
Trust Acct.)
Kenedix, Inc.
The Master Trust Bank of Japan, Ltd. (Trust Acct.)
Citigroup Global Markets Ltd. (CGML) – London Equity
The Bank of New York Treaty JASDEC Account
UBS AG London Asia Equities
Gibraltar Life Insurance （General other account）
TOTAL

Ratio
(%)2

# of units held
(unit)(% )Cohen & Steers Capital Management Inc. 2007/5/15

12,751

8.12%

14,239
9,909
9,819

9.06
6.31
6.25

Nikko Asset Management Co., Ltd.

2007/1/17

11,296

7.19%

9,385

5.97

Nomura Securities Co., Ltd.

2007/5/22

10,481

6.68%

7,850
7,636
6,243
5,175
3,853
3,599
77,708

5.00
4.86
3.97
3.29
2.45
2.29
49.49

Mizuho Securities Co., Ltd.

2007/5/22

9,613

6.12%

Resona Holdings, Inc.

2007/5/18

8,732

5.56%

Kenedix Inc.

2007/4/16

8,048

5.13%

Cohen & Steers International Realty Fund
2007/4/27
Inc.

7,956

5.07%

Prospect Asset Management, Inc.

7,876

5.02%

2007/1/18

Notes:
1 Reports submitted as of May 22, 2007 （does not reflect the PO on May 22,2007）
2 Ratio held of 157,000 units outstanding
22

06071T291 - 81460391

Disclosure and IR Activities
Active information disclosure through ourcompany website

Asset Management Reports(sent to existing investors)

最新情報
プレスリリースの追加他、最新の情報を掲載しております。

不動産ポートフォリオ
ポートフォリオの一覧・マップから個別物件の概要も、またポートフォリ
オの構成比率等もご覧頂けます。

(Reference) Number of investor meetings
Domestic institutions

216

Domestic regional financial institutions

71

International investors (Europe)

92

International investors (US)84

International investors (other)

70

TOTAL

533

Note:
1
From June 21, 2005 to June 11, 2007 (including
conference calls)

Domestic institutions

75

Domestic regional financial institutions

19

International investors (Europe)

40

International investors (US)39

International investors (other)

36

TOTAL

209

Note:
1 Six-months from November 1, 2006 to June. 11, 2007

EnglishAs an additional sorvice, no have
prepared an English web site

English Annual
Reports
Disclosure through English Website

http://www.kdx-reit.com/eng/(Reference) Access to KRI
websitePress release
Portfolio
Disclosure material
Occupancy rate
KDRM site top
Dividends
English Website
Bank borrowings
TOTAL TRAFFIC

15,512
7,215
4,928
4,499
4,261
2,650
1,723
1,501
34,453Note:
1 Six-months from November 1, 2006 to April. 30, 200723

06071T291 - 81460391

Offering Summary
IPO in 2005

Total offering size

PO in 2006

＜Domestic offering＞
Domestic
78,970 units＜Global offering＞
Domestic

54,340 units＜Global offering＞
Domestic
28,810 units

International

23,290 units

International

14,190 units

77,630 units

Total

43,000 units

Total
Over–allotment

Number of
pre-determined units

PO in 2007

3,970 units

3,970 units

2,100 units

9,770 units

3,980 units

52 units

Kenedix

3,770 units

Kenedix

Y.K. KW office2,000 units

Y.K. KWO Third

4,000 units

Kenedix REITManagement

3,880 units
100 units

Kenedix REITManagement

Post–offering outstanding units 78,970 units

157,000 units

200,000 units

Pricing dateJul. 11, 2005

Apr. 19, 2006

May 14, 2007

Delivery dateJul. 21, 2005

May 2, 2006

May 23, 2007

Discount rate

-

2.0%

2.0%

52 units

Pricing date

¥580,000¥593,096¥873,180

Offering price¥45.8B¥46.0B¥37.5BUBS Investment Bank
Nomura International

UBS Investment Bank
Nomura International

UBS Investment Bank
Nomura International

Joint bookrunner2406071T291 - 81460391

Financing

Internal growth

External growth

Growth since IPO
2005

2006

2007–

Set goal of achieving
aggregate portfolio
acquisition value of¥200B by 2008

Year for achieving
aggregate portfolio
acquisition value of¥200B moved forward to2007
Revised portfolio goals tofocus more on officeproperties

Targeted aggregate portfolio
acquisition value ¥200B substantiallyachieved with anticipated acquisitions
in connection with this offering
Revised memorandum of
understanding with theKenedix Group

Increase in ratio of office properties

Implementation ofcustomer satisfaction(CS) survey

Renovations undertaken in
response to CS survey

Goal of improving profitability

Rent levels increased
for new contracts

Strongportfolio
focusing on
mid-sized
officeproperties

KDX standard
Goal of maintaining and improving NOI yield levels

Able to get
unsecure loans
from inception

Rated A3 by
Moody’s

July 2005 Initialpublic offering(listing)

Rated A+ by
JCR1

Issuance of investment
units
through global offering
May 2006
Global offering

Shelf registration forinvestment
corporation
Issuance of investment
bonds
corporation bonds
Establishment ofcredit facility

Shelf registration forinvestment units

Targeting aportfolio sizeof ¥400B in
the mid-tolong term

Issuance of investment units
through 2nd global offering
May 2007
Global offering

Notes:
1 JCR = Japan Credit Rating Agency, Ltd.

25

06071T291 - 81460391

Unit Price Performance/Transaction Volume
KRI unit price performance
Volume (unit)

Unit price (Yen)
Follow-on price
JPY 873,180

6,000

1,000,000
950,000

5,000
900,000
4,000

850,000
Follow-on price
JPY 593,096

3,000

800,000

Listing price
JPY 580,000

750,000

2,000

700,000
650,000

1,000
600,0000
Jul 21, 2005

Nov 10, 2005

Mar 02, 2006

Jun 22, 2006
VolumeOct 12, 2006
KRI closing priceFeb 06, 2007

550,000
Jun29,
07,2007
2007
May

Series1

26

06071T291 - 81460391

Statements of Income

Rental and other operating revenues
Rental revenues
Common charges

OthersParking space rental revenues
Utility charge reimbursements
Miscellaneous
Total rental and other operating revenues (A)Disposal income

Operating revenues
Property management fees
Utilities
Tax
Repairs and maintenance costs
Other expenses¹
Depreciation

Total property-related expenses (B)Rental business profit (A-B)
Net operating income (NOI)
Asset management fees
Other operating expenses

Operating expenses
Operating income
Non Operating income
Interest expense
Investment coporation bond interest
Financing related expense
Amoutization of investment corporation bond issuance costs
Amortization of unit issuance costs
Amortization of organization costs
Other non-operating expenses²

Non-operating expenses
Non-operating expenses
Ordinary income
Income before income taxes
Current income taxes
Deferred income taxes

Net income
Retained earnings at the beginning of period
Retained earnings at the end of period

4th period
from November 1, 2006
to April 30, 2007
AmountOf(¥ thousand) Operating
4,965,303
4,234,864
730,439
682,158
182,047
274,748
225,3635,647,461
130,748
5,778,210
100.0
571,265
275,900
206,871
89,963
219,487
1,243,900
2,607,389
3,040,072
4,283,972
306,965
177,110
3,091,465
53.5
2,686,744
46.5
9,716
0.2
450,605
29,32020,595
1,501
17,784
5,089
22,685547,5819.5▲537,865▲9.3
2,148,879
37.2
2,148,879
37.2
816
0.0
4
2,148,058
37.2
592,148,117

3rd period
from May 1, 2006
to October 31, 2006
AmountOf(¥ thousand) Operating
4,549,456
3,908,749
640,706
582,042
175,387
314,355
92,3005,131,499
157,334
5,288,833
100.0
529,334
296,833
179,647
62,666
193,161
1,135,559
2,397,201
2,734,297
3,869,856
203,841
122,597
2,723,641
51.5
2,565,192
48.5
2,389
0.1
375,765
20,904
17,784
5,089
22,956442,500
8.4▲440,110▲8.3
2,125,081
38.4
2,125,081
38.4
1,009
0.0
0
2,124,071
38.4
40
2,124,112

Notes:
1
Other expenses:
Insurance premium, trust fees, etc.
2
Other operating expenses: Directors compensation, asset custody fees, general admin fees, auditors’ fees etc.

♦

Net operating days in each period♦

4th Period： 181days (Nov. 1, 2006–Apr. 30, 2007)
3rd Period： 184days (May 1, 2006–Oct. 31, 2006)♦

To see Income statement by property, pleaserefer to the list in the Kessan Tanshin♦

Rental and other operating revenues:– To the 64 properties as of the end of the 3rd
period, we have added 10 new properties anddisposed 2 residential properties during 4th period– 72 properties as of the end of the 4th period♦

Disposal income:– Income from disposal of two residential properties
3rd period: May 10, 2006, 4th period: April 20, 2007♦

Property-related expenses:– Property tax and city planning tax were included to
expenses on tax payment date♦

Amortization of unit issuance costs:– Issuance costs were split into six times (in three
years) from the 3rd period

Summary of the revisions to the 4th period(ended April 30, 2007) results forecast
Deviation
Initial forecast
Revised on April
Actual results from original（announced on
26, 2007
forecast
Dec 11, 2006）

Operatingrevenues¥5,542M¥5,767M¥5,778M+4.3%

Net income¥2,074M¥2,140M¥2,148M+3.6%

Distribution perunit¥13,200¥13,600¥13,682+3.7%

27

06071T291 - 81460391

Balance Sheets
ASSETS
Current assets
Cash and bank deposits
Entrusted deposits
Other current assets
Fixed assets
Property and equipment at cost
Biildings
Land
Buildings in trust
Land in trust
Intangible assets
leasehold
Other assets
Leasehold and security deposits
Long-term prepaid ezpenses
derivative assets
deferred assets
Organization costs
Investment corporation bond issuance costs
Unit issuance costs

TOTAL ASSETS

4th period
3rd period
as of April 30, 2007
as of October 31, 2006
Amount (¥ thousand) (% ) Amount (¥ thousand) (% )9,333,184
4.9
10,243,870
6.4
3,740,550
4,709,666
5,182,512
4,779,041
410,121755,162
178,896,941 95.0
149,945,922 93.5
178,516,827 94.8
149,719,621 93.4
4,902,623
1,370,913
7,910,082
2,148,301
60,426,940
56,634,477
105,277,180
89,565,928
285,1440.1
285,144
94,9690.1
226,300
0.1
11,64918,20583,32076,874
131,220
170,551
0.1
124,550
0.1
30,53840,717
68,875
71,13888,923
188,400,678 100.0
160,314,341 100.0♦

Properties and equipment at cost
– 66 properties held at the end of the 4th period areheld in the form of trust beneficiary interests. KDX
Funabashi Building, KDX Nogizaka Building, KDX
Nishi-Gotanda Building, KDX Okachimachi Building,
KDX Nishi-Shinjuku Building, KDX MonzenNakacho Building were acquired as properties.

(¥M )Acquisition
value

Book
value

Appraisalvalue at theend of4thperiod

Office115,979

118,029

127,187+11,208（+9.7% ）+9,158(+7.8% )Central urban retail

16,05916,606

18,050+1,991（+12.4% ）+1,444(+8.7% )Residential

43,052

44,16644,468+1,416（+3.3% ）+302(+0.7% )Total

175,090

178,801

189,705+14,615（+8.3% ） +10,904 (+6.1% )Differences from Differences fromacquisition value
book value
(% )
(% )

LIABILTIESCurrent liabilities
Trade payables
Short-term debt
Other account payables
Rents received in advancedeposits received
Fixed liablities
Ling-term debt
Leasehold and security deposit received
Leasehold and security
Deferred tax liability
Unrealized gain on derivatives

EQUITIES

Total unitholders' capital
Retained earnings
Unrealized gain from deferred hedge transactions

TOTAL UNITHOLDERS' EQUITYTOTAL LIABILITIES AND
UNITHOLDERS' EQUITY

21,444,151
275,299
20,000,000
225,737
916,372
26,74376,078,756
12,000,000
56,500,000
626,499
6,952,256
97,522,908
88,729,652
2,148,117
90,877,769

11.4

40.4

51.8
47.1
1.1
48.2

188,400,678 100.0

16,204,462
289,763
15,000,000
145,413
767,536
1,748
53,173,581
47,000,000
181,398
5,940,494
51,687
69,378,044
88,729,652
2,124,112
79,53290,933,297

10.1

33.2

(¥M )

End of 1st End of 2nd End of 3rd End of 4th
periodperiodperiodperiodShort-term debt

10,00011,50013,500Long-term debt

19,00030,50048,50058,000–––12,000Interest-bearing debt total

29,00042,00062,00088,500

Ratio of long-term

65.5%

72.6%

78.2%

79.1%

Interest-bearing debt ratio

37.5%

45.6%

38.7%

47.0%

Investment corporation bond
43.3
55.3
1.3
0.0
56.7

160,314,341 100.0♦

18,500Measurement of interest swap at fair value recorded asa piece of total unitholders’ capital from the 4th period2806071T291 - 81460391

Portfolio Overview
Properties acquired during the 4th period (10 properties)
Properties acquired on June 1, 2007 (5 properties■)
Acquisition
price
Area

OfficeTokyo
metropolitan
area

Other
regional
areas# of props. Name

1

Office properties as of the end of October 31, 2006 (29properties)

Completion

Location

(¥M )

date

Acquisition
price

Occupancy
rate

2

3

(% )

Type

Area

A-13

Centralurban
retailOther
regional
areas

(% )

5,950

May 1994

97.1%

Chiyoda ward, Tokyo

date

3

Minato ward, Tokyo

9,850

Aug. 1962

100.0%A-37

KDX Ochanomizu Building

Chiyoda ward, Tokyo

6,400

Aug. 1982

100.0%A-1

KDX Nihonbashi 313 Building

Chuo ward, Tokyo

5,940

Apr. 1974

98.9%

A-32

KDX Shiba-Daimon Building

Minato ward, Tokyo

6,090

Jul. 1986

93.0%

A-16

Toshin 24 Building

Yokohama, Kanagawa

5,300

Sep. 1984

100.0%A-39

KDX Toranomon Building

Minato ward, Tokyo

4,400

Apr. 1988

0.0%

A-2

KDX Hirakaw acho Building

Chiyoda ward, Tokyo

5,180

Mar. 1988

100.0%A-30

KDX Nishi-Gotanda Building

Shinagawa ward, Tokyo

4,200

Nov. 1992

73.7%

A-17

Ebisu East 438 Building

Shibuya ward, Tokyo

4,640

Jan. 1992

100.0%A-41

KDX Shinjuku 286 Building

Shinjuku ward, Tokyo

2,300

Aug. 1989

100.0%

A-3

Higashi-Kayabacho Building

Chuo ward, Tokyo

4,450

Jan. 1987

89.1%

A-33

KDX Okachimachi Building

Taito ward, Tokyo

2,000

Jun. 1988

100.0%A-4

KDX Hatchobori Building

Chuo ward, Tokyo

3,680

Jun. 1993

100.0%A-38

KDX Nishi-Shinjuku Building

Shinjuku ward, Tokyo

1,500

Oct. 1992

100.0%A-18

KDX Omori Building

Ohta ward, Tokyo

3,500

Oct. 1990

100.0%A-31

KDX M onzen-Nakacho Building

Koto ward, Tokyo

1,400

Sep. 1986

100.0%A-19

KDX Hamamatsucho Buildng

Minato ward, Tokyo

3,460

Sep. 1999

100.0%KDX Higashi-Shinjuku Building

Shinjuku ward, Tokyo

2,950

Jan. 1990

100.0%KDX Kojimachi Building

A-34

KDX Hon-Atsugi Building

Atsugi, Kanagawa

1,305

May 1995

100.0%A-29

A-35

KDX Hachioji Building

Hachioji, Tokyo

1,155

Dec. 1985

96.4%

A-20

Dai-ichi Kayabacho Building

Chuo ward, Tokyo

2,780

Oct. 1987

84.9%

A-42

KDX Kyoto Karasuma Building

Kyoto, Kyoto

5,400

Oct. 1982

97.1%

A-21

KDX Shinbashi Building

Minato ward, Tokyo

2,690

Feb. 1992

100.0%A-43

KDX Hakata Building

Fukuoka, Fukuoka

2,350

Jul. 1982

96.9%

A-44

KDX Sendai Building

Sendai, Miyagi

2,100

Feb. 1984

97.7%

A-36

KDX Niigata Building

Niigata, Niigata

1,305

Jul. 1983

83.9%

-

51,755Completion

price

Tokyo
metropolitanarea

Occupancy
rate

2

(¥M)

Toranomon Toyo BuildingTokyo
metropolitan
area
Office-Central urban retail properties as of the end of April 30, 2007
(3 properties)
Occupancy
Acquisition
Area

Completion1

Location

A-40

Office (Total 15 properties) Sub Total

Type# of props. Name

# of props. Name

C-1
C-2
C-3

Frame Jinnan-zaka
KDX Yoyogi Building
ZARA Tenjin Nishi-dori

Central urban retail (Total 3 properties) Sub Total

1

2

Location

(¥M)

date

Shibuya ward, Tokyo

9,900

Mar. 2005

Shibuya ward, Tokyo
Fukuoka, Fukuoka

2,479
3,680
16,059Aug. 1991
Nov. 2005
-

rate
3

(% )

91.7%
100.0%
100.0%-

Notes:
1
The acquisition price equals the transaction value of the trust beneficiary and other rights the investment corporation has
acquired (before taxes, and rounded down to the nearest million). Total acquisition price of 77 properties as of June 11,2007 is ¥197,090M.
2
The building completion date refers to the registered month/year when the building was initially built. The weighted
average of the building ages on acquisition prices of 72 properties as of the end of April, 2007 is 15.6 years. The weighted
averages of the building ages of 39 office properties, 3 central urban retail properties, 30 residential properties are 18.1
years, 4.0 years, 5.2 years, respectively.
3
The occupancy rate is calculated by dividing the occupied area (as of April 30, 2007) by the total leasable area (rounded
to the first decimal place), and the occupancy rates of 5 properties acquired on June 1, 2007 are calculated as ofDecember 31, 2006. The weighted average of the occupancy rates on acquisition prices of 72 properties as of the end of
April, 2007 is 95.9%. The weighted averages of the occupancy rates of 39 office properties, 3 central urban retailproperties, 30 residential properties are 95.7%, 94.7%, 96.5%, respectively.

Other
regional
areas

A-5

KDX Nakano-Sakaue Building

Nakano, Tokyo

2,533

Aug. 1992

100.0%A-22

KDX Shin-Yokohama Building

Yokohama, Kanagawa

2,520

Sep. 1990

100.0%

A-6

Harajuku F.F. Building

Shibuya ward, Tokyo

2,450

Nov. 1985

100.0%A-27

KDX Kajicho Building

Chiyoda ward, Tokyo

2,350

Mar. 1990

100.0%A-15

KDX Hamacho Building

Chuo ward, Tokyo

2,300

Sep. 1993

100.0%A-7

FIK M inami Aoyama

Minato ward, Tokyo

2,270

Nov. 1988

100.0%A-14

KDX Funabashi Building

Funabashi, Chiba

2,252

Apr. 1989

100.0%

A-8

Kanda Kihara Building

Chiyoda ward, Tokyo

1,950

May 1993

100.0%A-23

KDX Yotsuya Building

Shinjuku ward, Tokyo

1,950

Oct. 1989

100.0%A-9

KDX Shinjuku-Gyoen Building

Shinjuku ward, Tokyo

1,610

Jun. 1992

100.0%A-26

KDX Kiba Building

Koto, Tokyo

1,580

Oct. 1992

100.0%A-28

KDX Nogizaka Building

Minato ward, Tokyo

1,065

May 1991

100.0%
100.0%A-10

KDX Koishikaw a Building

Bunkyo, Tokyo

704

Oct. 1992

A-12

Portus Center Building

Sakai, Osaka

5,570

Sep. 1993

97.1%

A-24

KDX M inami Semba Dai-1 Building Osaka, Osaka

1,610

Mar. 1993

100.0%A-25

KDX M inami Semba Dai-2 Building Osaka, Osaka

A-11

Hakata-Ekimae Dai-2 Building

Office (Total 29 properties) Sub Total

Fukuoka, Fukuoka

1,560

Sep. 1993

93.6%

1,430

Sep. 1984

95.8%

86,224--29

06071T291 - 81460391

Portfolio Overview
Residential properties as of the end of April 30, 2007 (30properties)
Acquisition
price
Type

Area

Tokyo
metropolitan
area

Residential

Otherregional
areas# of props. Name

Location

B-19

Residence Charmante Tsukishima Chuo ward, Tokyo

B-20

Regalo Ochanomizu I & II

Bunkyo ward, Tokyo

1

Disposed properties during the fourth fiscal period (2 properties)

Completion

Occupancy
rate

2

(% )

5,353

Jan. 2004

100.0%

3,600

I :Jan. 2006
II :Feb. 2006

96.0%

(¥M)

date

3

B-1

Storia Sirokane

Minato ward, Tokyo

3,150

Feb. 2003

88.6%

B-2

Tre di Casa M inami Aoyama

Minato ward, Tokyo

2,460

Feb. 2004

92.5%

B-21

Regalo Shiba-Kouen

Minato ward, Tokyo

2,260

Nov. 2005

100.0%

B-3

Court M ejiro

Shinjuku ward, Tokyo

1,250

Mar. 1997

95.0%
91.7%

B-4

Apartments M otoazabu

Minato ward, Tokyo

1,210

Jan. 2004

B-5

Apartments Wakamatsu Kawada Shinjuku ward, Tokyo

1,180

Feb. 2004

97.8%

B-22

Chigasaki Socie Ni-bankan

Chigasaki, Kanagawa

1,160

Jan. 1991

96.1%
98.4%

B-6

Court Nihonbashi-Hakozaki

Chuo ward, Tokyo

1,130

Feb. 2004

B-23

Court Nishi-Shinjuku

Shinjuku ward, Tokyo

1,130

Oct. 2005

90.9%

B-7

Side Denenchofu

Ohta ward, Tokyo

1,110

Feb. 1997

97.2%

B-34

Gradito Kawaguchi

Kawagushi, Saitama

1,038

Feb. 2006

100.0%

B-8

S-court Yokohama-Kannai II

Yokohama, Kanagawa

945

Mar. 2003

97.4%

B-24

Regalo Komazaw a-Kouen

Setagaya ward, Tokyo

912

Feb. 2006

95.6%

B-9

Court M otoasakusa

Taito ward, Tokyo

880

Jan. 2005

97.5%

B-25

Court Shin-Okachimachi

Taito ward, Tokyo

878

Oct. 2005

91.6%

B-11

Bloom Omotesando

Shibuya ward, Tokyo

875

Mar. 2003

100.0%

B-13

Human Heim Okachimachi

Taito ward, Tokyo

830

Dec. 2004

100.0%

B-26

Primo Regalo Kagurazaka

Shinjuku ward, Tokyo

762

Jan. 2006

100.0%

B-27

Primo Regalo Youga

Setagaya ward, Tokyo

730

Dec. 2005

100.0%

B-28

Court Shimouma

Setagaya ward, Tokyo

638

Oct. 2005

96.7%

B-29

Ashiya Royal Homes

Ashiya, Hyogo

2,330

Jun. 1991

89.0%

B-18

Venus Hibarigaoka

Sapporo, Hokkaido

1,800

Mar. 1989

98.7%

B-30

Regalo Ibaraki I & II

Ibaraki, Osaka

1,600① May. 1991
95.0%
② Mar. 1993

B-31

Collection Higashi-Sakura

Nagoya, Aichi

1,264

Mar. 2006

B-32

Renaissance 21 Hirao Jousui-machFukuoka, Fukuoka

900

Oct. 2005

91.6%

B-33

M ontore Nishikouen Bay Court

Fukuoka, Fukuoka

826

Feb. 2006

97.2%

B-16

Abreast Hara

Nagoya, Aichi

444

Feb. 2000

97.8%

B-17

Abreast Hirabari

Nagoya, Aichi

407

Mar. 2000

100.0%

Residential (Total 30 properties) Sub Total

Acquisition
price
Type

Area

# of props. Name

Tokyo

Location1(¥M )Disposal
price
(¥M )

Completion
date

2

B-14

Court Shinbashi

Minato ward, Tokyo

748

895

Dec. 1997

B-15

Court Suitengu

Chuo ward, Tokyo

659

708

Jul. 2003

1,407

1,603

-

Residential metropolitan

area

Residential (Total 2 properties) Total

Notes:
1
The acquisition price equals the transaction value of the trust beneficiary and other rights theinvestment corporation has acquired (before taxes, and rounded down to the nearest million)
2
The building completion date refers to the registered month/year when the building was initially built.
3
The occupancy rate is calculated by dividing the occupied area (as of April 30, 2007) by the total
leasable area (rounded to the first decimal place).

98.5%

43,05230

06071T291 - 81460391“KENEDIX Selection”—Acquired Properties Highlights
A-32 KDX Shiba Daimon Building (Office)A-37 KDX Ochanomizu Building (Office)♦Location： Shiba Daimon, Minato-ku, Tokyo♦

Location： Kanda, Chiyoda-ku, Tokyo♦

Site area：1,182.40m2♦

Site area： 1,515.28m2

♦

GFA：

7,824.03m2♦

GFA： 7,720.08m2♦

Year built： July, 1986♦

Year built： August 1982♦

Acquisition price：¥6,090M♦

Acquisition price： ¥6,400M

5 minutes on foot from JR Yamanote Line, Keihin Tohoku Line andTokyo Monorail “Hamamatsucho” station; 4 minutes on foot from
Tokyo Municipal Subway “Shiba Koen” station; and 5 minutes on footfrom Tokyo Municipal Subway Asakusa Line / Ooedo Line “Daimon”
station respectively♦

5 minutes on foot from JR Chuo Line, Sobu Line, and Tokyo Metro
Marunouchi Line “Ochanomizu” station; 6 minutes on foot from
Tokyo Metro Chiyoda Line “Shin-Ochanomizu” station respectively♦

Stable office demand expected due to its superior access to key
locations in Tokyo city center♦

District with expected high demand from various areas due to its
excellent access to rail, main roads and the airport♦

Specification meets the needs of tenants who look for office space of
substantial size♦

Rent space of c. 420m2–850m2 which is relatively big and the 2.6m
high ceiling provide comfortable office space♦

A-41 KDX Shinjuku 286 Building (Office)A-39 KDX Toranomon Building (Office)♦Location： Toranomon, Minato-ku, Tokyo♦

Location： Shinjuku, Shinjuku-ku, Tokyo♦

Site area： 288.20m2♦

Site area：421.70m2♦

GFA： 2,277.38m2

♦

GFA：

♦

Year built： April 1988♦

Year built： August 1989♦

Acquisition price： ¥4,400M♦

Acquisition price： ¥2,300M

3,432.04m2♦

Acquired as an empty building as former tenants have moved out♦♦

Large scale renovation works to be implemented to upgrade it into
an Office building with high level equipment for convenient use andmore comfort

2 minutes on foot from Tokyo Metro Marunouchi Line “Shinjuku
Gyoen” station; 4 minutes on foot from Municipal Subway Shinjuku
Line “Shinjuku Sanchome” station respectively♦

Highly visible building facing Shinjuku-dori in busy commercial area.
Surrounded by mid- to high-rise office and retail buildings along
Shinjuku-dori♦Convenient to use rental space such as floor space with no center
posts and unit air conditioning system
31

Emphasis on Mid-Sized Office Buildings in the Tokyo Metropolitan
Area06071T291 - 81460391

Office (As of June 11, 2007)
44 properties, total acquisition price of ¥138B
Acquisition price(Tokyo metropolitan area)

Miyagi1 property ¥2.1B

Appraisal gain (loss) of office building portfolio1
10,0009,000

Tokyo’s 23 wards
31 Properties ¥104.1B

8,000
7,000

Acquisition price(Other regional areas)
Niigata
1 property ¥1.3B

（\M）

6,000
Central Tokyo1
24 properties ¥88.2B

5,000
4,000
3,000

Greater Osaka area
4 properties ¥14.1B

2,000
Other 18 wards
7 properties ¥15.9B

1,000
0

Fukuoka
2 property ¥3.7B(1,000)
Oct.31,05 Apr.30,06 Oct.31,06 Apr.30,07
Note：
1 Subtract total book value at end of period from the total appraisal
value at end of periodTokyo
Kanagawa
3 properties ¥9.1B
Hachioji, Tokyo
1 property ¥1.1B# of Acquisition price Ratio
properties
(%)
(¥B)
36
1,166
84.5
Tokyo metropolitan area
8
213
15.4
Other regional areas
44
1,379
100.0
Total

Other regional areas
15.4%

Chiba
1 property ¥2.2B

Central Tokyo
63.9%

Other Tokyo
metropolitan area
20.6%

Notes:
1
Central Tokyo: Chiyoda, Chuo, Minato, Shibuya and Shinjuku wards
2
Acquisition price are rounded to the nearest ¥100M
3
Ratios indicate the total acquisition price for properties in each area in proportion to the total acquisition price for all properties combined

32

06071T291 - 81460391

Focus on Office Buildings and External Growth Achieved
Portfolio overview
As of end of 3rd period(October 31, 2006)(64 properties approx. ¥147B)

As of June 11, 2007
(77 properties approx. ¥197B)
Residential
21.8%

Residential
30.2%

Type
Retail10.9%

Office58.7%

Central urban retail
8.1%

Individual
9 tenants
Official (Others) 2.8%
2 tenants
0.6%

Agriculture
1 tenant
0.3%

Constructions
21 tenants
6.5%
Manufactures
56 tenants
17.4%

Service
108 tenants
33.6%

Carriers & Telecome
5 tenants
Realtors Financial & Insurance
1.6%
23 tenants
14 tenants
7.2%
4.4%

Other regional areas
17.5%

Other regional areas
15.9%

Area

Office70.0%

Diversification in tenant mix(as of the end of 4th period)(Office: 39 properties, Number of tenants: 400)

Wholesale,
Retail & Food
82 tenants
25.5%

Tokyo
metropolitan area Number of end tenants by type
82.4%

Tokyo
metropolitan area
84.0%

2nd period 3rd period 4th period¥7.5–10.0B
1 property
6.7%

Size

¥5.0–7.5B
6 properties
22.6%¥2.5–5.0B
13 properties
29.7%

Less than ¥1.0B
16 properties
8.2%¥1.0–2.5B
28 properties
32.5%¥7.5–10.0B
2 property
10.0%¥5.0–7.5B
9 properties
25.9%

Less than ¥1.0B
14 properties
5.4%

OfficeCentral urban retailResidential

187
20
542

318
22
1,081

400
25
1,124

Note:
1 Including type duplication¥1.0–2.5B
37 properties
32.0%¥2.5–5.0B
15 properties
26.5%

33

06071T291 - 81460391(Reference) Office Building Investment (44 properties: ¥137.9B)
Appraisal value based yield of office building at acquisition (%)
7.0

6.8

Tokyo metropolitan
area
Other regional areas

6.5

6.1

5.9
5.75.6 5.8
5.5
5.3
5.5 5.1
5.1
5.0 5.1
5.0

6.1

6.0

5.8 5.8
5.6
5.2

6.0

5.0

5.3

5.9

5.7

5.5

5.3

5.1

6.5
6.1
5.8

6.0
5.4
5.2

5.2
5.0

5.4
5.1

5.75.8
5.5

5.1
5.1
4.9
4.6
4.5

4.7

NOI yield
oriented
investments

4.5
4.0
A-1
A-2
A-3
A-4
A-5
A-6
A-7
A-8
A-9
A-10
A-11
A-12
A-13
A-14
A-15
A-16
A-17
A-18
A-19
A-20
A-21
A-22
A-23
A-24
A-25
A-26
A-27
A-28
A-29
A-30
A-31
A-32
A-33
A-34
A-35
A-36
A-37
A-38
A-39
A-40
A-41
A-42
A-43
A-44

3.5

Note： Yield based on appraisal value that were calculated by data available from property appraisal reports
and should not be understood as data indicating actual or future profitability (NCF under Direct
capitalization method/Appraisal value)

Acquisition price of office buildings (¥B)
10

Tokyo metropolitan
area
Other regional areas

9

Out of the 12
properties withacquisition priceof more than
¥4.0B located inTokyo
metropolitan area,
6 were acquired
during the 1st–3rd
Period, and 6
more acquired in
the 6 months from4th Period on

8
7
6
5
4
3
2
1

Acquired at IPO in 2005

Acquired at PO in 2006

Acquired in the 6 months
from 4th Period on

A-44

A-43

A-42

A-41

A-40

A-39

A-38

A-37

A-36

A-35

A-34

A-33

A-32

A-31

A-30

A-29

A-28

A-27

A-26

A-25

A-24

A-23

A-22

A-21

A-20

A-19

A-18

A-17

A-16

A-15

A-14

A-13

A-12

A-11

A-10

A-9

A-8

A-7

A-6

A-5

A-4

A-3

A-2

A-1

0

34

06071T291 - 81460391(Reference) Office Building Investment (44 properties: ¥137.9B)
Access to the office buildings (44 properties)
from the nearest station

Completion year and period acquired (Office building)Investments in mid-sized
office buildings constructedin the second half of the
1980’s to the first half of the
1990’s

2000

50
11.0

40
1997

30
5.1

20 39.4

1.6
20.9

10

16.2

0
1

2

3

3.7

19.5

8.0

4

6.0

5

6

4.2

7

8

2.5

9

10

(minutes) on footTokyo metropolitan area Other regional areas

Completion year

Total acquisition price (¥B)

60

1994

1991

1988

1985

Investments leveraging the multi-pipeline

Acquisition pipeline

Sponsor network
Original network(Warehousing)Original network(Direct acquisition)
Total

Av.
Acquisitionacquisition
price
# of
price
(¥B)
properties
(¥B)

95.69

26

3.7

12.6

4

3.1

29.8

14

2.1

137.9

44

3.1

1982
Jul, 05

Dec, 05

May, 06

Oct, 06

Mar, 07

Period acquired
Notes：
1 42 office properties excluding KDX Nihonbashi 313 Bldg. (1974) and Toranomon Toyo Bldg. (1962)
2 Size of the pie charts indicates the acquisition price of each property

35

06071T291 - 81460391

Market Environment for Office Buildings
Percentage of entities based on
number of employees per office(Tokyo)2． Distribution of office buildings
by tsubo (Central Tokyo)

100 and above
30 – 99
1.5%
4.8%
10 – 29
15.2%

Over 3,000 tsubo
5.0%

Broad based
stock of midsized officebuildings
500 to 3,000
tsubo
28.6%

3. Office property traded by size
100
80
60

(% )

1.

22

19

21

23

51

56

58

2003

2004

24

29

28

21

48

40

Under 500 tsubo
66.4%

20
0

2002
Source: “Macro Market Research in Central Tokyo”, K.K. Ikoma Data Service
System as of March, 2007
One tusbo is approximately 3.3m2

4． Annual changes in average commercial
land value

5． Office property average rent andvacancy rates (Central Tokyo)

Mar-07

Dec-06“Latest Office Building Market Conditions in Central Tokyo”,
Miki Shoji Co., Ltd.

Appreciation of office building market

Building additional
meeting rooms anddressing rooms, etc

Source:Vacancy rate0
Restructuring ofinternalorganizations

Average rent

Dec-050.0
Dec-04

2007

2006

2005

Ministry of Land, Infrastructure and Transportation

20

Reorganization of
offices for cost
reduction

Source:Nationwide

2.0

17,0002006

40

Expansion of floor
space due to theincrease of
employees

Tokyo

2004

2003

2002

2001

(10.0)

4.0

18,000

Dec-03

(5.0)

2004

6.0

19,000

Dec-02

0.0

60

8.0

Dec-01

5.0

20,0002005

Over 10,000m²

6． Reasons cited by companies in Tokyo
if they were to relocate

(% )

(% )

10.0

5,000m² to 10,000m²

Source: “Real Estate Report 2007”, Urban Research Institute,
Corp

10.0

2

15.0

Yen per tsubo (approx. 3.3 m )Source: KDRM, based on Tokyo office statistics report as of 2004
Note：
(MPHPT Statistics Bureau)

Under 5,000m²

(% )

1–9
78.5%

Source: “Real Estate White Paper 2006”, K.K. Ikoma Data Service system36

06071T291 - 81460391

Residential Portfolio
Residential (as of June 11, 2007)
30 properties, total acquisition price of ¥43B
Acquisition price(Tokyo metropolitan area)

Fluctuations in the maximum Rosenka(Prefectural capitals)
Rank

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Acquisition price(Other regional areas)
Hokkaido
1 property ¥1.8B
Greater Osaka area
2 properties ¥3.9B

Fukuoka
2 properties ¥1.7B

Fluctuation（2005）

M aximum
Rosenka（2006）

26.4%
23.8%
19.2%
16.8%
15.5%
11.5%
10.1%
6.0%
5.0%
4.5%
4.4%
3.3%
3.1%
2.5%
2.3%

9.3%
9.9%
2.0%
3.6%
5.9%
4.8%
(3.2% )
(4.8% )
(3.8% )
(6.2% )
(3.2% )
(2.0% )
(4.2% )
(2.9% )

4,600
18,720
4,960
2,020
3,960
3,870
1,850
1,950
210
1,870
1,430
940
1,010
1,650
1,350

Nagoya
Tokyo
Osaka
Kyoto
Fukuoka
Yokohama
SapporoSaitama
Otsu
Kobe
SendaiShizuoka
Okayama
Hiroshima
Chiba

Source: National Tax Agency “Maximum Rosenka in Prefectural Capitals,
2006 ”
Note:
1
Maximum Rosenka (in thousand yen) per 1m2

Tokyo’s 23 wards
19 properties ¥30.3B

Japan Population Growth Rate
Rank

Kanagawa
2 properties ¥2.1B
Saitama
1 property ¥1.0B

Nagoya3 properties ¥2.1B

Tokyo metropolitan area
Other regional areas
Total

City

Fluctuation（2006）# ofproperties

Acquisition price
(¥B)

Ratio
(%)

22
8
30

334
95
430

77.7
22.2
100.0

Notes:
1
Acquisition price are rounded to the nearest ¥100M
2
Ratios indicate the total acquisition price for properties in each area in proportion to the totalacquisition price for all properties combined

1
2
3
4
5
6
7
8
9
10
11
12

City

Tokyo’s 23 w ards
Yokohama
Osaka
NagoyaSapporoKobe
Kyoto
Fukuoka
Kawasaki
Saitama
Hiroshima
Sendai
Total

Population
as of 2005

Grow th rate
(2000–2005)

8,483,050
3,579,133
2,628,776
2,215,031
1,880,875
1,525,389
1,474,764
1,400,621
1,327,009
1,176,269
1,154,595
1,024,947
127,756,815

4.3%
4.4%
1.2%
2.0%
3.2%
2.1%
0.0%
4.4%
6.2%
3.8%
1.8%
1.7%
0.7%

Source: MPHPT Statistics Bureau, Population Census 2005
Notes:
1 Population is rounded to the nearest thousand people
2 Cities where KRI owns or is planning to acquire properties are highlighted.

37

06071T291 - 81460391

Leverage of Multi-Pipeline and Kenedix Group’s Successful Track Record
Property acquisition leveraging multiple acquisition pipelines

100%
80%

Private funds

60%

Pension funds

Properties heldby Kenedix(incl. development projects)

Warehousing
pre-acquisition services

Corporate sector

Construction
companies anddevelopers

Financial institutions

Original network of theAsset Manager

Brokerage

Kenedix, Inc./
Kenedix Advisors Co., Ltd.

Real estate market

Increased importance of JREITs within Kenedix Group

Assets by type of investor

40%
20%
0%
Dec. 31,
Dec. 31,
Dec. 31,
Dec. 31,
Dec. 31,
Dec. 31,
Dec. 31,
2000
2001
2002
2003
2004
2005
2006
Foreign investors
Japanese institutional investors
Kenedix Group accounts
Pension funds
J-REITs
Source:Kenedix, Inc.
Note:
1 Includes properties of Japan Logistics Fund, which are entrusted to anaffiliate of Kenedix, Inc. for asset management, and properties held by KRI

Priority for information
to Kenedix REIT

Support line from Kenedix and
Kenedix Advisors (MOU)

Assets by type of property
544.5

600

Potential acquisition channels
（¥B）

500

385.7

400

240.3

300
200
100

Kenedix REITManagement, Inc.
(Asset Manager)

Asset Management

Kenedix Realty
Investment
Corporation(KRI) (Kenedix
REIT)

19.0

68.5

83.8

105.9

Dec. 31,2001

Dec. 31,2002

Dec. 31,2003

0Dec. 31,
2000

Office buildings

Apartment buildings

Distribution facilities

OthersDec. 31,2004

Dec. 31,2005

Dec. 31,2006

Commercial facilities

Source:Kenedix, Inc.
Note:
1 Includes properties of Japan Logistics Fund, which are entrusted to anaffiliate of Kenedix, Inc. for asset management, and properties held by KRI

38

06071T291 - 81460391

Management Structure of the Asset Manager
Decision making flow chart
Discussion& Resolution

Screening

Resolution/Report

Approval of transactions withrelated parties

Department
Concerned

Compliance
OfficerApproval of transactions exempt
from investment guidelines

Compliancecommittee1

Asset
management
committee

Approval of transactions with nonrelated parties under investment
guidelines

Resolution

ReportBoard of Directors

Preparation of investment guidelines

Note:
1 As of June 11, 2007, one lawyer works as an external commission member

Policy on transaction with related parties(1) Asset acquisition: Must not acquire properties for more than appraised price (except for properties pre-acquired by
Kenedix Inc. pursuant to the MOU)
(2) Asset disposal: Must not sell properties for less than appraised price(3) Real estate leasing: Proper conditions must be determined in conjunction with research on market price and conditions as well as
reference to third party opinion(4) Real estate agency business such as trading and leasing properties: commissions must be within range specified in Building Lots
and Buildings Transaction Business Law＜Reference＞
Meetings held by the various committees, Board of Directors of the asset manager /investment corporation
nd
rd
th
st
Total
1 Period 2

Period 3 Period 4 Period

Compliance Committee

7

7

7

8

29

Asset Management Committee

21

35

39

39

134

Board of Directors

9

7

9

8

33

Board of Directors of investment co

11

7

7

9

34
39

06071T291 - 81460391

Kenedix REIT Management, Inc.—Organizational Chart
Shareholders’meeting

Major members♦

Outside director
Eisuke Fujii

Board ofcorporate auditors

Corporate auditors♦

Board ofdirectors

Haruo Funabashi
Kenichi YamazakiCompliance officer
Hiroki Komatsu
Investmentcommittee

Taisuke
Miyajima
CEO & President

Compliance
Committee♦

Worked for 10 years for Sojitz Corporation（incl. Construction Department）♦

After joining Kenedix, he worked for Kenedix
Advisors before being transferred to Kenedix REITManagement

Kenji Ajitani

Representative
director
Taisuke Miyajima

Director & General Manager ,Investment Management Division♦♦

Investment
management div.
Kenji Ajitani

Real estate
inv. group♦♦

Asset mgmt.
group

Property ♦acquisition
anddisposition♦
ResearchandAnalysis ofreal estatemarkets

Property♦
leasing andmanagement
Assessment ♦of property
management/riskmanagement

Financialplanning div.
Masahiko Tajima

Finance andIRaccounting
group
group
Investor♦ Formulation
Relationsof budget,
activities
financialstatements,
Negotiations
disclosure
withregulatory
agenciesandconcerned
bodiesWorked for Mitsubishi Trust and Banking (debt
capital market group, Los Angeles branch). Seven
years of experience in real estate investment
advisory division after joining Kenedix, Inc.
Transferred to Kenedix REIT Management tobecome CEO and president

Corporate
administration div.
Teruo Nozaki♦

Business
administration
group
Running unitholders’and directors’
meetings♦

Administration/
Accounting/
Human Resources♦

Dealing withinspections
conducted byconcerned agencies

Masahiko Tajima♦

Worked for 12 years at Chuo Mitsui Trust andBanking, where he was responsible forsecuritization
Joined Kenedix, Inc. after four years of experiencein various securitized paper investments at
Sumitomo Life Insurance
MBA from Columbia Business School

Director & General Manager,
Financial Planning Division

Hiroki Komatsu
Compliance Officer♦

Worked for c.7 years for Chuo Mitsui Trust andBanking（Property Sales Department, Property Investment
Advisory Department,
Asset Finance Department）♦

Joined Kenedix, Inc after having worked for
Cititrust & Banking♦

Property appraiser♦

Joined MOF where he served as director, deputy
director of the National Tax Administration
Agency, SESC director, deputy vice-minister of
the National Land Agency, etc.
Corporate auditor of Kenedix, Inc.

♦

Haruo Funabashi
Corporate Auditor

40