Kenedix Realty Investment Corporation
7th Period Results (Ending October 2008)
December 12, 2008
Kenedix REIT Management, Inc.
http://www.kdx-reit.com/eng/Management policies based on J-REIT market environment
Current
situation

New investments

Limited increase in cap
rates for office buildings
in central Tokyo
WACC is on the rise.

Internal growth

Raised the ratio of
office buildings to 89%

Management policies
for the time being

Raised the level of NOI
yield
Raised rents for
new/existing tenants

Changes in leasing
market/tenant trends
caused by the
economic downturn

Emphasis on
diversified maturities
and relations withbanks
Conservative interestbearing debt ratio

Near-term refinancing
availability is watchedclosely.
Importance of low
interest-bearing debt
ratio

Portfolio management

AUM reached over
￥200B, 69 properties

Financial

External growth

Achievements♦ Investments only within the scope of replacement of assets♦ Sale of properties: Residentials, central urban retails, and regional
offices are high on the list of properties for sale
♦ Partial investment by ITOCHU to Kenedix REIT Management for
property information

Management of existing properties♦ Shorten vacancy periods and maintain high occupancy ratios throughdynamic and flexible leasing activities♦ Refrain from negotiations for rent increases with existing tenants, inprinciple

Financial policies♦ Further reduce interest-bearing debt ratio♦ Increasing cash position♦ Continue to maintain good relations with financial institutions

We focus on strengthening the financial base to seize
regrowth opportunities upon market upturn, while securing
stable cash distributions.
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

1

SECTION 1

7th Period Financial Results (Ending October 2008)

7th period financial results—Performance highlights
Performance
5th period
results(to Oct. 2007)

6th period
results(to Apr. 2008)

7,208

8,582

8,456

-

512

299

▲213 7th period: Profit from sale of ZARA Tenjin Nishi-dori and Hakata Ekimae Dai-2

Rental business profit

4,002

4,182

4,477

+294 +7.0% (Increase(Increase in rental revenues substantially exceeded increase in expenses
expenses))

Depreciation

1,392

1,430

1,445

+15 -

Net income

2,792

3,342
3,342

3,123
3,123

▲218

Net operating income (NOI)

5,394

5,612
5,612

5,923

+310 +5.5% (Net Operating Income： Rental revenues – Property-related expenses +Depreciation)

FFO (Funds from operation)

4,184

4,259

4,269
4,269

+10 Net income + Depreciation – Profit/Loss from property sale

Number of units outstanding

200,000units(¥M)

Operating revenues
Profit/Loss from property sale

FFO per unit
Distribution per unit

7th period
Difference
resultsof 6th & 7th(to Oct. 2008)
period(▲652M from 6th period)▲126 Mainly caused by decrease of profit from property (▲6th period: Net profit/loss from sale of 23 residentials
Building

200,000units 200,000units¥ 20,920¥ 21,297¥ 21,345
21,345¥ 13, 960

¥ 16,711¥ 15,618

Notes(Reference)IIf the profit/loss from property sale deducted：
deducted
7th period ¥2,823M
6th period ¥2,829M- No new issue＋¥48 Same as 6th periods’ FFO per unit
deducted▲¥1,093 (Reference)IIf the profit/loss from property sale deducted：
7th period ¥14,100

6th period ¥14,100

Financial ratio
7th period Difference of
5th period
6th period
results
results
results
6th & 7th
Notes
(to Oct. 2007) (to Apr. 2008) (to Oct. 2008)
periodTotal assets

213,763

230,520

239,648＋9,128 ＋3.9%

Total unitholders’ equity

127,761

128,314

128,087▲227 ▲0.2%

Total unitholders’ equity per unit

¥ 638,809¥ 641,570¥ 640,437▲¥1,133 Net asset value after distribution adjustment: ¥624,859

Interest-bearing debt ratio

35.3%

38.9%

41.2%

+2.3％

Increase due to acquisition of new properties

Unitholders’ equity to total assets

59.8%

55.7%

53.4%

▲2.3%

Decrease in equity capital ratio due to increase in debts and borrowings

77

68

69

+1

248,653.07㎡

248,625.52㎡

256,214.30㎡

96.9%

95.9%

95.6%

Number of properties
Total leasable floor area
Occupancy ratio+：Office（3） ▲：Office（1）、central urban retail（1）+7,588.78㎡ ＋3.1%▲0.3%

95.7% for offices, 94.7% for central urban retails, 96.7% for residentials

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

3

8th period earnings forecasts
Operating forecasts for 8th period (to April 2009)
7th period
results(to Oct.
2008)

8th period
forecasts(to Apr.
2009)

Operating revenues

8,456

8,298

+ ￥139M if profit/loss from property sale in the 7th Period is▲158 (Reference)
excludedOperating expenses

4,311

4,357

＋46 -

2,233

2,256

＋23 -

1,445

1,428

▲17 -

Operating income

4,144

3,941

▲203 Profit/loss from property sale in the 7th period on actual basis vanished

Non-operating expenses

1,034

1,067

＋33 Mainly due to increase in interest payable

Interest expense

948

1,007

＋58 Increase in cost of finance due to widening spreads

Ordinary income

3,124

2,881

▲243 -Net income

3,123

2,880

+ ￥56M, if profit/loss from property sale in the 7th period is▲243 (Reference)
excludedNumber of units outstanding

200,000

200,000

Distribution per unit

15,61814,400NOI (Rental revenues – Property-related expenses+ Depreciation)

5,923

6,042

＋119 Increase of rental operating income

FFO (Net income + Depreciation –Profit/Loss from property sale

4,269

4,309

＋40 No influence from property sale

299

0

68→69

69

(¥M)

Property-related expenses(excl. depreciation)
Depreciation(Reference) Profit/Loss from property sale
(Reference) Changes in the number of properties[Reference]

Difference of
8th forecast
and 7th actual

Notes

Approx. ￥14,100 when decating the profit/loss from property▲1,218 (Reference)saleth▲299 Profit/Loss from salel of 2 residentials in the 7 period

０ Assumes continued holding of properties held as of end of the 7th period

Preconditions of 8th period forecasts

Preconditions of 9th period forecasts

No acquisition/sale of properties
No profit/loss from property saleTaxes become expence
The estimated amount of property tax and city planning tax on officebuildings: + ¥19M from 8th period

As of the end of period, interest-bearing debt is expected to reachapprox. ¥ 98.75B, with interest-bearing debt ratio of approx. 41.2%

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

4

SECTION 2

Stronger Focus on Office Buildings

Increase in the ratio of office buildings
Increase in asset scale focused on office buildings

End of 7th period (2008/10)
Composition of portfolio by property types

Changes in total acquisition prices
(￥B)
250

■Offices ■ Central Urban Retails ■Residentials

226.3
217.1

197.0

Central Urban
Retails
5.4%

Residentials
5.6%

Offices
88.9%

200

175.0
146.7
150

137.9
115.9
100

81.4

188.4

201.2
Composition of offices by area

86.2
Other regionalareas¥35.3B
17.5%

69.1

50

0

37.7

48.2

12.3

12.3

18.9

20.7

End of 1st
period(2005/10)

End of 2nd
period(2006/4)

16.0

16.0

16.0

44.4

43.0

43.0

End of 3rd
period(2006/10)

End of 4th
period(2007/4)

End of 5th
period(2007/10)

16.0

12.3

12.7

12.7

End of 6th
period(2008/4)

End of 7th
period(2008/10)

Other Tokyo
metropolitan
area¥ 42.0B
20.8%

Notes: Figures for the 6th and 7th period include the acquisition price of building planned to be acquired of Sakae 4-chome Office Building (TentativeName) (￥4,325M). Amounts are rounded down to the nearest ￥100M. Pie chart shows the ratio of relevant property types to total, and arerounded down to the first decimal place. Central Tokyo: Chiyoda, Chuo, Minato, Shibuya, Shinjuku
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

CentralTokyo¥ 123.9B
61.5%

6

Focusing more on mid-sized office buildings by replacement ofassets
Focusing more on mid-sized office buildings in the Tokyo metropolitan area
Office buildings acquired in 7th period (Total acquisition price ￥14.31B)
KDX Iwamoto-cho Building

KDX Harumi Building

KDX Hamamatsucho Dai-2 Building

Average age of office buildings acquiredin each period(Year)
30
20
10
0
5th period

6th period

7th period*The average age of office buildings acquired in each period shown
above is as of the end of October 2008.
Acquisition
Date
Type
Location
Acquisition
priceCompletion
Occupancy

2008/5/1
OfficeChiyoda-ku Tokyo¥1.86B
2008/3
92.7%

Acquisition
Date
Type
Location
Acquisition
priceCompletion
Occupancy

2008/6/30
OfficeChuo-ku Tokyo¥10.25B
2008/2100.0%

Acquisition
Date
Type
Location
Acquisition
priceCompletion
Occupancy

2008/9/1
OfficeMinato-ku Tokyo¥2.20B
1992/4100.0%

Central Tokyo＋¥14.31B

Properties sold in 7th period （Total initial acquisition price ¥5.1B）
5.1B）
ZARA Tenjin Nishi-dori
Sales Date

Hakata Ekimae Dai-2 Building

2008/6/25
Central Urban
Type
RetailArea
Regional
Acquisition price¥3.68B
Initial Sales price¥4.10B
Completion
2005/11

Sales Date
Type
Area
Acquisition price
Initial Sales priceCompletion

2008/7/30
OfficeRegional¥1.43B¥1.47B
1984/9Fukuoka▲¥5.11B

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

7

KDX Harumi Building: Acquisition and occupancy increases(during 7th period)
Investment in property developed by Kenedix Group

Achieved leaselease-up (Occupancy ratio
ratio))
Occupancy ratio (end tenant basis)
KDX’ fixed rent ratio

KDX Harumi Building
Tenant (by section)

861.52

Office9260.61861.52

Office8260.61861.52

Office

92.90
tsubo

4,303.60 m2/1,303.05 tsubo
Data communications
company

80%

55.6%

60%

40%

46.3% 46.3% 46.3%
37.1%

20%

7

260.61861.52

Office6260.61861.52

Office861.52 m2 / 260.61 tsubo
Data communications co.

5

260.61861.52

Office861.52 m2 / 260.61 tsubo
Manufacturer (HQ)4

260.61861.52

Office3260.61861.52

Office2260.61861.52

Office1

205.32678.80

Entrance
Retail2584.56 m2 / 781.83 tsubo
Financial company
510.80 m2/
154.50 tsubo
Display condo

5 floors (2F – 6F) were
occupied at the time ofacquisition

09/2

260.61

74.81
tsubo

09
/1

10

92.90
tsubo

100.0%
92.7%

94.5%
Contract concluded
Contracts
for 1Fconcluded for 7F –74.2%
11F and part of 1F

08
/1
0
08
/1
1
08
/1
2

Office307.10m2

08/9861.52247.30m2

08/8

260.61

307.10
m2

100%

08
/7

11

C

08
/6

Type

B

08
/5

Total
Floor
Area
(m2)

Floor

Total
Floor
Area
(tsubo)A

100.0% 100.0%* KDX fixed rent ratio: The ratio of the sum of floor area covered by fixed
rent contracts concluded on June 30 2008 and the floor area of end
tenants (2F–6F) versus the building’s total floor area.

■ Fixed rents for space not occupied by end tenants (partial
fixed rent contract outline: a partial fixed rent master
lease contract was concluded with the seller Kenedix, Inc.
(KDX) at the time of acquisition)
Office portion¥18,000/month per tsubo (7F–11F)

Retail portion¥15,000/month per tsubo (1F)

168.0㎡/50.82tsubo Convenience store♦

Location: Harumi 3-chome, Chuo-ku,
Tokyo

♦

GFA

: 12,694.32 m2♦

Completion: February 2008♦

Number of stories : B1 F11♦

Acquisition price: ¥10,250M♦

Acquisition date

: June 30, 2008

Inception date 2008/7 ~ Office: 6 floor portion
2008/9 ~ Office: 8 floor portion
2009/1 ~ Office: 10 floor portion
2009/2 ~ Office: 10 floor portion
and Retail portion

All end tenant contract rent levels wereabove KDX’s fixed rents

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

8Flexible management according to market environment
Acquisition of offices and sale of properties (Residentials, central urban retail, regional office) and funding achieved(¥B)

4th period(Apr. 2007)

5th period(Oct. 2007)

6th period(Apr. 2008)

Strategy for the
8th period andthereafter

7th period(Oct. 2008)

10
5

New
debt

0

Sale

Equityfinance＜Future policy＞
Acquisition of offices will be
kept in principle within thescope of replacement＜Future policy＞

Sale

Repayment

Acquisition of
offices15

Acquisition of offices

20

Acquisition of offices

25•Repayment•Cash on hand

Acquisition of offices30•Acquisition

New
debt
Prepayment

35

Prepayment

40

Investment
Co Bonds

45

Sale

New
debt

Sale

・Preferential sale of central urban
retails, residentials and regional
offices.
・Depending on conditions for sale,offices can also be included toproperties for sale・Sale will be implemented on BV
basis, but preference will be onbuilding up stability

50%
45%
40%
35%

47.0%

35.3%

38.9%
41.2%

Changes in LTV

30%

End of 4th period

End of 5th period

End of 6th period

End of 7th period

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

9

SECTION 3

Management of Existing Properties

Management of existing properties－
rent level of new contracts for office buildings
Track record for increasing the rent level for new contracts
Changes in average rent increase (rents for new
tenants)
25%
20%
15%
10%

＋20～30%＋10～20%＜Future policy＞

0-▲5%

16.2%

14.9%

(Based on leased area)▲15-▲20%▲10-▲15%▲5-▲10%

21.6%

16.5%

Breakdown of changes in 7th period (Rents of new contracts)

11.3%
5%

＋0～5%

0%
3rd
period4th
period5th
period6th
period＋5～10%

7th
periodAverage change (including rent reduction)：
3rd period： 7.0% 5th period： 11.4% 7th period：
3.9%
4th period：14.0% 6th period： 16.7%

Average change by region (Simple average based on number of contracts)：
Central Tokyo：13.5% (rent increase 8, no change in rent 0)
Other Tokyo metropolitan area ： 5.8% (rent increase 5, rent reduction 2)
Other Regional areas：-5.1% (Rent increase 3, rent reduction 7)(Note) The above figures represent the simple averagevariances in rents for all new contracts(Note) The above increase/change are comparisons of new rents with the averagerent of relevant buildings (office buildings that are more than 2F tall)

Changes in tenant turnover ratio(actual and estimated: annualized)

15%

5th
period6th
period7th
period8th period(E)

Expandoffice space

4

2

3

3

Reduceoffice space

17

17

23

Other/
Unknown

5

11

5

14.8%

12.2%

8.2%
10%

7.7%

7.0%

8.4%

6.1%
2.7%

5%
0%
1st
period2nd
period3rd
period4th
period5th
period6th
periodAverage 8.4%(annualized basis)

Average vacancy period(Down time)

Main reasons for moving out

20%

7th 8th period
period(E)

Considering market
environment and future
trends, we will focus on
keeping vacancy period
short and improving
occupancy raito bycomplying flexibly to therequests of prospective
tenants

7th
periodOccupancy at
end of 7th period

Central Tokyo

1.0
4.2
months months

95.9%

32

Other Tokyo
metropolitan area

3.6
4.2
months months

96.9%

3

Other regional areas

10.6
10.2
months months

94.1%

Note: Other/Unknown includes 2 move outs following
negotiations on rent increase at contract
renewal

6th
periodNote:

Average (of each floor) based on number of contracts.
Floors covered by the survey are the followings:
Offices on 2F or above high that were・ vacant at start of period, but acquired new tenants during
the relevant period・ continuously vacant from start to end of period・ cancelled during but managed to acquire new tenants during
the relevant period

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

11

Management of existing properties－
rent level of renewed contracts for office buildings
Track record for increasing contract renewal
Distribution of volatility in the 7th period(Rents for renewed contracts)

Ratio of rents increased at contract renewal
and changes in average rent increase+20~30%
70%
60%
50%
40%
30%
20%
10%
0%

Ratio of rents increased at contract renew
renewalal
Average rent increase (%)
12%

6.9%

7.8%
39.5%

7.5%

10.3%

51.5%

43.4%

13.0%
4th period

5th period

6th period+30% ~

10%
8%
6%
4%
2%
0%

+10~20%tenants, and will focus on
maintaining high+5~10%

maintainstatus quo

occupancy ratios

Note The ratio of rent increase cases above reflect all upward rent revisions
revisions achieved
through negotiations irrespective of renewal terms. The ratios ofof rent increase
cases are based on leased floor area, whereas the average rent increases
increases are
based on rents+0~5%

No negotiations forrent increase in
principle

Implemented fullfledged negotiations
for rent increase100%

negotiate for rent
increases with existing

56.6％ 43.4％

7th period

Changes in occupancy ratios for officebuildings（by region）＜Future policy＞
In principle, we do not

Average unit rent for office buildings（End of 7th period ）（￥）30,00020,50098%

20,00017,40014,200
11,10096%

10,00094%

Started negotiations
for rent increase ofproperties in center
Tokyo

92%

0
Central Tokyo

Tokyo metropolitan area
Other regional areas

08
/1
0

08
/8

08
/6

08
/4

08
/2

07
/1
0
07
/1
2

07
/8

07
/6

07
/4

07
/2

06
/1
0
06
/1
2

06
/8

06
/6

06
/4

06
/2

90%

Other Tokyo
metropolitan
area

Other regional
areas

Total Office
Buildings

Note：Amounts show the weighted average of the sum of
average rent based on gross floor area divided by the
number of properties in each area. Survey covers offices
on 2F or above

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

12

Management of existing properties—
stability of mid-sized office buildings (tenant diversification)
Status of end-tenants for office buildings(End of 7th period)# of end-tenants(# of properties)

630

Ratio of largest end-tenant

2.1%

Ratio of Top 3 end-tenants

5.4%

(59)

End of 7th period – Breakdown of endtenants by sector for office buildings
個人 12
Individuals
12 tenants
2.6%
2.6%

Service
サービス業
180
180
tenants
39.6%
39.6%

Constructions
建設業 26 26 tenants
5.7%
5.7%
製造業
62
Manufactures
13.6%
62
tenants
13.6%

Status of rental deposits (End of 7th period)

2.4%(number)
400
350
300
250

OthersLaw firms
and others
10.7%
Capital of
10M-50M
23.7%

Wholesale,(Note) The above ratio shows the ratio of top endtenants within the entire portfolio (based onleased area)
Carriers&
運輸・
通信業
Telecome
11
11 tenants
2.4%(Reference) Tenant attributes including
capital position

不動産業
18
Real Estate184.0%
tenants
4.0%

卸売業・小売retail & food
118 tenants
業、飲食店
25.9%
118
25.9%
Financial
金融・保険業28 tenants
28
6.2%
6.2%

Capital of
50M-100M
2.2%

100M-500M
Capital of 100M-500M
500M of- 500M or more
7.7% Capital
3.3%＊Tenant attribute at the time of acquisition. Ratio of the leased area
＊Covered： 5 properties acquired after Feb. 29, 2008
(excluding KDX Jimbocho Bldg. which was acquired at 0％ occupancy)(Reference)
Changes in rent levels (market data)(Reference)
Changes in office buildings traded by size

Tokyo 23 wards ：Rent levels for large and mid-sizedbuildings (Jun. 1997＝100)
(%)

200
150
100
50
0

110

(properties)

Large buildings

1999
2000
2001
2002
2003
2004
2005
2006
2007

Mid-sized buildings

Less than 5 5-10 months
months10-13
months

13 months
or more(Reference) Credit capability of endtenants of office buildings

100

Listed companies
and
Listedaffiliatedcompanies
Companies
52.4%

Rent fluctuate less for midsized buildings is less thanfor large buildings

90

Less than
1,000㎡
13
10
10
15
44
25
35
31
26

1,000㎡5,000㎡
44
21
31
76
74
84
151
148
139

5,000㎡10,000㎡
13
20
17
53
49
41
72
72
65

More than
10,000㎡
24
53
40
46
67
43
60
63
54

80

Actual performance in the past 1 year
(during the 6th and 7th period)♦ More than 2 months rent outstanding：
4 tenants including 2 tenants who havecanceled their leasing contracts(Notes)1

70

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Note

Source:Large buildings: a building with a total floor area of 3,000 tsubo
or moreMid-sized buildings: a building with a total floor area of 1,000–
3,000 tsubo
Kenedix, Inc., based on the data by CB Richard Ellis ResearchInstitute (Latest data as of Sep. 2008)

2
Source:Based on the information disclosed in the “Company Information
Report” submitted to TSE or published in the newspapers
Calculation based on “Changes in number of office buildings traded”
and “Number of office buildings traded by size”
Kenedix, Inc., based on the “survey on actual trading of properties” by
Urban Research InstituteThe contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

13

Management of existing properties—
Consolidate BMs / construction / cost reduction
Management effect by the scale of portfolio investing primarily in mid-sized office buildings
Consolidation of BMs (maintenance companies) for management of properties
properties by group
Divide Tokyo into 3 areas andconsolidate BMs for each area
Area A (East) 11 properties：
Area B (South) 7 properties：
Area C (West) 7 properties：

9 BMs→ A Co
5 BMs→ B Co
7 BMs→ C Co
consolidated to 3companies

Increased management
quality, service levels andbusiness efficiency

Z08BB第401号

Depreciation, Changes in budgets and actual costs forconstruction
Construction cost

(￥M)

1,392

1,430

1,500

1,445

Depreciation

1,428

1,484

1,300
1,100

1,357

900

1,302

1,294
1,139

700
5th period929
6th period

7th period

8th period
budget9th period
budgetReduce construction cost through bid■Ongoing bid for air-conditioning facilities
・# of successful bids 5th period:
4 properties
cost reduction by ￥190M (reduction rate 24.4%)・ # of successful bids 6th period:
5 properties
cost reduction by ￥174M (reduction rate 39.3%)
・ # of successful bids 7th period:
5 properties
cost reduction by ￥132M (reduction rate 31.6%)・ # of bids 8th period:
2 properties

Implemented works for
14 properties→increased efficiencyof air conditioning
facilities helps to reduceenergy consumption→ reduce CO2＜Future policy＞
Reduce construction budgets for CS or value up (including
installation of air conditioners), as such works were alreadycompleted for many of our portfolio properties

Notes:
1 Construction budget shows budgeted costs for initial construction works under the Property Management Plan
2 Actual construction costs shows construction costs disclosed (Capex + repairs costs)

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

14

SECTION 4

Financial Strategies

Stable financial management—
Diversified maturities and Fixed debt interest rates
Debt financing with an emphasis on
diversifying repayments
Amount of debt maturing in each 6 month (as of December 11, 2008)

Diversification of debt maturities(¥B)

Long-termLong-term
長期借入金
borrowings

Inv. Co Bond
投資法人債
Investment
corporation bond

Outstanding amount of interestinterestbearing debts by remaining life

Short-term
Short-term
短期借入金
borrowings

20020(as of Dec. 11, 2008)

18018
16016

16.0
160

14014
12012

5.5
55

10010
808
606
404
202

11.5
115

9.0
90

2.25
122.5
Long-term

8.5
85

15
1.5
4.5
45

Short-term
Short-term
debtborrowings
￥\7bn
7B
7.1%
7.1%

6.5
65

6.0
60

35
3.5

50
5.0
30
3.0

30
3.0

3.0
30

00
2008 2009年
2009 2009年
2009 2010年
20102010年
2010 2011年
20112011年
2011 2012年
2012 2012年
2012 2013年2013 2013年2013 2014年
2014 2014年
2014 2015年
2015 2015年
2015 2016年
2016 2016年
2016
2008年
2H
1H
2H 上期
1H 下期
2H 上期
1H 下期
2H 上期
1H
2H 上期
1H
2H 上期
1H
2H
1H 下期
2H
1H
2H
下期
上期
下期
下期
下期
下期
上期
上期
下期

Notes:
1
Shows debt amounts that mature in each period2
1H is from Apr. 1 to Sep. 30 and 2H from Oct. 1 to Mar. 31 of the following year and not identical with the fiscal periods of theinvestment corporation (e.g. 2008 2H is from Oct. 1, 2008 to Mar. 31, 2009)

Fixed debt interest rates

Conservative management centered onborrowings at a fixed interest rates

Proportion of debt at fixed interest rate* vs. floating interest rate
(as of December 11, 2008)
2008)
Floating interest rate debt

￥7.0B 7.1％

Changes in debt ratio by type of debt
100%
80%
60%

Average interest rate (including up-front fees)
1.85％
Average life
2.5 years

Fixed interest rate debt

￥91.75B 92.9％

Long-term
borrowings
anddebt andInvestment
investment
Corporation
Co,
Bonds
Bonds
\74.8bn¥74.8B
75.7%
75.7%

Current
Current
portionof
ofportionlong-term
long-term
debtborrowings
\17bn
￥
17B
17.2%
17.2%

40%
20%
0%

Note: “Fixed interest rate debt” includes borrowings that wereconverted to fixed from floating through interest rate swap

st

nd

rd

th

th

th

th

1 period 第2期末
2 period 第3期末
3 period 第4期末
4 period 第5期末
5 period 第6期末
6 period 第7期末
7 period
第1期末

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

Long-term
長期借入金
borrowings

Investment
corporation bond

投資法人債

Short-term
短期借入金
borrowings

16

Stable financial management—
focus on maintaining conservative LTV＜Future policy＞
We will maintain conservative LTV. We will
also focus on conservative financial
management through conservative leveragepolicy and build-up our cash position

Changes in LTV
60%
55%
50%
45%

47.0%

45.6%

38.9%

38.7%

37.5%

40%
35%

Summary of covenants on borrowings

41.2%

35.3%

“Financial covenant”

5th
periodIf in any fiscal period① LTV exceeds a certain
level or
② DSCR falls below acertain level

30%
25%
1st
period2nd
period3rd
period4th
period6th
period7th
period・LTV＝total liabilities ÷ total assets(the difference between the appraisal value of
properties at end of each period and the BV will bereflected in the value of total assets(Added or subtracted as the case may be))・DSCR＝(Operating income＋Depreciation)÷interests paid
(Payment of principal with interest excluding lump-sum
repayment of principal)→ failure to comply with theabove for 2 consecutive
periods will result in
attachment of assets

Note: LTV＝Interest-bearing debt at end of period ÷Total assets

Borrowings in the 7th period and property trading(¥B)
Short-term borrowings
Current position of long-termborrowings
Long-term borrowings
Investment corporation bonds
Total

35.0
30.0
25.0

Repayment
borrowings

Refinanced
borrowings

19.25B

17.75B

20.0
15.0
10.0
5.0
0.0

Total
acquisition
price(c. 14.3B)

Newborrowings
10.5B

Sales price(5.6B)

(￥B)

18
16
14
12
10
8
6
4
2
0

12.75

2.0
2008
1H

4.5
1.0

5.0

8.0

6.5

6.0

2008
2H

2009
1H

2009
2H

11.5

9.25
1.0
2.0

2010
1H

2010
2H

3.5
1.0
11.5
2011
1H

End of 6th End of 7th Difference
periodperiod
5.75
5
▲0.75
26

19

▲7

460
12
89.75

62.75
12
98.75

+16.75
0
+9

9.0
1.0
5.0
2011
2H

1.5
2.0

3.0

3.0

2012
1H

2012
2H

2013
1H

5.0
2013
2H

2014
1H

2014
2H

2015
1H

2015
2H

2016
1H

Debts as of end of 6th period

New borrowings in the 7th period

Debt refinanced in the 7th period

Investment corporation bonds

New borrowings in the 7th period for refinancing during the 7th period

Repayments in the 7th period

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

3.0
2016
2H

17

Stable financial management—Diversification of debt providers
Borrowings

Breakdown of debt providers

The borrowing as of December 11, 2008

Sumitomo Mitsui
Banking Co.
189.5

Citibank 25
The Norinchukin
Bank 40
The Chuo Mitsui
Trust andBanking Co. Ltd.
145

Resona Bank 43
Mitsubishi UFJ
Trust andBanking Co. 72
The Bank of
Toyko-Mitsubishi
UFJ 98

Aozora Bank
120

DBJ 110

Continue focusing on stable financing by
maintaining positive relationship with financial
institutions, especially mega-banks and trust banks

Debt providers and balance of debts
Sumitomo Mitsui Banking Co.

6 period

7 period

Difference

152.5

189.5

+37

The Chuo Mitsui Trust andBanking Co., Ltd
Aozora Bank, Ltd.
Development Bank of JapanThe Bank of Tokyo-Mitsubishi
UFJ
Mitsubishi UFJ Trust and Banking
Corporation
Resona Bank, Ltd.
The Norinchukin Bank
Citibank Japan Ltd.
Mitsui Sumitomo Insurance Co.
The Chiba Bank, Ltd.
Investment Co Bond
Total

th

125
110
80
78

145
120
110
98

+20
+10
+30
+20

72
28
95
0
17
20
120
897.5

72
43
40
25
17
8
120
987.5

0
+15
▲55
+25
0
▲12
0
+90

Long-Term Borrowings(As of Dec. 11, 2008 ¥100M)th

Balance(\M)
1,000

LenderInvestment Co
Bond 120

Current portion of long-term
Short-term Borrowings
borrowing

The Chiba Bank
8
Mitsui Sumitomo
Insurance Co.
17

The Chuo Mitsui Trust and Banking Co., Limited
The Bank of Tokyo-Mitsubishi UFJ, Ltd.

500

Drawdown date

Repayment dateJan-10-2008

Jan-10-2009

Feb-29-2008

Feb-28-2009

Citibank Japan Ltd.

1,500

Oct-31-2008

Oct-30-2009

Mitsubishi UFJ Trust and Banking Corporation

1,000

Oct-31-2008

Oct-31-2009

Citibank Japan Ltd.

1,000

Nov-4-2008

Nov-2-2009

Aozora Bank, Ltd.(1,500）、Resona Bank, LTd.（500）
Total Short-Term Borrowings
The Chiba Bank, Ltd.（800） 、Aozora Bank, Ltd.（500）、Mitsui Sumitomo Insurance Co., Ltd（700）The Bank of Tokyo-Mitsubishi UFJ, Ltd.

2,000
7,000
2,000
2,500

Dec-8-2008

Dec-8-2009

Mar-1-2006
Mar-16-2006

Feb-28-2009
Mar-16-2009

The Chuo Mitsui Trust and Banking Co., Limited(1,500）、Aozora Bank, Ltd.(2,000）、The Bank of Tokyo-Mitsubishi UFJ, Ltd.
（1,000）、Mitsubishi UFJ Trust and Banking Corporation(1,000）、Resona Bank, LTd.(1,000）

6,500

May-1-2006

Apr-30-2009

Sumitomo Mitsui Banking Corporation

2,000

Oct-31-2007

Oct-31-2009

4,000

Apr-25-2008

Oct-25-2009

Sumitomo Mitsui Banking Corporation（ 1,000） 、 Aozora Bank, Ltd.(1,500） 、 The Bank of Tokyo-Mitsubishi
UFJ, Ltd.（1,500）
Total current portion of long-term borrowings
Sumitomo Mitsui Banking Corporation（3,750）、The Chuo Mitsui Trust and Banking Co., Limited(3,750）、
Mitsubishi UFJ Trust and Banking Corporation(1,500）、Resona Bank, LTd.（500）
Aozora Bank, Ltd.（1,500）、Mitsui Sumitomo Insurance Co., Ltd（1,000）
Development Bank of Japan
Mitsubishi UFJ Trust and Banking Corporation
Development Bank of JapanThe Norinchukin Bank
Sumitomo Mitsui Banking Corporation
The Chuo Mitsui Trust and Banking Co., Limited
The Norinchukin Bank
Sumitomo Mitsui Banking Corporation
Aozora Bank, Ltd.
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Sumitomo Mitsui Banking Corporation（3,000）、The Chuo Mitsui Trust and Banking Co., Limited（2,000）
The Chuo Mitsui Trust and Banking Co., LimitedAozora Bank, Ltd.
Resona Bank, LTd.
Development Bank of Japan
Aozora Bank, Ltd.
Sumitomo Mitsui Banking Corporation（1,200）、Mitsubishi UFJ Trust and Banking Corporation（1,300）
Sumitomo Mitsui Banking Corporation（1,300）、The Bank of Tokyo-Mitsubishi UFJ, Ltd.（800）、Mitsubishi UFJ Trust and Banking Corporation（1,400）
Sumitomo Mitsui Banking Corporation（2,200）、The Chuo Mitsui Trust and Banking Co., Limited（1,000）、Resona Bank, LTd.（300）

The Chuo Mitsui Trust and Banking Co., Limited
The Chuo Mitsui Trust and Banking Co., Limited
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Resona Bank, LTd.
Total Long-Term Borrowings
Total Borrowings

17,000
9,500
2,500
5,000
1,000
3,000
2,500
2,000
2,000
1,500
2,500
2,000
1,500
5,000
1,000
1,000
1,500
3,000
2,000
2,500
3,500
3,500
1,000
1,250
2,000
500
62,75086,750Aug-1-2005
May-1-2006
Jul-14-2006
Sep-1-2006
Dec-1-2006
Apr-2-2007
Apr-17-2007
Jan-10-2008
Feb-29-2008
Mar-31-2008
May-1-2008
Jun-30-2008
Jul-15-2008
Jul-31-2008
Sep-1-2008
Sep-22-2008
Sep-30-2008
Oct-31-2008

Jul-31-2010
Apr-30-2011
Apr-30-2016
Jul-13-2011
Aug-31-2013
Nov-30-2011
Apr-2-2010
Apr-2-2012
Apr-16-2011
Jan-10-2012
Feb-28-2011
Aug-31-2011
Sep-30-2011
Nov-1-2011
Feb-28-2011
Jun-30-2012
Dec-28-2012
Mar-31-2011
Jan-31-2010
Jan-31-2011
Jul-31-2011
Sep-1-2011
Mar-22-2011
Mar-31-2011
Oct-31-2010

Current credit rating and issuance of Investment corporation bonds
bondsInterest rate Maturity Maturity date

Rating agencies

RatingName

Size

Moody’sA3(stable)

1st Bond

￥9B

1.74%

5 yrs 2012/3/15

Japan Credit Rating Agency (JCR) A+(stable)

2nd Bond

￥3B

2.37%

10yrs 2017/3/15

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

18

Appendix

AppendixManagement of existing properties—yields and performance(results and analyses)
NOI yields realized with rental properties (by type,on an annualized basis)
4th
period5th
period6th
period7th
period7th period(Before Tax
adjusted)

Offices

5.3％
5.3％

5.5％
5.5％

5.6％
5.6％

5.3％
5.3％

5.4％

Centralurban retails

5.2％
5.2％

5.1％
5.1％

4.3％
4.3％

4.8％
4.8％

4.8％

Residentials

5.4
5.4％

5.3
5.3％

5.3％
5.3％

5.3％
5.3％

5.2％

Total

5.3％
5.3％

5.4％
5.4％

5.5％
5.5％

5.3％
5.3％

5.4%
5.4%

(Reference) Office buildings performance analyses

Income return and capital return of KRI(%)

Income return(Reference) Improved occupancy rates for officeproperties that had performed poorly before acquisition
KDX Hamacho building
KDX Nishi-Gotanda building
KDX Jimbocho building

Capital return

(%)

12

12

10

10

8

5.8

8

3.8

6

2

Income return

6.6

Capital return

6.4

6
4

4.8

5.5

Central Tokyo

23 wards

2

4.3

4.9

Central Tokyo

23 wards

0

0

Note:
1 IPD J REIT Universe employed as thebenchmarkNotes:
1 Returns realized in a year up to April 2008
2 Subject properties are those appraised twice ormore (to eliminate the influence ofsale/acquisition during the period)

Sakae 4-chome Office Building (tentative name)

KDX Kiba building
KDX Toranomon building
KDX Harumi building♦

Planned completion ： June 2009 (planned)♦

Location ： 4-chome Sakae, Naka-ku,

100%

Nagoya-shi

80%
60%
40%
20%
0%
Mar.06

Income return and capital return of benchmark

4

Note:
These numbers are adjusted by property & metropolitan taxes
KDX Harumi Builiding and KDX Iwamotocho Building’s tax are considered with part of land
Round off the second place decimal point

・Analyzed by IPD (Investment
Property Databank Ltd)

Actual income returns and capital returns

Sep.06Mar.07

Sep.07Mar.08

Sep.08♦

GFA ： 10,848.45m2 （planned）♦

Number of stories ：F11

Acquisition date

Acquisition
price(¥
price(¥M)

Land

2008/4/25

4,000

Building

2009/7/1(planned)

4,325(planned)

・ Fixed rent amounts to be received from theseller based on a rent-guaranteed master leaseagreement with the seller
Outline of the rent-guaranteed master leaseagreement
・Term: 1 year starting from July 2009
・Guaranteed monthly rents:
Retail space ￥35,000/tsubo
Office space ￥18,000/tsubo

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

20

Overview of appraisal values
List of appraisal values for office buildings
Property name
KDX Nihonbashi 313 Building
KDX Hirakawacho Building
Higashi-Kay abacho Yuraku Building

KDX Hatchobori Building
KDX Nakano-Sakaue Building
Harajuku F.F. Building
FIK Minami Aoyama
Kanda Kihara Building
KDX Shinjuku-Gyoen Building
KDX Koishikawa Building
Portus Center Building
KDX Kojimachi Building
KDX Funabashi Building
KDX Hamacho Building
Toshin 24 Building
Ebisu East 438 Building
KDX Omori Building
KDX Hamamatsucho Building
KDX Kayabacho Building
KDX Shinbashi Building
KDX Shin-Yokohama Building
KDX Yotsuya Building
KDX Minami Semba Dai-1 Building
KDX Minami Semba Dai-2 Building

KDX Kiba Building
KDX Kajicho Building
KDX Nogizaka Building
KDX Higashi-Shinjuku Building
KDX Nishi-Gotanda Building
KDX Monzen-Nakacho Building
KDX Shiba-Daimon Building
KDX Okachimachi Building
KDX Hon-Atsugi Building
KDX Hachioji Building
KDX Niigata Building
KDX Ochanomizu Building
KDX Nishi-Shinjuku Building
KDX Toranomon Building
Toranomon Toyo Building

Acquisition
price5,940,000
5,180,000
4,450,000
3,680,000
2,533,000
2,450,000
2,270,000
1,950,000
1,610,000
704,000
5,570,000
5,950,000
2,252,300
2,300,000
5,300,000
4,640,000
3,500,000
3,460,000
2,780,000
2,690,000
2,520,000
1,950,000
1,610,000
1,560,000
1,580,000
2,350,000
1,065,000
2,950,000
4,200,000
1,400,000
6,090,000
2,000,000
1,305,000
1,155,000
1,305,000
6,400,000
1,500,000
4,400,000
9,850,000

7th period
Appraisal value

compare toac quisit ion

comapre to
6t h periodCR
compare tobookvalue

7,680,000 29.3% 0.0% 22.3%
5,780,000 11.6% 0.0% 10.4%
6,380,000 43.4% -2.0% 41.9%
3,980,000
8.2% 0.0% 12.8%
2,680,000
5.8% 0.0% 4.9%
3,260,000 33.1% -3.0% 30.5%
3,140,000 38.3% -8.2% 37.4%
2,030,000
4.1% 0.0% 7.8%
2,140,000 32.9% 0.0% 33.0%
795,000 12.9% -13.7% 17.6%
5,500,000 -1.3% -3.5% 6.8%
6,400,000
7.6% -2.0% 9.5%
2,390,000
6.1% -6.3% -3.9%
3,010,000 30.9% -2.3% 28.1%
5,440,000
2.6% -8.4% 3.5%
5,380,000 15.9% -11.8% 17.3%
4,090,000 16.9% -1.0% 16.9%
3,950,000 14.2% 0.0% 16.6%
3,220,000 15.8% -1.5% 10.9%
3,020,000 12.3% -1.9% 12.3%
2,790,000 10.7% -10.9% 11.2%
2,440,000 25.1% 0.0% 23.7%
1,540,000 -4.3% -6.7% -1.3%
1,570,000
0.6% -4.3% 6.2%
1,800,000 13.9% -6.7% 7.6%
2,550,000
8.5% 0.0% 6.4%
1,060,000 -0.5% -1.9% -6.6%
3,370,000 14.2% 0.3% 5.5%
4,920,000 17.1% -2.2% 15.7%
1,430,000
2.1% 0.0% -2.2%
6,770,000 11.2% -1.9% 6.6%
2,010,000
0.5% 0.0% -6.5%
1,220,000 -6.5% -7.6% -6.9%
1,010,000 -12.6% -9.8% -24.7%
971,000 -25.6% -13.3% -34.8%
7,320,000 14.4% 2.1% 12.2%
1,540,000
2.7% 0.0% -1.5%
4,640,000
5.5% -4.7% -4.9%
11,100,000 12.7% -0.9% 12.0%

End of
7th p eri od

4.8%
4.6%
4.8%
4.8%
5.1%
5.4%
4.7%
4.8%
4.9%
6.0%
6.0%
4.8%
5.7%
5.3%
5.4%
4.9%
5.1%
4.6%
5.2%
4.5%
5.5%
5.2%
5.5%
5.5%
5.5%
4.8%
5.0%
5.3%
5.2%
5.2%
5.2%
4.8%
6.0%
5.5%
7.0%
4.6%
5.1%
4.4%
4.5%

com pare to
6th perio d

0.0%
0.0%
0.1%
0.0%
0.0%
0.2%
0.3%
0.0%
0.0%
0.7%
0.2%
0.1%
0.1%
0.1%
0.4%
0.3%
0.1%
0.0%
0.1%
0.1%
0.3%
0.0%
0.1%
0.1%
0.1%
0.0%
0.1%
0.0%
0.1%
0.0%
0.1%
0.0%
0.0%
0.1%
0.6%
0.0%
0.1%
0.3%
0.2%

Property nameAcquisition
price

7th period
Appraisal value

compare toac quisit ion

comapre t o
6t h periodCR
compare tobookvalue

End of
7th p eri od

2,300,000
2,500,000
8.7% -4.2% 6.5%
5,400,000
5,820,000
7.8% 2.8% 5.0%
KDX Hakata Building
2,350,000
2,200,000 -6.4% -12.4% -9.9%
KDX Sendai Building
2,100,000
1,910,000 -9.0% -10.3% -13.9%
KDX Roppongi 228 Building
3,300,000
2,800,000 -15.2% -15.9% -19.0%
Hiei Kudan-Kita Building
7,600,000
8,150,000
7.2% 1.1% 6.5%
KDX Shin-Yokohama 381 Building
4,700,000
4,100,000 -12.8% -12.8% -12.9%
KDX Kawasaki-Ekimae Hon-c ho Building
3,760,000
3,480,000 -7.4% -7.4% -7.9%
Nissou Dai-17 Building
2,710,000
2,090,000 -22.9% -9.1% -23.2%
Ikejiri-Oohashi Building
2,400,000
2,180,000 -9.2% -16.5% -11.3%
KDX Hamacho Nakanohas hi Building
2,310,000
2,140,000 -7.4% -10.1% -9.7%
KDX Kanda Misaki-cho Building
1,380,000
1,160,000 -15.9% -16.5% -17.2%
KDX Hakata-Minami Building
4,900,000
4,720,000 -3.7% -4.1% -4.4%
KDX Kitahama Building
2,220,000
2,020,000 -9.0% -9.0% -10.5%
Shin-toshin Maruzen Building
2,110,000
2,060,000 -2.4% -4.2% -5.7%
KDX Jimbocho Building
2,760,000
2,660,000 -3.6% -4.7% -10.8%
KDX Gobancho Building
1,951,000
1,870,000 -4.2% -7.4% -8.2%
Sakae 4-chome Office Building
4,000,000
4,180,000
4.5% 0.0% 0.3%
(Tentative Name)KDX Iwamoto-cho Building
1,864,802
1,810,000 -2.9% -4.7% -3.9%
KDX Harumi Building
10,250,000 10,700,000
4.4% 1.9% 4.6%
KDX Hamamatucho Dai-2 Building
2,200,000
2,240,000
1.8% 0.4% -0.9%
Office Total
196,965,102 211,106,000
7.2% -3.5% 5.4%
KDX Shinjuku 286 Building
Karasuma Building

com pare to
6th perio d

4.9%
5.3%
6.1%
5.7%
4.8%
4.6%
5.4%
5.8%
5.4%
5.7%
5.2%
5.2%
6.3%
5.7%
5.1%
5.3%
5.0%
5.3%
4.6%
4.5%
-

0.2%
0.0%
0.8%
0.1%
0.7%
0.0%
0.4%
0.4%
0.4%
0.9%
0.6%
0.7%
0.8%
0.4%
0.3%
0.6%
0.4%
0.5%
0.1%
0.0%
-

Note:
Under ￥1,000 cut it off (Acquisition price, Appraisal value, Book value)
Second decimal place omitted for ratios

Summary of appraisal values at the end of the 7th period(ended October 2008)(￥M)
OfficeCentral Urban Retails①②

Acquisition
price
196,965Book
value
200,372

12,37912,679③④=③-①

Apraisal
Difference
value(Apraisal value)
211,106
14,141
14,210④/①⑤=③-②

Difference(Book value)
7.2%
10,734

(%)

1,831

14.8%

⑤/②
(%)
5.4%

1,531

12.1%

Residentials

12,70912,742

12,090

-619

-4.9%

-652

-5.1%

Total

222,053

225,795

237,406

15,353

6.9%

11,613

5.1%

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

21

Summary of office building portfolio (7th period)
Portfolio invested heavily in midmid-sized office buildings located in Tokyo metropolitan area
Growth of portfolio assets by geography

Composition of portfolio properties
by geography(￥B)
CentralTokyo

140

Other Tokyo
metropolitan area

Other regional areas

123.9

109.6

100

Other regional
areas

88.2

90

76.0

80

Other Tokyo
metropolitan
area

56.6

60

35.7

Central Tokyo

17.5%
20.8%

61.6%

7~10min(4properties)
6min¥19.0B
19.0B(5properties)
18.0B¥18.0B20

1min(15properties)
56.7B¥56.7B

5min(9properties)
29.9B¥29.9B
4min(5properties) 3min¥11.4B
11.4B (11properties)

27.5

40

Composition of portfolio properties by waking
distance to the nearest railroad station

2min(11properties)
33.6B¥33.6B¥32.5B
32.5B

0
1st period 2nd period 3rd period 4th period 5th period 6th period 7th period

Properties in economic zones ofTokyo account for 82.3%

Properties within a 33-minute walk of
the nearest railroad station account for
61.0% and those within a 66-minute walkaccount for 90.5%.

Composition of portfolio properties
by price

Composition of portfolio properties bygross floor area (GFA)

Note: Central 5 wards of Tokyo consist of Chiyoda, Chuo, Minato, Shibuya and Shinjuku Wards

Changes in average acquisition prices
(￥B)

3.50
3.35
3.25

3.30

¥10B
More than \10B~(1properties)(1property)\7.5~10.0B ¥10.2B¥7.5~10.0B\10.2B(3properties)\25.7bn¥25.7B

3.14
3.10\1.0~2.5B¥1.0~2.5B(29properties)\54.7B¥54.7B\5.0~7.5B¥5.0~7.5B(8properties)\45.8B¥45.8B

2.97

4th period

5th period

6th period

7th period

More than
10,000㎡（6properties）¥4.2B\4.2bnLess than
3,000㎡（16properties）¥3.03B\3.03bn

3,000㎡~10,000㎡\2.5~5.0B¥2.5~5.0B(18properties)\63.9B¥63.9B

2.90

2.70

Less than ¥1.0B\1.0B(1properties)(1property)
\0.7B
¥0.7B

JPY2.5JPY2.5-7.5bn (54.5%)

Note: Figures for end of 6th and 7th Period include JPY 4,325mn for the planned acquisition of Sakae 4-chome Jimusho Bldg.
(Tentative name)
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

（38properties）¥128.9B\128.9bn

Properties with GFA of 3,000m2 10,000m2 account for 64.0%

22Emphasis on mid-sized office buildings in Tokyo metropolitan
area
60 Office properties, total acquisition price of ¥201.2B(as of Oct 31, 2008)

Tokyo’s 23 wards
42 Properties ¥142.2B

Acquisition price(Tokyo metropolitan area)
Acquisition price(Other regional areas)

Central Tokyo1
34 properties¥123.9B

Niigata
1 property ¥1.3B

Miyagi1 property ¥2.1B

Greater Osaka area
5 properties ¥16.3B

Other 18 wards
8 properties¥18.3B

Fukuoka
2 properties ¥7.2B

Tokyo

Other regional
areas
17.5%

Chiba
1 property ¥2.2B

Aichi2
1 property ¥8.3B

Kanagawa
6 properties ¥20.2B
Hachioji, Tokyo
1 property ¥1.1B

Notes:
1
Central Tokyo: Chiyoda, Chuo, Minato, Shibuya and Shinjuku wards
2
The price of Sakai 4-chome Office Building (Tentative Name) is ¥8.3B is the total of land acquired on Apr. 24, 2008 (¥4B)
and the building to be acquired on July 1, 2009 (¥4.3B)
3
Acquisition price are rounded to the nearest ¥100M. Ratios indicate the total acquisition price for properties in each area inproportion to the total acquisition price for all properties combined and are rounded down to the first decimal place

Other Tokyo
metropolitan
area
20.8%

Central Tokyo
61.5%

# of
properties

Acquisition
price
(¥B)

Ratio
(%)

50
10
60

165.9
35.3
201.2

82.4
17.5
100.0

Tokyo metropolitan area
Other regional areas
Total

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

23

Focusing on office buildings
Portfolio overview

Type

End of 3nd period(Oct. 31, 2006)
64 properties approx. ¥146.7B

End of 5th period(Oct. 31, 2007)
77 properties approx. ¥197.0B

Residential
7properties
Central
5.6%
urban retail2properties
5.4%

Residential
30properties
21.8%

Residential
32properties
30.2%

Of f ice
29buildings
58.7%

Centralurban retail3properties
10.9%

Centralurban retail3properties
8.1%

Other regional
areas
16.4%

Area
Size

¥5.0–7.5B(6properties)¥33.2B
22.6%¥2.5–5.0B(13properties)¥43.6B
29.7%¥7.5–10.0B(2properties)¥19.7B
10.0%

Less than ¥1.0B(16properties)¥12.1B
8.2%¥1.0–2.5B(28properties)¥47.7B
32.5%

Toky ometropolitan
area
83.5%

Toky ometropolitan
area
82.4%

Toky ometropolitan
area
84.0%
¥7.5–10.0B(1property)
¥9.9B
6.7%

Of f ice
60buildings
89.0%
88.9%

Of f ice
44buildings
70.0%
Other regional
areas
17.5%

Other regional
areas
15.9%

End of 7th period(Oct. 31, 2008)
69 properties approx. ¥226.3B¥5.0–7.5B(9properties)¥51.1B
25.9%¥2.5–5.0B(15properties)¥52.2B
26.5%

Less than ¥1.0B(14properties)￥10.7B
5.4%¥1.0–2.5B(37properties)¥63.1B
32.0%¥7.5–10.0B(4 properties)¥35.6B
15.7%¥5.0–7.5B(9 properties)¥51.1B
22.6%

Note: The portion (%) indicated in the circular graphs above the total acquisition prices for each category of assets and rounded down to thefirst decimal place
The contents are provided solely for informational purposes and not intended for the purpose of soliciting investment in, or as arecommendation to purchase or sell, any specific products. Please see disclaimer in the final page of this documents.

Over ¥10.0B(1 property)¥10.2B
4.5%

Less than ¥1.0B(2properties)
¥1.5B
0.6%
¥1.0–2.5B(35properties)¥63.7B
28.1%¥2.5–5.0B(18properties)¥63.9B
28.2%

24

Portfolio overview (Office buildings)(As of Oct. 31, 2008)

Office buildings as of the end of October 31, 2008 (60 properties)
Acquisition priceType

Offi ceArea

T ok yoMetroporit anarea

# of prop.

Name

Location（\M）1

Com pletion²

Occupancy
ratio（%）³

A-60

KDX Harum i Building

C huo-ward, Tokyo

10,250F eb-2008

100.0%

A-40

Toranomon Toyo Buildin g

Minato-ward, Tokyo

9,850

Aug-1962

100.0%

A-46

Hiei Kudan-Kita Building

C hiyoda-ward, Tokyo

7,600

Mar-1988

100.0%A-37

KDX Ochanomizu Building

C hiyoda-ward, Tokyo

6,400

Aug-1982

90.2%

A-32

KDX Shiba-Daimon Bu ilding

Minato-ward, Tokyo

6,090

J ul-1986

100.0%A-13

KDX Kojimachi Building

C hiyoda-ward, Tokyo

5,950

May -1994

98.2%

A-1

KDX Nihonbashi 313 Bui lding

C huo-ward, Tokyo

5,940

Apr-1974

100.0%

A-16

Toshin 24 Building

Yokohama, Kanagawa

5,300

Sep-1984

100.0%Area# o f p ro p.

Name

Lo cat ion（\M）1

Com pletio n²

Occup ancy
ratio （%）³

A-14

KDX F unab ashi Bu ilding

F unabashi, Chiba

2,252

Apr-1989

98.4%

A-61

KDX Hamamatuch o Dai-2 Bu ildin g

Minato-ward, T okyo

2,200

Apr-1992

100.0%

A-55

Shin -toshin Maru zen Build ing

Shinjuku-ward, T okyo

2,110

J ul-1990

80.9%

A-33

KDX Okachimachi Buildi ng

T aito-ward, Tokyo

2,000

Jun-1988

100.0%A-57

KDX Gob ancho Build ing

C hiyoda- ward, Tokyo

1,951

Aug-2000

85.7%

A-8

Kan da Kih ara Bu ilding

C hiyoda- ward, Tokyo

1,950

May -1993

100.0%
100.0%A-23

KDX Yot suya Build ing

Shinjuku-ward, T okyo

1,950

Oct-1989

A-59

KDX Iwamot o-ch o Bu ildin g

C hiyoda- ward, Tokyo

1,864

Mar-2008

92.7%

A-9

KDX Shin juku -Gyo en Bu ildin g

Shinjuku-ward, T okyo

1,610

Jun-1992

100.0%A-26

KDX Kib a Build ing

Koto-war d, Tokyo

1,580

Oct-1992

100.0%

100.0%A-38

KDX Nish i-Shin juku B uildin g

Shinjuku-ward, T okyo

1,500

Oct-1992

100.0%A-31

KDX Mo nzen -Nakacho Build ing

Koto-war d, Tokyo

1,400

Sep-1986

100.0%
100.0%A-2

KDX Hirakawacho Bui lding

C hiyoda-ward, Tokyo

5,180

A-47

KDX Shin-Yokohama 381 Building

Yokohama, Kanagawa

4,700

Mar-1988

97.5%

A-17

Ebisu East 438 B uildin g

Shibuya-ward, Tokyo

4,640

Jan-1992

100.0%

Mar-1988

Acqu isitio n p rice
T ype

Tokyo
Metro
poritanare a

100.0%

A-3

Higashi-K ayabacho Yuraku Building

C huo-ward, Tokyo

4,450

A-39

KDX Toranomon Build ing

Minato-ward, Tokyo

4,400

Apr-1988

78.6%

A-30

KDX Nishi-Gotanda Building

Shinagawa-ward, Tokyo

4,200

Nov-1992

100.0%A-52

KDX Kan da Misaki-cho Build ing

C hiyoda- ward, Tokyo

1,380

Oct-1992

A-48

KDX Kawasaki-Ekim ae Hon-cho Building

Kawasaki, Kanagawa

3,760

F eb-1985

100.0%A-34

KDX Ho n- At sug i Build ing

Atsugi, Kanagawa

1,305

May -1995

88.6%

A-4

KDX Hatchobori Building

C huo-ward, Tokyo

3,680

Jun-1993

100.0%A-35

KDX Hach ioji Bu ilding

H achioji, Tokyo

1,155

Dec-1985

85.6%

A-18

KDX Omo ri Building

Ota-ward, Tokyo

3,500

Oct-1990

100.0%A-28

KDX No gizaka B uildin g

Minato-ward, T okyo

1,065

May -1991

100.0%A-19

KDX Hamam atsucho Bui lding

Minato-ward, Tokyo

3,460

Sep-1999

75.4%

A-10

KDX Ko ishikawa B uildin g

Bunkyo-ward, Tokyo704

Oct-1992

100.0%A-45

KDX Roppongi 228 Building

Minato-ward, Tokyo

3,300

Apr-1989

78.0%

A-58

Sakae 4-cho me Office Bu ilding (T ent at ive) N agoya, Aichi

8,325

Jun-2009－

A-29

KDX Higashi-Shinjuku Building

Shinjuku-ward, Tokyo

2,950

Jan-1990

86.2%

A-12

Portus Cent er Bu ildin g

Sakai, Osaka

5,570

Sep-1993

100.0%A-20

KDX Kayabacho Building

C huo-ward, Tokyo

2,780

Oct-1987

100.0%A-56

KDX Jimb och o Bui lding

C hiyoda-ward, Tokyo

2,760

May -1994

59.8%

A-49

Nissou Dai-17 Building

Yokohama, Kanagawa

2,710

J ul-1991

100.0%A-21

KDX Shinbashi Buildi ng

Minato-ward, Tokyo

2,690

F eb-1992

100.0%A-5
A-22

KDX Nakano -Sakaue Bui lding
KDX Shin-Yokohama Building

N akano-ward, T okyo
Yokohama, Kanagawa

2,533
2,520

Jan-1987

Aug-1992
Sep-1990

96.5%
83.2%

A-6

Harajuku F.F. Building

Shibuya-ward, Tokyo

2,450

Nov-1985

100.0%

A-50

Ikejiri-Oohashi Bui lding

Meguro-ward, Tokyo

2,400

Sep-1988

100.0%A-27

KDX Kajicho Building

C hiyoda-ward, Tokyo

2,350

Mar-1990

100.0%A-51

KDX Hamacho Nakano hashi Bu ilding

C huo-ward, Tokyo

2,310

Sep-1988

100.0%A-15

KDX Hamacho Building

C huo-ward, Tokyo

2,300

Sep-1993

100.0%A-41

KDX Shinjuku 286 Bu ilding

Shinjuku-ward, Tokyo

2,300

Aug-1989

100.0%A-7

FIK Minami Aoyama

Minato-ward, Tokyo

2,270

Nov-1988

100.0%

Offic eOther
region al
are asA-42

Karasuma Bu ildin g

Kyoto, Kyoto

5,400

Oct-1982

98.1%

A-53

KDX Hakata-Minami Bu ildin g

F ukuoka, Fukuoka

4,900

Jun-1973

95.4%

A-43

KDX Hakata Bu ildin g

F ukuoka, Fukuoka

2,350

J ul-1982

100.0%A-54

KDX Kitahama Bu ildin g

Osaka, Osaka

2,220

J ul-1994

88.1%

A-44

KDX Send ai Build ing

Sendai, Miyagi

2,100

F eb-1984

86.2%

A-24

KDX Min ami Sem ba Dai-1 B uildin g

Osaka, Osaka

1,610

Mar-1993

91.6%

A-25

KDX Min ami Sem ba Dai-2 B uildin g

Osaka, Osaka

1,560

Sep-1993

91.2%

A-36

KDX Niig ata Bui lding

N iigata-shi, Niigata

1,305

J ul-1983

76.2%

201,290

Ave . 20.1 years

95.7%

Office（6 0 P rop）Su btotal

Notes:
1 Acquisition price is the purchase price for trust beneficiary interests etc. acquired by the Investment
Corporation exclusive of taxes, rounded down to the nearest million yen
2 Completion date is the date of construction completion recorded in the land register. However, for Sakae 4chome Office Building (Tentative Name), the planned completion date is shown. Average age subtotals andtotal is shown as the weighted-average portfolio age based upon acquisition prices with a base date ofOctober 31, 2008 and are rounded down to the nearest first decimal place. (excluding A-58 Sakae 4-chome
Office Building (Tentative Name)) The weighted-average age of the 68 properties held as of end of 7th
period (excluding Sakae 4-chome Office Building (Tentative Name)) is 18.6 years
3 Occupancy ratio is calculated by dividing leased area by leasable area and rounded to the first decimal
place. Average occupancy ratio of 68 properties held as of end of 7th period was 95.6% (excluding A-58
Sakae 4-chome Office Building (Tentative Name))

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

25

Portfolio overview (Central urban retail properties andresidential properties)(As of Oct. 31, 2008)
Central urban retail properties as of October 31, 2008 (2 properties)
Acquisition price
Type

Area

CentralUrban
RetailTokyo
Metroporitanarea# of prop.

Name

Location

C-1

Frame Jinnan-zaka

Shibuya-ward, TokyoC-2

KDX Yoyogi Building

Shibuya-ward, Tokyo

Central Urban Retail (2 prop.) Subtotal

Completion²

Occupancy
ratio（%）³

Mar-2005

97.9%

2,479

Aug-1991

91.7%

12,379Ave. 6.2 years

96.7%

（\M）

1

9,900

Residential properties as of the end of October 31, 2008 (7 properties)
Acqu isitio n p rice

Residential

T ype

Area

T ok yoMetroporitanarea

Lo cat ion（\M）1

Com pletio n²

Occup ancy
ratio （%）³

# o f p ro p.

Name

B-19

R esid en ce Ch ar mante Tsukishim a

Chuo-ward, Tokyo

5,353

Jan-2004

100.0%

B-3

C ourt Meji ro

Shinjuku-ward, Toky o

1,250

Mar-1997

100.0%

B-4

Ap ar tm ents Motoazabu

Minato-ward, Toky o

1,210

Jan-2004

94.6%

B-5

Ap ar tm ents Wakamatsu-Kawada

Shinjuku-ward, Toky o

1,180

F eb-2004

100.0%

B-34

Gradito Kawag uch i

Kawaguchi, Saitama

1,038

F eb-2006

100.0%

B-25

C ourt Shin -Okachimachi

Taito-ward, Tokyo878

Oct-2005

100.0%

B-18

Venus Hibarigaoka

Sapporo, Hok kaido

1,800

Mar-1989

88.7%

12,709Ave. 7.2 years

94.7%

Other
Regional
areas

Residenti al（ 7 prop.）Subt otal

Notes:
1 Acquisition price is the purchase price for trust beneficiary interests etc. acquired by theInvestment Corporation exclusive of taxes, rounded down to the nearest million yen.
2 Year built is the date of construction completion recorded in the land register. The total isshown as weighted-average portfolio age based upon acquisition price with a base dateof Oct. 31, 2008 (rounded down to the nearest first decimal place)
3 Occupancy ratio is calculated by dividing leased area by leasable area and rounded to
the first decimal place. Ratios are calculated as of Oct. 31 2008

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

26

(Reference data1) Market environment for office buildings
1．Breakdown of office based on number of employees per office
100 employees and above
1.6%
30–99 employees
5.0%

2．Distribution of office buildings by tsubo

More than
3,000 tsubo
5.0%

Potentially strong demand
for mid-sized office buildings
by tenants

500–
3,000 tsubo
28.6%

10–29 employees
15.7%

Less than
500 tsubo
66.4%

1–9 employees
77.7%

Proportion of offices with
1–29 employees: 93.4%

Broad based stock of
mid-sized officebuildings

Source: Survey conducted by Ikoma Data Service System based on KRI’s requests(survey as of end of Mar. 2007) “Macro market survey of Tokyo’s central 5 wards”
Note:
The above data covers rental office buildings located in Tokyo’s central 5 wards that weresurveyed by Ikoma Data Service System. Please note that the above data may not include thedata of all properties in the said 5 wards

Source: KDRM, based on Tokyo office statistics report as of 2006
(MPHPT Statistics Bureau)

3．Office building average rent and vacancy ratios (Central Tokyo)(￥（円/月・坪）
per tsubo)（％）

24,0004．Reasons citied by companies in Tokyo if they were to relocate
80%

9Average rate

Vacancy ratio

8

22,000

70%
62.3%

7

60%

6

50%

18,000

5

40%

16,0004

20,0002
12,0001

10,00002001/12

2002/12

2003/12

2004/12

2005/12

2006/12

2007/12

2008/9Source: “Latest office building market conditions in Central Tokyo (suvey as of end of Oct. 2008）”,
Miki Shoji Co., Ltd.

2006

2008

49.3%
36.6%
30.5%

30%

3

14,000

2004

23.7%

23.0%
18.6%

20%

15.1%

11.9%

10%
0%

Expansion of floor
space due to theincrease of employees

Restructuring ofinternal organizations

Dissatisfaction/inadequate
facilities in the building
currently occupied by tenant

Source： DISS Fudosan-Hakusho 2006
CBRE “Survey for Office demanding 2008”

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

27

(Reference data2) Market environment for office buildings
1. 23 wards of Tokyo: rent levels for large buildings and mediumsized buildings

2. Cap rates of properties in Tokyo and local cities(1,000yen/Tsubo)(千円/坪）

10.0%

30

Large
大型ビル
Medium-sized
中型ビル

25

福岡
Fukuoka

Osaka
大阪

東京
Tokyo

Nagoya名古屋

8.0%¥24,200

6.0%

5.8％
5.5％
5.3％

4.0%

4.0％

20

¥18,30015

2.0%1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Note:

Large building is a building with a gross floor area of 3,000 tsubo or overmedium-sized building is a building with a gross floor area of 1,000 to 3,000 tsubo
Source：Created by Kenedix based on the data complied by CBRE (the latest values as of 2008/9)

3. Changes in rent levels by region

2001/4 2002/4 2003/4 2004/4 2005/4 2006/4 2007/4 2008/4

Notes:

1 Expected cap rates based on direct reduction approach for A class buildings that have been
built for 5 years or less
2 Expected cap rates for properties in the Marunouchi and Otemachi areas used
Source：Created by Kenedix based on the data complied by Japan Real Estate Institute （as of 2008/10）

4. Changes in vacancy ratios by region(%)(¥1,000/Tsubo)（千円/坪）

14.0

25
Tokyo
東京

Osaka
大阪

Fukuoka
福岡

Nagoya名古屋¥22,600

Nagoya
名古屋

Tokyo
東京

Osaka
大阪

Fukuoka
福岡

12.0

20

10.3%

10.0
15

¥12,800¥11,400¥10,000

10

5

2002

Note:

7.9%

8.0

2003

2004

2005

2006

2007

4.3%

4.0
2.0

2008

Targeting the rental properties with a gross floor area of 100 tsubo or over in 5 wards of Tokyo(Chiyoda, Chuo, Minato, Shinjuku, and Shibuya)
Source: Created by Kenedix based on the data complied by Miki Shoji (the latest values as of 2008/10)

6.0%

6.0

Note:

2002

2003

2004

2005

2006

2007

2008

Targeting the rental properties with a gross floor area of 100 tsubo or over in 5
wards of Tokyo (Chiyoda, Chuo, Minato, Shinjuku, and Shibuya)
Source: Created by Kenedix based on the data complied by Miki Shoji (the latest values as of 2008/10)

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

28

KRI unitholders
Top 10 unitholders (as of October 31, 2008)

Investment units by unitholders
Individuals and others
Other Domestic Co.

Financial Inst. (incl. Securities)
Foreign Co. and Individuals

22.7

1st

49.0

15.6

2nd

12.4

47.0

8.5

# of units
held (unit)(%)

NikkoCiti Trust and Banking Co., Ltd. (Investment Trust
Acct.)

17,903

8.95%

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

15,597

7.79%

Japan Trustee Services Bank, Ltd (Trust Acct.)

13,076

6.53%

Goldman Sachs International

12,025

6.01%

Name

16.0
29.0

3rd

10.6

4th

6.8

46.5

6.4

40.3

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

11,478

5.73%

5th

5.7

48.4

5.1

40.8

Kenedix, Inc.

7,850

3.92%

6th 5.4

49.4

5.0

40.2

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

7,147

3.57%

7th

45.6

5.4

41.0

Goldman Sachs and Co. regular Acct.

6,512

3.25%

State Street Bank and Trust Company

5,763

2.88%

The Bank of New York, Treaty JASDEC Account

4,384

2.19%

101,735

50.86%

48.0

8.1
0%

20%

6.8

40%

34.6

60%

80%

100%

Note: Round to the first decimal place

Total
Note: Ratios are rounded down to the second decimal place

Type of unitholders (as of October 31, 2008)
Individual and Others
Financial Inst.
(Incl. Securities co.)Other Domestic Co.
Foreign Co. and Individuals
Total

# of
unitholder
5,605

(%)
94.0%

(Reference) Reporting of major unitholders# of units
Ratio (%)
held (unit)
16,234
8.1%

83

1.4%

91,126

45.6%

100
176
5,964

1.7%
3.0%
100.0%

10,72081,920200,000

5.4%
41.0%
100.0%

Note: Round to the first place decimal point

Name
Tower Investment Management Co., Ltd.

Submitted # of units
onheld (unit)
2008/11/21
25,175

Nomura Securities Co., Ltd.
2008/9/25
Nomura Asset Management Co., Ltd.
Nomura Securities Co., Ltd.
Nikko Asset Management Co. Ltd
2008/10/22
Nikko Asset Management Co. Ltd
Citigroup Alternative Investments LLC
Nikko Citigroup Ltd.
Notes:1 Reports submitted from 2007/5/22 to 2008/11/21
2 These are companies who has more than 5% units
3 Rounded to the first decimal place

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

22,084
21,274810
19,875
18,349
1,171
355

(%)
12.59%
11.04%
10.64%
0.41%
9.94%
9.17%
0.59%
0.18%

29

J-REITs investment trends by investor category
Trend of trading in JJ-REIT securities by investors
Banks
銀 行

外国人投資家and Individuals
Foreign Corporations(¥100M)
(億円)

買いBuy

売りSell買い(¥100M)(億円）

ネット（売買）
Net

5,000

売り

Buy

ネット（売買）

Net

Sell

1,000
500

4,000

0
3,000

-500
-1,000

2,000
年
2月
20
06
年
5月
20
06
年
8月
20
06
年
11
月
20
07
年
2月
20
07
年
5月
20
07
年
8月
20
07
年
11
月
20
08
年
2月
20
08
年
5月
20
08
年
8月

5年
11
月

5年
8月

05
年
5月

-1,500
20
06

20
0

20

20
0

05/5- 05 Oct.
05/10
06/3
06/8
07/1
07/6
07/11
08/4
08/9
May
- 05 Mar.
- 06 Aug.
- 06 Jan.
- 07 Jun.
- 07 Nov.
- 07 Apr.
- 08 Sep.
- 08

1,000

投資信託
Investment Trusts

0

買い
Buy

(¥100M)
（億円）

売り
Sell

ネット（売買）
Net

800-1,000600
400-2,000200
0-200-3,000

-400
8月

5月

2月

11
月

8月

5月

2月

11
月

8月

5月

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

08

年

年

20

08

年

20

08

年

07

20

年

07

年

年

07

07

年

年

06

年

06

06
年

年

年

Source:Tokyo Stock Exchange (data up to Oct. 2008)

20

08/9

05

05

Sep. - 08

20

08/4

06

Apr. - 08

20

07/11

20

07/6

20

07/1

20

Jan. - 07 Jun. - 07 Nov. - 07

20

06/8

05

Aug. - 06

20

06/3

20

05/10

20

Oct. - 05 Mar. - 06

2月

8月

5月

05/5
05/10
06/3
06/8
07/1
07/6
07/11
08/4
08/9
May
- 05 Oct.
- 05 Mar.
- 06 Aug.
- 06 Jan.
- 07 Jun.
- 07 Nov.
- 07 Apr.
- 08 Sep.
- 08

年

05/5

20

5月
20
05
年
8月
20
05
年
11
月
20
06
年
2月
20
06
年
5月
20
06
年
8月
20
06
年
11
月
20
07
年
2月
20
07
年
5月
20
07
年
8月
20
07
年
11
月
20
08
年
2月
20
08
年
5月
20
08
年
8月

20
05
年

May - 05

11
月

-600

-4,00030

Disclosure and IR activities
Active information disclosure through our company website■Latest topics are displayed in the ticker

Proactively held meetings with investors

Asset Management Reports(sent to existing investors)

English Annual
Reports■Disclosure Materials

You can see the past
disclosure materials in a list

■Latest financial
information
Shows video images ofresults briefings.

Approach targeting retail investors■Press Releases
Updated on the same day as theJapanese press release(Reference)
Number of investor meetings
Domestic institutions
Domestic regional financial institutions
International investors(Europe)
International investors (US)International investors (other)

TOTAL(Reference)
Access to KRI website（clicks）

Portfolio

13,990Press release

12,997

Disclosure material

7,492

What's new

6,371

Dividends

5,853

Domestic regional financial institution

KDRM site top

5,577

International investors (Europe)

List of loan

5,143International investors (US)Occupancy rate

4,170

International investors (other)English website

3,100

TOTAL

64,693

Note:2008/5/1 to 2008/10/31■Japanese
We have renewed our Japanesewebsite in March 2008.

Many of the participants replied they were satisfied
with the seminar.
# of participants:
169 persons

Note：2005/6/21 to2008/12/1(including conferencecalls)

Domestic institutions

Disclosure through JapaneseWebsitehttp://www.kdx-reit.com/

326
128
111
126
137
828

■Participated in a seminar for retail investors
Held by JAPAN-REIT / ib Research & Consulting Inc.

TOTAL

42
15
5
8
29
99

■ Relevant content can be viewed on the
J-REIT’s portal site (JAPAN-REIT.com)

From 2008/5/1–2008/12/1

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

31

Unit price performance/transaction volume
As of 2008/12/1

Kenedix Realty Investment Corporation（
Corporation（KRI）
KRI） Price・
Price・Volume

Highest price（trading price）：988,000（2007/5/31）
Lowest price（trading price）：100,300（2008/10/20）

Volume (unit)
20,000

Unitprice (¥)
Follow-on price
追加上場時公募価格
873,180円
JPY873,180

7,000

1,000,000
900,000

6,000

5,000

Listing price
上場時公募価格
580,000
円
JPY 580,000

Follow-on price
追加上場時公募価格
593,096円
JPY593,096

800,000
700,000

4,000

600,000

3,000

500,000
400,000

2,000
300,000
1,000

0
2005/7/21

200,000
100,000
2005/12/15

2006/5/16

2006/10/5

2007/3/6

出来高VolumePortfolio expansion

2007/7/31

2007/12/25

2008/5/27

本投資法人終値
Closing pricePortfolio expansion+
Increase the ratio of office buildings

2008/10/20（As of 2008/12/1）

Increase the ratio
of office buildings

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

32

Summary financials for the 7th Period—Income statement■Comparison of 7th period and 6th Period

Rental and other operationg revenues(※1)■Comparison of Forecasts for the 7th period(as of 2008/6/11) and actual results

6th period

7th period

2007/11/1
2008/4/30

2008/5/1
2008/10/31

Difference

(\M)

(\M)

(\M)

(¥M )
Note

6,770

7,111

341

Rental revenues

5,626

5,847

221 Ａ（+528）,B(▲459),C(+217),D(▲100)

Common area charges

1,144

1,263

119 Ａ（+137),B(▲10),C(+7),D(▲10)

OthersParling space rental revenues
Utility charge reimbursements
Miscellaneous
Total rental and other operating
revenues (A)Profit on sale of trust beneficiaryinterests in real estate
Operating revenues
Property management fee
Utilities
Taxes
Repairs and maintenance cost
Others（※１）
Depreciation
Total property-related expence B

859
240
458
160

1,045
250
668
126

186
10 Ａ(+23),B(▲12),C(+1),D(▲2)
210 Ａ(+104),B(▲6),C(+25),D(▲1)
▲34

7,630

8,156

526

952

299

▲653

8,582
750
450
395
149
272
1,430
3,447

8,456
792
611
406
188
234
1,445
3,678

Rental business profit（A－B）

4,182

4,477

295

Net operating income（NOI）
Loss on disposal of real estate
Asset management fee
Others（※２）
Operating expenses

5,612
439
424
205
4,517

5,923
442
190
4,311

311
18
▲15
▲206

Operating income

Loss on disposal of 13 properties in 6th period
Loss on disposal of 2 properties in 7th period▲126
42 Ａ(+73),B(▲39),C(+28),D(▲4)
161 Ａ(+95),B(▲12),C(+22),D(▲12)
1139▲38 ▲49 decrease of KDX Yoyogi Bld. In 6th period
15
231

Actualresults

4,065

4,144

79

8
504
113
28
5
41
5
31
730

14
689
114
145
5
41
5
32
1,034

6
185 increasing debt, raising interest, etc
1
117 Syndicate loan fee, upfront fee, etc
1304

Non-operating expenses▲ 721▲ 1,020

▲299

3,343
3,343
1
3,342
0
3,342

3,124
3,124
0
3,123
0
3,123

▲219
▲219
▲1
▲219
▲219

Difference

Comments (on the difference
between the revised forecast andactual results)

Operating revenue

8,174

8,456

・revenue increase from sale of 2
properties (+299)
・ revenue decrease from decrease+282 in expected rent income (▲98)
・revenue increase from acquisitionof 1property including increase inincome for utilities

Operatingexpenses

4,254

4,311

+57 ・ increase in income for utilities

Operating profit

3,919

4,144

+225 -

Non-operating
Profit924

1,034＋110 ・increase in mainly interest expenseincl. Interest
payable866

948

Loss on disposal of 10 properties in 6th period

Non operating income
Interest expense
Investment corporation bonds interest
Financing related expense
Amortization of bond issuance costs
Amortization of unit issuance costs
Amortization of organization costs
Other non-operating expenses
Non-operating expenses

Ordinary income
Income before income taxes
Income taxes
Net income
Retained earnings at the beginning of period
Retained earnings at the end of period

Forecast

Net income

3,002

3,123

Distribution per
unit¥15,000¥15,618# of Properties

・increase in mainly borrowing+82 related expenses (2008/7,
syndicated loan related fees)
Revenue increase from profit on sale(+299), ▲57 due to increase inoperating expenses, increase in loan+121
related expenses for the main part
resulted in increase of non-operating
expenses and ▲110+¥618 -The 2 properties (KDX Iwamoto-cho
Bldg and KDX Harumi Bldg.) were
70 Properties 69 Properties ▲1 Property already reflected in the forecast.
Subsequently 2 properties were soldand 1 acquired

Key factors that led to increase/decrease (Operating profit (loss))
A：occupancy rate of properties acquired in the 6th Period for the full year
B：Revenue decrease from properties sold in the 6th Period
C：Revenue increase from properties acquired in the 7th Period
D： Revenue decrease from properties sold in the 7th Period(※1) Other expenses：
Insurance premium, trust fee(※2) Other operating expenses：Compensation paid to directors, Asset custody fees,
General Admin fees, Auditor’s fees

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

33

Summary financials for the 7th period—Balance sheet andcashflow statement
Current assets
Cash and bank deposits
Entrusted deposits
Other current assets
Fixed assets
Property and equipment at cost
Buildings
Land
Buildings in trust
Lands in trust
Intangible assets
Ground leasehold
Investment and other assets
Leasehold and security deposite
Long-term prepaid expenses
Deffered income tax asset
Deffered assets
Organization costs
Corporate bond issuance costs
Unit issuance costs
Total asset
Current liabilities
Trade and other payables
Short-term debt
Other account payables
Rents in advance
OthersFixed liabilities
Corporate bonds
Long-term debt
Leasehold and security deposit received
Security deposit received in trust
Derivative liability
Liabilities
Total unitholders' capital
Retained earnings
Unrealized gain from deffered hedge transactions
Equities
Total liabilities and unitholders' equity

6th period
7th period
As of Apr. 30, 2008
As of Oct. 30, 2008(%)(%)（\ thousand）（\ thousand）
13,397,027
5.8
13,465,140
5.6
6,379,367
6,799,392
6,813,393
6,230,408
204,266
435,339
216,915,367
94.1
226,028,045
94.3
216,483,952
93.9
225,510,389
94.1
9,520,811
10,571,000
25,928,590
29,093,099
56,291,945
59,032,593
124,742,605
126,813,694
285,3500.1
285,3500.1
285,350
285,350
146,0650.1
232,306
0.1
23,326
12,226
121,520
213,679
1,217
6,399
207,8480.1
155,4120.1
20,35815,26957,18351,306130,305
88,837
230,520,243
100.0
239,648,597
100.0
34,026,147
441,418
31,750,000
351,588
1,172,674
310,465
68,179,934
12,000,000
46,000,000
1,271,027
8,905,814
3,091
102,206,081
124,973,750
3,342,285▲ 1,873
128,314,161
230,520,243

14.8

29.6

44.3
54.2
1.4
▲0.0
55.7
100.0

26,151,126
407,070
24,000,000
321,639
1,238,194
184,220
85,409,894
12,000,000
62,750,000
1,515,158
9,128,461
16,271
111,561,020
124,973,750
3,123,698▲ 9,872
128,087,577
239,648,597

10.9

35.6

46.6
52.1
1.3
▲0.0
53.4
100.0

♦

PPE increase by ￥9,027M(Acquisition price of assets acquired: ￥14,314M Acquisition price of assets sold:￥5,110M)♦

Decrease in short-term borrowings by ￥7,750M♦

Increase in long-term borrowings by ￥16,750M

Cashflow statement

Cash flow from operating activities
Cash flow from investing activities
Csh flow from financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

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

6th period
As of Apr. 30, 2008

7th period
As of Oct. 31, 2008（\ thousand）（\ thousand）

36,143,837▲47,793,395
11,460,091▲189,466
11,331,324
11,141,858

9,279,012▲14,377,205
5,659,983
561,790
11,141,858
11,703,649

34

J-REIT and real estate market overview
Forum for building up the real estate investment
market that is trusted by investors
No. of REITS(MLIT, Organizer: ARES October 2008)••

Market Cap ($US mn)

250
450,000

Market Cap

 J-REIT performance J-REIT consolidation effects and necessity
 J-REIT market development••

US REIT Reorganization

200

400,000

No. of Investment Corporations

350,000
300,000

150

Refinancing risk
Flexible capital policies (e.g., share buy-backs,
convertible CBs)
Sponsor creditworthiness
Management structure – External or Internal

250,000
200,000

100

150,000
50

Source of information on this page:
The Third “Forum for Building Up the Real Estate Investment
Market that is Trusted by Investors” reference materials(available on the ARES website - in Japanese only)

100,000
50,0000

0<Reference> REIT Structure by Country
1. Japan (J-REIT) – Externally Managed Type

2. USA (US REIT) – Internally Managed Type

Investor

Investor

Investment

Investment Corporation
Real EstateSponsor(Asset Management
Company Investor)

REIT

Management
Instructions

Investment

Stapled Security (*)
Management
Trust portion
Co. Equity

Real Estate

Investment

Asset Management Company

Administration outsourcing (*)

Investor

Investment

MandateEmployees

3-2. Australia (Stapled Type)

Asset management division,building manager, leasing agent, others
Employees

Management

Each divisional function is outsourced
where necessary

Trust
Real Estate
MandateAsset Management Company
Employees
Management
Administration outsourcing (*)

Instructions

Building manager, leasing agent, others

Building manager, leasing agent, others(*) In some cases administration is outsourced via theasset management company(*) In some cases administration is outsourced via theasset management company

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

35

Shareholders of Asset Management Company（Change of Shareholders and Kenedix, Inc.’s result）
Change of shareholders of Kenedix REIT Management

Results of Kenedix group
AUM (by type of investor)

Schedule of shareholder change
2008/12/11

Stock transfer approved by the Asset Management Company

2008/12/19

Execution of the Stocktransfer

100%
80%
60%

Shareholders (before)

40%

Address# ofShares(%)

20%

2-2-9 Shimbashi,
Shimbashi, MinatoMinato-ku,
ku, Tokyo

6,450

100%

0%

Name

Kenedix Inc.

Change to multi shareholders fromsole shareholder

Shareholders (after)

00/12

01/12

02/12

Foreign Investor
Kenedix Group account

03/12

04/12

05/12

Japanese institutional Investor
J-REIT

06/12

07/12

08/09

Pension FundLPT

AUM (by type of property)(%)

2-2-9 Shimbashi,
Shimbashi, MinatoMinato-ku,
ku, Tokyo

5,805

90％
90％

800,00010％
10％

700,000

Name

Kenedix Inc.
ITOCHU Corporation（￥M）

Address# ofshares2-5-1 KitaKita-Aoyama, MnatoMnato-ku,
ku, Tokyo

645

844,077

900,000

734,980
Other
Logistics facilities

600,000

Total-

Profile of ITOCHU co.
Name

6,450

100%

544,480

Commercial facilities

500,000

Residential

400,000

Office385,663
240,393

300,000

ITOCHU Corporation

Founded1949/
1949/12President

Eizo Kobayashi

Capital¥202,241M
202,241M

200,000

68,477100,000

83,799105,880

19,040

0

00/12

01/12

02/12

03/12

04/12

05/12

06/12

07/12

08/09

Source： Kenedix, Inc. as of Sep. 2008
Note：

Includes properties of Japan Logistics Fund, which are entrusted to anaffiliate of Lenedix, Inc. for asset management, and properties held by KRI

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

36

Management structure of the asset management company
Decision making flow chart
Discussion& Review

Preview

Resolution/Reporting

Creation of Asset Administration
Plan, etc.
Approval for transactions withinterested parties

Complianceofficer

Corresponding
Division

Approval for transactions outside ofmanagement guidelines

Compliancecommittee*

Resolution
Assetmanagement
committee

Approval for transactions that follow
Management guidelines excluding
those with interested parties
Note:

ReportingBoard of Directors

Creation of management guidelines

One lawyer works as an external commission member

Policy on transaction with related parties¾ Asset acquisition: Must not acquire properties for morethan appraised price (except for properties pre-acquired by
Kenedix Inc. pursuant to the MOU)
¾ Asset disposal: Must not sell properties for less thanappraised price＜Reference＞
Reference＞
Meetings held by the various committees, Board of Directors of theasset management
management company/investmentcompany/investment corporation
1st
peri
od

2nd
period3rd
period4th
period5th
period6th
period7th
periodCompliance committee

7

7

7

8

6

8

9

Asset management
committee

21

35

39

39

38

38

53

Board of Directors

9

7

9

8

9

7

9

Board of Directors ofInvestment Corporation

11

7

7

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< Reference >Asset management company’company’s management fee structure Asset management company’s management fee structure¾ Management fee I : 0.15% of total assets¾ Management fee II : 3.0% of money available for distribution in eachfiscal period¾ Acquisition fee: 0.5%of acquisition price(0.25% if interested parties)¾ Sale fee: capped at 0.5% of transfer price Property management fees
¾ Rental property management: 2% of rent revenues + 2% of theoperating revenues from the property (after operating expenses, andbefore depreciation expenses)¾ Management transfer: amount determined in proportion to theacquisition/sale price(e.g. ¥1 – 3B → ¥2M, or ¥5 – 10B → ¥2.4M）¾ Construction Supervision: amount determined in proportion to theconstruction costs(e.g. ¥1 – 5M →5% or ¥10 – 100M → ¥450,000＋3%)

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

37

Kenedix REIT Management, Inc.—Organizational chart
Major members

Shareholders’meeting
Auditor (part-time)
Haruo Funabashi, Kenichi Yamasaki♦

Auditors
Board ofdirectors♦ After joining the Ministryof Finance, he served ascommissioner of Tokyo
Customs, Deputy
Commissioner of the
National Tax
Administration, Secretary
Haruo Funabashi General of the Securities
and Exchange
AuditorSurveillance(part-time)
Commission, Director
General, Minister’s
Secretariat of the
National Land Agency
before joining Kenedix as
an auditor♦

Compliance officer

Taisuke Miyajima
CEO & President

Yuuji Kamimura

Investmentcommittee

Compliancecommittee♦

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

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

Kenji Ajitani
Director & General Manager,
Investment Management
Division

Representative
director
Taisuke Miyajima♦♦

Investment
management div.
Kenji Ajitani

Property
management div.
Masashi Ohwa

Financialplanning div.
Masahiko Tajima

Business
administration div.
Teruo Nozaki♦ Property
acquisition
anddisposition♦ Researchand Analysisof real estatemarkets

Asset
Management
group

Property
Managementgroup♦ Property
management♦ Property
leasing♦ Property♦ Assessment
managementof property
management/riskmanagement

Engineering
group

IR
group

♦ Construction ♦ Investor
Relationsmanagement
activities

Finance andaccounting
group

♦

Business
administrationgroup♦ Formulation ♦ Runningof budget,unitholders’ andfinancialdirectors’
statements,
meetings♦ Negotiations disclosure
with♦ Administration/♦ Procurement Accounting/regulatory
agencies and of funds
Human Resources
concerned
bodiesWorked for Asahi Urban Development Corporation,
Nihonjisho, others before he joined Kenedix
Executive Officer & General Manager of REITManagement Division, Kenedix Advisors before joining
Kenedix REIT Management

Masashi Ohwa
Director & General Manager,
Property Management Division♦

Asset
Investment
group

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

Worked for 12 years at Chuo Mitsui Trust andBanking, where he was responsible for securitization
Joined Kenedix, Inc. after 4 years of experience invarious securitized paper investments at Sumitomo
Life Insurance
MBA from Columbia Business School

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

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

Yuuji Kamimura
Compliance Officer

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

38

Disclaimer
The contents of this document, including summary notes, quotes, data and other information,
are provided solely for informational purposes and not intended for the purpose of soliciting
investment in, 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 priornotice of any 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 performance of 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 andfinancial performance to be materially different from those explicitly or implicitly expressed inthis document.
With respect to any and all terms herein, including without limitation, this document, theinformation provided is intended to be thorough. However, no absolute assurance orwarranties are given with respect to the accuracy or completeness thereof.
Neither KRI nor Kenedix REIT Management (KDRM) shall be liable for any errors,
inaccuracies, loss or damage, or for any actions taken in reliance thereon, or undertake any
obligation to publicly update the information contained in this document after the date of thisdocument.

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

39