KENEDIX Retail REIT CORPORATION (3453)

Translation of Japanese Original
INTERIM FINANCIAL REPORT FOR THE FISCAL PERIOD ENDING SEPTEMBER 30, 2015 (REIT)(For the Reporting Period from October 3, 2014 to March 31, 2015)
May 25, 2015
Kenedix Retail REIT Corporation (“KRR”) is listed on the Tokyo Stock Exchange with the securities code number 3453.
(URL http://www.krr-reit.com/en/)
Representative:
Akihiro Asano, Executive Director
Asset Management Company: Kenedix Real Estate Fund Management, Inc.
Representative:
Ryosuke Homma, CEO and President
Inquiries:
Koichiro Nobata, General Manager of Planning Department, Retail REIT Division
TEL+81-3-5623-3868
Planned submission of semiannual securities report: June 29, 2015
Preparing presentation material:
Yes
Hold a financial brief meeting:Yes (for analysts and institutional investors)(Amounts are rounded down to the nearest ¥million)

1. PERFORMANCE FOR THE INTERIM PERIOD ENDED MARCH 31, 2015
(1) Business Results
Operating Revenues(Millions of Yen)

Interim period ended
March 31, 2015

%
(－)

1,003

Operating Income(Millions of Yen)
%
(－)

498

(Percentages show period-on-period changes)

Ordinary Income(Millions of Yen)
335

Net Income(Millions of Yen)
%
(－)

334

%
(－)

Net Income
per Unit
Yen
Interim period ended
4,547(1,297)
March 31, 2015
(Note 1) Although the accounting period for KRR’s interim period ended March 31, 2015 includes 180 days from October 3, 2014 to March
31, 2015, its substantial asset management period covers only 50 days from February 10, 2015 to March 31, 2015.
(Note 2) Net income per unit is calculated by dividing net income by the day-weighted average number of investment units outstanding during
the period (73,458 units). The figure in brackets shows net income per unit based on the day weighted average number of nvestment
units outstanding during the period (257,415 units) assuming the beginning date of the fiscal period is February 10, 2015, the day thatthe asset management actually started.
(Note 3) The purpose of the percentages of operating revenues, operating income, ordinary income and net income is to show changes from theprevious period. However, no applicable figures are shown for the interim period under review, as the said period was KRR’s firstfiscal period.

(2) Financial Position

As ofMarch 31, 2015

Total Assets(Millions of Yen)

Net Assets(Millions of Yen)

94,611

58,191Net Assets to Total Assets%
61.5

Net Asset Value per Unit
(Yen)

223,168(3) Cash Flows
Cash Flows from Operating
Activities(Millions of Yen)
Interim period ended
March 31, 2015

(653)

Cash Flows from Investing
Activities(Millions of Yen)
(78,080)

Cash Flows from Financing
Activities(Millions of Yen)
84,511

Cash and Cash Equivalents
at the End of the Period(Millions of Yen)
5,777

This is an English-language translation of the original Japanese announcement on our website released on May 25, 2015. However, no assurance or warranties are
given with respect to the accuracy or completeness of this English-language translation. The Japanese original shall prevail in the case of discrepancies between
this translation and the Japanese original.

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KENEDIX Retail REIT CORPORATION (3453)

2. FORECAST OF RESULTS FOR THE FISCAL PERIOD ENDING SEPTEMBER 30, 2015 (October 3, 2014 toSeptember 30, 2015) AND MARCH 31, 2016 (October 1, 2015 to March 31, 2016)(Percentages show period-on-period changes)
Operating
Revenues(Millions of Yen)(%)

Operating Income(Millions of Yen)(%)

Ordinary Income(Millions of Yen)(%)

Net Income(Millions of Yen)
(%)

4,857
(－)

2,334
(－)

1,876
(－)

1,858
(－)

7,127

0

3,962
(-18.4)

1,874(-19.7)1,545(-17.7)1,541(-17.1)

5,912

0The First fiscal period ending
September 30, 2015
The Second fiscal period ending
March 31, 2016

Distributions per
Unit Excluding
Excess of Earning(Yen)

Distributions in
Excess of Earnings
per Unit (Yen)(Reference) Forecasted net income per unit (Forecasted net income / Forecasted average number of investment units during period)
For the fiscal period ending September 30, 2015: ¥11,070 For the fiscal period ending March 31, 2016: ¥5,912(Note 1)
Distributions per unit are calculated based on the number of investment units issued as of March 31, 2015, which is the end of
the interim period (260,750 units).
(Note 2)The purpose of the percentages of operating revenues, operating income, ordinary income and net income is to show changes fromthe previous period. However, no applicable figures are shown for the fiscal period under review, as the said period was KRR’s firstfiscal period.

3. OTHER(1) Changes in Accounting Policies/Changes in Accounting Estimate/Retrospective Restatement(a) Changes in accounting policies accompanying revisions to accounting standards: None(b) Changes in accounting policies other than (a): None(c) Changes in accounting estimates: None(d) Retrospective restatement: None
(2) Number of Investment Units Issued and Outstanding (including treasury investment units)(a) Number of investment units issued and outstanding at the end of the period (including treasury investment units)
As of March 31, 2015: 260,750 units(b) Number of treasury investment units at the end of the period
As of March 31, 2015: 0 units(Note) Please refer to “Per Unit Information” on page 22 for the number of investment units used as the basis for calculating net income perunit.
* Status of interim audit procedures
As of the time of disclosure of this interim financial results report, audit procedures for the interim financial statements pursuant to the Financial Instruments
and Exchange Act of Japan are incomplete.
* Remarks on appropriate use of forecasts of performance and other special notes
Forward-looking statements presented in this interim financial report, including forecasts of performance, are based on information currently available to
KRR and on certain assumptions KRR deems to be reasonable. As such, actual operating and other results may differ materially from these forecasts as aconsequence of numerous factors. The above-mentioned forecasts are based on “Assumptions for the Forecasts of Financial Results for the Fiscal Periods
Ending September 30, 2015 and March 31, 2016” on page 10 for calculation, and our judgment as of March 31, 2015. Actual operating revenues, operating
income, ordinary income, net income, distributions per unit and distributions in excess of earnings per unit may vary according to changes in market
conditions. These forecasts do not guarantee the distribution amount.
KRR’s first fiscal period is from October 3, 2014 to September 30, 2015. As the period is longer than nine months, an interim settlement of account has been
adopted. Going forward, KRR will settle accounts at the end of March and September each year.

This is an English-language translation of the original Japanese announcement on our website released on May 25, 2015. However, no assurance orwarranties are given with respect to the accuracy or completeness of this English-language translation. The Japanese original shall prevail in the case of
discrepancies between this translation and the Japanese original.

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KENEDIX Retail REIT CORPORATION (3453)

1. KRR and Related Corporations
As there have been no significant changes from the “Management structure of KRR” described in the Securities Registration Statement(submitted on January 6, 2015; prepared in Japanese only), the disclosure is omitted.
2. Investment Policies and Status of Asset Management(1) Investment Policies
As there have been no significant changes from policies described in “Investment Policy,” “Investment Properties” and “Distribution
Policy” in the Securities Registration Statement (submitted on January 6, 2015; prepared in Japanese only), the disclosure is omitted.
(2) Status of Asset Management(Overview of the Interim Period)i) Transition of KRR
KRR was established on October 3, 2014, with unitholders’ capital of ¥150 million (750 units) and with Kenedix Real Estate
Fund Management Inc. ( “KFM”) as the organizer under the Act on Investment Trusts and Investment Corporations of Japan(the “Investment Trust Act”). On October 30, 2014, KRR was registered with the Director-General of the Kanto Local
Finance Bureau (registration number: Director-General of the Kanto Local Finance Bureau No. 97). KRR issued newinvestment units (254,250 units) through a public offering with the payment due date on February 9, 2015, which were listedon the Real Estate Investment Trust Securities (J-REIT) Market of Tokyo Stock Exchange, Inc. (the Tokyo Stock Exchange)(Securities code: 3453) on February 10, 2015. In addition, new investment units (5,750 units) were issued through athird-party allotment on March 11, 2015. As a result, the number of investment units issued at the end of the interim period
was 260,750 units.
KRR seeks to invest primarily in neighborhood, community and other shopping centers that cater to the day-to-day needs of
local area customers and have stable demand from retailers and customers, in order to provide stable investment returns overthe long term. Sponsored by Kenedix, Inc., a leading, independent real estate asset management company, KRR entrusts its
asset management and investment operations to KFM, with the following strategies.
(Note) For our management purposes and ease of classification, we define neighborhood, community and other shopping centers fordaily needs as retail properties that generally have the following characteristics:
a. Retail trade area of approximately a one to ten kilometer radius (and generally, a three to five kilometer radius), with customers
predominantly from local areas surrounding the retail property
b. Operational capacity to accommodate certain daily local retail needs and strong customer traffic on both weekdays and weekends
c. Composed of various specialty stores to meet a range of day-to-day needs such as groceries,clothing and other daily goods andservicesii) Investment Environment
Japan’s real GDP in the 1st quarter of 2015 increased 0.6% (first preliminary estimate) from the previous quarter. GDP increased forthe second quarter in a row, following the 4th quarter of 2014, when we saw Japan’s first growth in GDP after the April 1, 2014
consumption tax rate hike to 8%. There were also improvements in corporate earnings and employment conditions, and according to
the Cabinet Office, fiscal 2015 spring wage increases exceeded that of fiscal 2014, when wage increases were the highest in 15
years. The March 2015 Economy Watchers Survey of the Cabinet Office reported a Diffusion Index (DI) for current economic
conditions of 52.2. Furthermore, there are signs of a rebound in the household sector as the household activity DI in the survey
marked 50.9, the first time after the consumption tax hike that this figure was above 50.
In the financial environment, interest rates remained low due to the additional monetary easing by the Bank of Japan that started in
October 2014. The yen has been weakening rapidly while stock prices have moved up just as quickly. In the J-REIT market, there
have been substantial financing activities as capital flowed into this sector, mainly through investment trusts that invest in J-REITs.
Monetary easing and a large amount of equity raised by J-REITs also supported a high level of transaction activity in the real estatemarket.

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KENEDIX Retail REIT CORPORATION (3453)

iii) Management Performance(A) Acquisition of Assets
KRR acquired and started the operations of the following trust beneficiary interests in real estate (18 properties; total acquisition
price: ¥80,843 million) on February 10, 2015.
The below is property portfolio of KRR as of March 31, 2015.

Property
number

Property
Type(Note 1)

T-1

CSC

T-2
T-3
T-4

Urban
Station-Front SC
Urban
Station-Front SC
Urban
Station-Front SC

Location(City or Ward,
Prefecure)

Property nameAcquisitionPrice(million yen)
(Note 2)

Appraisal
Value(million Yen)
(Note 3)Acquisition Date

Fululu Garden Yachiyo

Yachiyo, Chiba

14,84815,000February 10, 2015

MONA Shin-Urayasu

Urayasu, Chiba

8,063

8,340

February 10, 2015

Passaggio Nishiarai

Adachi ward, Tokyo

5,850

6,020

February 10, 2015

Daikanyama Address Dixsept

Shibuya ward, Tokyo

5,390

5,400

February 10, 2015

T-5

NSC

Unicus Ina

Kitaadachi-gun,Saitama

4,379

4,410

February 10, 2015

T-6

NSC

Yorktown Kita-Kaname

Hiratsuka, Kanagawa

4,000

4,120

February 10, 2015

T-7

NSC

Unicus Yoshikawa

Yoshikawa, Saitama

3,600

3,630

February 10, 2015

T-8

SS

Sports Club Renaissance Fujimidai

Nerima ward, Tokyo

2,586

2,600

February 10, 2015

O-1

NSC

Blumer Maitamon

Kobe, Hyogo

8,389

8,520

February 10, 2015

O-2

SM

Life Takadono (Land)

Osaka, Osaka

2,685

2,700

February 10, 2015

O-3

NSC

Omihachiman, Shiga

2,140

2,390

February 10, 2015

N-1

SS

Nagoya, Aichi

2,311

2,380

February 10, 2015

N-2

NSC

Valor Ichinomiya-Nishi

Ichinomiya, Aichi

2,174

2,190

February 10, 2015

N-3

SS

K’s Denki(Land)

Nagoya, Aichi

889

903

February 10, 2015

F-1

SM

Sunny Noma

Fukuoka, Fukuoka

1,497

1,500

February 10, 2015

R-1

NSC

Roseo Mito

Mito, Ibaraki

9,675

9,780

February 10, 2015

R-2

SM

K’s Denki Aomori Honten

Aomori, Aomori

1,469

1,590

February 10, 2015

R-3

NSC

Super Sports Xebio Aomori-Chuo

Aomori, Aomori

898

901

February 10, 2015

80,84382,374

Piago Kahma Home Center
Omihachiman
Kahma Home Center Nakagawa
Tomita (Land)

Nakagawa

Tomita

Total

Note:
1. Properties are categorized into the following five types of retail properties for daily needs: NSC (Neighborhood Shopping Center), SM(Supermarket), CSC (Community Shopping Center), Urban Station-Front SC (Urban Station-Front Shopping Center) and SS (Specialty Store).
We categorize these properties generally into five separate groups asfollows.
Type of Neighborhood, community andother shopping centers for daily needs

Features

Trade area

NSC (Neighborhood Shopping Centers)

Shopping centers with a supermarket as an anchor or coretenant and several specialty store tenants

three to fivekilometer

SM (Supermarkets)

Stand-alone stores that primarily provide groceries,
with a retail trade area

three kilometer

CSC (Community Shopping Centers)

Larger shopping centers than NSC, which have a supermarket
as an anchor or core tenant in addition
to specialty store tenants

five to ten
kilometer

Urban Station-Front Shopping Centers

Shopping centers that are located in the immediate vicinity ofan urban public transportation station, which take advantage of
stable foot traffic

three to ten
kilometer－4－

KENEDIX Retail REIT CORPORATION (3453)

SS (Specialty Stores)

Single- or multiple-tenant shopping centers that specialize in asingle type of merchandise or service, such as drug stores,
convenience stores,health clubs or electronic appliance stores

one to ten
kilometer

2. “Acquisition price” represents the purchase price of each trust beneficiary interest specified in purchase agreement in relation to the acquisitionof each property (excluding acquisition costs, adjustment in property tax and city-planning tax, and consumption tax; and rounded down to thenearest one million yen)
3. “Appraisal value” is from the appraisal report prepared for the acquisition.

(B) Management and Operation of Assets
KFM provides property management services for all of the properties owned by KRR at the end of the interim period under review(March 31, 2015). By using the same company for both asset management and property management services, KRR aims to build
stronger relationships with tenants and increase returns from its portfolio. Furthermore, by implementing retail property managementthat better reflects the needs of our tenants, KRR strives to accumulate know-how and improve tenant satisfaction.
KRR invests primarily in neighborhood and community shopping centers that cater to the day-to-day needs of customers. The
portfolio is diversified in terms of properties, tenants and other characteristics with a goal to generate consistent long-term cash flows.
At the same time, a portion of the rent includes sales-linked rent to explore the upside potential for rental income. By using thesemeasures, we aim to pursue a portfolio that achieves both stability and growth.
As of the end of the interim period under review, portfolio as a whole performed well with an overall occupancy ratio of 99.4%.
Furthermore, the portfolio is diversified in terms of tenants as there are 279 end-tenants in our retail properties.
(C) Financing
When financing to acquire properties, KRR seeks to achieve the proper balance between financial stability and the efficiency of thecost of the funds with the objectives to achieve stable medium- to long-term returns and consistent growth of assets undermanagement.
(Equity Finance)
In the current fiscal period, KRR was listed on the Tokyo Stock Exchange on February 10, 2015. In regard to this initial public
offering, KRR sold 254,250 newly issued units, of which 168,825 units were offered in Japan and 85,425 units were offeredoverseas, and raised 56,430 million yen. In addition, 5,750 units were issued through third-party allotment on March 11, 2015,
raising 1,276 million yen that was used to prepay a portion of borrowing for acquisition of properties.
Due to these activities, unitholders’ capital increased to 57,707 million yen on March 31, 2015.
(Debt Finance)
During the interim period under review, KRR borrowed for the acquisition of properties and used the proceeds from the issuance of
newly issued units through third-party allotment for the early repayment of debt. Consequently, debt totaled 26,850 million yen at
the end of the interim period under review. When undertaking borrowings, we combine a number of loans, spreading out repayment
dates as shown below, considering the interest rate trends and other financial environment. We use swaps to fix the interest payments
to hedge against the risk of a rise in interest rates.

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KENEDIX Retail REIT CORPORATION (3453)

Series

1-A

1-B

1-C

LenderAmount(in thousandsof yen)Interest rate

Drawdown date

Repayment date
(Note 1)

Repayment
methodRemarks

2,000,000

JBA 1-month
Japanese Yen
TIBOR + 0.30%(Floating interest
rate)

February 10,
2015

February 10,
2016

Full onmaturity

Unsecured/
Unguaranteed

3,850,000

0.54500%(Note 2)February 10,
2015

February 10,
2018

Full onmaturity

Unsecured/
Unguaranteed

7,000,000

0.75125%(Note 2)February 10,
2015

February 10,
2020

Full onmaturity

Unsecured/
Unguaranteed

5,500,000

0.86475%(Note 2)February 10,
2015

February 10,
2021

Full onmaturity

Unsecured/
Unguaranteed

5,400,000

0.97750%(Note 2)February 10,
2015

February 10,
2022

Full onmaturity

Unsecured/
Unguaranteed

Sumitomo Mitsui Banking
Corporation
The Bank of Tokyo-Mitsubishi
UFJ, Ltd.
Mizuho Bank, Ltd.
Aozora Bank, Ltd.
Resona Bank, Ltd.
Sumitomo Mitsui Trust Bank,
LimitedSumitomo Mitsui Banking
Corporation
The Bank of Tokyo-Mitsubishi
UFJ, Ltd.
Mizuho Bank, Ltd.
Mizuho Trust and Banking Co.,
LimitedSumitomo Mitsui Banking
Corporation
The Bank of Tokyo-Mitsubishi
UFJ, Ltd.
Mitsubishi UFJ Trust andBanking Corporation
Sumitomo Mitsui Trust Bank,
Limited
Aozora Bank, Ltd.
Resona Bank, Ltd.
The Gunma Bank,Ltd.
The Musashino Bank,Ltd.

1-D

Mizuho Bank, Ltd.
Mizuho Trust and Banking
Co.,Limited
Sumitomo Mitsui Banking
Corporation
The Bank of Tokyo-Mitsubishi
UFJ ,Ltd.
Sumitomo Mitsui Trust Bank,
Limited
Aozora Bank, Ltd.
Resona Bank, Ltd.

1-E

Mizuho Bank, Ltd.
Sumitomo Mitsui Banking
Corporation
The Bank of Tokyo-Mitsubishi
UFJ ,Ltd.
Sumitomo Mitsui Trust Bank,
Limited
Aozora Bank, Ltd.
Mizuho Trust and Banking
Co.,Limited
Mizuho Bank, Ltd.
Resona Bank, Ltd.

1-F

Development Bank of Japan Inc.

1,500,000

0.92500%

February 10,
2015

February 10,
2021

Full onmaturity

Unsecured/
Unguaranteed

1-G

Development Bank of Japan Inc.

1,600,000

1.03250%

February 10,
2015

February 10,
2022

Full onmaturity

Unsecured/
Unguaranteed

JBA 1-month
February 10,
Japanese Yen
Full on
Unsecured/
February 10,
1-H
1,322,500 TIBOR + 0.50%
2016
2015
maturity
Unguaranteed(Floating interest(Note3)rate)(Note 1) The repayment date will be the following business day in case such date falls on a day that is not a business day or the preceding business day in case such
Sumitomo Mitsui Banking
Corporation

date falls in the next calendar month.
(Note 2) These borrowings are floating interest rates. However, we have entered into interest rate swap agreements to hedge the risks of interest rate volatility.
These rates are the interest rates including the effect of the swaps (i.e., fixed interest rates).
(Note 3) Early repayment was made on March 16 , 2015.

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KENEDIX Retail REIT CORPORATION (3453)

As a result, the average years to debt repayment dates is 5.1, the weighted average interest rate is 0.793%, the long-term debt ratio is92.6% and the LTV ratio (note), is 33.4%.
(Note) The LTV ratio, or loan-to-value ratio, is the ratio of the total amount of borrowings, corporate bonds and tenant leasehold and security
deposits (net of amounts reserved for return of tenant leasehold and security deposits), to the total assets minus amounts reserved for return oftenant leasehold and security deposits.

iv) Results of Operations
The asset management period for the interim period under review is effectively 50 days that started on February 10, 2015, whenassets were acquired, and ended on March 31, 2015. For this period, revenue was 1,003 million yen, operating income was 498
million yen, ordinary income was 335 million yen and net income was 334 million yen.
(Outlook)i) Outlook for Asset Management
The Japanese economy is expected to continue to recover at a moderate pace owing to increasing corporate earnings and otherpositive factors. However, we should pay attention to uncertainties about the overseas economy regarding the direction of U.S.
financial policies, the health of emerging economies and other events.
As for Japan’s retail sector environment, household sentiment is recovering with the improvement in employment condition andrising wages, as well as the stock market rally. As a result, the negative effects of the April 2014 consumption tax hike are expected
to weaken.
In the real estate trading market, we anticipate the high level of transaction volume to continue because of the strong appetite of
J-REIT and other investors to acquire properties. The Bank of Japan’s aggressive monetary easing measures will help provide
continuous supply of adequate funds in the real estate market. However, investors should also keep in mind the risk of rise in interest
rates in the future.
From a medium to long-term perspective, to generate a steady stream of rental revenue, consistently increase our assets and establish
a suitable financial position, KRR will continue to manage assets based on the following policies.
(A) Investment Strategy for New Properties and Disposition Policy
We receive a variety of support from many sources in order to achieve the steady growth of our assets and increase the value of ourassets. One source is the Kenedix Group, including Kenedix, Inc., the parent company of KFM (see note). We also receive support
from our Alliance Companies: Sumitomo Mitsui Finance and Leasing Co., Ltd., Nippon Commercial Development Co., Ltd., andP&D Consulting Co., Ltd. We are implementing a growth strategy that takes full advantage of the external growth opportunities
created by the large and diverse acquisition pipeline made possible by the support of these companies.
When acquiring properties, we make decisions based on all applicable factors with emphasis on four parameters: the retail property’s
attractiveness, its location, the property’s profitability and the tenant mix. By using this selection process results, we invest in retailproperties with a competitive edge, and good prospects for consistent rental revenue and growth in asset value. We also invest in landownership interests underlying retail properties. While many of the land-only properties are selected from the “JINUSHI BUSINESS”
portfolio held by Nippon Commercial Development, we make these investments after examining the terms of the land leasing
agreement, the characteristics of the tenant, the asset value of the land, and the proportion of land-only properties in our portfolio. We
may also consider making an equity investment in a tokumei kumiai (silent partnership) for warehousing properties, provided that weare given an opportunity to acquire them in the future.
Regarding disposition of a portfolio property, we make decisions based primarily on the significance of these properties in thecontext of the portfolio. This is assessed by comprehensive evaluation of the outlook for future profitability and asset value
determined based on its current profitability and market trends.
Note: The Kenedix Group consists of Kenedix, Inc. and its subsidiaries and affiliates.

(B) Management Strategy for Existing Properties
KRR is committed to building a portfolio that can pursue both stability and growth. We believe that implementing integrated asset
and property management services makes it possible to properly manage retail properties and pursue internal growth. Furthermore,this integrated management framework facilitates activities to enliven local communities where our properties are located, enabling
us to aim for medium to long-term growth in asset value.

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KENEDIX Retail REIT CORPORATION (3453)

To accomplish these goals, KFM oversees properties owned by KRR while placing priority on the following themes.
・“One-stop" asset management and property management services
・ Continuously implementing a retail property management cycle through our in-house property management services
・ Pursuit of internal growth through management of retail properties
・ Directing investments and management policies to enliven local communities in the medium to long-term“One-stop" asset management and property management services
KRR plans to use the integrated asset management and property management services of KFM for strengthening relationships withtenants and making the portfolio more profitable.
Continuously implementing a retail property management cycle through our in-house property management services
KFM provides property management services for all of KRR’s properties. We do this for the purposes of performing retail property
management that better reflects the needs of the tenants as well as accumulating know-how and improving tenant satisfaction.
Specifically, we use direct contact with tenant companies at our properties in order to strengthen tenant relationships and makeproperties more profitable. To this end, we perform periodic monitoring of market conditions so that we can identify the needs oftenants and the customers visiting their sites. This process makes it possible to find issues that stand in the way of achieving greater
satisfaction for tenants and their customers. Once we have discovered points that require attention, we take actions that take fulladvantage of the resources and knowledge regarding retail properties within the Kenedix Group. Solutions include measures such as
the effectively utilizing capital expenditures, optimizing tenant mix, realizing growth in asset value by pursuing property expansions,and cutting costs, to improve tenant satisfaction and acquire more know-how.
Pursuit of internal growth through management of retail properties
KRR seeks to use the proper management of retail properties to achieve the goals of consistent revenue, higher profitability andgrowth in asset value.
i. Effectively utilize capital expenditure
We will use proper and well-timed capital expenditures to increase the satisfaction of tenants and make our properties morecompetitive.
ii. Optimize tenant mix
We will constantly work on attracting new tenants that are highly appealing to shoppers and replace tenants with others, optimizing
tenant composition, in order to seek stable revenue and higher profitability by attracting more customers.
iii. Realize growth in asset value by pursuing property expansions
We will use the extensive knowledge involving retail properties of the Kenedix Group and our Alliance Companies to utilize theunderutilized space (note) at properties and expand properties. These measures will take into account the competitive position ofeach property, the effect on our financial position and other factors. By increasing space that can be leased, we would like to increase
revenue and asset value.
Note: The underutilized space is defined as the area that is calculated by multiplying the floor space ratio, or the ratio of total area of the building
to the site area, which is prescribed in Article 52 of the Building Standards Act and applied to each retail property in accordance with the
Building Standards Act, City Planning Act and other laws and regulations, by the land area that is allowed to be used as a retail property site,and subtracting from this figure the actual gross floor area of the building.

Directing investments and management policies to enliven local communities in the medium to long- term
At our retail properties, we seek tenants that provide services, hold community involved events and use other measures to help
enliven the local communities where our properties are located. We believe these activities will contribute to the medium tolong-term growth in the asset value of these properties.
(C) Financing
We will establish a suitable financial foundation by examining numerous financing methods and selecting the optimum ones. These
decisions will reflect interest rates and other elements of the financial environment. Our goal is to select financing methods that resultin the optimum balance between financial stability and the financing cost.

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KENEDIX Retail REIT CORPORATION (3453)(D) Disclosure of Information
Our policy concerning disclosure activities is to use extensive investor relations activities to distribute a broad range of information
to investors and other related parties as well as to announce information as soon and as accurately as we can. We use TDnet (Timely
Disclosure network) and press releases to meet the timely-disclosure requirements of the Tokyo Stock Exchange. In addition, we
proactively post information on our website (http://www.krr-reit.com/en/).
(E) Conflicts of Interest
In addition to managing the assets of KRR, KFM provides asset management services to other investment corporations and realestate funds. KFM uses a “preferential right for acquisition opportunities” system for the property acquisition process. KFM has apipeline committee, which includes a compliance officer, and operates in accordance with rules. This system is structured toprevent improper allocation of acquisition opportunities as well as conflicts of interest among the REIT and funds managed by
KFM. Through these measures, KFM is taking suitable actions regarding conflicts of interest.

(Reference Material)(A) Acquisition of Assets
KRR additionally acquired one asset (acquisition price of 11 billion yen) on April 16, 2015.
Property
number

Property
Type

Property name

O-4

NSC

Blumer HAT Kobe

Location(City or Ward,
Prefecure)

AcquisitionPrice(million yen)Appraisal
Value(million Yen)

Acquisition Date

11,000

11,200April 16, 2015

Kobe, Hyogo(B) Financing
KRR borrowed funds for the acquisition on April 16, 2015.
SeriesLenderAmount(in thousands ofyen)Interest rate

Drawdown date

Repayment date
（Note 1）

Repayment
methodRemarks

2-A

Sumitomo Mitsui
Banking Corporation

6,900,000

JBA 1-month Japanese
Yen TIBOR + 0.30%(Floating interest rate)

April 16, 2015

April 16, 2016

Full onmaturity

Unsecured/
Unguaranteed

2-B

Sumitomo Mitsui
Banking Corporation

4,600,000

1.36600%（Note 2）

April 16, 2015

April 16, 2025

Full onmaturity

Unsecured/
Unguaranteed(Note 1) The repayment date will be the following business day in case such date falls on a day that is not a business day or the preceding business day in case suchdate falls in the next calendar month.
(Note 2) These borrowings are floating interest rates. However, we have entered into interest rate swap agreements to hedge the risks of interest rate volatility.
These rates are the interest rates including the effect of the swaps (i.e., fixed interest rates).

－9－

KENEDIX Retail REIT CORPORATION (3453)

ii) Forecasts of Operating Results (Earnings)
For the fiscal period ending September 30, 2015 (From October 3, 2014 to September 30, 2015) and the fiscal period ending
March 31, 2016 ( From October 1, 2015 to March 31, 2016), the forecasts of financial results are estimated as set forth below.
Fiscal period ending September 30, 2015
Operating revenues¥4,857 million

Operating Income¥2,334 million

Ordinary income¥1,876 million

Net Income¥1,858 million

Distributions per unit

¥7,127¥0

Of the above, distributions in excess of earnings

Fiscal period ending March 31, 2016
Operating revenues¥3,962 million

Operating Income¥1,874 million

Ordinary income¥1,545 million

Net Income¥1,541 million

Distributions per unit

¥5,912¥0

Of the above, distributions in excess of earnings

Please refer to “Assumptions for the Forecasts of Financial Results for the Fiscal Periods Ending September 30, 2015 andMarch 31, 2016” set forth below for information on current assumptions for the forecasts of operating results.
(Note)

The above-mentioned forecasts are based on certain assumptions for calculation, and our judgment as of March 31 2015. Actual
operating revenues, operating income, ordinary income, net income, distributions per unit and distributions in excess of earnings
per unit may vary in response to changes in market conditions. These forecasts do not guarantee the distribution amount.

Assumptions for the Forecasts of Financial Results for the Fiscal Periods Ending September 30, 2015 and March 31, 2016
Item

Assumptions


Calculation periodProperty portfolioOperating revenues
The 1st fiscal period: October 3, 2014 to September 30, 2015 (363 days)
Since the management of assets started on February 10, 2015, the acquisition date, thesubstantial operating days are 233 days.
The 2nd fiscal period: October 1, 2015 to March 31, 2016 (183 days)
It is assumed that there will be no changes (any acquisition of new properties or any sale ofexisting properties, etc.) in property portfolio of 19 assets, which are 18 IPO assets andBlumer HAT Kobe, acquired on April 16, 2015, until the end of the period ending March 31,
2016.
The actual property portfolio may change due to the acquisition of new properties other thanBlumer HAT Kobe or the disposal of owned properties, etc.
Operating revenues of the IPO assets are based on leasing agreements as of March 31, 2015,
and other factors, including expectations based on market trends.
Operating revenues of Blumer HAT Kobe are based on information provided by the sellers,
leasing agreements as of March 31, 2015, and other factors, including expectations based onmarket trends.
Forecasts are based on the assumption that there will be no rent in arrears or non-payments by
the tenant.

－ 10 －

KENEDIX Retail REIT CORPORATION (3453)



Operating expenses
Non-operating expenses
Certain corporate andother taxes
Borrowings


Investment unitsDistributions per unit
(excluding excess ofearnings per unit)
Distributions in excessof earnings per unitProperty-related operating expenses other than depreciation are calculated based on historic
data, etc. and these costs reflect fluctuations in the costs, including leasing costs based onthe
leasing agreements.
Depreciation expenses of 552 million yen and 433 million yen is assumed for the periods
ending September 30, 2015 and March 31, 2016, respectively, using the straight-line
depreciation method.
When a property is sold, the purchaser of the property typically reimburses the seller, pursuant
to the purchase agreement, for the pro rata portion of the property-related taxes that relates tothe period from the acquisition date to the end of the calendar year in which the acquisition
occurs. As is customary for property transactions in Japan and in accordance with Japanese
GAAP, KRR intends to capitalize the portions of the real estate taxes on the IPO assets andBlumer HAT Kobe, and not expensed in the fiscal period ending September 30, 2015, when
the acquisition occurs. In addition, they are not expensed in the period ending March 31, 2016
because the amount to be expensed for such costs may not be decided by March 31, 2016.
Accordingly, such costs for the IPO assets and Blumer HAT Kobe are not expensed for theperiods ending September 30, 2015 and March 31, 2016. The total amount of property-related
taxes on the IPO assets and Blumer HAT Kobe to be capitalized is assumed to be 688 million
yen. The amounts that would have been due for property-related taxes in respect of capitalized
amounts had all such amounts been treated as expenses is 422 million yen and 345 million
yen for the periods ending September 30, 2015 and March 31, 2016, respectively.
With respect to building repair expenses, the amount assumed to be necessary for each
property is based on the repair plan of the asset manager (KFM) for each period. However,repair expenses maybe substantially different from the expected amount due to certain
unexpected factors.
The total amount of 317 million yen is assumed for offering-related costs and initial start-up
costs. The offering-related costs and the initial start-up costs will be amortized using thestraight-line method over 36 months and 60 months, respectively. The related costs are
assumed to be 66 million yen and 49 million yen for the periods ending September 30, 2015
and March 31, 2016, respectively.
For interest expenses and other debt-related costs, 389 million yen and 278 million yen are
expected for the fiscal periods ending September 30, 2015 and March 31, 2016, respectively.
The amount of 18 million yen and 3 million yen have been assumed for certain deferredincome and corporate taxes with respect to the commercial fixed term land lease agreement
for Sunny Noma and other taxes for the fiscal periods ending September 30, 2015 and March
31, 2016, respectively.
The aforementioned costs may be substantially different due to changes in the related leaseagreement.
As of today, KRR has outstanding balance of 38,350 million yen in borrowings.
The LTV ratio as at the end of the period ending September 30, 2015 and March 31, 2016 isboth expected to be approximately 40.8%.
The LTV ratio has been calculated according to the following formula:
LTV ratio =(Borrowings + Corporate bonds + Tenant leasehold and security deposits –Amounts reserved for return of tenant leasehold and security deposits) / (Total assets –Amounts reserved for return of tenant leasehold and security deposits)
The forecasts are based on our assumption of 260,750 units issued as of today. It is assumed
that there will be no changes in the number of investment units due to the new issuance ofunits until the end of the fiscal period ending March 31, 2016.
Distributions per unit (excluding excess of earnings per unit) are calculated in accordance withthe distribution policy outlined in KRR’s Articles of Incorporation.
Actual distributions per unit (excluding excess of earnings per unit) may fluctuate due tovarious factors including movements in investment assets, fluctuations in rental revenues
caused by tenant replacements, or unexpected repairs.

Distributions in excess of earnings per unit is not currently scheduled.

Forecasts are based on the assumption that there will be no amendments to the law, taxation
system, accounting standards, public listing regulations, requirements of the Investment Trusts
Association, Japan, etc. that may affect the aforementioned forecast figures.
Forecasts are based on the assumption that there will be no unexpected significant changes ingeneral economic trends and real estate market trends or other conditions.

Other


－ 11 －

KENEDIX Retail REIT CORPORATION (3453)

3. Interim Financial Statements(1) Interim Balance Sheet(in thousands of yen)
Reporting Period(As of March 31, 2015)
AssetsCurrent assets
Cash and deposits

2,717,508

Cash and deposits in trust

6,905,850

Operating accounts receivable

187,674

Prepaid expenses

25,476

Deferred tax assets

75

Consumption taxes receivable

1,935,654

Total current assets

11,772,240

Noncurrent assets
Property, plant and equipment
Buildings in trust

22,506,324

Accumulated depreciation(117,239)

Buildings in trust, net*1 22,389,084

Structures in trust

1,102,263

Accumulated depreciation(8,704)Structures in trust, net*1

1,093,558

Machinery and equipment in trust

21,302

Accumulated depreciation(151)

Machinery and equipment in trust, net

21,151Tools, furniture and fixtures in trust

6,847

Accumulated depreciation(101)

Tools, furniture and fixtures in trust, net

6,745Land in trust*1 58,536,091

Construction in progress in trust

12,025

Total property, plant and equipment, net

82,058,657

Intangible assets
Leasehold right in trust

175,056

Other

2,425

Total intangible assets

177,482

Investments and other assets
Lease and guarantee deposits

10,000

Lease and guarantee deposits in trust

5,270

Long-term prepaid expenses

269,293Long-term deposits

78,530Total investments and other assets

363,093

Total noncurrent assets

82,599,233

Deferred assets
Deferred organization expenses

45,576

Investment unit issuance costs

194,523

Total deferred assets

240,100

Total assets

94,611,573－ 12 －

KENEDIX Retail REIT CORPORATION (3453)(in thousands of yen)
Reporting Period(As of March 31, 2015)
Liabilities
Current liabilities
Operating accounts payable

284,025

Short-term loans payable

2,000,000

Accounts payable-other79,421

Accrued expenses

4,663

Income taxes payable

1,814

Advances received

423,296

Deposits received

635,108

Total current liabilities

3,428,329

Noncurrent liabilities
Long-term loans payable

24,850,000

Tenant leasehold and security deposits in trust*1

8,119,399

Asset retirement obligations

22, 758

Total noncurrent liabilities

32,992,158

Total liabilities

36,420,487

Net assets
Unitholders' equity
Unitholders' capital

57,857,000

Surplus
Unappropriated retained earnings

334,085

Total surplus

334,085

Total unitholders' equity

58,191,085

Total net assets*2 58,191,085

Total liabilities and net assets

94,611,573－ 13 －

KENEDIX Retail REIT CORPORATION (3453)(2) Interim Statement of Income and Retained Earnings(in thousands of yen)
Reporting Period(From October 3, 2014
to March 31, 2015)
Operating revenues
Rent revenue-real estate*1822,652

Other lease business revenue*1

180,487

Total operating revenues

1,003,139

Operating expenses
Expenses related to rent business*1,*2

422,483

Asset management fees

54,724

Asset custody fees

1,426

Administrative service fees

5,590

Directors' compensation

4,431

Other operating expenses*2

Total operating expenses

15,493504,150

Operating income

498,989

Non-operating income
Interest income

347

Total non-operating income

347

Non-operating expenses
Interest expenses

36,431

Borrowing related expenses

111,408

Amortization of deferred organization expenses

4,984

Amortization of investment unit issuance costs

10,618

Total non-operating expenses

163,441

Ordinary income

335,894

Income before income taxes

335,894

Income taxes
Current

1,884

Deferred(75)

Total income taxes

1,808

Net income

334,085

Unappropriated retained earnings

334,085－ 14 －

KENEDIX Retail REIT CORPORATION (3453)(3) Interim Statement of Changes in Net Assets
Reporting Period (From October 3, 2014 to March 31, 2015)(in thousands of yen)

Unitholders' equity
Surplus
Total net assets
Unappropriatedretainedearnings

Unitholders'
capitalBalance at the beginningof current period
Changes of items during
the period
Issuance of new
investment units

－

Total
surplus－57,857,000

Net income
Total changes of items
during the period
Balance at the end ofcurrent period

－

Total
unitholders'equity*1－－

57,857,000

57,857,000

334,085

334,085

334,085

334,085

57,857,000

334,085

334,085

58,191,085

58,191,085

57,857,000

334,085

334,085

58,191,085

58,191,085－ 15 －

KENEDIX Retail REIT CORPORATION (3453)(4) Interim Statement of Cash Flows(in thousands of yen)
Reporting Period(From October 3, 2014
to March 31, 2015)
Net cash provided by (used in) operating activities
Income before income taxes

335,894

Depreciation and amortization

127,655

Amortization of deferred organization expenses

4,984

Amortization of investment unit issuance costs

10,618Interest income(347)

Interest expenses

36,431

Decrease (increase) in operating accounts receivable(187,674)

Decrease (increase) in consumption taxes refund receivable(1,935,654)

Decrease (increase) in prepaid expenses(25,476)

Increase (decrease) in operating accounts payable

281,766

Increase (decrease) in accounts payable-other

69,896

Increase (decrease) in advances received

423,296

Increase (decrease) in deposits received

635,108

Decrease (increase) in long-term prepaid expenses(269,293)

Decrease (increase) in long-term deposits(78,530)

Payment of organization expenses(50,560)

Subtotal(621,885)Interest income received

347

Interest expenses paid

(31,767)

Income taxes paid

(70)

Net cash provided by (used in) operating activities(653,376)

Net cash provided by (used in) investing activities
Purchase of property, plant and equipment in trust(82,159,885)

Purchase of intangible assets(2,509)Purchase of intangible assets in trust(176,383)

Payments for lease and guarantee deposits(10,000)

Payments for lease and guarantee deposits in trust(5,270)

Repayments of tenant leasehold and security deposits in trust(122,389)

Proceeds from tenant leasehold and security deposits in trust

8,241,789

Payments of restricted bank deposits in trust(3,917,992)

Proceeds from restricted bank deposits in trust

71,892

Net cash provided by (used in) investing activities(78,080,747)

Net cash provided by (used in) financing activities
Increase in short-term loans payable

3,322,500

Decrease in short-term loans payable(1,322,500)

Proceeds from long-term loans payable

24,850,000

Proceeds from issuance of investment units

57,661,383

Net cash provided by (used in) financing activities

84,511,383

Net increase (decrease) in cash and cash equivalents

5,777,258

Cash and cash equivalents at the beginning of period-

Cash and cash equivalents at the end of period*1－ 16 －

5,777,258

KENEDIX Retail REIT CORPORATION (3453)(5) Notes on Assumption of Going Concern
Not applicable(6) Summary of Significant Accounting Policies
1.Method of depreciation of
noncurrent assets(1) Property, plant and equipment (including trust assets)
The straight-line method is applied.
Useful lives of the assets ranging are as follows:
Buildings: 2 to 64 year
Structures: 8 to 59 years
Machinery and equipment: 15 to 25 years
Tools, furniture and fixtures: 5 to 10 years(2) Intangible assets (including trust assets)
The straight-line method is applied.
(3) Long-term prepaid expenses
The straight-line method is applied.

2. Accounting for deferred assets(1) Deferred organization expenses
Deferred organization expenses are amortized over a period of 5 years under the straight-line method.
(2) Unit issuance costs
Unit issuance costs are amortized over a period of 3 years under the straight-line method.

3. Accounting for revenues andexpenses

Accounting for property-related taxes
Property-related taxes including property taxes, city planning taxes and depreciable property taxes are imposed on
properties on a calendar year basis. These taxes are generally charged to operating expenses for the period, for the portionof such taxes corresponding to said period. Under Japanese tax regulations, the seller of the property is liable for thesetaxes on the property from the date of disposal to the end of the calendar year in which the property is disposed. The
seller, however, is reimbursed by the purchaser for these accrued property-related tax liabilities.
When KRR purchases properties, it typically allocates the portion of the property-related taxes related to the period
following the purchase date of each property through the end of the calendar year. The amounts of those allocatedportions of the property-related taxes are capitalized as part of the acquisition costs of the related properties. Capitalized
property-related taxes amounted to ¥522,992 thousand as of March 31, 2015.

4. Method of hedge accounting(1) Hedge accounting method
Deferral hedge accounting is applied. However, the special treatment is applied for the interest-rate swap agreementsthat meet the criteria for special treatment.
(2) Hedging instruments and risks hedged
Hedge instruments
Interest-rate swap transactions
Hedged items
Interest payments on debts(3) Hedging policy
KRR enters into derivative transactions based on its risk management policies with the objective of hedging risks
provided in its Articles of Incorporation.
(4) Method of assessing the effectiveness of hedging
The assessment of hedge effectiveness is omitted since the interest rate swaps satisfy the requirements for special
treatment.
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments which arehighly liquid, readily convertible to cash and with insignificant risk of market value fluctuation, with maturities of threemonths or less from the date of purchase.

5. Scope of cash and cash
equivalents on interim
statement of cash flows
6. Other significant accounting
policies for the preparation ofinterim financial statements(1) Accounting method for trust beneficiary interests in real estate and other assets
The assets and liabilities as well as revenues and expenses of financial assets held in the form of trust beneficiaryinterests in real estate and other assets are recorded in full in KRR’s interim balance sheet and interim statement ofincome.
Of the assets in trust accounted for under the respective account items, the following significant items are separately
indicated on the interim balance sheet.
1. Cash and deposits in trust
2. Buildings in trust, structures in trust, machinery and equipment in trust, tools, furniture and fixtures in trust, landin trust, construction in progress in trust
3. Leasehold right in trust
4. Lease and guarantee deposits in trust
5. Tenant leasehold and security deposits in trust(2) Accounting method for consumption taxes
Consumption taxes are separately recorded. Non-deductible consumption taxes applicable to the acquisition ofassets are included in the cost of acquisition for each asset.

－ 17 －

KENEDIX Retail REIT CORPORATION (3453)(7) Notes to Interim Financial Statements(Notes to Interim Balance Sheet)* 1. Assets pledged as collateral and relevant secured liabilities:(in thousands of yen)
Assets pledged as collateral

Reporting Period
As of March 31, 2015

Buildings in trust

2,508,877

Structures in trust

50,209Land in trust

6,593,388
Total

9,152,475

Secured liabilities
Tenant leasehold and security deposits in trust

3,846,100* 2. Minimum net assets prescribed in Article 67-4 of the Investment Trust Act(in thousands of yen)
Reporting Period
As of March 31, 2015
50,000(Notes to Interim Statement of Income and Retained Earnings)* 1. Breakdown of real estate rental revenues and expenses(in thousands of yen)
Reporting Period
From October 3, 2014
to March 31, 2015
Rental and other operating revenues:
Rental revenues

726,354

Rental revenues from limited proprietary rights of land

45,575

Common area charges

50,722

Subtotal

822,652

Others:Parking space rental revenues

24,540Utility charge reimbursement

78,134

Miscellaneous

77,812

Subtotal

180,487

Total rental and other operating revenues

1,003,139

Property management fees and facility management fees

119,953

Utilities

97,199

Taxes

1,265

Repairs and maintenance

5,345

Insurance

1,915

Trust fees

2,547

Depreciation

127,571

Others

66,684

Total property-related expenses

422,483

Net operating income from real estate rental business

580,656－ 18 －

KENEDIX Retail REIT CORPORATION (3453)* 2. Depreciation amount(in thousands of yen)
Reporting Period
From October 3, 2014
to March 31, 2015

Property, plant and equipment

126,245

Intangible assets

1,409(Notes to Interim Statement of Changes in Net Assets)* 1. Total number of authorized investment units and total number of investment units issued and outstanding are as follows:
Reporting Period
From October 3, 2014
to March 31, 2015
Total number of authorized investment units

5,000,000

Total number of investment units issued and outstanding

260,750(Notes to Interim Statement of Cash Flows)* 1. Reconciliation of interim balance sheet items to cash and cash equivalents at end of reporting period(in thousands of yen)
Reporting Period
As of March 31, 2015
Cash and deposits

2,717,508

Cash and deposits in trust

6,905,850

Restricted bank deposits in trust (Note)(3,846,100)

Cash and cash equivalents

5,777,258

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

(Notes to Lease Transactions)Operating lease transactions (Lessee)
Future minimum lease payments(in thousands of yen)
Reporting Period
As of March 31, 2015
Due in 1 year

10,500Due after 1 year

220,048

Total

230,548

Operating lease transactions (Lessor)
Future minimum lease income(in thousands of yen)
Reporting Period
As of March 31, 2015
Due in 1 year

1,861,974

Due after 1 year

17,768,871

Total

19,630,845－ 19 －

KENEDIX Retail REIT CORPORATION (3453)(Notes to Financial Instruments)
1. Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on interim balance sheet and estimated fair value are shown in the following table. Items whose fair values are recognized to
be extremely difficult to grasp are not included in the following table (note 2).
As of March 31, 2015
(in thousands of yen)
Carrying amount
Estimated fair value(1) Cash and deposits
2,717,508
2,717,508(2) Cash and deposits in trust
6,905,850
6,905,850
Subtotal
9,623,358
9,623,358(1) Short-term loans payable
2,000,000
2,000,000(2) Long-term loans payable
24,850,000
24,468,590(3) Tenant leasehold and security deposits in trust
3,579,119
3,584,730
Subtotal
30,429,119
30,053,321
Derivative transactions－－
Note1: Methods to determine the estimated fair value of financial instruments and matters related to derivative transactions

Difference(381,409)
5,610(375,798)－

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 amount approximates fair value.

Liabilities(1) Short-term loans payable
Since these items are settled in a short period of time with floating interest rates, their carrying amount approximates fair value.

(2) Long-term loans payable
Among these items, the fair value of loans payable with fixed interest rates is calculated based on the present value, which is the total amount of principal and interest
discounted by the estimated interest rate to be applied in the event that KRR conducts new borrowings of the same type. As for the fair value of loans payable withfloating interest rates, it is based on the carrying amount since market interest rates are reflected in the short term and the fair value is believed to approximate thecarrying amount as the credit standing of KRR has not changed significantly since the loans were made. (However, the fair value of long-term loans payable subject tothe special treatment for interest-rate swaps is based on the present value of the total of principal and interest, accounted for together with the applicable interest-rate
swaps, discounted by the estimated interest rate to be applied in the event that KRR conducts new borrowings of the same type.)(3) Tenant leasehold and security deposits in trust
The fair value is determined based on the present value of contractual cash flows discounted at current interest rates which would be applicable to contracts with similarterms and credit risk.

Derivative transactions
Please refer to “Notes to Derivative Transactions”.
Note2: Financial instruments whose fair values are recognized to be extremely difficult to grasp(in thousands of yen)Classification

Reporting Period
As of March 31, 2015

Tenant leasehold and security deposits *4,540,279*Tenant leasehold and security deposits is not publicly traded, and it is difficult to determine their fair value based on estimated future cash flows because therepayment dates of those deposits are not certain. Therefore, these financial instruments are not included in the above quantitative information.

－ 20 －

KENEDIX Retail REIT CORPORATION (3453)(Notes to Derivative Transactions)(1) Transactions not subject to hedge accounting
As of March 31, 2015 : Not applicable(2) Transactions subject to hedge accounting
As of March 31, 2015
Hedge
accounting
methodType of derivativetransactions

Hedged items

Specialtreatment ofinterest-rate
swapsInterest rate swap
transaction:
Receive/floating andpay/fixed

Long-term loans
payableContract amount(in thousands of yen)
Maturing after 1
year
21,750,000

21,750,000

Fair value(in thousands of yen)Calculation method for
applicable fair value*-*Interest rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fair value is included in thefair value of the hedged long-term loans payable. （Please refer to “Notes to Financial Instruments (Note1) Methods to determine the estimated fair value of financial
instruments and matters related to derivative transactions Liabilities (2) Long-term loans payable”.）(Notes to Asset Retirement Obligations)
Asset retirement obligations reported on interim balance sheet
Changes in the amount of asset retirement obligations consisted of the following(in thousands of yen)
Reporting Period
From October 3, 2014
to March 31, 2015
Balance at the beginning of the period－

Increase due to acquisition of properties

22,711

Adjustment for passage of time

47

Balance at the end of the period

22,758(Notes to Investment and Rental Properties)
KRR owns retail properties for rental purposes mainly in the four major metropolitan areas and other regional areas.
The book value and fair value concerning the above real estate for rental purposes are as follows.
(in thousands of yen)
Reporting Period
From October 3, 2014
to March 31, 2015
Book value
Balance at the beginning of period－
Changes during the period
82,233,714
Balance at the end of reporting period
82,233,714
Fair value at the end of reporting period
82,374,000
Note 1: Book value is acquisition cost less accumulated depreciation.
Note 2: Among changes in the amount of real estate for rental purposes that occurred during the reporting period, principal increases were the acquisition of real estate
trust beneficiary interests in 18 property totaling ¥82,319,654 thousand and the principal decrease was depreciation amounting to ¥127,524 thousand.
Note 3: The fair value at end of interim period is the appraisal value determined by outside appraisers. However, when a slight fluctuation occurs in appraisal values orin the indicators that are believed to appropriately reflect market prices since the reporting dates of the most recent appraisals, the most recent fair values based onstandard estimation methods for determining fair value are recorded as the fair values as of the end of reporting period.
The profit or loss for the interim period under review concerning investment and rental properties is indicated under “Notes to Interim Statement of Income
and Retained Earnings.”－ 21 －

KENEDIX Retail REIT CORPORATION (3453)(Notes to Per Unit Information)
Reporting Period
From October 3, 2014
to March 31, 2015
Net asset value per unit

¥223,168

Net income per unit

¥4,547(¥1,297)

Note1: Net income per unit is calculated by dividing net income by the day-weighted average number of investment units outstanding during the period (73,458 units).
The figure in brackets shows net income per unit based on the day-weighted average number of investment units outstanding during the period (257,415 units)
assuming the beginning date of the fiscal period is February 10, 2015, the day that the asset management actually started.
Note2: The basis for calculating net income per unit is as follows:
Reporting Period
From October 3, 2014
to March 31, 2015
Net income (in thousands of yen)

334,085

Net income not available to ordinary unitholders (in thousands of yen)-

Net income available to ordinary unitholders (in thousands of yen)

334,085

Weighted average number of units during the period (units)73,458(Notes to Significant Subsequent Events)
Not applicable(Omission of Disclosure)Notes to Securities, Equity-Method Income and Retained Earnings, and Segment Information are omitted as immaterial to disclose.

－ 22 －

KENEDIX Retail REIT CORPORATION (3453)(8) Movements in Investment Units Issued and Outstanding
Movements in the number of investment units issued and outstanding and unitholders’ capital since first fiscal periods are
summarized in the following table.
Investment Units Issued andOutstanding (Units)
Increase
Balance(Decrease)

Unitholders’ Capital(Millions of Yen)
Increase
Balance(Decrease)

Date

Particulars

Remarks

October 3, 2014

Private placement

750

750

150

150

(Note 1)February 9, 2015

Public offering

254,250

255,000

56,43056,580(Note 2)

March 11, 2015

Third-party allotment

5,750

260,750

1,276

57,857(Note 3)Note 1: KRR was established with an offering price of ¥200,000.
Note 2: KRR undertook an additional issue of new investment units (public offering) with the aim of procuring funds for the acquisition of investment properties.
The underwritten price was ¥221,950 per unit with an offering price of ¥230,000 per unit.
Note 3: KRR undertook an additional issue of new investment units by way of third-party allotment with the aim of procuring funds for the the repayment of certain
short-term borrowings.The underwritten price was ¥221,950 per unit.

－ 23 －

KENEDIX Retail REIT CORPORATION (3453)

4. Management of KRR and KFM(1) Resignation/Appointment of the Directors of KRR
As of May 25, 2015
No. of
Title

Name

Investment

Background

Units
Owned
Executive

AkihiroAsano

Director

April 1994
January 2001
January 2004
January 2009
January 2013
March 2014
September 2014

Supervisory
Director

Yoshiyuki
Wada

October 2014
April 1974
June 1977
September 1978
June 1988
May 2003
August 2007

Supervisory
Director

Mai
Ishiwatari

September 2014
October 2014
July 2002
July 2004
June 2006
January 2008
January 2012
July 2014
September 2014
October 2014
December 2014

The Development and Construction Division of Mitsubishi
Corporation
Mitsubishi Corp.-UBS Realty Inc.
Real Estate Investment Advisory Department of Kenedix, Inc.
Outside director of Mitsui & Co., Logistics Parners Ltd.
General Manager of Strategic Investment Team 1 of Kenedix, Inc.
Executive Officer, General Manager of the Strategic Investment
Department of Kenedix, Inc.
Director and COO, General Manager of the Retail REIT Divisionof KFM (current position)
Executive Director of KRR (current position)
PricewaterhouseCoopers (formerly Coopers & Lybrand)
MISUZU Audit Corporation (formerly Chuo Audit Corporation)
Became a Japanese certified public accountant
Representative partner of Chuo Audit Corporation
Assistant General Manager of the Business Development Divisionof Chuo Audit Corporation
Grant Thornton Taiyo ASG LLC (formerly Grant Thorton Taiyo
ASG) (current position)
Auditor of Zero Co., Ltd. (current position)
Supervisory Director of KRR (current position)
Became a member of the Tokyo Bar Association
Yamada Ozaki Law Office (formerly The Law Office of Hideo
Yamada)Partner of Authense Law Offices
Partner of Polaris Law Offices
Rajah & Tann LLPGeneral Manager of Human Resources and Legal of Cocone
Corporation
Executive Director of Human Resources and Legal of Cocone
Corporation (current position)
Supervisory Director of KRR (current position)
Partner of Shiroyama-Tower Law Office－ 24 －---

KENEDIX Retail REIT CORPORATION (3453)(2) Directors and Corporate Auditors of KFM

As of May 25, 2015
Title
President andRepresentative
Director

Name
Ryosuke
Homma

Brief Personal History
April 1968
April 1973
February 1979
June 1986
June 1992
September 1994
October 1996
November 2003
March 2007
March 2010
March 2013
October 2013

Director and
COO, General
Manager ofResidential
REIT Division

Akira
TanakaApril 1987
September 2000
January 2004
September 2006
April 2008
December 2009
February 2010
March 2010
August 2011
November 2011
October 2013
February 2014

Director and
COO, General

Naokatsu
UchidaManager of
Office REIT
Division

Director and
COO, General
Manager of
Retail REIT
Division
Director(part-time)

April 1990

Mitsubishi Corporation
Mitsubishi Company (Thailand) Ltd.
Baghdad Office, Mitsubishi Corporation
Overseas Construction Department
Los Angeles Office, Mitsubishi International Corporation
President & CEO, MC Realty, Inc.
CEO and President, Kenedix, Inc. (formerly
Kennedy-Wilson Japan Co., Ltd.)CEO and President, Kenedix Advisors Co., Ltd.
(formerly KW Pension Fund Advisors Co., Ltd.)
Chairman and Representative Director, Kenedix, Inc.
Chairman and Director, Kenedix, Inc.
Senior Adviser, Kenedix, Inc (current position)
President and Representative Director, Kenedix Real
Estate Fund Management, Inc. (current position)
Mizuho Trust & Banking Co., Ltd. (formerly Yasuda
Trust & Banking Co., Ltd.)
Kenedix, Inc. (formerly Kennedy-Wilson Japan Co., Ltd.)
Director and COO, Kenedix Advisors Co., Ltd.
(formerly KW Pension Fund Advisors Co., Ltd.)
Executive Officer and General Manager of Strategic
Investment Department, Kenedix, Inc.
Senior Executive Officer and General Manager ofStrategic Investment Department, Kenedix, Inc.
Director, Kenedix Asset Management, Inc.
President and Representative Director, Kenedix Advisors, Inc.
Director, Kenedix, Inc.
Representative Director, Kenedix Residential Partners, Inc.
Executive Director, Kenedix Residential Investment
Corporation
Director and COO, KDR General Manager of Residential REIT
Division, Kenedix Real Estate Fund Management, Inc.
Director and COO, General Manager of Residential REIT
Division, Kenedix Real Estate Fund Management, Inc. (current
position)
Kyoto Branch, Mitsubishi UFJ Trust and Banking
Corporation (formerly The Mitsubishi Trust Banking

No. ofShares
Owned
-

-

-

Corporation)
Business Development Division
Real Estate Division
Real Estate Project Origination Division
MAC Advisers Inc.
CEO, MAC Investment Management Inc.
CEO, Joint Asset Management Co., Ltd.
Financial Planning Division, Kenedix Office Partners, Inc.
(formerly Kenedix REIT Management, Inc.)
January 2011
General Manager of Financial Planning Division
February 2012CEO and President
March 2012
Executive Director, Kenedix Realty Investment Corporation
October 2013
Director and COO, KRI General Manager of Fund Division,
Kenedix Real Estate Fund Management, Inc.
February 2014
Director and COO, General Manager of the Office REIT Division,
Kenedix Real Estate Fund Management, Inc. (current position)
See “Resignation/Appointment of the Investment Corporation Directors of KRR” above-

April 1988-

April 1995
April 1998
April 2005
October 2007
November 2007
June 2009
January 2010

AkihiroAsano

MasahikoTajimaJuly 1994
October 1996
June 1998
July 2000

Sumitomo Mitsui Trust Bank, Ltd. (formerly The Mitsui Trust andBanking Co., Ltd.)Business Affairs Department
Credit Planning Department Securities Department
Structured Finance Department, Sumitomo Life Insurance
Company
Kenedix, Inc.

－ 25 －

KENEDIX Retail REIT CORPORATION (3453)

May 2005
June 2007
February 2012
October 2013
March 2014
May 2014
March 2015
Corporate
Auditor(part-time)

Haruo
Funabashi

July 1969
June 1988
May 1989
March 1995
July 1997
June 1998
June 2000
July 2001
February 2003
May 2004
October 2004
October 2004

March 2005
June 2009

October 2013
Corporate
Auditor(part-time)

Tetsuo Ueda

April 1979
February 2004
June 2006
April 2008

October 2008
March 2010

October 2013
December 2013
March 2014
March 2014
May 2014
Corporate
Auditor(part-time)

Shintaro
Kanno

October 1994
March 2001
June 2001
March 2003
April 2004
October 2013

General Manager of Financial Planning Division, Kenedix OfficePartners, Inc. (formerly Kenedix REIT Management, Inc.)
Director and General Manager of Financial Planning Division
Executive Officer and General Manager of Corporate Planning
Department, Kenedix, Inc.
Director (part-time), Kenedix Real Estate Fund Management, Inc.
(current position)
Director, Space Design Inc. (current position)
Director, Head of Corporate Planning Department, Kenedix, Inc.
Director, Japan Senior Living Partners Co., Ltd. (current position)
Director & CFO, Head of Corporate Planning Department,
Kenedix, Inc. (current position)
Ministry of Finance
Deputy Financial Commissioner, Ministry of FinanceCounselor, Japanese Embassy in FranceCommissioner, Tokyo Customs
Deputy Commissioner, National Tax Administration
Secretary General, Securities and Exchange
Surveillance Commission
Deputy Vice-Minister, National Land Agency
Vice-Minister for, Ministry of Land, Infrastructure and Transport
Chief Executive Officer, Sirius Institute Inc. (current position)
Visiting Professor, Graduate School of International
Corporate Strategy, Hitotsubashi University
Corporate Auditor, Kenedix Office Partners, Inc.
(formerly KW REIT Management, Inc.) (current position)
Corporate Auditor, Kenedix Advisors Co., Ltd.
(formerly KW Pension Fund Advisors Co., Ltd.)(current position)
Corporate Auditor, Kenedix, Inc. (formerly
Kennedy-Wilson Japan Co., Ltd.) (current position)
Director, The Dai-ichi Life Insurance Company,
Limited (formerly The Dai-ichi Mutual Life
Insurance Company) (current position)
Corporate Auditor (part-time), Kenedix Real Estate
Fund Management, Inc. (current position)
Resona Bank, Ld. (formerly The Daiwa Bank, Ltd.)
General Manager, Hiroshima Branch
General Manager, Ueno Branch
General Manager, Business Management Department, Kenedix
Advisors, Inc.
(present Kenedix Real Estate Fund Management, Inc.)
General Manager of General Administration Department andCompliance Officer
General Manager, General Administration and Human Resources
Division, Kenedix, Inc. and General Manager, General
Administration Department, Kenedix Advisors, Inc.
General Manager, General Administration and Human Resources
Division, Kenedix, Inc.
General Manager assigned to General Administration and Human
Resources Division, Kenedix, Inc.
Corporate Auditor, Kenedix, Inc. (current position)
Corporate Auditor, Kenedix Real Estate Fund Management, Inc.
(current position)
Corporate Auditor, Japan Senior Living Partners Co., Ltd. (current
position)
Tohmatsu & Co.
Akasaka Houwa Accounting Firm
Corporate Auditor, Kenedix, Inc. (formerly Kennedy-Wilson Japan
Co., Ltd.) (current position)
Shintaro Kanno Accounting Firm (current position)
Corporate Auditor, Kenedix Advisors Co., Ltd. (formerly KW
Pension Fund Advisors Co., Ltd.) (current position)
Corporate Auditor (part-time), Kenedix Real Estate FundManagement, Inc. (planned)－ 26 －---

KENEDIX Retail REIT CORPORATION (3453)

Key full-time employee
No. of Shares
Owned

Title

Name

Brief Personal History

GeneralManager ofthe Retail
REIT
Division
GeneralManager ofComplianceDepartment
andCompliance
Officer

AkihiroAsano

See “Resignation/Appointment of the Investment Corporation Directors of KRR” above-

Shoji Higashi

April 1984

Mori Building Co., Ltd.

-

April 1988

Legal Division

August 1999

MORI TRUST CO., LTD.
Senior Vice Manager of General Affairs Department,
Legal Section

July 2000

Manager of General Affairs Department, Legal Section

December 2000

Manager of President's OfficeFebruary 2001

General Electric International, Inc.
External assignment to GE Real Estate Corporation
Senior Operation Manager

August 2002

Transferred to GE Real Estate Corporation
Senior Operation Manager

September 2006

Managing Director
Head of Legal and Management Division

January 2009

GE Capital Japan
Managing Executive Officer of Real Estate Business
Leader of Operation Risk Management

October 2014

Kenedix Real Estate Fund Management, Inc.
General Manager of Compliance Department and－ 27 －

KENEDIX Retail REIT CORPORATION (3453)

5. Reference Information(1) Component of Assets

Areas(Note 1)

Type ofSpecified Asset

The interim period
As of March 31, 2015
Total Amount Held
Ratio
(Thousands(％)
of Yen)(Note 3)(Note 2)

Tokyo metropolitan area

49,523,551

52.3

Greater Osaka area

13,453,889

14.2

Greater Nagoya area

5,473,242

5.8

Fukuoka area

1,541,860

1.6

Tokureishi and other areas

12,241,170

12.9

Total of Trust Beneficiary Interests in Real Estate

82,233,714

86.9Bank Deposits and Other Assets

12,377,859

13.1

Total Assets

94,611,573

100.0

Trust BeneficiaryInterest in Real Estate

The interim period
As of March 31, 2015
Amount(Thousands of Yen)

Ratio
(％)
(Note 3)

Total Liabilities (Note 4)

36,420,487

38.5

Total Net Assets (Note 4)

58,191,085

61.5

94,611,573

100.0

Total Assets
Note1:“Areas” are categorized to the Tokyo metropolitan area, the Greater Osaka area, the Greater Nagoya area, the Fukuoka area and Tokureishi and otherareas. References to “Tokyo metropolitan area” are to the area that consists of Tokyo, Kanagawa, Saitama and Chiba prefectures. References to the“Greater Osaka area” are to the area that consists of Osaka, Kyoto, Hyogo, Nara and Shiga prefectures. References to the “Greater Nagoya area” areto the area that consists of Aichi, Gifu and Mie prefectures. References to the “Fukuoka area” are to the area that consists of Fukuoka prefecture.
“Tokureishi and other areas” refers to cities designated by government ordinance, which have a population of 200,000 persons or more, and to otherarea with a population of fewer than 200,000 persons, which we believe will have suitable customer traffic from surrounding area.
Note2: “Total Amount Held” is the amount allocated in the interim balance sheets at the end of the period (figures are on a net book value basis after deducting
depreciation),and is rounded down to the nearest ¥1 thousand.
Note3: “Ratio” is the ratio of the amount allocated in the balance sheets to the total assets rounded to the first decimal place.
Note4: “Total Liabilities” and “Total Net Assets” are those on the interim balance sheets.

－ 28 －

KENEDIX Retail REIT CORPORATION (3453)(2) Overview of the Portfolioi) Overview of Assets Held
The following summarizes the real estate or the real estate properties in trust owned by KRR as of March 31, 2015.
Carryin
Locationamount at theProperty
Acquisition Shareend ofProperty(City or Ward,
Ownership(%)
Type
Property name
price
Form
numberPrefecure)interim(Note 1)
(Million) (Note 3)(Note 2)
period(Million)
Trustbeneficiary
15,105
14,84818.4
Fululu Garden Yachiyo
Yachiyo, Chiba
T-1
CSC
interest inreal estate
Trust
Urban
beneficiary
8,191
8,063
10.0
Urayasu, Chiba
Station-Front MONA Shin-Urayasu
T-2
interest inSCreal estate
Trust
Urban
beneficiary
5,967
5,850
7.2
Adachi ward, Tokyo
T-3
Station-Front Passaggio Nishiarai
interest inSCreal estate
Trust
Urban
beneficiary
Daikanyama Address
5,467
5,390
6.7
Shibuya ward, Tokyo
T-4
Station-Frontinterest in
DixseptSC
real estate
Trustbeneficiary
Kitaadachi-gun,
4,439
4,379
5.4
NSC
Unicus Ina
T-5
interest in
Saitamareal estate
Trustbeneficiary
4,056
4,000
4.9
NSC
Yorktown Kita-Kaname
Hiratsuka, Kanagawa
T-6
interest inreal estate
Trustbeneficiary
Yoshikawa,
3,673
3,600
4.5
NSC
Unicus Yoshikawa
T-7
interest in
Saitamareal estate
TrustbeneficiarySports Club Renaissance
2,621
2,586
3.2
SS
Nerima ward, Tokyo
T-8
interest in
Fujimidai
real estate
Trustbeneficiary
8,537
8,389
10.4
NSC
Blumer Maitamon
Kobe, Hyogo
O-1
interest inreal estate
Trustbeneficiary
2,727
2,685
3.3
SM
Life Takadono (Land)
Osaka, Osaka
O-2
interest inreal estate
Trustbeneficiary
Piago Kahma Home Center
2,188
2,140
2.6
NSC
Omihachiman, Shiga
O-3
interest in
Omihachimanreal estate
Trustbeneficiary
Kahma Home Center
2,351
2,311
2.9
SS
Nagoya, Aichi
N-1
interest in
Nakagawa Tomita (Land)
real estate
Trustbeneficiary
2,213
2,174
2.7
NSC
Valor Ichinomiya-Nishi
Ichinomiya, Aichi
N-2
interest inreal estate
Trustbeneficiary
K’s Denki Nakagawa
907
889
1.1
SS
Nagoya, Aichi
N-3
interest in realTomita (Land)estateTrustbeneficiary
1,541
1,497
1.9
SM
Sunny Noma
Fukuoka, Fukuoka
F-1
interest inreal estate－ 29 －

KENEDIX Retail REIT CORPORATION (3453)

R-1

NSC

Roseo Mito

Mito, Ibaraki

R-2

SM

K’s Denki Aomori Honten

Aomori, Aomori

R-3

NSC

Super Sports Xebio
Aomori-Chuo

Aomori, Aomori

Total
Note1:

Note2:
Note3:

Trust
beneficiaryinterest inreal estate
Trustbeneficiaryinterest in realestateTrustbeneficiaryinterest inreal estate

9,817

9,675

12.0

1,505

1,469

1.8

918

898

1.1

82,23380,843100.0

Properties are categorized into the following five types of retail properties for daily needs: NSC (Neighborhood Shopping
Center), SM (Supermarket),CSC (Community Shopping Center), Urban Station-Front SC (Urban Station-Front Shopping
Center) and SS (Specialty Store). For the details of each type of retail properties, please refer “Section 2. Investment Policies
and Status of Asset Management, (2) Status of Asset Management (Overview of the Interim Period), iii) Management
Performance, (A) Acquisition of Asset”.
“Location” indicates the residential address. For those without a residential address, the building or land address on theregistry (one of the addresses for those that have multiple addresses) is shown.
“Share” represents the percentage of the acquisition price for each property in the total acquisition price, rounded down to thefirst decimal point.

－ 30 －

KENEDIX Retail REIT CORPORATION (3453)

ii) Overview of tenants as of . March 31, 2015
Amount of

Property
number

Property nameLeasable area(m2)
(Note 1)

Leased area(m2)
(Note 2)

Occupancy Number
security
Annual rent
rateof(Thousand) deposits(Milli(%)
tenants(Note 5)on)
(Note 3) (Note 4)(Note 6)

T-1

Fululu Garden Yachiyo

77,057.56

76,800.63

99.7

50

1,106,382

4,248

T-2

MONAShin-Urayasu

9,568.31

9,523.31

99.5

1(74)

618,784

636

T-3

Passaggio Nishiarai

10,546.25

10,404.31

98.7

1(39)

394,427

229

T-4

Daikanyama Address Dixsept

5,056.39

4,681.24

92.6

1(25)

335,262

309

T-5

Unicus Ina

13,044.37

13,044.37

100.0

1

263,472

136

T-6

Yorktown Kita-Kaname―(Note 7)

100.0

1

T-7

Unicus Yoshikawa

10,620.04

10,620.04

100.0

1(11)

T-8

Sports Club Renaissance Fujimidai

3,120.87

3,120.87

100.0

1

O-1

Blumer Maitamon

30,037.11

29,210.10

97.2

46

O-2

Life Takadono (Land)

4,437.07

4,437.07

100.0

1

―
(Note 7)―(Note 7)

O-3

Piago Kahma Home Center
Omihachiman

14,313.00

14,313.00

100.0

2

―
(Note 7)―(Note 7)

N-1

Kahma Home Center Nakagawa Tomita(Land)―(Note 7)

100.0

1

―
(Note 7)―(Note 7)

N-2

Valor Ichinomiya-Nishi

100.0

1

―
(Note 7)―(Note 7)N-3

K’s Denki Nakagawa Tomita (Land)

100.0

1

―
(Note 7)―(Note 7)

F-1

Sunny Noma

2,814.67

2,814.67

100.0

1

―
(Note 7)―(Note 7)

R-1

Roseo Mito

45,654.67

45,654.67

100.0

1(22)

R-2

K’s Denki Aomori Honten

10,083.41

10,083.41

100.0

1

―
(Note 7)

174

R-3

Super Sports Xebio Aomori-Chuo―(Note 7)―(Note 7)

100.0

1

―
(Note 7)―(Note 7)

282,040.81

280,394.78

99.4

279

5,574,688

Total
Note 1:
Note 2:

Note 3:Note 4:―(Note 7)―(Note 7)
9,447.48―(Note 7)

9,447.48―(Note 7)―(Note 7)259,285―(Note 7)672,150

652,967―(Note 7)201―
(Note 7)
407

421

8,119

“Leasable area” is equivalent to gross floor area of space that we consider to be available for lease in each property, rounded
to the second decimal. For land-only properties, leasable area is equivalent to land area as described in the property registry.
The construction site within Roseo Mito is excluded from leasable area.
“Leased area” indicates the total leased area based on the lease agreements for each property as of March 31, 2015. As
for lease agreements of buildings, the leased area of warehouses and land are excluded. As for pass-through type master
leases (the master lease in which rent received by the lessor is in principle the same amount as the rent received by themaster lessee from end-tenants), the leased area based on the lease agreements between the master lessee and theend-tenants as of March 31, 2015 is shown. As for sublease type master leases (the master lease in which a fixed amountof rent is received from the master lessee.), the leased area to the master lessee is shown.
The occupancy rate is calculated by dividing leased area by leasable area as of March 31, 2015, rounded to the second
decimal. The “Total” of “Occupancy rate” represents the average occupancy rate of all properties in the initial portfolio.
Number of tenants is based upon the number of lease agreements with respect to the building(s) (or land in the case ofland-only properties with leasehold interest) on each such property used mainly as stores and offices, as of March 31, 2015.
－ 31 －

KENEDIX Retail REIT CORPORATION (3453)

Note 5:Note 6:Note 7:

Where one lessee leases more than one section of the property, the lessee is counted as a tenant for each section leased within
the property. Where pass-through type master lease agreements are entered into, the number of master lessees is indicated,with the number of end-tenants indicated in parentheses. Where sublease type master lease agreements are entered into, thenumber of master lessee is shown.
The “Total” of “Number of tenants” shows the total number of tenants. As for pass-through type master leases, the numberof end-tenants is used for calculation. As for sublease type master leases, the number of master lessee is used for
calculation.
“Annualized fixed rent” is generally calculated by multiplying the monthly fixed rent and common area charges for the month
ended March 31, 2015 (excluding warehouses in the case of building lease agreements) by twelve and rounding down to thenearest thousand yen. However, if the current owner and end-tenants have agreed as of March 31, 2015 to a subsequentchange in the fixed rent, which will occur prior to our acquisition, we have multiplied the new, agreed-upon monthly fixed rentby twelve. Sales-linked rent for sales-linked agreements and fixed and sales-linked agreements are not included in thecalculation of annualized fixed rent. Where fixed master lease agreements are entered into, annual rent or monthly rent
multiplied by twelve, as set forth in such master lease agreement, is used for the calculation.
“Tenant leasehold and security deposits” indicates the outstanding balance of any tenant leasehold and security deposit fromthe relevant end-tenant(s) set forth in lease agreement(s) effective as of March 31, 2015 (excluding warehouses in the case ofbuilding lease agreements), rounded to the nearest million yen.
We have not obtained consent from the tenant(s) to release this information.

－ 32 －

KENEDIX Retail REIT CORPORATION (3453)

iii) Capital expenditures(A) Planned capital expenditures
The table below shows major capital expenditures for renovations, repairs and other projects that are planned for the first fiscal period
ending September 30, 2015. These expenditures are for real estate owned by KRR and real estate in trusts in which KRR owns trust
beneficiary rights. These planned projects may include some expenditures that will be recorded as expenses rather than capital
expenditures for accounting purposes.
Portfolio
No.

Property nameLocation

PurposeSchedule

Planned amount of capital
expenditure(Thousands of yen)
Total
Payment for
amountTotal
the period
already paid

T-2

MONA
Shin-Urayasu

Urayasu, Chiba

HVAC system replacement

From April to
September 2015

64,030

-

-

T-2

MONA
Shin-Urayasu

Urayasu, Chiba

Rest room remodeling

From April to
September 2015

47,062--

T-3

Passaggio
Nishiarai

Adachi ward,
Tokyo

Replacing to LED lights
for common areas

From April to
September 201527,196

-

-

T-2

MONA
Shin-Urayasu

Urayasu, Chiba

Painting of exterior
stairways

From April to
September 2015

14,950--T-1

Fululu Garden
YachiyoYachiyo, Chiba

Repairing of private power From April togenerator
September 2015

12,819--(B) Capital expenditures during the period under review
The amount of capital expenditures in the interim period under review was 6,847 thousand yen. There were also expenditures of
5,345 thousand yen that were recorded as repair expenses. In total we spent 12,192thousand yen on the projects.
iv) Major portfolio properties
The table below shows the major properties owned by KRR as of March 31, 2015. Major properties are defined as those that accountfor 10% or more of our total rental revenue generated from all assets held by KRR.
Portfolio No.

Property name

Annual rent
Number of(Millions of yen)tenants(Note 1)

Leased area(m2)

Leasable area
(m2)

T-1

Fululu Garden Yachiyo

50

1,106

76,800.63

77,057.56

T-2

MONA Shin-Urayasu

1 (74)

618

9,523.31

9,568.31

O-1

Blumer Maitamon

46

672

29,210.10

30,037.11

R-1

Roseo Mito

1 (22)

652

45,654.67

45,654.67

Note: Annual rent is 12 times the fixed monthly rent (including a common service charge) under a leasing contract with tenants at portfolio
properties as of March 31, 2015 (excluding building leasing contracts for warehouses), rounded down to the nearest million yen. For
master leases, where the master lease company sub-leases space to other tenants, the fixed monthly rent under the master lease
contract is multiplied by 12, rounded down to the nearest million yen.

－ 33 －

KENEDIX Retail REIT CORPORATION (3453)(3) Information Concerning Major Tenants
The following summarizes top 10 tenants (end-tenants or sub-lease type master leasee) as of March 31, 2015
TenantAnnualleaseholdfixed and security
Total
Ratio
Type ofrent
Name of end
Lease term
deposits
leasedLease typebusiness Property name
(%)
(in
end
(in
tenantsarea(Note 1)(Note
2)
thousands
thousands(m2)
of yen)of yen)(Note 3)(Note 4)
Ito-YokadoCo., Ltd.
(Note 5)

Lease renewal

RetailFululu Garden
Yachiyo―(Note 6)―(Note 6)―(Note 6)―(Note 6)―(Note 6)―(Note 6)―(Note 6)XEBIOCo., Ltd

RetailA Fululu
GardenYachiyo,
B Super Sports
Xebio
Aomori-Chuo

A―(Note 6)B―
(Note 6)A―
(Note 6)B―
(Note 6)A―
(Note 6)B―
(Note 6)A―
(Note 6)B―
(Note 6)A―
(Note 6)B―
(Note 6)A―
(Note 6)B―
(Note 6)A―
(Note 6)B―
(Note 6)

P&D
Consulting
Co., LtdReal
estateUnicus Ina

13,044.37

4.6

263,472

Regularbuilding lease

No updateprovisions

YorkMartCo., Ltd.

RetailYorktown
Kita-Kaname―(Note 6)―(Note 6)―(Note 6)―(Note 6)―(Note 6)―(Note 6)

KohnanShoji Co.,Ltd.

RetailUnicusYoshikawa

7,490.20

2.7―(Note 6)―
Aug. 29, 2031
(Note 6)―(Note 6)―(Note 6)

LIFE
Corporation

RetailA Unicus
Yoshikawa, B
Life Takadono(Land)

A 2,455.80
B 4,437.07

A 0.9
B 1.6

A―
(Note 6)B―
(Note 6)A―
(Note 6)B―
(Note 6)

A Fixed-term
A Aug. 29,
building lease2031,
B Commercial
B Jul. 29,
fixed-term
2035
land lease

A―(Note 6)B―
(Note 6)EDION
Corporation

RetailBlumerMaitamon―(Note 6)―(Note 6)―(Note 6)―(Note 6)―(Note 6)―(Note 6)―(Note 6)A―
(Note 6)B―
(Note 6)A―
(Note 6)B―
(Note 6)A―
(Note 6)B―
(Note 6)A―
(Note 6)B―
(Note 6)A―
(Note 6)B―
(Note 6)A―
(Note 6)B―
(Note 6)A―
(Note 6)B―
(Note 6)

9,447.48

3.3―(Note 6)―(Note 6)―(Note 6)

Fix termbuilding lease

No updateprovisions

DCM
KAHMA
CO., LTD.

RetailValor Co.,Ltd.

RetailA Piago Kahma
Home Center
Omihachiman,
B KahmaHome Center
Nakagawa
Tomita (Land)
Valor
Ichinomiya-Nis
hi

136 Sep. 25, 2026―
(Note 6)

―
―
―
―
―
―
―
(Note 6)(Note 6)(Note 6)(Note 6)(Note 6)(Note 6)(Note 6)Note 1: “Type of business” is based on Japan Standard Industrial Classification.
Note 2: “Ratio” is the ratio of leased area of the end tenant to total leasable area of the portfolio as of March 31, 2015, rounded tonearest number.
Note 3: “Annual fixed-rent” for each property is based on monthly contracted rent (including common area charges) as set forth in therelevant lease agreements effective as of March 31, 2015 (excluding warehouses for building lease agreements) for each
property or property in trust, truncated to thousands of yen.
Note 4: Indicates the outstanding balance of any tenant leasehold and security deposit from the relevant end-tenant(s) set forth in leaseagreement(s) effective as of March 31,2015, rounded down to the nearest million yen.
Note 5: Of our ten largest tenants by anticipated annual fixed rent, Ito-Yokado Co., Ltd. is a major tenant, which we define as a tenantthat occupies more than 10% of our total leased area in our anticipated initial portfolio.
Note 6: We have not obtained consent from the tenant to release this information.

LIXIL Viva
Corporation

RetailRoseo Mito

－ 34 －

KENEDIX Retail REIT CORPORATION (3453)【Reference】

Earnings Performance for the Individual Properties for the 1st Interim Fiscal Period (October 3, 2014 to March 31, 2015) ：180 days
※As of March 31, 2015
Tokyo metropolitan area
Greater Osaka area

Location
Property No.

T-1

T-2

T-3

T-4

T-5

T-6

T-7

T-8

O-1

O-2

O-3

Sports Club
Piago Kahma
Daikanyama
Yorktown
UnicusLife Takadono
Unicus Ina
Blumer Maitamon
RenaissanceHome Center
Address
Kita-Kaname
Yoshikawa(Land)
Fujimidai
Omihachiman
Dixsept
February 10, 2015 February 10, 2015 February 10, 2015 February 10, 2015 February 10, 2015 February 10, 2015 February 10, 2015 February 10, 2015 February 10, 2015 February 10, 2015 February 10, 2015
Fululu Garden
YachiyoProperty Name
Acquisition Date

MONA
Shin-Urayasu

Passaggio
Nishiarai

Price
Information

Acquisition price ( In millions of yen )14,848

8,063

5,850

5,390

4,379

4,000

3,600

2,586

8,389

2,685

Percentage of total portfolio

18.4%

10.0%

7.2%

6.7%

5.4%

4.9%

4.5%

3.2%

10.4%

3.3%

2.6%

Net book value ( In millions of yen )15,105

8,191

5,967

5,467

4,439

4,056

3,673

2,621

8,537

2,727

2,188

Lease Information

Number of tenants

50

1（74）

1（39）

1（25）

1

Leasable floor area (㎡)

77,057.56

9,568.31

10,546.25

5,056.39

13,044.37

Leased floor area (㎡)76,800.63

9,523.31

10,404.31

4,681.24

13,044.37

1－（Note 2）

2,140

1（11）

1

46

1

2

10,620.04

3,120.87

30,037.11

4,437.07

14,313.00

10,620.04

3,120.87

29,210.10

4,437.07

14,313.00

Occupancy ratio

99.7%

99.5%

98.7%

92.6%

100.0%

100.0%

100.0%

100.0%

97.2%

100.0%

100.0%

50days50days50days50days50days50days50days50days50days50days50days222,097

148,729

83,57070,23636,917

129,339

Rental revenues

176,852

100,892

57,77048,97036,85499,568Other operating revenues

45,24547,836

25,79921,26662

29,77180,35966,15536,15335,003976

40,73823,237

11,26811,023

503

26

8

8

8

120

Utilities

21,982

19,82012,967

10,620-

Repairs and maintenance

3,195

1,694

126

195

123

10

529

230

154

86

91

231

As of March 31, 2015
Operating periods①Rental and other operating revenues ( In thousands of yen )Income and Retained Earnings Information
for the 1st Interim Fiscal Period （Note 1）②Property-related expenses ( In thousands of yen )Property management fees
Taxes

Insurance

46,117－（Note 2）－
（Note 2）

16,526－（Note 2）28－
（Note 2）－
（Note 2）

23,728Trust fees and other expenses

13,887

21,163

11,62813,067137③NOI（＝①-②） ( In thousands of yen )141,738

82,57447,41635,23335,941

32,12029,653

19,154

83,222

5,592
9,168

④Depreciation ( In thousands of yen )26,36912,728

10,254

4,874

9,569

6,581

5,131

4,939

16,461-

3,413⑤Rental operating income （＝③-④） ( In thousands of yen )115,368

69,84537,16230,35826,372

25,53824,521

14,21566,761

9,168

23,352

26,765⑥Capital expenditures ( In thousands of yen )

4,588

2,259

-

-

-

-

-

-

-

-

-

⑦NCF （＝③-⑥） ( In thousands of yen )137,149

80,31547,41635,23335,941

32,12029,653

19,154

83,222

9,168

26,765

Reference

Expense ratio （＝②／①）
Property tax for the year 2014 ( In thousands of yen )Assets pledged as collateral

36.2%

44.5%

43.3%

49.8%

2.6%

2.4%

19.4%

4.5%

35.7%

4.6%

3.0%

139,71044,651

70,51523,142

20,423

15,64530,033

10,527

83,237

7,384

28,628

○

-

-

-

-

-

-

-

-

-

○

Note 1:Although the accounting period for the Investment Corporation’s interim period ended March 31, 2015 includes 180 days from October 3, 2014 to March 31, 2015, its substantial
asset management period covers only 50 days from February 10, 2015 to March 31, 2015.
Note 2:We have not obtained consent from the tenant(s) to release this information.

－ 35 －

KENEDIX Retail REIT CORPORATION (3453)【Reference】

Earnings Performance for the Individual Properties for the 1st Interim Fiscal Period (October 3, 2014 to March 31, 2015) ：180 days
Greater Nagoya area
Fukuoka area Tokureishi and other areas

Location

N-1

Property No.

N-2

N-3

F-1

R-1

R-2

R-3

Super Sports
K’s Denki
Kahma Home
K’s Denki
Valor IchinomiyaSunny Noma
Roseo Mito
Xebio
Nakagawa
Center Nakagawa
Aomori
Nishi
Aomori-Chuo
Tomita (Land)
Tomita (Land)
HontenFFebruary 10, 2015 February 10, 2015 February 10, 2015 February 10, 2015 February 10, 2015 February 10, 2015 February 10, 2015

Property Name
Acquisition Date

Total of 18
Properties

Price
Information

Acquisition price ( In millions of yen )

2,311

2,174

889

1,497

9,675

1,469

898

80,843

Percentage of total portfolio

2.9%

2.7%

1.1%

1.9%

12.0%

1.8%

1.1%

100.0%Net book value ( In millions of yen )

2,351

2,213

907

1,541

9,817

1,505

918

82,233

Lease Information

Number of tenants

1

1

1

1

1（22）

1

1

2,814.67

45,654.67

10,083.41

2,814.67

45,654.67

10,083.41

Leasable floor area (㎡)Leased floor area (㎡)9,447.48－（Note 2）

9,447.48－（Note 2）※As of March 31, 2015

279
282,040.81－（Note 2）

280,394.78

Occupancy ratio
As of March 31, 2015
Operating periods

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

99.4%

50days50days50days50days50days50days50days50days *Total: Cost-weighted average operating period (days)①Rental and other operating revenues ( In thousands of yen )Income and Retained Earnings Information
for the 1st Interim Fiscal Period （Note 1）

97,414

1,003,139

Rental revenues

87,551

822,652

Other operating revenues

9,863

180,487②Property-related expenses ( In thousands of yen )Property management fees
Taxes

14,503－（Note 2）－
（Note 2）－
（Note 2）

5,132－
（Note 2）

8

Utilities

Trust fees and other expenses③NOI（＝①-②） ( In thousands of yen )④Depreciation ( In thousands of yen )⑤Rental operating income （＝③-④） ( In thousands of yen )⑥Capital expenditures ( In thousands of yen )⑦NCF （＝③-⑥） ( In thousands of yen )119,953－（Note 2）

1,265

8,079

97,199-5,345

Repairs and maintenanceInsurance

294,911－（Note 2）

183

1,915

1,098

69,232

18,134

21,253

6,938

12,227

82,911

15,033

8,737

708,227

-

4,830

-

4,744

13,936

2,111

1,624

127,571

18,134

16,423

6,938

7,483

68,975

12,922

7,112

580,656

-

-

-

-

-

-

-

6,847

18,134

21,253

6,938

12,227

82,911

15,033

8,737

701,380

Reference

Expense ratio （＝②／①）

2.4%

3.8%

6.1%

15.5%

14.9%

5.0%

8.0%

29.4%

Property tax for the year 2014 ( In thousands of yen )

9,661

19,916

3,949

7,055

52,53813,987

6,151

587,160

Assets pledged as collateral

-

-

-

-

-

-

-

Note 1:Although the accounting period for the Investment Corporation’s interim period ended March 31, 2015 includes 180 days from October 3, 2014 to March 31, 2015, its substantial
asset management period covers only 50 days from February 10, 2015 to March 31, 2015.
Note 2:We have not obtained consent from the tenant(s) to release this information.

－ 36 －