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Kenedix Realty Investment Corporation Semiannual Report

Financial Section
Contents
Independent Auditor’s ReportE

Balance Sheets

F

Statements of Income and Retained Earnings

G

Statements of Changes in Net Assets

G

Notes to Financial Statements

H

Statements of Cash Flows (Unaudited)R

Financial Summary (Unaudited)
Historical Operating Trends
For the 13th–17th Fiscal Periods
PeriodUnit

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

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

15th Period(as of Oct. 31, 2012)

16th Period(as of Apr. 30, 2013)

17th Period(as of Oct. 31, 2013)

Operating revenues

mn yen

9,044

9,090

10,212

9,867

9,819

(Rental revenues)

mn yen

8,498

9,090

9,617

9,306

9,501

Operating expenses

mn yen

4,618

5,004

5,696

5,465

5,578

(Property-related expenses)

mn yen

3,961

4,284

4,822

4,740

4,845

Operating income

mn yen

4,425

4,086

4,516

4,401

4,240

Ordinary income

mn yen

3,040

2,551

3,011

3,003

2,832

Net income (a)mn yen

3,052

2,540

3,009

3,002

2,831

Total assets (b)mn yen274,973

303,284

306,734

308,172

316,753(+5.0)(+10.3)(+1.1)(+0.5)(+2.8)

110,914137,372

140,581

142,369

150,558(Period-on-period change)

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

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

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

Number of investment units issued andoutstanding (e)Unitholders’ equity per unit (d)/(e)(-1.6)(+23.9)(+2.3)(+1.3)(+5.8)

150,272

150,063

150,389

150,653

150,781(+10.9)(-0.1)(+0.2)(+0.2)(+0.1)

147,153

147,153

147,153

147,153

147,153%(+10.5)

(0.0)

(0.0)

(0.0)

(0.0)

unit

286,550

286,550

286,550

286,550

286,550
526,195yen

524,419

523,688524,828

525,747mn yen

2,749

2,683

2,738

2,703

2,665

yen

9,596

9,364

9,557

9,434

9,302

(Earnings distributed per unit)

yen

9,596

9,364

9,557

9,434

9,302

(Distribution in excess of earnings per unit)

yen

—

—

—

—

—

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

1.1 (2.2)

0.9 (1.8)

1.0 (2.0)

1.0 (2.0)

0.9 (1.8)

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

2.1 (4.2)

1.7 (3.4)

2.0 (4.0)

2.0 (4.0)

1.9 (3.7)

54.6

49.5

49.0

48.9

47.6

(+2.9)(-5.2)(-0.5)(-0.1)(-1.3)

40.3

45.3

45.8

46.2

47.5

Total distribution (f)Distribution per unit (f)/(e)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)%%%(-2.7)(+5.0)(+0.5)(+0.4)(+1.3)

90.0

105.6

90.9

90.0

94.1

Other references
Number of properties

properties

Total leasable floor aream2

Occupancy ratio at end of period

74

83

84

83

85

300,016.89

340,589.96

351,153.72

347,853.97

358,517.31

%

94.7

95.4

95.5

93.9

95.8

Depreciation expenses for the period

mn yen

1,442

1,578

1,621

1,662

1,696

Capital expenditures for the period

mn yen

674

918

904

772

894

Leasing NOI (Net Operating Income) (Note 5)

mn yen

5,980

6,384

6,416

6,228

6,352

FFO (Funds From Operation) (Note 6)

mn yen

3,950

4,119

4,187

4,202

4,293

yen

13,786

14,374

14,612

14,664

14,984

FFO per unit (Note 7)

Notes: 1. Return on assets = Ordinary income/{(Total assets at beginning of period + Total assets at end of period)/2} × 100
2. Annualized values for the 13th Fiscal Period are calculated based on a period of 184 days, 182 days for the 14th Fiscal Period, 184 days for the 15th Fiscal Period,
181 days for the 16th Fiscal Period and 184 days for the 17th Fiscal Period.
3. Return on net assets = Net income/{(Total net assets at beginning of period + Total net assets at end of period)/2} × 100
4. Payout ratio is rounded down to the first decimal place.
5. Leasing NOI = Rental revenues – Rental expenses + Depreciation expenses for the period
6. FFO = Net income + Depreciation expenses for the period – Gain on sale of real estate property + Loss on sale of real estate property
7. FFO per unit = FFO/Number of investment units issued and outstanding (figures below ¥1 rounded down)
8. Where applicable, figures are rounded down to the nearest million.

14 |Kenedix Realty Investment Corporation Semiannual Report

Operating Revenues

Operating Income

9,819
10,212
9,044

9,090

13th Period

14th Period

15th Period

4,240

million yen
4,425

9,867

9,819

16th Period

17th Period(Ended Oct. 31, 2011) (Ended Apr. 30, 2012) (Ended Oct. 31, 2012) (Ended Apr. 30, 2013) (Ended Oct. 31, 2013)

Net Income

13th Period

4,516

4,401

4,240

15th Period

16th Period

17th Period

4,086

14th Period

million yen(Ended Oct. 31, 2011) (Ended Apr. 30, 2012) (Ended Oct. 31, 2012) (Ended Apr. 30, 2013) (Ended Oct. 31, 2013)

Distribution per Unit

2,831
3,052

9,302

million yen

3,009

3,002

15th Period

16th Period

2,831

yen

9,596

9,364

9,557

9,434

9,302

13th Period

14th Period

15th Period

16th Period

17th Period

2,540

13th Period

14th Period

17th Period(Ended Oct. 31, 2011) (Ended Apr. 30, 2012) (Ended Oct. 31, 2012) (Ended Apr. 30, 2013) (Ended Oct. 31, 2013)

Total Assets(Ended Oct. 31, 2011) (Ended Apr. 30, 2012) (Ended Oct. 31, 2012) (Ended Apr. 30, 2013) (Ended Oct. 31, 2013)

Net Assets Ratio / Unitholders’ Equity

316,753
303,284

306,734

47.6

million yen

308,172

316,753

%

54.6%
49.5%

49.0%

48.9%

47.6%

150,272

150,063

150,389

150,653

150,781

million yen

million yen

million yen

million yen

million yen

13th Period

14th Period

15th Period

16th Period

17th Period

274,973

13th Period

14th Period

15th Period

16th Period

17th Period(Ended Oct. 31, 2011) (Ended Apr. 30, 2012) (Ended Oct. 31, 2012) (Ended Apr. 30, 2013) (Ended Oct. 31, 2013)

Interest-Bearing Debt Ratio (LTV Ratio) / Interest-Bearing Debt

47.5

(Ended Oct. 31, 2011) (Ended Apr. 30, 2012) (Ended Oct. 31, 2012) (Ended Apr. 30, 2013) (Ended Oct. 31, 2013)

Occupancy Ratio

95.8

%

45.3%

45.8%

46.2%

47.5%

110,914137,372

140,581

142,369

150,558

million yen

million yen

million yen

million yen

million yen

13th Period

14th Period

15th Period

16th Period

17th Period

%

94.7%

95.4%

95.5%

93.9%

95.8%

13th Period

14th Period

15th Period

16th Period

17th Period

40.3%(Ended Oct. 31, 2011) (Ended Apr. 30, 2012) (Ended Oct. 31, 2012) (Ended Apr. 30, 2013) (Ended Oct. 31, 2013)(Ended Oct. 31, 2011) (Ended Apr. 30, 2012) (Ended Oct. 31, 2012) (Ended Apr. 30, 2013) (Ended Oct. 31, 2013)Kenedix Realty Investment Corporation Semiannual Report

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16 |

Kenedix Realty Investment Corporation Semiannual Report

Balance Sheets
Kenedix Realty Investment Corporation
As of October 31, 2013 and April 30, 2013
In thousands of yen

ASSETS
Current assets:
Cash and bank deposits (Note 12)
Rental receivables
Consumption tax refundable
Other current assets (Note 7)
Total current assets
Property and equipment, at cost: (Notes 3, 11 and 13)
Land
Buildings and structures (Note 5)
Machinery and equipment
Tools, furniture and fixtures
Construction in progressLess-accumulated depreciation
Net property and equipment
Other assets:
Ground leasehold (Notes 11 and 13)
Investment securities (Note 12)
Corporate bond issuance costs
Unit issuance costs
Other assets (Notes 11 and 13)
Total assets
LIABILITIES AND NET ASSETS
Liabilities
Current liabilities:
Trade and other payables
Current portion of corporate bonds (Notes 4 and 12)
Short-term debt and current portion of long-term debt (Notes 4 and 12)
Deposits received
Rents received in advance
Other current liabilities
Total current liabilities
Corporate bonds (Notes 4 and 12)Long-term debt (Notes 4 and 12)
Leasehold and security deposits received
Total liabilities
Net Assets
Unitholders’ equity
Unitholders’ capital
Units authorized: 2,000,000 units
Units issued and outstanding: 286,550 units
As of October 31, 2013 and April 30, 2013, respectively
Surplus
Voluntary retained earnings
Reserve for reduction entry
Retained earnings
Total surplus
Total unitholders’ equity
Total net assets (Note 8)
Total liabilities and net assets
See accompanying notes to the financial statements.

As of October 31, 2013

As of April 30, 2013

¥ 11,452,986
254,059
100,159
228,433
12,035,637¥ 14,813,927
185,047—
76,501
15,075,475

215,346,646
103,827,730
1,766,278
455,837
4,914(19,630,791)
301,770,614

205,702,745
100,488,908
1,557,795
446,748
6,699(17,966,695)
290,236,200

356,332
1,106,339
35,651
18,903
1,429,698¥316,753,174

357,106
896,655
26,04337,806
1,542,881¥308,172,166¥¥

810,169—
46,800,000
6,162
1,506,618
202,575
49,325,524
6,300,000
97,458,000
12,888,425
165,971,949

863,2311,500,000
30,000,000
16,967
1,686,455
366,030
34,432,683
4,500,000
106,369,500
12,216,921
157,519,104

147,153,820

147,153,820

795,928
2,831,477
3,627,405
150,781,225
150,781,225¥316,753,174

497,043
3,002,199
3,499,242
150,653,062
150,653,062¥308,172,166

Kenedix Realty Investment Corporation Semiannual Report| 17

Statements of Income and Retained Earnings
Kenedix Realty Investment Corporation
For the six months period from May 1, 2013 to October 31, 2013 and November 1, 2012 to April 30, 2013
In thousands of yen
From May 1, 2013 to October 31, 2013 From November 1, 2012 to April 30, 2013

Operating revenues:
Rental revenues (Notes 10 and 11)¥9,501,700¥9,306,087

Gain on sale of real estate property (Note 10)234,506

462,044

Dividends income

82,984

99,1689,819,190

9,867,299

Total operating revenues
Operating expenses:
Property-related expenses (Notes 10 and 11)

4,845,827

4,740,084

Asset management fees

549,899

553,018

Administrative service and custodian fees

69,22669,474

Other operating expenses

113,451

103,073

Total operating expenses
Operating income

5,578,403

5,465,649

4,240,787

4,401,650

Non-operating expenses:
Interest expense

1,050,678

1,046,727

Financing-related expenses

321,587

315,050

Amortization of unit issuance costs

18,90318,903

Amortization of corporate bond issuance costs

6,143

6,626

Others, net

10,495

10,9391,407,806

1,398,245

Ordinary income

Total non-operating expenses

2,832,981

3,003,405

Income before income taxes

2,832,981

3,003,405

Income taxes (Note 7)
Net income

1,504

1,329

2,831,477

3,002,076

Retained earnings at the beginning of period
Retained earnings at the end of period—

123¥2,831,477¥3,002,199

See accompanying notes to the financial statements.

Statements of Changes in Net Assets
Kenedix Realty Investment Corporation
For the six months period from May 1, 2013 to October 31, 2013 and November 1, 2012 to April 30, 2013
In thousands of yen
Unitholders’ equity
Surplus
Voluntary retained
earnings
Unitholders’capitalReserve for
reduction entry

Retainedearnings

Total
surplusTotal
unitholders’equityTotal¥147,153,820¥225,796¥3,009,928¥3,235,724¥150,389,544¥150,389,544

Provision of reserve for reduction entry—

271,247(271,247)———

Payments of dividends——(2,738,558)(2,738,558)(2,738,558)(2,738,558)

Net income——

3,002,076

3,002,076

3,002,076

3,002,076—

271,247(7,729)263,518

263,518

263,518¥147,153,820¥497,043¥3,002,199¥3,499,242¥150,653,062¥150,653,062

Provision of reserve for reduction entry—

298,885(298,885)———

Payments of dividends——(2,703,314)(2,703,314)(2,703,314)(2,703,314)

Net income——

2,831,477

2,831,477

2,831,477

2,831,477—

298,885(170,722)

128,163

128,163

128,163¥147,153,820¥795,928¥2,831,477¥3,627,405¥150,781,225¥150,781,225

Balance as of October 31, 2012
Changes during the fiscal period

Total changes during the fiscal period
Balance as of April 30, 2013
Changes during the fiscal period

Total changes during the fiscal period
Balance as of October 31, 2013
See accompanying notes to the financial statements.

18 |Kenedix Realty Investment Corporation Semiannual Report

Notes to Financial Statements
Kenedix Realty Investment Corporation
For the six months period from May 1, 2013 to October 31, 2013 and November 1, 2012 to April 30, 2013

1.

ORGANIZATION AND BASIS OF PRESENTATIONORGANIZATION
Kenedix Realty Investment Corporation (”the Investment Corporation”) was established on May 6, 2005 under the Act on Investment
Trusts and Investment Corporations of Japan (“the Investment Trust Act”). On July 21, 2005, the Investment Corporation was listed on
the Real Estate Investment Trust Market of the Tokyo Stock Exchange with a total of 75,400 investment units issued and outstanding(Securities Code: 8972). Subsequently, the Investment Corporation raised funds through four public offerings and other means including
global offerings. As a result, as of October 31, 2013, the end of the seventeenth fiscal period, the number of investment units issued
and outstanding totaled 286,550 units.
The Investment Corporation is externally managed by Kenedix Real Estate Fund Management, Inc. (Note) (“the Asset Management
Company”) as its asset management company. The Investment Corporation entrust the Asset management Company and in collaboration
with the Asset Management Company, the Investment Corporation strives to maximize cash distribution to investors by securing stableearnings and sustainable investment growth. To this end, the Investment Corporation adopts the basic policy of conducting dynamic andflexible investment stance that seeks to respond to its environment and market trends, and endeavors to ensure a timely response toopportunities. (Note: On effective from October 1, 2013, the Asset Management Company for the Investment Corporation, Kenedix
Office Partners, Inc. was integrated with Kenedix Advisors, Inc. and with Kenedix Residential Partners, Inc. as the surviving corporation.
Kenedix Residential Partners, Inc. was renamed Kenedix Real Estate Fund Management, Inc. as part of the integration.)
During the period ended October 31, 2013, the Investment Corporation acquired two office buildings (Itopia Nihonbashi SA Building:acquisition price of ¥2,200 million, Welship Higashi-Shinjuku: acquisition price of ¥1,900 million) located in the Tokyo Metropolitan Area,
one central urban retail property (Ginza 4chome Tower: acquisition price of ¥9,800 million), an equity interest in a Japanese silent partnership (tokumei kumiai, “TK”) for a trust beneficiary interest in DNI Mita Building (acquisition price of ¥200 million) and sold Ikebukuro
Nikko Building (initial acquisition price of ¥1,653 million). As of October 31, 2013, the Investment Corporation had total unitholders’capital of ¥147,154 million with 286,550 investment units outstanding. The balance of interest-bearing debt amounted to ¥150,558
million as of October 31, 2013, comprising ¥144,258 million in borrowings (¥135,158 million in long-term borrowings and ¥9,100 million in short-term borrowings) and ¥6,300 million in investment corporation bonds. The Investment Corporation owned a portfolio of 85
properties with a total acquisition price of ¥304,800 million containing a total leasable area of 358,517.31m2 and preferred two investment
securities with a total acquisition price of ¥1,091 million. The occupancy ratio was approximately 95.8%. A portfolio of 85 properties
consists of 79 office buildings, 3 residential properties, 3 central urban retail properties. 69 properties are located in the Tokyo
Metropolitan Area and 16 properties are located in Other Regional Areas.
BASIS OF PRESENTATIONThe Investment Corporation maintains its accounting records and prepares its financial statements in accordance with accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of International
Financial Reporting Standards. The financial statements are prepared in accordance with the Investment Trust Act.
The financial statements are basically a translation of the Japanese audited financial statements of the Investment Corporation. In preparing the accompanying financial statements, certain reclassifications have been made to the financial statements issued domestically inorder to present them in a format which is familiar to readers outside Japan. Certain information in the business report and supplementaryschedule has been omitted. Additional information has been added to the Japanese audited financial statements for the convenience ofreaders outside Japan and this includes disclosing the prior year’s comparatives as supplemental information in the English translated
financial statements although the Japanese audited financial statements only need to disclose the current year’s information.

2.

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

Kenedix Realty Investment Corporation Semiannual Report| 19(B) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation of property and equipment is calculated on a straight-line basis over the estimateduseful lives of the assets ranging as stated below:
From May 1, 2013 to October 31, 2013

From November 1, 2012 to April 30, 2013

Buildings and structures

2-49 years

2-49 years

Machinery and equipment

3-17 years

3-17 years

Tools, furniture and fixtures

3-20 years

3-20 years(C) UNIT ISSUANCE COSTS
Unit issuance costs are amortized over a period of 3 years under the straight-line method.
(D) CORPORATE BOND ISSUANCE COSTS
Corporate bond issuance costs are amortized over a maturity period under the straight-line method.
(E) ACCOUNTING TREATMENT OF TRUST BENEFICIARY INTERESTS IN REAL ESTATE
For trust beneficiary interests in real estate, which are commonly utilized in the ownership of commercial properties in Japan, all assets
and liabilities within trust are recorded in the relevant balance sheets and statements of income and retained earnings.
(F) GROUND LEASEHOLD
Fixed term leasehold on a building and the special agreement on buildings sales, and the building are amortized over a contractual periodof 48 years and 9 months under the straight-line method.
(G) REVENUE RECOGNITION
Operating revenues consist of rental revenues including base rents and common area charges, and other operating revenues including
utility charge reimbursements, parking space rental revenues and other miscellaneous revenues. Rental revenues are generally recognizedon an accrual basis over the life of each lease. Utility charge reimbursements are recognized when earned and their amounts can bereasonably estimated. Reimbursements from tenants including utility charge reimbursements are recorded on a gross basis and suchamounts are recorded both as revenues and expenses during the fiscal period, respectively.
(H) TAXES ON PROPERTY AND EQUIPMENT
Property-related taxes including property taxes, city planning taxes and depreciable property taxes are imposed on properties on a calendar year basis. These taxes are generally charged to operating expenses for the period, for the portion of such taxes corresponding tosaid period. Under the Japanese tax rule, the seller of the property at the time of disposal is liable for these taxes on the property fromthe date of disposal to the end of the calendar year in which the property is disposed. The seller, however, is reimbursed by the purchaser
for these accrued property-related tax liabilities.
When the Investment Corporation purchases properties, it typically allocates the portion of the property-related taxes related to the period
following the purchase date of each property through the end of the calendar year. The amounts of those allocated portions of theproperty-related taxes are capitalized as part of the acquisition costs of the related properties. Capitalized property-related taxes amounted
to ¥26,946 thousand and ¥10,265 thousand as of October 31, 2013 and April 30, 2013, respectively. In subsequent calendar years, suchproperty-related taxes are charged as operating expenses in the fiscal period to which the installments of such taxes correspond.
(I) INCOME TAXES
Deferred tax assets and liabilities are computed based on the difference between the financial statements and income tax bases of assets
and liabilities using the statutory tax rates.
(J) CONSUMPTION TAXES
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes. Non-deductible consumption taxes
applicable to the acquisition of assets are included in the cost of acquisition for each asset.

20 |Kenedix Realty Investment Corporation Semiannual Report(K) DERIVATIVE FINANCIAL INSTRUMENTS
The Investment Corporation utilizes interest-rate swap and interest-rate cap contracts as derivative financial instruments only for the
purpose of hedging its exposure to changes in interest rates. The Investment Corporation deferred recognition of gains or losses resulting
from changes in fair value of interest-rate swap and interest-rate cap contracts because these contracts met the criteria for deferral
hedging accounting. However, the Investment Corporation adopted the special treatment for interest-swap and interest-rate cap contracts if they met the criteria for hedging accounting under this treatment, whereby the net amount to be paid or received under theinterest-rate swap or interest-rate cap contract is added to or deducted from the interest on the assets or liabilities for which the swap orcap contract was executed. The hedge effectiveness for interest-rate swap and interest-rate cap contracts is assessed each fiscal period
except for those that meet the criteria of special treatment.
(L) ROUNDING OF AMOUNTS PRESENTED
Amounts have been truncated in the Japanese financial statements prepared in accordance with Japanese GAAP and filed with regulatory
authorities in Japan, whereas amounts have been rounded to the nearest million in the accompanying financial statements. Totals shownin the accompanying financial statements do not necessarily agree with the sums of the individual amounts.

3.

SCHEDULE OF PROPERTY AND EQUIPMENT
In millions of yen
As of October 31, 2013
Acquisition
costs

Accumulated
depreciation

Land¥215,346¥

Buildings and structures

103,828

Machinery and equipment

1,766

Tools, furniture and fixtures
Construction in progress
Total

4.

As of April 30, 2013
Book
value

Acquisition
costs

Accumulated
depreciation

Book
value

—

¥215,346¥205,703¥—¥205,703

18,63885,190100,489

17,042

83,447

732

1,034

1,558

683

875

456

260

196

447

242

205

5

—

5

6

—

6

¥321,401¥19,630¥301,771¥308,203¥17,967¥290,236

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

The following summarizes short-term debt, long-term debt and corporate bonds outstanding as of October 31, 2013:
Classification

Short-term debt

Drawdown date

Last
Repayment date

Weighted-averageinterest rate

Balance(In millions of yen)

January 31, 2013

January 31, 2014

0.68%

August 19, 2013

November 29, 2013

0.55%

¥

1,000

August 19, 2013

November 29, 2013

0.60%

1,000

August 19, 2013

February 19, 2014

0.60%

1,000

September 13, 2013

March 13, 2014

0.57%

1,000

September 13, 2013

March 13, 2014

0.57%

900

October 31, 2013

October 31, 2014

0.55%

3,000

November 12, 2010

November 12, 2013

1.58%

November 12, 2010

November 12, 2013

1.58%

800

November 12, 2010

November 12, 2013

1.58%

400

December 1, 2010

November 12, 2013

1.32%

500

December 1, 2010

November 12, 2013

1.32%

200

December 1, 2010

November 12, 2013

1.32%

100

July 30, 2010

January 31, 2014

1.66%

3,700

January 31, 2011

January 31, 2014

1.57%

1,300

March 12, 2012

March 12, 2014

0.96%

2,250

March 12, 2012

March 12, 2014

0.96%

1,800

March 12, 2012

March 12, 2014

0.96%

1,800

March 12, 2012

March 12, 2014

0.96%

450

September 30, 2011

March 31, 2014

1.16%

2,500

July 13, 2011

July 14, 2014

1.54%

1,000

July 30, 2010

July 31, 2014

1.73%

3,700

July 29, 2011

July 31, 2014

1.03%

2,200

July 29, 2011

July 31, 2014

1.03%

1,000

Subtotal
Current portion of long-term debt

1,200

9,100
¥

1,500

Kenedix Realty Investment Corporation Semiannual Report

Classification

Current portion of long-term debt

Drawdown date

Last
Repayment date

Weighted-averageinterest rate

Balance(In millions of yen)

July 29, 2011

July 31, 2014

1.40%

September 1, 2011

August 29, 2014

1.15%

¥

1,000

March 22, 2011

September 22, 2014

1.63%

2,700

September 30, 2011

September 30, 2014

1.27%

1,000

December 26, 2011

October 31, 2014

1.24%

2,500

December 26, 2011

October 31, 2014

1.26%

2,000

December 26, 2011

October 31, 2014

1.26%

2,000

December 26, 2011

October 31, 2014

1.26%

1,000

SubtotalLong-term debt

300

37,700
May 1, 2006

April 30, 2016

2.73%

January 29, 2010

January 30, 2015

2.17%

¥

5,000
1,008

February 18, 2010

February 18, 2015

2.19%

1,840

February 18, 2010

February 18, 2015

2.19%

1,360

February 18, 2010

February 18, 2015

2.19%

800

February 18, 2010

February 18, 2015

2.19%

400

April 2, 2010

April 2, 2015

2.22%

1,650

November 12, 2010

November 12, 2015

1.79%

1,200

November 12, 2010

November 12, 2015

1.79%

800

November 12, 2010

November 12, 2017

2.02%

2,300

December 1, 2010

November 12, 2015

1.46%

800

December 1, 2010

November 12, 2015

1.46%

200

December 1, 2010

November 12, 2017

2.21%

700

January 31, 2011

January 29, 2016

1.94%

800

February 28, 2011

August 31, 2015

1.91%

3,000

February 28, 2011

January 29, 2016

1.95%

500

March 31, 2011

January 29, 2016

1.91%

2,000

March 31, 2011

March 31, 2016

1.31%

1,000

April 28, 2011

October 31, 2015

1.86%

1,500

April 28, 2011

January 29, 2016

1.89%

1,000

August 31, 2011

February 27, 2015

0.99%

1,500

September 30, 2011

March 31, 2015

1.29%

2,500

December 26, 2011

October 31, 2015

1.34%

2,500

December 26, 2011

October 31, 2015

1.32%

2,500

December 26, 2011

October 31, 2015

1.34%

2,000

December 26, 2011

October 31, 2016

1.44%

2,500

December 26, 2011

October 31, 2016

1.42%

2,500

December 26, 2011

October 31, 2016

1.44%

2,000

January 10, 2012

January 29, 2016

1.27%

2,500

January 31, 2012

January 30, 2015

1.19%

1,500

March 12, 2012

March 12, 2015

1.08%

1,000

March 28, 2012

March 28, 2017

1.36%

500

March 28, 2012

March 28, 2019

1.77%

1,400

March 28, 2012

March 28, 2019

1.77%

1,000

March 30, 2012

September 30, 2015

1.21%

2,000

April 27, 2012

October 30, 2015

1.27%

1,000

June 29, 2012

June 30, 2017

1.29%

1,500

September 21, 2012

September 21, 2017

1.16%

5,000

September 21, 2012

September 21, 2017

1.16%

1,000

September 21, 2012

September 21, 2017

1.16%

1,000

October 31, 2012

April 30, 2015

1.01%

2,500

October 31, 2012

October 31, 2016

1.06%

2,500

October 31, 2012

October 31, 2016

1.05%

1,500

October 31, 2012

October 31, 2017

1.10%

2,500

October 31, 2012

October 31, 2018

1.25%

2,500

December 10, 2012

December 12, 2016

0.98%

500

December 28, 2012

December 28, 2016

1.01%

2,000

December 28, 2012

December 28, 2017

1.09%

500

December 28, 2012

December 29, 2017

1.09%

500

January 15, 2013

January 15, 2017

0.97%

1,000

February 18, 2013

February 18, 2017

0.84%

1,500

March 26, 2013

March 26, 2018

1.04%

1,000

March 26, 2013

March 26, 2018

1.04%

1,000

| 21

22 |

Kenedix Realty Investment Corporation Semiannual Report

Classification

Drawdown dateLong-term debt

Last
Repayment date

Weighted-averageinterest rate

Balance(In millions of yen)

April 30, 2013

April 30, 2016

0.73%

July 31, 2013

July 29, 2016

0.63%

¥

1,000

July 31, 2013

July 31, 2018

0.73%

500

August 19, 2013

August 19, 2018

0.95%

1,000

August 19, 2013

August 19, 2018

0.95%

1,000

August 19, 2013

August 19, 2018

0.95%

500

August 19, 2013

August 19, 2018

0.95%

500

August 19, 2013

August 19, 2018

0.97%

500

August 30, 2013

August 31, 2018

1.08%

700

August 30, 2013

August 31, 2018

1.08%

500

August 30, 2013

August 31, 2018

1.08%

300

August 30, 2013

August 31, 2020

1.42%

1,500

September 30, 2013

September 30, 2019

1.06%

1,800

September 30, 2013

September 30, 2019

1.06%

900

October 31, 2013

October 31, 2018

0.89%

1,500

500

Subtotal

97,458

Corporate bonds

March 15, 2007

March 15, 2017

2.37%

March 8, 2012

September 8, 2017

2.00%

¥

1,500

September 12, 2013

September 12, 2018

1.00%

1,800

Subtotal

6,300

Total

5.

3,000

¥150,558

REDUCTION ENTRY

The amount of reduction entry of property and equipment acquired by government subsidy
In thousands of yen
As of October 31, 2013

As of April 30, 2013

¥26,230¥26,230

Buildings and structures

6.

PER UNIT INFORMATION
Yen
From May 1, 2013 to October 31, 2013

From November 1, 2012 to April 30, 2013

Net asset value per unit

¥526,195¥525,748

Net income per unit

¥

9,881

¥ 10,477

286,550

286,550Weighted average number of units (units)

The weighted average number of units outstanding of 286,550 as of October 31, 2013 and April 30, 2013 was used for the computationof 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.

7.

INCOME TAXESThe Investment Corporation is subject to corporate income taxes at a regular statutory rate of approximately 37%. However, theInvestment Corporation may deduct from its taxable income amounts distributed to its unitholders, provided the requirements are met
under the Special Taxation Measures Law of Japan. Under this law, the Investment Corporation must meet a number of tax requirements,
including a requirement that it currently distribute in excess of 90% of our distributable profits as defined in the Special Taxation
Measures Law of Japan for the fiscal period in order to be able to deduct such amounts. If the Investment Corporation does not satisfy
all of the requirements, the entire taxable income of the Investment Corporation will be subject to regular corporate income taxes. Since
the Investment Corporation distributed in excess of 90% of its distributable profit in the form of cash distributions totaling ¥2,665 million(deducting ¥166 million as the provision of reserve for reduction entry) and ¥2,703 million (deducting ¥299 million as the provision ofreserve for reduction entry) for the periods ended October 31, 2013 and April 30, 2013. Such distributions were treated as deductible
distributions for purposes of corporate income taxes. The effective tax rate on the Investment Corporation’s income was 0.05% and0.04% for the periods ended October 31, 2013 and April 30, 2013.

Kenedix Realty Investment Corporation Semiannual Report| 23

The following summarizes the significant difference between the statutory tax rate and the effective tax rate:
As of October 31, 2013

As of April 30, 2013

Statutory tax rate

36.59%

36.59%

Deductible cash distributions(34.43)(32.93)

Provision of reserve for reduction entry(2.14)(3.64)

Others0.03

0.02

Effective tax rate

0.05%

0.04%

The significant components of deferred tax assets and liabilities as of October 31, 2013 and April 30, 2013 were as follows:
In thousands of yen
As of October 31, 2013

As of April 30, 2013

Deferred tax assets:
Enterprise tax payable
Amortization of leasehold rights

¥

47

¥

36

1,543

1,278

Subtotal deferred tax assets

1,590

1,314

Valuation allowance

1,543

Total deferred tax assets

8.

¥

1,278

47

¥

36

NET ASSETSThe Investment Corporation issues only non-par value units in accordance with the Investment Trust Act. The entire amount of the issue
price of new units is designated as stated capital. The Investment Corporation is required to maintain net assets of at least ¥50 million as
required by the Investment Trust Act.

9.

RELATED-PARTY TRANSACTIONSTRANSACTIONS WITH KENEDIX REAL ESTATE FUND MANAGEMENT, INC.
Kenedix Real Estate Fund Management, Inc., a consolidated subsidiary of Kenedix, Inc., provides the Investment Corporation with property
management services and related services. For these services, the Investment Corporation pays Kenedix Real Estate Fund Management, Inc.
property management fees in accordance with the terms of its Property Management Agreements. For these services, the Investment
Corporation paid ¥362 million to Kenedix Real Estate Fund Management, Inc.

10.

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

Rental and other operating revenues, property-related expenses, gain on sale of real estate property for the six months periods fromMay 1, 2013 to October 31, 2013 and November 1, 2012 to April 30, 2013 consist of the following:
In thousands of yen
From May 1, 2013 to October 31, 2013

From November 1, 2012 to April 30, 2013

Rental revenues¥6,649,670¥6,628,333

Common area charges

1,587,331

1,589,549

8,237,001

8,217,882

Parking space rental revenues

299,884

292,402

Utility charge reimbursement

851,381681,272

Miscellaneous

113,434

114,531

Subtotal

1,264,699

1,088,205

9,501,700

9,306,087

Rental and other operating revenues:

Subtotal
Others:Total rental and other operating revenues
Property-related expenses:
Property management fees and facility management fees

951,025

951,905

1,696,849

1,662,016

Utilities

928,822753,048

Taxes

851,090820,158

Insurance

14,372

14,837

Repairs and maintenance

173,604

322,652

Trust fees

42,37742,926

Loss on retirement of fixed assets

10,114

5,193

Others177,574

167,349¥4,845,827¥4,740,084

Depreciation

Total property-related expenses

24 |Kenedix Realty Investment Corporation Semiannual Report

Gain on sale of real estate property:
Revenue from sale of investment property¥1,970,000¥3,180,000

Cost of investment property

1,672,153

2,641,181

Other sales expenses
Gain on sale of real estate property

11.

63,341

76,775¥ 234,506¥ 462,044

PROPERTY INFORMATIONType

Office Buildings

Central Urban
Retail Properties

Residential Properties

Tokyo
Metropolitan Area

Other Regional
Areas

Tokyo
Metropolitan Area

Other Regional
Areas

Tokyo
Metropolitan Area

64

15

2

1

3

¥221,923¥52,295¥6,603¥1,80072.81%

17.16%

2.17%

0.58%

7.28%

Net book value

221,450

50,919

5,994

1,745

22,019Appraisal value

205,818

44,417

5,573

1,560

21,87073.71%

15.91%

2.00%

0.55%

7.83%

Location

Number of properties

Property information(In millions of yen)

Acquisition price
Percentage of total acquisition price

Percentage of total appraisal value

Financial results for the period from May 1, 2013 to October 31, 2013
Rental and other operating revenues¥22,180(In thousands of yen)

¥6,601,873¥2,162,391¥188,186¥91,588¥457,662

Rental revenues

5,757,566

1,825,792

167,392

81,547404,704

Other revenues

844,307

336,599

20,794

10,041

52,9582,119,341

847,177

55,24832,414

94,798Property management fees

621,588

270,775

19,3508,255

31,057

Taxes

602,884

207,590

13,006

7,608

20,002

Utilities

647,058

238,328

2,696

2,174

38,566

Repairs and maintenance

104,826

52,181

7,176

7,643

1,778

8,484

4,963

357

311

257

134,501

73,34012,663

6,423

3,138

NOI (Net Operating Income)

4,482,532

1,315,214

132,938

59,174362,864

Depreciation expenses

1,117,815

414,689

57,561

21,437

85,347

Operating income from property leasing activities

3,364,717

900,525

75,37737,737

277,517

Property-related expenses

Insurance
Trust fees and other expenses

Capital expenditures

513,966

376,034

2,908

—

1,120

NCF (Net Cash Flow)¥3,968,566¥ 939,180¥130,030¥59,174¥361,744

A breakdown of property-type as of October 31, 2013 was as follows:
Class of assets

Property and equipment

Property type

Office Buildings

Area

Tokyo Metropolitan Area
Other Regional Areas

Subtotal
Residential Properties

69.9%

50,91916.1%

272,369

86.0%

5,994

1.9%

Other Regional Areas

1,745

0.6%

7,739

2.4%

Subtotal

Total

Percentage of total assets¥221,450

Tokyo Metropolitan Area

Central Urban Retail Properties Tokyo Metropolitan Area
Subtotal

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

22,0197.0%

22,0197.0%

302,127

95.4%

Investment securities

1,106

0.3%

Bank deposits and other assets

13,520

4.3%

Total assets

316,753

100.0%

Total liabilities

165,972

52.4%

Net assets¥150,781

47.6%

Kenedix Realty Investment Corporation Semiannual Report

12.

| 25

FINANCIAL INSTRUMENTS

Seventeenth Fiscal Period (May 1, 2013 to October 31, 2013)(A) OVERVIEW(1) POLICY FOR FINANCIAL INSTRUMENTS
The Investment Corporation procures essential funds for acquiring properties and undertaking the repayment of loans primarily throughbank loans and the issuance of corporate bonds and new investment units. The Investment Corporation uses derivatives for the purpose ofhedging its exposure to changes in interest rates and does not enter into derivatives for speculative or trading purposes. Management of
surplus funds is undertaken in a prudent manner that considers fully such factors as safety, liquidity, interest rate conditions and cash flows.
(2) TYPES OF FINANCIAL INSTRUMENTS AND RELATED RISK
Investment securities are preferred equity securities issued by a special purpose entity (tokutei mokuteki kaisha, ”TMK”) as set forth by
the Act on Securitization of Assets and Japanese silent partnership (tokumei kumiai, ”TK”) interests are exposed to credit risk of the issuer
and risk of fluctuation of value of its property.
Debt and corporate bonds are used primarily for procuring funds necessary for the acquisition of properties and have a redemption dateof a maximum of seven years following the accounting date. Although a certain portion of said liabilities are subject to interest rate fluctuation risk, the Investment Corporation utilizes derivatives (interest-rate swap and interest-rate cap transactions) in order to reduce such risk.
Interest-rate swap and interest-rate cap transactions are used as derivative financial instruments. Utilizing interest-rate swap and interestrate cap transactions, the Investment Corporation fixes its interest expense for long-term debt bearing interest at a variable rate. With
regard to hedge accounting methods, hedging instruments and hedged items, hedge policy, and the assessment of the effectiveness ofhedging activities, please see 2. (K) Derivative Financial Instruments.
(3) RISK MANAGEMENT FOR FINANCIAL INSTRUMENTS(a) Monitoring of market risk (the risks arising from fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap transactions and interest-rate cap transaction in order to minimize risk arising fromfluctuations in interest rates on funds procured. The Investment Corporation periodically reviews the value of the property and financial
condition of the issuer with regard to investment securities.
(b) Monitoring of liquidity risk (the risk that the Investment Corporation may not be able to meet its obligations on scheduled
due dates) associated with funds procurement
Although loans and other liabilities are subject to liquidity risk, the Investment Corporation reduces such risk by spreading out payment
due dates and by using diversified fund procurement methods. Liquidity risk is also managed by such means as regularly checking thebalance of cash reserves.
(4) SUPPLEMENTARY EXPLANATION OF THE ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available,
fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions
and factors could result in a different fair value.
(B) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of financial instruments on the balance sheet as of October 31, 2013 and estimated fair value are shown in thefollowing 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

햲 Cash and bank deposits
Subtotal햲 Short-term debt
햳 Corporate bonds(including current portion of corporate bonds)
햴 Long-term debt(including current portion of long-term debt)
Subtotal
Derivative Transactions (*)

Carrying value

Estimated fair value

Difference¥ 11,452,986¥ 11,452,986¥

11,452,986

11,452,986—

9,100,000

9,100,000—

6,300,000

6,482,910

182,910135,158,000¥150,558,000

135,751,380¥151,334,290

593,380¥776,290

—

—

—

—

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

26 |Kenedix Realty Investment Corporation Semiannual Report*1: METHODS TO DETERMINE THE ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS AND OTHER MATTERS RELATED TO
SECURITIES AND DERIVATIVE TRANSACTIONSASSETS햲 Cash and bank deposits
Since these items are settled in a short period of time, their carrying value approximates fair value.
LIABILITIES햲 Short-term debt
Since these items are settled in a short period of time, their carrying value approximates fair value.
햳 Corporate bonds
The fair value of corporate bonds is based on quoted market prices.
햴 Long-term debt
The fair value of long-term debt is based on the present value of the total of principal and interest discounted by the interest rate to be
applied if similar new loans were entered into. The fair value of long-term debt bearing interest at variable rates, which is subject to fixedinterest rates resulting from interest-rate swaps and special treatment applied to said swaps, is based on the present value of the total ofprincipal and interest, which is handled together with applicable interest-rate swaps, discounted by the interest rate to be applied if similarloans were entered into.
DERIVATIVE TRANSACTIONS햲 Hedge accounting not applied
Not applicable햳 Hedge accounting applied
Contracted amount(In thousands of yen)

Hedge accounting
methodType of derivativetransactions

Special treatment ofinterest-rate swaps

Interest-rate swaps:
Receive/floating andpay/fixed

Long-term debt

Interest-rate cap

Long-term debt

Special treatment ofinterest-rate cap
Total

Maturing after 1 year

Fair value(In thousands of yen)Calculation method for
applicable fair value¥26,700,000¥20,700,000*—

3,000,000

3,000,000*—¥29,700,000¥23,700,000

Hedged items—(*) Interest-rate swaps and interest-rate caps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, theirfair value is included in the fair value of the hedged long-term debt.

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

Carrying value (In thousands of yen)

Investment securities¥1,106,339

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above preferred equity securities
of TMK and 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 bank deposits¥11,452,986

Total¥11,452,986*4: REDEMPTION SCHEDULE FOR DEBT AND CORPORATE BONDS
In thousands of yen
Due within 1 year
or less

Due after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Short-term debt

¥ 9,100,000

¥

¥

¥

¥

Corporate bonds

—

—

—

4,500,000

1,800,000—

Long-term debt

¥37,700,000¥30,558,000¥30,800,000¥15,000,000¥14,500,000¥6,600,000

—

—

—

—

Due after
5 years¥—

Kenedix Realty Investment Corporation Semiannual Report

13.

| 27

INVESTMENT AND RENTAL PROPERTIES

Seventeenth Fiscal Period (May 1, 2013 to October 31, 2013)
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, 2013

Net change

As of October 31, 2013

Fair value as of October 31, 2013
(In thousands of yen)

¥290,593,741¥11,533,520¥302,127,261¥279,238,000

notes: 1. The carrying value represents the acquisition cost less accumulated depreciation.
2. The fair value is the appraisal value or the survey value determined by outside appraisers.
3. Among changes in the amount of real estate for rental purposes that occurred during the fiscal period under review, principal increases and decreases were
the acquisition of 3 properties totaling ¥14,020,279 thousand, the sale of 1 property totaling ¥1,672,153 thousand and depreciation amounting to¥1,696,849 thousand.

Income and loss in the fiscal period ended October 31, 2013 for real estate for rental purposes is listed in the Note “10.
BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, GAIN ON SALE OF REAL ESTATEPROPERTY“.

14.

SUBSEQUENT EVENTSISSUANCE OF THE NEW INVESTMENT UNITS
On October 24, 2013 and November 6, 2013, the Board of Directors of the Investment Corporation resolved to issue new investment
units as detailed below. The payments were completed on November 13, 2013 through issuance of public offering, and the payments
were completed on December 10, 2013 through issuance of third-party allotment. As a result of the issuance of new investment units,
the Investment Corporation had total unitholders’ capital of ¥166,261,745,670 with 332,540 investment units outstanding as ofDecember 10, 2013.
(Issuance of New Investment Units through Public Offering)Issuance of New Investment Units: 43,800 units (Domestic Offering 21,900 units, International Offering 21,900 units)

Issue Price (Offer Price): ¥430,950 per unit

Aggregate Issue Price (Total Offer Price): ¥18,875,610,000

Issue Amount (Paid-in Value): ¥415,480 per unit

Total Issue Amount (Aggregate Paid-in Value): ¥18,198,024,000

Payment Date

: November 13, 2013

(Issuance of New Investment Units through Third-Party Allotment)
Issuance of New Investment Units: 2,190 units

Issue Amount (Paid-in Value): ¥415,480 per unit

Total Issue Amount (Aggregate Paid-in Value): ¥909,901,200

Payment Date

: December 10, 2013

Allottee: Nomura Securities Co., Ltd.

(Use of proceeds)
The funds from the Domestic Offering and International Offering, allocated as a portion of the funds for the acquired properties inEighteenth Fiscal Period and residual amounts allocated as a portion of the funds for the repayment of borrowings alongside theacquisition of assets acquired in the Seventeenth Fiscal Period. Furthermore, because cash on hand was allocated as a portion of thefunds for the acquisition of properties acquired in the Seventeenth Fiscal Period, the funds from the issuance of new Investment Unitsby third-party allotment are allocated to as proceed to compensate for the decrease of cash on hand resulting from the allocation.

28 |Kenedix Realty Investment Corporation Semiannual ReportStatements of Cash Flows (Unaudited)
Kenedix Realty Investment Corporation
For the six months period from May 1, 2013 to October 31, 2013 and November 1, 2012 to April 30, 2013
In thousands of yen
From May 1, 2013
From November 1, 2012
to October 31, 2013
to April 30, 2013

CASH FLOWS FROM OPERATING ACTIVITIES:
Income before income taxes
Adjustments to reconcile income before income taxes to
net cash provided by operating activities:
Depreciation and amortization
Interest income
Interest expense
Loss on retirement of fixed assets
Changes in assets and liabilities:
Rental receivables
Consumption tax refundable
Accrued consumption tax
Trade and other payables
Rents received in advance
Property and equipment due to sale
Others, net
SubtotalInterest income received
Cash payments of interest expense
Cash payments of income taxes
Net cash provided by operating activities¥ 2,832,981¥ 3,003,405

2,023,561(565)
1,050,678
10,114

1,981,289(558)
1,046,727
5,193(69,012)(100,159)(155,406)
109,022(179,837)
1,672,153(212,763)
6,980,767
565(1,056,258)(890)
5,924,184

240,699—
68,323(102,818)
203,5932,641,181(129,157)
8,957,877
558(1,076,960)(1,092)7,880,383

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
Purchases of investment securities
Proceeds from leasehold and security deposits received
Payments of leasehold and security deposits received
Payments of restricted bank deposits
Proceeds from restricted bank deposits
Others, net
Net cash used in investing activities(15,090,275)(202,400)
1,161,189(623,098)(94,092)
32,279(292)(14,816,689)(2,860,168)—
639,486(1,409,380)—
569,851—(3,060,211)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt
Payments of short-term debt
Proceeds from long-term debt
Payments of long-term debt
Proceeds from issuance of investment corporation bonds
Redemption of investment corporation bonds
Payment of dividends
Net cash provided by (used in) financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of period

7,900,000(4,500,000)
11,700,000(7,211,500)
1,784,250(1,500,000)(2,702,999)
5,469,751(3,422,754)
14,371,603¥ 10,948,849

1,200,000(1,200,000)
9,000,000(7,211,500)——(2,738,824)(950,324)
3,869,848
10,501,755¥14,371,603

See related notes.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (UNAUDITED)CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments which are highly liquid, readily
convertible to cash and with insignificant risk of market value fluctuation, with maturities of three months or less from the date of purchase.
CASH AND CASH EQUIVALENTS (UNAUDITED)Cash and cash equivalents consisted of the following as of October 31, 2013 and April 30, 2013:
In thousands of yen

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

As of October 31, 2013

As of April 30, 2013

¥11,452,986¥14,813,927(504,137)(442,324)¥10,948,849¥14,371,603

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