Semiannual Report 31st Fiscal Period
May 1, 2020–October 31, 2020

2-1-6 Uchisaiwaicho,
Chiyoda-ku, Tokyo
Security code: 8972

Characteristics of Kenedix Office Investment Corporation
We seek to maximize unitholder returns by focusing on investing in and managing

mid-sized office buildings in the Tokyo metropolitan area to generate
stable profits and sustainably expand assets under management.
We recognize the importance of factoring environmental, social, andgovernance (ESG) considerations into real estate investment management.
Strengthening efforts to help realize social sustainability is a key management priority.

Tokyo
metropolitan area

Tokyo metropolitan
area investment
ratio (Note 1)

81.4%

Mid-sized
office buildings

Mid-sized officebuilding investment
ratio (Note 1)

84.0%

Securing
environmental
certifications
and assessments
Number of certified
and assessed
properties (Note 2)

42

Percentage of
total floor area

56.8%

Contributing toa sustainable environment

Maximizing unitholder returns

Table of contents
Characteristics of Kenedix Office
Investment Corporation
Results for the 31st Fiscal Period (Oct. 2020)and Future Initiatives
Message from the Management
ESG Initiatives
Asset Reshuffling Strategy
Financial Strategy

2
4
6
10
12
14

Financial Section
Financial Summary (Unaudited)
Balance Sheet
Statement of Income and Retained Earnings
Statement of Changes in Net Assets
Statement of Cash Flows
Notes to the Financial Statements
Independent Auditor’s Report

15
16
18
19
20
21
46

Investor and Property Information
Unitholders’ Information
Portfolio Map (as of October 31, 2020)
Photos of Properties Acquiredin the 20th Fiscal Period (Apr. 2015) Onward

2

48
50
52

Image of a typical mid-sized office building

Around2 elevators

Characteristics andattractiveness of mid-sized

8–10 stories
Total floor area:
500–3,000 tsubo(roughly 1,600–9,900 m2)

Around100–150 tsubo(roughly 330–500 m2)
per floor of rental area

office buildings in
the Tokyo metropolitan area

Abundant
numberof properties

High liquidity

Broad tenant
base

83.0%

61.8%

92.2%

The ratio of mid-sized officebuildings (total floor area of
500 tsubo or more but less than
3,000 tsubo (roughly 1,600–
9,900 m2)) in the 5 central(Source 1)
wards of Tokyo is 83.0%. (Note 3)
The number of mid-sized officebuildings is larger than that oflarge-sized office buildings, so there
are many excellent investment
opportunities, and they are more
efficient in operation thansmall-sized office buildings.

Transaction prices for mid-sized
office buildings range fromapproximately 1 billion yen to
10 billion yen, and the ratio ofthese transactions to the total
number is 61.8% (the ratio oftrading volume between 1 billion
yen and 10 billion yen) and they
are relatively actively traded. (Source 2)

The percentage of businessestablishments with fewer than
30 employees, which are the mainusers of mid-sized officebuildings, is high at 92.2% inTokyo (Source 3). We therefore believethat even if vacancies occur, newtenants will be relatively easy tofind and we will be able tomaintain high occupancy rates.

Favorable
supply–demandbalance inthe leasing market

82%

The percentage of small andmid-sized buildings built 20 years
or more ago in Tokyo’s 23 wards(leased area basis) is 82%, and new
supply is limited compared tolarge-sized office buildings (Source 4).
We are able to secure competitivenessby appropriately managing andoperating these buildings,
continuing to renovate theirfacilities, and performing construction
work to upgrade their value.

Note 1:Shown as the ratio of the acquisition price for each category to the total acquisition price, rounded down to the first decimal place (as of the end of the 31st fiscal period (October
31, 2020)).
Note 2: The number of properties is counted without duplication in case a property has multiple certifications and assessments. The total floor area ratio is calculated without duplication
by dividing certified floor area by total floor area of the portfolio (as of November 30, 2020).
Note 3: Percentage of the number of rental office buildings located in the 5 central wards of Tokyo that are surveyed by CBRE K.K. by building size (as of the end of September 30, 2016).
Source 1: Based on a survey conducted by CBRE K.K. at the request of the Asset Management Company.
Source 2: Compiled by the Asset Management Company based on “the number of office building transactions by transaction size (FY2008-FY2020)” (fiscal year 2020 up to October 31)
from the “Real Estate Transactions Study” by Urban Research Institute Corporation, a think tank specializing in real estate in the Mizuho Financial Group.
Source 3: Compiled by the Asset Management Company based on “2014 Economic Census for Business Frame Tokyo (revised results) (as of March 27, 2017).”
Source 4: Compiled by the Asset Management Company based on “Tokyo 23 Wards | Office Stock Pyramid 2020” published by XYMAX REAL ESTATE INSTITUTE Corporation on
January 10, 2020.
Refer to the following for the definitions of each term used in this document.
• “5 central wards of Tokyo” refers to Chiyoda, Chuo, Minato, Shinjuku, and Shibuya wards.
• “Tokyo metropolitan area” refers to Tokyo, Kanagawa, Saitama, and Chiba prefectures.
• “Other regional areas” refers to regional core cities such as government ordinance-designated cities.
• Kenedix Office Investment Corporation is referred to as “the Investment Corporation” or “KDO,” and Kenedix Real Estate Fund Management, Inc., “the Asset Management Company”
or “KFM.”
main use under the Building Standards Act is office and whose total floor• “Mid-sized office buildings” as defined by the Investment Corporation refers to rental office buildings whosearea of the entire building stated in the certificate of all registered elements fulfills the criteria of 13,000 m2 or less in the 23 wards of Tokyo and 20,000 m2 or less outside the 23 wards ofTokyo.

Kenedix Office Investment Corporation3

Results for the 31st Fiscal Period (Oct. 2020) and Future Initiatives

31st fiscal period (Oct. 2020)
Distribution per unit (DPU)

15,384 yen+6.7% period over period+6.1% compared with forecast(Note)

Note: As of June 15, 2020

31st fiscal period (Oct. 2020) results
AUM

Gain on saleof real estate properties

Balance of reserve
for reduction entry

443.7 billion yen

1.05 billion yen

3.49 billion yen

Increased by 10.9 billion yen
through asset reshuffling

We also expect to record
1.12 billion yen from the sale of properties
in the 32nd fiscal period (Apr. 2021)

Utilize to stabilize distributionsin anticipation of temporary
revenue decline

Occupancy rate

Increase in monthly rent
from tenant turnover

Increase in monthly rent
upon rent revision

98.1%

6.2 million yen

7.0 million yen

The occupancy rate is remaining
at the general level envisioned despite
the residual impact from COVID-19

The level of rent charged has
increased for more than
90% of new tenants

Beginning early negotiations
amid the COVID-19 pandemic led
to increases to a certain extent

Average interest rate
on interest-bearing debt

Interest-bearing debt ratio(LTV)

Status of credit rating

0.94%

43.9%

AA- (Stable)

Worked to reduce interest
rate costs while maintaining
the average borrowing period

Maintained stable financial baseby keeping LTV at a conservative level

Japan Credit Rating Agency, Ltd.
continues to assign a high rating

Note: The reserve for reduction entry was calculated by adding the provision of reserve for reduction entry stated in Basis for Calculating Cash Distribution for
the relevant fiscal period to the balance of reserve for reduction entry on the balance sheet as of the end of the relevant fiscal period.

4(Note)DPU history
Increase due to gainon sale of properties+14.3% over 2 years
15,384792

14,412(Yen)

13,458446
13,01227th fiscal
period(Oct. 2018)

13,71913,6391,179

14,592619

14,001

14,412

13,10013,63928th fiscal
period29th fiscal
period(Apr. 2019)15,180(Oct. 2019)30th fiscal
period(Apr. 2020)

31st fiscal
period(Oct. 2020)

32nd fiscal
period(Apr. 2021) (Note)

Note: Forecast as of December 14, 2020 calculated under certain assumptions.

Future efforts

1

External growth

Aim for sustainable growththrough asset reshuffling andidentifying quality property acquisition
opportunities while keeping an eye
on the real estate trading market

3

Financial strategy

Focus on further reducing
interest costs and diversifying
maturities while maintaining good
relationships with financial institutions

2

Internal growth

Maintain flexibility in leasing andmanagement in response todiversifying demand while keeping
an eye on trends in the officeleasing market

4

ESG

Aim for compatibility between
sustainable growth and social
responsibility through continuous
initiatives for improving sustainability

Kenedix Office Investment Corporation

5

Message from the Management
Agile and flexible asset management succeeded
in increasing the distribution per unit (DPU)
for the 31st fiscal period by 304 yen comparedto the revised forecast, amid the impact
from COVID-19.

DPU for the 31st fiscal period (Oct. 2020) rose 2.0% to 15,384 yen, an
increase of 304 yen compared the DPU forecast (Note) of 15,080 yen.
During the period under review, Kenedix Office Investment
Corporation (KDO) worked with Kenedix, Inc. to reshuffle strategic
assets. More specifically, KDO acquired Shinbashi M-SQUARE Bright,a relatively new building in the center of Tokyo while simultaneously
selling three considerably older buildings KDO owned in the city
through a mutual purchase and sale with the Mitsui Fudosan Group.
This limited a future increase in the risk of repair expenses, etc. The
acquired building, Shinbashi M-SQUARE Bright, is a high-grade
medium-sized office building that was completed in 2018 and isequipped with the latest equipment. Located near Shimbashi Station, it
also offers excellent access to a main station in Tokyo and highvisibility. The main advantages of the transaction are the anticipated140-yen increase in DPU over the medium and long term, the desired
lowering of the average age of properties, and the recognition of a gainon the sale of properties over two fiscal periods. This resulted in a
portfolio of 98 properties valued at 443.7 billion yen as of the end of the
31st fiscal period (October 31, 2020), and achieved sustained external
growth despite the COVID-19 pandemic.
While we were concerned about the impact from the spread of
COVID-19 on internal growth, the office building occupancy rate for theInvestment Corporation remained at the high level of 98.1% as of
October 31, 2020, despite the effective suspension of leasing activities
under the State of Emergency declaration in April 2020 and the delay it
caused in backfilling vacant units. The tenant turnover ratio rose from
3.3% last fiscal period (Apr. 2020) to 7.0% in the fiscal period underreview, owing to a large tenant who moved out of the KDX Yokohama
Kannai Building. Although the impact from the spread of COVID-19 isincreasing agreement cancellations by tenants who have experienced
deterioration in business performance and reduction in size and relocation
Note: As of June 26, 20206

Sustainable Growth“Achieveby Building a Robustand Profitable Portfolio”

Jiro Takeda
Executive Director,
Kenedix Office Investment Corporation
Director & COO, Head of Office REIT Department,
Kenedix Real Estate Fund Management, Inc.

Kenedix Office Investment Corporation

7

Message from the Managementof offices due to the introduction of telecommuting,onward. However, the impact on the overall portfolio

move-ins have also proceeded to a certain extent as the

profitability has been extremely limited.

latent need for expansion and relocation that existed
before the pandemic materializes. This has resulted in

In terms of financial strategy, we are steadfastly

an extended period of free rent, but we expect to be able

maintaining a stable financial base. We took advantage

to maintain the occupancy rate based on contracted areaof the low interest rate environment during theto a certain extent.

pandemic this fiscal period to refinance, and reduced
interest costs while maintaining the average remaining

Tenant turnover resulted in an increase of 6.2
million yen in monthly rent for the fiscal period, andperiod to maturity. This consequently reduced thethe rent level has increased for more than 90% of new

average interest rate on interest-bearing debt to 0.94%.

tenants. While a temporary decline in the occupancy

The interest-bearing debt ratio (LTV) as of October 31,

rate is anticipated in the future due to the increase in2020 was 43.9%, holding firm at a conservative level.

turnover ratio, the level of contracted rent for new
tenants moving in is maintaining at pre-COVID-19

We continue to focus on ESG initiatives andlevels for many properties. We see this in a positive

acquired CASBEE real estate certification for threelight, and expect a certain extent of increase in unit

properties, including the newly acquired Shinbashi

rent prices from tenant turnover.

M-SQUARE Bright. This brought the percentage ofA certain measure of success in negotiations on rent

total property floor space for which environmental

revisions with tenants who were due to renew contracts

certifications and other assessments have been

was achieved, resulting in a monthly increase in rent

obtained to 56.8% as of November 30, 2020. The

from rent revisions for the period of 7 million yen.

Investment Corporation also issued its second green

In regard to concerns about demands for rent relief

bond in October 2020. We are also working tofrom tenants due COVID-19, the Investment

encourage mask wearing and strengthen relationships

Corporation did reduce the rent of some tenants for awith tenants by distributing an anti-microbial mask

limited period of time with the expectation thatspray to tenants at the expense of the Asseteconomic activity would resume from June 2020

Management Company.

Views on changes in office requirements
Working at home has taken root with the expansion of telecommuting due to the spread of COVID-19.

Change infunctions

The pandemic has accelerated flexibility in workstyles and diversification of work locations,changing the function and nature of the main office.

Scope of workspace

Change in functions required in offices

Morning

Private home

8

Scope ofworkspace

Evening

Expansion of
telecommuting

Private home

OfficeCafé
Accommodations

Satellite officeWorkstyle reform
OfficePursue initiatives to address
the increasing diversification
in office requirements as
telecommuting expands andworkstyle reforms are pursued.

(Activity Based Working) and flexible rental agreements.
We are preparing to begin rentals in the spring of 2021.
To the tenant companies, this will offer the advantage ofminimizing the cost and work involving in vacating an
office, and we think we will be able to set the rent higher
than the normal rent by an amount equivalent to the

While we must remain vigilant in watching the trend inmoving expenses they will not need to pay. This will

the spread of COVID-19, we must focus on changes inmake it possible to incorporate the relocation needs ofoffice requirements during and after the pandemic andcompanies that wish to maintain agility.

adapt management of assets to a new era, amid anenvironment in which contract cancellations are
increasing due to deteriorating corporate performanceand the introduction of telecommuting.
The expansion of telecommuting and national
emphasis on workstyle reform due to the COVID-19
pandemic is changing the traditional workstyle inwhich all workers head to the office at a set time every

Strive to achieve sustained growthin unitholder value by continuing
to invest in a flexible and agile manner,with our sights set on the officemarket after COVID-19 is brought
under control.

morning and return home at a set time every night. In

The Investment Corporation will thus actively seize

the future, workplaces could conceivably become

growth opportunities presented by changing officedecentralized as workers use their homes, the hotel

requirements, and aims to achieve sustained growth bythey are staying at, or other location as a sort ofbuilding and managing a robust, profitable portfolio.

satellite office in addition to the main office. TheyIn terms of external growth, we anticipate thecould choose the place and time they work, depending

tough environment for acquisitions to continue evenon the nature of that day’s work.

after COVID-19 is brought under control. Our goal is

If office requirements over the medium and longto achieve sustained growth despite this by focusing onterm change because telecommuting becomes anasset reshuffling and superior acquisition opportunities

established practice, the traditional rental model could

while keeping an eye on the real estate trading market.

cause vacancy rates to climb and profitability to

For internal growth, we will engage in agile

deteriorate. Moreover, if the changes in the businessleasing and flexible investment matched to officeenvironment surrounding companies accelerate amid

requirements, while keeping an eye on changing trends

the pandemic, this could result in an increasing numberin the office rental market.

of companies that want the agility to relocate, expand,Our financial strategy will be to maintain goodor reduce office size according to the performance andrelationships with financial institutions as we work to reduce

growth of the company. I therefore think that officeinterest rate costs further and diversify maturity dates.

building lessors must also a build flexible rental model

For ESG, we will continue to implement initiatives

that accommodates such changes in office functions.

aimed at ongoing improvements in sustainability, andAs one initiatives targeting such diversified office

aim to achieve both sustainable growth and fulfill our

requirements, the Investment Corporation is planning tosocial responsibilities.

rent offices with interior furnishings and furniture in the

We will strive to maximize unitholder returns,

KDX Iidabashi Building, which has a block of vacant

which are represented by distributions and net asset

units. This plan will incorporate the concept of ABWvalue (NAV), through such initiatives.

Kenedix Office Investment Corporation

9

ESG Initiatives
Materiality in the Kenedix Group
Kenedix, Inc., the parent company of the Asset Management Company, has established material issues in order to identify subjects that are
critical for achieving sustained growth of the Kenedix Group along with stakeholders and society. We will strive to find solutions to theseissues both in business and society by implementing specific initiatives for each material issue. We also intend to contribute to achieving
the sustainable development goals (SDGs) through initiatives targeted at solving material issues.

Key areas
Contribution toa sustainable
environment
Commitment toa diverse society

Stakeholder
engagement

Material issues

Applicable SDGs

Reduction of energy consumption and CO2 emissions
Reduction of water consumption and waste materials
Collaboration with tenants on environmental initiatives
Providing properties that take the environment andthe community into consideration
Improving resilience
Initiatives for an aging society with fewer children
Continuous improvement in customer satisfaction
Community engagement
Managing conflicts of interests

Attractive working
environment

Recruiting, employee retention, and career advancement
Health and wellbeing of employees
Diversity and equal opportunities

Responsibleorganization

Compliance
Risk management
Commitment to responsible investments

Environmental certification status (as of November 30, 2020)
GRESB Real Estate
Assessment

Certification for CASBEE
for Real Estate

Trend in environmental
certifications andassessments (Note 1)(No. of48 buildings)

16
Rated 4 Stars in the GRESB ratings,
the second-highest level
Awarded Green Star for
9 consecutive years

Total of 21 properties
S rank (highest rank) : 10 properties
A rank: 11 properties

DBJ Green Building
Certification

BELS Certification

x

3
2011

2014

2017

2020

Acquisition ofenvironmental certifications
and other assessments (Note 2)42
56.8 %

properties

25 properties have obtained
the certification, including KDX
Toranomon 1chome Building which
has earned five stars, the top rating

In 2014, KDX Musashi-Kosugi Building
became the first J-REIT property toreceive a BELS Certification (three stars)
Two properties have obtained thecertification

Total floor area ratio

Note 1: When a building has obtained multiple environmental certifications and assessments, they are each counted as one without duplication.
Note 2: The number of properties is counted without duplication in case a property has multiple certifications and assessments. Total floor area ratio is calculated without duplication by dividing
certified floor area by total floor area of the portfolio.

10Issuance of green bonds

KDO issued a second tranche of green bonds in October 2020 to commit to stronger initiatives aimed at
improving sustainability, and contribute to the development of the domestic green bond market byoffering opportunities to the universe of investors who take an active stance towards ESG investment.

Cooperating with communities in bicycle sharing

We have offered sections of 6 property sites to serve as bicycle parking for bicycle sharing. Enhance
convenience for tenants and local residents by cooperating on projects that will further increase usageneeds during the COVID-19 pandemic.

Installation of AEDs
We are actively working to install automatic external defibrillators (AEDs) and have already installed
them in about 99% of the properties we own (as of November 30, 2020). They are available not only forthe tenants but for residents of neighboring communities as well. This is displayed on the AED stickers
and the location of the AEDs is registered on administrative maps, and elsewhere. AEDs will gradually
be installed in properties that are jointly owned with third parties.

Activities supporting Japan for UNHCR, the United Nations Refugee Agency
KDO has been supporting Japan for UNHCR, which is the official support contact point in Japan onbehalf of UNHCR, the refugee support organization of the United Nations, by providing common areasof our properties as locations for fund-raising activities to support refugees and showing theiradvertising video on the digital signage in our properties. Both types of support are offered for free.

Response to COVID-19
Establishment of safety precautions
and hand sanitizing stations

Distribution of mask spray

We are working to preventthe spread of COVID-19
through tenant employees
and visitors within thebuilding by raisingawareness about safetymeasures and installing
hand sanitizer stations at
all properties.

The Asset Management
Company distributed
antibacterial “mask spray”
at its expense to the tenants
occupying the properties
entirely owned by KDO toencourage mask-wearing
and strengthen relationships
with the tenants.

Kenedix Office Investment Corporation

11

Asset Reshuffling Strategy
Assets under management (AUM) and number of owned properties
Under our basic policy of reshuffling assets and identifying quality property acquisition opportunities, AUM grew to 98 properties, valued
at 443.7 billion yen at the end of the 31st fiscal period (October 31, 2020).
(Billion yen)

600

Office buildings (left axis)
Central urban retail property (left axis)
Number of properties (right axis)

PO

Residential (left axis)
Others (left axis)
Fiscal period in which public
offering occurred

99

500

98

(Properties)

100

443.7
PO

400

432.8

75

PO

PO
PO

300

50
PO

200

PO

PO

31
PO

100

25

69.1

0
1st fiscal period(Oct. 2005)

0
6th fiscal period(Apr. 2008)

11th fiscal period(Oct. 2010)

16th fiscal period(Apr. 2013)

21st fiscal period(Oct. 2015)

26th fiscal period(Apr. 2018)

31st fiscal period(Oct. 2020)

Results of asset reshuffling from the 21st fiscal period (Oct. 2015) onward
We have steadily accumulated a results from strategic asset reshuffling from the 21st fiscal period (Oct. 2015) onward, based on wholistic
consideration of building age, profitability, unrealized gains/losses, and other factors.
21st fiscal period

22nd fiscal period

23rd fiscal period

24th fiscal period

25th fiscal period(Oct. 2015)(Apr. 2016)(Oct. 2016)(Apr. 2017)(Oct. 2017)(Apr. 2018)

KDX Hamamatsucho
Center Building

KDX Nagoya
Nichigin-mae Building

KDX Shin-Nihonbashi
Ekimae Building

KDX Sapporo Kitaguchi
Building

Mitsubishijuko
Yokohama Building(Quasi co-ownership interests)

KDX Shibuya
Nanpeidai Building

KDX Yokohama
Kannai Building

KDX Shin-Yokohama
381 Building

KDX
KDX
Ikejiri-Oohashi Shin-Yokohama
Building
214 Building

BR Gotanda(Compartmentalized
ownership and partial
land leasehold)

ARK Mori Building(Compartmentalized ownership)
KDX Shin-Osaka Building

KDX Toranomon
1chome Building

KDX Nishi-Shinbashi
Building

KDX Nihonbashi
Edo-dori Building

Mutualtransaction

Mutualtransaction

Mutualtransaction

Nagoya Nikko Shoken
Building

KDX Toranomon Building

BUREX Toranomon

KDX Nihonbashi
Kabutocho Building

KDX Nogizaka Building

Toranomon Toyo Building

KDX Roppongi
228 Building

KDX Gobancho
Building

KDX Kanda
Misaki-cho Building

26th fiscal period

Residence Charmante
Tsukishima
Residential

12Asset reshuffling points and impact in the 31st fiscal period (Oct. 2020)
Acquired in the 31st fiscal period

To be transferred in the 32nd fiscal period

Transferred in the 31st fiscal period (Oct. 2020)(Oct. 2020)

KDX Nihonbashi
Honcho Building

Shinbashi M-SQUARE Bright(Apr. 2021)

KDX Nihonbashi
Edo-dori Building

KDX Shin-Nihonbashi Building

Assetreshuffling

Highlights of asset reshuffling
We collaborated with sponsors to acquire a rarely available, recently constructed buildings in central Tokyo.
Three relatively old properties were sold to lower the risk of higher repair and other costs in the future.
A gain on the sale of properties was recorded over two fiscal periods, and is expected to increase DPU
and retained earnings amid the COVID-19 pandemic.

Advantages-28.8 years

Increase in DPU
from gain on the saleof properties (Note 3)

Gains on sales ofproperties acquired (Note 2)

Decrease inaverage age (Note 1)

31st fiscal period(Oct. 2020)

32nd fiscal period(Apr. 2021)+1.0 bn yen +1.1 bn yen+792 yen/unit

Note 1: Calculated by deducting the weighted average age of the properties sold at acquisition price from the age of the property to be acquired as of June 30, 2020.
Note 2: Gains on sales of properties are estimated based on the book value and selling expenses, etc.
Note 3: Shows the impact on DPU in the 31st fiscal period. DPU is also expected to increase to a certain extent from the gain on the sale of properties in the 32nd fiscal period.

27th fiscal period

28th fiscal period

29th fiscal period

30th fiscal period

31st fiscal period

32nd fiscal period(Oct. 2018)(Apr. 2019)(Oct. 2019)(Apr. 2020)(Oct. 2020)(Apr. 2021)

KDX Chofu Building(Compartmentalized ownership)

Tosabori Prime

Shinbashi
M-SQUARE Bright

KDX Hamamatsucho Place

Total acquisition
price

Acquired

18 Properties
131.0

KDX Kanda
Ekimae Building

bn yenMutualtransaction

Frame Jinnan-zaka(Quasi co-ownership interests: 49%)
RetailMutualtransaction

Frame Jinnan-zaka(Quasi co-ownershipinterests: 51%)

KDX Nihonbashi
Honcho Building

KDX Shin-Nihonbashi
Building

RetailSold

KDX Hamamatsucho
Dai-2 Building

KDX Nihonbashi
Edo-dori Building

18 Properties
74.6
bn yenKenedix Office Investment Corporation

13

Financial Strategy
Status of interest-bearing debt financing
We continue to decrease interest costs when refinancing while paying attention to the trend in interest rates.
Average interest rate and average remaining period
to maturity of interest-bearing debt (Note)

Outstanding borrowings from financial institutions
as of the end of the 31st fiscal period (Oct. 2020)16 lending financial institutions

Average interest rate (including up-front fee) (%)
Average remaining period to maturity (year)

1.10

1.07
5.2

5.0

1.06
5.2

1.04
5.0

1.02
4.8

0.97
4.5

0.94

The Bank of Fukuoka
The Nishi-Nippon City Bank
The Hiroshima Bank
The 77 Bank
Sumitomo Life Insurance Company
Higashi-Nippon Bank
The Norinchukin Bank
The Mie Bank

4.9 %Mizuho Trust & Banking

2.8%

4.5

Aozora Bank

5.5%

Sumitomo Mitsui Banking

Resona Bank

Total
borrowings fromfinancial institutions

5.9%

Mizuho Bank
End of 25th
fiscal period

End of 26th
fiscal period

End of 27th
fiscal period

End of 28th
fiscal period

End of 29th
fiscal period

End of 30th
fiscal period

End of 31st
fiscal period(Oct. 2017)(Apr. 2018)(Oct. 2018)(Apr. 2019)(Oct. 2019)(Apr. 2020)(Oct. 2020)

9.9%

190.7
billion yen

Sumitomo Mitsui
Trust BankMUFG Bank

19.8%

10.4%

Note: The average interest rate and borrowing period are the weighted averages basedon the balance of debt outstanding as of the end of each fiscal period (with theaverage interest rate rounded to the second decimal place and the averageborrowing period rounded to the first decimal place).

25.3%

Development Bank of Japan

15.5%

Major indices related to financial stability (the end of the 31st fiscal period (Oct. 2020))
We will maintain a stable financial position by engaging in conservative management practices while ensuring sufficient liquidity.
Interest-bearing debt ratio(LTV) (Note 1)

Fixed interest rate ratio

Maintain stable financial basewith a target of 45%(Note 2)Credit rating status

Continue to hedge against a potential risein interest rates

43.9 %

Japan Credit Rating Agency, Ltd. (JCR)

93.0 %

AA- (Stable)

Note 1: The Interest-bearing debt ratio (LTV) is the balance of interest-bearing debt at the end of the fiscal period divided by total assets at the end of the fiscal period.
Note 2: Includes borrowings fixed by interest rate swaps.

Diversification of interest-bearing debt maturities
We seek to reduce refinancing risk by strategically diversifying debt maturities.
12th tranche of unsecured
Investment Corporation bonds(green bonds) of 1.0 billion yen
issued in October 2020.

Balance of interest-bearing debt by maturity (as of October 31, 2020)

178.25 billion yen
12.5 billion yen
Investment corporation bonds
11.0 billion yen
Long-term debt

Short-term debt

Total interest-bearing debt

201.75 billion yen(Billion yen)

1.0

19.7
8.5

15.8
4.0

9.9
11.2

11.8

1.0
9.15
8.15

7.5
3.8

9.0
6.7

14
14

12.3

12.6

12.5

7.0

14.0

15.0

16.6

2.0

2.0

2.0

2.0
4.7

11.05

14.3

12.0

9.05

14.0

6.85

5.0
4.0

32nd fiscal
period34th fiscal
period36th fiscal
period38th fiscal
period40th fiscal
period42nd fiscal
period44th fiscal
period46th fiscal
period48th fiscal
period51st fiscal
period(Apr. 2021)(Apr. 2022)(Apr. 2023)(Apr. 2024)(Apr. 2025)(Apr. 2026)(Apr. 2027)(Apr. 2028)(Apr. 2029)(Oct. 2030)

Financial Summary (Unaudited)
Historical Operating Trends
For the 27th-31st Fiscal Periods

27th Period
28th Period
29th Period
30th Period
31st Period(as of(as of(as of(as of(as ofOct. 31, 2018) Apr. 30, 2019) Oct. 31, 2019) Apr. 30, 2020) Oct. 31, 2020)

PeriodUnit

Operating revenues

millions of yen

15,42015,212

15,027

15,272

16,714(Rental revenues)

millions of yen

14,802

14,595

14,95915,215

15,583Operating expenses

millions of yen

8,271

8,039

8,199

8,132

8,380

(Property-related expenses)

millions of yen

7,105

6,880

7,092

7,008

7,086

Operating income

millions of yen

7,148

7,172

6,828

7,140

8,334

Ordinary income

millions of yen

6,109

6,179

5,845

6,177

7,311

Net income (a)millions of yen

6,107

6,178

5,844

6,175

7,310

Total assets (b)(Period-on-period change)

millions of yen%

437,221(+3.4)

436,753(–0.1)

439,773(+0.7)

447,707(+1.8)

459,719(+2.7)

Interest-bearing debt (c)(Period-on-period change)

millions of yen%

183,050(–1.5)

182,050(–0.5)

185,050(+1.6)

192,050(+3.8)

201,750(+5.1)

Unitholders’ equity (d)(Period-on-period change)

millions of yen%

229,313(+7.3)

229,440(+0.1)

229,276(–0.1)

229,589(+0.1)

230,665(+0.5)

Unitholders’ capital(Period-on-period change)

millions of yen%

220,970(+7.2)

220,970(0.0)

220,970(0.0)

220,970(0.0)

220,970(0.0)

Number of investment units issued and outstanding (e) unit

428,510428,510428,510428,510428,510Unitholders’ equity per unit (d)/(e)yen535,141

535,437

535,054535,786

538,295

Total distribution (f)millions of yen

5,766

5,878

5,844

6,175

6,592

Distribution per unit (f)/(e)yen

13,45813,71913,63914,412

15,384(Earnings distributed per unit)

yen

13,45813,71913,63914,412

15,384(Distribution in excess of earnings per unit)

yen

—

—

—

—

─

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

1.4 (2.8)

1.4 (2.9)

1.3 (2.6)

1.4 (2.8)

1.6 (3.2)

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

2.8 (5.5)

2.7 (5.4)

2.5 (5.1)

2.7 (5.4)

3.2 (6.3)

Net assets ratio at end of period (d)/(b)(Period-on-period change)%

52.4(+1.9)

52.5(+0.1)

52.1(–0.4)

51.3(–0.9)

50.2(-1.1)

Interest-bearing debt ratio at end of period (c)/(b)(Period-on-period change)%

41.9(–2.1)

41.7(–0.2)

42.1(+0.4)

42.9(+0.8)

43.9(+1.0)

Payout ratio (Note 4) (f)/(a)

%

94.4

95.1

99.9

99.9

90.1

Other references
97

96

97

99

98

Total leasable floor area2m

471,041.45

468,528.20

480,328.18

488,127.53

488,010.71

Occupancy rate at end of period

%

99.1

99.2

99.5

99.5

98.1

Depreciation expenses for the period

millions of yen

2,358

2,369

2,419

2,470

2,523

Capital expenditures for the period

millions of yen

925

1,231

1,426

1,485

1,251

Leasing NOI (Net Operating Income) (Note 5)

millions of yen

10,055

10,084

10,287

10,676

11,019FFO (Funds From Operation) (Note 6)

millions of yen

7,934

7,983

8,265

8,646

8,776

FFO per unit (Note 7)

yen

18,516

18,63019,287

20,17820,480

Number of properties

properties

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 27th Fiscal Period are calculated based on a period of 184 days, 181 days for the 28th Fiscal Period, 184 days for the 29th Fiscal Period,
182 days for the 30th Fiscal Period, and 184 days for the 31st Fiscal Period.
3. Return on net assets = Net income / {(Total net assets at beginning of period + Total net assets at end of period) / 2} × 100
4. Payout ratio is rounded down to the first decimal place.
5. Leasing NOI = Rental revenues – Property-related expenses + Depreciation expenses for the period
6. FFO = Net income + Depreciation expenses for the period – Gain on sale of real estate properties + Loss on sale of real estate properties
7. FFO per unit = FFO / Number of investment units issued and outstanding (figures below ¥1 rounded down)

Kenedix Office Investment Corporation

15

Kenedix Office Investment Corporation

Balance Sheet
As of October 31, 2020
As of October 31, 2020 As of April 30, 2020
AssetsCurrent assets
Cash and deposits (Notes 4 and 16)
Cash and deposits in trust (Notes 4 and 16)
Operating accounts receivable
Prepaid expenses
Other
Total current assets
Non-current assets
Property, plant and equipment (Notes 5 and 18)
Buildings
Accumulated depreciation
Buildings, net
Structures
Accumulated depreciation
Structures, net
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Land
Buildings in trust (Note 8)
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Total property, plant and equipment, net
Intangible assets (Note 5)
Leasehold right (Note 18)
Leasehold right in trust (Note 18)
Other
Total intangible assets
Investments and other assets
Investment securities (Note 16)
Lease and guarantee deposits
Lease and guarantee deposits in trust
Long-term prepaid expenses
Other (Notes 11,16 and 17)
Total investments and other assets
Total non-current assets
Deferred assets
Investment corporation bond issuance costs
Investment unit issuance costs
Total deferred assets
Total assets

16
KENEDIX Office Investment Corporation

In thousands of yen¥¥

16,128,897
12,042,095
336,234
109,949
13,76628,630,942¥

14,699,777
11,470,987
277,457
74,60012,394
26,535,218

17,975,653(6,526,749)
11,448,903
43,564(17,805)
25,759435,359(284,721)
150,638
99,918(68,421)31,49627,520,902
128,754,352(35,161,391)
93,592,960
379,369(191,656)
187,712
1,876,485(850,091)
1,026,394
561,026(365,732)
195,294
293,726,525
6,150
427,912,737

17,951,815(6,221,158)
11,730,656
43,564(16,589)
26,974432,209(272,362)
159,847
96,841(64,691)
32,15027,520,902
126,874,865(33,269,306)
93,605,558
362,902(179,886)
183,016
1,741,678(796,661)
945,017528,530(346,706)
181,824
283,648,781

285,257
348,426540
634,225

285,257
349,201
1,168
635,627

1,137,526
10,000122,889
1,183,120
21,6762,475,213
431,022,176

1,127,724
10,000122,889
1,150,151
20,501
2,431,266
421,101,622

57,394
9,171
66,565459,719,684

51,84018,34270,182447,707,022–

418,034,728¥

As of October 31, 2020 As of April 30, 2020
Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable (Notes 7 and 16)
Current portion of long-term loans payable (Notes 7,16 and 17)
Accounts payable–otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Deposits received
Total current liabilities
Non-current liabilities
Investment corporation bonds (Notes 7 and 16)
Long-term loans payable (Notes 7, 16 and 17)
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Other (Notes 16 and 17)
Total non-current liabilities
Total liabilities
Net Assets
Unitholders' equity
Unitholders' capital
Surplus
Voluntary retained earnings
Reserve for reduction entry
Total voluntary retained earnings
Unappropriated retained earnings
Total surplus
Total unitholders' equity
Valuation and translation adjustments
Deferred gains or losses on hedges (Notes 16 and 17)
Total valuation and translation adjustments
Total net assets (Note 12)
Total liabilities and net assets

In thousands of yen¥¥

1,496,596
12,500,000
23,000,000
679,554
79,227756
304,8212,678,412
3,799
40,743,168¥

829,804
9,500,000
22,300,000
486,379
71,983825
378,113
2,821,477
7,225
36,395,810

11,000,000
155,250,000
2,007,851
19,640,709
412,880
188,311,441
229,054,609

10,000,000
150,250,000
2,005,687
19,113,024
352,748
181,721,460
218,117,270

220,970,508

220,970,508

2,775,335
2,775,335
7,310,459
10,085,794
231,056,303

2,775,335
2,775,335
6,175,926
8,951,261
229,921,769(391,228)(391,228)
230,665,074
459,719,684(332,017)(332,017)
229,589,752
447,707,022¥

See accompanying notes to the financial statements.

Kenedix Office Investment Corporation17

Kenedix Office Investment Corporation

Statement of Income and Retained Earnings
For the period from May 1, 2020 to October 31, 2020
From May 1, 2020

From November 1, 2019

to October 31, 2020

to April 30, 2020

In thousands of yen
Operating revenues
Rent revenue – real estate (Note 14)¥

13,757,065¥

13,429,120

Other lease business revenue (Note 14)

1,826,092

Gain on sale of real estate properties (Note 14)

1,057,790–

73,52257,60016,714,470

15,272,699

Expenses related to rent business (Note 14)

7,086,783

7,008,903

Asset management fees

1,110,211

929,882

Dividends income
Total operating revenues

1,785,979

Operating expenses

Directors' compensation

8,400

8,400

Asset custody fees

23,431

23,193Administrative service fees

58,20757,595

Audit fees

12,80012,80080,234

91,860Total operating expenses

8,380,067

8,132,635

Operating income

8,334,402

7,140,064

Interest income

69

68

Gain on forfeiture of unclaimed dividends

309

353

3

109

382

531

805,749

792,200

Other operating expenses

Non-operating income

Interest on refund
Total non-operating income
Non-operating expenses
Interest expenses
Interest expenses on investment corporation bonds

30,712

29,038Financing-related expenses

128,471

125,667

Amortization of investment corporation bond issuance costs

5,551

4,963

Amortization of investment unit issuance costs

9,171

9,171

Other non-operating expenses

43,783

2,352

Total non-operating expenses

1,023,438

963,393

Ordinary income

7,311,346

6,177,202

Income before income taxes

7,311,346

6,177,202

1,115

1,332

Income taxes (Note 11)
Current
Deferred11(4)

Total income taxes

1,126

1,328

7,310,219

6,175,873

240

52

Net income
Retained earnings brought forward
Unappropriated retained earnings
See accompanying notes to the financial statements.

18
KENEDIX Office Investment Corporation¥

7,310,459¥

6,175,926

Kenedix Office Investment Corporation

Statement of Changes in Net Assets
For the period from May 1, 2020 to October 31, 2020
Valuationandtranslation
adjustments

Unitholders' equity (Note 6)

Surplus
Voluntary
retainedearnings

Deferred
gains orUnappropriatedlosses

Total

Unitholders'

Reserve forretained earnings

Total

unitholders'on

Total net

capitalreduction entry(Note 21)

surplusequityhedgesassetsIn thousands of yen
Balance as of
October 31, 2019¥

220,970,508¥

2,775,335¥

5,844,500¥

8,619,835¥

229,590,343¥ (314,241)¥

229,276,102

Changes during the fiscal period
Dividends of surplus––（5,844,447）（5,844,447）（5,844,447）–（5,844,447）

Net income––

6,175,873

6,175,873

6,175,873–

6,175,873

–

–

–

–

–

(17,776)(17,776)––

331,425

331,425

331,425(17,776)

313,649

229,921,769¥ (332,017)

Net changes of items otherthan unitholders’ equity
Total changes during
the fiscal period
Balance as ofApril 30, 2020¥

220,970,508¥

2,775,335¥

6,175,926¥

8,951,261¥¥

229,589,752

Changes during the fiscal period
Dividends of surplus––（6,175,686）（6,175,686）（6,175,686）–（6,175,686）

Net income––

7,310,219

7,310,219

7,310,219–

7,310,219

–

–

–

–

–

(59,211)(59,211)––

1,134,533

1,134,533

1,134,533(59,211)

1,075,322

231,056,303¥ (391,228)

Net changes of items otherthan unitholders’ equity
Total changes during
the fiscal period
Balance as of
October 31, 2020¥

220,970,508¥

2,775,335¥

7,310,459¥

10,085,794¥¥

230,665,074

See accompanying notes to the financial statements.

Kenedix Office Investment Corporation

19

Kenedix Office Investment Corporation
Statement of Cash Flows
For the period from May 1, 2020 to October 31, 2020

From May 1, 2020
to October 31, 2020

From November 1, 2019
to April 30, 2020

In thousands of yen

Cash flows from operating activities
Income before income taxes¥

Depreciation
Amortization of long-term prepaid expenses

7,311,346¥

6,177,202

2,523,749

2,470,882

118,931

117,317

Interest income

(69)

(68)

Interest expenses

836,461

821,239

Amortization of investment unit issuance costs

9,171

9,171

Amortization of investment corporation bond issuance costs

5,551

4,963

Decrease (increase) in operating accounts receivable(58,776)

83,749Decrease (increase) in consumption taxes receivable–

61,789Decrease (increase) in prepaid expenses(35,348)

35,176

Increase (decrease) in operating accounts payable

287,784(194,273)

Increase (decrease) in accounts payable–other

189,242

10,954

Increase (decrease) in accrued consumption taxes(73,292)

245,758

Increase (decrease) in advances received(143,064)

256,430

Increase (decrease) in deposits received(3,426)(9,087)

Decrease in property, plant and equipment in trust due to sale

5,287,017–

Decrease (increase) in long-term prepaid expenses(151,900)(35,245)

Other, net(14,249)

1,953

16,089,127

10,057,914

69

68(829,217)(819,195)

SubtotalInterest income received
Interest expenses paid
Income taxes paid

(835)

(812)

15,259,143

9,237,974(28,038)(143,355)

Purchases of property, plant and equipment in trust(17,408,155)(9,814,320)

Repayments of tenant leasehold and security deposits(111,848)(28,690)

Proceeds from tenant leasehold and security deposits

99,08929,040

Repayments of tenant leasehold and security deposits in trust(623,681)(317,128)

Proceeds from tenant leasehold and security deposits in trust

1,296,269

675,899–(74,775)

Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchases of property, plant and equipment

Payments of restricted deposits in trust
Proceeds from restricted deposits in trust

89,05921,551(16,687,305)(9,651,778)

Cash flows from financing activities
Proceeds from short-term loans payable

4,000,000

9,500,000

Repayments of short-term loans payable(1,000,000)(2,200,000)

Proceeds from long-term loans payable

16,800,000

8,200,000

Repayments of long-term loans payable(11,100,000)(10,500,000)

Net cash provided by (used in) investing activities

Proceeds from issuance of investment corporation bonds

992,122

1,990,031

Dividends paid

(6,174,673)(5,844,312)

Net cash provided by (used in) financing activities

3,517,449

1,145,719

Net increase (decrease) in cash and cash equivalents

2,089,287

731,914

Cash and cash equivalents at the beginning of period

24,344,686

23,612,771

Cash and cash equivalents at the end of period (Note 4)
See accompanying notes to the financial statements.

20
KENEDIX Office Investment Corporation¥

26,433,973¥

24,344,686

Kenedix Office Investment Corporation

Notes to the Financial Statements
For the period from May 1, 2020 to October 31, 2020

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Kenedix Office Investment Corporation (“the Investment Corporation”) is a real estate investment corporation whose units are listedon the Tokyo Stock Exchange. The Investment Corporation is engaged in the ownership and operation of selected mainly officebuildings in Japan, with a focus on mid-sized office buildings in the Tokyo metropolitan area. The Investment Corporation wasincorporated on May 6, 2005 as an investment corporation under the Law Concerning Investment Trusts and Investment Corporationsof Japan, or “the Investment Trust Law.” 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 eight public offerings. Pursuant to the Investment Trust Law, theInvestment Corporation is externally managed by a registered asset management company, Kenedix Real Estate Fund Management,
Inc. (“the Asset Management Company”), a subsidiary of Kenedix, Inc. (“Kenedix”). In concert with the Asset Management Company,
the Investment Corporation strives to maximize cash distribution to investors by securing stable earnings and sustainable investment
growth. To this end, the Investment Corporation adopts a dynamic and flexible investment stance that accurately reflects its
environment and market trends, and endeavors to ensure a timely response to each and every opportunity.
During the period ended April 30, 2020, the Investment Corporation acquired two office buildings (Tosabori Prime: acquisition
price of ¥5,000 million, and KDX Kanda Ekimae Building: acquisition price of ¥3,300 million).
During the period ended October 31, 2020, the Investment Corporation acquired one office building (Shinbashi M-SQUARE Bright:
acquisition price of ¥16,300 million) and sold two office buildings (KDX Nihonbashi Honcho Building: initial acquisition price of¥4,000 million, and KDX Nihonbashi Edo-dori Building: initial acquisition price of ¥1,350 million) with a disposition price of ¥6,550
million.

At the end of the thirtieth and thirty-first fiscal periods (fiscal periods ended April 30, 2020 and October 31, 2020), the Investment
Corporation had total unitholders’ capital of ¥220,970 million with 428,510 investment units outstanding, respectively. The Investment
Corporation owned a portfolio of 99 properties (consisting of 98 office buildings and one other property) and 98 properties (consistingof 97 office buildings and one other property) with total acquisition prices of ¥432,835 million and ¥443,785 million at the end of thethirtieth and thirty-first fiscal periods, respectively. The occupancy ratios were approximately 99.5% and 98.1% at the end of thethirtieth and thirty-first fiscal periods, respectively.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with the provisions set forth in the Investment Trust Act ofJapan, the Financial Instruments and Exchange Law of Japan and related regulations, and in conformity with accounting principles
and practices generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to the application anddisclosure requirements of the International Financial Reporting Standards or accounting principles generally accepted in the UnitedStates of America.
The accompanying financial statements are basically a translation of the audited financial statements that were prepared for Japanese
domestic purposes from the accounts and records maintained by the Investment Corporation and filed with the Kanto Local Finance
Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law. In preparing the accompanying
financial statements, relevant notes have been added and certain reclassifications have been made to the financial statements issued
domestically in order to present them in a form that is more familiar to readers outside Japan. The Investment Corporation’s fiscal
period is a six-month period that ends at the end of April and the end of October each year. The Investment Corporation does notprepare consolidated financial statements because it has no subsidiaries.

Kenedix Office Investment Corporation21

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(A) Securities
Non-marketable securities classified as other securities are carried at cost. Cost of securities sold is determined by the moving
average method. Concerning silent partnership (tokumei kumiai, “TK”) interests, the method of incorporating the amount ofequity equivalent to the portion that corresponds to the net gain or loss of the TK is adopted.
(B) Property, Plant and Equipment (including trust assets)
Property, plant and equipment are stated at cost. Depreciation of property, plant and equipment is calculated on a straight-line
basis over the estimated useful lives of the assets ranging as stated below:
From May 1, 2020
to October 31, 2020
Buildings
2–49 years

From November 1, 2019
to April 30, 2020
2–49 years

Structures

2–45 years

2–45 years

Machinery and equipment

3–17 years

3–17 years

Tools, furniture and fixtures

3–20 years

3–20 years(C) Intangible Assets (including trust assets)
Intangible assets are amortized by the straight-line method.
Leasehold right: Fixed-term land leasehold is amortized over a contractual period of 48 years and 9 months under the straightline method.
(D) Long-term Prepaid Expenses
Long-term prepaid expenses are amortized by the straight-line method.
(E) Investment Unit Issuance Costs
Investment unit issuance costs are amortized over a period of three years under the straight-line method.
(F) Investment Corporation Bond Issuance Costs
Investment corporation bond issuance costs are amortized over a maturity period under the straight-line method.
(G) 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, allassets and liabilities in trust are recorded in the relevant balance sheets and statements of income and retained earnings.
(H) Revenue Recognition
Operating revenues consist of rental revenues including base rents, common area charges and other operating revenues, which
include utility charge reimbursement, parking space rental revenues and other miscellaneous revenues. Rental revenues are
generally recognized on an accrual basis over the life of each lease. Utility charge reimbursements are recognized when earned
and their amounts can be reasonably estimated. Reimbursements from tenants including utility charge reimbursements arerecorded on a gross basis and such amounts are recorded both as revenues and expenses during the fiscal period.

22
KENEDIX Office Investment Corporation

(I)Taxes on Property, Plant and Equipment
Property-related taxes including property taxes, city planning taxes and depreciable property taxes are imposed on properties on acalendar year basis. These taxes are generally charged to operating expenses for the period, for the portion of such taxes
corresponding to the said period. Under Japanese tax rules, the seller of property at the time of disposal is liable for these taxes on
the property from the date of disposal to the end of the calendar year in which the property is disposed. The seller, however, isgenerally 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 tothe period following the purchase date of each property through the end of the calendar year. The amounts of those allocatedportions of the property-related taxes are capitalized as part of the acquisition costs of the related properties. Capitalized propertyrelated taxes amounted to ¥38,663 thousand and ¥35,360 thousand as of October 31, 2020 and April 30, 2020, respectively. In
subsequent calendar years, such property-related taxes are charged as operating expenses in the fiscal period to which the
installments of such taxes correspond.

(J) Income Taxes
Deferred tax assets and liabilities are computed based on the difference between the financial statements and income tax bases ofassets and liabilities using the statutory tax rates.
(K) Consumption Taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes. Non-deductible consumption
taxes applicable to the acquisition of assets are included in the cost of acquisition for each asset.
(L) Derivative Financial Instruments
The Investment Corporation utilizes interest-rate swap contracts as derivative financial instruments only for the purpose ofhedging 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 contracts because these contracts met the criteria for deferral hedging accounting.
However, the Investment Corporation adopted special treatment for interest-rate swap contracts if they met the criteria for hedging
accounting under this treatment. The hedge effectiveness for the interest-rate swap contracts is assessed each fiscal period except
for those that meet the criteria of special treatment.
(M) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments which are highly liquid,readily convertible to cash and with insignificant risk of market value fluctuation, with maturities of three months or less fromthe date of purchase.
(N) Presentation of Amounts
Amounts of less than one thousand yen have been truncated in the Japanese financial statements prepared in accordance withJapanese GAAP and filed with regulatory authorities in Japan. Unless otherwise noted, amounts are rounded down and ratios arerounded off in the accompanying financial statements.
Totals shown in the accompanying financial statements do not necessarily agree with the sums of the individual amounts.

Kenedix Office Investment Corporation23

3. ACCOUNTING STANDARDS ISSUED BUT NOT YET EFFECTIVE
New accounting standards and implementation guidance issued but not yet effective are as follows:・ “Accounting Standard for Revenue Recognition” (Accounting Standards Board of Japan (ASBJ) Statement No. 29 issued on
March 31, 2020)
・ “Implementation Guidance on Accounting Standard for Revenue Recognition” (ASBJ Guidance No. 30 issued on March 31,
2020)(1) Overview
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) in the United States
have jointly developed comprehensive accounting standards for revenue recognition and issued “Revenue from Contracts with
Customers” (IFRS 15 (IASB) and Topic 606 (FASB)) in May 2014. Given the situation where IFRS 15 is applied from fiscal
years beginning on or after January 1, 2018 and that Topic 606 is applied from fiscal years beginning after December 15, 2017,
the ASBJ has developed comprehensive accounting standards for revenue recognition and issued them together with theimplementation guidance.
The basic policy of the ASBJ when it developed the accounting standards for revenue recognition was to specify the accounting
standards, incorporating the basic principles of IFRS 15 as a starting point, from the perspective of comparability between
financial statements, which is one of the benefits of maintaining compatibility with IFRS 15. The basic policy also stipulates that
if there is an item to which consideration should be given, such as practices that have been conducted thus far in Japan, alternative
treatments will be added to the extent to which comparability is not impaired.
(2) Scheduled date of application
The accounting standards will be applied from the beginning of the fiscal period ending October 31, 2021.
(3) Impact of applying the accounting standards
The impact of applying “Accounting Standard for Revenue Recognition” and its guidance on the financial statements is currently
under evaluation.

・ “Accounting Standard for Fair Value Measurement” (ASBJ Statement No. 30 issued on July 4, 2019)
・ “Implementation Guidance on Accounting Standard for Fair Value Measurement” (ASBJ Guidance No. 31 issued on July 4,
2019)・ “Implementation Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. 19 issued on March
31, 2020)(1) Overview
The IASB and the FASB have established detailed guidance regarding fair value measurement (IFRS 13 “Fair Value Measurement”(IASB) and Topic 820 “Fair Value Measurement” (FASB)). The ASBJ repeatedly considered the guidance regarding fair valueof financial instruments and disclosure in order to improve the comparability with such international accounting standards, andissued “Accounting Standard for Fair Value Measurement” and “Implementation Guidance on Accounting Standard for Fair
Value Measurement.”(2) Scheduled date of application
The accounting standards will be applied from the beginning of the fiscal period ending October 31, 2021.
(3) Impact of applying the accounting standards
The impact of applying the “Accounting Standard for Fair Value Measurement” and its guidance on the financial statements iscurrently under evaluation.

KENEDIX Office Investment Corporation

24

・“Accounting Standard for Disclosure of Accounting Estimates” (ASBJ Statement No. 31 issued on March 31, 2020)(1) Overview
Paragraph 125 of International Accounting Standard 1 (IAS 1), “Presentation of Financial Statements,” (issued by the IASB in2003) requires disclosure of information about the “assumptions the entity makes about the future, and other major sources of
estimation uncertainty.” In this regard, there has been a request that the major sources of estimation uncertainty should be
disclosed in the notes to financial statements under Japanese GAAP to provide useful information to users of financial statements.
In response to this request, the ASBJ developed and issued “Accounting Standard for Disclosure of Accounting Estimates.”(2) Scheduled date of application
The accounting standard will be applied from the end of the fiscal period ending April 30, 2021.
・“Accounting Standard for Accounting Policy Disclosures, Accounting Changes and Error Corrections” (ASBJ Statement No. 24
issued on March 31, 2020)(1) Overview
The ASBJ’s Standards Advisory Council recommended that the ASBJ consider enhancing disclosures for notes relating to“accounting policies and methods adopted in the cases where the relevant accounting standards were not clear.” In response tosuch recommendations, the ASBJ issued the revised “Accounting Standard for Accounting Policy Disclosures, Accounting
Changes and Error Corrections.”(2) Scheduled date of application
The accounting standard will be applied from the end of the fiscal period ending April 30, 2021.

4. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following as of October 31, 2020 and April 30, 2020.
As of October 31, 2020

As of April 30, 2020

In thousands of yen
Cash and deposits¥

16,128,897¥

14,699,777

Cash and deposits in trust

12,042,095

11,470,987

Restricted deposits in trust (Note)(1,737,018)(1,826,078)

Cash and cash equivalents in trust¥

26,433,973¥

24,344,686

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

Kenedix Office Investment Corporation25

5. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Property, plant and equipment and intangible assets consist of the following as of October 31, 2020.
Type of asset

Balance atthe beginningof period

Decreaseduring theperiodIncreaseduring theperiodBalance atthe end of
periodDepreciation
Accumulated
depreciation

Depreciation
for the periodNetbalance atthe end of
periodRemarks(in thousands of yen)
Buildings¥ 17,951,815¥ 23,838

43,564¥–¥ 17,975,653¥ 6,526,749¥ 305,591¥ 11,448,903––

43,56417,805

1,215

25,759432,2093,150–

435,359284,721

12,359150,638

Structures
Machinery andequipment
Tools, furnitureand fixtures
Land

96,841

3,077–

99,91868,421

3,730

31,49627,520,902––

27,520,902––

27,520,902

Subtotal

46,045,333

30,065–46,075,399

6,897,698

322,896

39,177,700¥ 126,874,865¥ 2,682,955¥ 803,468¥ 128,754,352¥ 35,161,391¥ 2,109,983¥ 93,592,960

362,902

16,466–379,369

191,656

11,770187,712

1,741,678

140,227

5,421

1,876,485

850,091

56,086

1,026,394

528,530

37,0064,510

561,026

365,732

21,610195,294

283,648,781

14,774,582

4,696,837

293,726,525––

293,726,525

–

6,150

–

6,150

–

–

6,150

Subtotal

413,156,757

17,657,388

5,510,237

425,303,909

36,568,871

2,199,450

388,735,037

Total property, plant andequipment

459,202,091

17,687,453

5,510,237

471,379,308

43,466,570

2,522,346

427,912,737–¥ 290,050¥ 4,792–¥ 285,257

Property,plant andequipment

Buildings in
trust
Structures intrust
Machinery andequipment in
trust
Tools, furnitureand fixtures intrust
Land in trust
Construction inprogress in trust

Intangible
assetsLeasehold right¥ 290,050

Leasehold rightin trust

363,784––

363,784

15,357774

348,426

6,278

–

–

6,278

5,738

627

540

660,113––660,11325,8881,402

634,225¥ 459,862,205¥ 17,687,453¥ 5,510,237¥ 472,039,421¥ 43,492,458¥ 2,523,749¥ 428,546,962

Other
Total intangible assets
Total

¥

–

¥

¥

Note1: The amount of increase during the period is primarily attributable to the acquisition of the one real estate property.
Note2: The amount of decrease during the period is primarily attributable to the sales of the two real estate properties.

26
KENEDIX Office Investment Corporation

Notes 1
and 2

Notes 1and 2

Property, plant and equipment and intangible assets consist of the following as of April 30, 2020.
Type of asset

Balance atthe beginningof period

Increaseduring theperiodDecreaseduring theperiodBalance atthe end of
periodDepreciation
Accumulated
depreciation

Depreciation
for theperiodNetbalance atthe end of
periodRemarks(in thousands of yen)
Buildings¥ 17,834,390¥ 117,424

Structures

34,963–¥ 17,951,815¥ 6,221,158¥ 303,993¥ 11,730,656

8,601

–

43,564

16,5891,038

26,974432,209––432,209272,362

12,328

159,847

94,116

2,725–

96,84164,691

3,542

32,15027,520,902––

27,520,902––

27,520,902

45,916,582

128,751–

46,045,333

6,574,802

320,90239,470,531¥ 124,425,127¥ 2,449,737–¥ 126,874,865¥ 33,269,306¥ 2,064,420¥ 93,605,558

359,676

3,225–

362,902179,886

11,493

183,016

1,656,878

84,799–1,741,678

796,661

52,836

945,017505,190

23,340–528,530

346,706

19,826

181,824

Land in trust

276,458,793

7,189,987–

283,648,781––

283,648,781

Subtotal

403,405,666

9,751,091–

413,156,757

34,592,560

2,148,577

378,564,197

Total property, plant andequipment

449,322,249

9,879,842–

459,202,091

41,167,362

2,469,480

418,034,728–¥ 290,050¥ 4,792–¥ 285,257

Machinery andequipment
Tools, furnitureand fixtures
Land
Subtotal
Property,plant andequipment

Intangible
assetsBuildings in
trust
Structures intrust
Machinery andequipment in
trust
Tools, furnitureand fixtures in
trust

¥

¥

Leasehold right¥ 290,050

Leasehold rightin trust

363,784––

363,784

14,583

774

349,201

6,278

–

–

6,278

5,110

627

1,168

1,402

635,627

Other
Total intangible assets
Total

¥

–

660,113–¥ 449,982,362¥ 9,879,842

¥

¥

–

660,113

24,486–¥ 459,862,205¥ 41,191,849

¥

Note

Note

¥ 2,470,882 ¥ 418,670,356

Note: The amount of increase during the period is primarily attributable to the acquisition of the two real estate properties.

6. UNITHOLDERS’ EQUITY
Total number of authorized investment units and total number of investment units issued and outstanding are as follows:

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

From May 1, 2020
to October 31, 2020
2,000,000

From November 1, 2019
to April 30, 2020
2,000,000

428,510428,510

Kenedix Office Investment Corporation27

7. SHORT-TERM LOANS PAYABLE, LONG-TERM LOANS PAYABLE AND INVESTMENTCORPORATION BONDS
The following summarizes short-term loans payable, long-term loans payable and investment corporation bonds outstanding as of
October 31, 2020:
Classification
Short-term loans payable

Drawdown date

Last repayment date

Weighted-average

Balanceinterest rate

(In thousands of yen)

January 31, 2020

January 31, 2021

0.319%

January 31, 2020

January 31, 2021

0.319%¥

500,000

January 31, 2020

January 31, 2021

0.259%

4,200,000

January 31, 2020

January 31, 2021

0.259%

800,000

March 12, 2020

February 28, 2021

0.359%

2,000,000

March 31, 2020

March 31, 2021

0.309%

500,000

June 30, 2020

June 30, 2021

0.359%

1,000,000

June 30, 2020

June 30, 2021

0.309%

1,000,000

June 30, 2020

June 30, 2021

0.309%

1,000,000

August 31, 2020

August 31, 2021

0.315%

1,000,000

November 12, 2013

November 12, 2020

1.074%

November 12, 2013

November 12, 2020

1.074%

500,000

November 29, 2013

November 30, 2020

1.122%

1,000,000

November 29, 2013

November 30, 2020

1.122%

900,000

November 29, 2019

November 30, 2020

0.359%

1,000,000

November 29, 2019

November 30, 2020

0.309%

500,000

November 29, 2019

November 30, 2020

0.319%

200,000

January 10, 2014

January 31, 2021

1.205%

1,300,000

January 31, 2014

January 31, 2021

1.130%

2,300,000

January 30, 2015

January 31, 2021

0.710%

1,500,000

July 10, 2014

July 10, 2021

0.903%

2,000,000

July 10, 2014

July 10, 2021

0.903%

500,000

September 1, 2014

August 31, 2021

0.885%

800,000

September 1, 2014

August 31, 2021

0.885%

500,000

March 20, 2014

September 20, 2021

1.013%

4,000,000

September 30, 2014

September 30, 2021

0.893%

1,000,000

October 31, 2014

October 31, 2021

0.802%

3,000,000

March 12, 2014

March 12, 2023

1.358%March 20, 2014

March 20, 2022

1.199%

3,000,000

March 20, 2014

March 12, 2023

1.349%

2,000,000

July 31, 2014

July 31, 2022

1.014%

2,200,000

September 3, 2014

August 31, 2022

0.979%

1,000,000

September 3, 2014

August 31, 2022

0.979%

950,000

October 31, 2014

October 31, 2023

1.071%

2,000,000

Subtotal
Current portion of long-term loans payable

12,500,000¥

SubtotalLong-term loans payable

28
KENEDIX Office Investment Corporation

500,000

2,000,000

23,000,000¥

1,800,000

October 31, 2014

October 31, 2023

1.126%

1,500,000

October 31, 2014

October 31, 2023

1.071%

1,000,000

October 31, 2014

October 31, 2024

1.257%

2,000,000

October 31, 2014

October 31, 2024

1.259%

1,000,000

January 30, 2015

January 31, 2025

1.161%

1,500,000

February 18, 2015

February 28, 2022

0.907%

1,250,000

February 18, 2015

February 28, 2022

0.907%

350,000

February 18, 2015

February 29, 2024

1.157%

1,700,000

February 18, 2015

February 28, 2025

1.314%

1,250,000

February 27, 2015

February 28, 2025

1.153%

2,100,000

March 12, 2015

February 28, 2025

1.218%

1,000,000

March 31, 2015

March 31, 2025

1.266%

2,500,000

Classification
Long-term loans payable

Drawdown date

Last repayment date

Weighted-average

Balanceinterest rate

(In thousands of yen)

April 30, 2015

April 30, 2022

0.825%¥

2,300,000

August 31, 2015

August 31, 2022

0.872%

500,000

August 31, 2015

August 31, 2022

0.872%

500,000

August 31, 2015

August 31, 2022

0.872%

500,000

August 31, 2015

August 31, 2022

0.872%

500,000

August 31, 2015

August 31, 2022

0.872%

500,000

August 31, 2015

August 31, 2022

0.872%

500,000

September 30, 2015

September 30, 2024

1.065%

2,000,000

October 30, 2015

October 31, 2024

0.989%

1,000,000

October 30, 2015

October 30, 2025

1.114%

1,500,000

October 30, 2015

October 30, 2025

1.114%

2,000,000

October 30, 2015

October 30, 2025

1.114%

2,500,000

October 30, 2015

October 30, 2025

1.121%

2,500,000

November 12, 2015

November 30, 2025

1.173%

1,000,000

January 29, 2016

January 31, 2022

0.590%

2,500,000

January 29, 2016

January 31, 2022

0.640%

500,000

January 29, 2016

January 29, 2026

1.074%

2,000,000

January 29, 2016

January 29, 2026

1.024%

1,800,000

February 18, 2016

February 18, 2026

0.998%

1,000,000

February 18, 2016

February 18, 2026

0.998%

500,000

March 31, 2016

March 31, 2026

0.898%

1,000,000

April 28, 2016

April 30, 2024

0.654%

2,000,000

April 28, 2016

April 30, 2026

0.835%

2,000,000

April 28, 2016

April 30, 2026

0.865%

1,000,000

July 29, 2016

July 31, 2026

0.613%

1,500,000

August 2, 2016

July 31, 2026

0.544%

1,000,000

October 31, 2016

October 31, 2024

0.668%

1,000,000

October 31, 2016

October 31, 2026

0.876%

2,500,000

October 31, 2016

October 31, 2026

0.760%

1,000,000

October 31, 2016

October 31, 2026

0.734%

4,000,000

October 31, 2016

October 31, 2026

0.826%

1,500,000

December 12, 2016

November 30, 2026

0.982%

500,000

December 28, 2016

December 28, 2026

0.950%

1,500,000

January 16, 2017

January 31, 2027

0.860%

500,000

January 31, 2017

January 31, 2027

0.853%

700,000

March 28, 2017

March 31, 2027

0.850%

500,000

June 30, 2017

June 30, 2027

0.849%

1,500,000

August 10, 2017

July 28, 2027

0.800%

3,500,000

August 31, 2017

August 31, 2023

0.544%

1,000,000

September 21, 2017

March 31, 2024

0.555%

1,000,000

September 21, 2017

September 30, 2025

0.680%

1,500,000

September 21, 2017

March 31, 2027

0.732%

1,000,000

September 21, 2017

September 21, 2027

0.873%

1,000,000

September 21, 2017

September 30, 2027

0.851%

2,500,000

October 31, 2017

October 31, 2027

0.810%

2,500,000

November 13, 2017

November 13, 2027

0.931%

3,000,000

December 7, 2017

November 30, 2027

0.899%

1,400,000

December 7, 2017

November 30, 2027

0.820%

1,200,000

December 7, 2017

November 30, 2027

0.969%

1,000,000

December 7, 2017

November 30, 2027

0.939%

1,000,000

December 7, 2017

November 30, 2027

0.869%

1,000,000

Kenedix Office Investment Corporation

29

Classification
Long-term loans payable

Weighted-average

Balanceinterest rate

(In thousands of yen)

Drawdown date

Last repayment date

December 7, 2017

November 30, 2027

0.899%

December 7, 2017

November 30, 2027

0.869%

600,000

December 28, 2017

December 28, 2025

0.744%

500,000

December 28, 2017

December 28, 2026

0.878%

500,000

December 28, 2017

December 28, 2027

0.864%

500,000

March 12, 2018

March 31, 2028

0.914%

1,500,000

March 26, 2018

March 31, 2027

0.808%

1,000,000

March 26, 2018

March 31, 2028

0.902%

1,000,000

July 31, 2018

July 31, 2028

0.988%

500,000

August 20, 2018

August 31, 2025

0.696%

500,000

August 20, 2018

August 31, 2028

1.003%

1,000,000

August 20, 2018

August 31, 2028

1.003%

1,000,000

August 20, 2018

August 31, 2028

1.003%

500,000

August 20, 2018

August 31, 2028

0.966%

500,000

August 31, 2018

August 31, 2025

0.700%

500,000

August 31, 2018

August 31, 2025

0.723%

300,000

August 31, 2018

August 31, 2028

1.012%

700,000

October 31, 2018

October 31, 2028

1.013%

1,500,000

October 31, 2018

October 31, 2028

0.910%

1,000,000

October 31, 2018

October 31, 2028

1.013%

500,000

March 28, 2019

March 31, 2029

0.838%

1,400,000

March 29, 2019

March 31, 2029

0.839%

2,950,000

June 14, 2019

June 30, 2023

0.246%

500,000

June 14, 2019

December 28, 2026

0.517%

500,000

June 14, 2019

April 30, 2027

0.605%

1,000,000

June 14, 2019

March 31, 2029

0.725%

1,000,000

July 10, 2019

July 31, 2023

0.230%

500,000

July 31, 2019

July 31, 2022

0.291%

1,000,000

July 31, 2019

July 31, 2023

0.295%

1,000,000

July 31, 2019

April 30, 2027

0.554%

1,000,000

July 31, 2019

April 30, 2027

0.554%

1,000,000

September 30, 2019

September 30, 2026

0.489%

1,000,000

September 30, 2019

March 31, 2027

0.531%

900,000

September 30, 2019

March 31, 2027

0.425%

800,000

January 31, 2020

January 31, 2025

0.406%

700,000

January 31, 2020

January 31, 2027

0.526%

1,500,000

January 31, 2020

January 31, 2029

0.675%

1,500,000

March 12, 2020

February 28, 2026

0.361%

1,800,000

March 31, 2020

March 31, 2028

0.642%

1,000,000

June 30, 2020

June 30, 2028

0.646%

2,000,000

June 30, 2020

June 30, 2028

0.646%

2,000,000

June 30, 2020

June 30, 2028

0.646%

700,000

June 30, 2020

June 30, 2028

0.510%

2,000,000

July 31, 2020

July 31, 2028

0.636%

2,700,000

August 31, 2020

August 31, 2030

0.705%

1,500,000

September 30, 2020

September 30, 2025

0.396%

1,000,000

September 30, 2020

September 30, 2027

0.511%

1,000,000

September 30, 2020

September 30, 2030

0.738%

700,000

October 30, 2020

April 30, 2027

0.542%

1,400,000

October 30, 2020

October 31, 2030

0.803%

1,500,000

October 30, 2020

October 31, 2030

0.803%¥

300,000

Subtotal

30

Investment corporation bonds

KENEDIX Office Investment Corporation

800,000

155,250,000
July 25, 2014

July 25, 2024

1.180%¥

2,000,000

Classification
Investment corporation bonds

Drawdown date

Last repayment date

Weighted-average

Balanceinterest rate

(In thousands of yen)

April 28, 2016

April 28, 2028

0.900%¥

July 19, 2017

July 19, 2022

0.260%

1,000,000

July 19, 2017

July 16, 2027

0.640%

2,000,000

February 15, 2019

February 15, 2024

0.390%

2,000,000

January 30, 2020

January 30, 2025

0.250%

2,000,000

October 20, 2020

October 18, 2030

0.610%

1,000,000

Subtotal

1,000,000

11,000,000

Total

¥

201,750,000

The following summarizes short-term loans payable, long-term loans payable and investment corporation bonds outstanding as ofApril 30, 2020:
Classification
Short-term loans payable

Drawdown date

Last repayment date

Weighted-average

Balanceinterest rate

(In thousands of yen)

January 31, 2020

January 31, 2021

0.318%

January 31, 2020

January 31, 2021

0.318%¥

500,000

January 31, 2020

January 31, 2021

0.273%

4,200,000

January 31, 2020

January 31, 2021

0.273%

800,000

March 12, 2020

February 28, 2021

0.376%

3,000,000

March 31, 2020

March 31, 2021

0.330%

500,000

July 31, 2014

July 31, 2020

0.736%

August 30, 2013

August 31, 2020

1.420%

1,500,000

August 30, 2019

August 31, 2020

0.268%

1,000,000

September 22, 2014

September 30, 2020

0.798%

2,700,000

April 22, 2014

October 31, 2020

0.954%

2,900,000

July 31, 2014

October 31, 2020

0.756%

300,000

November 12, 2013

November 12, 2020

1.074%

2,000,000

November 12, 2013

November 12, 2020

1.074%

500,000

November 29, 2013

November 30, 2020

1.122%

1,000,000

November 29, 2013

November 30, 2020

1.122%

900,000

November 29, 2019

November 30, 2020

0.371%

1,000,000

November 29, 2019

November 30, 2020

0.321%

500,000

November 29, 2019

November 30, 2020

0.318%

200,000

January 10, 2014

January 31, 2021

1.205%

1,300,000

January 31, 2014

January 31, 2021

1.130%

2,300,000

January 30, 2015

January 31, 2021

0.710%

1,500,000

March 12, 2014

March 12, 2023

1.358%March 20, 2014

September 20, 2021

1.013%

4,000,000

March 20, 2014

March 20, 2022

1.199%

3,000,000

March 20, 2014

March 12, 2023

1.349%

2,000,000

July 10, 2014

July 10, 2021

0.903%

2,000,000

July 10, 2014

July 10, 2021

0.903%

500,000

July 31, 2014

July 31, 2022

1.014%

2,200,000

September 1, 2014

August 31, 2021

0.885%

800,000

September 1, 2014

August 31, 2021

0.885%

500,000

September 3, 2014

August 31, 2022

0.979%

1,000,000

Subtotal
Current portion of long-term loans payable

9,500,000¥

SubtotalLong-term loans payable

500,000

2,700,000

22,300,000¥

1,800,000

September 3, 2014

August 31, 2022

0.979%

950,000

September 30, 2014

September 30, 2021

0.893%

1,000,000

October 31, 2014

October 31, 2021

0.802%

3,000,000

Kenedix Office Investment Corporation

31

Classification
Long-term loans payable

32
KENEDIX Office Investment Corporation

Drawdown date

Last repayment date

Weighted-average

Balanceinterest rate

(In thousands of yen)

October 31, 2014

October 31, 2023

1.071%

October 31, 2014

October 31, 2023

1.126%¥

2,000,000
1,500,000

October 31, 2014

October 31, 2023

1.071%

1,000,000

October 31, 2014

October 31, 2024

1.257%

2,000,000

October 31, 2014

October 31, 2024

1.259%

1,000,000

January 30, 2015

January 31, 2025

1.161%

1,500,000

February 18, 2015

February 28, 2022

0.907%

1,250,000

February 18, 2015

February 28, 2022

0.907%

350,000

February 18, 2015

February 29, 2024

1.157%

1,700,000

February 18, 2015

February 28, 2025

1.314%

1,250,000

February 27, 2015

February 28, 2025

1.153%

2,100,000

March 12, 2015

February 28, 2025

1.218%

1,000,000

March 31, 2015

March 31, 2025

1.266%

2,500,000

April 30, 2015

April 30, 2022

0.825%

2,300,000

August 31, 2015

August 31, 2022

0.872%

500,000

August 31, 2015

August 31, 2022

0.872%

500,000

August 31, 2015

August 31, 2022

0.872%

500,000

August 31, 2015

August 31, 2022

0.872%

500,000

August 31, 2015

August 31, 2022

0.872%

500,000

August 31, 2015

August 31, 2022

0.872%

500,000

September 30, 2015

September 30, 2024

1.065%

2,000,000

October 30, 2015

October 31, 2024

0.989%

1,000,000

October 30, 2015

October 30, 2025

1.114%

1,500,000

October 30, 2015

October 30, 2025

1.114%

2,000,000

October 30, 2015

October 30, 2025

1.114%

2,500,000

October 30, 2015

October 30, 2025

1.121%

2,500,000

November 12, 2015

November 30, 2025

1.173%

1,000,000

January 29, 2016

January 31, 2022

0.590%

2,500,000

January 29, 2016

January 31, 2022

0.640%

500,000

January 29, 2016

January 29, 2026

1.074%

2,000,000

January 29, 2016

January 29, 2026

1.024%

1,800,000

February 18, 2016

February 18, 2026

0.998%

1,000,000

February 18, 2016

February 18, 2026

0.998%

500,000

March 31, 2016

March 31, 2026

0.898%

1,000,000

April 28, 2016

April 30, 2024

0.654%

2,000,000

April 28, 2016

April 30, 2026

0.835%

2,000,000

April 28, 2016

April 30, 2026

0.865%

1,000,000

July 29, 2016

July 31, 2026

0.613%

1,500,000

August 2, 2016

July 31, 2026

0.544%

1,000,000

October 31, 2016

October 31, 2024

0.668%

1,000,000

October 31, 2016

October 31, 2026

0.876%

2,500,000

October 31, 2016

October 31, 2026

0.760%

1,000,000

October 31, 2016

October 31, 2026

0.734%

4,000,000

October 31, 2016

October 31, 2026

0.826%

1,500,000

December 12, 2016

November 30, 2026

0.982%

500,000

December 28, 2016

December 28, 2026

0.950%

1,500,000

January 16, 2017

January 31, 2027

0.860%

500,000

January 31, 2017

January 31, 2027

0.853%

700,000

March 28, 2017

March 31, 2027

0.850%

500,000

June 30, 2017

June 30, 2027

0.849%

1,500,000

August 10, 2017

July 28, 2027

0.800%

3,500,000

August 31, 2017

August 31, 2023

0.544%

1,000,000

September 21, 2017

March 31, 2024

0.555%

1,000,000

Classification
Long-term loans payable

Subtotal

Weighted-average

Balanceinterest rate

(In thousands of yen)

Drawdown date

Last repayment date

September 21, 2017

September 30, 2025

0.680%

September 21, 2017

March 31, 2027

0.732%

1,000,000

September 21, 2017

September 21, 2027

0.873%

1,000,000

September 21, 2017

September 30, 2027

0.851%

2,500,000¥

1,500,000

October 31, 2017

October 31, 2027

0.810%

2,500,000

November 13, 2017

November 13, 2027

0.931%

3,000,000

December 7, 2017

November 30, 2027

0.899%

1,400,000

December 7, 2017

November 30, 2027

0.820%

1,200,000

December 7, 2017

November 30, 2027

0.969%

1,000,000

December 7, 2017

November 30, 2027

0.939%

1,000,000

December 7, 2017

November 30, 2027

0.869%

1,000,000

December 7, 2017

November 30, 2027

0.899%

800,000

December 7, 2017

November 30, 2027

0.869%

600,000

December 28, 2017

December 28, 2025

0.744%

500,000

December 28, 2017

December 28, 2026

0.878%

500,000

December 28, 2017

December 28, 2027

0.864%

500,000

March 12, 2018

March 31, 2028

0.914%

1,500,000

March 26, 2018

March 31, 2027

0.808%

1,000,000

March 26, 2018

March 31, 2028

0.902%

1,000,000

July 31, 2018

July 31, 2028

0.988%

500,000

August 20, 2018

August 31, 2025

0.696%

500,000

August 20, 2018

August 31, 2028

1.003%

1,000,000

August 20, 2018

August 31, 2028

1.003%

1,000,000

August 20, 2018

August 31, 2028

1.003%

500,000

August 20, 2018

August 31, 2028

0.966%

500,000

August 31, 2018

August 31, 2025

0.700%

500,000

August 31, 2018

August 31, 2025

0.723%

300,000

August 31, 2018

August 31, 2028

1.012%

700,000

October 31, 2018

October 31, 2028

1.013%

1,500,000

October 31, 2018

October 31, 2028

0.910%

1,000,000

October 31, 2018

October 31, 2028

1.013%

500,000

March 28, 2019

March 31, 2029

0.838%

1,400,000

March 29, 2019

March 31, 2029

0.839%

2,950,000

June 14, 2019

June 30, 2023

0.246%

500,000

June 14, 2019

December 28, 2026

0.517%

500,000

June 14, 2019

April 30, 2027

0.605%

1,000,000

June 14, 2019

March 31, 2029

0.725%

1,000,000

July 10, 2019

July 31, 2023

0.230%

500,000

July 31, 2019

July 31, 2022

0.291%

1,000,000

July 31, 2019

July 31, 2023

0.295%

1,000,000

July 31, 2019

April 30, 2027

0.554%

1,000,000

July 31, 2019

April 30, 2027

0.554%

1,000,000

September 30, 2019

September 30, 2026

0.489%

1,000,000

September 30, 2019

March 31, 2027

0.531%

900,000

September 30, 2019

March 31, 2027

0.425%

800,000

January 31, 2020

January 31, 2025

0.406%

700,000

January 31, 2020

January 31, 2027

0.526%

1,500,000

January 31, 2020

January 31, 2029

0.675%

1,500,000

March 12, 2020

February 28, 2026

0.361%

1,800,000

March 31, 2020

March 31, 2028

0.642%

1,000,000
150,250,000

Kenedix Office Investment Corporation

33

Classification
Investment corporation bonds

Drawdown date

Last repayment date

Weighted-average

Balanceinterest rate

(In thousands of yen)

July 25, 2014

July 25, 2024

1.180%¥

2,000,000

April 28, 2016

April 28, 2028

0.900%

1,000,000

July 19, 2017

July 19, 2022

0.260%

1,000,000

July 19, 2017

July 16, 2027

0.640%

2,000,000

February 15, 2019

February 15, 2024

0.390%

2,000,000

January 30, 2020

January 30, 2025

0.250%

2,000,000

Subtotal

10,000,000

Total

¥

192,050,000

8．
．REDUCTION ENTRY
The amount of reduction entry of property, plant and equipment acquired by government subsidy is as follows:
As of October 31, 2020
As of April 30, 2020
In thousands of yen
Buildings in trust¥

26,230¥26,2309. COMMITMENT LINE AGREEMENTThe Investment Corporation has concluded a commitment line agreement with bank of account, etc.
As of October 31, 2020

As of April 30, 2020

In thousands of yen
Maximum amount¥

6,000,000

Drawn credit facility¥

6,000,000–

Balance¥–

6,000,000¥

6,000,000

10. PER UNIT INFORMATION
From May 1, 2020
to October 31, 2020

From November 1, 2019
to April 30, 2020
Yen

Net asset value per unit¥

538,295¥

535,786

Net income per unit¥

17,059¥14,412

Weighted-average number of units (units)

428,510428,510

The weighted-average number of units outstanding of 428,510 as of October 31, 2020 and April 30, 2020, respectively, was used forthe computation of the amount of net income per unit. Net income per unit after adjusting for residual units is not included because
there were no residual investment units.

34
KENEDIX Office Investment Corporation

11. INCOME TAXESThe Investment Corporation is subject to corporate income taxes at a regular statutory rate of approximately 32%. However, theInvestment Corporation may deduct from its taxable income amounts distributed to its unitholders, provided the requirements are
met under the Special Taxation Measures Law of Japan. Under this law, the Investment Corporation must meet a number of tax
requirements, including a requirement that it currently distribute in excess of 90% of its net income for the fiscal period in order tobe able to deduct such amounts. If the Investment Corporation does not satisfy all of the requirements, the entire taxable income of
the Investment Corporation will be subject to regular corporate income taxes. The Investment Corporation distributed in excess of
90% of its distributable income in the form of cash distributions totaling ¥6,592 million and ¥6,175 million for the fiscal periods
ended October 31, 2020 and April 30, 2020, respectively. Therefore, such distributions were treated as deductible distributions forpurposes of corporate income taxes. The effective tax rate on the Investment Corporation’s income was 0.02% for the fiscal periods
ended October 31, 2020 and April 30, 2020, respectively. The following table summarizes the significant differences between thestatutory tax rate and the effective tax rate.

From November 1, 2019
to April 30, 2020

From May 1, 2020
to October 31, 2020
Statutory tax rate

31.46%

31.46%

Deductible cash distributions(28.37)(31.45)

Provision of reserve for reduction entry(3.09)–

Others0.01

0.01

Effective tax rate

0.02%

0.02%

The significant components of deferred tax assets and liabilities as of October 31, 2020 and April 30, 2020 are as follows:
As of October 31, 2020

As of April 30, 2020

In thousands of yen
Deferred tax assets
Enterprise tax payable¥

Amortization of leasehold right

4,831

4,587

Deferred gains or losses on hedges

129,892

110,974

Subtotal

24

¥

36

134,748

115,598

Valuation allowance(134,723)(115,562)

Total deferred tax assets

¥

¥

24

36

12. NET ASSETSThe Investment Corporation issues only non-par value units in accordance with the Investment Trust Act. The entire amount of theissue 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.

13. RELATED-PARTY TRANSACTIONS(1) Parent Company, Major Corporate Unitholders and Other
Thirty-first fiscal period (From May 1, 2020 to October 31, 2020) and Thirtieth fiscal period (From November 1, 2019 to April 30,
2020): Not applicable(2) Affiliated Companies and Other
Thirty-first fiscal period (From May 1, 2020 to October 31, 2020) and Thirtieth fiscal period (From November 1, 2019 to April 30,
2020): Not applicable(3) Fellow Subsidiary Companies and Other
Thirty-first fiscal period (From May 1, 2020 to October 31, 2020) and Thirtieth fiscal period (From November 1, 2019 to April 30,
2020): Not applicable

Kenedix Office Investment Corporation35

(4) Directors, Major Individual Unitholders and Other
Thirty-first fiscal period (From May 1, 2020 to October 31, 2020) and Thirtieth fiscal period (From November 1, 2019 to April 30,
2020): Not applicable

14. BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATEDEXPENSES, AND GAIN AND LOSS ON SALE OF REAL ESTATE PROPERTY
Rent revenue – real estate, expenses related to rent business, and gain and loss on sale of real estate property for the fiscal
periods from May 1, 2020 to October 31, 2020 and from November 1, 2019 to April 30, 2020 consist of the following:
From May 1, 2020

From November 1, 2019

to October 31, 2020

to April 30, 2020

In thousands of yen
Rental and other operating revenues
Rent revenue – real estate
Rental revenues¥ 12,051,161¥ 11,698,824

1,705,904

1,730,295

13,757,065

13,429,120

Parking space rental revenues

507,703

510,017

Utility charge reimbursement

1,085,419

981,703

Common area charges
Subtotal
Others:Miscellaneous

232,969

294,258

Subtotal

1,826,092

1,785,979¥ 15,583,157¥ 15,215,099¥ 1,436,668¥ 1,440,554

Utilities

1,039,948

1,020,457

Taxes

1,316,730

1,283,557

441,103474,879

Insurance

19,286

18,656

Trust fees

40,73433,416

Total rent revenue – real estate
Property-related expenses
Expenses related to rent business
Property management fees and facility management fees

Repairs and maintenance269,173

267,1112,523,136

2,470,270¥ 7,086,783¥ 7,008,903¥ 5,000,000¥

OthersDepreciation
Total expenses related to rent business
Gain on sale of real estate properties
KDX Nihonbashi Honcho Building
Revenue from sale of investment properties
Cost of investment properties

3,905,680

Other sales expenses
Gain on sale of real estate properties

154,834¥－－－

939,484¥¥ 1,550,000¥－

KDX Nihonbashi Edo-dori Building
Revenue from sale of investment properties
Cost of investment properties
Other sales expenses
Gain on sale of real estate properties

36
KENEDIX Office Investment Corporation¥－

1,381,337－

50,356－

118,305¥－

15. LEASESThe Investment Corporation, as lessor, has entered into leases whose fixed monthly rents are due in advance with lease terms ofgenerally two years for office buildings. The future minimum rental revenues under existing non-cancelable operating leases as of
October 31, 2020 and April 30, 2020 are as follows:
As of October 31, 2020

As of April 30, 2020

In thousands of yen
Due within one year

¥ 3,168,087¥ 2,673,596

Due after one year

8,183,583

8,393,119¥ 11,351,671¥ 11,066,716

Total

16. FINANCIAL INSTRUMENTS
Thirty-first fiscal period (From May 1, 2020 to October 31, 2020)(A) Overview(1) Policy for financial instruments
The Investment Corporation procures essential funds for acquiring properties and undertaking the repayment of loans primarily
through bank loans and the issuance of investment corporation bonds and new investment units. The Investment Corporation uses
derivatives for the purpose of hedging its exposure 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, which are Japanese silent partnership (tokumei kumiai, “TK”) interests, are exposed to credit risk of the issuer
and risk of fluctuation of value of its property.
Loans payable and investment corporation bonds are used primarily for procuring funds necessary for the acquisition of properties
and have a redemption date of a maximum of approximately 10 years following the accounting date. Although a certain portion ofsaid liabilities are subject to interest-rate fluctuation risk, the Investment Corporation utilizes derivatives (interest-rate swap
transactions) in order to reduce such risk.
Interest-rate swap transactions are used as derivative financial instruments. Utilizing interest-rate swap transactions, the Investment
Corporation fixes its interest expense for long-term loans payable bearing interest at a variable rate. With regard to hedge accounting
methods, hedging instruments and hedged items, hedge policy, and the assessment of the effectiveness of hedging activities, please
see Note 2(L) “Derivative Financial Instruments.”(3) Risk management for financial instruments(a) Monitoring of market risk (the risks arising from fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap transactions in order to minimize risk arising from fluctuations in interest rates
on funds procured. The Investment Corporation 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 procurement of funds
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 the balance 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 priceavailable, fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different
assumptions and factors could result in a different fair value. Moreover, the contract amounts, etc. of derivative transactions in “(B)
Estimated Fair Value of Financial Instruments” do not indicate the market risk of derivative transactions.

Kenedix Office Investment Corporation

37

(B) Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet as of October 31, 2020 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 fairvalue (Refer to *2 below).
Carrying value
Estimated fair value
Difference
In thousands of yen(1) Cash and deposits(2) Cash and deposits in trust
Subtotal(1) Short-term loans payable¥ 16,128,897¥ 16,128,897

12,042,095

12,042,095–

28,170,992

28,170,992–

12,500,000

12,500,000–(2) Current portion of investment corporation bonds(3) Current portion of long-term loans payable

¥

–

–

–

–

23,000,000

23,057,531

57,531(4) Investment corporation bonds

11,000,000

11,011,000

11,000(5) Long-term loans payable

155,250,000

156,906,399

1,656,399¥ 201,750,000¥ 203,474,930¥ 1,724,930(391,228)(391,228)–

Subtotal
Derivative transactions(*)(*)The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing
the net liability position.
*1 Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivativetransactions
Assets(1) Cash and deposits and (2) Cash and deposits in trust
Since these items are settled in a short period of time, their carrying value approximates fair value.
Liabilities(1) Short-term loans payable
Since these items are settled in a short period of time, their carrying value approximates fair value.
(2) Current portion of investment corporation bonds and (4) Investment corporation bonds
The fair value of investment corporation bonds is based on quoted market prices. The fair value of those for which no market priceis available is based on the quoted price obtained from counterparty financial institutions, etc.
(3) Current portion of long-term loans payable and (5) Long-term loans payable
The fair value of long-term loans payable is based on the present value of the total of principal and interest discounted by the interest
rate to be applied if similar new loans were entered into. The fair value of long-term loans payable bearing interest at a variable rate,
which is subject to fixed interest rates resulting from interest-rate swaps and special treatment applied to said swaps, is based on thepresent value of the total of principal and interest, which is handled together with the applicable interest-rate swaps, discounted by
the interest rate to be applied if similar loans were entered into.
Derivative Transactions
Please refer to Note 17 “DERIVATIVE TRANSACTIONS.”*2 Financial instruments for which it is extremely difficult to determine the fair value
Classification
Investment securities

Carrying value (In thousands of yen)¥

1,137,526

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above TK interests are notincluded in the preceding table.

38
KENEDIX Office Investment Corporation

*3 Redemption schedule for receivables
Due within 1 year or less
(In thousands of yen)
Cash and deposits¥

16,128,897

Cash and deposits in trust

12,042,095

Total

¥

28,170,992*4 Redemption schedule for loans payable and investment corporation bonds
Due within
1 year or lessDue after

Due after

1 year through2 years through2 years

3 years

Due after

Due after

Due after

3 years through 4 years through4 years

5 years

5 years

In thousands of yen
Short-term loans payable
Investment¥

12,500,000

corporation

Total

¥

–

¥

–

¥

–

¥

–

¥

–

–

1,000,000–

4,000,000

2,000,000

4,000,000

23,000,000

18,050,000

11,300,000

11,700,000

21,350,000

92,850,000

bonds
Long-term loans payable¥

35,500,000¥

19,050,000¥

11,300,000¥

15,700,000¥

23,350,000¥

96,850,000

Thirtieth fiscal period (From November 1, 2019 to April 30, 2020)(A) Overview(1) Policy for financial instruments
The Investment Corporation procures essential funds for acquiring properties and undertaking the repayment of loans primarily
through bank loans and the issuance of investment corporation bonds and new investment units. The Investment Corporation uses
derivatives for the purpose of hedging its exposure 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, which are Japanese silent partnership (tokumei kumiai, “TK”) interests, are exposed to credit risk of the issuer
and risk of fluctuation of value of its property.
Loans payable and investment corporation bonds are used primarily for procuring funds necessary for the acquisition of properties
and have a redemption date of a maximum of approximately 9 years following the accounting date. Although a certain portion ofsaid liabilities are subject to interest-rate fluctuation risk, the Investment Corporation utilizes derivatives (interest-rate swap
transactions) in order to reduce such risk.
Interest-rate swap transactions are used as derivative financial instruments. Utilizing interest-rate swap transactions, the Investment
Corporation fixes its interest expense for long-term loans payable bearing interest at a variable rate. With regard to hedge accounting
methods, hedging instruments and hedged items, hedge policy, and the assessment of the effectiveness of hedging activities, please
see Note 2(L) “Derivative Financial Instruments.”(3) Risk management for financial instruments(a) Monitoring of market risk (the risks arising from fluctuations in interest rates and others)
The Investment Corporation uses interest-rate swap transactions in order to minimize risk arising from fluctuations in interest rates
on funds procured. The Investment Corporation 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 procurement of funds
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 the balance 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 priceavailable, fair value is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different

Kenedix Office Investment Corporation

39

assumptions and factors could result in a different fair value. Moreover, the contract amounts, etc. of derivative transactions in “(B)
Estimated Fair Value of Financial Instruments” do not indicate the market risk of derivative transactions.
(B) Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet as of April 30, 2020 and estimated fair value are shown in the following
table. The following table does not include financial instruments for which it is extremely difficult to determine the fair value (Referto *2 below).
Carrying value
Estimated fair value
Difference
In thousands of yen(1) Cash and deposits(2) Cash and deposits in trust
Subtotal(1) Short-term loans payable¥ 14,699,777¥ 14,699,777

11,470,987

11,470,987–

26,170,764

26,170,764–

9,500,000

9,500,000–(2) Current portion of investment corporation bonds(3) Current portion of long-term loans payable

¥

–

–

–

–

22,300,000

22,345,163

45,163(4) Investment corporation bonds

10,000,000

10,033,200

33,200(5) Long-term loans payable

150,250,000

152,628,904

2,378,904¥ 192,050,000¥ 194,507,267(332,017)(332,017)

Subtotal
Derivative transactions(*)¥

2,457,267–(*)The value of assets and liabilities arising from derivatives is shown at net value and with the amount in parentheses representing
the net liability position.
*1 Methods to determine the estimated fair value of financial instruments and other matters related to securities and derivativetransactions
Assets(1) Cash and deposits and (2) Cash and deposits in trust
Since these items are settled in a short period of time, their carrying value approximates fair value.
Liabilities(1) Short-term loans payable
Since these items are settled in a short period of time, their carrying value approximates fair value.
(2) Current portion of investment corporation bonds and (4) Investment corporation bonds
The fair value of investment corporation bonds is based on quoted market prices. The fair value of those for which no market priceis available is based on the quoted price obtained from counterparty financial institutions, etc.
(3) Current portion of long-term loans payable and (5) Long-term loans payable
The fair value of long-term loans payable is based on the present value of the total of principal and interest discounted by the interest
rate to be applied if similar new loans were entered into. The fair value of long-term loans payable bearing interest at a variable rate,
which is subject to fixed interest rates resulting from interest-rate swaps and special treatment applied to said swaps, is based on thepresent value of the total of principal and interest, which is handled together with the applicable interest-rate swaps, discounted by
the interest rate to be applied if similar loans were entered into.
Derivative Transactions
Please refer to Note 17 “DERIVATIVE TRANSACTIONS.”*2 Financial instruments for which it is extremely difficult to determine the fair value
Classification
Investment securities

Carrying value (In thousands of yen)¥

1,127,724

Because no quoted market price is available and it is extremely difficult to determine the fair value, the above TK interests are notincluded in the preceding table.

40
KENEDIX Office Investment Corporation

*3 Redemption schedule for receivables
Due within 1 year or less
(In thousands of yen)
Cash and deposits¥

14,699,777¥

26,170,764

Cash and deposits in trust

11,470,987

Total*4 Redemption schedule for loans payable and investment corporation bonds
Due within
1 year or lessDue after

Due after

1 year through2 years through2 years

3 years

Due after

Due after

Due after

3 years through 4 years through4 years

5 years

5 years

In thousands of yen
Short-term loans payable
Investment¥

9,500,000

corporation

Total

¥

–

¥

–

¥

–

¥

–

¥

–

–

–

1,000,000

2,000,000

4,000,000

3,000,000

22,300,000

21,700,000

11,950,000

12,200,000

16,050,000

88,350,000

bonds
Long-term loans payable¥

31,800,000¥

21,700,000¥

12,950,000¥

14,200,000¥

20,050,000¥

91,350,000

17. DERIVATIVE TRANSACTIONS
The following summarizes the contracted amount and the fair value of interest-rate swap contracts as of October 31, 2020:(1) Hedge accounting not applied
Not applicable(2) Hedge accounting applied
Hedge

Type ofaccounting

derivative

methodtransactions

Principle method Interest-rate

Contracted amount

Hedgeditems(In thousands of yen)
Maturing
after 1 year

Fair value(In thousandsof yen)Calculation
method for
applicable fair value

Long-termBasedswaps:

loans

amount provided byReceive/floating

payable¥55,950,000¥

55,950,000¥(391,228)

and pay/fixed

on

the

counterparty
financial institutions

Special treatment Interest-rateLong-termof interest-rate

swaps:

loans

swaps

Receive/floating

payable65,450,000

44,150,000¥ 121,400,000¥ 100,100,000*

and pay/fixed
Total

¥

(391,228)(*)Interest-rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As aresult, their fair value is included in the fair value of the hedged long-term loans payable.

Kenedix Office Investment Corporation

41

The following summarizes the contracted amount and the fair value of interest-rate swap contracts as of April 30, 2020:(1) Hedge accounting not applied
Not applicable(2) Hedge accounting applied
Hedge

Type ofaccounting

derivative

methodtransactions

Principle method Interest-rate

Contracted amount

Hedgeditems(In thousands of yen)
Maturing
after 1 year

Fair value(In thousandsof yen)Calculation
method for
applicable fair value

Long-termBasedswaps:

loans

amount provided byReceive/floating

payable¥43,650,000¥

42,650,000¥(332,017)

and pay/fixed

on

the

counterparty
financial institutions

Special treatment Interest-rateLong-termof interest-rate

swaps:

loans

swaps

Receive/floating

payable74,050,000

55,950,000¥ 117,700,000¥ 98,600,000*

and pay/fixed
Total

¥

(332,017)(*)Interest-rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As aresult, their fair value is included in the fair value of the hedged long-term loans payable.

18. INVESTMENT AND RENTAL PROPERTIES
Thirty-first fiscal period (From May 1, 2020 to October 31, 2020)
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, 2020

Net change

As of October 31, 2020

Fair value

As of October 31, 2020
(In thousands of yen)
¥ 520,792,000¥ 418,669,303¥ 9,877,219¥ 428,546,523*1: The carrying value represents the acquisition cost less accumulated depreciation.
*2: Fair value at the end of the fiscal period is the appraisal value determined by outside appraisers. Fair value at the end of the fiscal
period under review of KDX Shin-Nihonbashi Building that was sold on November 2, 2020 is calculated based on the sale price(¥3,200,000 thousand) in the transaction agreement on June 26, 2020.
*3: Among changes in the amount of real estate for rental purposes that occurred during the fiscal period under review, principal
increase/decrease factors were the acquisition of one property totaling ¥16,430,044 thousand, the sales of two properties totaling¥5,287,017 thousand and depreciation amounting to ¥2,523,136 thousand.
Income and loss in the fiscal period ended October 31, 2020 for real estate for rental purposes is listed in Note 14 “BREAKDOWNOF RENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, AND GAIN AND LOSS ON SALE
OF REAL ESTATE PROPERTY.”

42
KENEDIX Office Investment Corporation

Thirtieth fiscal period (From November 1, 2019 to April 30, 2020)
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 October 31, 2019

Net change

As of April 30, 2020

Fair value
As of April 30, 2020
(In thousands of yen)
¥ 506,912,000¥ 411,259,731¥ 7,409,572¥ 418,669,303*1: The carrying value represents the acquisition cost less accumulated depreciation.
*2: Fair value at the end of the fiscal period is the appraisal value determined by outside appraisers.
*3: Among changes in the amount of real estate for rental purposes that occurred during the fiscal period under review, principal
increase/decrease factors were the acquisition of two properties totaling ¥8,394,455 thousand and depreciation amounting to¥2,470,270 thousand.

Income and loss in the fiscal period ended April 30, 2020 for real estate for rental purposes is listed in Note 14 “BREAKDOWN OFRENTAL AND OTHER OPERATING REVENUES, PROPERTY-RELATED EXPENSES, AND GAIN AND LOSS ON SALE OF
REAL ESTATE PROPERTY.”

19. SEGMENT AND RELATED INFORMATION
Thirty-first fiscal period (From May 1, 2020 to October 31, 2020)(A) Segment Information
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has no reportablesegment subject to disclosure.
(B) Related Information(1)

Information about each product and service

Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of theoperating revenues on the statement of income and retained earnings.
(2)

Information about each geographic area(a)

Net sales

Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenues on the statementof income and retained earnings.
(b)

Property, plant and equipment

Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts for over 90% of the amount ofproperty, plant and equipment on the balance sheet.
(3)

Information about each major customer

Disclosure is omitted because net sales to a single external customer account for less than 10% of the operating revenues on thestatement of income and retained earnings.
Thirtieth fiscal period (From November 1, 2019 to April 30, 2020)(A) Segment Information
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has no reportablesegment subject to disclosure.
(B) Related Information(1)

Information about each product and service

Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of theoperating revenues on the statement of income and retained earnings.

Kenedix Office Investment Corporation

43

(2)

Information about each geographic area(a)

Net sales

Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenues on the statementof income and retained earnings.
(b)

Property, plant and equipment

Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts for over 90% of the amount ofproperty, plant and equipment on the balance sheet.
(3)

Information about each major customer

Disclosure is omitted because net sales to a single external customer account for less than 10% of the operating revenues on thestatement of income and retained earnings.

20. SIGNIFICANT SUBSEQUENT EVENTS
Not applicable

44

KENEDIX Office Investment Corporation

21. DISTRIBUTIONS
Thirty-first fiscal period(From May 1, 2020 to October 31, 2020)

Thirtieth fiscal period(From November 1, 2019 to April 30, 2020)

(Yen)

(Yen)

I. Retained earnings at the end of period¥ 7,310,459,769¥ 6,175,926,413

II. Total distributions¥ 6,592,197,840¥ 6,175,686,120

Distributions per unit

¥ 15,384¥ 14,412

Provision of reserve for reduction entry¥718,261,929¥ -IV. Retained earnings brought forward
to the next period¥ -¥ 240,293

In accordance with the policy stipulated in Article
35 (1) of its Articles of Incorporation, theInvestment Corporation determines that theamount of distribution shall exceed the amountequivalent to 90% of its distributable profit as
stipulated in Article 67-15 of the Act on Special
Measures Concerning Taxation, and shall be up to
the amount of its profits as the ceiling. Following
this policy, the Investment Corporation has
decided that, of the amount remaining after theprovision of reserve for reduction entry as
stipulated in Article 66-2 of the Act on Special
Measures Concerning Taxation is deducted fromunappropriated retained earnings, it shall
distribute the outstanding ¥6,592,197,840 as
profit distribution.
In addition, the Investment Corporation decided
not to distribute cash in excess of distributableprofit, stipulated in Article 35 (2) of its Articles ofIncorporation.

In accordance with the policy stipulated in Article
35 (1) of its Articles of Incorporation, theInvestment Corporation determines that theamount of distribution shall exceed the amountequivalent to 90% of its distributable profit as
stipulated in Article 67-15 of the Act on Special
Measures Concerning Taxation, and shall be up to
the amount of its profits as the ceiling. Following
this policy, the Investment Corporation has
decided to distribute ¥6,175,686,120, themaximum integral multiple amount of investment
units issued and outstanding of 428,510 units, up
to the amount of unappropriated retained earnings
for the fiscal period under review.
In addition, the Investment Corporation decided
not to distribute cash in excess of distributableprofit, stipulated in Article 35 (2) of its Articles ofIncorporation.

III. Voluntary reserve (provision)

Method of calculating distribution
amountKenedix Office Investment Corporation

45

46

Kenedix Office Investment Corporation

47

Unitholders’ Information
Outline of Kenedix Office Investment Corporation (as of October 31, 2020)
Structure of Investment Corporation
Property Support Line Company
Trademark Licenser

Investment Corporation5

Kenedix, Inc.

Mizuho Trust &Banking Co., Ltd.

2 4
Asset Management Company

General Meetingof Unitholders

1

Kenedix Real Estate FundManagement, Inc.

6

Executive Director
Jiro Takeda
Supervisory Director
Shiro Toba
Supervisory Director
Yoshihiro Morishima
Supervisory Director
Takahiro Seki

Property Support Line Company

Kenedix Investment
Partners, Inc.

Administrator for
Unitholders’ Register
Administrator forSpecial Accounts
Sumitomo Mitsui
Trust Bank, Limited

8

Ernst & Young
ShinNihon LLC

Kenedix Property
Management, Inc.
1 Asset management agreement
2 Memorandum of Understanding
on providing real estate information
3 Property management agreement
4 Trademark licensing agreement

7

Auditor3

Administrative Agent(Accounting business)
Mitsubishi UFJ Trust andBanking Corporation

Board of Directors

2

Property Management
Company (Note)

Asset Custodian /Administrative Agent(Institutional administration)

Administrative Agent for
Investment Corporation Bonds
Sumitomo Mitsui
Banking Corporation
MUFG Bank, Ltd.

5 Asset custodian agreement / Administrative agency agreement(Institutional administration)
6 Administrative agency agreement (Accounting business)
7 Unitholder registry administrator agreement/Special accounts administration agreement
8 Financial agency agreement

Note : Several properties are not under the property management of Kenedix Property Management, Inc.

Unitholder structure as of the end of the 31st fiscal period (October 31, 2020)
Percentage of unitholders by type of unitholder

Other domestic
companies
94(1.95%)

Individuals and others
12,989 units(3.03%)
Foreign companies
and individuals
146,815 units(34.26%)

Foreign companies
and individuals
299(6.21%)

Financial institutions(including securities
companies)
122(2.53%)

428,510 units
Other domestic
companies
5,595 units(1.30%)

Percentage of unitholders by type of unitholder

4,812
Financial
institutions(including
securities companies)
263,111 units(61.40%)Individuals
and others
4,297(89.29%)Note: Ratios rounded down to the second decimal place.

48

IR schedule
Fiscal period ended October
May

Jun.

Jul.

Aug.

Financial results
announcement

Sep.

Fiscal period ended April
Oct.

Nov.

Fiscal period end

Dec.

Jan.

Financial results
announcement

Start of distribution payments
Asset management report publication

Feb.

Mar.

Apr.

Fiscal period end

Start of distribution payments
Asset management report publication

Unitholder memorandum
Fiscal period ends

April 30 and October 31 of each year

General Meetingof Unitholders

In principal, at least once every two years

Unitholder fixed date
for voting

Prescribed in Article 16 of the Articles of Incorporation

Distribution payment dates

April 30 and October 31 (within three months from payment fixed date)Listing

Tokyo Stock Exchange (Securities code: 8972)

Newspaper for publicannouncements

Nihon Keizai Shimbun (Nikkei)

Unitholder registry andspecial account administrator

Sumitomo Mitsui Trust Bank, Limited
4-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo

Postal address andtelephone inquiries

Stock Transfer Agency Department
Sumitomo Mitsui Trust Bank, Limited
8-4 Izumi 2-chome, Suginami-ku, Tokyo Toll-free tel: 0120 782 031

Receipt of Distribution
During receipt period

Take your distribution receipt to the head or branch offices of Japan Post Bank Co., Ltd. or post offices(bank agents).

After receipt period

Specify the receipt method on the back of the distribution receipt and mail it to the Stock Transfer Agency Divisionof Sumitomo Mitsui Trust Bank, Limited, or receive distributions at a branch of the bank.

Receiving future distributions

Distributions can be paid by remittances to bank or ordinary postal savings accounts. If transfer designations orother procedures are preferred, you should, in principle, contact the brokerage with which you have an account.
If you do not have a brokerage account and have a special account, contact Sumitomo Mitsui Trust Bank,
Limited, the institution for managing special accounts.

Exclusion

Under the Articles of Incorporation of KDO, you cannot receive distributions after three years have passed
since distribution payments start, so please receive them as soon as possible.

Kenedix Office Investment Corporation

49

Portfolio Map (as of October 31, 2020)

49

Tokyo metropolitan
area(central 5 wards)

properties
Ueno

JR Yamanote Line

A-93

A-37
Suidobashi

A-29

D-2

A-38

Shinjuku

A-66

Shinjuku
Ward Ichigaya

A-41

A-55
A-120

JR Chuo Line

Shibuya
Ward

A-71

A-88

A-27

A-46

Chiyoda
Ward

A-64

Tokyo
A-121

A-112
A-115

Shibuya
山
手
A-17
線

A-51
A-74
Nihonbashi

A-108
A-67

A-107

Toranomon

A-109

Shimbashi

Chuo Ward

A-124
A-32

Hamamatsucho

A-91

A-60

A-128
Acquired in the 31st fiscal period
Shinbashi M-SQUARE BrightA-89

ShinagawaSee our website for further details on owned properties.
List of Properties
URL: https://www.kdo-reit.com/en/portfolio/list.html

50

A-3

A-4

A-19

Ebisu

A-73
A-20

A-21

A-116

MinatoWard

A-119

JR Sobu
Line

A-87

Kanda

A-127

A-1

A-7

A-113

A-8

A-6

山
手
線

A-59

Iidabashi

A-56

A-13

Harajuku

A-92

Ochanomizu

Tokyo metropolitan
area (excluding central 5 wards)

30

properties
Saitama Prefecture

埼玉県
A-99

A-86

A-90

A-62

A-84

A-33

A-96

Tokyo Metropolitan

東京都

A-78

A-14

A-5

A-35

A-85

A-83

A-31

Tokyo
central5 wards

A-125

A-26
A-95

A-83

A-72

A-94
A-22
神奈川県

A-63

A-30

A-102

A-117

A-48
A-48

A-30

A-101

A-34

A-123

Kanagawa Prefecture

Other regional
areas

A-14

19

千葉県

A-122

A-16

Chiba Prefecture

SapporoA-118

properties

A-70

Osaka (including Toyonaka
and Sakai) and Kyoto

Nagoya

A-12

A-42

A-54

A-58

A-79

A-69

A-82

A-100

A-106

A-111

A-104

A-110

A-126

Fukuoka

Hiroshima

A-53

A-98

Sendai
A-44
Utsunomiya
A-97

Tokyo metropolitan area

Kenedix Office Investment Corporation

51

Photos of Properties Acquired in the 20th Fiscal Period (Apr. 2015) Onward
Tokyo metropolitan area (central 5 wards)

A-107

KDX Ginza East Building

A-112

A-113

A-109

KDX Hamamatsucho
Center Building

KDX Shin-Nihonbashi
Ekimae Building

A-116

A-108

KDX Toranomon 1chome Building

A-119

Pentel Building
A-115

ARK Mori Building(Compartmentalized ownership)52

KDX Nishi-Shinbashi Building

A-124

KDX Hamamatsucho PlaceKDX Shibuya Nanpeidai Building

A-127

A-128

KDX Kanda Ekimae Building

Shinbashi M-SQUARE BrightTokyo metropolitan area (excluding central 5 wards) and other regional areas

A-102

KDX Yokohama Nishiguchi Building

A-117

A-122

A-125

KDX Chofu Building

A-104

A-106

A-123

Mitsubishijuko Yokohama Building(Quasi co-ownership interests)

A-110

KDX Yokohama
Kannai Building

A-118

A-122

BR Gotanda

KDX Minami-Honmachi Building

A-111

KDX Sakura-dori Building KDX Shin-Osaka Building

KDX Sapporo Kitaguchi Building

A-126

KDX Nagoya Nichigin-mae Building

Tosabori Prime

Kenedix Office Investment Corporation

53

Introducing Our Website
We have updated our Virtual Tour page!
Enjoy a 360º virtual tour of our properties.
Home Page

Initiatives for Sustainability

https://www.kdo-reit.com/en/

ESG DisclosureThis describes our basic policy
on sustainability and ourmain ESG initiatives.

Virtual TourYou can interact with the screen to view theexterior and interior of office buildings.

Entrance Hall

Office Space

1F Elevator Hall

2F Elevator Hall