Financial Statements(4th Fiscal Period: From August 1, 2013 to January 31, 2014)(3rd Fiscal Period: From February 1, 2013 to July 31, 2013)
Independent Auditor’s Report
Balance Sheets
Statements of Income and Retained Earnings
Statements of Changes in Net Assets
Statements of Cash Flows
Notes to Financial Statements

1

KENEDIX RESIDENTIAL INVESTMENT CORPORATION

Balance Sheets
As of January 31, 2014 and July 31, 2013
Fourth Fiscal Period
as of January 31, 2014

Third Fiscal Period
as of July 31, 2013

(in thousands of yen)
ASSETS
Current assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Deferred tax assets
Consumption taxes receivable
Other
Total current assets¥2,159,067
2,390,548
16,1057,282
20
128,539
3,835¥507,327
637,662
4,399
9,925
17
-

4,705,396

1,159,330

Noncurrent assets
Property, plant and equipment
Land
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust

2,787,377
41,974,471(990,705)
40,983,766
294,631(18,270)
276,361
672,252(30,908)
641,344
11,525(268)
11,25756,889, 348
1,567

2,787,377
14,727,699(460,294)
14,267,405
118,904(8,531)
110,373
318,149(16,176)
301,973
5,715
(106)
5,609
13,766,910-

Total property, plant and equipment, net

101,591,020

31,239,647

405,922
10,983489,832
20,054405,922
10,15693,43939,498Investments and other assets
Investment securities
Lease and guarantee deposits
Long-term prepaid expenses
Other
Total investments and other assets
Total noncurrent assets
Deferred assets
Deferred organization costs
Investment unit issuance costs
Total deferred assets
Total assets

926,791

549,015

102,517,811

31,788,662

29,327

34,628148,462

43,010177,789

77,638¥107,400,996¥33,025,630

2

Fourth Fiscal Period
as of January 31, 2014

Third Fiscal Period
as of July 31, 2013

(in thousands of yen)
LIABILITIESCurrent liabilities
Operating accounts payable
Short-term loans payable
Current portion of long-term loans payable
Accounts payable-otherAccrued expenses
Income taxes payable
Accrued consumption taxes
Advances received
Deposits received
Total current liabilities
Noncurrent liabilities
Long-term loans payable
Tenant leasehold and security deposits in trust
Total noncurrent liabilities
Total liabilities¥222,805
7,200,000
126,0216,932
706
492,315
40,000¥57,096
2,830,000
5,500,000
49,025
405
944
1,837
160,145
9,671

8,088,779

8,609,123

48,000,000
1,103,240

10,000,000
245,32149,103,240

10,245,321

57,192,019

18,854,444

48,592,740

13,773,456

NET ASSETS
Unitholders' equity
Unitholders' capital
Surplus
Unappropriated retained earnings

1,632,542

406,661

Total surplus

1,632,542

406,661

Total unitholders' equity

50,225,282

14,180,117(16,305)(8,931)

Valuation and translation adjustments
Deferred gains or losses on hedges(16,305)(8,931)

Total net assets

Total valuation and translation adjustments

50,208,977

14,171,186

Total liabilities and net assets¥107,400,996¥33,025,630

See accompanying notes to the financial statements.

3

KENEDIX RESIDENTIAL INVESTMENT CORPORATIONStatements of Income and Retained Earnings
For the period from August 1, 2013 to January 31, 2014 and the period from February 1, 2013 to July 31, 2013

Fourth Fiscal Period
from August 1, 2013
to January 31, 2014

Third Fiscal Period
from February 1, 2013
to July 31, 2013

(in thousands of yen)
Operating revenues
Rent revenue-real estate
Other lease business revenue
Dividends income¥3,312,813
283,257
20,095¥1,018,433
117,076-

Total operating revenues

3,616,165

1,135,509

Operating expenses
Expenses related to rent business
Asset management fees
Asset custody fees
Administrative service fees
Directors' compensation
Other operating expenses

1,230,091
136,124
7,400
21,9654,500
90,742442,61970,886
2,075
11,0184,500
51,247

Total operating expenses
Operating income
Non-operating income
Interest income
Total non-operating income
Non-operating expenses
Interest expenses
Derivatives-related expenses
Borrowing expenses
Amortization of deferred organization costs
Amortization of investment unit issuance costs
Total non-operating expenses

1,490,822

582,345

2,125,343

553,164

210

38

210

38

227,924
12,070211,369
5,301
35,37374,611
11,913
41,593
5,215
12,298492,037

145,630

Ordinary income

1,633,516

407,572

Income before income taxes

1,633,516

407,572

1,016
(3)

952
(0)

Income taxes
Current
Deferred
Total income taxes
Net income

1,013

952

1,632,503

406,620

Retained earnings brought forward

39

41

Unappropriated retained earnings¥1,632,542¥406,661

See accompanying notes to the financial statements.

4

KENEDIX RESIDENTIAL INVESTMENT CORPORATIONStatements of Changes in Net Assets
For the period from August 1, 2013 to January 31, 2014 and the period from February 1, 2013 to July 31, 2013
Valuation andtranslation
adjustments

Unitholders' equity
Surplus

Unappropriatedretainedearnings

Unitholders'
capitalTotal
unitholders'equityTotal
surplusDeferred gains
or losses on
Total net assets
hedges(in thousands of yen)
Balance as of January 31, 2013¥

13,773,456 ¥

463,620 ¥463,620 ¥14,237,076 ¥(24,023) ¥ 14,213,053

Changes of items during the period
Dividends from surplus-(463,579)(463,579)(463,579)-(463,579)

Net income
Net changes of items other thanunitholders' equity-

406,620

406,620

406,620-

406,620

-

-

-

-

15,092

15,092

Total changes of items during the period-(56,959)(56,959)(56,959)

15,092(41,867)

13,773,456

406,661

406,661

14,180,117(8,931)

14,171,186

34,819,284--

34,819,284-

34,819,284

Balance as of July 31, 2013
Changes of items during the period
Issuance of new investment units
Dividends from surplus-(406,622)(406,622)(406,622)-(406,622)

Net income
Net changes of items other thanunitholders' equity-

1,632,503

1,632,503

1,632,503-

1,632,503

-

-

-

-

(7,374)(7,374)34,819,284

1,225,881

1,225,881

36,045,165(7,374)36,037,791

48,592,740 ¥

1,632,542 ¥

1,632,542 ¥50,225,282 ¥(16,305) ¥ 50,208,977

Total changes of items during the period
Balance as of January 31, 2014¥

See accompanying notes to the financial statements.

5

KENEDIX RESIDENTIAL INVESTMENT CORPORATIONStatements of Cash Flows
For the period from August 1, 2013 to January 31, 2014 and the period from February 1, 2013 to July 31, 2013
Fourth Fiscal Period
from August 1, 2013
to January 31, 2014

Third Fiscal Period
from February 1, 2013
to July 31, 2013

(in thousands of yen)
Net cash provided by (used in) operating activities
Income before income taxes¥1,633,516¥407,572

Depreciation and amortization

555,044

194,877

Amortization of deferred organization costs

5,301

5,215

Amortization of investment unit issuance costs

35,373

12,298Interest income

(210)

(38)

Interest expenses

227,924

74,611

12,07011,913

Decrease (increase) in operating accounts receivable(11,706)

1,104

Decrease (increase) in consumption taxes refund receivable(128,539)

-

2,643

(5,689)

Increase (decrease) in operating accounts payable

138,383

23,036

Increase (decrease) in accounts payable-other

77,004

7,207

Increase (decrease) in accrued consumption taxes(1,837)(2,321)

Increase (decrease) in advances received

332,170

2,506

Derivatives-related expenses

Decrease (increase) in prepaid expenses(396,393)

29,233

Other, net

26,184657

Subtotal

2,506,927

762,181

Decrease (increase) in long-term prepaid expenses

Interest income received
Interest expenses paid
Income taxes paid
Net cash provided by (used in) operating activities

210

38

(221,397)(74,630)

(944)

(946)

2,284,796

686,643

Net cash provided by (used in) investing activities(70,879,091)(11,690)-(405,012)(1,006)-

179-

Repayments of tenant leasehold and security deposits in trust(85,024)(41,264)

Proceeds from tenant leasehold and security deposits in trust

942,943

46,569(70,021,999)(411,397)

Increase in short-term loans payable-

2,830,000

Decrease in short-term loans payable(2,830,000)(3,000,000)

Proceeds from long-term loans payable

39,700,000-

Proceeds from issuance of investment units

34,678,458-

Dividends paid

(406,629)(462,889)

Net cash provided by (used in) financing activities

71,141,829(632,889)

Purchase of property, plant and equipment in trust
Purchase of investment securities
Payments for lease and guarantee deposits
Proceeds from collection of lease and guarantee deposits

Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

3,404,626(357,643)

Cash and cash equivalents at the beginning of period

1,144,989

1,502,632¥4,549,615
See accompanying notes to the financial statements.

¥1,144,989

Cash and cash equivalents at the end of period

KENEDIX RESIDENTIAL INVESTMENT CORPORATION

6

Notes to Financial Statements
For the period from August 1, 2013 to January 31, 2014 and the period from February 1, 2013 to July 31, 2013

1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
Kenedix Residential Investment Corporation (“the Investment Corporation”) was established on November 15, 2011 under the Act on Investment
Trusts and Investment Corporations of Japan (“the Investment Trust Act”). On April 26, 2012, the Investment Corporation was listed on the Real
Estate Investment Trust Market of the Tokyo Stock Exchange (Securities Code: 3278) with a total of 74,690 investment units issued andoutstanding. Subsequently, the Investment Corporation additionally issued 165,000 investment units on August 6, 2013 through public offerings,
including a global offering, and 1,182 investment units on September 4, 2013 by way of a third-party allotment. As a result, as of January 31, 2014,
the end of the fourth fiscal period, the number of investment units issued and outstanding totaled 241,622 units.
The Investment Corporation is externally managed by Kenedix Real Estate Fund Management, Inc. (Note) (“the Asset Management Company”) .
The Investment Corporation entrusts the Asset Management Company to manage its assets and, in collaboration with the Asset Management
Company, the Investment Corporation strives to maximize cash distributions to investors by securing stable earnings and sustainable investment
growth. To this end, the Investment Corporation adopts the basic policy of conducting a dynamic and flexible investment stance that seeks to
respond to its environment and market trends, and endeavors to ensure a timely response to opportunities. (Note: Effective from October 1, 2013,
the Asset Management Company for the Investment Corporation, Kenedix Residential Partners, Inc. was merged integrated with Kenedix
Advisors,Inc. and with Kenedix Office Partners, Inc., and it was the surviving entity. Kenedix Residential Partners, Inc. was renamed Kenedix Real
Estate Fund Management, Inc. as part of the merger.)
During the fourth fiscal period, the Investment Corporation acquired 60 properties on August 7, 2013 (total acquisition price of ¥68,556 million)
and has a portfolio comprised of 80 properties, etc. (total acquisition price of ¥99,031 million) as of as of January 31, 2014 the end of the fourthfiscal period.
The occupancy rate of the overall portfolio (excluding land with leasehold interest) was 95.9% as of January 31, 2014, and 96.2% as of July 31,
2013, the end of the third fiscal period. Furthermore, the occupancy rate of the overall portfolio (including land with leasehold interest) was 96.0%
as of January 31, 2014, and 96.6% as of July 31, 2013.
During the fourth fiscal period, the Investment Corporation procured funds of ¥34,819 million through a public offering, etc. for the purpose of
acquiring the properties mentioned above, and unitholders’ capital reached ¥48,593 million as of January 31, 2014. In addition, with borrowings of¥37,700 million made on August 7, 2013, the balance of borrowings as of January 31, 2014 was ¥55,200 million (long-term loans payable of¥48,000 million and current portion of long-term loans payable of ¥7,200 million).

Basis of Presentation
The Investment Corporation maintains its accounting records and prepares its financial statements in accordance with accounting principles
generally accepted in Japan (Japanese GAAP), including provisions set forth in the Investment Trust Act, the Companies Act of Japan, theFinancial Instruments and Exchange Act of Japan and related regulations, which are different in certain respects as to the application anddisclosure requirements of International Financial Reporting Standards.
The accompanying financial statements are a translation of the audited financial statements of the Investment Corporation, which wereprepared in accordance with Japanese GAAP and were presented in the Securities Report of the Investment Corporation filed with the Kanto Local
Finance Bureau. In preparing the accompanying financial statements, certain reclassifications and modifications have been made to the financial
statements issued domestically in order to present them in a format that is more familiar to readers outside Japan. In addition, the notes tofinancial statements include certain information that might not be required under Japanese GAAP but is presented herein as additional information.
The Investment Corporation fiscal period is a six-month period which ends at the end of January or July. The Investment Corporation does notprepare consolidated financial statements because it has no subsidiaries.

72. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(A) Securities
Other securities without market value are stated using the moving average cost method. Equity investments in an anonymous association
are stated, the amount equivalent to the corresponding equity interests including net amount of gain or loss from the anonymous association.
(B) Property and Equipment (including trust assets)
Property and equipment are stated at cost. Depreciation of property and equipment is calculated on a straight-line basis over the estimateduseful lives of the assets ranging as stated below:

Buildings

From August 1, 2013
to January 31, 2014
3-62 years

From February 1, 2013
to July 31, 2013
3-62 years

Structures

3-25 years

3-25 years

Machinery and equipment

8-30 years

8-30 years

Tools, furniture and fixtures

30 years

30 years(C) Long-term Prepaid Expenses
Long-term prepaid expenses are amortized by the straight-line method.
(D) Deferred Organization Costs
Deferred organization costs are amortized over a period of 5 years under the straight-line method.
(E) Unit Issuance Costs
Unit issuance costs are amortized over a period of 3 years under the straight-line method.
(F) Accounting Treatment of Trust Beneficiary Interests in Real Estate
For trust beneficiary interests in real estate, which are commonly utilized in the ownership of commercial properties in Japan, all relevant
assets and liabilities in trust are recorded on the balance sheet and the statement of income and retained earnings.
(G) Revenue Recognition
Operating revenues consist of rental revenues including base rents and common area charges, and other operating revenues including
parking space rental revenues and other miscellaneous revenues. Rental revenues are generally recognized on an accrual basis over the lifeof each lease.
(H) Taxes on Property and Equipment
Property-related taxes including property taxes, city planning taxes and depreciable property taxes are imposed on properties on a calendar
year basis. These taxes are generally charged to operating expenses for the period, for the portion of such taxes corresponding to said period.
Under Japanese tax regulations, the seller of the property is liable for these taxes on the property from the date of disposal to the end of thecalendar year in which the property is disposed. The seller, however, is reimbursed by the purchaser for these accrued property-related tax
liabilities.

When the Investment Corporation purchases properties, it typically allocates the portion of the property-related taxes related to the period
following the purchase date of each property through the end of the calendar year. The amounts of those allocated portions of the8

property-related taxes are capitalized as part of the acquisition costs of the related properties. Capitalized property-related taxes amounted to¥115,840 thousand as of January 31, 2014. There were no capitalized property-related taxes as of July 31, 2013.
(I)

Income Taxes
Deferred tax assets and liabilities are computed based on the difference between the financial statements and income tax bases of assets
and liabilities using the statutory tax rates.

(J) Consumption Taxes
Transactions subject to consumption taxes are recorded at amounts exclusive of consumption taxes. Non-deductible consumption taxes
applicable to the acquisition of assets are included in the cost of acquisition for each asset.
(K) Derivative Financial Instruments
The Investment Corporation enters into derivative transactions to hedge risks prescribed in its Articles of Incorporation based on its risk
management policies. The Investment Corporation hedges interest rate volatility risk of its interest payments on its borrowings by utilizing
interest rate cap transactions and interest rate swap transactions as hedging instruments.
As for the method of assessment of the effectiveness of the hedge in the period from the inception of the hedge to the time of judgment of its
effectiveness, the cumulative changes in cash flow of the hedged items and hedging instruments are compared and a judgment is madebased on changed amount, etc. However, an assessment of the effectiveness of hedging activities is omitted in the case of interest rate
swaps that meet the requirements for special treatment. Furthermore, assessment of the effectiveness of hedging activities is omitted in thecase of interest rate caps that do not meet the requirements for special treatment as the important conditions regarding hedged items andhedging instruments are the same and are clearly expected to have the effect of limiting the impact of interest rate volatility within a certain
range on an ongoing basis.
(L) Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, deposits placed with banks and short-term investments which are highly liquid, readily
convertible to cash and with insignificant risk of market value fluctuation, with maturities of three months or less from the date of purchase.
(M) Presentation of Amounts
Amounts are truncated in the Japanese financial statements prepared in accordance with Japanese GAAP and filed with regulatory
authorities in Japan, whereas amounts are rounded to the nearest million in the accompanying financial statements. Totals shown in theaccompanying financial statements do not necessarily agree with the sums of the individual amounts.

9

3．ASSETS PLEDGED AS COLLATERAL AND SECURED LIABILITIESAssets pledged as collateral and relevant secured liabilities as of January 31, 2014 and July 31, 2013 are as follows:

Assets pledged as collateral

As of January 31, 2014

As of July 31, 2013

(in thousands of yen)

Cash and deposits in trust¥-¥637,662

Buildings in trust-

14,267,405

Structures in trust-

110,373

Machinery and equipment in trust-

301,973

Tools, furniture and fixtures in trust

-

5,609

Land in trust-

13,766,910

Total

-

29,089,932

Short-term loans payable-

2,830,000

Current portion of long-term loans payable-

5,500,000

Long-term loans payable-

10,000,000-¥18,330,000

Secured liabilities

Total

¥

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

10

5. BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUESAND PROPERTY-RELATED EXPENSES
Rental and other operating revenues and property-related expenses for the periods from August 1, 2013 to January 31, 2014 and from February 1,
2013 to July 31, 2013 consist of the following:
From February 1, 2013

From August 1, 2013
to January 31, 2014

to July 31, 2013

(in thousands of yen)

Rental and other operating revenues:
Rental revenues¥3,070,936¥884,944

Rental revenues from limited proprietary rights of land

78,31078,310Common area charges

163,567

55,1793,312,813

1,018,433

Parking space rental revenues

120,60940,673

Miscellaneous

162,648

76,403

Subtotal
Others:283,257

117,076

Total rental and other operating revenues

Subtotal¥3,596,070¥1,135,509

Property management fees and facility management fees

¥279,243¥84,438

67,73916,378Taxes

59,821

59,696

Repairs and maintenance

127,176

37,244

Insurance

5,650

2,230

Trust fees

33,0788,700

Depreciation

555,044

194,877

Others102,340

39,056¥1,230,091¥442,619

Utilities

Total property-related expenses

6. UNITHOLDERS’ EQUITY
Total number of authorized investment units and total number of investment units issued and outstanding are as follows:
From August 1, 2013
to January 31, 2014
Total number of authorized investment units

5,000,000

From February 1, 2013
to July 31, 2013
5,000,000

Total number of investment units issued and outstanding

241,62275,440

7. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of the following as of January 31, 2014 and July 31, 2013:
As of January 31, 2014

As of July 31, 2013

(in thousands of yen)

Cash and deposits¥2,159,067¥507,327

Cash and deposits in trust

2,390,548

637,662

Cash and cash equivalents¥4,549,615¥1,144,989

11

8. LEASESThe Investment Corporation, as lessor, has entered into leases whereby fixed monthly rents are due in advance with a lease term of generally
two years for residential properties. The future minimum rental revenues under existing non-cancelable operating leases as of January 31, 2014
and July 31, 2013 are as follows:
As of January 31, 2014

As of July 31, 2013

(in thousands of yen)Due in 1 year

¥414,896¥204,105

Due after 1 year

6,042,971

5,884,373

Total¥6,457,867¥6,088,478

9. FINANCIAL INSTRUMENTS(A). Overview(1) Policy for financial instruments
The Investment Corporation procures funds for asset acquisitions, repairs, payment of distributions, repayment of loans, etc. through loans fromfinancial institutions, issuance of investment units and other means. With regard to the procurement of interest-bearing debts, the Investment
Corporation ensures that it can effectively combine stable long-term funds with flexible short-term funds. Management of surplus funds isundertaken through various bank deposits focusing on safety, liquidity and effectiveness. The Investment Corporation uses derivatives for the
purpose of hedging its exposure to changes in interest rates and other risks and does not enter into derivative transactions for speculative or
trading purposes.
(2) Types of financial instruments and related risk
Bank deposits are for managing the Investment Corporation’s surplus funds and are exposed to credit risk such as the bankruptcy of financial
institutions at which funds are deposited. Investment securities represent equity investments in an anonymous association and are exposed tocredit risk of the issuer and interest rate fluctuation risk.
Borrowings, which are made primarily for the purpose of procuring funds for the acquisition of real estate and trust beneficiary interests in realestate and have a repayment date of a maximum of 7 years and 6 months as of January 31, 2014, the end of the fourth fiscal period, are exposed
to liquidity risk where alternative funds may not be procured by the repayment date. Also, borrowings with floating interest rates are exposed tointerest rate fluctuation risk. Derivatives are used for the purpose of hedging interest rate fluctuation risk for a certain portion of the borrowings.
(3) Risk management for financial instruments
a. Credit risk
While bank deposits are exposed to credit risk such as the bankruptcy of financial institutions at which funds are deposited, such risk is monitored
by deposits in non-interest bearing ordinary savings accounts or with financial institutions with credit ratings above a certain level. Investment
securities represent equity investments in an anonymous association and are exposed to credit risk of the issuer and interest rate fluctuation risk.
To manage this credit risk, the Investment Corporation regularly evaluates the results of operations and the financial condition of the issuer, etc. In
utilizing derivatives, the Investment Corporation aims to mitigate counterparty risk such as by transacting with financial institutions with favorable
ratings.
b.

Market risk

While borrowings with floating rates are exposed to interest rate volatility risk, such risk is monitored by adjusting the rate of the balance ofborrowings with floating rates against the total borrowings according to the financial environment, interest rate forecasts by continuous monitoring,etc. and by using derivatives, etc. A risk management policy is established with regard to the execution and management of derivatives and suchtransactions are conducted based on this policy.
c.

Liquidity risk

Though borrowings are subject to liquidity risk, the Investment Corporation reduces such risk by spreading out payment due dates and by
diversifying financial institutions. Liquidity risk is also managed by such means as regularly checking the balance of cash reserves.
(4) Supplementary explanation of the estimated fair value of financial instruments
The fair value of financial instruments is based on their quoted market price, if available. When there is no quoted market price available, fairvalue is reasonably estimated. Since various assumptions and factors are reflected in estimating the fair value, different assumptions and factors
could result in a different fair value.
(B). Estimated Fair Value of Financial Instruments
The carrying value of financial instruments on the balance sheet and estimated fair value are shown in the following table.

12

As of January 31, 2014
Carrying amount

Estimated fair value

Difference(in thousands of yen)

(1) Cash and deposits¥ 2,159,067¥ 2,159,067(2) Cash and deposits in trust

2,390,548

2,390,548-

4,549,615

4,549,615

-

-

-

-

7,200,000
48,000,000

7,200,000
48,085,192

85,19255,200,000

55,285,192¥20,054¥20,054

Subtotal(1) Short-term loans payable(2) Current portion of long-term loans payable(3) Long-term loans payable
Subtotal
Derivative transactions¥-

85,192¥-As of July 31, 2013
Carrying amount

Estimated fair value

Difference(in thousands of yen)

(1) Cash and deposits¥507,327¥507,327(2) Cash and deposits in trust

637,662

637,662-

1,144,989

1,144,989-

Subtotal¥-(1) Short-term loans payable

2,830,000

2,830,000-(2) Current portion of long-term loans payable

5,500,000

5,500,000(3) Long-term loans payable

10,000,000

10,000,000-

18,330,000

18,330,000-¥39,498¥39,498

Subtotal
Derivative transactions¥-

Note 1: Methods to determine the estimated fair value of financial instruments and matters related to derivative transactions
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)Current portion of long-term loans payable and (3) 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 ofprincipal and interest discounted by the estimated interest rate to be applied in the event that the Investment Corporation conducts new borrowingsof the same type. As for the fair value of loans payable with floating 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 the carrying amount as the credit standing of the Investment
Corporation has not changed significantly since the loans were made. (However, the fair value of long-term loans payable subject to the special
treatment for interest-rate swaps is based on the present value of the total of principal and interest, accounted for together with the applicableinterest-rate swaps, discounted by the estimated interest rate to be applied in the event that the Investment Corporation conducts new borrowingsof the same type.)
Derivative transactions
Please refer to Note 10 “DERIVATIVE TRANSACTIONS”.

13Note 2: Financial instruments whose fair values are recognized to be extremely difficult to grasp(in thousands of yen)Classification

As of January 31, 2014

Investment securities *As of July 31, 2013

405,922405,922*Fair values of investment securities are not subject to disclosure of fair value as they have no market value and their fair values are recognized to
be extremely difficult to grasp.
Note 3: Redemption schedule for financial assets with maturities
As of January 31, 2014
Due in 1 year or
less

Due after 2 years
through 3 years

Due after 1 year
through 2 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Due after 5 years(in thousands of yen)

Cash anddeposits
Cash anddeposits in trust
Total¥2,159,067¥-

2,390,548¥4,549,615

¥

¥

-

-

¥

-

¥

-

¥

¥

-

-

¥

¥

-

-

¥

-

As of July 31, 2013
Due in 1 year or
less

Due after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Due after 5 years(in thousands of yen)

Cash anddeposits
Cash anddeposits in trust
Total¥507,327¥-

637,662¥1,144,989

¥

¥

-

-

¥

-

¥

-

¥

¥

-

-

¥

¥

-

-

¥

-

Note 4: Redemption schedule for loans payable
As of January 31, 2014
Due in 1 year or
less

Due after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years

Due after 5 years(in thousands of yen)

Short-term loans
payableLong-term loans
payable
Total

¥

-

¥

-

¥

-

¥

-

¥

-

7,200,000

12,000,000

12,000,000

11,000,000

11,000,000

7,200,000¥ 12,000,000¥ 12,000,000¥ 11,000,000¥ 11,000,000

Due in 1 year or
less

Due after 1 year
through 2 years

Due after 2 years
through 3 years

Due after 3 years
through 4 years

Due after 4 years
through 5 years¥¥

2,000,000¥

2,000,000

As of July 31, 2013
Due after 5 years(in thousands of yen)

Short-term loans
payableLong-term loans
payableTotal¥2,830,000

¥

-

¥

-

5,500,000

6,500,000

3,500,000¥8,330,000¥6,500,000¥3,500,000

¥

-

¥

¥

-

-

¥

¥

-

-

¥

-

14

10. DERIVATIVE

TRANSACTIONS

The contract amount and the fair value of interest-rate cap transactions and interest-rate swap transactions as of January 31, 2014 are shown in
the following table.
(1)

Transactions not subject to hedge accounting
Not applicable(2)

Transactions subject to hedge accounting
Hedge
Type of derivative
Hedged items
accounting
transactions
methodAccounting
method, inprinciple
Specialtreatment forinterest-rate
swapsInterest-rate cap
transaction:

Long-termloans payable

Contract amount(in thousands of yen)
Maturing after 1
year

Fair value(in thousands of yen)Calculation method
for applicable fair value¥10,000,000¥20,054

Based on the amountprovided by counterparty
financial institutions¥10,000,000

Interest rate swap Long-termtransaction:loans payable¥29,500,000¥29,500,000*
Receive/floating
and pay/fixed
Total¥39,500,000¥39,500,000¥20,054*Interest rate swaps for which the special treatment is applied are accounted for together with the underlying hedged item. As a result, their fairvalue is included in the fair value of the hedged long-term loans payable.
The contract amount and the fair value of interest-rate cap contracts as of July 31, 2013 are shown in the following table.
(1)

Transactions not subject to hedge accounting
Not applicable(2)

Transactions subject to hedge accounting
Hedge
Type of derivative
Hedged items
accounting
transactions
methodAccounting
method, inprinciple

Interest-rate cap
transaction:

Long-termloans payable

Contract amount(in thousands of yen)
Maturing after 1
year

Fair value(in thousands of yen)Calculation method
for applicable fair value¥10,000,000¥39,498

Based on the amountprovided by counterparty
financial institutions¥10,000,000

1511. INCOME TAXESThe Investment Corporation is subject to corporate income taxes at a regular statutory rate of approximately 40%. However, the Investment
Corporation may deduct from its taxable income amounts distributed to its unitholders, provided the requirements under the Special Taxation
Measures Law of Japan are met, including a requirement that it currently distributes in excess of 90% of its net income for the fiscal period in order
to be able to deduct such amounts. If the Investment Corporation does not satisfy all of the requirements, the entire taxable income of theInvestment Corporation will be subject to regular corporate income taxes. Since the Investment Corporation distributed in excess of 90% of its
distributable income in the form of cash distributions totaling ¥1,632 million and ¥407 million for the periods ended January 31, 2014 and July 31,
2013, respectively, the distributions were treated as deductible distributions for purposes of corporate income taxes. The effective tax rates on theInvestment Corporation’s income were 0.06% and 0.23% for the periods ended January 31, 2014 and July 31, 2013, respectively. The following
table summarizes the significant differences between the statutory tax rate and the effective tax rate:

Statutory tax rate
Deductible cash distributions
Others
Effective tax rate

From August 1, 2013
to January 31, 201436.59%

From February 1, 2013
to July 31, 201336.59%(36.56)(36.50)

0.03

0.14

0.06%

0.23%

The significant components of deferred tax assets and liabilities as of January 31, 2014 and July 31, 2013 are as follows:
As of January 31, 2014

As of July 31, 2013

(in thousands of yen)

Deferred tax assets:
Enterprise tax payable

¥20

¥17

Deferred gains or losses on hedges

5,847

3,855

Subtotal deferred tax assets

5,867

3,872

Valuation allowance

5,847

3,855

Total deferred tax assets

¥20

¥17

16

12. RELATED-PARTY TRANSACTIONS
1．Parent Company, major corporate unitholders and other
Third Fiscal Period (February 1, 2013 to July 31, 2013) and Fourth Fiscal Period (August 1, 2013 to January 31, 2014): Not applicable
2．Affiliated companies and other
Third Fiscal Period (February 1, 2013 to July 31, 2013) and Fourth Fiscal Period (August 1, 2013 to January 31, 2014): Not applicable
3．Fellow subsidiary companies and other
Third Fiscal Period (February 1, 2013 to July 31, 2013) and Fourth Fiscal Period (August 1, 2013 to January 31, 2014): Not applicable
4．Directors, major individual unitholders and other
Fourth Fiscal Period (August 1, 2013 to January 31, 2014)
Classification

Name

Principal business /Position

Ratio ofvotingrights held(%)

Relationship
Position held
Relation to
concurrently
the entity

Nature oftransaction

Directors
and Close
Relatives

Akira
TanakaExecutive Director
for the Investment
Corporation and
CEO and Presidentof Kenedix
Residential Partners,
Inc.

Possessionof Right
0.0％(Direct)

Executive Director for theInvestment Corporation and
CEO and President ofKenedix Residential Partners,
Inc.
(Note 1)

Payment of asset
management fee
to Kenedix
Residential
Partners, Inc.
(Note 2)

Transaction
amount（inthousandsof yen)(Note 3)(Note 4)
¥821,684

Account

Accounts
payable-other

Balance atthe end of
period(inthousandsof yen)(Note 4)¥90,487

Note 1: Kenedix Residential Partners, Inc., as the successor company merged with Kenedix Advisors, Inc. and Kenedix Office Partners, Inc. as of
October 1, 2013, and changed its corporate name to Kenedix Real Estate Fund Management, Inc. Furthermore, Ryosuke Homma was
appointed as CEO and President of Kenedix Real Estate Fund Management, Inc., as of October 1, 2013. The transaction amount and thebalance at the end of period indicate the Fourth Fiscal Period amounts applicable to Kenedix Residential Partners, Inc. up to September
31, 2013 and after October 1, 2013 with Kenedix Real Estate Fund Management, Inc. ,on and after October 1, 2013.
Note 2: Akira Tanaka serves as a representative of the third party (Kenedix Residential Partners, Inc.), and the asset management fee isestablished in the Articles of Incorporation of the Investment Corporation.
Note 3: Asset management fee includes ¥685,560 thousand related to the acquisition of investment securities and is accounted for in the bookvalue for the individual assets.
Note 4: Consumption taxes are not included in the transaction amount, but are included in the balance at the end of period.
Third Fiscal Period (February 1, 2013 to July 31, 2013)
Classification

Name

Principal business /Ratio of

PositionvotingrightsRelationship
Relation to
Position held
the entity
concurrently

Nature ofTransaction

transaction

amountthe end of（inperiodthousands(inof yen)thousands

held (%)

Directors
and Close
Relatives

Akira
TanakaExecutive Director
for the Investment
Corporation and
CEO and Presidentof Kenedix
Residential Partners,
Inc.

－

Executive Director for theInvestment Corporation and
CEO and President ofKenedix Residential Partners,
Inc.

Payment of asset
management fee
to Kenedix
Residential
Partners, Inc.
(Note 1)

Account

Balance at(Note 3)of yen)¥74,886(Note 3)
¥22,577

Accounts
payable-other

Note 1: Akira Tanaka serves as a representative of the third party (Kenedix Residential Partners, Inc.), and the asset management fee isestablished in the Articles of Incorporation of the Investment Corporation.
Note 2: Asset management fee includes ¥4,000 thousand related to the acquisition of investment securities and is accounted for in the book value
for the assets.
Note 3: Consumption taxes are not included in the transaction amount, but are included in the balance at the end of period.

1713. INVESTMENT AND RENTAL PROPERTIESThe Investment Corporation owns real estate for rental purposes in the Tokyo Metropolitan Area and other regional areas for the purpose ofgenerating rental revenues.
The book value and fair value concerning the above real estate for rental purposes are as follows.

Fourth Fiscal Period
from August 1, 2013
to January 31, 2014

Third Fiscal Period
from February 1, 2013
to July 31, 2013

(in thousands of yen)Book value
Balance at the beginning of period
Changes during the period
Balance at the end of period
Fair value at the end of period¥31,239,647
70,351,373
101,591,020¥103,878,000¥31,418,684(179,037)
31,239,647¥32,180,000

Note 1: Book value excludes accumulated depreciation from acquisition costs.
Note 2: Among changes in the amount of real estate for rental purposes that occurred during the third fiscal period, the principal decrease wasdepreciation (¥194,877 thousand) and during the fourth fiscal period, the principal increase was the acquisition of 60 properties in realestate trust beneficiary interests (¥70,859,613 thousand) and the principal decrease was depreciation (¥555,044 thousand).
Note 3:The fair value is the appraisal value or the survey value determined by outside appraisers.
Income and loss in the fiscal periods ended January 31, 2014 and July 31, 2013 for real estate for rental purposes is listed in Note “5.
BREAKDOWN OF RENTAL AND OTHER OPERATING REVENUES AND PROPERTY-RELATED EXPENSES.”

14. SEGMENT INFORMATION
Segment information for the period ended from August 1, 2013 to January 31, 2014 and from February 1, 2013 to July 31, 2013 is as follows:(A) Segment information
Disclosure is omitted because the real estate leasing business is the Investment Corporation’s sole business and it has no reportable segment
subject to disclosure.
(B) Related information(1) Information about each product and service
Disclosure is omitted because net sales to external customers for a single product/service category account for over 90% of the operating revenue
on the statement of income and retained earnings.
(2) Information about each geographic area(a) Net sales
Disclosure is omitted because net sales to external customers in Japan account for over 90% of the operating revenue on the statement of income
and retained earnings.
(b) Property, plant and equipment
Disclosure is omitted because the amount of property, plant and equipment located in Japan accounts for over 90% of the amount of property,
plant and equipment on the balance sheet.
(3) Information about each major customer
Disclosure is omitted because net sales to a single external customer account for less than 10% of the operating revenue on the statement ofincome and retained earnings.

18

15. PER UNIT INFORMATION

Net asset value per unit

From August 1, 2013
to January 31, 2014
¥207,800

From February 1, 2013
to July 31, 2013
¥187,847

Net income per unit

¥6,890¥5,389Weighted average number of units (units)

236,920

75,440The weighted average number of units outstanding of 236,920 and 75,440 were used for the computation of the amount of net income per unit
as of January 31, 2014 and July 31, 2013.
Net income per unit after adjusting for residual units is not included because there were no residual investment units.
The basis for calculating net income per unit is as follows:
From August 1, 2013
to January 31, 2014
Net income (in thousands of yen)
Net income not available to ordinary unitholders (in thousands of yen)
Net income available to ordinary unitholders (in thousands of yen)
Weighted average number of units during the period (units)

From February 1, 2013
to July 31, 2013

¥1,632,503¥406,620--¥1,632,503¥406,620

236,920

75,44016. SIGNIFICANT SUBSEQUENT EVENTS
Not applicable1917. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following as of January 31, 2014:

Type of asset

Balance atthe beginningof period

Decreaseduring theperiodIncreaseduring theperiodBalance atthe end of
periodDepreciation
Accumulated
depreciation

Depreciation
for theperiodNetbalance at
end of theperiodRemarks(in thousands of yen)
Land

Property,plant andequipment¥2,787,377

¥

-

¥

-

¥2,787,377

¥

-

¥

-

¥2,787,377

Sub total

2,787,377--

2,787,377--

2,787,377

Buildings in trust

14,727,699

27,246,772-

41,974,471

990,705

530,41240,983,766

Structures in trust

118,904

175,727-

294,631

18,2709,739

276,361

Machinery andequipment in trust

318,149

354,103-672,252

30,90814,731

641,344

Tools, furnitureand fixtures in
trust

5,715

5,810

-

11,525268

162

11,257

13,766,910

43,122,438-

56,889,348--

56,889,348

-

1,567

-

1,567

-

-

1,567

Land in trust
Construction inprogress in trust
Sub total
Total

28,937,377

70,906,417¥31,724,754¥70,906,417¥-

99,843,794

1,040,151

555,044

98,803,643-¥102,631,171¥1,040,151¥555,044¥101,591,020,

Note : The amount of increase during the period is primarily attributable to the acquisition of the real estate properties and capital expenditures.
Property, plant and equipment consists of the following as of July 31, 2013:

Type of asset

Balance atthe beginningof period

Decreaseduring theperiodIncreaseduring theperiodBalance atthe end of
periodDepreciation
Accumulated
depreciation

Depreciation
for theperiodNetbalance at
end of theperiodRemarks(in thousands of yen)
Land

Property,plant andequipment¥2,787,377

¥

-

¥

-

¥2,787,377

¥

-

¥

-

¥2,787,377

Sub total

2,787,377--

2,787,377--

2,787,377

Buildings in trust

14,715,539

12,160-14,727,699

460,294

184,888

14,267,405

Structures intrust

118,485419-

118,904

8,531

3,440

110,373

Machinery andequipment in trust

316,9241,225-

318,149

16,176

6,474

301,973

Tools, furnitureand fixturesin trust

3,679

2,036

-

5,715

106

75

5,609

Land in trust

13,766,910--

13,766,910--

13,766,910

Sub total

28,921,537

15,840-28,937,377

485,107

194,877

28,452,270¥ 31,708,914¥15,840-¥31,724,754¥485,107¥194,877¥31,239,647

Total

¥

Note : The amount of increase during the period is primarily attributable to capital expenditures.

20

18. SHORT-TERM DEBT AND LONG-TERM DEBT
Short-term debt and long-term debt consists of the following as of January 31, 2014:

Classification

LenderBalance atthebeginning of
periodDecreaseduring theperiodIncreaseduring theperiodAverageinterest rate
（Note 3）（Note 4）

Balance atthe end of
periodPayment
due date（Note 9）Use

Remarks(Note 6)

Unsecured/
Nonguaranteed(Note 6)

Unsecured/
Nonguaranteed(Note 6)

Unsecured/
Nonguaranteed(in thousands of yen)

Short-termloanspayableCurrent
portion of
long-term
loans
payableSumitomo Mitsui
Banking
Corporation（Note 7）The Bank ofTokyo-Mitsubishi
UFJ, Ltd.
（Note 7）
Sumitomo Mitsui
Banking
Corporation（Note 8）-0.649%

April 30,2014

1,000,000-

0.649%

April 30,
2014-

830,000-

1.100%

April 30,
2014

2,830,000-

2,830,000-

Sumitomo Mitsui
Banking
Corporation

2,000,000--

2,000,000

Aozora Bank, Ltd.

1,500,000--

1,500,000
0.799%

April 30,
2014-

¥1,000,000

1,000,000-

830,000

Sub total¥¥

The Bank ofTokyo-Mitsubishi
UFJ, Ltd.

1,000,000--

1,000,000

Resona Bank, Ltd.

1,000,000--

1,000,000-

600,000-

600,000-

600,000-

600,000-

500,000-

500,000

Sub total

5,500,000

1,700,000-

7,200,000

Aozora Bank, Ltd.
（Note 2）2,000,000--

2,000,000

The Bank ofTokyo-Mitsubishi
UFJ, Ltd.

2,000,000--

2,000,000

Sumitomo Mitsui
Banking
Corporation（Note 2）The Bank ofTokyo-Mitsubishi
UFJ, Ltd.
（Note 2）
Aozora Bank, Ltd.
（Note 2）Long-term
loans
payable¥1,000,000

Resona Bank, Ltd.

1,500,000--

1,500,000

Sumitomo Mitsui
Banking
Corporation

1,000,000--

1,000,000

0.549%

August 31,
2014

1.060%

April 30,
2015

21

Sumitomo Mitsui
Banking
Corporation

2,500,000--

2,500,000

The Bank ofTokyo-Mitsubishi
UFJ, Ltd.

1,000,000--

1,000,000

Sumitomo Mitsui
Banking
Corporation-

1,750,000-

1,750,000

The Bank ofTokyo-Mitsubishi
UFJ, Ltd.

-1,500,000-

1,500,000

Aozora Bank, Ltd.

-

500,000-

500,000

Resona Bank, Ltd.

-

500,000-

500,000

Sumitomo Mitsui
Trust Bank,
Limited

-500,000-

500,000

Mizuho Trust &Banking Co., Ltd.

-

500,000-

500,000

Mizuho Bank, Ltd.

-

250,000-

250,000

Sumitomo Mitsui
Banking
Corporation-

3,000,000-

3,000,000

The Bank ofTokyo-Mitsubishi
UFJ, Ltd.

-2,000,000-

2,000,000

Aozora Bank, Ltd.

-

1,000,000-

1,000,000

Sumitomo Mitsui
Trust Bank,
Limited-1,000,000-

1,000,000

Resona Bank, Ltd.

-

500,000-

500,000

Mizuho Bank, Ltd.

-

500,000-

500,000

Mizuho Trust &Banking Co., Ltd-

500,000-

500,000

Sumitomo Mitsui
Banking
Corporation-

4,000,000-

4,000,000

The Bank ofTokyo-Mitsubishi
UFJ, Ltd.

-2,500,000-

2,500,000

Aozora Bank, Ltd.

-1,500,000-

1,500,000

1.014%

April 30,
2016

0.599%

August 31,
2015

0.787%

August 31,
2016

0.910%

August 31,
2017

22

Resona Bank, Ltd.

-

1,000,000-

1,000,000

Sumitomo Mitsui
Trust Bank,
Limited-1,000,000-

1,000,000

Mizuho Bank, Ltd.

-

500,000-

500,000

Mizuho Trust &Banking Co., Ltd-

500,000-

500,000

Sumitomo Mitsui
Banking
Corporation-

3,250,000-

3,250,000

The Bank ofTokyo-Mitsubishi
UFJ, Ltd.

-2,000,000-

2,000,000

Aozora Bank, Ltd.

-

1,000,000-

1,000,000

Resona Bank, Ltd.

-

500,000-

500,000

Sumitomo Mitsui
Trust Bank,
Limited

-500,000-

500,000

Mizuho Trust &Banking Co., Ltd-

500,000-

500,000

Mizuho Bank, Ltd.

-

250,000-

250,000

Development Bankof Japan Inc.

-

3,000,000-

The Bank ofTokyo-Mitsubishi
UFJ, Ltd.

-

1,000,000

Sumitomo Mitsui
Banking
Corporation-

Sub total
Total

1.052%

August 31,
2018

3,000,000

1.088%（Note 5）

August 31,
2018-

1,000,000

1.109%

January 31,
2021

1,000,000-

1,000,000

1.221%

July 31,2021

10,000,000

38,000,000-

48,000,000¥18,330,000¥39,700,000¥2,830,000¥55,200,000

23Note1 : Annual repayments of long-term loans payable (except for current portion of long-term loans payable) scheduled for the next five years
after the balance sheet date are as follows:
Due after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

through 2 years

through 3 years

through 4 years

through 5 years(in thousands of yen)
Long-term loans payable¥12,000,000¥12,000,000¥11,000,000¥11,000,000

Note 2: Of the long-term loans payable conducted during the fiscal period, these were listed in the current portion of long-term loans payable.
Note 3: All debts except for the following Note5 are borrowing at a floating rate.
Note 4: Average interest rates are the weighted average during the period and figures are rounded to the nearest third decimal place. Also, withregard to borrowings for which interest rate swap transactions and interest rate cap transactions were implemented in order to hedge theinterest rate volatility risk, the weighted average interest rates taking into consideration the effects of the interest rate swaps and interest
rate caps are indicated.
Note 5: Borrowings is applied at a fixed rate.
Note 6: All debts were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate (additional expenses areincluded) and repayment of debts.
Note 7: Early repayment was made on January 31, 2014.
Note 8: Early repayment was made on August 7, 2013.
Note 9: Except for the above (Note 7 and 8), all the repayment methods of debt financing are lump-sum repayments on the due date.

24

Short-term debt and long-term debt consists of the following as of July 31, 2013:

Classification

LenderBalance at the

Increase

Decrease

Balance at

beginning ofduring theduring thethe end of

periodperiodperiodperiodAverageinterest rate
（Note 3）（Note 4）

Payment due
date

Use

Remarks（Note 8）(in thousands of yen)
Sumitomo Mitsui
Banking¥1,000,000¥-¥1,000,000¥-

Corporation

0.769%The Bank ofTokyo-Mitsubishi

1,000,000-

1,000,000

April 30,
2013-

UFJ, Ltd.
Sumitomo Mitsui
Banking
Short-term

Corporation

loans

Sumitomo Mitsui

payableBanking

April 30,
1,000,000-

1,000,000-

1.169%-

1,000,000-

1,000,000

0.650%-

1,000,000-

1,000,000

0.650%-

830,000-

830,000

1.100%

Corporation
The Bank ofTokyo-Mitsubishi
UFJ, Ltd.
Sumitomo Mitsui
Banking

Secured/Non-guaran(Note 5)

April 30,

teed
(Note 9)2014
April 30,
2014
April 30,

Corporation
Sub Total

2013(Note 6)2014
(Note 7)3,000,000

2,830,000

3,000,000

2,830,000

2,000,000--

2,000,000

1,500,000--

1,500,000

Sumitomo Mitsui
Banking
Corporation(Note 2)Current
portion of

Aozora Bank, Ltd.
(Note 2)long-term

The Bank ofloansTokyo-Mitsubishi

payableUFJ, Ltd.

Secured/0.809%

1,000,000--

1,000,000

1,000,000--

1,000,000

Sub Total

5,500,000--

5,500,000

Aozora Bank, Ltd.

2,000,000--

2,000,000

2,000,000--

2,000,000

April 30,
2014

(Note 5)

Non-guaran
teed(Note 9)(Note 2)
Resona Bank ,Ltd.
(Note 2)The Bank ofTokyo-Mitsubishi
Long-term

UFJ, Ltd.

1.060%

loans
payableResona Bank, Ltd.

Secured/1,500,000--

1,500,000

1,000,000--

1,000,000

April 30,
2015

(Note 5)

Non-guaran
teed(Note 9)Sumitomo Mitsui
Banking
Corporation25

Sumitomo Mitsui
Banking

2,500,000--

2,500,000

Corporation

1.053%The Bank ofTokyo-Mitsubishi

Secured/1,000,000--

1,000,000

10,000,000--

10,000,000¥ 18,500,000¥2,830,000¥3,000,000¥18,330,000

April 30,
2016

(Note 5)

Non-guaran
teed(Note 9)UFJ ,Ltd.
Sub total
Total

26

Note 1: Annual repayments of long-term loans payable (except for current portion of long-term loans payable) scheduled for the next five years
after the balance sheet date are as follows:
Due after 1 year

Due after 2 years

Due after 3 years

Due after 4 years

through 2 years

through 3 years

through 4 years

through 5 years(in thousands of yen)
Long-term loans payable¥6,500,000¥3,500,000

¥

-

¥

-

Note 2: Borrowings listed in the current portion of long-term payable were listed in long-term payable in the previous fiscal period.
Note 3: All debts are borrowings at a floating rate.
Note 4: Average interest rates are the weighted average during the period and figures are rounded to the nearest third decimal place. Also, withregard to borrowings for which interest rate cap transactions were implemented in order to hedge the interest rate volatility risk, theweighted average interest rates taking into consideration the effects of the interest rate caps are indicated.
Note 5: All debts were used as the funds for acquiring real estate properties or trust beneficiary interest in real estate (ancillary expenses areincluded) and repayment of debts.
Note 6: ¥170 million was repaid on March 31, 2013 and ¥830 million was repaid on the final principal repayment date.
Note 7: ¥100 million will be repaid on March 31, 2014 and ¥730 million will be repaid on the final principal repayment date. Also, if an early
repayment is made on the principal of the short-term borrowing before March 31, 2014, the amount of repayment of principal with March 31,
2014 as the principal repayment date will be the amount where the total of the principal of the short-term borrowing repaid based on thesaid early repayment is deducted from the scheduled principal repayment amount of ¥100 million.
Note 8: Except for the above (Note 6 and 7), all the repayment methods of debt financing are lump-sum repayments on the due date.
Note 9: The assets that are pledged as collateral are KDX Daikanyama Residence, KDX Yoyogi Residence, KDX Odemma Residence, KDX
Iwamoto-cho Residence, KDX Bunkyo Sengoku Residence, KDX Azumabashi Residence, KDX Shimura Sakaue Residence, KDX Musashi
Nakahara Residence, KDX Chiba Chuo Residence, KDX Kawaguchi Saiwai-cho Residence, KDX Toyohira Sanjo Residence, KDX Jozenji
Dori Residence, KDX Izumi Residence, KDX Chihaya Residence, KDX Sakaisuji Hommachi Residence, KDX Shimmachi Residence, KDX
Takarazuka Residence and KDX Shimizu Residence, for a total of 18 properties.

27

19. DISTRIBUTIONS
Fourth Fiscal Period(From August 1, 2013 to January 31, 2014)

I. Retained earnings at the end of
periodII. Total distributions
Distributions per unit

Third Fiscal Period(From February 1, 2013 to July 31, 2013)¥1,632,542,142¥406,661,143¥1,632,398,232¥406,621,600¥6,756¥5,390¥143,910¥39,543

In accordance with the policy described in Article
38-1 of its Articles of Incorporation, the Investment
Corporation determines that the amount of
distribution shall exceed the amount equivalent to
90% of its distributable profit as stipulated in
Article 67-15 of the Special Taxation Measures
Law, and shall be up to its profits as the maximum
amount. Following this policy, the Investment
Corporation has decided that it shall distribute¥1,632,398,232 which is the maximum integral
multiple to 241,622 units issued and outstanding as
the distribution of earnings. Procedures for the
distribution of amounts exceeding distributable
income are outlined in Article 38-2 of theInvestment Corporation’s Articles of Incorporation.
In the fourth fiscal period, the Investment
Corporation has decided not to distribute cash inexcess of distributable profit.

In accordance with the policy described in Article
38-1 of its Articles of Incorporation, the Investment
Corporation determines that the amount of
distribution shall exceed the amount equivalent to
90% of its distributable profit as stipulated in
Article 67-15 of the Special Taxation Measures
Law, and shall be up to its profits as the maximum
amount. Following this policy, the Investment
Corporation has decided that it shall distribute¥406,621,600 which is the maximum integral
multiple to 75,440 units issued and outstanding as
the distribution of earnings. Procedures for the
distribution of amounts exceeding distributable
income are outlined in Article 38-2 of theInvestment Corporation’s Articles of Incorporation.
In the third fiscal period, the Investment
Corporation has decided not to distribute cash inexcess of distributable profit.

III. Retained earnings brought forward
to the next period

Method of calculating distribution
amount28

29