Semi-annual Report for the 1st Period(From October 3, 2014 to September 30, 2015)

From the Executive Director

Thanks to your support, Kenedix Retail REIT Corporation (KRR) was listed on theTokyo Stock Exchange on February 10, 2015, as a real estate investment trust(REIT) and I am pleased to report our results of operations for the first fiscal period(from October 3, 2014 to September 30, 2015).
We seek to build a portfolio of primarily neighborhood, community and othershopping centers that cater to the day-to-day needs of local area customers.
Japanese consumers tend to shop frequently, often daily, for day-to-day necessities,
and purchase smaller amounts on each trip. This reflects longstanding consumer
tastes in Japan for eating fresh or convenience foods prepared daily and storing lessat home. Moreover, Japan is undergoing unprecedented demographic changes that,
we believe, are influencing the nature of local retail markets. In particular, the agingof the Japanese population and the increased concentration of populations in urban
areas has resulted in shrinkage of retail trade areas for shopping centers. We havealso observed an increase in market share of specialty stores as consumer tastes
change. Accordingly, we believe that our selective investments in local shopping
centers for daily needs with specialty stores or supermarkets as their main tenants
give us the ability to enliven local communities and to enhance social infrastructure
by becoming essential parts of the daily lifestyle of local area customers, driving
high-frequency traffic from concentrations of residents in the local retail trade area.
Upon listing, we acquired 18 shopping centers for daily needs with acquisition priceof 80,843 million yen and we additionally acquired one property of 11,000 million yen
on April 16, 2015.
In the first fiscal period, operating revenue totaled 5,103 million yen, operating
income was 2,463 million yen, ordinary income was 1,939 million yen and net
income was 1,933 million yen. As a result, the distribution to unitholders was 7,414
yen per unit.
Going into the second fiscal period, we issued new investment units and acquired 13
shopping centers for daily needs. As a result, our portfolio size by acquisition priceincreased by 60 % from the time of the IPO to approximately 129.7 billion yen with32 properties.
With strong support from our Sponsor, Kenedix, Inc. and our Alliance Companies,
namely Sumitomo Mitsui Finance and Leasing Co., Ltd., Nippon Commercial
Development Co., Ltd., and P&D Consulting Co., Ltd., we dedicate ourselves to thegrowth of our portfolio and the maximization of unitholder value.
We respectfully look forward to your continued support.

Akihiro Asano
Executive Director, Kenedix Retail REIT Corporation
Director and COO, Head of Retail REIT Division,
Kenedix Real Estate Fund Management, Inc.

Financial Highlights
For 1st fiscal period(October 3, 2014 to September 30, 2015)
Distribution per Unit

¥ 7,414（Includes distribution in excess of earnings per Unit : 13 yen）

Forecast DPU for 2nd fiscal period¥ 6,605

Operating revenue¥ 5,103 mn

Operating income¥ 2,463 mn

Net income¥ 1,933 mn

Total assets¥ 108,382 mn¥ 59,790 mn

Total net assets¥ 229,301

Net assets per Unit

Number of properties / tenants

19

occupancy rate at the end of period

properties/ 321tenants

99.6 %

Contents
I. Overview of KRR
From the Executive Director
Financial Highlights
Key Characteristics
Highlights
Portfolio List
Portfolio Map
Performance of Investment Unit
Close-up KRR Vol.1

II. Asset Management Report
Overview of Asset Management
Profile of KRR
Status on Investment Properties
Capital Expenditures
Expenses and Liabilities
Acquisition and Disposition
Accounting
OthersIII. Financial Statement
1Key Characteristics (1)Focused Investment in Neighborhood, Community
1. The only J-REIT specialized in shopping centers for daily needs

We are the only listed J-REIT to focus on neighborhood, community and other shopping
centers for daily needs. We seek to generate long-term stable cash flow through portfolio
diversification on a property and tenant basis, which is less affected by economic
fluctuations. We also seek profitability growth through implementation of sales-linked
rents and potential rent increase through appropriate tenant reshuffling.

Large

Large-scale suburban
retail properties• RSC (Regional Shopping Center)• GMS (General Merchandise Store)
on a stand-alone basis• Outlet malls

Our core investment targets

Urban retail properties
featuring high-end

Property size

Neighborhood, community andother shopping centers for daily needs

small

SM

CSC

Neighborhood
Shopping
Centers

Supermarkets

Community
Shopping
Centers

Shopping
centers with asupermarket
as an anchor orcore tenant

Stand-alone
stores thatprimarily
providegroceries

3km

NSC

Retailtrade area
in radius(approximate)

3-5km

High

• brand shops

SS

Urban
StationFront
Shopping
Centers

Specialty Stores

Larger shopping
centers than
NSC, with asupermarket as
an anchor orcore tenant

Shopping
centers in theimmediatevicinity of anurban public
transportation
stationSpecialty storessuch as drug
stores,convenience
stores, healthclubs orelectronic
appliance stores

5-10km3 -1 0 k m

1 -1 0 k m

The majority of portfolio
properties of other listed
retail-focused J-REITs
consist of large-scale
suburban retail properties
and urban retail properties
featuring high-end brandshops

Frequency of customer visits

Low

Note: The size of property, frequency of customer visits and retail trade areas referenced above have been definedby us based on general characteristics of shopping centers for daily needs.

2. Characteristics of our shopping centers
Located within residential districts or adjacent to major roads or streets, which provide daily
goods and services
1. Retail trade area••

Approximately 1 to 10 kilometer radius (generally 3 to 5 kilometer radius)
Customers predominantly from local areas

2. Operational features••

Accommodate certain daily local retail needs
Strong customer traffic on both weekdays and weekends

3. Tenant composition••

Various specialty stores to meet a range of day-to-day needs
Groceries, clothing and other daily goods and services

2and Other Shopping Centers for Daily Needs
3. Retail property trends and macroeconomic conditions

We expect that retail trade area will shrink due to population aging and concentration in thefour major metropolitan areas. The importance of specialty stores in retail market is increasing
with increase in specialty supermarket market share and decrease in size of retail properties
in response to diversifying consumer needs. We believe that demand for neighborhood,community and other shopping centers that cater to the day-to-day needs will increase in thischange of macroeconomic environment and diversifying consumer needs.
Shrinkingretail trade area due
高齢化及び四大都市圏への
to aging population and
人口集中に伴う 商圏
concentrated population in theの小規模化
four major
metropolitan areas

高齢者が牽引する
Domestic
consumption
led 国内消費by the elderly

専門スーパーのIncreasein specialty
supermarket
market share
市場シェアの拡大

Increasing importanceof shopping centers
生活密着型商業施設のthat 重要性の向上
cater to the dayto-day needs

商業施設のDecreasein size ofretail properties
小規模化の進行

政府による
コン of
Government
promotion"Compact City"
パクトシティの推進

生活必需品に対する
Stable demand for
安定的支出
daily
necessities

4. Summary of portfolio (as of October 2, 2015)

Our portfolio is structured to create stable cash flow through property and tenant diversification,
as well as our primary geographic targets that are four major metropolitan areas, which haverelatively stable demographics.

Location

Tenant categories(Note)

Tokureishi andother areas

Other

Health clubs

15.6%

1.2%

Greater
Nagoya area

4.1%

11.3%

Groceries

3.2%

Fukuoka area

20.2%

Sporting goods

3.3%
Four major
metropolitan
areas

84.4 %

Restaurants

4.8%
Tokyo
metropolitan
area

GMS

12.4%

Clothing andaccessories

Greater
Osaka area

7.6%

30.0%

Consumerelectronics

7.8%(Note) The figures are based on rents as of September 30, 2015

Hardware stores

7.3%

49.0%

3

Servicebusinesses

10.7%

Other product sale
shops

11.3%

Key Characteristics (2)Strong Sponsor & Alliance Company
1. Leveraging extensive support from Sponsor and Alliance Companies

We have strong support from our Sponsor, Kenedix, Inc. as well as our Alliance
Companies for both internal and external growth. With their support, we have access to alarge and diverse pipeline of acquisition opportunities as well as a variety of technicalexpertise.

SponsorAlliance Companies

Other
supportSupport for internal
growthSupport forexternal
growthType of support
Pipeline support●●

Warehousing services●●

Leasing services

●

●

●

●

●

PM services

●

●

●

Environmentally-friendly technology /knowhow●

Evaluation of operating conditions
and advisory on operations●

Personnel support●

Right to use trademarks●●●

2. Overview of Alliance Companies

Sumitomo Mitsui Finance and Leasing Co., Ltd.

• Founded in Feb. 1963 (Leasing business since May
1968)• Main lines of business: Leasing of a variety ofequipment and machinery, loans and factoring, etc.
• Shareholders: Sumitomo Mitsui Financial Group, Inc.
(60%), Sumitomo Corporation (40%)

P&D Consulting Co., Ltd.

• Founded in Aug. 1998
• Main lines of business: Development andmanagement of retail facilities, retail consulting, etc.
• Development / management of its own brand"Unicus" (10 locations) and development of otherretail facilities (8 locations) (as of Sep. 30, 2015)

4▪Nippon Commercial Development Co., Ltd.

• Founded in Apr. 2000
• Main lines of business: Real estate investment, subleasing / leasing / fund fee businesses• JINUSHI BUSINESS• Nippon Commercial Development's "JINUSHI BUSINESS"
is a business model whereby they invest in landownership interests and lease the land to tenants basedon commercial fixed-term land lease agreements togenerate stable cash flow (rent) in the long term.

Support
3. The Kenedix Group's strong commitment to J-REITs

Even after the financial crisis in 2008, the Kenedix Group continued to steadily increase
its AUM, which had grown to 1,638.9 billion yen as of September 30, 2015. Its AUM in JREIT accounts for more than half of its total AUM.
Total AUM: JPY1,638.9 billion (as of end of Sep. 2015) (Note)
J-REIT: JPY1,100.3billion

Kenedix Office
Investment
Corporation

Kenedix
Residential
Investment
Corporation

Japan Senior
LivingInvestment
Corporation

Kenedix Retail
REIT
Corporation

Private REIT / Private funds JPY468.7 billion

Kenedix
PrivateInvestment
Corporation

Japan
Logistics Fund
Inc.

Premier
Investment
Corporation

Breakdown of AUM as of end of September, 2015
Proprietaryinvestments
4.3%

Privatefunds

Private REIT/
Privatefunds

J-REIT
67.1%

28.6%
Note: The Kenedix Group's total AUM includes proprietary investments of JPY699 million.

（注）ケネディクス・グループの連結対象不動産699億円を含みます。

4. Strong acquisition pipeline and preferential negotiation rights of retail properties

We seek active external growth through strong acquisition pipeline from our Sponsor andusing preferential negotiation rights with our Alliance Companies.
Examples of properties with preferential negotiation rights granted by the Sponsor or owned by our Alliance Companies
SS

SS

SM

Home Center Kohnan Sunadabashi
Location: Nagoya, Aichi

Royal Home Center Totsuka-Fukaya
Location: Yokohama, Kanagawa

Yorkmart Totsuka-Fukayacho
Location: Yokohama, Kanagawa

SM

SM

SM

[Mandai Tsukaguchi]
Location: Amagasaki, Hyogo[Nishi, Osaka Project]
Location: Osaka, Osaka[Chuo, Osaka Project]
Location: Osaka, Osaka(Note 1) As of September 30, 2015, we have no plans to acquire these properties and there is no guarantee that we can acquire these properties in the future.
We may acquire only the underlying land of these properties.
(Note 2) The illustrations above are only completion images based on design drawings and may differ from actual buildings after completion.

5

Highlights

Track record since IPO
Driving growth and profitability through selective acquisitions

We began our operations on February 10, 2015 with 18 properties and we additionallyacquired Blumer HAT Kobe on April 16, 2015. We realized our active external growth utilizing
debt capacity in early stage after listing. In addition, we acquired 13 properties through public
offering on October 2, 2015. As a result, we achieved 60.5% external growth of our portfolio,
from 80.8 billion yen at our listing and 129.7 billion yen only eight months later.

1st period

2nd period

Listed on

April 16, 2015
Acquistion ofBlumer HAT
KobeFebruary 10, 2015
Acquisition of

18 properties

October 2, 2015
Acquisition of

13 properties(Total asset value)(JPY bn)

SponsorAlliance Companies
External sources
150

100

+37.9 bn

129.7 bn

Aquired properties
on October 2, 2015

Properties after
acquisition on
October 2, 2015

91.8 bn80.8 bn50

0Properties acquired
upon IPO(as of Mar.31, 2015)

Existing properties(as of Sep.30, 2015)

Aiming for steady
growth of asset value
going forward

Abundant external growth opportunities

Promoting external growth strategy

Significant external growth due to our portfolio
composed primarily of retail properties that caterto day-to-day needs, which make up an
increasing share of retail properties in depth

Promoting external growth strategy Strong
pipelines from our Sponsor & Alliance Companies
Diverse acquisition channels and methods alsoavailable

6Portfolio List

Portfolio List (as of October 2, 2015)
Total acquisition
price
No.

¥129,763mn

Name of property

Weighted averageoccupancy rate
Location(city / ward, prefecture)

99.0%
Acquisition
price(JPY mn)

Number oftenants
Occupancy
rate
(%)

388
Number oftenants(Note1)T-1 Fululu Garden Yachiyo

Yachiyo, Chiba

14,848

99.5

49

T-2 MONA Shin-Urayasu

Urayasu, Chiba

8,063

98.0

72

T-3 Passaggio Nishiarai

Adachi ward, Tokyo

5,850

98.3

40

T-4 Daikanyama Address Dixsept

Shibuya ward, Tokyo

5,390

93.9

26

T-5 Unicus Ina

Kitaadachi-gun, Saitama

4,379

100.0

1

T-6 Yorktown Kita-Kaname

Hiratsuka, Kanagawa

4,000

100.0

1

T-7 Unicus Yoshikawa

Yoshikawa, Saitama

3,600

100.0

11

T-8 Sports Club Renaissance Fujimidai

Nerima ward, Tokyo

2,586

100.0

1

O-1 Blumer Maitamon

Kobe, Hyogo

8,389

99.5

48

O-2 Central Square Takadono (Land)

Osaka, Osaka

2,685

100.0

1

O-3 Piago Kahma Home Center Omihachiman

Omihachiman, Shiga

2,140

100.0

2

O-4 Blumer HAT Kobe

Kobe, Hyogo

11,00099.5

41

N-1 Kahma Home Center Nakagawa Tomita (Land)

Nagoya, Aichi

2,311

100.0

1

N-2 Valor Ichinomiya-Nishi

Ichinomiya, Aichi

2,174

100.0

1

N-3 K's Denki Nakagawa Tomita (Land)

Nagoya, Aichi

889

100.0

1

F-1 Sunny Noma

Fukuoka, Fukuoka

1,497

100.0

1

R-1 Roseo Mito

Mito, Ibaraki

9,675 100.0 (Note2)22

R-2 K's Denki Aomori Honten

Aomori, Aomori

1,469

100.0

1

R-3 Super Sports Xebio Aomori-Chuo

Aomori, Aomori

898

100.0

1

91,843

99.6

321

Total of assets acquired during 1st period
T-9 Super Viva Home Iwatsuki (Land)

Saitama, Saitama

4,815

100.0

1

T-10 K’s Denki Shonan-Fujisawa (Land)

Fujisawa, Kanagawa

3,169

100.0

1

T-11 Unicus Kamisato (Land)

Kodama-gun, Saitama

3,000

100.0

1

T-12 Unicus Konosu (Land)

Konosu, Saitama

1,700

100.0

1

T-13 Inageya Yokohama Minamihonjuku (Land)

Yokohama, Kanagawa

1,442

100.0

1

T-14 Gourmet City Chiba-Chuo

Chiba, Chiba

760

100.0

1

O-5 Carino Esaka

Suita, Osaka

6,555

99.1

30

O-6 COMBOX Komyoike

Izumi, Osaka

6,450

100.0

1

O-7 Hankyu Oasis Hirakatadeguchi

Hirakata, Osaka

1,280

100.0

1

O-8 Welcia Kishiwadakamori (Land)

Kishiwada, Osaka

487

100.0

1

R-4 Ashico Town Ashikaga

Ashikaga, Tochigi

4,180

92.7( Note2)

25

R-5 Yorktown Shinden-Higashi

Sendai, Miyagi

3,252

100.0

2

R-6 Kasumi Technopark Sakura

Tsukuba, Ibaraki

830

100.0

1

Total of assets acquired on October 2, 201537,920

98.4

67

Total

129,763

99.0

388(Note1) "Number of tenants" indicates the number of end-tenants(Note2) Although the building and the land are leased separately to different tenants, the occupancy rate reflects the occupancy of both the building and the land
(Note3) "Occupancy rate" and "number of tenants" are as of September 30, 2015

7

Portfolio
Map
ポートフォリオマップ

Portfolio map (as of October 2, 2015)
Tokyo metropolitan area
Fululu Garden

MONA
Shin-Urayasu

T-3 Nishiarai

T-4 Dixsept

T-6 Kita-Kaname

Yorktown

T-7 Unicus
YoshikawaClub
T-8 Sports
Renaissance Fujimidai

Denki ShonanT-10 K's
Fujisawa (Land)

T-11 (Land)）T-1 Yachiyo

T-2

T-5 Unicus Ina

Viva Home
T-9 Super
Iwatsuki (Land)

NEW

Passaggio

Unicus Kamisato

NEW

NEW

Inageya Yokohama

Unicus Konosu

T-12 （Land）

Daikanyama Address

T-13 Minamihonjuku （Land）

City ChibaT-14 Gourmet
Chuo

NEW

NEW

NEW

Greater Osaka area
O-3 Center Omihachiman

COMBOX

O-7 Hirakatadeguchi

O-2 Takadono (Land)

O-5 Carino Esaka

O-6 Komyoike

NEW

Piago Kahma Home

Central SquareO-1 Blumer Maitamon

Hankyu Oasis

NEW

NEW

8

O-4 Blumer HAT Kobe

Welcia kishiwadakamori

O-8 (Land)

NEW

R-2
R-3

R-5

R-4 R-1
R-6

Total

32 Properties
Greater Nagoya area
Kahma Home Center

N-1 Nakagawa Tomita （Land） N-2 Valor Ichinomiya-Nishi

K's Denki

N-3 Nakagawa Tomita(Land)

Tokureishi and other areas

Fukuoka area
F-1 Sunny Noma

K's Denki Aomori

Super Sports Xebio

R-1 Roseo Mito

R-2 Honten

R-3 Aomori-Chuo

Town
R-4 Ashico
Ashikaga

R-5 Yorktown
Shinden-Higashi

R-6 Sakura

NEW

NEW

9

Kasumi TechnoparkNEWPerformance of Investment Unit

Performance of Investment Unit
(Unit)
100,000(JPY)
320,000

40,000平成27年2月10日終値
266,100円

Unit price

TSE REIT Index

Trading volume

300,000

35,000280,000

30,000260,000

25,000240,000

20,000220,000

15,000200,000

10,000180,000

5,000

160,000

Feb. 10,2015

End ofFeb.

End ofMar.

End ofApr.

End ofMay

End ofJun.

End ofJul.

End ofAug.

End ofSep.

End ofOct.

0(Note) TSE REIT Index adjusted to KRR's closing unit price of JPY266,100 as of February 10, 2015.

HIGH

LOW

CLOSE

February 10, 2015

269,600

260,100

266,100

February, 2015

275,400

260,100

273,600

March, 2015

280,800

262,500

278,300

April, 2015

300,000

277,900

299,300

May, 2015

309,500

292,200

298,000

June, 2015

298,200

279,100

290,500

July, 2015

290,600

248,200

276,300

August, 2015

283,500

245,200

256,800

September, 2015

254,900

218,000

230,600

October, 2015

255,600

225,000

236,500

October 30, 2015

239,000

236,400

236,500

10

Close-up KRR Vol. 1
T-5

NSC Neighborhood Shopping Centers

Unicus Ina
Shopping centers for daily needs with a supermarket as
an anchor tenant

Unicus Ina is a neighborhood shopping center
that was developed by P&D Consulting Co., Ltd.,
which is one of the Alliance Companies. P&D
developed and operates 10 UNICUS® branded
shopping centers, and Unicus Ina wascompleted in April 2006.
Unicus Ina is a stylish shopping center with anopen mall configuration that has space for
events and performances by community groups.
The first floor tenants include a grocery store,
drug store, clothing stores, book store, movie
rental shop, restaurants, and stores offering
services. The second floor has a hundred-yen
store, clothing stores, café, ice cream shop, andstores offering services. Grocery store operator
Yaoko, the anchor tenant, attracts large numbersof customers. Combining this store with storesproviding a variety of services makes Unicus Ina
a competitive shopping center.
Unicus Ina is only a five-minute walk from
Hanuki Station on the Saitama New Urban
Transit Ina Line (also known as the New Shuttle),
which starts at the JR Omiya Station. The
population surrounding this property continues togrow as new houses are constructed. The
shopping center is also easily accessible by carfrom areas within a 15-minute drive, which are
its primary catchment areaa. These areas
include Ina Town and the cities of Ageo,
Okegawa, Kuki, Shiraoka and Hasuda. There
are parking spaces for about 680 vehicles in thisshopping center.

P&D’s idea for Unicus Ina was selected in acompetition of concepts for a retail property to
become the nucleus of a new center for thecommunity of Ina Town. To reflect the wishes of
the Ina Town municipal government, theshopping center has a disaster response storage
space, a community room that Ina Town leases
and a number of locally owned stores. In addition,schools and other community organizations havemade frequent use of the shopping center’s
event space for their performances. Holding
these events has played an important role inmaking Ina Town, contributing to enlivening local
communities.

▪ Property features

11

Acquisition price

JPY4,379 mn

Location

Kitaadachi-gun, Saitama

Land area

32,553.16 m2

GFA

14,160.04 m2

Core tenant

P&D Consulting

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